Huge Potential: Gas Rights Purchased for $1 Could Skyrocket to Billions with Helium Discovery

South African startup Renergen acquired the production and exploration rights for grassy fields near Virginia, a town in the Free State province. The founders initially anticipated finding small natural gas reserves to power nearby mining opportunities. In 2013, they purchased the rights for $1, and CEO Stefano Marani began testing the composition of the gas flowing from two old drill pipes. Surprisingly, they discovered unusually high concentrations of helium.

Helium has a variety of commercial uses beyond just filling party balloons. It is essential in the production of microchips and in operating life-saving MRI scanning technology when in liquid form. However, global helium prices are unpredictable and supplies are inconsistent, as the gas is only produced in fewer than 10 countries worldwide.

Renergen has unexpectedly found significant helium reserves at the Virginia Gas Project. The company claims to have proven helium reserves of over 7 billion cubic feet, potentially valued at more than $4 billion, and possibly up to $12 billion if additional reserves are included.

Nick Mitchell, the chief operating officer of Renergens, recalls having modest aspirations of setting up a small gas power station to deliver a few megawatts to nearby mining opportunities. They did not anticipate the extensive scale and world-class nature of the helium deposit. The company successfully produced liquid helium from the plant for the first time in January 2023. While delays occurred due to a vacuum seal leak in the helium cold box, the company hopes to begin commercial operations in the next month, extracting and processing helium alongside natural gas for distribution to customers such as the global engineering firm Linde.

The first ship berths at the Lekki Deep Sea Port in Lagos state, Nigeria in this photograph taken on July 1, 2022. As the deepest port in the country, it is built to handle a capacity of four million metric tons of dry goods annually and is projected to generate revenue of $361 billion, while also creating up to 170,000 new job opportunities. In various parts of the African continent, there are ongoing developments in innovative transport systems, telecoms operations, and smart cities, all aimed at boosting economies and enhancing trade prospects. Take a look at the gallery for more insights.

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The Kazungula Bridge, a 923-meter long structure over the Zambezi River, links Botswana and Zambia. Its opening in May 2021 marks the replacement of a ferry, aiming to streamline truck traffic on a significant trade route running north to south. Image credit: MONIRUL BHUIYAN/AFP/AFP via Getty Images.

Altaeros has teamed up with the UK company World Mobile to provide internet balloons for their network expansion in Zanzibar. These solar-powered balloons, filled with helium, will hover 300 meters (984 feet) above the ground and have a broadcast radius of approximately 70 kilometers (44 miles) each. They will utilize 3G and 4G frequencies to transmit the signal.

courtesy World Mobile

Egypt is in the process of constructing a New Administrative Capital located just 28 miles (45 kilometers) east of Cairo. The project, which began in 2015 and is expected to cost $58 billion, aims to become a center for government and the finance industry. With space for 6.5 million people, the new city is intended to attract some of Cairo's 20 million residents. It will boast numerous skyscrapers, including Africa's tallest building, the Iconic Tower. Additionally, a $4 billion, 100-kilometer monorail project connecting Cairo and the new city was announced in 2020.

The Grand Ethiopian Renaissance Dam (GERD) is an ambitious $5 billion project that aims to generate 6,000 megawatts of electricity annually. Located on the Blue Nile River near Ethiopia's border with Sudan, the dam is set to turn Ethiopia into Africa's biggest hydroelectric exporter. However, its construction has sparked controversy as it threatens the water supply of Egypt and Sudan, which rely on the Nile River for 85% of their water. Despite years of negotiations, no resolution has been reached, and Ethiopia began generating electricity from the dam on February 20, 2022.

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In 2015, Egypt invested $8 billion to expand the Suez Canal, resulting in increased trading potential and a considerable revenue boost. Ongoing efforts to deepen and widen the southern section of the canal are now in progress, prompted by the week-long blockage caused by the grounding of the Ever Given container ship in 2021.

(Photo credit: Khaled Desouki/AFP/Getty Images)

Google Equiano, a subsea internet cable connecting Portugal to South Africa, is set to supercharge internet connectivity in western Africa. With 20 times the bandwidth of the previous cable serving the region, it has the potential to increase internet speeds by five-fold in some countries and reduce data costs, as indicated by research commissioned by Google.

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Egypt announced its plans for its inaugural high-speed rail system in January 2021. The contract for the 2,000-kilometer (1,243-mile) rail network was awarded to Siemens Mobility. Once completed, the railway will connect 60 cities throughout Egypt. (Image: an artist's rendition of the future train carriages, courtesy of Siemens Mobility)

Namibia has successfully reclaimed 40 hectares of land to develop a new port terminal. Walvis Bay, the country's largest commercial port, currently handles five million tons of cargo annually. A significant investment of $300 million over five years has led to the expansion of the port's capacity for container units, resulting in reduced waiting times for ships. The completion of the new container terminal, situated on the reclaimed land, was officially announced to be fully operational as of September 2020.

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Nigeria's new refinery, set to be the largest in Africa, is expected to solve the country's fuel problem by processing 650,000 barrels of oil a day. Aliko Dangote's project aims to address Nigeria's frequent power cuts caused by fuel shortages, which have affected the economy. Operations are set to begin after its first batch of crude oil was received in December 2023.

Nigeria is set to benefit from a new rail line project, the Lagos-Kano Standard Gauge Railway. This ambitious endeavor will cover a distance of 1,678 miles (2,700 kilometers), connecting the port city of Lagos with the northern city of Kano, located near the border with Niger. The purpose of this railway is to stimulate economic growth by facilitating the transportation of both passengers and freight. The construction of the railway is being carried out by the China Civil Engineering Construction Company (CCECC), with financial support from Exim Bank. The project is being executed in phases, with the first section between Abuja and Kaduna completed in 2016, while the second section, linking Lagos to Ibadan, was opened in June 2021.

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is working on developing partnerships with technology companies to help build the infrastructure and attract innovation to the city. Once complete, Konza Technological City aims to be a hub for research, technology, and development, creating thousands of jobs and driving economic growth in Kenya.

From railways to ports, these infrastructure megaprojects are reshaping Africa

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Smaller footprint

Renergen's natural gas reserves are particularly unique due to the remarkably high concentration of helium. Marani reports that the average is 3%, reaching as high as 12% in certain places. In comparison, the US, the largest global helium supplier, has an average concentration of 0.35%, while Qatar, another major player, averages 0.04%, according to the US Bureau of Land Management.

According to Chris Ballentine, chair of geochemistry at Oxford University in the UK, Renergen's helium could be more environmentally friendly. Typically, helium is a byproduct of liquefied natural gas (LNG), which primarily consists of methane. Ballentine explains that it is only economically viable to extract helium on its own at a certain concentration, usually around 0.3%.

This implies that the majority of helium supply is controlled by hydrocarbon producers who extract and sell helium as a secondary activity, resulting in production being connected to a significant carbon footprint, he adds. However, a higher concentration of helium leads to a decrease in associated methane production, thus lowering its carbon footprint.

An aerial view of a well site at the Virginia Gas Project.

Courtesy Renergen

The Renergen prospects are particularly intriguing because, while there are hydrocarbons connected to their helium production, the footprint is much smaller. "They've essentially discovered a primary helium gas system," he says.

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$4.6 billion plant in South Africa will make the fuel of the future

In the end, Ballentine envisions the industry shifting away from extracting helium from LNG and instead utilizing sources like gas fields where helium is found with nitrogen, as detailed in a study he collaborated on. Additionally, the high concentration of helium results in more affordable production. Marani states, "We are a lower-cost producer of helium compared to most other competitors. We drill shallow wells of around 1,000 to 1,500 feet, which are low-cost and have a small footprint, and the gas naturally emerges."

Africas supply point

Ballentine believes that the emergence of a new player in a different geographic region is highly beneficial, especially with the frequent disruptions in the global helium supply. He emphasizes, "We are currently facing a supply crisis due to the limited supply points available...entities like Renergen will definitely help alleviate this situation."

Africa currently does not produce any helium, despite the presence of helium-rich gas fields in Tanzania. Although these fields have not yet been commercially developed, Renergens gas project in South Africa has been given special status as a "strategic integrated project" by the government to expedite regulatory approvals.

According to Mitchell, the company's "phase one project," a small pilot funded by the US government, will produce approximately 350 kilograms of helium per day, enough to meet all of South Africa's needs with some leftover. Its "phase two project," expected to be operational in 2027 with funding from the US government and South Africa's Standard Bank, aims to increase production to 4.2 tons per day. This would account for roughly 6% to 8% of the world's helium supply. Research and Markets forecasts the global helium market to reach over $6 billion in 2027, indicating potentially significant returns.

African startup Spiro is one the leading providers of electric two-wheelers on the continent, with around 10,000 vehicles currently on the road.

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A battery exchange program is bringing electric vehicles to Africa's roads.

Despite the company's ambitious goals, its stock price experienced a major decline in the fourth quarter of 2023, possibly due to social media criticism of its transparency, according to experts interviewed by CNN. However, Marani remains confident that Renergen will address investor concerns with upcoming developments that will "not only significantly reduce project risk but also result in tangible delivery."

In December, the company made an announcement that it had sold 5.5% of the equity in Tetra4, Renergens subsidiary that owns and operates the Virginia Gas Project, for 550 million rand ($29 million) to Mahlako Energy Fund and Third Way Investment, two investment management firms based in Johannesburg. The company plans to raise additional equity through an initial public offering (IPO) on the Nasdaq stock market in the US, despite already being listed in South Africa and Australia.

Eleni Giokos, Michael Cross and Tom Bouchier Hayes contributed to this report.