THE recent announcements that the IDC will be investing as a shareholder, anteing up R70-million for a 45% share in an SPV with a scoped framework, on top of a R10-million injection from Phefo Power, to speed up the development of the Kinetiko Energy / Afro Energy gas find in the Amersfoort – Volksrust areas of Mpumalanga, should be seen as a positive step, but is it enough to set the ball rolling?
The ‘enough’ relates not only to capital injection into the development of this huge gas find, but the elimination of corruption, red tape, regulation and silo mentality, political and/or vested interests and apparent Eskom recalcitrance to commit to making natural gas a relevant transitional fuel for power generation.
The Australian gas explorer Kinetiko Energy, through its local subsidiary and Rights Holder, Afro Energy, has been active in the development of its gas find since being awarded a license more than a decade ago, but the combination of a lack of appetite from local investors, Eskom woes and a lack of cohesion within government departments has meant that the project hasn’t seen the sort of progress made in the Free State gas find being developed by Renergen. To be fair, the discovery of the world’s highest levels of helium there have blurred the gas picture more than somewhat, spurring investment and creating a potential bonanza for early punters.
Massive potential
Speaking exclusively to CBN, Kinetiko Energy’s new CEO, Nick de Blocq, outlined the huge potential of the Mpumalanga gas fields.
“Our area under rights and application covers nearly 7 000 km2 (compared to the Free State resource of just 187ha) and so far we have sunk 30 core-holes and perm test wells, with a 100% success rate in cutting gas, and mapped close to 80 productive ‘compartments’ of proven 98% purity methane, giving us a 2C Resource certification of 4,9 million TCF (Trillion Cubic Feet). To put that into perspective, Sasol based its three-to-four decade drilling and production project in the Pande-Temane-Inhassoro area of Mozambique on 2.5 TCF and Mossgas flowed profitably for its initial 20 years while producing just 1 TCF. Having recently flown about 12 000 line km of aeromag/gravity surveys and drilled and logged three more wells, we hope to see a positive reflection in our new resource report later this year.
“Recent investor interest – both locally and in Australia – during our May 2022 capital raise programme will allow the further exploration and proof-of-concept projects to be extended to at least 20 productive wells in an initial phase, and the establishment of mid-stream infrastructure suppliers with ready offtake markets. We are currently in discussions with nine interested parties with whom we could potentially partner for the drilling, production and processing phases of commercialising the gas.
“While our gas predictions are based on the cluster of wells in the Amersfoort area, we have barely scratched the surface (!) in the southern district area of Volksrust where gas has been found in every borehole that has been drilled although proof of concept for a GTP (Gas Treatment Plant) or LNG (Liquefied Natural Gas) still needs to be established. We have found a deeper basement with a higher potential for good pressure and flow rates in this southern part of Block 271. Our compartmentalised, gassy sandstone geology has proven to be productive wherever we have sunk a borehole, and after covering about 10% of our areas with aerial surveys, we have uncovered 79 such compartments ripe for exploration – and we have only dabbled in two or three of them to date. There is a lot of work to do, and we are being well assisted every step of the way by the Petroleum Agency!”
Future prospects
“The future exploitation of the Amersfoort and Volksrust fields stands on three main legs:
- Gas to power (GTP) and feedstock
- LNG & CNG production and virtual pipelines
- Pipelines
“There is already a redundant gas generator in the nearby Majuba Power Station, just a few kilometres from our first exploratory wells, which seems to indicate that Eskom may have been experimenting with gas powered electricity generation from the recently canned underground coal gasification (UCG) project. It is entirely feasible, based on the pressure and quantities so far discovered, to pipe natural gas to this power station which could be partially or wholly converted to natural gas with a meaningful contribution to energy security while minimising the burning of coal and the cost of 1 500 coal-truck deliveries a day…
“Furthermore, we share a boundary with Sasol’s Secunda plant where they already process natural gas from the Pande-Temane gas fields in Mozambique via the 865km long ROMPCO pipeline. As might be expected, the proximity of our resource has generated great interest from Sasol, especially as the Mozambique resource is in decline and is likely to be exhausted during the next decade or so. Natural gas is the key ingredient in the feedstocks that Sasol requires for products such as fertilizers, plastics, pharmaceuticals and fabrics, in addition to being an energy source. Sasol has also stated their intent to evolve their CTL (Coal to Liquids) Fischer-Tropsch system to a GTL (Gas to Liquids) facility in order to maintain cleaner liquid fuel demand and are already looking at ways to replace decreasing production from the Mozambican fields. Proximate, indigenous gas should always compete easily with imported content!
“The production of LNG (Liquefied Natural Gas) and CNG (Compressed Natural Gas) for transportation and industrial processes on site for onward transportation via virtual pipelines – road or rail – has enormous potential for industry and society, with production having already commenced at the Free State facility, and more widespread availability has huge potential in the production of hydrogen, alongside thermal industry which also trying to clean up its act.
“The third and longer term ‘leg’ could be realised via the partial replacement of the Pande-Temane source from our northern Block 270 directly into Secunda and the connection of Amersfoort/Volksrust gas into the existing Lilly pipeline from Secunda to KZN. This line runs through three of our Rights areas” concluded de Blocq.
No omelette without scrambling eggs
Just as the invention of the motor car changed society fundamentally and put saddlers and blacksmiths out of work, so the time of the coal industry is rapidly running its course. And what a run it has had, fostering commerce and industries all over the world – from steam locomotives to battleships and of course, power generation.
Energy pundits predict that energy from coal will necessarily be with us for many years to come, but like oil and coal itself, the transition to other forms of energy from creation to widespread acceptance accelerates rapidly once proven; and natural gas has been proven and even has the label of a renewable resource along with nuclear, wind, solar and biomass. The test as far as South Africa is concerned, lies in resolving the political morass, Eskom corruption and maladministration, union response to job losses, and the vested interests that pervade the coal industry. Tough nuts to crack, but climate change momentum and the energy supply crisis will see the smart money placed on gas.
