This South African business could turn an R8 investment into R1.5 trillion after new gas findings

Renewable energy company Renergen has reported promising results after drilling at the Virginia Gas Project, with the group reportedly discovering a significant deposit of natural gases.

The Virginia Gas Project is the only onshore petroleum plant in South Africa. The site covers an area that includes Welkom, Virginia, and Theunissen.

In a shareholder statement on Tuesday (2 November), Renergen said that drilling has now been completed and gas samples from the completed well have confirmed gas contents, with 1.9% helium and 90.8% methane.

Furthermore, the well produces gas at a rate of 187,000 standard cubic feet per day, making this one of the more significant gas strikes in the Virginia Gas Project and well above the average of 120,000 standard cubic feet per day of current wells, it said.

“We are really pleased with this result. The helium is as expected, but more importantly, the flow rate is higher than expected, and the gas intersection is almost exactly on prognosis, which reaffirms our modelling of the predicted gas-bearing structures,” said Stefano Marani, chief executive.

A R1.5 trillion investment? 

Stefano Marani and Nick Mitchell, directors of Renergen, had natural gas in mind when they purchased the gas rights for the 187,000-hectare piece of land in 2012 for $1 (about R8 at the time), AFP reported. Instead, they estimate their investment could be worth over $100 billion (R1.54 trillion) today.

Renergen has estimated its helium reserve could be as large as 9.74 billion cubic metres, more extensive than the known reserves of the entire US.

While helium is perhaps best known for its use in balloons, its benefits go far beyond this. Helium is considered highly valuable for its use in medical scanners, space travel, and superconductors.

Certain unique properties make it an essential component in manufacturing fibre-optic cables, microchips, and other electronic equipment.

It is also used to inflate car’s airbags and in high concentrations in deep-sea diving tanks.

Super-cooled helium is used to force liquid hydrogen and oxygen rocket fuel into a rocket engine to be an essential component for future space exploration.

Read: Other countries need to help fund South Africa’s new power plans: Ramaphosa