In 2013 Nick Mitchell and I acquired Molopo South Africa Exploration and Production (aka Molopo) from a listed Australian company with backing from private shareholders. The company was severely distressed – gas prices had dropped over 80%, the platinum sector had scared international investors away from mining in SA and the seller had just lost money drilling for oil in the US and needed to exit. The gas field, stretching across about 187 000 hectares of land in the Free State, was considered marginal at best, given it had extremely small proven gas reserves, and neither the buyer nor seller knew that there was any meaningful amount of helium in the field, only methane which is the main ingredient of natural gas. Molopo had only one thing going for it: it held the only petroleum production right issued in South Africa by the government, which is still true today. So, we paid US$1 and picked up the company’s liabilities; happy buyer – happy seller.
There were already four holes in the ground, drilled by gold explorers in the area, blowing some gas. We quickly worked out we could put gas generators on the holes and make a very small amount of power, around 1.4MW (enough to power a very small strip mall), and make a small income on the side without much effort. However, the generator supplier needed a fresh gas sample to guarantee engine performance, so we drove to the Free State and took samples. Much to our surprise, we saw 2% helium concentrations in the gas (and in our most recent well, up to 12% concentrations). Everything changed. At that point, the best helium concentration in the world was in the United States with an average concentration of just 0.35% across the country. We knew we had something special. It turned out to be the richest helium reserve in the world!
We scrapped the planned power generating side project and raised more money from friends and family to explore a little more, and slowly peeled away the layers to understand what was truly hidden underground. We learned the methane in the gas was originating from bacteria and was therefore renewable, unlike traditional natural gas fields where the methane is as a result of fossilised organic matter millions of years old. We also learned that the helium concentration in the gas is so high because of a cosmological freak accident dating back about 2 billion years. At the time, heavy metals uranium and thorium were deposited in the area as a result of a meteor shower, followed by a meteor strike in Vredefort which created the largest known crater in the world which preserved all these heavy metals. These metals break down over time and make helium. Without those meteors, the helium would not be there.
We are now building the country’s first commercial Liquid Natural Gas (LNG) plant under the banner of Renergen, which will supply logistics companies with a cheaper fuel than diesel. This means transporting goods will cost less. More importantly, under the right conditions, LNG produces up to 90% less greenhouse gas emissions than diesel does, contributing towards reducing climate change. The other benefit is that every litre of diesel we displace, we reduce the country’s imports of energy resources. So it all adds up to a very proudly South African project which will benefit many people and create several much-needed jobs.
Written by: Stef Marani, Renergen Limited