Prospex Energy (PXEN ) announced that its joint venture company Tarba Energía S.L. (“Tarba”) has contracted well intervention work as well as a programme for system optimisation and automation at its gas to power project at El Romeral in Southern Spain.
If successful, the well workover has the potential to increase gas production by up to 15,000 cubic metres per day to 27,000 cubic metres per day and would allow the subsequent start-up of a second generator to double electrical output, the investment firm told its shareholders.
The well workover budget, which has been fully approved by Tarba, the plant’s operator, has been increased to €0.103m to cover the costs of extra equipment to meet HSE commitments.
Tarba has committed to increase the gross budget for the intervention work by €14,000 from €65,000 to €79,000 to cover the cost of mobilising extra equipment including a larger flare stack to the well sites in anticipation of higher flow rates from the well interventions.
The Group said contracts had been committed on Thursday with Dajan Well Services S.r.l. for the well workover project which now remains on schedule for the week starting 18 October.
The workover project will involve the injection of foaming surfactants via the production tubing to create a low-density foam from the gas and water in the well. This will reduce the water that has built up in the tubing and allow the gas to flow to the surface, the Group told investors.
Meanwhile, contract work has also been committed alongside Power Solution Iberia S.A. (“PSI”) to automate plant operations to allow continuous operation of the generators.
The Company explained that the work will be executed during the planned plant shutdown this month while the approved budget for the work being carried out by PSI is €71,000.
A contract has also been committed with Reda Oilfield UK Ltd. for the foaming surfactant chemicals which are necessary to allow removal of produced formation water from the tubing.
CEO, Mark Routh, said: “We have supported Tarba in agreeing to the extra costs of this well workover plan in order to protect the environment and to ensure that suitable equipment is readily available on site to ensure the safe and optimum outcome of the well intervention.”
Routh said modelled flow rates from the workover gives the plan the “maximum chance of success, so that it has the potential to make a significant impact on Tarba’s net income.”
He commented, “The agreed system upgrade with PSI to automate the plant for continuous operation has been scheduled during the planned October plant shut down.
He outlined that this factor alone could allow an increase of income from electricity generation by up to 65%, since the generators are currently shut down overnight and on Sundays.
Meanwhile, Routh acknowledged that wholesale electricity prices in Spain continue to rise. He noted that the plant sold electricity this month at prices exceeding €200/MWh, reflecting a four-fold multiple of the average wholesale electricity price for the 12 months to May 2021.
He added, “Gross income for Tarba at El Romeral has already exceeded €194,000 in September and this figure could double in the coming months after the shutdown following the planned plant optimisation programme and with a successful outcome of the well workover.”
In its half-year report on Monday, the Group said it had made “significant strides” to establish itself as a European-focused energy production and electricity generation company in 1H21.
Since the investment firm’s acquisition of the El Romeral project back in March 2021, the Company has earnt an increasing income throughout the year from electricity generation. This has resulted in the Company reporting a net profit after taxation of £0.129m during 1H21 from continuing operations, up from a loss of £1.02m in 1H20, and a 13.48% increase in the net book value of investments to £4.1m compared to £3.8m in the prior 2020 period.
Prospex said its outlook going forward was ‘one of consolidation and growth’ and that with a shortage of gas across Europe, markets are experiencing record high gas and electricity prices. As a result, it stated that these prices are unlikely to be sustainable longer term.
The Group outlined: ‘The drive to convert energy supply towards renewable energy sources must continue but cannot be achieved quickly. Local indigenous onshore gas is the optimum energy source to fulfil the energy gap whilst the transition to renewables gains pace. Prospex is well positioned to grow its business into this undeniable market opportunity, while using the strength of our team and our assets to invest in appropriate alternative energy sources.’
Follow News & Updates from Prospex Energy here: