LNG-to-Power Can Help South African Energy Grid, Improve Reliability, Support Industry, and Decrease Emissions Relative to Coal

     Perhaps it would have been better if South Africa built LNG-to-power infrastructure five or ten years ago but it there is still time. This post started out mainly as a rebuttal to an article in The Conversation by Richard Callahan, Director, Africa Programme, University of Cambridge Institute for Sustainability Leadership that argues against gas replacing coal in favor of wind, solar, and green hydrogen. I believe a combination approach including natural gas would be better and offer a more stable grid. Hydrogen can still be developed but alongside natural gas. Hydrogen can be blended in and co-fired with natural gas at power plants. Green hydrogen is very expensive and will be significantly limited in its ability to replace coal for power. H2 is less energy-dense than hydrocarbons, and this would be a big problem as well. In fact, the idea of wind, solar, and green hydrogen replacing any hydrocarbon for grid power is rather far-fetched. Energy storage of some sort (besides the H2) would also be required in high amounts and high costs.

     Callahan argues that if South Africa wants to develop natural gas it should adopt UN-style pledges such as the Global Methane Pledge to keep gas sector methane emissions at an absolute minimum. This is probably OK. I disagree with Callahan’s notion that the development of a natural gas industry and LNG import industry in South Africa will result in stranded assets. It will be more than 30 years before such infrastructure would be threatened by the likes of wind, solar, and green hydrogen. The infrastructure and power plants could also be designed to accommodate some hydrogen so that any transition toward hydrogen will be seamless and will utilize existing natural gas infrastructure.

     Highly efficient combined-cycle natural gas power plants can replace coal and offer 60% or higher emissions reduction. LNG-to-power is likely the best means to replace coal with gas in South Africa. The current grid as shown below is almost entirely powered by coal. Even with the high amounts of baseload power from coal the country still needs more power and has been plagued for years with load-shedding issues resulting in rolling outages which I wrote about last year. I wrote that delays in building new power plants, corruption in coal-supply contracts, sabotage and over-regulation of renewable energy projects, and a lack of grid maintenance and investment were some of the main issues. The bottom line is simply that the power supply is inadequate to meet demand. Couple that with an energy transition that is not cheap and does not provide reliable power. The country has goals to reduce coal’s share on the grid from 84.4% (2021) to 60% in 2030. With a grid that is already inadequate, there is a need to add more generation capacity, including more baseload capacity.  Utilizing coal for backup power or as demand response also means more emissions and pollution since idling coal plants on stand-by for demand spikes still emit both. Natural gas is a much cleaner demand response resource than coal and those plants can start up and ramp up quickly compared to coal plants.

Data Source: Statista

     There are many factors that still favor coal production in South Africa, including employment in the industry. A 2022 paper in Energy for Sustainable Development explored South Africa’s energy transition. Factors are included in the graphics below. South Africa developed an Integrated Resource Plan (IRP) in 2019, considering their Paris Accord commitments. The country is entrenched in coal production and export, which provides good-paying jobs. Thus, loss of employment is a big concern with the energy transition. Renewable energy jobs generally do not pay as well as coal mining and coal power plant jobs.

    

     The 2023 Integrated Resource Plan includes bullish support for the development of a South African LNG and local natural gas industry. The IRP includes significant natural gas development and LNG-to-power projects. Remember, the graphs below are by capacity, and since combined cycle natural gas has much higher capacity factors, or utilization rates, than wind or solar, the numbers should be adjusted accordingly. I tend to cringe when I see intermittent renewables and baseload supply like gas and coal being compared by capacities since it is generally misleading to anyone who does not understand how they really compare, even though capacity comparisons are common.  

 

 

South African Gas and Oil Exploration

     Two gas condensate fields discovered offshore South Africa were in the process of being developed by TotalEnergies but they decided at the end of July 2024 to abandon the project. Apparently, deep water and fast ocean currents made the project non-viable. Total is still involved in other offshore South African projects including in the Orange Basin. Significant Orange Basin discoveries offshore Namibia are encouraging.

     South Africa’s Karoo Basin is currently being explored via seismic surveys. The work by Shell was put on hold by the government due to opposition from environmental groups and local residents. The country’s Mineral Resources Minister Gwede Mantashe is in favor of the project and seismic exploration has recently resumed. Mantashe is quite bullish on South African gas production. I think they need to hash out issues with environmental groups and local residents to advance these projects which could have positive economic impacts and positive emissions impacts relative to coal and even LNG.  The Karoo Basin may even have significant shale gas reserves.

 

     Rhino Oil and Gas Exploration South Africa (Rogesa) announced plans to drill up to 20 gas exploration wells in the Highveld region targeting biogenic methane, helium, and geologic hydrogen. The company says they will not use hydraulic fracturing. Local farmers are very suspicious of the project, noting damage to adjacent land by coal mining.

 

     In September 2024, South African public power company Eskom and petrochemicals company Sasol signed a Memorandum of Understanding (MoU) to “collaboratively explore and research potential future liquified natural gas (LNG) requirements. The collaboration will also enable the country to find a solution for gas users who require longer term certainty of supply beyond this decade.”

 

“The collaboration aims to determine the potential volumes that South Africa requires to establish a viable LNG import market along with the enabling infrastructure, and will be facilitated by government-to-government relations where necessary. This initiative focuses on using gas for power generation to provide essential base load electricity and position gas as a key enabler of re-industrialisation, while also ensuring continued supply to the market by unlocking global LNG resources. Furthermore, the collaboration will contribute to enhancing South Africa’s energy mix and enable the country’s energy transition and decarbonisation.”

 

“We have made it clear that we are serious about LNG solutions for the country, and that our demand for gas across both industrial and energy frontiers will unlock these solutions,” said Minister Ramokgopa. “This collaboration between our two energy champions – one public, one private – will provide a data-driven and commercially sound basis for gas-fed industrialisation and for us to explore the well-worn path to lower carbon energy that the global north has already taken by scaling gas to power. Gas has emerged as the second-largest contributor to global electricity production, experiencing rapid growth as many countries shift from coal to gas in their energy mix to enable positive implications for climate change, as gas typically emits less CO2 per unit of energy.”

 

     Thus, it appears South Africa is ready to develop gas-to-power, gas-to-chemicals, and gas-to-industrialization. The graphic below from the Cambridge Institute for Sustainability Leadership shows the gas fields, pipelines, and other gas infrastructure along with the levels of complexity of each area and project.

 

 

 

    

 

LNG and Onshore Gas from Mozambique

     Gas fields, mostly offshore but some onshore in Mozambique are being developed. The floating offshore LNG Coral South project is an $8 billion project led by Eni, ExxonMobil, and a few other companies that came online at the end of 2022. These Coral South offshore gas fields in the prolific Rovuma Basin have recoverable reserves of around 16 TCF (if I am correct), which is more than enough to supply natural gas to southern African countries like South Africa as well as exporting it elsewhere.

     In 2019 TotalEnergies bought from Anadarko their LNG project onshore NE Mozambique in the Cabo Delgado area. Unfortunately, the area has been plagued through the years with an insurgency that includes many elements, including the worst of Islamic extremists like Al Shabaab and ISIS. It has abated somewhat in recent years. TotalEnergies project was suspended due to an upsurge of violence in the Cabo Delgado region in 2021. It consists of two gas fields set to feed two LNG liquefaction trains under construction. TotalEnergies announced in March 2024 that they hope to restart the project. Total CEO Patrick Pouyanné is planning to visit the country at the end of this month to meet with the new president, who is being elected or likely re-elected today (October 9). The country’s dominant political party has been in power for decades. Pouyanné may announce the resumption of the project then with construction to resume in early 2025.

     The Pande and Temane gas fields in Southern Mozambique continue to be developed by Sasol. Southern Mozambique borders South Africa. These fields are currently powering a natural gas power plant, building an LPG plant in Mozambique, and helping the area to develop. The country has a goal of universal energy access by 2030. Here is proof that natural gas can both alleviate energy poverty and spur economic development and do so quickly. The power plant is currently producing 450 MW and Sasol hopes to double that by the end of 2024. In an August 2024 interview Sasol VP Ovidio Rodolfo spoke about Sasol’s projects in Mozambique:

 

“Besides supplying gas for power generation stations, we are constructing an LPG plant in Temane that will be the first in the country dedicated to the domestic market. It will produce close to 30,000 tpy of LPG that can be used as cooking gas, replacing almost 70% of current imports and enabling the massification of LPG utilisation in the country.”

 

“Sasol is in Mozambique for the long term, and while our current focus is to make the most of our reserves in the south, the long-term conversation revolves around how Sasol can best partner with Mozambique to monetize the gas reserves in the Rovuma Basin gas reserves, both domestically and regionally, be it through LNG production, transportation or other means.”

 

 

References:

 

Gas isn’t a good alternative to coal – South Africa should focus on solar, wind and green hydrogen. Richard Callan. The Conversation. October 7, 2024. Gas isn’t a good alternative to coal – South Africa should focus on solar, wind and green hydrogen (theconversation.com)

South Africa's energy transition – Unraveling its political economy. Jonathan Hanto, Akira Schroth, Lukas Krawielicki, Pao-Yu Oei, and Jesse Burton. Energy for Sustainable Development. Volume 69, August 2022, Pages 164-178. South Africa's energy transition – Unraveling its political economy - ScienceDirect

Farmers push back against Highveld gas-drilling exploration plan. Tony Carnie. Daily Maverick. September 18, 2024. Farmers push back against Highveld gas-drilling exploration plan (dailymaverick.co.za)

Eskom and Sasol sign agreement on exploring LNG to unlock Gas to Power and mitigate imminent gas shortage for South Africa. Sasol. September 20, 2024. Eskom and Sasol sign agreement on exploring LNG to unlock Gas to Power and mitigate imminent gas shortage for South Africa |

South Africa: TotalEnergies exits from offshore Blocks 11B/12B and 5/6/7. TotalEnergies. July 29. 2024. totalenergies_communique-de-presse-TotalEnergies-se-retire-des-blocs-offshore-11B12B-et-567-2407_en_pdf.pdf

Viewpoint: Mozambique holds elections amid renewed hopes for LNG projects. GZERO Staff. GZERO. October 7, 2024. Viewpoint: Mozambique holds elections amid renewed hopes for LNG projects - GZERO Media

Coral South project in Mozambique ships first LNG cargo, helps meet global demand. ExxonMobil. November 14, 2022. Coral South project in Mozambique ships first LNG cargo, helps meet global demand (exxonmobil.com)

AfDB gives green light for Total's Mozambique LNG Project. Riviera Nes. November 28, 2019. Riviera - News Content Hub - AfDB gives green light for Total's Mozambique LNG Project (rivieramm.com)

TotalEnergies in Mozambique. TotalEnergies. TotalEnergies in Mozambique | TotalEnergies.com

Mozambique: TotalEnergies publishes its response to Le Monde French Newspaper. TotalEnergies. March 1, 2024. Mozambique : TotalEnergies publishes its response to Le Monde French Newspaper | TotalEnergies.com

Mozambique's Oil And Gas Market To Benefit From Pande, Temane And Inhassoro Project. Oil & Gas / Mozambique. April 21, 2021. Mozambique's Oil And Gas Market To Benefit From Pande, Temane And Inhassoro Project (fitchsolutions.com)

From gas to power with Sasol in Mozambique. Mozambique. August 6, 2024. From gas to power with Sasol in Mozambique - Ovidio RODOLFO - The Energy Year

Courts temporarily halted Shell’s exploration but fracking in Karoo gets Mantashe’s nod.  Sanele Khakhu. Mail & Guardian. October 3, 2024. Courts temporarily halted Shell’s exploration but fracking in Karoo gets Mantashe’s nod – The Mail & Guardian (mg.co.za)

Africa: South Africa's Potential for Oil and Gas 'Significant' – Mantashe. AllAfrica. October 8, 2024. Africa: South Africa's Potential for Oil and Gas 'Significant' - Mantashe - allAfrica.com

Integrated Resource Plan. December 2023. Department of Mineral Resources and Energy. Republic of South Africa. IRP-2023-for-Public-Comments-User-friendly.pdf (dmre.gov.za)

Africa’s Gas Road to Nowhere. South Africa’s policy debate on using gas to accelerate the energy transition. Sikho Luthango. Cambridge Institute for Sustainability Leadership. cisl_gas_paper_on_clg_africa.pdf (cam.ac.uk)