Sasol JV in Botswana

Yesterday Sasol announced a JV with an Australian company called Origin Energy which involves extracting Coal Bed Methane (CBM) in Botswana. If you are unsure what CBM is here is a brief explanation. "CBM is a clean natural gas by-product of ancient plant matter, trapped in underground coal seams. CBM production is a process of desorbing natural gas from coal using wells drilled for that purpose. The process of production is similar to the mine safety processes used in degassing coal mines. The water that is produced during the production process is pumped to the surface and treated so it can be disposed of or recycled for beneficial purposes such as agriculture."

It must be noted that it is different from shale gas and its extraction is apparently a lot less strenuous on the environment than fracking. Instead of consuming loads of water, it actually produces water as a by-product. The agreement involves a number of exploration activities in the central province of Botswana over the next 2 years. This would also be very positive for the Botswana economy which is so reliant on Diamonds, cattle and tourism. The company says if the project decides to go really big they may consider a pipeline into one of their chemical plants or even a start up of a synthetic fuels business.

Sasol already have big gas assets in Mozambique which it has been utilizing successfully since 2004. In fact they are opening up a big processing plant next week which should lift gas production in that region by 50% by 2016. The plant actually supplies most of its gas to South Africa where it is used as an energy source.

Because Southern Africa is so reliant on coal for its energy supply it is nice to see that there are alternatives out there. Especially in the form of gas which is more environmentally friendly than coal. Other than a possible finding off the coast of Namibia we don't have oil either. With Sasols synthetic fuel technology using our own gas as a massive energy resource would be fantastic for the region. This is also why all the shale gas in the Karoo sounds so compelling. It's great to have a company like Sasol in your economy.