Integrated alternative and renewable-energy business Renergen announced recently that the Overseas Private Investment Corporation (OPIC), of the US, had approved a $40-million loan facility in favour of Tetra4’s Virginia gasfield project, in the Free State.

Tetra4 is a Renergen subsidiary.

The funds from the loan facility, which has a 12-year term and a 30-month grace period, will be used to finance the construction of a pipeline to join all the wells to a single processing facility, as well as the construction of a natural gas liquefier to produce liquefied natural gas (LNG).

Funds will also be used to build a helium liquefier to cool the helium to a liquid for ease of transport.

The plant was expected to reach commercial production by early 2021, Renergen CEO Stefano Marani told Engineering News. Construction was expected to start in the first half of this year.

According to Marani, the loan facility would bring the plant into operation and generate cash flow.

“We envisage only two phases – the second being the commercialisation of the sandstone field identified within our production right,” he said.

Renergen was unable to quantify the magnitude of this find at the time, considering that the concentrations of helium at 11% were “well beyond the global average” of 0.5%, Marani added.

“We have a good working model on the origin of the helium, but we need to do further work to confirm the validity of the model before we define the size of the investment in Phase 2.”

The development of this infrastructure is aligned with the South African government’s Gas Utilisation Master Plan, which aims to increase natural gas use and reduce the country’s reliance on coal and diesel imports.

OPIC’s funding, Marani noted, recognised the importance of alternative and cleaner energy sources, as well as the high development impact of the project, which were both key OPIC objectives.

“OPIC’s endorsement of the Tetra4 project is symbolic of how far this project has progressed and the level to which it has been derisked; it is also significant for a number of additional reasons,” Marani said in a statement last week.

He elaborated that the project would result in meaningful foreign direct investment into South Africa, while also introducing LNG onto the domestic market. Further, it would result in the installation of the first liquid helium processing technology in the country, as well as would have a positive balance of payments effect by displacing current imports of diesel and helium and enhancing helium exports.

Additionally, the endorsement of the Tetra4 project was expected to result in cost efficiencies for current users of diesel fuel as they switched to LNG.

“We are proud to be playing an important role in advancing the development of alternative energy sources in the country, while simultaneously contributing towards the country’s economic development.

“Through OPIC’s funding, we are well positioned to take the Tetra4 project to the next level and start realising the growth potential of this world-class deposit for the benefit of all stakeholders,” Marani stated.