Prospex Energy (AIM: PXEN), an investor in European gas and power projects, announced that Spanish regulatory authorities have granted a 10-year extension to the El Romeral 1, 2, and 3 natural gas production concessions, owned by Tarba Energia. Prospex holds a 49% interest in El Romeral through its investment in Tarba.
The royal decree, signed on July 24, 2024, permits the Spanish Ministry for Ecological Transition and the Demographic Challenge (MITECO) to extend the El Romeral natural gas concessions for 10 years, the maximum allowable term.
This extension ensures the supply of electricity to the Spanish grid from the El Romeral gas facility and power plant until at least July 2034, with a potential further extension to 2044.
El Romeral is currently operating at 30% capacity (2.7 MW) as Tarba awaits permits to drill five additional infill wells on the concessions to boost production. Moreover, an adjacent solar project named “Helios” is expected to add 5 MW, utilizing shared infrastructure with the gas facility.
Commenting on the development, Prospex’s CEO Mark Routh said, “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.”
Thoughts
Good news for Prospex Energy’s El Romeral gas facility and power plant in Spain: its license has been extended by Spanish authorities until at least July 2034. The facility is operated by Tarba and co-owned by Prospex, with a 49.9% working interest, and Warrego Energy, holding a 50.1% interest. Warrego is now fully owned by Hancock Energy in Perth, Australia.
Last year, Prospex announced Project Helios, a photovoltaic solar project to be built adjacent to El Romeral in southern Spain. Helios will co-generate with El Romeral, increasing its output by 60% using existing infrastructure. The 5 MW solar array will occupy 20 hectares next to the power plant.
The existing grid connection has an 8.2 MW output capacity allocated to El Romeral, which is currently using only 2.7 MW. Prospex notes that additional grid capacity is available to accommodate increased output within the existing infrastructure. Helios represents a strategic diversification, as solar deployments in southern Spain have an ROI of only 3-4 years, making this an ideal hedge for the company.
Helios will enable Prospex to increase its power export in the near term, alongside a capacity boost expected from drilling five new gas wells on the existing El Romeral concession. Together, these two initiatives offer significant potential growth over the next year.
Notably, El Romeral is expected to reach full capacity from just two of the proposed five wells. Any additional gas from the remaining or future wells will support expansion plans at the power plant and the ability to supply natural gas directly to the grid or the local market in Andalucia.
In FY23, El Romeral generated gross revenues of €1.8 million, supplying enough electricity to cover the needs of approximately 6,700 homes, even while operating at one-third capacity. With the future wells, the plant is expected to reach its full capacity of selling 8.1 MW of power into the grid. The combination of increased natural gas production and new solar generation is anticipated to supply electricity to about 20,100 homes.
