EDR.L Regulatory News (EDR)

28 Jun 2006 07:01

Egdon Resources PLC28 June 2006 28 June 2006 For immediate release EGDON RESOURCES PLC Portland Gas Storage Project Update Egdon Resources Plc (AIM : EDR), the onshore UK focused energy company, todayprovides an update on its gas storage project on the Isle of Portland in Dorset. Portland Gas Limited ('Portland Gas'), a wholly owned subsidiary of EgdonResources Plc, is pleased to report that drilling operations for the Portland-1borehole have been completed and the BDF Rig 28 is expected to be releasedwithin the next 24 hours. A total drilled depth of 2929 metres was reached in the Triassic SherwoodSandstone on 21st June 2006. The Portland-1 borehole on the Isle of Portland, Dorset was drilled to confirmthat a halite sequence with a low insoluble content (called 'S7' by PortlandGas), within a Triassic salt sequence ('Saliferous Beds') of the Wessex Basin,was suitable for the creation of caverns to store natural gas. Initial technicalanalyses of the data acquired from the borehole, by Portland Gas consultantDEEP. Underground Engineering GmbH ('DEEP') of Germany, indicates thatindividual caverns of approximately 250,000 cubic metres could be created withinthe S7 sequence at the Isle of Portland location. This is the same volume usedin the pre-feasibility work for the project prior to the drilling of thePortland-1 borehole. The Saliferous Beds were encountered with a thickness of 470 metres (41 metresthicker than forecast). The top of the target S7 interval was penetrated at adepth of 2365 metres and was found to have a thickness of 135 metres (43 metresthinner than forecast). DEEP will coordinate the completion of further laboratory work on core samplesover the S7 sequence and computer simulation of the proposed cavern leachingprogramme. Final confirmation of project feasibility is expected in August 2006. Portland Gas has also undertaken feasibility work, with DEEP and RPS Energy atWinfrith, Dorset, looking at the use of brine, rather than gas as a cushion forthe gas storage operations. In the case of gas cushion operations a quantity ofgas must always remain in the caverns to maintain a minimum operating pressure.If brine were used the pressure would always be maintained close to the maximumoperating pressure. Gas withdrawn from the caverns would be compensated byreplacement with an equivalent volume of brine at the subsurface pressure.Conversely, when gas is injected into the caverns the brine would be withdrawn.Such operations would offer significant benefits to the Portland project as itwould remove the need to purchase gas to maintain the internal pressure.Portland Gas proposes to source the brine required for these operations from theTriassic Sherwood Sandstone aquifer in Dorset. While the Portland-1 boreholeconfirmed that the properties of the Sherwood Sandstone aquifer are not suitableon the Isle of Portland, feasibility studies have identified an area close tothe proposed route of the gas pipeline, which would link the storage facilitieson the Isle of Portland to the National Transmission System, where the Sherwoodcould be used. At this location boreholes could be directionally drilled towithdraw or inject saline formation water. A brine pipeline would be constructedalongside the gas pipeline to the Isle of Portland to support the gas storageoperations. Commenting on the project's progress, Andrew Hindle, Joint Managing Director ofEgdon, said: "We are delighted that the borehole encountered a sequence of salt which appearssuitable to create caverns for the storage of natural gas. We anticipate thatthe results of the remaining technical work will enable us during August 2006 toconfirm the feasibility of a gas storage project on the Isle of Portland, and atthe same time outline the proposed storage volumes, injection and withdrawalrates and project development timetable from start-up. The presence in Dorset ofan aquifer with very saline waters has provided us with the opportunity ofreplacing very costly gas with brine for the cushion within the caverns. TheEnvironmental Impact Assessment work is now at an advanced stage for the projectand planning and pipeline construction authorisation applications are beingprepared for submission in Q4 2006." For further information please contact: Egdon resources Plc Andrew Hindle, Joint Managing Director 01256 702 292Mark Abbott, Joint Managing Director Buchanan Communications Eric Burns 01943 883 990Ben Willey 020 7466 5000 Company Background Egdon is an established, UK-based energy company primarily focused on thehydrocarbon-producing basins of the onshore UK. Egdon also has explorationinterests in the offshore UK and France. Egdon's shares are traded on the AIMmarket. The Company is developing two major business areas: An oil and gas exploration and production business which has a portfolio oftwenty exploration licences containing identified oil and gas prospects rangingfrom discoveries under appraisal through to higher risk but higher reward "wild-cat" exploration prospects. A gas storage business initially focused on the prospective development of amajor salt cavern gas storage facility beneath the Isle of Portland, Dorset. In accordance with AIM rules -guidance for mining, oil and gas companies, theinformation contained in this announcement has been reviewed and signed off bythe Joint Managing Director of Egdon Resources Dr Andrew Hindle, a CharteredGeologist with over 22 years experience. This information is provided by RNS The company news service from the London Stock Exchange