PERTH (miningweekly.com) – ASX-listed junior Sunbird Energy on Friday announced that it had obtained final approvals for the acquisition of the Ibhubesi gas project, offshore South Africa, from Forest Oil Corporation.
The approvals concluded Sunbird’s acquisition of a 76% interest in Production Right Block 2A, which covers a 5 000 km2 area within the Orange basin and contains the Ibhubesi project.
Sunbird MD Will Barker said that completing the Forest Oil transaction delivered a highly valuable asset to Sunbird, in South Africa’s largest proven gas field, at a time when emergency load shedding is again in the headlines in South Africa.
“The South African energy market is both highly constrained and high value, creating a unique opportunity for Sunbird as the most advanced project for the supply of energy for the domestic market.
“We look forward to progressing our gas sales negotiations with Eskom for the supply of gas to the existing Ankerlig power station that is currently run on expensive diesel, and further exploring Block 2A’s upside potential.”
Over $125-million has been invested in the exploration and appraisal of Block 2A since 2000, with seven of the 11 wells drilled to date discovering commercial volumes of gas. Beyond the existing discoveries, an independent assessment determined that the block contained a best estimate prospective gas resource of 7.8-trillion cubic feet.
Having executed the sale and purchase agreement in December 2012, which provided Sunbird with control of the entities holding the Ibhubesi licence and operatorship of the licence, South African government approvals were still required for the acquisition.
Sunbird had previously revealed plans to fast-track the commercial development of its Ibhubesi gas project, which has a maiden reserve of 540-billion cubic feet. The initial phase of Ibhubesi, which is located 380 km north of Cape Town and 105 km offshore, could involve an investment of between R12-billion and R14-billion to produce 28.3-billion cubic feet of gas yearly over an initial six- to eight-year horizon.
Eskom plans to replace the existing high-cost diesel feedstock at the 1 332 MW Ankerlig power station, in Cape Town, with natural gas and convert the plant from an open-cycle gas turbine (OCGT) to a closed-cycle gas-turbine facility. Together with the 740 MW Gourika power station, in Mossel Bay, these OCGT's cost Eskom more than R10-billion to operate last year and are 16 to 18 times more expensive to run than coal-fired power stations.