Independent Resources Advances Italy’s First CBM Project
oilbarrel.com
Unlike North America and Australia, where coal bed methane resources are making significant contributions to energy supplies, operators in Western Europe have been slow to grasp the resource opportunities presented by the gas trapped in coal seams. In the UK, AIM-quoted IGas Energy sells gas to the grid from its on-site generation facility at Doe Green in Cheshire while in France, ASX minnow European Gas Limited is inching its huge Lorraine CBM project towards first gas. Another AIM company, Independent Resources, is working on Italy’s first CBM project, Fiume Bruna, near Grosseto in Tuscany.
The Fiume Bruna permit covers 247 sq km in an area that was host to an active coal industry until the late 1950s, when the mines were abandoned in the wake of a major explosion. The permit carries an in-place reserves estimate of 167 billion cubic feet, of which some 91.4 bcf is thought to be recoverable. Independent Resources holds 100 per cent of what could prove to be a material resource: after all, this is onshore, shallow drilling in a major EU economy where a growing deficit of gas ensures strong pricing.
Independent Resources has been working on the project since 2005and is now in the appraisal stage, with the company last month starting civil works for the Fiume Bruna-2 well site. This well will re-enter and test a 344 metre deep borehole previously known as Pietra-1, which found a single seam of coal and shale some seven metres thick.
The discovery of a gas-bearing carbonaceous shale sequence that lies above and below the coal seam is of particular interest. Shale formations have been creating something of a buzz in the oil and gas industry, particularly in North America where operators have been able to apply the right combination of geological and engineering knowhow to crack these complex rock sequences and unlock the often huge hydrocarbon resources held inside. It doesn’t come quickly or cheaply, however: the fastest way to cash-in on a gas shale play is to prove up the productive potential and sell up to a reserves-hungry company with money to spend.
It is still early days for Independent Resources. “Our discovery of gas shale in this basin, whose extent we hope to confirm soon, is something we look forward to testing over the next few months," said executive chairman Grayson Nash.
Investors will hope this well proves more successful than the first well, Fiume Bruna-1, which last August disappointed when it hit a thick evaporitic sequence in the deeper part of the basin, which made seismic imaging difficult. This 200 metre thick sequence above the target coal zone masked the details of tectonic faulting so the well missed its target: the well will need to be deviated to reach the coal. The company has since recalibrated its seismic and borehole data to take into account the evaporitic sediments and get a better handle on the subsurface, which should help with the positioning of future wells.
The company is also busy in Italy’s Po Valley, where it is planning an underground natural gas storage facility at Rivara. This could be one of the largest gas storage projects in Europe, with a working capacity of 3.2 billion cubic metres. Independent Resources had been planning a phased development, with the first stage coming onstream in 2014. However, although deemed important to Italy’s future gas planning, the project has been stymied by the country’s labyrinthine environmental permitting process. This frustration is shared by many companies that operate in Italy, where patience is not so much a virtue as a necessity.
The Italian projects show the ambition of Independent Resources. It intends to play a strategic role in the Italian energy industry, leveraging its upstream and mid-stream assets to build a profitable and sustainable business. The Rivara UGS facility, for example, will enable the company to secure higher prices for its Fiume Bruna gas, by storing the gas until winter when prices are typically higher.
Outside Italy, the company holds an 18.97 per cent interest in the Ksar Hadada permit in Tunisia. This block will be known to followers of AIM-listed Petroceltic International, which operates the block and drilled an inconclusive well on the Sidi Toui structure in 2004 to widespread disappointment. There is plenty of potential here, with Sidi Toui’s potential still to be tested and a number of other oil and gas prospects awaiting the drillbit.
What’s more, this is a project with real traction. A recent farm-in partner, PetroAsian Energy, has agreed to pay up to US$14.5 million for two new wells and a 100 km 2D seismic shoot on the onshore block. The partners plan to drill the wells by mid-year, providing some near-term newsflow for investors. It’s a nice conventional upstream story to complement the CBM and storage possibilities in Italy – and following the PetroAsian farm-in, Ksar Hadada also has the momentum to deliver newsflow and possibly production within a relatively short timeframe compared to the longer-term possibilities of Italy. |
