Business

Renergen delivers first domestically produced LNG

You can also listen to this podcast on iono.fm here.

JIMMY MOYAHA: Renergen is the company that found the significant deposit of helium and gas near Virginia in the Free State.

The company’s been working on this project since 2016, and it has now announced that it has started to produce the first commercial liquefied natural gas in South Africa and will sell it to Ardagh Glass Packaging, previously Consol Glass, and Italtile subsidiary Ceramic [Industries]. These contracts will result in Renergen earning its first commercial revenue.

Read: Renergen starts delivering SA’s first locally produced commercial LNG

Stefano Marani is on the line. He’s the CEO of Renergen. Stefano, thank you so much for joining me. You’ve been going for over six years now, nearly seven years, so this must be a big day in Renergen’s short history. You’ve earned your first revenue.

STEFANO MARANI: If you want to be technically correct, we bought the field back in 2013. So yes, to answer your question, it is a big day. It’s particularly fulfilling to go and see these deliveries being made to the customers, and the customers by the same token being as happy as they are with what’s being delivered.

JIMMY MOYAHA: You produce liquefied natural gas, LNG, in South Africa, but Sasol already offers industrial clients natural gas which it gets from Mozambique. Apart from the obvious [fact] that the one is a gas and the other is a liquid, are there significant differences between the two?

STEFANO MARANI: I suppose the fundamental key difference is transportability. Natural gas is lighter than air, and so typically what happens is that natural gas gets transported through a pipeline.

If you have the pipeline infrastructure, like they do in Europe or like they do in the United States or in China, it’s great, because you’ve got the plumbing everywhere.

If you are not in a city or a town that has the necessary plumbing – the pipes underground to move the gas – then there’s no way that you can receive this gas as a product.

That’s when you have to start looking at things like either compressing the gas or liquefying the gas.

And so liquefied natural gas is a means of moving energy at an incredibly high density of energy over long distances by truck. That means that we can start to service cities that don’t have natural gas, like Cape Town, East London, Port Elizabeth, Bloemfontein, and Welkom, etc.

JIMMY MOYAHA: Is it not a lot more expensive than normal natural gas?

STEFANO MARANI: It is more expensive, but it’s also more expensive for another reason. In order to get it down to liquid status, it’s a much more purified version of gas and pipeline gas, which means that it’s a little bit more niche in the sense that there are significantly fewer impurities, and so as a result you tend to use it in far higher-end uses.

JIMMY MOYAHA: What is your liquefied or natural gas capacity at the plant currently, and how much of that are you selling to Ardagh and Ceramic?

STEFANO MARANI: At the moment in phase one we are at about 60% to 65% of the plant’s capacity, and that’ll get ramped up to 100% by the middle of next year. Essentially all of that product is going to those two customers.

The final batch, the final ramp up, which will take place, as I said, during the course of next year, will go to trucking customers as a substitute for diesel, which obviously reduces greenhouse gas emissions enormously.

But it’s also just a lot cheaper to run a truck on LNG than it is to run it on diesel.

JIMMY MOYAHA: Now there is significant excitement about Renergen, and there has been since the company listed because the helium deposit near Virginia in the Free State is so significant, and many people are waiting for you to start to produce helium – and you are more than a year behind schedule. What is the status of your helium production?

STEFANO MARANI: Unfortunately in October we were 10 hours away from liquid helium coming out of the plant.

Then we had the setback with the conduction oil system, which is not part of the plant, it’s one of the utilities. But the fact is that the plant was reliant on it. So we warmed the plant up, we removed that conduction oil system, we put it back in. I think the evidence that the utilities are now working is there, because at the very least the LNG modules are working and we are supplying customers.

Now we are going through the motions of finalising the commissioning [of the] helium system. So watch this space. It’s close. I’m not going to commit to a date, but let me just say that it is close.

JIMMY MOYAHA: ‘Close’ meaning soon. I think a lot of people will be very happy with that. Have you signed the supply agreements for helium?

STEFANO MARANI: Those were signed in 2015. Helium is in exceptionally short supply right now. Prices have gone ballistic, so there is no shortage of customers looking for product right now. We’re getting calls from Indonesia, from China, from Thailand, from the United States, from Germany, and pretty much everywhere. Everyone is looking for helium.

JIMMY MOYAHA: How much helium will you be able to produce? What would be your capacity once the plant runs at full capacity?

STEFANO MARANI: I need to remind you and the listeners [that] phase one is a proof of concept. It’s not the big event. So the proof of concept will supply about 150% of South Africa’s needs, just to put it in context. And that’s the proof of concept.

It works out to about 350kg of helium per day, and it’s a very small amount by global standards. Globally, the entire planet consumes about 80 tonnes of helium per day.

It’s the second phase where things start to really ramp up. In the second phase we’ll be producing somewhere between 5% to 8% of the entire planet supply of helium from the plant in Virginia.

JIMMY MOYAHA: And when do you foresee that happening? When do you foresee switching on that plant?

STEFANO MARANI: All things being equal, assuming that we manage to stick to the schedule with the requisite lenders and the equity investors for phase two, phase two should be operational in 2026, running at very high levels of capacity.

JIMMY MOYAHA: So still a few years away. Stefano, thanks so much for your time. That was Stefano Marani, the CEO of Renergen.


Source link

Related Articles