Gas to replace Eskom’s vapourware?

April 2019 Security Services & Risk Management

A handful of estates in Gauteng offer piped gas as an alternative energy source to their residents. With Eskom’s unstable electricity supply and increasing tariffs, it differentiates these estates into an exclusive market.

Laetitia Jansen van Vuuren.
Laetitia Jansen van Vuuren.

The majority of the estates are not in close enough proximity to Sasol’s natural gas pipeline and have to settle for LPG (liquefied petroleum gas) storage tanks. LPG is transported by means of tankers to the developments, stored in large underground vessels and piped underground to each home.

A few developments with this sort of setup include Steyn City Lifestyle Resort, Waterfall Country Estate and South Hills. Home users thus have a guaranteed gas supply, unaffected by power cuts and load shedding. They can enjoy high-end technology and comfort with instantaneous heat, faster cooking times, increased efficiency and cost saving – all without the effort to change LPG gas bottles often and also at a lower bulk purchase price.

However, Southdowns Estate in Irene is one step ahead with its natural gas pipe network. Managing director of Southdowns, Jack Prentice, identified the opportunity in 2006 already. The Sasol pipeline runs within 2 km of the estate and Prentice signed an agreement with Sasol to supply gas to the estate. Southdowns’ high-pressure customer metering station (HPCMS) supplies gas to all the houses, as well as the shopping centre, college, sports complex and gym.

Key advantages

An advantage of piped natural gas is its affordability compared with LPG and electricity. The price of natural gas ranges between R220.00 and R320.00/GJ compared with LPG at R470.00-R520.00/GJ or electricity at R500.00/GJ (equivalent to R1.80/kWh tariff). The price is also not prone to the constant price fluctuations seen in crude oil products and has a more stable price. It has a much better carbon footprint compared with coal.

When the sun isn’t shining or the wind isn’t blowing, gas remains reliable. Another advantage of natural gas is the safety aspect; it is lighter than air and will evaporate into the atmosphere if a leak occurs compared with LPG, which is heavier and more likely to accumulate on ground level and ignite.

Natural gas has the potential to replace electricity as the primary energy source in homes. Hot water, space heating, gas cooking and even generators powered by gas are possible. In countries like Europe and America, piped natural gas is a common utility to houses. This is in stark contrast with South Africa, where Southdowns is one of the very few South African residential developments to realise and seize the benefits natural gas can offer to residents. With Eskom’s reliability of supply and current load shedding schedules, gas will be a major consideration for developers to increase the perceived value of properties.

Security of supply

A common point of contention in South Africa is the issue of availability of natural gas and also the guaranteed supply thereof. No one wants to make a large capital investment without guaranteed security of supply.

It is true that South Africa does not have an oversupply of gas available, but there is still gas available based on a first-come-first-serve basis. The development of South Africa’s Gas to Power IPP Programme and Gas Utilisation Master Plan (GUMP) has been underway for the past few years. A framework and plan for the strategic development of natural gas demand and supply in South Africa is in great need. To narrow it down, there are three methods of increasing South Africa’s gas supply:

• Piped natural gas from neighbouring countries, i.e. Mozambique

• Imported liquefied natural gas (Shipping LNG)

• Domestic natural gas sources, either conventional (onshore/offshore) or unconventional (shale gas/coal bed methane)

Sasol is the sole importer of natural gas from Mozambique along the 865 km ROMPCO pipeline. The majority of the gas is used for Sasol’s internal operations and the rest is distributed to Gauteng, Free State, Mpumalanga and KZN. In 2013, the total natural gas supply in South Africa was approximately 186 PJ (91% from Mozambique and 9% from Sasol Secunda’s plant).

Construction of ROMPCO Loopline 1 and 2 has further increased the supply to about 220 PJ per annum. However, South Africa’s total gas consumption is equivalent to a single medium-sized LNG terminal. Compared to other countries like Spain with a similar energy requirement, we are using seven to eight times less natural gas.

Biggest hurdle

Despite the vast opportunity for natural gas to improve the footprint in South Africa, given government’s commitment to diversifying the energy mix away from coal, the biggest hurdle is marrying the demand and supply of gas at the same time. To secure a stable supply of gas, an anchor client must be proven. However, to secure an anchor client, proof of a stable supply of natural gas must be supplied – a case of what comes first, the chicken or the egg!

There have been numerous efforts by DoE in South Africa to facilitate the construction of our own LPG import facility but no significant progress has been made. As industry players, we need to dynamically support the drive for a bigger supply. South Africa’s natural gas industry has a lot of potential – we are lagging the rest of the world with natural gas consumption, gas to power generation, domestic and industrial usage, pipeline infrastructure and import facilities.

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