Domestic natural gas and helium producer Renergen has inked multiple conditional helium sales agreements from its planned Phase 2 plant at the Free State-based Virginia gas project.
Following the company’s maiden sales agreement in April for Phase 2 helium, Renergen has further secured three take-or-pay agreements for the supply of helium for periods of 10 to 15 years with Linde, Messer and Helium24.
Linde and Messer both have 15-year agreements with the company, while Helium24 signed on for 10 years.
Renergen on August 4 confirmed that these sales agreements, along with the iSi agreement in April, account for a combined 220 containers a year, which represents 65% of design capacity contemplated in the front-end engineering and design (FEED) of the Phase 2 project.
All contracts are based on a fixed dollar/mcf price, escalating on every anniversary at the US Consumer Price Index, which will start from the date of first production anticipated to start in the fourth quarter of 2023.
The cumulative volume of helium to be supplied under the contracts is 196 containers a year.
The agreements are conditional upon completion of a number of project development milestones at the Virginia gas project, including completion of an engineering, procurement and construction (EPC) contract by the appointed EPC contractor in relation to Phase 2 at the Virginia gas project, and either party may terminate owing to a delay in the start of the expected production date.
Should the company be unable to deliver at least 80% of yearly take-or-pay quantities during any consecutive six-month period once the plant is operational, the parties may terminate the contract.
Commenting on this major Phase 2 milestone, Renergen CEO Stefano Marani says that adding these prestigious names to its customer list for Phase 2 production is “an incredible achievement and a testament to what the team is building at Virginia”.
“Importantly, having long-term offtake agreements in place with tier-one customers provides a strong foundation for the company when we enter discussions with lenders to approve project funding, as it eliminates a significant component of market risk,” Marani comments.