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Free State natural gas project, South Africa

7th June 2019

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Free State natural 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.

Based on Renergen’s five-year production mark, it is feasible that the company can produce between 1 000 kg/d and 1 500 kg/d of helium, which could increase to about 5 000 kg/d, should it have the option of tapping into the contingent reserves.

Additionally, Renergen will produce, concurrently, 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.

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 about R550-million, which includes the cryogenic liquefiers.

Planned Start /End Date
Contractual award is expected to start within the first half of 2019, with construction estimated to begin in the second half of 2019. The project is expected to reach commercial production by early 2021.

Latest Developments
Renergen has raised $10-million in its secondary listing on Australia’s stock exchange.

The company has raised $10-million through issuing12.5-million shares at $0.80 apiece, twice the minimum subscription.

Funds raised under the ASX initial public offering (IPO) will be used for further exploration and expansion of the Virginia project, in addition to the $40-million in debt funding that Renergen has secured from US-based development finance institution OPIC.

The Virginia project development currently includes drilling of additional production wells and a feasibility study for the commercialisation of the high concentration helium reserves contained in the project’s prospective sandstone deposit.

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: the company has embarked on a technical and commercial exercise, which includes a detailed request for proposals, and is evaluating and clarifying this with the bidders.

Gas processing facilities: the company has embarked on a technical and commercial exercise, which includes a detailed request for proposals and is evaluating and clarifying this with the bidders.

Following a review by Renergen’s in-house and external engineering teams, the gas gathering project will be executed on a full engineering, procurement and construction (EPC) basis, while the gas processing facility may be executed on an EPC management basis. The final adjudication and award of this project is expected before the first half of 2019.

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.

Edited by Creamer Media Reporter

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