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Virginia gas project, South Africa

10th July 2020

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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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 â„“/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 has said that the project has the potential to be the answer to the world’s helium shortage woes following a recent helium prospective resources report, which confirms that the project has undiscovered gross recoverable helium volumes of more than 344-billion cubic feet (bcf).

The report has given the company the necessary data to begin planning Phase 2 of the project, “and [the company’s] intention is that Phase 2 will supply enough helium to overcome long-term shortfalls”, Renergen CEO Stefano Marani has said.

Should Renergen recover 100% of the updated helium resources, the South African project could provide enough helium for the world’s consumption for the next six decades.

The significant milestone forms part of the company's ongoing assessment and development of the project, during which Renergen commissioned Edinburgh University geochemistry senior lecturer Dr Stuart Gilfillan and isotope geosciences Professor Finlay Stuart to conduct a conceptual study of the source abundance of helium within the company's Virginia production right area, which covers 187 000 ha.

Renergen has a valid licence for the area until 2042 and holds 100% of the economic interest in the production right.

With the benefit of this recently completed report, the company has requested its reserves and resources accreditation agency Sproule (formerly known as MHA Petroleum Consultants) to review the report and use it, if possible, to estimate helium prospective resources under the Society of Petroleum Engineers' Petroleum Resources Management (PRMS) standards.

Sproule recently provided its 'Evaluation of Certain Helium Prospective Resources on the Tetra4 Virginia Gas Project, Free State, South Africa as of July 1, 2020' report, wherein it states that, following PRMS conventions, the 1U volume of prospective resources represents the volume with a 90% chance of being recovered or exceeded – the P90 confidence level.

Similarly, the 2U volume corresponds to the median recovery – the P50 case – and the 3U volume is the category for the largest 10% of the prospective resources – the P10 case.

The 1U volume of prospective resources comprises an estimated 32.5 bcf of recoverable helium, 2U comprises about 106.2 bcf and 3U about344 bcf.

Spoule also evaluated the volumes of helium available for prospective resources (in the Virginia gas project) using a probabilistic methodology to account for the early-stage exploration phase and the wide range of uncertainty in many variables.

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).

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

Western Shell Cryogenic Equipment (technology and equipment), and Bohrmeister Technik (Phase 1 – drilling contract).

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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