Prospex Energy secures 10-year extension for El Romeral gas concessions, shares gain
() , an investor in European gas and power projects, said that Spanish regulatory authorities have granted a 10-year extension to the natural gas production concessions El Romeral 1, 2 and 3, owned by Tarba Energia. Prospex has a 49% interest in El Romeral through its investment in Tarba.
The royal decree was signed on July 24, 2024, allowing the Spanish Ministry for Ecological Transition and the Demographic Challenge (MITECO) to grant the extension of the El Romeral natural gas concessions for 10 years, the maximum allowed term.
The move guarantees electricity supply to the Spanish grid from the El Romeral gas facility and power plant until at least July 2034, when the concessions may be extended for a further 10 years until 2044.
El Romeral is currently operating at 30% capacity (2.7 MW) as Tarba waits on permits to drill 5 further infill wells on the concessions to increase production. Additionally, an adjacent solar project "Helios" is expected to add 5 MW, sharing infrastructure with the gas facility.
Mark Routh, Prospex's CEO, commenting: "The official extension of the El Romeral production concessions for the maximum allowable term of ten years, is a very welcome step by the Spanish regulatory authorities. It is also an important official acknowledgement by the Spanish state of the crucial role natural gas will continue to play in the nation's energy security and the ecological transition process."
View from Vox
Good news from Prospex's El Romeral gas facility and power plant in Spain as its license is extended by Spanish authorities until at least July 2034. The facility is operated by Tarba and co-owned through Tarba by Prospex, which has a 49.9% working interest, and Warrego Energy which has a 50.1% working interest. Warrego is now wholly owned by Hancock Energy in Perth, Australia.
Last year, Prospex announced the development of Project Helios, a photovoltaic hybridisation solar project to be built adjacent to El Romeral in southern Spain. Helios will cogenerate with El Romeral, increasing its output by 60% via existing infrastructure. The 5 MW solar array will occupy 20 hectares adjacent to the power plant.
The existing grid connection has a 8.2 MW output allocated to El Romeral, which is currently utilising only 2.7 MW. Prospex notes further grid capacity is available to accept increased output within the existing infrastructure. Helios is a prudent diversification strategy, given solar deployments in southern Spain have an ROI of only 3-4 years, making this an ideal hedge for the company.
Helios will allow Prospex to increase its power export in the near term alongside a capacity increase expected from the drilling of 5 new gas wells on the existing El Romeral concession. Combined, the two programmes represent significant upside over the next year.
Importantly, El Romeral is expected to reach full capacity from just 2 of the proposed 5 wells. Any extra gas from the remaining or future wells will facilitate expansion plans at the power plant as well as the ability to supply natural gas directly to the grid or local market in Andalucia.
In FY23, El Romeral generated gross revenues of €1.8m, supplying enough electricity to cover the needs of c. 6,700 homes in the area, even when operating at 1/3rd capacity. With the future wells, the plant is expected to reach its nameplate capacity to sell 8.1 MW of power into the grid. The combination of further natural gas extracted from the concessions and the new solar generation is expected to cover 20,100 homes.
shares gained 6.9% on the announcement.
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