Drilling at emerging natural gas and helium producer Renergen’s Virginia project, in the Free State, has progressed through the Karoo Supergroup and successfully intersected gas-charged sandstones and fractures, as was previously expected, the company reported on Monday.

The gas was intersected under pressure in the morning of December 9, after the company drilled about 50 m into the sandstone.

The team on site has been flaring the gas for initial flow testing, which is showing flow rates of up to 850 000 standard cubic feet daily, with the valves partially closed to keep conditions on site safe.

When fully closed, the well reaches around 12 bar of pressure. More crucially, however, is that the gas composition is now 12% helium, with methane of over 75% according to the laboratory results. The global average of helium concentrate is about 0.5%.

On current plans, the well will be drilled into the sandstone for a further 1.2 km horizontally in January to maximise the productive reservoir intersection, which should, in turn, maximise flow potential, the company stated.

The reservoir size and deliverability will ultimately determine the extent of any reserve, which will, in turn, determine the size of Phase 2 of the Virginia project.

Commenting on the early drilling success, CEO Stefano Marani said the project “has all the indications of a game changer”, and enthuses that the project is now “significantly bigger and better” than the company originally thought.

While more testing is required to determine the size of the reservoir, he warned that it was key to understand that this sandstone play had not been factored into any previous reports, meaning it was practically a new discovery for the company.

Marani added that with a 12% helium concentration and these flow rates, the drill site has the potential to become a globally significant helium resource and could make Renergen "a significant helium supplier globally".

This well sets a strong foundation as Renergen looks to determine the size of Phase 2 of the Virginia gas project.

The equipment limited initial flow rates from the very limited section of sandstone so far drilled in this find could move Renergen into potential domestic power production capability, potentially as high as 100 MW.

As a result, Renergen on Monday said it would welcome proposals from interested parties on gas-fired power solutions, as well as from parties looking to receive power in the Free State. 

“We will focus on completing the well and flow testing in order to estimate the extent of the accumulation and confirm its deliverability, which we expect to be completed in March 2020,” Marani said.