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(Sharecast News) - Angus Energy announced on Tuesday that production at the Saltfleetby Field had achieved a steady operating state.
The AIM-traded company said the field's three producing wells, B2, A4, and the newly-drilled B7T, were now contributing to gas exports to the National Grid.
Despite a short duration plant outage, the firm said it was currently exporting gas at a combined average daily rate of 9.5 million standard cubic feet per day, with peak flows exceeding 10 million standard cubic feet per day.
Angus said it anticipated surpassing a combined average daily rate of 10 million standard cubic feet per day on a sustainable basis, as the B7T well continued its clean-up process.
While gas prices had declined in recent weeks, winter pricing for 2023-2024 remained strong, with forecast prices of £1.24 per therm based on Heren NBP published trading data.
With continued production at the current level and considering existing hedge prices and market forward prices, Angus estimated generating around £2.5m in revenues on average each month for winter 2023 from Saltfleetby.
Looking ahead, Angus said it was evaluating various opportunities for gas storage at Saltfleetby, including storage for natural gas, hydrogen, and carbon dioxide.
To facilitate that, the company had engaged planning consultants to submit a further planning permission for an expanded site at Saltfleetby, which would accommodate new wells and process plants.
Initial drilling efforts would target the Namurian reservoir, located below the currently-exploited Westphalian reservoir, as a potential commercial source of natural gas.
Those wells would also be designed to serve as potential injection wells for gas storage, whether in the Namurian or Westphalian reservoirs.
If deemed appropriate, Angus said it would seek further planning permissions at the national level for gas storage.
In addition, Angus said it was planning to explore the design parameters for managing hydrogen or carbon dioxide at high pressures, in conjunction with traditional natural gas storage.
The firm said it had already made strides in the area with the use of hydrogen-tight Soluforce pipe in the first commercial transmission grid connection at Theddlethorpe Entry Point.
Its board said the Namurian reservoir, beneath the Westphalian reservoir, had already produced 1.5 billion cubic feet of natural gas to date.
However, there was a significant variation in estimates of the gas in place between Angus' recent competent person's reports and the internal estimates provided by previous operators, Gazprom-Wintershall and Roc Oil.
No detailed interpretation of the Namurian reservoir, independent from the Westphalian, had yet been undertaken, and so Angus said it had initiated a full third-party reinterpretation of both reservoirs, expected to be completed in October.
Based on estimates from Gazprom-Wintershall in 2006, the overall field's storage capacity ranged between 700 and 800 million cubic metres, making it the largest onshore storage facility in the UK.
However, Angus said its own estimates of the storage capacity were higher, and did not include the Namurian reservoir.
"The company is pleased to have reached this production milestone and to be able to turn attention to both organic and inorganic growth opportunities," said chief executive officer Richard Herbert.
"Gas storage is an obvious and topical one.
"Properly engineered to manage hydrogen or carbon dioxide as well as natural gas, storage at Saltfleetby has the potential to meet the twin demands of present and future administrations for clean energy and energy security and we are pleased to be able to align shareholder interests with those longer term goals whilst offering the possibility of enhanced gas recoveries in the medium term."
At 1608 BST, shares in Angus Energy were up 3.61% at 1.18p.
Reporting by Josh White for Sharecast.com.
