INFA.L Regulatory News (INFA)

19 Feb 2008 07:00

Portland Gas plc19 February 2008 For Immediate Release 19 February 2008 Portland Gas plc Portland Project Update The Directors of Portland Gas plc (AIM : PTG) ("Portland" or the "Company") thegas storage project development company would like to provide an update on thePortland Project (the "Project"). Preparations are being made to ensure that construction of the gas storagefacility and associated infrastructure could commence immediately upon the grantof planning permission for the project. The construction has been tendered inthree packages. Tenders were received separately for the pipelines andfacilities during January 2008 and are currently being evaluated. Tenders forthe drilling rigs will be received during February 2008. The current estimate for the construction cost is £500 million. NM Rothschild &Sons were appointed in 2006 to determine the most appropriate financingstructure. Rothschild has recently launched, on behalf or Portland, a process toselect one or more joint venture partners to develop the project together withPortland. This process would allow bidders to submit offers to fund thosedevelopment costs of the Project attributable to the bidders' interest in theProject and in addition to fund a share of the costs otherwise attributable toPortland. The process would form part of a Third Party Access compliantstructure under the Gas Act. The process has already seen expressions ofinterest submitted to Rothschild from a number of potential joint venturepartners. On 6 February 2008 the planning committee of Weymouth & Portland Borough Council('WPBC') voted unanimously to support the planning application for the gasstorage facility on Portland subject to Dorset County Council ('DCC'), thedetermining authority for the planning application, being satisfied with theapplications for the gas storage and other facilities associated with theProject. Portland Gas anticipates that a decision will be made by the DCCplanning committee in the near future. The authorisation for the construction ofthe pipeline infrastructure required for the project is the responsibility ofthe Department of Business, Enterprise and Regulatory Reform. 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 PR - Watershed 01308 485693Sara Hudston 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. The Isle of Portland project is seeking to develop a major gas storage facility,with the creation of 14 underground storage caverns totaling 1000 mcm (35 bcf)of natural gas - equating to 1% of the UK's annual demand. Portland Gas has drilled and successfully appraised the salt sequence atPortland and is currently progressing through the planning, financing andtendering for construction processes. The Company is currently also evaluating the potential of a Permian saltsequence in the Larne area of Northern Ireland to create salt gas storagecaverns. The Company has commenced an Environmental Impact Assessment for theproposed project and has also acquired a 3D seismic programme during October andNovember 2007 to define the distribution and thickness of the salt within thearea of interest. It is anticipated that the results of the seismic programmewill be known later in the first quarter 2008. 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 its North Sea gas fields. That resource of secure and sustainable gas flowhas 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 nation becomes increasingly reliant on less flexible imported gas, theoutcome of which is that in order to maintain control of supply and demandrequirements, the need for a substantial portfolio of natural gas storagefacilities is now a national 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. Without the construction of more storage facilities, the UK will have anever-increasing shortage in storage capacity as our imports, and indeed demand,increase. This information is provided by RNS The company news service from the London Stock Exchange