Po Valley Energy Ltd.Po Valley Energy Ltd.
Castello

Castello, east of Milan, is the first Company's gas field entered into commercial production. The field was drilled in 2005 at a location updip from the former ENI Agnadello well, which produced 13 billion cubic feet of gas over a period of five years in the 1980s.

During 2009 the Company achieved the production concession, built the gas plant and, in December 2010, convened gas production. In April 2010 the field experienced a faster decline in wellhead pressure. Downhole tests found water incursion in the deepest gas bearing level and, consequently, the level was shut-off, with low permeability of the shallow gas bearing level strongly affecting the gas flow-rate.

The Company's plan was to sidetrack the existing well with the aim to recover the remaining attic gas, estimated to be 100 million cubic metres (3.5 bcf), in the meantime the well continued to produce at around 3,500 cubic metres per day (0.12 mmcf/day).

Starting from the current Vitalba-1dir location, the bottom hole of the new side-track was identified using the recent geological, geophysical and engineering studies. Authorisation to drill was granted in March 2011 with drilling started in November. In early December 2011 the Company advised the market that production capacity has been confirmed during clean-up and testing of the Pliocene SAN A2 sand level in Vitalba1dirA well.

During clean-up of the well, the flow-rate reached 2.6 million cubic feet/day with a 1/4" choke, stabilising at 1.4 million cubic feet/day with a 3/16" choke and 0.6 million cubic feet/day with a 1/8" choke. Initial pressure fully recovered in all cases. There was no water associated with the gas production.

Following full evaluation of the test results, production rates will be finalised. At this stage the Company estimates a daily production rate in the order of 0.7 million cubic feet/day. Revised reserves will be determined after initial well production data is incorporated in the static and dynamic model of the field.

Production from Vitalba1dirA is planned within January 2012.  



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