Bastion Oil and Gas South Africa (Pty) Ltd (“Bastion”) is a South African empowered company committed to finding solutions for South Africa’s energy deficit by exploring for and producing indigenous onshore gas.
| QUESTION | ANSWER | |
| 1. | Does South Africa have onshore gas? | Yes. Kinetiko Energy Limited (ASX listed) and Renergen Ltd (JSE and ASX listed) have proven this to be correct. Kinetiko is exploring CBM in the Permian age Karoo Basin and Renergen for biotic gas in the Witwatersrand Basin. |
| 2. | What is the origin of this onshore gas?
| Coal bed methane (CBM), also referred to as coal seam gas, can be found in coal seams where the gas has been adsorbed into the solid matrix of the coal. |
| 3. | Where is the gas located?
| It appears in the Permian Basin of South Africa. The gas has also migrated to sandstones with a secondary porosity in the encompassing Vryheid Formation. The hosting of gas also appears to be aided by fractured porosity that has been created during the later period of dolerite intrusions. Bastion believes that these targets of CBM traps are also present in the acreage that neighbours Kinetiko. These reservoirs do not require hydraulic fracturing. |
| 4. | Why was onshore gas not developed previously?
| In addition to the lack of a gas market, the gas reservoir model in the past was poorly understood. Onshore gas was not required for power generation because South Africa generated its power from coal. Eskom could generate power from coal at much less cost than gas. Coal power plants in South Africa are ageing and power generation using coal is now considered environmentally unsustainable. South Africa has committed itself to transitioning to cleaner energy solutions through the Just Energy Plan. Gas as an energy source is recognized as part of that plan. |
| 5. | Does South Africa have sufficient commercial quantities of onshore gas? | Yes. Renergen has the first South African gas production right. Kinetiko and Renergen are both also focused on near term commercial gas production projects. The challenge is that South Africa must maintain an investment friendly environment that encourages further onshore gas exploration. Capital markets in South Africa remain reluctant to invest in gas exploration and production. Although this is changing, it is not happening fast enough. |
| 6. | Why should we invest in domestic onshore gas exploration? | Energy security is not the only reason. Here are some other good reasons:
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| 10. | What are the benefits of South Africa producing onshore gas? | Domestic gas resource utilisation creates the value chain within South Africa with the following benefits:
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| 11. | What are the challenges facing onshore gas exploration and development in South Africa? | There are many but not insurmountable. Entry barriers are slowly being removed but many of the following remain to be addressed:
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| 12. | What are the rewards for investors in onshore South African gas exploration and production companies? | Investors in successful gas exploration and development projects can expect significant capital growth when the following is present:
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As Bastion continues to de-risk these onshore gas opportunities through intelligent exploration, we look forward to partnering with like-minded companies, development finance institutions and industry as joint venture partners, financiers, contractors and gas off-takers who like us consider this a worthwhile endeavour.
For more information please contact the undersigned at barrisford@bastionoil.com or info@bulwarkoil.co.za
Barrisford Petersen
Founder and Managing Director
Bastion Oil and Gas South Africa (Pty) Ltd
Bulwark Oil And Gas Sa (Pty) Ltd
Rockit Energy (Pty) Ltd
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