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 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 in 2025, “arguably making it among the biggest helium projects on the planet", Renergen 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 just over half its estimated proven and probable reserves.

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 1 000 000 ℓ/d of diesel, subject to the final agreed design being scoped by Renergen and offtaker Ivanhoe Mines.

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 2025.

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 160 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 started commercial operation at the beginning of September 2022.

Phase 2 is expected to complete construction in 2025 or 2026.

Latest Developments
The LNG system at Renergen’s Virginia gas plant is complete, with preliminary performance data indicating that the LNG “exceeds design specifications”.

The on-site storage tanks and virtual pipeline tankers are full and the Ceramic Industries on-site installation is complete and fully commissioned, while Consol’s site is now cooled down with nitrogen waiting for final commissioning and handover to take place.

Renergen reports that the helium train has been tested and all components are working as designed, with the microturbines creating the cooling effect as required.

During the test, the helium train was supercooled to within near helium liquefaction temperatures before the test had to be paused, owing to the conduction oil system, providing lubrication and heating for the plant, proving to be unreliable.

“The utility was incorrectly installed and was providing inconsistent heating for the conduction oil . . . to ensure no damage . . . to the plant, management decided to turn the plant off to repair the utility in question,” the utility has explained, noting that it has since been corrected, reinstalled, tested and is operating reliably and within specification.

With the plant having been turned off to complete this repair, the company took the opportunity to connect additional wells that were recently drilled. This will increase the output of the plant and bring the plant closer to within full design specification.

The process from here is to pressurise the pipeline, prime the utilities and turn on the plant for steady-state production, with LNG starting first and liquid helium thereafter.

Renergen has said that the helium module has its full attention.

“Fundamentally, there is no material difference to where the company was three weeks ago. Had we pushed to continue to helium liquefaction point without pausing the operation, the risk to the plant would have been significant.

“While stopping the plant within hours of producing liquid helium was less than ideal and extremely frustrating to the whole team, and no doubt shareholders too, the decision was the correct one, as the risk was simply too high,” Marani has noted.

He has added that this commissioning has “always been about ensuring minimal risk to turn on, not speed”.

“We are fully cognisant of the plant being delayed, but we have been working around the clock to ensure it is safe to turn on without damaging this critical investment, which will operate for the next 20 years, at least.

“Our shareholders’ faith in the team does not go unnoticed, and our primary focus is to deliver a fully functioning plant with the lowest possible risk,” he has added.

Key Contracts, Suppliers and Consultants
Phase 1:
Sproule, formerly MHA Petroleum (helium reserve independent expert report); and VGI (owner’s engineer regarding 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); Babcock (DAF CF 430 trucks); and Volvo (FM440 trucks).

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 undertaken 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.