Kinetiko Energy Ltd (ASX:KKO, OTC:KKOEF) continues to draw plenty of attention in energy-hungry South Africa as it makes strong progress with its energy transition solution focused on commercialising advanced shallow conventional gas projects.
On completing initial exploratory work in its most northerly tenement in Mpumalanga Province, Exploration Block ER272, the company is highly encouraged by the results which have the potential to deliver commercial advantages, including offtake opportunities.
Being in the immediate vicinity of the Lily-1 Pipeline along with Sasol’s Secunda Synfuels plant considerably enhances the commercialisation potential.
“Excellent” results
The initial exploration campaign of six core holes has delivered results described by Kinetiko as “excellent”, showing easily correlating geology pointing to huge gas pay across ER272.
Geophysical logging has resulted in net gas cuts ranging from 101 to 166 metres with an average of 128 metres across the core holes.
Core hole 292-06C topped out at 166 metres out of 178 metres of sub-igneous stratigraphy, or 93% of the bore length being gas-laden.
Geophysical logging has resulted in an average gas-cut of 128 metres being measured while the work also indicates superior reservoir properties in the block.
The reservoirs display the most superior porosities and permeabilities across Kinetiko’s rights areas, thereby holding the potential for commercial flow rates.
Map of Block ER272 showing cross-section for log correlation across all six boreholes.
“Laden with gas”
Kinetiko CEO Nick de Blocq said: “The results of our initial exploratory work in Exploration Block ER272, the most northerly tenement, have now been completed and we have analysed the results of six core holes in this area.
"Due to the dip of the Karoo Basin structures, we find the depths of our boreholes in ER272 to be the shallowest in our rights portfolio at around 290 metres average terminal depth.
"It is therefore especially pleasing to share these results that show sandstone-driven, net gas cuts that sometimes exceed 90% of the sub-igneous stratigraphy.”
The reservoirs display the most superior porosities and permeabilities across Kinetiko’s rights areas, thereby holding the potential for commercial flow rates.
"The sediments are literally laden with gas in reservoir formations displaying superior porosity and permeability,” de Blocq said.
Geographical advantages
The geographical position of such a high-potential exploration success being in the vicinity of both the Sasol Synfuels plant at Secunda and the Lily-1 pipeline has obvious commercial advantages.
Sasol intends to utilise an increasing amount of its own gas from their historical source in Mozambique, a lot of which is currently in national reticulation. That source is expected to deplete substantially post-2026.
In an obvious solution to mitigate the pollutive effects of coal, Sasol also plans to replace a significant amount of coal in their Coal-to-Liquids Synfuel plant with cleaner gas, leaving less process gas output for the 'Lily Line' customers who are facing a real issue with a gas cliff looming.
Kinetiko said that this, therefore, represented multiple large offtake opportunities for its gas in the region and was one of the major drivers for the huge national coverage this exploration outcome has generated.
"Given the proximity of these discoveries to the Lily-1 Pipeline and Sasol’s Secunda Synfuels plant, the commerciality potential is significant," the CEO added.