UPDATE 1-S.African anti-fracking group threatens legal challenge
* 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 (Updates with Shell comment in paragraph 11)
By Ed Cropley
JOHANNESBURG, July 22 (Reuters) - A South African anti-fracking group threatened a legal challenge on Tuesday to government plans to grant shale gas exploration licences in the pristine semi-desert of the Karoo, saying the regulatory process had been marked by "patent ineptitude".
In a February State of the Nation address, President Jacob Zuma described shale gas as a "game changer" for the economy and said Pretoria would allow hydraulic fracturing, or fracking, "within the framework of our good environmental laws".
The government had been expected to publish regulations overseeing shale exploration before an election in May this year although there is still no sign of the rules.
Fracking involves digging wells up to 4 km deep and pumping in large amounts of water and chemicals under high pressure to crack the shale rock and release the gas. In a dry region such as the Karoo, in the middle of the country, any change in water use causes concern.
Green groups wanting to protect the Karoo, believed to hold significant shale gas deposits, said Pretoria was incapable of ensuring firms such as Royal Dutch Shell, at the forefront of the fracking push, would adhere to the rules.
They accused the energy companies of already drawing up slip-shod environmental plans and failing to consult communities and 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 or production."
If the government failed to heed TKAG's call for a moratorium on exploration licences within 30 days, the group would seek a pre-emptive injunction blocking them and was prepared to go to the Constitutional Court, he added.
Deal declined to reveal TKAG's backers although Cartier billionaire Johann Rupert, South Africa's richest man and a major Karoo landowner, told Reuters last year he was prepared to fund a challenge as far as necessary.
The Department of Mineral Resources did not comment. Shell said it was committed to following government regulations and listening to the views of Karoo residents.
The first formal interest in shale gas in the Karoo began in 2008, with an application for exploration rights by Bundu Oil and Gas, a subsidiary of Australia's Challenger Energy.
The issue hit the headlines three years later, when Shell applied for an exploration licence covering more than 95,000 square km, almost a quarter of the Karoo. An outcry from farmers led to a moratorium on the granting of licences.
The basis for Shell's pro-fracking argument is a U.S. Energy Information Administration (EIA) assessment of 390 trillion cubic feet of technically recoverable reserves, about two-thirds of deposits estimated in the United States.
Such quantities, if realised, could have a huge impact on an economy that has always been a big oil and gas importer. However, Deal cited other studies that estimated reserves at less than 10 percent of the EIA assessment. (Reporting by Ed Cropley, editing by David Evans)