Good news to the Free State and the companies involved. Natural gas is what Stefano Marani and Nick Mitchell had on their minds when they bought gas rights on this 87,000-hectare piece of land in the Free State province in 2012, for just $1. When they had their gas finds tested, they discovered unusually high amounts of helium mixed in with the gas that mean their dollar investment could be worth billions. Renergen, their company, is almost ready to start producing both natural gas and helium, placing South Africa on an elite map with helium reserves that could be the richest and cleanest in the world.
It was stated during October 2021, that the first tests revealed helium oncentrations of two to four percent. In the United States, helium is extracted at concentrations as low as 0.3 percent. Further exploration has found concentrations as high as 12 percent.
The global helium market was worth $10.6 billion in 2019, according to the firm Research and Markets. Since few countries produce helium, supplies are frequently disrupted. Renergen estimates on its helium reserve could be as much as 9.74 billion cubic meters, larger than the known reserves in the entire United States. That’s enough to fill about 1.4 trillion party balloons.
Chris Ballentine, chair of geochemistry at the University of Oxford, said helium is usually produced as part of liquified natural gas operations.
Natural gas is often obtained by fracking, a process that injects water, sand and chemicals into bedrock under high pressure to split it to release any oil and gas trapped inside. But fracking also contaminates groundwater and causes small earthquakes that can ruin nearby homes and buildings. Marani stated they don’t have to frack. Their rock has already cracked, there’s a giant fracture underground. And so when they drill, they are literally drilling just into that giant fracture where the gas is and then the gas escapes naturally with no stimulation at all. The company plans to have 19 wells installed by early next year. Gas currently extracted is being used as compressed natural gas in a pilot project to run buses.
Eventually the plant will process liquified natural gas for domestic use and liquid helium for export around the world. Demand, and prices, for helium have more than doubled over the last 30 years. As the uses for helium multiply, nations around the world are increasingly concerned about securing a steady supply.
Keeping helium as a liquid requires cooling it to nearly absolute zero. Those temperatures, combined with the fact that helium doesn’t burn or interact with other gases, make it useful for cooling incredibly hot things. Magnets on MRI scanners, for example, or rocket engines.
Other major producers are Qatar and Algeria. Russia, Tanzania and the United States have all been looking at developing new reserves. Eventually, helium production at the South African site could rise to five tonnes daily, roughly seven percent of the planet’s current helium production, Marani said.
Robert Katzke, 59, drilling manager for Renergen (R), stands at the company’s construction site in Virginia, Free State, on September 22, 2021.
Renergen’s deal with Argonon Helium, a company formed in March for the transaction, will see helium traded like a cryptocurrency, using blockchain technology to create tokens that can be exchanged directly for the gas. Helium, unlike many other commodities, does not at present have a spot market, where assets are traded for immediate delivery.
Thie chief executive, Stefano Marani of Renergen stated on 19 October 2021 that helium was a rare element without substitutes and plays a vital role across several high-growth sectors, including medical resonance imagery, welding, fibre optics and electronics, which was leading to a growing global shortfall of helium supply, and rising prices.
Agreement for 19 years
The company, Renergen has completed a forward sale agreement for 100 000 units of helium to Argonon Helium US, a helium trading company. The agreement is for 19 years. Each unit represents a thousand cubic feet (mcf) of liquid helium.
Argonon will use the helium to issue tokens, which will in due course be listed on an exchange with the assistance of financial services provider Purple Group’s EasyCrypto platform, providing transparency in the price of helium for the first time.
Renergen’s share price surged 6.7 percent to R585.85 yesterday morning after the deal was announced. Purple group’s share price was up 1.51 percent to R2.02 at the same time. The global helium market, currently under supplied, consumes around 6 000 000 units per annum, according to estimates by Edison Group and Hannam and Partners, with an anticipated consumption of over 126 000 000 units by the time Renergen’s Virginia Gas Project’s licence expires, assuming no growth in demand.
Previous related articles
Emerging liquefied natural gas (LNG) and helium producer Renergen has signed a $40-million loan agreement with the Overseas Private Investment Corporation (OPIC), marking a significant milestone for the company, which recently listed on the ASX.
US provides $40m for Renergen’s South African gas project
2018 – Renergen previously released an updated independent reserve review for its Virginia project, a 187 000 ha area of gasfields spanning across Welkom, Virginia and Theunissen, in the Free State, which included quantified results of recoverable helium-4 resources, at 6.2-billion cubic feet on a discovered commercial basis.
Tetra4’s Virginia Gas Project