News & ASX Releases

Pipeline Connection For Po Valley's First Gas Production Well

November 14, 2006

ASX-listed Po Valley Energy Limited has secured agreement on its maiden pipeline connection with the national Italian gas pipeline operator. Italian national pipeline contractor, SNAM Rete Gas, will allow Po Valley to connect its Sillaro gas field east of Bologna into the national Italian gas grid over a short 300 metre connection, ahead of planned initial supply deliveries next year.

The grid distance is much closer than anticipated by Po Valley, reducing construction times and capital costs for commercialising Sillaro’s first outputs. “Sillaro will connect into the two existing medium pressure gas lines 300 metres from the wellhead,” Po Valley’s Chief Executive Officer, Mr Michael Masterman, said today.

“As SNAM plans to upgrade one of these lines from medium pressure to high pressure within two years, that will provide Po Valley with further injection and production options for Sillaro and other nearby projects,” Mr Masterman said.

The estimated cost of the Sillaro connection line is A$230,000. Following construction, Po Valley intends entering into a transportation contract with SNAM similar to that provided for under SNAMs regulatory framework.

“Agreement on pipeline connection points is an important step forward for Po Valley,” Mr Masterman said.

“As well as cost and time advantages, the closer connection distance also ensures simpler regulatory approvals as a smaller number of landowners are involved,” he said.

“Being able to connect to a national pipeline grid less than 500 metres away is a major competitive advantage of holding natural gas fields in northern Italy, giving entry to one of the most lucrative gas markets in the world”.

“For most gas producers, transportation and high capital costs become major issues after a discovery. In our case, the pipeline grid is literally at our farm gate.” Po Valley also announced today it had signed an Engineering, Procurement, Construction and Installation contract (“EPCI contract”) for Sillaro and Castello (aka Vitalba) gasfields with Orion Energy International (“Orion”).

Under the contract, Orion will manage procurement and installation of surface plant equipment and pipeline connections for the Sillaro and Castello surface plant.

“Orion has a specialist team of Italian oil and gas engineers which will drive forward the surface plant equipment procurement and construction for our new gasfields. Commencing this work now ensures Po Valley can move quickly forward with development once regulatory approvals are in place.”

The Australian gas explorer recently announced a A$5.85 million placement with US investor, Harbinger Management Corporation and Australian investor, Hunter Hall Investment Management, to progress the current production schedule and evaluate five new Italian gas licences awarded to Po Valley exclusively.

Michael Masterman Po Valley Energy 0417 851 303
Kevin Skinner Field Public Relations (08) 8234 9555 / 0414 822 631

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