HELIUM and gas producer Renergen has appointed a well drilling contractor to drill a horizontal well for its Virginia gas project to establish a possible extension of its helium reserves.
This comes after the dual-listed firm secured a $40 million loan with the US government agency the Overseas Private Investment Corporation (OPIC) in a deal highlighting the increasing strategic global importance of helium.
Site mobilisation is expected to take place within two weeks, followed by a drilling campaign, which is expected to continue for the rest of the calendar year, Renergen said in a note to shareholders.
It said Bohrmeister Technik, a well credentialled drilling contractor that specialises in the manufacture and supply of hydraulic exploration drilling rigs in South Africa, will drill a horizontal well in the prospective sandstone contained within the Virginia gas project’s production area.
“The well will provide the requisite information to enable estimation of the scale of helium reserves contained within the sandstone, which have not been factored into existing reserve estimates,” Renergen said.
The previous well drilled into the sandstone in 2016 had helium concentrations of almost 11%.
Renergen said it has identified in the production area “a discrete sandstone body of varying quality occupying an area of at least 90 square kilometres, which is up to 100 meters thick in certain parts”.
Dykes associated with fractured margins have been identified as potentially gas-bearing with a higher helium concentration than the rest of the field, where the helium concentration is over 3% on average, the firm explained.
It said the geological model developed over the past six months forms the basis its drilling strategy for 2020, which includes additional inclined wells to intersect known fault structures in the current production area and will serve to feed Phase I of the Virginia project.
Renergen expects daily production of 2,700 gigajoules of LNG and 350 kg of helium from 2021 from its gas project in Welkom in the Free State province.
If successful, the horizontal well will kickstart Phase II, which will see a significant increase in expected production levels compared to Phase I, the company said.
