RENERGEN Ltd is celebrating today after encountering significant gas shows in its P007 well at its Virginia Gas Project in the Karoo Basin, South Africa – penetrating a 6-metre-thick gas bearing fractured sandstone layer.
The current flow rate is higher than almost all other existing wells in the permit area, recording more than 200,000 cubic feet per day.
Renergen holds a 100% interest across 462,000 acres in the onshore Free State.
The project encompasses three gas fields, Welkom, Virginia, and Theunissen. Renergen is developing the fields into a major LNG project.
Renergen said P007 was considered a true exploration well and was being drilled to inform possible resources for Phase 2 development. It noted the find was outside the primary focus area for reserves to be exploited in Phase 1 development, currently under construction, but is also in close proximity to the Phase 1 gas gathering system.
Phase 1 of the project is expected to come online this year, delivering volumes of 350kg of helium and 2500 gigajoules of LNG per day. EPCM is currently working on construction of Phase 1 infrastructure.
Once it reached the Karoo sediments, P007 penetrated a 6m thick gas bearing and fractured sandstone layer, which displaced the drilling fluid and started flowing gas to surface.
The company has collected gas samples to determine composition, including helium concentration.
However it said results will likely be delayed due to the limited availability of the requisite analytical equipment which is currently under maintenance.
P007 will not be under-reamed to increase the diameter of the well, before setting casing and prepared for production. As soon as the laboratories come back online over the coming weeks, the gas composition/helium results will be released to market.
“This is truly a spectacular result, with flow rates higher than almost all other wells in the existing areas,” Renergen CEO Stefano Marani said.
“Importantly, what makes the gas strike at P007 even more impressive is that it is one of our wild-card exploration wells.”
He noted the result would not only have a meaningful impact on the company’s resource base, but also highlighted the effectiveness of its inclined percussion drilling method – the first time Renergen had used it.
“The success of P007 now provides the company with a clear path on which drilling technology to deploy for all future drilling.”
LNG produced from both Phase 1 and Phase 2 will go to the domestic market. Phase 1 gas supply has already been contracted to French supermajor Total for its downstream retail arm as trucking fuel, to replace diesel.
Helium produced from Phase 1 and Phase 2 will be exported to the international market.
Renergen shares shot up 12% on Tuesday, trading at A$1.76
Mark Tilly
9 March 2021
Energy News Bulletin