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Virginia gas project, South Africa – update

Image of the Virginia gas project

Photo by Renergen

12th May 2023

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 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 the first liquefied natural gas (LNG), for commercial consumption.

Phase 1 aims to produce up to 350 kg/d of helium. Output will be increased through the construction of Phase 2, expected in 2026, “arguably making it amongst the bigger 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 of 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 of the project will entail drilling additional gas wells, constructing additional gas-gathering pipelines and a larger processing and liquefaction facility, as well as the associated road tanker distribution and downstream customer dispensing facilities.

In this phase, production output will increase by 34 400 GJ/d of LNG and 4 200 kg/d of liquid helium, in addition to the Phase 1 operation.

Potential Job Creation
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. Although this is small, relative to mining operations, energy is typically a catalyst and has the effect of creating significant knock-on opportunities by offering clean, reliable energy.

Capital Expenditure
The total Phase 1 projected capital expenditure to roll out the first phase of production was about R1-billion, which included the cryogenic liquefiers. Phase 2 is estimated at $1.16-billion.

Planned Start/End Date
Phase 2 of the Virginia project is expected to start construction in 2023, and is expected to be ready to start operations in 2026.

Latest Developments
Renergen, through its subsidiary Tetra4, has signed agreements with transport company Timelink to supply LNG and displace a significant portion of diesel in Timelink's line-haul fleet.

Timelink will also convert its fleet to operate on diesel dual fuel technology.

Renergen COO Nick Mitchell has noted that, while over 24-million vehicles worldwide operate on natural gas, and this figure is set to double in the next decade, “the importance of this first significant partnership with a line-haul transport client lies in demonstrating the results in a South African context”.

Significant reductions in carbon dioxide, nitrogen oxides and particulate emissions are some environmental benefits of natural gas over diesel.

Renergen will have multiple LNG filling points across South Africa that will deliver the LNG fuel to selected customers across all the major highways once the project is in its second phase.

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).

Sproule (evaluation and certification of reserves, based on the results of the additional data acquisition and current drilling campaign. This will build on previous work undertaken by MHA Petroleum Consultants, acquired by Sproule in 2019).

Worley RSA (scope of owners engineer role to execute the expansion of the Virginia gas project).

The company is tendering the engineering, procurement and construction contract to experienced helium and LNG equipment suppliers, based on the FEED.

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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