* Green group ready to challenge fracking in highest court
* Pretoria sees shale gas as economic "game changer"
* Karoo landowners fear environmental damage
* No sign of expected government guidelines
By Ed Cropley
JOHANNESBURG, July 22 (Reuters) - A South Africananti-fracking group threatened a legal challenge on Tuesday togovernment plans to grant shale gas exploration licences in thepristine semi-desert of the Karoo, saying the regulatory processhad been marked by "patent ineptitude".
In a February State of the Nation address, President JacobZuma described shale gas as a "game changer" for the economy andsaid Pretoria would allow hydraulic fracturing, or fracking,"within the framework of our good environmental laws".
The government had been expected to publish regulationsoverseeing shale exploration before an election in May this yearalthough there is still no sign of the rules.
Fracking involves digging wells up to 4 km deep and pumpingin large amounts of water and chemicals under high pressure tocrack the shale rock and release the gas. In a dry region suchas the Karoo, in the middle of the country, any change in wateruse causes concern.
Green groups wanting to protect the Karoo, believed to holdsignificant shale gas deposits, said Pretoria was incapable ofensuring firms such as Royal Dutch Shell, at theforefront of the fracking push, would adhere to the rules.
They accused the energy companies of already drawing upslip-shod environmental plans and failing to consult communitiesand landowners, violating fundamental property rights.
"The environmental management plans are fatally flawed,"Jonathan Deal, head of the Treasure the Karoo Action Group(TKAG), told a news conference.
"The state is not ready to manage either exploration orproduction."
If the government failed to heed TKAG's call for amoratorium on exploration licences within 30 days, the groupwould seek a pre-emptive injunction blocking them and wasprepared to go to the Constitutional Court, he added.
Deal declined to reveal TKAG's backers although Cartierbillionaire Johann Rupert, South Africa's richest man and amajor Karoo landowner, told Reuters last year he was prepared tofund a challenge as far as necessary.
Shell and the government's Department of Mineral Resourcesdid not have immediate comment.
The first formal interest in shale gas in the Karoo began in2008, with an application for exploration rights by Bundu Oiland Gas, a subsidiary of Australia's Challenger Energy.
The issue hit the headlines three years later, when Shellapplied for an exploration licence covering more than 95,000square kilometres, almost a quarter of the Karoo. An outcry fromfarmers led to a moratorium on the granting of licences.
The basis for Shell's pro-fracking argument is a U.S. EnergyInformation Administration (EIA) assessment of 390 trillioncubic feet of technically recoverable reserves, about two-thirdsof deposits estimated in the United States.
Such quantities, if realised, could have a huge impact on aneconomy that has always been a big oil and gas importer.However, Deal cited other studies that estimated reserves atless than 10 percent of the EIA assessment. (Reporting by Ed Cropley, editing by David Evans)