ADX clinches Sicily gas permit in European energy | Australian Markets

ASX-listed ADX Energy has lastly put its foot on one of Europe’s most tantalising offshore gas performs after formally receiving 100 per cent of a high-impact exploration permit masking 346 sq. kilometres off the western tip of Sicily in Italy.

Fresh from a massive in-country oil and gas exploration coverage change, Italy’s Environment and Energy Security Ministry has given ADX the inexperienced gentle for gas-only exploration after placing the company’s funds, technical expertise and organisational muscle via a thorough health examine.

ADX says the potential prize ready for it on the back of a profitable exploration program is a juicy 369 billion cubic toes (Bcf) of gas from 5 prime prospects.

Historic 2D seismic has hinted at stacked reservoirs with top-notch, 30 per cent porosity at some of the targets and factors to the potential of a juicy low-risk, high reward exploration play of low-cost drilling coupled with the possibility of outsized returns.

The lease sits in shallow waters much less than 100 metres deep, simply 30 kilometres off Sicily’s shoreline and comes with potential entry to the Transmed pipeline, which runs immediately previous the permit from North Africa to its level of entry at Mazara del Vallo in western Sicily.

The company’s new grounds cowl a patch of the Sicily Channel that has been largely neglected for gas regardless of historic oil exploration and drilling.

The geology is nearly a carbon copy of close by producing fields, equivalent to Italian energy heavyweight ENI’s Argo-Cassiopea offshore and Lippone-Mazara onshore discoveries, the place related stacked gas sands have delivered hefty sources from compact structural traps.

If ADX’s prospects finish up mirroring these at Argo-Cassiopea – which holds virtually 360Bcf of stacked gas throughout two fields in the identical Miocene-Pliocene sands – the company says every of its wells might doubtlessly pump out 20–30 million cubic toes of gas a day and notch up about 50Bcf every.

Adding to the excitement, previous exploration work has already lit the trail. Old seismic and properly logs, together with these from the Nilde-2 properly within the lease, strongly level to 99 per cent biogenic methane, a candy gas requiring minimal processing. This gas seems trapped in Miocene sandstones between 700 and 2000 metres under floor.

As is the case for the shallow gas play we’re pursuing in Upper Austria, the supply of historic, high high quality 2D seismic knowledge and manufacturing properly knowledge has strengthened our confidence in the potential of the Sicily Channel permit. The latest, close by shallow gas discoveries and subject developments by ENI have additionally opened up the Sicily Channel for gas exploration.

ADX lodged its bid for the Sicily Channel permit in January, sizzling on the heels of Italy’s long-awaited coverage shift that ended a freeze on new exploration licences. The freeze dated back to 2019, when Rome pulled the plug on all hydrocarbon exploration in a bid to cut carbon emissions.

But Europe’s scramble for alternate options to Russian gas after its Ukraine invasion flipped the script. With demand surging, Italy’s new centre-right, pro-gas authorities below Prime Minister Giorgia Meloni moved shortly to revive home exploration, eyeing home-grown clean gas to shore up energy security.

For ADX, the numbers stack up properly. Robust European gas costs – at the moment round €34 (A$61) per megawatt – coupled with beneficial tax phrases of a 10 per cent royalty and 28 per cent company tax make the economics of the Sicily Channel permit onerous to disregard.

Moving ahead, a treasure trove of previous wells and 2D seismic, beforehand aimed toward deeper oil, has given ADX a head begin in sizing up its new permit.

The company says it’s now able to hit the ground working by transforming seismic, choosing up properly logs and fast-tracking recent 3D surveys, aiming to mature its prospects and secure an unbiased skilled’s tick to spotlight the permit’s full gas potential.

All up, ADX’s Sicily Channel prize seems like the actual deal – shallow waters, stacked sands, premium pricing and a authorities that’s out of the blue rolling out the welcome mat for gas.

With the groundwork already mapped and the drills not far off, the company now has a golden probability to show an neglected nook of the Mediterranean into a severe gas play – and the punters are more likely to be watching each transfer.

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