London-listed Tlou Energy has set out plans to trim its running costs, in response to problems in the world’s financial markets, while competitor Kalahari Energy has received support from the US Trade and Development Agency (USTDA) for its power plans.
The two companies are pursuing coal-bed methane (CBM) opportunities in Botswana.
Tlou said senior management were cutting pay by around 50%, with the potential for more reductions in future.
Furthermore, one or both of the Lesedi 3 and 4 production pods will be shut in, saving both gas and cash. Halting flaring would save gas that can be used in future to generate electricity, once the company has a power purchase agreement (PPA) in place.
The drilling of more wells is being considered, Tlou said, but no decision has been taken.
Work on Lesedi 4 may continue with the gas being used to drive the company’s existing generators. Whether this can be accomplished does rely on the ability of employees to visit field operations at a point when travel restrictions have been imposed, in response to the coronavirus.
Tlou began producing gas in 2014 and is working on a power project in order to meet local demand. Progress has been slower than expected, but in February the company said it had received approval from the Botswana government for a temporary PPA, while talks on a full PPA continue.
The company has also raised the possibility of a solar project at its Lesedi site. It has approvals for 20 MW of gas-fired power generation and 20 MW of solar generation. Tlou has talked of the possibility of a “low carbon power bond”.
Meanwhile, the USTDA announced last week that it would support Kalahari’s plans for a 110 MW nameplate CBM-fired power plant, with a transmission line to the Serule substation.
Kalahari has appointed Prana Energy to act as project developer, which has brought together a team including Owners Team Consultation and the US’ Advanced Resources International.
“USTDA is helping enhance Botswana’s energy security and economic growth” said Thomas R. Hardy, USTDA’s Acting Director. “This project will build upon USTDA’s commitment to working with our partners in Botswana to develop and expand the country’s natural gas options.”