The share price of Renergen, which has begun extracting the first onshore gas from its Virginia facility, slid a further 3.3% to R26.11 yesterday morning despite a favourable update about its plant commissioning.
The drop in share price continues a steady and sharp slide since June 10 when the price traded at R41.12.
SmallTalkDaily Research analyst Anthony Clark said the price had been affected by some retail investors, particularly from Australia, who had berated Renergen unnecessarily on social media because of delays in commissioning the helium and liquid natural gas plant in Virginia.
He said there appeared to be a lack of understanding among these investors that energy facilities were long-term projects, and delays in commissioning due to Covid and supply chain issues, particularly from China, were not unexpected and did not mean the project would not succeed.
Renergen CEO Stefano Marani said yesterday: “We are fully cognisant of the plant being delayed, but we have been working around the clock to ensure its safe turn-on without damaging this critical investment, which will operate for the next 20 years at least.”
He said the helium train was turned off recently for a period, but the equipment was now operating according to specification.
“While stopping the plant within hours of producing liquid helium was less than ideal and extremely frustrating to the whole team, and no doubt shareholders too, the decision was the correct one as the risk was too high. This commissioning has always been about ensuring minimal risk to turn on, not speed,” he said.
Initially, when the helium train was tested, all components were working as designed, with the microturbines creating the cooling effect as required.
During the test, the helium train was super cooled to within near helium liquefaction temperatures before the test had to be paused due to a utility proving to be unreliable.
“The utility is the conduction oil system providing lubrication and heating to the plant. The utility was incorrectly installed and was providing inconsistent heating to the conduction oil, and in order to ensure no damage would be done, management decided to turn the plant off to repair the utility,” he said.
With the plant turned off for the repair, the opportunity was taken to connect additional wells drilled recently, which would increase plant output, and bring the plant closer to within full design specification.
Meanwhile, he said the LNG system was complete and initial data showed the LNG exceeded design specifications.
“The on-site storage tanks and virtual pipeline tankers are full. Ceramic Industries on-site installation is complete and fully commissioned, while Consol’s site is now cooled down with nitrogen waiting for final commissioning and handover to take place,” Marani said.
The next process would be to pressurise the pipeline, prime the utilities and turn on the plant for steady state production, with LNG commencing first, and liquid helium turning on thereafter.
BUSINESS REPORT