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 domestic natural gas and helium producer 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 across both stages of 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. Both stages of Phase 2 will potentially increase this to the LNG equivalent of about 600 000 ℓ/d of diesel, subject to what current studies show geologically.

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 have the first stage completed by late 2023 and the second stage by 2025, by which time more than 300 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 of both stages in 2025 or 2026.

Latest Developments
The pipeline for the Virginia gas project, built by EPCM Bonisana, has performed “better than expected” under performance testing, with an almost 7% increase in flow relative to the original design characteristics, along with a reduction of more than 30% in power consumption from what had originally been estimated.

The plant is being laid on its foundations and is awaiting the final shipments to install the plant and connect the pipeline.

Meanwhile, a target gas-bearing fracture system has been intersected close to prognosis at Renergen’s R2D2 well, between wells MDR5 and HR1, at the Virginia gas plant.

Renergen said on June 18 that gas samples would be collected and sent to the laboratory for analysis, with compositional results expected shortly.

The forward programme is to run electric logs to ascertain the orientation of the faults and enable the team to plan on how to finish the well and maximise contact with the fracture.

“This is a great result and will go a long way in helping to improve the accuracy with which we identify gas-bearing structures in the reserve area while . . . showing the critically important feature that we may potentially be able to reduce our well spacing,” said CEO Stefano Marani.

Key Contracts, Suppliers and Consultants
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, 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.