Renergen plans to roll out 12 to 18 liquefied natural gas (LNG) filling stations across SA by 2023 to cater to truck owners seeking a cheaper, cleaner alternative to diesel.
The company, which also holds what appears to be the world’s largest helium deposit at its Virginia Gas Project in the Free State, says these stations will be established across the country, including in Johannesburg, Durban, Harrismith, Port Elizabeth and Bloemfontein, to serve the long-haul trucking needs of logistics groups.
Renergen CEO Stefano Marani says that SA imports most of its petrol and diesel and his group’s project is “critical for our own domestic energy security”.
The Virginia Gas Project comprises 187,000ha of gas fields across Welkom, Virginia and Theunissen.
Marani says that though the market for LNG — which is predominantly made up of methane — is still small in SA, with the first phase of its project to supply 400 trucks up until 2021, it expects the second phase to add 3,000 to 5,000 more trucks to its customer base by 2023.
The trucks would include the likes of Scania and Volvo, which are either bought already equipped to run on LNG or can be adapted quite easily to use a combination of the natural gas and diesel.
As part of this first phase of the project rollout, Renergen has struck a deal with Total to turn two of the French fuel giant's filling stations on the N3 — one in Johannesburg, the other in Durban — into LNG outlets.
These Total stations will be rebranded in the colour green to indicate they sell this fuel, which is 15% to 25% cheaper than diesel.
In phase two, further fuel stations will be added across SA.
Renergen, which listed on the JSE in 2015 and is also listed on the Australian stock exchange, is the only locally based company that mines LNG and helium for the domestic market.
Marani believes its filling station rollout over the next three years will make it hard for any newcomer to compete.
“It is going to entrench our position. It is going to be very difficult for anyone to come and compete with the infrastructure requirements that we will have had already established by that stage of the game.
“Plus, we also enter into medium-term off-take agreements with customers, which give our customers security of supply and us the security of knowing we have a customer we can supply to.
“Typically it will be a five-year contract for the supply of LNG. That means that no-one is just going to be able to pull up a truck and fill up with LNG unless they have actually contracted with us.
“There will be a digital handshake that will need to communicate with our dispensing equipment and only then will the LNG dispense into a truck,” he says.
Passenger cars, however, are not going to be users of LNG any time soon, unless you want your vehicle, house and worldly belongings to go up in a puff of smoke.
“You don’t want to use LNG in cars. You want to use compressed natural gas (CNG) in cars,” says Marani.
“LNG sits at -162°C. CNG can sit in compressed form for 20 years but to keep LNG at -162°C you can only store it for four days in a tank before it starts boiling off.
“You need to know you are going to drive that vehicle every day for a certain number of kilometres.
“You can achieve that with trucks and buses. You can’t achieve that with cars. The risk is you put LNG in your tank and you leave the car in your garage and you go away on holiday for two weeks.
“You will come back and your house will be gone.”
But glass-makers and even vehicle manufacturers which use liquefied petroleum gas (LPG) for their heating requirements may also want to switch to the cheaper fuel source.
With these potential customers in mind, the group announced SA’s first LNG auction earlier this week.
Marani says that as the second phase of the project is rolled out there will be surplus natural gas available and that the “easiest way to sell what we are not going to put into the transport sector would be through the online auction”.
Renergen is also nicely positioned to benefit from the global shortage of helium, which is used in medical equipment such as ventilators for Covid-19 patients.
An initial analysis has found that Renergen’s helium deposit may be the largest in the world.
“At this stage we are still doing feasibility studies, but we are hoping that on the low side it will produce 5t a day, and on the high side 10t a day.
“The world consumes 80t a day. This means we would be a meaningful percentage of the planet's consumption,” says Marani.
Renergen, which has a market capitalisation of about R1.7bn, has no plans to make any further acquisitions, saying it has enough to keep it busy.
“It’s like a sandpit in the Sahara. We need just 10% of those prospective resources and we could supply helium for the next 100 years,” says Marani.
