IOG.L Regulatory News (IOG)

20 Sep 2007 07:00

Island Oil and Gas PLC20 September 2007 20 September 2007 ISLAND AWARDS FRONT-END ENGINEERING STUDY CONTRACT FOR THE OLD HEAD OF KINSALE AND SCHULL GAS FIELD DEVELOPMENT Island Oil & Gas plc (LSE:IOG) today announces that it has awarded a contract toPegasus International UK Ltd, for front-end engineering work ahead of the jointdevelopment of the Old Head of Kinsale and Schull Gas Fields in the Celtic Sea,offshore Ireland. The Studies, which will focus on field development options,including subsea tiebacks, will commence immediately ahead of plans to bring theFields onstream during 2009. Pegasus are specialist subsea engineering consultants, with offices in the UKand the USA, who support operators in the definition of field developmentoptions and the associated detailed design works. The Phase 1 works for thefront-end engineering studies will establish a technical definition for thesubsea tie back options and the operational and functional requirements for thesubsea facilities. They will also generate production profiles and gascomposition and condensate recovery volumes. This work, in conjunction with other studies that are currently beingundertaken, will provide a basis for the updating of field development costestimates and schedules. It is anticipated that the subsequent planned Phase 2works, in the end of the 4th Qtr 2007, will enable an active dialogue withsuppliers and offshore service contractors in order to establish fielddevelopment plans. These plans will form the basis for a Declaration ofCommerciality. Following this an application for a Petroleum Lease covering thetwo gas fields, together with a Plan of Development, will then be submitted tothe Minister for Communications, Energy and Natural Resources for approval. Following technical evaluation of the drilling results from the recent Old Headof Kinsale and Schull pre-development wells this summer, Island believes the twofields potentially contain in the range of 80 to 120 bcf of recoverable gas,subject to confirmation and verification as part of an updated reserves reportthat is currently underway. Preliminary discussions with Parties that couldpotentially market any future gas produced from Old Head and Schull have beeninitiated. In addition to plans for the joint development of the two fields, Islandcontinues to investigate gas storage opportunities and the potential partnershipadvantages to Island, its co-venturers and the Irish government in offering apossible strategic gas reserve for the country. Commenting on the award of the contract, Paul Griffiths, Chief Executive ofIsland, said: "Our pre-development drilling results this year have exceeded the pre-drillexpectations, as a consequence of which we can now consider the jointdevelopment of the gas fields. This could result in a significant cost savingand a greater flexibility to market the gas in a way that exploits the potentialuplift in Winter gas prices. Island has initiated the process of confirming thecommercial potential of the Old Head and Schull gas fields prior to aDeclaration of Commerciality" Enquiries: Lisa J Newman MCIPR MIRSNewman ConsultingTel: +44 (0)1252 878682 Paul GriffithsChief ExecutiveIsland Oil & Gas plcTel: +353 1 631 3755 Notes to Editors: Island was founded in 2003 and listed on AIM in December 2004 (LSE:IOG). TheCompany has interests in eleven Irish offshore licences, as well as licences inthe Netherlands, Morocco and Albania. This announcement has been reviewed and approved by Paul Griffiths, ChiefExecutive of Island. Paul Griffiths is a geology graduate of the Royal Schoolof Mines, Imperial College London, and is a member of the Petroleum ExplorationSociety of Great Britain. He has 30 years experience in the oil and gasexploration sector and is a qualified person as defined in the guidance note forMining Oil & Gas Companies, March 2006 of the London Stock Exchange. Further information on Island can be found on the Company's website at http://www.islandoilandgas.com. This information is provided by RNS The company news service from the London Stock Exchange