Shell applied for gas exploration rights for an area covering 90,000 km2—the size of KwaZulu-Natal. Falcon Oil and Gas applied for an area of 30,000km2—one-and-a-half times the size of the Kruger National Park—which encompasses Jansenville, the mohair capital. Sunset Energy applied for 35,000km2 around Graaff-Reinet. Besides these, there are many more; together they cover an area the size of the Eastern Cape Province. It could be the world’s fifth largest shale gas find.
According to Jansenville, Sasol is not pursuing further exploration, after initial studies of the Karoo “did not reveal particularly strong prospects”, although it remains interested in the venture. “[It] supports the current moratorium on additional license applications” which allows the government “to define the robust and world-class regulatory environment that is critical for the responsible functioning of shale gas exploration and operations”. Sasol was awarded a technical co-operation permit of 82,145km2 offshore Kwazulu-Natal and might apply for exploration rights after the year-long study period.
Econometrix, South Africa’s largest independent macro-economic consulting firm, reports: “Just 10% of the US Energy Information Administration (EIA) estimated 485 tcf (trillion cubic feet) shale resource could add R200 billion ($24 billion) to GDP annually and create 700,000 sustainable jobs.”
Jan Willem Eggink, general manager upstream of Shell, says: “The hundreds of thousands of jobs are only generated if we are producing the gas and it goes into the market where new industry will start. The exploration phase will not generate a very high number of jobs because the skills are not yet here. We will have two rigs: each rig will have 50 to 100 people, possibly slightly more; it depends on the rig.”
PASA believes that only 10% of the estimated reserve is viable for exploitation. Eggink believes that Econometrix’s case studies on 4% and 10% of the gas reserves are “conservative cases”.
“The bottom line is we have to drill wells to actually find out whether the shale [is] there and can be productive,” says Eggink.
South Africa imports 65% of its natural gas from Mozambique. This could be the solution to the country’s dependence on foreign energy.
“The National Planning Commission (NPC), headed up by Trevor Manuel, outlines the challenges for South Africa which are inequality, poverty, unemployment, education and energy. I think these have to be resolved in the foreseeable future. If not resolved, I think there is a huge problem for South Africa. This project provides an opportunity to address many of these issues listed in the NPC report,” says Eggink.
“If you have sufficient energy in a country, then industries will build, employment will rise appropriately and through that, education will also get a boost because if you have significant employment opportunities these people need to be educated.”
Shell has conducted public participation meetings in the Karoo and Cape Town, he says.
“The Environmental Management Plan (EMP) we submitted has the most extensive consultation any project has had in South Africa so far. We had, I don’t know, 6,000 questions which we have all answered individually. They are published on the Golder Associates website, which is an independent entity.
“With regard to environmental impact, the footprint of the development will be very small. First of all, we will explore, and we will explore up to 24 wells in accordance with the EMP in our area. These drilling rigs will end up on a football pitch-sized area. After that we may go into development, and nowadays, on this football pitch-sized areas [you can place] up to 32 wells. One development could be between 1,000 and 2,000 wells which would mean, with these horizontal wells, that you would need 60 or 70 of these football pitch-sized areas, four to five kilometres from each other. That is one development.
“That will be a pretty small area, compared to our license area. We will be operating in 1% of the area for development, and at surface the impact will be significantly smaller than that 1%.” FORBES AFRICA calculates it to be 900km2.
When it comes to water contamination by fracking fluids and gas, Eggink quotes the April 2012 report on The Environmental Impacts of Shale Gas and Shale Oil Extraction Activities, by the Committee of the Environmental, Public Health and Food Safety of the EU.
“It is important to note that no official or other reputable sources have demonstrated any systematic [connection] between shale gas and shale oil extraction and human and animal health. No official or other reputable sources worldwide have demonstrated any cases where hydraulic fracturing has led to contamination of drinking water.”
Eggink quotes one case, which is currently being disputed, in Wyoming. It relates to the poor quality of wells, which he assures will not be the case with Shell as it adheres to high operating standards.
All the chemicals to be used will be disclosed on Shell’s website. Eggink claims that from a list of a few hundred possible chemicals, only 8 to 10—on occasion slightly more—are used, depending on the rock mechanics of the site to be drilled.
According to Econometrix: “At depths of 4,000 to 5,000m below the surface where the shale deposits are expected to be found, any water in the vicinity or between the surface and those depths is likely to have been rendered unusable through natural contamination with arsenic and uranium.”
Chapter 10 of Shell’s EMP outlines its commitments to ensure minimum environmental impact and adhere to safety regulations. The most salient points include: full compensation to landowners with proven direct negative impact or loss due to their activities. Shell won’t compete with locals for water and will monitor water quality through an independent party. It will employ local experts to identify the most suitable water source for development areas. Shell promises to recycle flowback water and responsibly dispose of remaining fluids. It promises that permanently plugged and abandoned wells will adhere to the highest international practices.
Cryptocurrency for Africans
George Gordon is on a quest to revolutionize the financial system. The director of Africa Master Blockchain Company talks digital currencies, blind risks and board games.
What is this new African cryptocurrency you are offering?
Where the majority of current digital currencies are based on speculative models, AfriUnion Coin (AUC) and the AfriNational Tokens (ANT)are designed for a transactional purpose allowing international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. While the option for speculative trade is available with AUC, the focus is not around that.
Each African country will have a specially-designed ANT which will allow users to pay for goods and services and bills easily through completely digital means without requiring any bank account. AUC and ANT will be fully interchangeable to one another and there will be no fees for the user.
It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to. The ability to freely have the power to send and receive money locally and internationally will allow the freedom of choice and spending power many Africans don’t have currently.
What is your own investment philosophy?
I am a gambler! I believe in taking risks and putting things on the line. That being said, blind risk or whimsical guesses don’t get you very far. Always acquire enough information to understand to a reasonable level what the thing you are planning on investing is or how it works and then trust your instinct and gut feel.
What advice would you give entrepreneurs wanting to invest in blockchain?
First, do some research in terms of what the blockchain technology is being applied for or created in terms of its application to an industry or project. Thereafter, check the white paper for the design of the platform as well as its functionality and applicability to what it is trying to achieve. If it aligns with your personal investment rules, then go for it,however, remember that blockchain is continuously evolving and thus you need to explore outside the usual and standard.
First cash-less, now card-less. What is the future of online banking?
If we are looking into what is currently science fiction, I would say the future is digital contact lenses that will be able to connect you to all your social media accounts, internet, news as well as make payments by just looking at QR codes or specialized barcodes to approve and accept payments.
Now, realistically we are not far off from such innovation and technology, but for the time being, I think the next step is scanning of QR codes at retailers and having the transaction automated from your wallet to the retailers digitally.
What is your most prized investment and why?
My mind. I believe that the work I have put into developing my mind, and continue to do so every day, is the number one investment that I have ever done. It allows me to look at things in a unique perspective as well as provides me with the tools to push boundaries and create new opportunities.
Money, success, fame? Which is most important to you?
I would have to say success… because it is most likely going to bring the other two as well, right? But success in the form of starting something and letting it grow and succeed and knowing that something new exists because of your efforts.
What do you spend your money on mostly?
Board games. I love board games and believe it’s a fantastic way to expand your mind as well as have fun with friends.
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King Price Insurance’s CEO Gideon Galloway, who built an insurance company in South Africa worth over $226 million in six years, talks investments, industry trends and how self-driving cars will change the entire car insurance landscape.
Offering The American Dream
Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.
It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.
A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.
“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.
With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.
Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.
“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”
According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.
These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.
“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.
According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”
Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.
“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.
The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.
According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.
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