Po Valley Energy (ASX: PVE) is progressing development of its Bezzecca gas field in Italy with the bid process for the Engineering, Procurement, Installation and Construction contract for the pipeline and related surface facilities now underway.
This follows completion of the Environmental Impact Assessment and issue of the related Decree by the Lombardy Region and bidders have until the end of May to submit their proposals.
The company has also purchased 10 kilometres of 2D seismic from Italian major Eni that will be reprocessed shortly to define the bottom hole location for the Bezzecca-2 well.
Bezzecca was discovered in 2009 with the Bezzecca-1 well flowing gas at a combined rate of 3.9 million cubic feet per day during testing.
It will be brought into production through the construction of a 7 kilometre pipeline to connect the field with the company’s existing Castello surface gas plant.
Production will be sourced from the Pliocene and Miocene formations which are located at a depth of 2,000 metres.
The field has Proved and Probable Reserves of 4.2 billion cubic feet of gas.
Po Valley has also made progress on the Selva, Teodorico and Gradizza.
Cash at bank at 31 March 2014 was €1.02 million (A$1.5 million).
Approximately 55 kilometres of 2D seismic related to the Selva Stratigraphic prospect within the Podere Gallina license was purchased from Eni and will be reprocessed as soon as possible.
This prospect previously formed part of the Eni – operated Selva field that produced 85 billion cubic feet of gas from 15 wells over a 35 year period.
The company filed a drilling application including an Environmental Impact Study for the Podere Maiar-1 exploration well in the second quarter of 2013.
Following minor variation requests by the Emilia Romagna Region, a revised EIS was filed in April 2014.
Po Valley has also held further meetings with Eni to discuss and fine tune the tie-in logistics for the offshore Teodorico gas discovery in the AR94PY area to the Naomi Pandora facilities located 12 kilometres to the southeast.
The reprocessing of the 3D seismic acquired in 2013 continues and is near completion. Further 3D seismic will be purchased in due course to start the evaluation of promising exploration targets within the same AR94PY license.
It also filed the production concession application for the Gradizza gas field with the Ministry of Economic Development in February.
The company had confirmed the commercial viability of the field in January and estimated it to host best estimate Contingent Resources of about 2.7 billion cubic feet of gas.
Technical work continued on the two oil prospects Bagnolo in Piano and Ravizza (located in the Cadelbosco di Sopra and Grattasasso license respectively).
Well data purchased from Eni was received and a preliminary development study was completed. The results confirm the technical viability and commercial attractiveness of the projects.
Po Valley produced about 5.66 million standard cubic metres in the first quarter of 2014, generating about €1.55 million (A$2.3 million) in revenue.
Flow rates at the Sillaro gas field was a stable 60,000scm per day though this was down 18% from the rate achieved in the second half of 2013. Current production rate is 57,000scm/d.
The field is currently at 40% depletion level with increasing water cuts in some reservoirs.
PO Valley noted that with careful production management it is anticipated that the field will continue to produce steadily in forthcoming years though it will be subject to natural decline.
The Vitalba field continues to produce at limited rates due to the increase in water production.
Although water production has stabilised over the past few months, the production rate is not expected to improve.
However, the Castello plant will be used to treat gas fed from the Bezzecca field.
With the bid process for the Engineering, Procurement, Installation and Construction contract for the pipeline and related surface facilities for the Bezzecca field now underway, Po Valley Energy is close to bringing its third gas field into production.
This is expected to provide a substantial boost to production given that Bezzecca-1 had produced 3.9 million standard cubic feet of gas per day during testing compared with production of about 2.2MMscfd in the first quarter of this year.
Progress has also been made towards bringing the Gradizza-1 gas discovery into production along with the offshore Selva Stratigraphic prospect.
Bringing Bezzecca and other fields into production should provide upside to the current valuation of circa $13.5 million.
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