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The company reached an agreement with Brazilian independent oil producer Imetame in April to fuel the 28MW Prosperidade thermoelectric plant with natural gas produced from the Caburé field and adjacent blocks (REC-T-197, REC-T-198, REC-T-211, REC-T-212). Imetame will act as the initial operator and Alvopetro will be responsible for its share of unit capital when it starts producing or in March 2020, whichever comes first.
The firms also closed an agreement with Bahia state natural gas distribution company Bahiagás which provides for the sale of 150,000m3/d on a firm basis plus up to 350,000m3/d on an interruptible basis, adjustable annually.
According to Alvopetro's latest operational update, the consortium will now focus on the construction of strategic midstream infrastructure, including building a pipeline and a natural gas processing facility. The land for the facility is already secured and all field surveys and permitting works are complete. The firms are now awaiting regulatory approval to start construction.
"This is a transformational time for Alvopetro and these agreements underscore the value in our Caburé natural gas field and provide the foundation for unlocking natural gas opportunities in Bahia state in Brazil," Alvopetro said in a statement.
Imetame has already anticipated that it expects two existing wells in Caburé to be completed and tied-in to a low-pressure early production facility in 2018 and to drill three additional development wells next year.
Alvopetro reported a first quarter net loss of US$1mn, similar to that seen in the same period of last year, primarily due to negative funds flow from operations. Capex amounted to US$1.3mn in the quarter, down 50% from 1Q17.
Investments included US$0.8mn to test a well on the REC-T-183 block, capitalized G&A of US$0.3mn and Caburé permitting costs of US$0.1mn.