Prospex Energy (PXEN) said it has been reassured by the operator of the El Romeral power project that continuous operations at the Spanish-based power plant are “feasible and safe.”
The Company, which is focused on investing in European energy projects, holds a 49.9% working interest in the project near Carmona in Southern Spain through Tarba Energía S.L.
Recently, the owners of Tarba (Prospex and Warrego Energy Limited) had agreed to operate the El Romeral power plant for 24 hours per day for six days per week “until further notice.”
Since revenues generated by the plant had been at an all-time high as a result of the current electricity prices, the switch to almost continuous operations is expected to boost revenue.
Earlier this month, the price of electricity in Spain was recorded at unprecedented levels at more than six-times what it was in March 2021 when the El Romeral project was acquired.
After monitoring the reservoir performance and the operating regime at El Romeral closely, Tarba said it is confident that “the right balance is being achieved between ultimate recovery of remaining reserves and maximising electricity output and therefore income at this time.”
Over the last two weeks the plant has been successfully operating 24 hours a day, six days a week securing the recent high electricity prices. The power-plant automation and operational procedures have now been fully tested to enable continuous operation whenever required.
Currently, Tarba has cash in hand of more than €400,000 and the forecast revenue for March 2022 is likely to exceed €500,000 at current forward curve electricity prices, it told investors.
Prospex said the reservoir modelling work by Tarba will continue to forecast gas production profiles from the El Romeral concession using a suite of production strategies including further sensitivities on rates, pressures and ultimate recoveries. In addition, the production strategy will be regularly reviewed and optimised based on sound reservoir management.
Further production capacity exists if new wells can be drilled on the concessions to increase gas production. Tarba applied for permits to drill several infill wells in September 2021 and continues to pursue the consent of the regulatory authorities which is expected later this year.
Commenting, Mark Routh, Prospex's CEO, told investors: "The El Romeral concession has been producing gas for the power plant for twenty years and it was essential that the rate of production decline was thoroughly understood before instigating continuous plant operations. We now know that continuous operations are feasible and safe. I am very proud of our management and operating team at the plant who have embraced this new operating regime which was made possible by the success of the plant upgrades installed last December."
He added: "We have selected the optimum production strategy based on the latest reservoir modelling which strikes the right balance between maximising recovery and optimising electricity production at this crucial time for the supply of energy in Europe. Reservoir modelling will continue and our production strategy will be optimised to match the availability of new gas production from our planned infill wells in the El Romeral concession."
The El Romeral gas and power project in Spain, with gas production wells supplying gas to an 8.1MW power plant near Carmona in Southern Spain is owned and operated by Tarba.
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