NOMPU SIZIBA: JSE-listed natural gas and helium producer Renergen has announced to the market that it has made a significant gas strike at one of its wells in the Karoo. The company says the well is able to produce some 200 000 cubic feet of gas per day.
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Well, to tell us more about the find and the implications, I’m joined on the line by Stefano Marani, the CEO at Renergen. Thank you so much for joining us, Stefano. This is an exciting development for you, obviously. When did the strike actually happen and was it a lucky unexpected strike?
STEFANO MARANI: Good evening. Yes. The sight took place about a week ago, and we’ve been monitoring it since. It was it was lucky in the sense that it wasn’t in our proven areas. It was in a completely unproven exploratory area. So in that sense it’s a great step forward for us. But, all in all, a very positive result for the company because this has north of the region [?0:55] implications for our Phase 2 development.
NOMPU SIZIBA: How significant is this find in the context of what you want to achieve as a company? And at what point will you start directing gas to the market, and who in actual fact is your market?
STEFANO MARANI: This will help us quantify and determine the full extent of what Phase 2 could be. And Phase 2 is obviously the next market that we’re in the process of planning and developing. In terms of the market that we’d be selling to, the senior …… [1:28] is predominantly the export market for us. So that would be true to all of the large industrial gas users abroad.
Domestically on the LNG side, we’ve partnered up with Total for distribution of LNG at filling stations for trucks in South Africa.
NOMPU SIZIBA: Excellent. In the meantime, what’s happening with your established exploration wells in terms of striking more gas? Are you hoping that you’re going to get there very soon?
STEFANO MARANI: We’ve already got 12 wells and then this one is the 13th, and these will all be connected into the pipeline to feed the first plant. And we’ve got a couple of additional wells that we’re in the process of drilling, which are starting to come closer towards their target depth. And so we’ll be monitoring that drilling, but that …… [2:13] will obviously feed into the pipeline and come online.
NOMPU SIZIBA: Just give us a sense of context in terms of capacity. This new well or this new strike means that you’re able to produce 200 000 cubic feet of gas per day. What is your current capacity and what is your aim in terms of where you want to be, say, in the next couple of years?
STEFANO MARANI: So ultimately the 200 000 …… [Scfs? – standard cubit feet?? –2:37] to think about it in terms of energy content, that’s the same as about 5 000 litres of diesel per day in terms of energy. In terms of helium, it’s probably between 30 and 50 kilograms per day, which is quite a lot of helium. Where we’d like to get to, when Phase 1 turns on later on this year, we’d be aiming at a maximum capacity of about 70 000 litres equivalent of diesel per day.
And then our Phase 2 plant would probably be eyeing something in the region of a 250 000 to 300 000 diesel litre equivalent of energy per day, with a ramp-up from there.
NOMPU SIZIBA: Just help us understand the pricing of the commodities that you produce – are they related directly to what’s happening with the crude oil price? How do you come to the price?
STEFANO MARANI: We price our LNG links to the cost of diesel, at a discount to diesel. So not only do you get the environmental benefit of a cleaner fuel, but you’re also cheaper than diesel. And yes, it’s directly linked to the oil price. Helium is a separate gas, just a very rare gas, and it’s got a whole different pricing methodology.
NOMPU SIZIBA: I understand that helium, if you consume it as a human being, it helps you to laugh. What other properties does it have?
STEFANO MARANI: Super cooling. So you use it for the manufacturer of electronics and you use it for cooling down magnets, like in MRIs. So you can’t do MRIs without them. They use it to launch rockets. Falcon 9 used about two million party balloons to get up into the air. So it has all sorts of really funky and weird and wonderful properties.
NOMPU SIZIBA: Excellent. Stefano, thank you very much for your time. Congratulations on the find, and all the very best to you. That was Stefano Marani, the CEO at Renergen.