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Botala Energy Ltd (ASX:BTE) has announced the completion of an independent wellfield feasibility study that outlines various development options for the Serowe Coal Bed Methane (CBM) Gas Project in Botswana. This comprehensive study, conducted by Fraser McGill of South Africa, confirms the commercial viability of utilizing gas for electricity generation and liquefied natural gas (LNG) production.
The feasibility study focused on the commercial development of wells already drilled at Project Pitse, which serves as Botala's first commercial pilot project within the broader Serowe initiative. It encompassed assessments of well development, gas extraction processes, and included a pre-feasibility concept study addressing midstream and downstream options.
Botala Energy expressed that the completion of these detailed technical and financial studies represents a significant milestone for the company and its Serowe CBM Gas Project. The positive findings establish a robust foundation for advancing the project toward development, showcasing the potential for commercial gas production and subsequent rapid production increases.
The study revealed favorable commercial outcomes, highlighting attractive internal rates of return (IRRs) and net present values (NPVs), particularly under scenarios of medium and high gas flows. The company noted that the feasibility study could achieve bankable status upon securing offtake agreements and adequately developing downstream options.
Currently, Botala Energy is engaged in advanced negotiations with potential offtakers, anticipating the finalization of agreements in the near term. This is driven by significant local industrial demand for gas, coupled with a projected gas shortage in South Africa beginning in early 2027.
Botala’s CEO, Kris Martinick, emphasized the study’s findings as providing the necessary confidence to initiate developments, positioning the company to become a modest, low-cost commercial producer of LNG by 2026. The expansion is expected to be funded primarily through a combination of debt and cash flow generated from progressively producing wells.
The feasibility study meticulously examined wellfield design options based on varying gas flow rates sufficient for a 10MW gas power generation setup, supported by recent CBM Resource Certification. It also delineated a clear pathway for gas development, underscoring its commercial viability and strategic significance.
Additionally, the concept study assessed upstream, midstream, and downstream opportunities, with the upstream section reaching a bankable standard through enhanced engineering and cost definitions. Midstream and downstream options will be further defined once a design flow rate is established based on outcomes from the five-well pilot cluster at Serowe-3.1, known as Project Pitse.
Downstream considerations include gas compression (CNG), liquefaction (LNG), and power generation with connections to the Southern African Power Pool. Botala Energy plans to finalize decisions on downstream options soon.
The conclusions of the study hinge on achieving sustained gas flows exceeding approximately 40 thousand standard cubic feet per day (mscf/d) and securing necessary funding and sales agreements. Notably, gas from the Serowe-3.1 well has been flared multiple times to demonstrate gas flow, consistently surpassing the low-gas case flow identified in the feasibility study as commercially viable. Following these flaring events, gas flow was halted for environmental, safety, and operational considerations, while the remaining wells in the pilot cluster were drilled.
