As to the technical challenges of operating in Italy, we belief that state-of-the-art technology such as 3-D geophysical imaging and new completion and production tools, technologies that are regularly used throughout the world can help unlock trillions of cubic feet of gas that have yet to be discovered and produced in the Po Valley. In fact, we are one of the first companies to carry out large-scale 3-D geophysical acquisition surveys onshore Italy. We have completed three large-scale 3-D geophysical surveys, acquiring more than 100,000 acres (400 sq km) of data in northern Italy and developing the largest portfolio of 3-D geophysical data for onshore Italy. The processed and interpreted data is critical in identifying and mapping large, drillable subsurface geological structures containing commercial quantities of hydrocarbons.
The most recent 3-D geophysical survey was completed on our Ponte dei Grilli permit area in August 2012. We are now turning our operational emphasis from data acquisition to drilling. Numerous drilling prospects have been identified from processing and interpreting 3-D geophysical data acquired during these recent surveys. A number of applications for drilling permits will be filed with the Italian government beginning in September 2012.
Italy is the third largest producer of oil and natural gas in Western Europe, after the United Kingdom and Norway. The Po Valley region in northern Italy has historically been a prolific hydrocarbon region and remains Italy’s largest producing province. Over 26 trillion cubic feet (750 billion cubic meters) of gas have been produced from the region since production began in the late 1940s. Italy also has smaller amounts of gas production in other provinces throughout the country, as well as offshore.
However, Italy is becoming increasingly dependent on imported natural gas, primarily from Algeria, Libya, and Russia. High gas demand and consumption in Italy, combined with import capacity constraint and gas supply disruptions, have adversely affected Italy’s gas markets. Imported natural gas now accounts for about 90% of the gas consumed in Italy, compared to less than 70% 10 years ago. Since the beginning of 1998, Italy’s proven natural gas reserves have dropped more than 70%.
Ironically, large potential gas reserves remain untapped throughout Italy that we believe can be economically developed in the near term. On average, one well has been drilled every 10 square miles â€“ and only one exploration well was drilled in Italy in 2011. This lack of activity in the recent past has been due in part to changes in energy policies within the European Union and complicated Italian governmental regulations and approval processes at both the federal and regional levels.
But positive changes are occurring with the Italian government. Italy’s Ministry of Development’s new energy plan, expected to be published before the end of the year, includes provisions for transferring Italy into a European hub for north Africa and central Asia natural gas and, more importantly for BRS, revitalizing Italy’s domestic upstream oil and gas industry. In August 2012, Italian government stated the goal of doubling the country’s domestic oil and gas production. Part of this revitalization plan is to simplify the approval process for drilling permits.