Karoo Basin Gas Project, South Africa
A world class shale gas play
- 95% interest via subsidiary in an application for a permit to explore 3,500km2.
- World class shale gas province ranked eighth largest basin for shale gas reserves globally.
- Karoo Basin recoverable resource estimated at 390 trillion cubic feet (tcf) gas (US EIA, June 2013).
- Challengers’ application is centered on the 1968 discovery well.
- Only other applicants in the fairway are Shell and Chevron.
Geology
The Karoo Basin, which extends across 600,000km2 is located in central and southern South Africa and contains organic rich shales of Permian age with combined thickness up to 5,000 feet. The focus for shale gas exploration is in the southern portion of the basin where the shales are at sufficient depth and where five wells, all pre-1970, intersected the shales with significant gas shows. One well, the Cranemere CR 1/68 well, flowed more than 8 MMcf/day of natural gas from the Fort Brown shale during testing over a 158 feet interval in 1968. The production was judged to be from fractures and secondary porosity in the shales. As first mover, Challenger’s South African subsidiary, Bundu Gas and Oil Exploration (Pty) Ltd (Bundu), selected its application area of approximately 1 million acres to be centred around this well.
The US Energy Information Administration (EIA) updated its 2011 report on World Shale Gas Resources in June 2013. The EIA estimates that the Lower Permian Ecca Group shales in the Karoo Basin contain 1,559 Tcf of risked shale gas in-place, with 390 Tcf as the risked, technically recoverable shale gas resource.
The Opportunity
Challengers 95% owned subsidiary Bundu has lodged an application for the Cranemere project, a significant shale gas prospect located in the Eastern Cape Province. The application covers 3,500km2 (870,000 acres) centred on the 1968 discovery well.
The Karoo Basin has become the focus of intense interest in the past few years, following the initial application to explore for shale gas in the basin by Bundu (acquired by Challenger in April 2010) in February 2009. Furthermore, the low economic growth rates and power crisis in South Africa have strongly motivated the government to pursue potential shale gas resources as a catalyst to transform the economy.
Shell and Falcon Oil and Gas are also pursuing exploration rights in the region. Chevron has announced an Agreement with Falcon Oil and Gas Ltd to jointly co-operate on unconventional gas opportunities in the Karoo Basin, with the result that Challenger is the only junior company with interests in the basin, alongside Shell and Chevron.
