Grove Delays Abbadesse Development
Grove Energy says development of the Abbadesse discovery in Italy has been delayed due to apparent extension of the Abbadesse gas reservoir into the adjoining ENI operated San Potito Concession. This extension appears to have been validated by the results of the Longanesi-1 exploration well drilled in 2006, 1,100 meters to the west of Grove's Abbadesse-1 well and which also demonstrates the significance of the discovery. Pursuant to Italian law, natural resources must be exploited efficiently and the Ministry of Economic Development instructed Grove and ENI to agree to a common development plan for the gas reservoir.
As a result, Grove and ENI have agreed in principle to unify the new gas field under a common production concession. This will involve the parties agreeing to carve out from their respective concessions the area of the Longanesi/Abbadesse reservoir and to prepare an application for a new concession to be held by each of the parties according to their proportional entitlement. Grove and ENI are preparing documentation to reflect this and a progress announcement is expected in the near future.
While the delay in development has been disappointing, it is noted that on average it takes about three years to bring onto production a gas discovery in many parts of the world outside North America; however, in the meantime European gas prices have increased substantially and ENI have drilled the Longanesi-1 exploration well that, like Abbadesse-1, was completed as a producing well.
Based on the forgoing, production is predicted to occur in 2008. The first milestone for the development will be the submission of a Joint Development Plan to the Italian Authorities. This is expected in first quarter 2007. Authorization will follow some 4-9 months after, at which time construction and development work will commence.
On the basis that the Abbadesse discovery would be carved out from the San Marco Permit, Grove has embarked on an aggressive 2D seismic acquisition, reprocessing and interpretation program. The data has been acquired from ENI's seismic data base and to date Grove owns over 400 kms at a cost of approximately C$2.5 million. As part of the processing and interpretation underway at Veritas in London, Grove will also utilize Amplitude Versus Offset processing (AVO) to identify and delineate prospects. AVO was successfully used to identify the Abbadesse discovery on seismic. Results are expected during 1st quarter 2007 and will better define previously identified leads and prospects. The objective of acquiring and interpreting this seismic data is to complete a block wide prospect inventory which will allow Grove to undertake a multi-well exploration program.
Grove intends to seek farm in partners for this acreage.
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