Helium and methane miner Renergen said “a few weeks delay” in the commissioning of its Phase 1 plant was “a small price” to reduce the risk of catastrophic failure, CEO Stefano Marani said in an update yesterday.
The commissioning of Phase 1 of the Virginia Gas Project, the first onshore gas project in South Africa, which is expected to produce helium and methane, has attracted significant investor interest on the JSE and which has helped to propel Renergen’s share price 89 percent over 12 months to the R36.32 that it traded at yesterday.
Kela Securities predicted recently in report that Renergen has a few catalysts that could see its share price rise in 6 to 12 months, of which the July commissioning of the helium plant had been expected to be the first.
The second catalyst was a potential R1 billion Central Energy Fund investment for a 10 percent stake in Renergen, while the third was a possible Nasdaq listing. A Phase 2 development and capital raise was possible before the end of this year, while Canadian miner Ivanhoe Mines might decide to increase its stake in Renergen from 4.35 percent to up to 50 percent.
“The team is satisfied with the results being achieved,” and they were proceeding with the commissioning “cautiously,” Marani said yesterday.
He said they had also intersected a new gas flow, which they called Gandalf, at 480 metres from the surface with a flow rate of around 90 000 standard cubic feet per day.
“The target depth is 1 200m, so after initial testing the well was cased in preparation to drill to the full depth. At present the drillers are preparing to drill through the cement and further to the target depth, which is anticipated to be complete towards the end of August,” he said.
Gas alarm and monitoring system testing was underway, final insulation installation on hot conduction of the oil lines and cryogenic lines was underway, the first fill of externally sourced helium product was being introduced to the system, while helium leak tests were completed and passed.
The on-site laboratory for testing and control of liquid natural gas and helium had been commissioned and staff training was complete, the flare system was ready for testing, while the main compressor building and associated structures were ready for gas introduction.
“On completion of all of the above activities we will undertake a final risk assessment before introducing hydrocarbons into the plant and declaring it ready for start-up,” Marani said.
“Caution in commissioning has been the central theme over the past weeks,” he said.
edward.west@inl.co.za
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