Renergen (ASX:RLT) stumbles onto unexpected discovery at Virginia Gas Project

  • November 06, 2020 02:18 PM AEDT
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Renergen (ASX:RLT) stumbles onto unexpected discovery at Virginia Gas Project

Summary

  • Renergen Limited is an emerging LNG and helium producer. The Company wholly owns Tetra4, which holds the first and only onshore petroleum production right in South Africa.
  • Natural gas source of its Virginia Gas Project contains one of the richest helium concentrations recorded globally along with high proportion of light hydrocarbons primarily methane, enhancing the clean nature of the product for the logistics and power sectors.
  • The Company recently uncovered an unexpected gaseous odour at its Virginia Gas Project. It plans to conclude logging of the hole prior to drilling.

Renergen Limited (ASX:RLT) is an emerging producer of liquefied natural gas (LNG) and helium with the first and only onshore petroleum production right in South Africa at the Virginia Gas Project. Its wholly owned principal asset Tetra4 holds the production rights for the gas project.

The Company has gained momentum on the back of its latest discovery of an unexpected gaseous odour at its Virginia Gas Project.

Presently, Renergen’s dispensing station supplies Compressed Natural Gas (CNG). The commercialisation of the Virginia Gas Project will enable the Company to unlock full value and pursue its ‘wellhead to tank’ strategy to deliver premium gas and refined products directly to its customers.

Impressively, its production rights to a unique renewable gas resource at the Virginia Gas Project, gives it the first-mover advantage regarding the supply of domestic natural gas that contains one of the richest helium concentrations logged internationally. On top of this, Renergen boasts very pure natural gas with almost zero higher alkanes and an average of more than 90% methane. The almost zero higher alkanes help lower the complexity of liquefication.

The natural gas rich in helium and lighter hydrocarbons primarily methane, allows a cleaner energy substitute for the South African transport and power sectors.  

Renergen to Become Global Helium Producer and First Commercial Supplier of LNG in South Africa

Under the Virginia Gas Project stationed in the Free State, the Company has exploration and production rights of 187,000 hectares of gas fields across Virginia, Welkom and Theunissen.

In order to produce liquid helium and LNG, Renergen plans to expand the Virginia Gas Project in various stages starting with connecting existing wells to a new gas pipeline and building a new helium and LNG plant. Upon making the plant operational, the Company plans to cease CNG production and replace it with LNG. 

A lot of optimism surrounds Renergen to emerge as a major global producer of helium as the Company’s plant is believed to be the first liquid helium processing technology in South Africa. Helium plays a central role in numerous modern industries, including space exploration, rocketry and high-level scientific applications.  

Given the potential to offer a reliable autonomous energy supply, with significantly reduced carbon emissions, Renergen also seems well-positioned to become the first commercial supplier of LNG across South Africa. 

This shall be further supported by selling the LNG product to domestic consumers, primarily aimed towards the South African transport industry. 

Unexpected Gaseous Odour Uncovered  

Recently, Renergen released an update on its drilling program at the Virginia Gas Project, revealing an unexpected discovery of a gaseous odour.

The Company is progressing with the drilling of hole P2V2 through the base of the Karoo sedimentary section into the underlying Witwatersrand group. Renergen is engaged in logging the well before cementing the final casing string.

Drilling will restart at the hole as soon as well MDR1 (a previous exploration hole) has been re-entered and deepened with the newly arrived directional drilling rig. As no gas was observed in the original drilling quite a few years ago, the Company unexpectedly discovered a gaseous odour on the re-entry of MDR1. Subsequent to this breakthrough discovery, it opted to make another attempt at logging the hole in order to locate the ingress point of the gas before commencing the drilling.

Logging was planned to be completed in the next 3-4 days, and drilling to commence subsequently, according to the Company update dated 30 October.

Previously, MDR1 was drilled and cased past the Karoo but was later interpreted to be around 200 metres away laterally from the expected gas-bearing fault structure.  

Further Exploration Potential

Opportunistically, Renergen’s exploration rights have not been exhausted and it looks forward to maximising access to its reserves. The Company holds an additional onshore petroleum exploration right, the Evander Exploration Right in Evander, South Africa.

The Evander site has not witnessed any drilling from Renergen but drilling on the site was carried out by other companies in search of minerals, including two wells that produce natural gas with helium.

A significant number of additional sites indicating the presence of natural gas have been highlighted at the Evander Exploration Right.

Renergen seeks to unleash value for its stakeholders by offering clean energy options amid the ongoing emphasis on climate change. Lowering impacts of greenhouse gas emissions by substituting diesel with cleaner LNG is expected to maximise the impact of this renewable gas source.  

Overall, Renergen is focused on the commercialisation of the Virginia Gas Project that boasts substantial reserves of both helium and natural gas. Moreover, it aims to deliver growth by exploiting supplementary opportunities in the ambitious helium and natural gas sector while establishing a large-scale natural gas company based in South Africa with diversified streams of revenue.

Stock Information

On 06 November 2020 (AEDT 1:23 PM), the share price of RLT stood at $1.115 on ASX with a market capitalisation of $134.45 million. The Company is also listed on the Johannesburg Stock Exchange’s AltX exchange.

 

 


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