UCT Economist concedes fracking could create Karoo ghost towns

On Wednesday 3rd April, I attended a presentation by Mr. Jan-Willem Eggink of Shell (SA) (Upstream) at the offices of Investec Bank in Cape Town. The presentation, hosted by pro-shale gas mining Professor Brian Kantor of Investec, commenced with Shell’s views on shale gas development for South Africa. Supporting Mr. Eggink’s presentation was Mr. Rob Jeffery, MD of Econometrix, who essentially presented a synopsis of the Econometrix study commissioned by Shell and released circa March 2012, just before the passing of its principle author, Mr. Tony Twine. Also present (and this is the crux of this post) was associate Professor Tony Leiman of the Environmental Economics Policy Research Unit at UCT.

In the general question and answer session following the three presentations, Prof. Leiman, in response to his example of a town in North Dakota (Williston) which he stated had experienced a recent ‘boom’ owing to ‘fracking’ activity, was posed the following question by Jonathan Deal, representing TKAG:

“Prof. Leiman, you have cited the positive aspects of towns that experience an increased level of economic activity resulting from shale mining activity. You must be aware of the documented ‘boom to bust’ cycle that afflicts communities in the US as the towns experience a ‘boom’ and later, when the drillers leave, a ‘bust’ which leaves the town worse off than it was before  the ‘boom’. What is your view on the probability of this phenomenon in the Karoo?”

Prof. Leiman responded: “There is a strong probability that certain Karoo towns may well become ‘ghost towns’ because of this cycle, but in the scheme of the benefit to SA [Prof. Leiman appeared to be pro-shale gas mining] it is possibly an acceptable outcome.”


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