Australia’s Po Valley Energy Limited has announced maiden gas reserves for its majority-owned onshore Selva Malvezzi field, northeast of Bologna in northern Italy.
The maiden gross 2P reserves for Selva of 13.3 were prepared by CGG, from previously reported gross contingent resources (“2C”) but also includes results from new drilling on the field early last year (Podere Maiar 1 well).
The milestone estimate announced delivers 8.38 bcf of net 2P reserves attributable to Po Valley and represents the company’s first reserves for this gas field. In addition to the Selva reserves, the Production Concession area contains on a best estimate basis, 34.8 bcf (100%; CoS 30%) of Prospective Resources in East Selva which will be a priority for drilling following the final grant of the Production Concession, and the Fondo Perino prospect (prospective resources 100% best estimate, 14.6 bcf, CoS 34%).
The prospects for success of East Selva were significantly upgraded to 30% following the successful Podere Maiar 1dir well. Additional resources in Selva South Flank and Riccardina which are also within the Production Concession licence application area, will be estimated during the June Quarter. In addition, the Podere Gallina Exploration Licence contains the Cembalina prospect (prospective resources 100% best estimate 3.3 bcf, CoS 51%).
Last month, the Italian Government granted the Selva field a preliminary award for the Production Concession and Selva remains on course to commence first production in 2020.
Selva is 63%-owned by Po Valley. The remainder is owned 20% by United Oil & Gas Plc and 17% by Prospex Oil & Gas.
The Selva gas field sits within the Podere Gallina Exploration Permit and was a significant historic producer for Eni S.p.A, producing 2,380 MMscm (84 bcf) from 24 wells between 1956 and 1984.
Po Valley CEO, Mr Michael Masterman, said: “Selva is less than one kilometre from the country’s national gas grid, and offers a low start-up capex (€3m gross) and a high IRR (+120%).
“Release of its reserve estimate is a welcome step forward after positive flow testing of the Podere Maiar-1 well (“PM-1”) from two targeted reservoirs was achieved in January last year.
”As well as Selva, there is additional prospectivity within both the Selva Malvezzi Production Concession including the East Selva, Fondo Perino, Selva South Flank and Riccardina structures and in the Podere Gallina Exploration licence with the Cembalina prospect. The field partners plan to later this year acquire 3D seismic data over these additional structures, the results of which will inform further development drilling activity in the Production Concession.
“We are totally focused on progressing Selva toward first gas in CY20 at a gross rate of up to 150,000 cubic metres per day,” Mr Masterman added, “and then building from there. At this rate, Selva will be generating significant cash flows for Po Valley with longer term upside from the licence’s additional prospectivity.”
Mr Masterman said the robust reserve estimate reinforced Po Valley’s strategy of securing exposure to the surging Italian domestic gas market where prices over CY18 rose more than 50% to ~€0.30/cm (US$9.60/mcf).
“Italy continues to have to import more than 90% of its gas consumption so new domestic contributors such as Selva build shareholder value and help deliver Italy’s push to use natural gas as a critical transition fuel towards a low carbon economy and with negligible environmental impacts.”