Ahead of commissioning of the first phase of its Virginia Gas Project, Renergen Limited’s subsidiary, Tetra4, the holder of South Africa’s first and only onshore natural gas and helium production right, has taken delivery of four DAF CF 430 trucks from Babcock.
Having commenced construction in 2019, the Free State-based project – sitting on a massive production right that spans 187 000 hectares across the towns of Virginia, Welkom and Theunissen – is expected to produce its first liquified natural gas (LNG) and helium in May this year. The roughly R1-billion project will produce 50 t of LNG and 350 kg of helium per day at name plate capacity.
“We are excited about the imminent commissioning of phase 1 of our Virginia Gas Project – South Africa’s first commercial LNG facility,” explains Nick Mitchell, chief operations officer at Renergen. “With this project, South Africa becomes one of the only seven remaining producers of helium in the world, alongside the United States, Canada, Qatar, Russia, Poland and Algeria.”
The first phase of the project goes live with two main customers – Consol Glass and Ceramic Industries. The two companies will consume about 60% of the LNG from phase 1, with the remaining 40% destined for the trucking market as part of Renergen’s strategy to drive the dual fuel concept in the local logistics industry due to start later this year
In fact, Renergen’s own four DAF trucks will be retrofitted with a dual fuel kit, which has been proven to achieve a substitution rate of between 35% and 50% on average, depending on the route and weight of the cargo.
“Key to our buying decision was DAF South Africa’s willingness to collaborate with us on the LNG dual fuel project, which we believe is the local transport industry’s immediate bridge to the net carbon reduction and into a renewable future. Although we will retrofit an LNG dual fuel kit, Babcock has agreed to stand by its product in collaboration with the supplier of the dual fuel kits to eliminate any warranty issues and ensure the ongoing maintenance of our trucks,” says Mitchell.
Due to the documented financial and environmental benefits, Mitchell believes dual fuel sets the logistics industry on the path to a sustainable future. He, however, says that there is no silver bullet on the road to sustainability, stressing that all alternatives, including natural gas, electric vehicles and hydrogen, among others, will all have a role to play and must co-exist.
Marius Barnard, MD of Babcock’s Transport Solutions business, says sustainability is an integral part of Babcock’s environmental, social and governance (ESG) strategy. The Renergen deal reinforces Babcock’s commitment to its Plan Zero 40 strategy, which seeks to achieve net zero emissions by 2040. Working with its OEM partners, suppliers and customers alike, the group strives to embed the highest standards in environmental management and protection.
In addition, Barnard says the deal is testimony to Babcock’s relationship-building approach to doing business. The company is proactively identifying ways to keep its customers competitive through several initiatives aimed at lowering their total cost of ownership.
“The biggest elephant in the room is the imminent increase in fuel prices. We need to find ways to bring those costs down for our customers by exploring all avenues around alternative drivetrains, including gas and potentially electric,” says Barnard.
Mark Gavin, sales director for Babcock’s Transport Solutions business, says given that up to 50% of a long haulage transporter’s running costs are attributable to diesel, dual fuel offers a feasible alternative, especially considering the abundance of natural gas in the local market.
Alec Jackson, senior sales executive at Babcock Transport Solutions business, says the company is no stranger to the dual fuel concept. For the past three-and-a-half years, Babcock has been supporting a growing fleet of DAF trucks running on compressed natural gas (CNG) in South Africa.
“We have 24 dual fuel trucks in the market. With this solution, one of our clients in Pretoria is saving between R1 and R1,20 per kilometre, which translates to between R10 000 and R14 000 per truck per month. Every time the diesel price goes up, they save more,” explains Jackson.
Looking ahead, Mitchell believes that LNG prospects in South Africa represent an exciting future for the local logistics sector. At the recent 4th annual South African Investment Conference, Renergen committed a further R15-billion for the development of its phase 2 of the Virginia Gas Project. The second phase will produce between 500 t and 600 t of LNG per day, almost 10 to 12 times the size of phase 1. This will be complemented by about 5 t of helium per day.
“We are sitting on one of the most exciting and strategic natural gas discoveries in the country. We have spent the past nine years proving the resource and building a business model to support it. We are glad to announce that we have a proven resource totaling as much as 400-billion cubic feet of LNG (over 11-trillion diesel litre equivalent),” says Mitchell.
In conclusion, Mitchell says the quick lead time in the face of current stock shortages in the global trucking market was another key competitive edge for Babcock in securing this deal.
“Supply chain shortages, most notably microchips, have had a devastating effect on the automotive industry, creating long lead times for new vehicle orders. Despite these documented stock challenges, Babcock was able to meet our delivery timeframes. We placed our order in January this year and received our trucks by the end of March. It is ironic that the chip shortage is in part because of the lack of helium, which this project will begin supplying to help restore chip production,” concludes Mitchell.