Green energy supplier Renergen has marked another significant milestone for Phase 2 of its Virginia gas project, through the completion of a notification process by the US International Development Finance Corporation (IDFC) to the US Congress of a commitment to provide a $500-million loan to Tetra4.

Renergen earlier this month announced that it had received approval from the US IDFC for $500-million in senior debt funding, as well as secured a $250-million debt facility from Standard Bank. The funding was, however, dependent on the Congressional notification.

As the company moves closer to the start of construction, CEO Stefano Marani says the team is “fully committed to reducing the number of hurdles”. He adds in the company’s latest quarterly update, published on June 26, that this approval is a “major step forward in de-risking Phase 2”.

Only the standard project finance conditions for Phase 2, like those of Phase 1, remain outstanding.

The milestone update follows several months of due diligence on site studying the Phase 1 construction, geological and market conditions for helium and liquified natural gas (LNG) with the lenders.

During the quarter under review, Phase 2 of the Free State-based project went through the respective credit and board committees, which resulted in positive approvals to proceed with the cumulative loans of $750-million.

LNG OFFTAKE AGREEMENT

Early this quarter, the natural gas and helium producer announced that it had secured an additional contract for the supply of LNG to logistics operator Timelink Cargo, which will convert a significant portion of its trucking fleet to run on LNG.

“This is a fantastic step forward and aligns with our vision of assisting in the decarbonisation of the logistics sector within South Africa,” the company enthuses, adding that the agreement will see Timelink invest in the dual fuel conversion kits and Tetra4 invest in the associated LNG dispensing equipment required for installation within Timelink’s Johannesburg depot.

Following the successful performance testing of the LNG train, Renergen confirms that it is now significantly more familiar with the operations of the LNG system and that it has improved production by a further 12.8% relative to the previous quarter, producing 823 t.

The company expects this trend to continue over time until the plant reaches full capacity early next calendar year.

HELIUM COLD BOX

While preparing for helium performance testing for the purposes of achieving a taking over certificate, Renergen identified a defect which was reducing efficiency in the helium liquefaction process.

The helium cold box operates in a vacuum to optimise the insulation of the cold box and, during liquefaction, the vacuum chamber showed signs of losing its vacuum.

Upon inspection, the Renergen team located the circuit containing the leak and the original-equipment manufacturer has started with planning and preparation for repairing the leak.

The repair will be done off-site to ensure maximum safety of the helium cold box and avoid any contamination of equipment from the elements.

Given the nature of the repair, Renergen envisages restarting performance testing of the helium system in October.

The Virginia gas project’s Phase 2 development is not impacted by this process.

MORPHEUS

Lastly, during the quarter, Renergen drilled a twin of an historic blower in the southern part of the Phase 1 well's footprint and the new well is flowing at 70 000 standard cubic feet per day, with helium at a concentration of 3.2%.

New well Morpheus has highlighted some important characteristics on the migration path of the gas in this portion of the field, and further downhole studies will be done to map the geology in this section of the field to bolster Renergen’s underground geological model.

The drilling of the well has cost R1.8-million to date.