The junior has been flaring gas at Selemo for a year, but the use of gas to generate power is a tangible sign of what the 3.2 trillion cubic feet (3C) contingent gas resource can ultimately achieve.

 

It will also allow the company to reduce its spending on diesel to run the pilot wells and reduce emissions, as the gas is no longer being flared but is being redirected towards generators. 

 

Tlou founder and managing director Tony Gilby told Energy News the junior was the only company with certified reserves and environmental approvals in energy-hungry Botswana, which put it at least 2-3 years ahead of other players such as fellow Aussie Strata-X Energy and local firm Kalahari Energy.

 

"We are now the first people to produce electricity from CSG gas in the country, even it is just in a small way," he said.

 

"It is still technically the first gas monetisation in that we are able to reduce out significant diesel costs, and that will lead to a scalable project."

 

Gilby said it was also a benefit that when the government next visited the site it will see a tangible proof of concept for electricity being produced from gas for the first time.

 

Tlou is now focused on finalising its submission to the government into a plan to develop 100 megawatts of power generation.

 

"That's an official process the government is running. The next step is to put in a submission for 100MW, and we'll do that in a scalable sense," he said. 

 

"We won't jump strait to 100MW because it is too expensive, for a new industry for a small company.

 

"Each step in this derisked the process. We have now produced electricity from gas, and the next stage will be to physically deliver gas from electricity into the grid, and then expand towards any part of that target the government awards to us."

 

While the small project will have surplus power following the conversion process, the Selemo pilot is about 100km from the nearest powerline, and full development will require a separate process to support the case for a transmission line, but if approved it would require additional wells. 

 

"That again needs to be part of a robust proposal to the government, and it needs to be of a size that will support that, which is much more than what we are producing for our own needs," he said.

 

Gilby, who founded Sunshine Gas and was an early player in the Queensland CSG sector, said Botswana was now about where the Sunshine State was in 2000.

 

"The industry in Queensland really only took off in 2005. Before that it was very embryonic, and we are probably about half way through that phase now," he said. 

 

"There are still lots of questions about how this industry will work, and whether there is more gas, so we are at the start of the derisking stage that Queensland went through.

 

"Of course, in Botswana it could happen faster and earlier."

 

The company wants to increase reserves and finalise its proposal for the 100MW project, and it is advanced in both of those steps, which could be transformational for both the company and the nation.

 

Unlike Queensland, where the industry often has to compete with multiple landholders across rich agricultural lands, Tlou is operating "effectively in the middle of nowhere" on government-controlled leasehold land there are few neighbours to deal with beyond a handful of cattle farmers.

 

"They need water, and we can provide them that. Reverse osmosis plants have come a long way, and there is only a little bit of salt with the water, so we can clean that up and provide it to landholders," he said.

 

Gilby said the company was still working on its multiple funding options in anticipation of a development, although the money needed is not significant.

 

He said Tlou would prioritise local Botswana financing, although it is keeping its options open.

 

Tlou plans to replace another diesel generator in the near term which would provide further savings on diesel costs. 

 

The new Cummins G8.3 generator can supply up to 60 kVA of power and has been customised to run on a small portion of the gas being produced at the Selemo pilot that would otherwise be flared. 

 

It is expected that the conversion of generation from diesel to gas will initially reduce the diesel requirement by 50,000 litres per year, and the savings should grow with time given that a second gas to power generation unit is planned to be installed.

 

Tlou shares last traded at 12c.