JOHANNESBURG (miningweekly.com) – Gas-to-liquids (GTL) producer Sasol has applied to explore for shale gas in the Karoo, together with Chesapeake Energy and Statoil ASA.
The application is for an onshore right to search for the natural shale-based gas, which has already caused Sasol's GTL price to soar.
In converting gas into oil using GTL technology, Sasol effectively speeds up Mother Nature by a couple million years and current crude oil prices expressed as a multiple of natural gas prices show Sasol's GTL to be in a sweet spot.
"The reason why the GTL price has shot up is because there's new technology being developed in the US that enables the extraction of gas out of shale, which was previously not economic," Sasol CEO Pat Davies tells Mining Weekly Online in a video interview.
"It's quite a radical shift and it's having an impact on gas prices around the world," he says.
This has also allowed Sasol's GTL to gain a competitive advantage over liquefied natural gas.
"This puts us in a very good space. We make our money in GTL in the price of gas versus the price of oil, because we take gas and we convert that into oil, so the bigger that gap, the more money we make," says Davies.
"If there is shale gas in the Karoo, and if it's economically extractable, that will provide opportunities to supply gas into our own facilities or to on-sell it to others. It's a great business opportunity, but a long-term one."
Sasol Petroleum International (SPI) MD Ebbie Haan says that the additional gas resource potentially provides Sasol with a low carbon feedstock.
"It's an exploration licence and thereafter we will look at the economics and what it means in hardware and that will be a longer-term project," Haan says.
The exploration application, which was submitted in November, may take a year to process.