28 Jan 2014 07:00
28 January 2014 For immediate release
InfraStrata plc
("InfraStrata" or the "Company")
Islandmagee gas storage project update
InfraStrata plc (AIM:INFA), the independent petroleum exploration and gas storage company, is today providing an update on the gas storage project at Islandmagee, Northern Ireland.
Following a review of its European wide gas assets portfolio which determined that further investment in gas storage in Northern Ireland is no longer aligned with the portfolio's objectives, BP Gas Marketing Limited ("BPGM") has decided to relinquish its option to acquire 50.495% of the shares of IMSL and will therefore not be taking any further participation in the project. BPGM's funding over the past two years has enabled Islandmagee Storage Limited ("IMSL"), the project company, to make much progress with the project, including the securing of land rights, planning permission for the project, and the capital investment in the construction of a well pad. More recently all the remaining pipeline easements have been obtained and agreements reached with The Crown Estate in relation to a sub-surface agreement for lease and a pipelines lease.
The funds invested by BPGM have left IMSL in a position to cover the company's existing commitments and leave funds, which IMSL anticipates are sufficient, to secure the project until there is new funding to develop the project to the next stage. Discussions will commence shortly with potential new investors.
In January 2014 the Utility Regulator ("UREG") in Belfast and the Commission for Energy Regulation ("CER") in Dublin published an industry update on the transmission tariffs for gas storage. UREG and CER stated that they will be working with Ofgem in London and the government departments in Belfast, Dublin and London and colleagues in Brussels to progress this important issue with an aim to have arrangements in place by 2015. They plan to report on progress in May 2014.
In October 2013, as previously reported, the project was granted 'Project of Common Interest' ("PCI") status which means recognition by the European authorities that the Islandmagee gas storage project brings benefits not only to the Member State in which it is located, but to a much wider area. The project also 'pre-qualified' (deemed eligible for support) in October 2013 under the Treasury's 'UK Guarantee Scheme' which is making cover of up to £40 billion available to ensure that key infrastructural projects across all sectors in the UK are not held back due to any difficulty in obtaining project finance.
A total of approximately £5 million has been invested in the project since its inception in 2007 and it is estimated that a further £4 million will need to be invested to move the project to the financial investment decision point, where full project funding of an estimated £300-400 million will be required to construct the facility. The initial funds will be required to drill a well (Islandmagee-1) to 1,650 metres depth to obtain cores of the salt sequence and undertake further engineering design work.
Commenting on the update, Andrew Hindle, CEO of InfraStrata said:
"Although we are disappointed that BPGM is leaving the project due to their wider strategy reasons, we very much appreciate their financial support and the dedication of their team, which has enabled the project to be developed significantly further over the past two years.
We welcome the Regulators publication setting out the principles on which they will develop gas storage transportation tariffs. It will be important that good progress is made in the coming months.
At Islandmagee, with its uniquely favourable geology and proximity to strong points on the gas and electricity networks, we have an overwhelmingly advantageous location for a gas storage facility.
The project remains as important as ever for security of gas supplies to the north and south of the island and a critical piece of infrastructure for the development of renewable generation on the island. Although the demand for gas remains flat to falling due to more renewable power generation, the periods of peak demand are rising year-on-year as gas-fired power stations respond to the great swings in output capacity from the intermittent renewable power sources. Gas storage development on the island is a key element to resolve these impending infrastructure issues.
InfraStrata will work closely with our Northern Ireland project partner to seek a new partner for this strategically important project over the coming months, and InfraStrata still hopes to be able to drill the Islandmagee-1 well at the end of the year when the Company plans to bring a rig over to Northern Ireland to drill the exploration well.
In the meantime, InfraStrata continues to focus on its petroleum exploration activities and as reported last week is making good progress with its three well drilling programme, kicking off shortly with the drilling by operator Egdon Resources of the Burton-on-the-Wolds-1 well."
For further information please contact:
InfraStrata plc
Andrew Hindle, Chief Executive Officer 020 8332 1200
Stewart McGarrity, Finance Director
Financial PR - Buchanan
Richard Darby/Gabriella Clinkard/Tom Hufton 020 7466 5000
Nominated Advisor and Broker - Arden Partners plc
Richard Day/ Katelin Kennish 020 7614 5917
Notes to Editors:
Background on InfraStrata plc
InfraStrata is an independent petroleum exploration and gas storage company. The Company is focused on two areas in the UK, in Dorset, England and Antrim, Northern Ireland.
Further information is available on the Company's website www.infrastrata.co.uk.
Background on Islandmagee Storage Limited (IMSL)
IMSL is an independent Northern Ireland registered company; a joint venture between InfraStrata plc (65% shareholder) and Moyle Energy Investments Limited (35% shareholder), part of the Mutual Energy group of companies. The gas storage facility at Islandmagee will have the capability to store 500 million cubic metres of natural gas.
IMSL was granted planning permission for the above ground facilities in October 2012. Applications have been submitted for three marine licences to the Department of Environment (DOE) and Northern Ireland Environment Agency. DOE are currently liaising with key stakeholders through a Marine Science Group and consulting on an outline monitoring plan for the project.
For more information about the project and to view the IMSL press release, please visit the Islandmagee Storage Project website www.islandmageestorage.com.
In accordance with the AIM Rules - Note for Mining and Oil and Gas Companies, the information contained in this announcement has been reviewed and signed off by the Chief Executive Officer of InfraStrata plc Andrew Hindle BSc, MSc, PhD, a Chartered Geologist with 28 years' experience, a Fellow of the Geological Society of London, and a member of the American Association of Petroleum Geologists and the Petroleum Exploration Society of Great Britain.