INFA.L Regulatory News (INFA)

31 Mar 2008 07:00

Portland Gas plc31 March 2008 For Immediate Release 31 March 2008 Portland Gas PRESS RELEASE Results of the 3D seismic survey - Larne project The Directors of Portland Gas plc (AIM: PTG) ("the Company" or "Portland Gas")are pleased to announce the results of the 3D seismic programme acquired duringOctober and November 2007 by its wholly owned Northern Ireland subsidiaryPortland Gas NI Limited. The interpretation of the data has indicated that the Permian salt sequenceencountered in 1981 in the Larne-2 borehole extends as anticipated under LarneLough into the area where Portland Gas was granted an exploration licence in2007 by The Crown Estate. Interpretation of the seismic data indicates that thesalt in the target area is at a depth of approximately 1400 metres with athickness of approximately 200 meters. Portland Gas is now planning to drill aborehole later in 2008 on Islandmagee to confirm the seismic interpretation andto take cores of the salt sequence to complete the design of the caverns tostore natural gas. The Company is seeking a suitable site from which to drillthe borehole within the area of its onshore mineral licence, awarded in 2007near Ballylumford by the Department of Enterprise, Trade and Investment. The Company is also negotiating terms with a strategic partner to take a 25-35%interest in the project. Portland Gas will be the operator of the proposed jointventure. Portland Gas is now undertaking an Environmental Impact Assessment with theintention of submitting a full planning application for the gas storage projectin 2009, subject to concluding any necessary landowner agreements. The Companywill liaise closely during 2008 with all stakeholders to ensure that the surfacefacilities, required to create the caverns and compress the gas into store, arelocated in the most appropriate place and designed to minimise visual andenvironmental impact. The caverns would be created within the salt sequencebelow Larne Lough but accessed from directionally drilled boreholes on the land.The nearest point of connection to the national gas infrastructure is at theScotland to Northern Ireland Pipeline above ground installation at Ballylumford. Network, market, technical and economic analyses are also underway to determinethe most appropriate storage capacity and the gas injection and withdrawal ratesfor the facility. Initial studies indicate that the facility could have astorage volume of up to 500 million cubic metres (18 billion cubic feet) of gas.In this case some reinforcement of the current gas infrastructure will berequired to manage the injection and withdrawal of gas and provide sufficientflexibility to meet demand spikes for customers. Portland Gas would ensure that the capacity availability is Third Party Accesscompliant under Northern Ireland and European legislation. It is anticipatedthat a proportion of the capacity in the facility would be made available underlong-term contracts to facilitate the debt financing of the project, however themajority would be auctioned on an annual basis. Customers could be based inNorthern Ireland, the remainder of the UK or the Republic of Ireland. Commenting on the project Andrew Hindle, the CEO of Portland Gas plc, said: "We are delighted with the results of the seismic programme. The asset wouldhave a significant positive impact on the dynamics of the gas market in thewhole of Ireland and add significantly to security of gas supplies. Indeed, inwinter, Northern Ireland could become a net exporter of gas from its currentposition of 100% dependence on imports." For further information please contact: Portland Gas plcAndrew Hindle, Chief Executive Officer 020 8332 1200Craig Gouws, Chief Financial Officer Investor Relations - Buchanan Communications 020 7466 5000Ben Willey Corporate PR - Watershed 01308 420785Sara Hudston Jet PR (Northern Ireland Public Relations Consultant) 07803 722322Jacqui Thompson Nominated Advisor and Broker - Seymour Pierce 020 7107 8000Jonathan Wright Notes to Editors: Background on Portland Gas plc Portland's business focuses on the development of gas storage projects in theUnited Kingdom and internationally. It currently has two projects in itsportfolio, the first an advanced project at the Isle of Portland which has beenunder development for over 3 years, and the second the Larne Lough project inNorthern Ireland which was announced in July 2007. Further information isavailable on the Company's website www.portland-gas.com. Background to gas storage Natural gas is an extremely important source of energy, currently contributing37 per cent of the UK's energy needs. For many years, the UK has relied heavilyon the its North Sea gas fields. That resource of secure and sustainable gasflow has limited the need to provide significant storage volumes since daily andseasonal demands for gas have been accommodated by the flexibility of suppliesclose to shore. This relative luxury is becoming less and less sustainable asthe UK becomes increasingly reliant on less flexible imported gas, the outcomeof which is that in order to maintain control of supply and demand requirements,the need for a substantial portfolio of natural gas storage facilities is now anational issue. Gas storage plays an important role in managing swing demand and mitigating theneed for (expensive) emergency imports. Gas storage facilities can be filledduring times of lower demand to be available during periods of higher demand,either on a daily basis or seasonally. Opportunities for a safe and environmentally friendly method of storing gas arerelatively few. One of the safest and most environmentally friendly methods ofstoring large quantities of gas is deep underground within caverns createdwithin salt sequences. This information is provided by RNS The company news service from the London Stock Exchange