Po Valley receives nod for Italian plant

Perth-based Po Valley Energy has taken a step towards maiden gas production at its Italian project after receiving formal government approval for the installation of a commercial plant.

The final regulatory approval paves the way for Po Valley to start civil works and surface plant installation, expected to start at the end of the month, at its Castello project, which also includes the Sillaro gas field.

"Castello civil works and plant installation are due to commence on Monday next week, with a target four-month schedule for completion in October 2009," chief executive Michael Masterman said.

"The equipment is built, tested and in storage awaiting installation.

"The rig to drill Sillaro 2 is scheduled to move to the well site this week and the well is expected to spud in the first week of July.

"Drilling and well completion is estimated to take about two months at which time we can then begin to also install the production plant at Sillaro."

He added the approval also allows the company to access its facility with the Bank of Scotland.

Po Valley has already secured sales contracts with two Italian gas distributors, Elettrogas and Italtrading SpA, for all of the first three years of gas produced at Castello and Sillaro fields.

The contracts are expected to generate up to $150 million in sales revenue through to September 2012.

Castello has an estimated reserve life of around 10 to 12 years while Sillaro has a life of between 15 to 20 years.