LNG | 110% Green

Since 2012, the Western Cape Government has actively promoted the importation of Liquefied Natural Gas (LNG) into the Province via Saldanha Bay. This is for four reasons. LNG will provide fuel to Gas-to-Power stations, which are required to balance the variability of solar and wind power. As our renewable energy installations increase, the more LNG we will need to balance the grid. These Gas-to-Power plants will also improve South Africa’s energy security. Third, natural gas will replace dirty industrial fuels such as Heavy Fuel Oils and coal, thereby reducing pollution and greenhouse gas emissions. Finally, investment in LNG infrastructure will drive South Africa’s re-industrialisation provide a critical economic catalyst to the Western Cape economy. 

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In pursuit of this, the Department of Economic Development & Tourism has conducted numerous feasibility studies which are all available below.

Pre-feasibility report for the importation of natural gas into the Western Cape with a specific focus on the Saldanha Bay-Cape Town Corridor, March 2013 (H Visagie)

As there is no developed natural gas business along the West Coast, this report looked at the following elements of the gas value chain: 

  • Gas Market Potential: identified two potential market sectors - industrial sector and gas-fired power generation;
  • Potential Gas Supply Options: three potential sources evaluated - indigenous gas supplies, piped gas and supply of LNG;
  • Infrastructure Development: an analysis of the infrastructure is presented (LNG receiving terminal, high-pressure transmission pipelines and a low-pressure gas distribution pipeline network)
  • Schedule of Implementation: includes a cost and timing analysis

The review concluded that an offshore LNG receiving terminal option to be the most commercially viable and the inclusion of the Ankerlig power station contributed added value to all options evaluated. 

The report can be accessed here

Environmental Screening and Safety Study for the proposed LNG terminal at Saldanha and associated pipeline infrastructures to Atlantis and Cape Town, August 2014. (CSIR)

Based on the conclusions of the pre-feasibility study (Visagie, 2013), an environmental screening study was done for constructing a proposed 2 MMTPA LNG importation facility and associated gas pipeline infrastructure to the Cape Town, Saldanha, Stellenbosch, Paarl and Wellington regions. The study addresses issues and planning at a sub-regional level. The screening phase found that it should be feasible to route both the main high pressure pipeline and the subsidiary low pressure distribution pipelines while keeping the environmental impacts to the minimum possible.However further, more in-depth studies would be required.

The various chapters of the report can be accessed below:

Preliminary assessment of the marine environmental conditions for LNG shipment and transfer operations for an area within the Port of Saldanha, September 2014 (CSIR)

This study provides a technical basis for the findings of the pre-feasibility study in relation to the suitability of the three potential site locations identified within the port limits of the Port of Saldanha:

  • Location 1 (Onshore Big Bay): Trestle jetty
  • Location 2 (Big Bay northeast of the jetty) Option 1 and 2: Floating Storage and Regasification Unit (FSRU) with turret mooring system
  • Location 3 (close to Salamander Bay): Trestle jetty or FSRU operation

The report can be accessed here

Preliminary assessment of the marine environmental conditions for LNG shipment and transfer operations for an area within the West Coast of South Africa, September 2014 (CSIR)

This study provides a technical basis for the findings of the pre-feasibility in relation to the suitability of the two potential site locations along the West Coast  (within St Helena Bay and the area between Dassen and Robben Islands). For both locations, a turret-moored Floating Storage and Regasification Unit (FSRU)  would be used. 

The report can be accessed here

The socio-economic impact of importing LNG into the West Coast of the Western Cape, February 2015 (Deloitte)

The study came out of the context of the 2014 period of load shedding, where Eskom was operating its costly diesel-fired OCGT at significantly higher than intended loads. With power generation as the anchor tenant, the establishment of a natural gas industry could take off, the economic impacts of which are looked at in this report. The study found that:

  • There is a strong economic case for the use of imported natural gas in power generation on the West Coast;
  • This would allow infrastructure to be extended for gas-based industrialisation, which would provide significant fuel cost savings, a viable alternative fuel source for new investment, and reduced GHG emissions;
  • There is a broader opportunity to distribute imported natural gas to residential users and transport users. 

The report can be accessed here

Liquefied Natural Gas (LNG) importation: evaluating the risks, June 2016 (PwC)

As part of the exploration of importing LNG through the Saldanha-to-Cape Town corridor, this study comprises a qualitative commercial, financial and regulatory risk assessment for different contracting scenarios across the gas value chain. Three different scenarios are unpacked:

  • Scenario 1: “Internationally-led”, in which gas supply, terminal operation, gas transmission, power generation and other off-take opportunities are all under the control of a single entity;
  • Scenario 2: “SA dominant”, in which a State Owned Company takes on the role of the aggregator of landed gas to service downstream market opportunities, investing in the requisite infrastructure; and
  • Scenario 3: “Consortium-led”, in which a disaggregated consortium of public and private entities comes together to service a diverse market opportunity.

The analysis describes a plausible contracting model for each of the above scenarios and identifies key risks and responsible parties for these risks. In addition, the report indicates possible bottlenecks in the contracting process and mitigation through appropriate stakeholder engagements.

The report can be accessed here

Feasibility study for the Western Cape LNG importation and gas-to-power project, 2019 (Delphos International)

The purpose of this study was to assess the viability of the importation of LNG at Saldanha Bay for electricity generation and industrial, transport and domestic use. The study covers the development of gas storage, transmission and distribution infrastructure along the West Coast corridor of the Western Cape. 

Building on and updating previous studies, it is the most comprehensive analysis of the West Coast LNG Project opportunity to date and includes:

  1. Market demand analysis
  2. Socio-economic impact assessment
  3. Economic, financial and contractual development
  4. Risk analysis
  5. US sources of supply
  6. Legal and regulatory analysis

As such, the study provides the basis for investors to consider various infrastructural, financial, and institutional permutations at different scales and can form the basis for a full bankable feasibility study.

To access this study click here

Techno-economic analysis of energy in the Western Cape Transport sector, 2019 (eScience)

This report is forthcoming. 

Contact

Mr Ajay Trikam

Director: Energy

Ajay.Trikam@westerncape.gov.za