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.

The source of the Virginia gas project’s natural gas is primarily microbial. It originates from deep within the Witwatersrand Supergroup through groundwater circulating through large faults and contacting bacteria deep within the earth’s crust.

This means the methane is biogenic and a continuing renewable resource. Its natural gas contains one of the richest helium concentrations recorded globally.

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. 

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 start operations in 2026.

Latest Developments
South African Mineral and Petroleum Resources Minister Gwede Mantashe has formally dismissed the appeal lodged by Springbok Solar Power Plant against the amendment of Tetra4’s production right, thereby confirming the inclusion of helium as a by-product of petroleum or natural gas in the project.

This decisive outcome follows a comprehensive review of legal and scientific arguments, and ends the debate over Tetra4 parent company Renergen’s right to extract and commercialise helium from its resource in the Free State, Renergen has said.

Mantashe found that this interpretation “not only aligns with a purposive reading of the Mineral and Petroleum Resources Development Act but also upholds the principles of resource efficiency and regulatory consistency within the framework governing petroleum production”.

Renergen asserts that the ruling brings finality to the question of whether helium is regulated as a mineral or as a by-product of petroleum, confirming that its rights to extract and produce helium are secure and fully compliant with South African law.

“Our focus now remains on ramping up production and delivering on our commitments as South Africa's premier helium and natural gas producer,” Marani has said.

This Ministerial decision, combined with the recent decision by the Department of Mineral and Petroleum Resources director-general, which effectively set aside the Section 53 approval relied upon by the Springbok Solar Project, renders the development unlawful, Renergen has explained.

Following the director-general’s ruling, Renergen attempted to obtain urgent temporary relief against further construction-related activities,as the project has continued.

The hurdle for urgency was not met in Bloemfontein High Court on May 23, but the court instructed the company to place this matter on the ordinary roll, ensuring it has sufficient time to review the merits of the case.

The matter will most likely be heard in the early June, Renergen has said. 

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 (EPC) 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 EPC 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.