Tlou Energy Limited, the AIM and ASX listed unconventional gas explorer said the firm announcement by Botswana government to incorporate 100MW of coal bed methane (CBM) power into its future generation supply plans could be transformational to the company and shareholders.
Tlou Acting Managing Director, Gabaake Gabaake stated that as the most advanced CBM project in the country they are well placed to become a major supplier of this power.
He said given the latest news, their plan to initially develop a 10MW project is now even more tangible and the potential for being granted not only an offtake for ‘our gas but to generate revenues by supplying much needed power to the national grid provides even more encouragement that our project will be a success.’
Gabaake was bullish that there is also a possibility that Tlou will be granted approval for a project larger than 10MW.
“Should our application be successful, it will allow the company to fast-track the development of the Lesedi and Mamba project areas knowing we have a long term committed government backing our project,” he said.
“A larger project also gives Tlou more options and the ability to capitalise on economies of scale to potentially optimise development costs.”
“The Government of Botswana has always been extremely helpful and supportive of our project and this news continues to show their support for CBM in Botswana. We look forward to developing the project to the benefit of Tlou’s Shareholders and the people of Botswana.”
100 MW CBM Power Supply
In his address at the recent Botswana Resource Sector Conference in Gaborone, the Minister of Minerals, Energy and Water Resources detailed a plan to address the power deficiency in the country. For the first time, CBM has been included as part of the plan, with the government committing to an initial 100MW of generation to be brought into the market via CBM.
With independently certified contingent gas resources of ~3.3 trillion cubic feet (TCF) (3C High Estimate) already in place, Tlou has a vital role to play in the Botswana CBM Industry. The company pledged that it will work closely with the government to ensure that it plays a major part in bringing this power into the market as it ties in well with Tlou’s scalable gas -to-power project and strategy to position the company as a significant vertically integrated energy provider in Southern Africa.
“Should Tlou’s application be successful then various elements of the project, including timing, pricing mechanism, mid-stream and upstream options, will be negotiated with the Ministry of Minerals, Energy and Water Resources,” Gabaake said.
“The company will also continue to discuss project level financing options with a number of potential strategic partners and power construction firms who are keen to expand into the Southern African gas- to-power market”.
Tlou also revealed that arrangements are underway to use gas for the 2 X 45MW (90 MW total) Open Cycle Gas Turbine Power Plant (owned by Botswana Power Corporation) at the Orapa diamond mine, the largest diamond mine in the world and a major consumer of power produced from imported diesel –a power option which is significantly more expensive and environmentally unattractive when compared with Tlou’s proposed gas-to-power offering. Tlou submitted its expression of interest for the supply of gas to Orapa in 2015 and also hopes to be in a position to update upon this in due course.