Leni Gas & Oil (LGO) has entered into a Heads of Agreement with Praxair Espana, a Spanish subsidiary of industrial gas supplier Praxair, for a nitrogen enhanced oil recovery pilot project in the west flank of the Ayoluengo upper Jurassic reservoirs in Spain.

LGO has identified from the recently completed geotechnical review of its Spain acreage that complementary artificial stimulation methods to mobilise the oil within the various producing Ayoluengo Upper Jurassic reservoirs can be used to maximise total recoverable reserves.

Nitrogen enhanced oil recovery projects have the dual advantage of minimum environmental impact and maximum reservoir mobilisation efficiency, the company said.

The Heads of Agreement sets out the proposed terms of a definitive agreement and project execution plan between the companies for Praxair to provide nitrogen and equipment for the pilot project, and LGO to conduct the design and operation of the injection facilities into the west flank of the Ayoluengo upper Jurassic sands.

The west flank currently has no existing production with OIIP of 27.31mmbo and a low historical recovery factor below 5%.

The existing Ayoluengo production is from the east flank upper Jurassic reservoirs with OIIP of 79.39mmbo and historical recovery of 21%.

LGO is currently undertaking complementary exploitation projects to increase the productivity and drainage radius of all wells in the east flank.

Engineering design and permitting of the project by LGO has started with facilities construction planned to commence at end 2010 with and nitrogen injection at end of the first quarter of 2011.