Proving the Helium Play

Alternative energy investment firm Renergen will to start liquefied natural gas (LNG) production for South Africa’s domestic market this year.

The company is already producing and selling gas, and plans to accelerate production in 2019.

“We are busy evaluating bids and are completing our capital raise for the project, and then we will go into full-scale construction of the liquefiers for both LNG and helium,” CEO Stefano Marani told Africa Energy Series.

He adds that that the new plant will have a rated capacity of up to 50 tons of LNG per day, which Renergen will grow into as it connects wells and continues drilling.

“Our longer term projection, based on our current geological understanding, would be at 180 tons of LNG per day, within five years.”

As it grows, Renergen intends to prove its pressurized helium play where it has discovered helium concentrations of up to 11 percent, and because its focus is on alternative energy, it is open to the possibilities that go beyond oil and gas.

Renergen started off as a special purpose acquisition company (SPAC) and became an operating entity after it acquired natural gas company Tetra4, South Africa’s first and only onshore petroleum product right holder, in the Free State.

Tetra4 has about 187,000 hectares of production rights and a further 100,000 hectares of exploration rights and has proven reserves equivalent to more than 1 billion liters of diesel equivalent, with 3P Reserves of up to roughly 10 billion litres of diesel equivalent.

“These are rights which have numerous wells, which are currently blowing gas. What we did with the funds from the listing of the SPAC originally was that we used them to build the first upstream onshore pilot plant in South Africa, to take upstream onshore gas and get it into a usable format for vehicles and use it as an alternative to diesel,” he says.

Although the pilot project started out small, the company underwent a two year process to obtain its environmental authorization, which, once approved in 2017, made Renergen the only licensed onshore upstream operator that can launch a full scale project.
“The pilot plant we built was quite small because, at the time, the dispensation that we had was only to operate from a single well. We sized the plant according to what the flow of that well was,” Marani notes.

Having released an updated independent reserve review for its Virginia project last year, which showed 187,000 hectares of gas fields spanning the Free State, the company now has recoverable helium-4 resources of 6.2 billion cubic feet (bcf) on a discovered commercial basis. Renergen now expects to become a major global producer of helium, and to put South Africa on the map as one of eight countries in the world to export the gas. Renergen also has gross 2P proven reserves of 142 bcf of methane.

With a market cap of R800 million, Renergen considers itself a small company with great potential to contribute substantially to South Africa’s energy sector over time.

This article will be published in the upcoming Africa Energy Series: South Africa report, which will be launched at the Africa Petroleum Producers Organization Cape VII Congress and Exhibition, hosted by Africa Oil & Power on April 1, 2019 in Malabo, Equatorial Guinea.