Free State natural gas project, South Africa

3rd May 2019 By: Sheila Barradas - Creamer Media Research Coordinator & Senior Deputy Editor

Free State natural gas project, South Africa

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 possibility 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 sometime in the second half of 2019. The project is expected to reach commercial production by early 2021.

Latest Developments
Renergen has, ahead of its planned listing on the ASX this month, announced a further increase in reserves at its subsidiary Tetra4’s Virginia project.

The company has also reported that an independent reserve review by US-based firm MHA Petroleum Consultants has confirmed a 12.2% increase in proven methane reserves to 40.76-billion cubic feet, while proven helium reserves have increased by 16.1% to 1.01-billion cubic feet.

This has resulted in an economic valuation of R9.8-billion for the project’s proven and probable reserves.

“The continuous improvement in reserves as we further our geological understanding of the resource is highly encouraging.

“Favourable market conditions, particularly with the massive upward shift in helium prices, has made Tetra4’s prospects of becoming a global helium participant all the more tangible,” Renergen CEO Stefano Marani has said.

Renergen believes a secondary listing on the ASX will enable it to “tap into a deeper pool of investors” to fund its expansion plans.

It hopes to raise A$5-million to fund a second phase of exploration at the Virginia project.


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.