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 through the construction of Phase 2 expected around 2023/24, “arguably making it among the biggest helium projects on the planet", CEO Stefano Marani has said. This will deliver more than 0.4-billion cubic feet (bcf) of helium, which, over 19 years, amounts to 7.6 bcf, or 2.2%, 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- to medium-scale production capabilities.

Phase 2 is intended to have the first stage completed by 2023/24.

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 R1-billion, 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 year end 2021. Phase 2 is expected to complete construction of both stages in 2025 or 2026.

Latest Developments
Renergen reported a more than 600% increase in helium reserves and a more than 400% increase in methane reserves at the Virginia  gas project on November 2.

The company told shareholders that following a recent drilling campaign as part of the ongoing assessment and development of Virginia, accreditation agency Sproule had upgraded the methane and helium reserves at the project.

The 1P helium reserves are now estimated at 7.2 bcf and the 1P methane reserves have increased to 215.1 bcf, a 620% and 427% respective increase.

“The significant growth in methane and helium reserves at Virginia is a major milestone for the company and confirms Virginia as a world-class helium project. After more than two years of hard work by the exploration team, the results speak for themselves,” Marani said.

“We have and continue to work towards ensuring Virginia is well-placed to supply helium into a growing and constrained market. Increasing our 1P helium reserves by over 600% since March 2019 is a great step forward in achieving this goal and importantly, highlights the enormous potential of Virginia to become a significant helium supplier not only in South Africa, but globally . . . Additionally, an estimated 400 PJ of methane at 2P also positions the company exceedingly well to become an integral part of South Africa’s energy mix.”

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).

Phase 2:
Saipem (front-end engineering design, or 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.