Johannesburg - Listed gases and welding products business Afrox will process and market helium from a Free State helium and natural gas field, as part of an agreement with its parent company The Linde Group and alternative energy company Renergen.
According to the companies, the 187 000 hectare field in Virginia, near Welkom, has proven reserves of 25 billion cubic feet of natural gas and helium, and is the first and only onshore petroleum right in South Africa capable of supplying helium to numerous specialised and industrial markets.
Read: Afrox to process helium from SA gas field
Helium, a colourless, odourless and tasteless gas, is used to cool down superconductive magnets in magnetic resonance imaging (MRI) for use in medical diagnostic purposes. It is also widely used in the welding industry. Helium is scarce on earth and is often found trapped with natural gas in low concentrations.
The commercialisation of the field will see Afrox source the product locally, instead of importing it. Managing director Schalk Venter said yesterday that the company imported 180 000 cubic metres of helium a year. Local production would shield Afrox against foreign exchange pressures, he said. “Reliability will also increase significantly,” Venter said. He said Afrox wanted to grow its share in the helium market.
Nick Haines, the head of The Linde Group’s global source development, global helium and rare gases, said yesterday that the company would supply the helium to Afrox, “and what Afrox does not use will be exported”.
Renergen chief executive Stefano Marani said yesterday that the plant, which would cost at least e12 million (R199m), would be project financed. However, Marani said detailed engineering studies would give a clearer indication of the cost of the plant.
He said the production of helium would diversify South Africa’s energy mix and improve access to energy. “As we know, access to energy is a catalyst for economic growth.”
Linde’s extraction technology will separate helium from natural gas through a single system, utilising a patented processing plant, which purifies, compresses, liquefies and stores the helium, ready for distribution to customers.
Linde Engineering will design the helium plant, expected to commence operations in 2019. The plant would be of modular design and would be manufactured in Europe before being shipped to the Free State, Marani said.
Haines said: “Linde has worked diligently to commercialise this unique Helium resource together with (Renergen’s subsidiary) Tetra 4 and looks forward to receiving helium upon commencement of plant operations.”
Processing
Tetra 4 has drilled wells, thousands of feet deep to tap the natural gas source dome, while ensuring minimal visual and environmental impact on the gas field’s landscape. Wells and well-heads were being interconnected underground via an intricate network of pipes. The pipes will feed directly into the Linde-engineered helium processing plant.
Renergen, South Africa’s only JSE-listed alternative energy company, recently acquired Tetra 4, formerly known as Molopo South Africa Exploration and Production. Tetra 4 is the only holder of an onshore petroleum production right in the country.
Marani said natural gas from the field could be used in the transport industry, but did not give further details. “We are far advanced on a number of fronts,” he said.
The natural gas can be used as fuel for heavy duty vehicles. It can also be used for heating, cooking, electricity generation and manufacturing. Afrox’s shares were down 0.11 percent at R17.45 yesterday.
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