Looking the Bullfrog in the Mouth.
French global oil conglomerate, Total, has broadcast an immense gas-condensate discovery at their offshore Brulpadda 1AX prospect rig operation in the Outeniqua Basin, due south of Plettenberg Bay. The announcement came in time for the South African State of the Nation Address (SONA )speech, just before massive national power cuts, and has diverted interest away from the Xolobeni case and the rights of customary communities to decide what happens to their lands. This announcement came with words like “growth prospects”, “game-changer” and “ exploration boon”[1].
This deepsea Brulpadda find has taken Total 5 years since a “chaotic combination of currents, waves and winds”[2]in 2014 wreaked mechanical havoc on its rig, stopping operations. Total has now contracted a rig designed for bad weather and currents like our Agulhas Current. They struck high quality gas condensate (fundamentally a “wet gas”, gas that contains a small amount of oil) at a depth of 3.6 kilometres and there’s talk of a billion barrel gas yield.This summer was a calm one, but Cape summers aren’t always this tranquil.
Total has warned that extraction in this region will be costly and is conditional on a 3D seismic survey application, plus an extra 4 exploration wells on this license. This well will cost the country a minimum of R42 billion since there is a favourable 100% “uplift” capital expenditure provision for oil corporations which make discoveries in this country. In other words, the RSA taxpayer will pay for this development.
A major benefit for RSA will be Brulpadda’s fiscal role in generating tax and other revenue for the government. Total and its Brulpadda partners will pay the regular 28% corporate tax on all taxable income from the find and a royalty of approximately 5% on the ‘transfer’ of all oil/ gas, which includes the disposal or consumption thereof. The most optimistic estimates are a yield of $1 trillion[3]for Total and its partners. Whether these financial gains are worth the environmental costs of offshore drilling has also been largely omitted from the debate.
All South Africans should be asking the fundamental questions:
Is it worth it?
The gas may only see production in 2027[4].. What is the logic of ‘transitioning’ to gas after an 8 year delay? The Intergovernmental Panel on Climate Changehas warned that nations around the world, including RSA, must stop burning fossil fuels by around 2030 to avoid catastrophic warming. By 2027 climate change will be a fully fledged reality and Brulpadda will become a stranded asset. Further development of gas infrastructure is incompatible with the Paris agreement target. So the question remains: is the Ramaphosa government genuinely committed to cut all carbon emissions within 30 years or are they paying lip service to it?
Ramaphosa described the discovery as a “catalytic find”[5]. Chosen words that beg analysis. A catalyst is an agent that speeds up a reaction between two forces but remains unaffected by the chemistry itself. History shows that oil exploitation facilitates displacement of people in the locale, both physical and economic displacement. History also shows you’d be hard pressed to find a country where foreign oil agencies have not benefitted from this disempowerment of the indigeny and the injurious consequences of oil wars and conflict. This past week City Press reported the death of 6 activists who questioned the development of an “oil project’ in Empembeni near Richards Bay[6]. The oil industry has continued, and will continue, with impunity. Oil and violence are old friends.
A 180km undersea pipeline will need to be constructed and laid to link Brulpadda to Mossel Bay. Apparently 80kms exists so there is still 100kms of pipeline to lay in a challenging sea. We will hear about the “dilution of effects in seawater” of the severity of the impacts of the hydrocarbons, drilling wastes and cuttings, their toxicity, radioactivity and contamination in relation to the exploration activities, plus the negation of effects of the continual leaks in pipelines. These are toxic substances that cannot be broken down by environmental processes, are mostly water-insoluable and can bioaccumulate up the foodchain. They create the potential harms to health and environmental ‘well-being’ in the sense that this word is used in the environmental right contained in section 24 of the Constitution. The big question no one is asking is : what is the actual cost of failure, of an oil spill?
What material improvement in fundamental living conditions will South Africans experience?
This gas could either be converted into petrol at PetroSA’s gas-to-fuel refinery in Mossel Bay or it could be converted into electricity. There’s false hope of reduced petrol prices transforming the economy. Chairperson of the Central Energy Fund, Luvuyo Makasi, believes the find will help” fuel and energy security of the county and it will be a mechanism to help counter the country’s ever-rising fuel price” [7]. Does anyone really believe Total will sell that gas at a discount to the South African consumer? That gas will be sold at the prevailing price on global markets and there is a single market-clearing price for gas of a given quality, significantly influenced by crude oil pricing.
It’ll be a decade, and some radical, gas-centric infrastructural developments before Brulpadda makes any impact on our electrical grid.
Aldworth Mbalati, chief executive of DNG Energy, a local oil and gas exploration company, reckons, “Gas plays a critical role as a transition fuel which is cleaner and its CO2 emissions are 60% less than fossil fuels. So, with gas, we are achieving our objective of keeping the country’s economy running and preserving the environment.”[8]Let’s hope this is a typo and that Mbalati is aware that gas is actually a fossil fuel too. South Africa still has twice the global average of CO2 emissions per person. Why low-carbon when we can employ people in no-carbon, renewable technologies?
Regards to job creation let’s be frank, privatizing the ocean commons creates super-profits for the polluters and remediation of that pollution will fall on the poor who rely on ocean resources. Those involved with the Total project will be specialists already in employ, however for those few local caterers and helicopter pilots Total promises “making use of HDSA [historically disadvantaged South African] contractors whose services and standards are competitive with those outside South Africa.”[9]
If we want to talk seriously about energy security of this country and significant economic growth, we need to talk about energy diversification. There are fast developing technologies and South Africa must unlock ingenuity in fields that directly compete with oil and gas to secure renewable energy resources. The truth is that venture capital is pouring into alternative energy and can reduce our dependency on fossil fuels with the aim of carbon neutrality by 2050. All it takes is the political will, or the voice of the people in solidarity.
[1]https://www.reuters.com/article/safrica-oil/south-africa-says-has-up-to-60-tcf-of-offshore-gas-potential-idUSL5N20A5IH
[2] http://africaoilgasreport.com/2018/12/oil-patch-sub-sahara/will-brulpadda-now-spud-open-up-south-africa/
[3]https://www.businessinsider.co.za/mtn-boss-stake-in-brulpadda-gas-find-2019-2
[4]https://www.biznews.com/premium/2019/02/12/brulpadda-gas-production-2027
[5]SONA speech 2019
[6]https://city-press.news24.com/News/kzns-killing-fields-6-activists-dead-after-questioning-oil-project-20190212
[7]Naidoo, M. 2019. ‘Gas could rescue Economy’, Sunday Tribune, 10 Feb, p.1.
[8]Naidoo, M. 2019. ‘Gas could rescue Economy’, Sunday Tribune, 10 Feb, p.1.
[9]https://www.fin24.com/Economy/5-questions-totals-adewale-fayemi-on-brulpadda-and-hitting-the-ground-running-20190216
Oceans Not Oil 