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Wednesday, April 22, 2020
Tlou Energy and the Botswana Power Corporation (BPC) entered into a Power Purchase Agreement (PPA) for a 2-MW pilot coal bed methane (CBM) project in the country. The interim PPA is now undergoing final regulatory formalities.
According to Tlou in its Q1 operational report, the company remains in discussions with potential project finance partners who have been waiting to see the interim PPA in place, which facilitates connection to the power grid and first revenue for the Company. A pathway to revenue generation is key for financiers and once connected to the grid, expansion of the project (and thereby increasing revenue) is seen as a relatively straightforward and largely de-risked process.
Tlou submitted a proposal to Botswana’s Ministry of Mineral Resources Green Technology and Energy Security (MMGE) in 2018 for the development of a 10MW CBM Gas-to-Power plant. The 10 MW proposal is separate to the 2 MW interim PPA. BPC and MMGE continue to assess the 10-MW proposal and will advise the company in due course.
The company also reported on its Lesedi project. The Lesedi 3 and 4 production pods have been flowing gas for many months with sustained gas flow rates having been achieved from both pods.
Increased sustained gas flow rates are anticipated to take some considerable time, based on the currently available data, unless additional wells are drilled to facilitate the dewatering process. A decision to drill additional wells is being considered but no decision has yet been made.
During the quarter, the company proposed to shut-in one or possibly both of the production pods as sufficient data has now been gathered indicating the presence of potentially commercial gas in the coal seams. Shutting-in the wells reduces unnecessary expenditure and stops flaring of gas that could otherwise be converted to electricity and sold once the project is connected to the grid. Bringing the pods back on-line should not take too long given the current understanding of the production process gleaned from the comprehensive data base acquired.
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