Name of the Project
Virginia gas project.

Location
The project spans 187 000 ha of gasfields across Welkom, Virginia and Theunissen, in the Free State, in South Africa.

Project Owner/s
Tetra4, a subsidiary of Renergen.

Project Description
The project entails the construction of a 52 km gas-gathering pipeline and cryogenic liquefaction processing facilities.

The aim is to produce all South Africa’s helium requirements and potentially export the balance of production, as well as produce the first liquefied natural gas (LNG) locally available for commercial consumption.

Phase 1 aims to produce 350 kg/d of helium. Output will be increased to up to 10 000 kg/d of helium in Phase 2, “arguably making it amongst the biggest helium projects on the planet", CEO Stefano Marani has said. This works out to 0.7-billion cubic feet (bcf), which over 19 years is 13.87 bcf out of 344 bcf or 4% of the Prospective Resource.

Renergen is also in the construction phase of South Africa’s first commercial LNG plant.

Phase 1 of the project will produce about 50 t/d of LNG, which is about 75 000 ℓ /d of diesel equivalent. Phase 2 will potentially increase this to the LNG equivalent of about 300 000 ℓ/d of diesel.

Phase 2 allocations will likely result in the project transforming into a significant LNG production facility, placing the project more in line with global production capabilities.

Phase 2 is intended be completed by late 2023, by which time more than 150 wells would have been added.

Potential Job Creation
Despite the project’s size relative to traditional mining operations, it will create an estimated 360 temporary jobs during development and construction, and an estimated 82 permanent jobs once all the clusters have been developed.

Capital Expenditure
The total projected capital expenditure to roll out the first phase of production is estimated at R750-million, which includes the cryogenic liquefiers.

Planned Start /End Date
Phase 1 of the Virginia project is expected to start producing LNG and liquid helium by 2021. Phase 2 is expected to complete construction in 2023 or 2024.

Latest Developments
Renergen has said that it aims to supply up to between 12% and 15% of the world's helium from Phase 2 of its Virginia gas project, if the reserves are proven.

While the company is hopeful of easing the global helium shortage, Marani has warned that the final project development will ultimately be dependent on results from the company’s reservoir engineers.

The project has 12 wells already drilled, with more on the way.

The world is further pushing to reduce running costs as much as possible, Marani has said, and with savings of between 15% and 25%, LNG fuel in heavy logistics is the ideal.

In discussing whether a mindset change is needed to kickstart the increased adoption of LNG, Marani has indicated that LNG “appeals to the wallets” of logistics companies, which, like any other business, have “a fiduciary responsibility to cut costs for shareholders”.

This would be the deciding consideration for the logistics sector to adopt a new technology, or clean fuel, especially as the infrastructure and technology are already available.

Dedicated filling points in South Africa, which are being established through a partnership between Renergen and Total South Africa, give certainty to customers, Marani has said, noting that the company has witnessed a “massive upsurge” in demand for the remaining product at the Virginia gas project.

The first route targeted under the agreement with Total will be the N3 between Johannesburg and Durban, followed by the corridors leading to the other major cities once Renergen’s Phase 2 project comes into production.

These filling stations will be operational by the start of the third quarter of 2021, at the latest, Total South Africa regional sales manager Lebogang Buthelezi has said.

The agreement with Renergen is in line with Total’s strategy to advance towards a more carbon-neutral space, with cleaner and more sustainable energy sources.

According to Marani, LNG displaces diesel use and reduces operating costs, while helping customers meet sustainability targets owing to the significantly lower greenhouse-gas emissions from natural gas over diesel.

Renergen will have multiple delivery trucks across South Africa that will deliver the LNG fuel to multiple sites once the project is in its third phase, with long-term projections aimed at the establishment of filling stations in Cape Town, Johannesburg, Harrismith, Bloemfontein, Port Elizabeth and Durban.

Key Contracts and Suppliers
Sproule (formerly MHA Petroleum - helium reserve independent expert report) and VGI (owner’s engineer with regard to the engineering and procurement phase of the project).

EPCM Bonisana (gas gathering work), a subsidiary of EPCM Holdings (EPC contractor).

Western Shell Cryogenic Equipment (technology and equipment), and Bohrmeister Technik (Phase 1 – drilling contract).

Contact Details for Project Information
Renergen, tel +27 10 045 6000, email info@renergen.co.za or investorrelations@renergen.co.za.