The search for indigenous natural gas resources intensifies

Source: Tosaco Energy

Tosaco Energy announced on Thursday that the company was awarded three onshore Technical Cooperation Permits (TCP's) by the Petroleum Agency of South Africa.

Photo provided by Tosaco Energy

Tosaco Energy announced on Thursday that the company was awarded three onshore Technical Cooperation Permits (TCP's) by the Petroleum Agency of South Africa. Tosaco Energy is a majority black-owned South African exploration and production company focused on developing onshore natural gas resources and related infrastructure. Tosaco Energy is a sister company of the Tosaco Holding Company which owns a 25% interest in Total South Africa.

The award of these permits is in line with the South African government’s strategic focus on unlocking indigenous gas resources and to diversify the current energy mix away from coal. South Africa’s current primary energy consumption is dominated by the use of coal. Coal
made up approximately 70% and 68% of the primary energy consumed in 2014 and 2015 respectively. Coal is the largest primary energy fuel type and is envisaged to remain a large contributor to the South African energy mix in the future.

The three permits are located in the Mpumalanga province, all in close proximity to existing natural gas pipeline infrastructure and power stations. The proximity to these infrastructures will assist with the development of the potential gas resource. The total area
of the permits covers approximately 2900 square kilometers, making Tosaco Energy one of the largest onshore acreage holders active in South Africa.

Speaking after the signing ceremony, Tosaco Energy’s Chief Geologist, Mr Bill McAloon, highlighted that the gas targets the company is focused on are sandstone deposits in the Vryheid formation, consisting of sediments deposited in deltaic, shoreline and fluvial systems that entered an inland basin from highlands to the north and northwest. The geological model proposes that the gas has been adsorbed from the interbedded coal beds and migrated into the adjacent sandstones, which then essentially become conventional gas reservoirs, similar to the gas deposits presently producing from offshore South African waters. Any future exploration and production drilling will therefore, not involve hydraulic
stimulation (fracking). Initial resource estimates are that there are significant gas resources in the permit areas, in the order of trillions of cubic feet of clean natural gas.

“The initial exploration process will involve various geological and geophysical techniques, which are relative low cost and have a very low environmental impact. Tosaco will ensure that all operations are conducted using good oil field practice and we are committed to
making sure our operations have the minimal impact on the environment and will maximise economic growth. Local beneficiation is one of our top priorities”, says McAloon.

Bradley Cerff, Tosaco CEO, says the award of the four TCPs is an important milestone in the company's short history. "The award sets the stage for Tosaco Energy to become a fully integrated energy company building on existing investments. Local gas resources have the potential to reduce South Africa's dependence on coal. From a global perspective, there has been a conscious decision by a number of countries to reduce coal consumption and its use in electricity generation. Gas is a more environmentally friendly option for electricity generation with far less harmful atmospheric pollutants than coal", says Cerff.

Signing the documents on behalf of Tosaco Energy was Chairman of the board, Dr Kinesh Pather. “I am very pleased and encouraged by the South African government’s commitment to a implementing a gas strategy. The gas economy, although in its infancy, will continue to
develop with the necessary legislative and political support” said Pather. Pather also complimented the Petroleum Agency on its support throughout the process and believed that this now sets the stage for further investment in the exploration of gas in Southern Africa. Despite limited data available across the permits, the company is positive that it will be in a position to test the gas resource by early 2019.

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