What have been Renergen’s main milestones, and what is the company’s focus today?

Renergen’s only asset is the Virginia gas field; it holds South Africa’s first and only onshore petroleum production right, granted in 2012. Since then, no other onshore petroleum production rights have been awarded in South Africa. The holding company Renergen was listed in 2015 to raise capital to develop the pilot plant. This was completed in May of 2016 and has been running CNG for a few buses in the Free State to prove the concept. The whole concept was to extract gas out of the well and to put it directly into the tank, using natural gas as an alternative to diesel. The pilot proved successful, and in the interim we discovered that the deposit has an incredibly high helium concentration. In the rest of the world, helium content is typically between 0.1% and 0.3%, and our last well clocked in at 11%, which is a game-changing discovery. Another unique aspect of the asset is that the gas is actually not hydrocarbon in origin, but rather bacterial in origin, so the wells never die – they replenish. The helium replenishes by virtue of a fragment of an asteroid that is underneath our field. The business model has evolved to one where we are now at financial close. We raised US$40 million from the U.S. government along with an IPO in Australia, which is going to see us through the construction. The total capex for the Virginia Gas project is about US$40 million to US$45 million, and the project goes online and starts selling liquid in 2021. Right now the right is valid for another 23 years, and we can renew it at our discretion for a further 30 years.

Why do you think South Africa has not developed more gas resources before?

The legislative framework has been very challenging, which has inhibited investment. No one wants to take on an exploratory program without knowing that his or her investment is going to be protected, and that certainty just does not exist yet. Last year the minister announced the government’s intention to have a dedicated oil and gas legislative framework specifically outlining the requirements for the upstream sector, and this is expected to be finalized during 2020.

Can you tell us more about the fundamentals of the helium market?

America discovered helium more than 100 years ago. The government saw it as a strategic asset that could lift an aircraft. They built a reserve in Amarillo, Texas, and they pumped helium into it to develop a strategic stockpile. MRIs were invented, which require helium. The strategic reserve started selling off all this helium into MRIs along with a host of new technologies all requiring the valuable gas, but then, by early 2018, the BLM announced it ran out of helium. That came completely by surprise, just two months after helium was declared the second most critical resource to national security. We now have this massive disparity between supply and demand.

Once it is online, how much of the world’s helium will the Virginia Gas project be producing?

Phase one of the project is very small. The world uses about 80 tons per day of helium, and our first phase project is about 350 kilograms per day. It will be enough to saturate the South African market and export a little bit. As for phase two, we need to do a lot of testing. We are hoping that during the course of 2020 we will have done all the necessary engineering and design and define the size of phase two.

Why did you choose to list with Australia?

We listed in Australia because being listed in South Africa as an oil and gas company is very difficult. The JSE is a very large exchange with very large companies, and these are all FMCG companies, financial services and banks. Being the only listed oil and gas company is a very big challenge. The ASX makes a lot of sense because the exchange has a lot of experience in oil and gas and smaller companies. So, the dual listing made perfect sense because now there is an investor base out there that will give us access to liquidity when needed and has a deep fundamental understanding of the industry. The IPO was over 2.5 times oversubscribed, whereas in South Africa for us to raise any money was incredibly difficult. We only needed A$10 million and we raised that quite easily in Australia.

On the LNG side, what is the opportunity to develop the market in South Africa?

South Africa has a disproportionally large fleet of trucks on the road relative to its economy. In our phase two, ‘blue sky’ scenario, we would be covering just 0.7% of the demand coming from trucks alone. The market is very large, and every litre of diesel that you replace with LNG has the potential to reduce carbon emissions by up to 90%.