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 a 52 km 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 and ramp up to 1.2 t/d and 5 t/d of helium in Phase 2.

Additionally, Renergen will concurrently produce up to 10 000 GJ/d of LNG upon reaching full production. This amount of energy is equivalent to 277 000 ℓ/d of diesel.

Should production be maintained, the production right has a remaining life span of about 23 years.

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 R500-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 start construction in 2022 or 2023.

Latest Developments
Renergen recently recorded short-term venting of pressurised gas in the drilling mud while still in the Karoo Formation, before intersecting the targeted sandstone deposit at its Virginia gas project.

The well was drilled to a depth of 254 m in the Karoo Formation overlying the target sandstone, and casing has been set in anticipation of penetrating the sandstone a short distance laterally from the casing shoe.

Drilling out of the casing shoe started on November 29 and the well is drilling ahead horizontally in the Karoo Formation.

The findings were recorded in the company’s current horizontal drilling operations targeting the previously announced 90 km² sandstone unit within the company’s production right area in the Free State.

In a cautionary announcement issued in early December, the company advised that evaluation of the drilling in the horizontal sandstone section, once penetrated, would be reported “as soon as meaningful results are available”.

Until such time, Renergen would be unable to provide any further guidance.

Given the high pressures and concentration of helium encountered in the original discovery well, Renergen has confirmed that it “has taken all necessary measures to ensure the integrity of the well” and has noted that it has “successfully confirmed the integrity of the casing cementation”.

The horizontal well has been designed to evaluate the extent and composition of any gas in this sandstone unit, where a previous vertical well encountered over-pressured natural gas with an 11% concentration of helium.

A successful horizontal well, establishing material extent and sustainable commercial gas flow rates for this target reservoir, will underpin a significant expansion (dubbed Phase II) of the Virginia gas project, which is being developed.

Key Contracts and Suppliers
MHA Petroleum (helium reserve independent expert report) and VGI (owner’s engineer with regard to the engineering and procurement phase of the project).

Gas gathering work: EPCM Bonisana, a subsidiary of EPCM Holdings (EPC contractor).

Western Shell Cryogenic Equipment (contract to supply the technology and equipment for the plant).

On Budget and on Time?
Too early to state.

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