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 52 km of 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 among the biggest helium projects on the planet", CEO Stefano Marani has said. This will result in 0.7-billion cubic feet (bcf), which over 19 years amounts to 13.87 bcf, or 4%, of the 344 bcf 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’s transforming into a significant LNG production facility, placing the project more in line with global small-scale production capabilities.

Phase 2 is intended to 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 is progressing with the drilling of the P2V2 well at its Virginia gas project.

The well has been beset with delays since being spudded in June; however, the company on November 27 said it now had two drill rigs active on the project, with Renergen having successfully set casing at the base of the Karoo sequence.

Following this, borehole integrity tests will be conducted, prior to re-entering the hole with directional drilling equipment.

Going forward, Renergen plans to drill directionally to intersect the subvertical fracture systems, which are the conduits for the gas flows – low-pressure methane and helium –in nearby producing wells.

Meanwhile, Renergen reports that the MDR1 well – a legacy well about 300 m from a known gas-productive fracture and previously cased to the base of the Karoo sediments – has been re-entered with a directional drilling unit, also on a turnkey basis.

Renergen reports that, while directional control from the base of Karoo has so far proved to be slower to drill, encouraging gas shows are clearly evident in the drilling mud. Subject to resolving the directional control in the well, Renergen plans to drill ahead to the target fractures before evacuating the drilling mud and flow-testing the hole.

Planning is also advanced for an additional three-well programme using a new drilling contractor, with operations expected to start in the coming weeks.

Renergen will accumulate all the data from the current drilling programme and use this to inform the reserves update, which will follow several weeks later.

Key Contracts, Suppliers and Consultant
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.