“The regulatory approval process to convert the exploration licence to a production concession is now formally underway and we are confident of a positive outcome,” Po Valley’s CEO Michel Masterman said.

“When approved, the company will be able to quickly install this surface infrastructure and bring this highly economic gas field into production.”

Po Valley drilled and successfully tested the Sillaro field in December and January, with the discovery of two additional gas bearing levels and flow rates on test 10 times higher expected levels.

The company said the application follows intensive reservoir studies and surface plant engineering conducted over the past three months.

Development of the Sillaro Pliocene level is planned on the basis of two production wells – the current in place Sillaro-1dir and a second Sillaro-2 to the west of the exploration well, to be drilled this year or early next.

The province’s medium pressure pipeline grid is just 50 metres from the Sillaro well site. However, due to the unexpectedly high flow rates encountered, a short four kilometre spur line along the existing medium pressure pipeline corridor is planned to connect Sillaro directly to the high pressure Italian National.

“This will allow Po Valley to achieve higher daily production rates - expected to be in the order of over 8 million cubic feet per day - and provide access to the entire

Italian market,” Masterman said.

“Discussions are underway with the pipeline operator, SNAM Rete Gas, to determine if Po Valley Energy or SNAM constructs the entry point spur line.”

This latest development follows an announcement made on Tuesday, in which the company said it had applied for eight exploration licence applications over new gas targets in and around its existing project areas near Bologna and Milan.

Three of the lead applications are for uncontested areas, with the likely final grant of the first licences expected to coincide with Po Valley’s first gas production, from Sillaro, in the first half of next year.

The exploration licence applications cover 2005 square kilometres, almost twice Po Valley’s current licence acreage in northern Italy.

Of the five applications which have competing bids, Po Valley is progressing due diligence or has already commenced negotiations with other bidders, to joint venture the blocks.