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, 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 deliver 0.7-billion cubic feet (bcf) of gas, 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 has made another significant gas strike at its Virginia gas project in well MDR1, 300 m north of the producing MDR5 well.

The MDR1 well was originally an abandoned hole drilled several years ago. It has been redrilled and redirected using horizontal drilling techniques to intersect the anticipated gas-bearing fracture, to provide additional gas deliverability for the Phase 1 development, which is under construction.

Despite several challenges drilling with the previously untested technique, the well is now producing gas at an estimated 86 000 standard cubic feet a day.

“MDR1 is another important well for us for two reasons. The most obvious reason is that it is less than 600 m from the new plant, so it will tie in quickly and easily.

"The second reason . . . is that we now have an accumulating body of evidence to suggest that we can significantly reduce spacing between wells without influencing individual well production, which, in turn, means a higher well density in the prevailing production scenario,” Renergen CEO Stefano Marani  has explained.

Renergen did not expect the well to produce for a few more weeks, as the lost circulation material injected in the well generally takes several weeks to cure and open the fractures, “so this well may just produce even more in time, which would be an unexpected bonus,” he has added.

Key Contracts, Suppliers and Consultant
Phase 1:
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 (engineering, procurement and construction contractor – Phase 1 gas gathering pipeline).

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

Phase 2:
Saipem (front-end engineering design (FEED) contract for the development of the downstream LNG and liquid helium processing facilities, including the associated balance of the plant).

EPCM Holdings (FEED contract – Phase 2 gas gathering pipeline).

Sproule (evaluation and certification of reserves, based on the results of the additional data acquisition and the current drilling campaign. This will build on previous work carried out by MHA Petroleum Consultants, which was acquired by Sproule in 2019).

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