Plexus Regulatory News (POS)

Plexus Holdings PLC / Index: AIM / Epic: POS / Sector: Oil Equipment & Services

Plexus Holdings PLC ('Plexus' or 'the Company')

Global methane leak concerns generate increased interest in

Plexus POS-GRIP® metal-to-metal HG® seal solutions

Plexus Holdings PLC, the AIM quoted oil and gas engineering services business and owner of the proprietary POS-GRIP friction-grip method of wellhead engineering, is pleased to report that, in line with recent global press coverage surrounding the growing issue of methane leaks in the energy sector, the Company is experiencing an increasing level of interest in its POS-GRIP HG metal-to-metal seal technology from both operators and various industry safety and standards bodies. POS-GRIP equipment is proven to be a "gas-proof" solution for natural gas wellheads, having been successfully deployed on hundreds of gas wells, including the Total operated Solaris well in 2015, which is believed to be the highest pressure well ever drilled in the North Sea.

Methane is a principal component of natural gas, and a number of recently published studies have highlighted the fact that gas leaks from the wellhead to the consumer are far higher than had previously been thought. The furore over the damaging nature of gas leak toxic emissions, and in particular methane, in relation to climate change reached a turning point at this year's World Gas Conference in Washington in June, where tackling methane was viewed as being "part of business as usual". A series of major IOC CEOs stated at the conference that reducing gas leaks is now a major priority, which is perhaps not surprising when one considers that methane has a global warming potential of up to 86 times greater than carbon dioxide over a twenty year period.

These gas leaks do not just occur from operating wells, they also occur from abandoned wells of which there are estimated to be three million across the USA. Such is the scale of the problem that there is growing concern that methane leaks from gas infrastructure even have the potential to reverse the perceived environmental benefits of natural gas when compared to dirtier fossil fuels, such as coal. The Environmental Defence Fund ('EDF') made the case that, although gas fired power plants produce much lower carbon dioxide emissions than coal-fired plants for the same electricity generation, methane leaks could cut that advantage out completely if just more than 2.7% of gas production escapes on its journey from well to power plant. Above that level gas is actually worse than burning coal.

A number of responses to this issue have been launched and continue to be developed. For example in March the US Oil and Gas Climate Initiative ('OGCI') organisation, which is an investment vehicle formed by a number of international oil majors announced in Houston a US$20m grant aiming to fund technologies that will help reduce methane emissions. Then only this month the Independent Energy Standards Corporation ('IES') announced the completion of its first transaction in relation to the IES TrustWell™ Responsible Gas Program. This looks at the ability to source gas responsibly, and the TrustWell rating system for a producing well evaluates a wide range of risks and impacts including emissions and methane, leaks and spills, well integrity, water sourcing, and others. This program enables IES to segment each well into a Silver, Gold, and Platinum rating and is open to both natural gas producers and purchasers. It would be a logical extension to begin to certify equipment items for leak proof performance. 

The industry's concern is that if left unchecked, methane emissions could hold back or even prevent the wider adoption of natural gas as a cleaner source of energy. The industry is taking the issue extremely seriously as the stance taken at the World Gas Conference confirmed. Indeed, only a few days ago Royal Dutch Shell's Integrated Gas and New Energies Director, Maarten Wetselaar was recently reported in the FT as saying: "The industry needs to continue addressing methane emissions, which can diminish the relative greenhouse gas emissions of natural gas." In response to this important development, a number of major operators have publicly set targets to limit methane emissions from their operations, including Royal Dutch Shell which has pledged to limit methane emissions to less than 0.2% of the total volume of natural gas it extracts. In April 2018, BP set a similar target. Bob Dudley, BP's CEO, was reported as saying, "Some people may not be aware of the benefits of gas. Others see the benefits but are genuinely concerned about methane emissions. That's a legitimate concern and we share it - in fact, we're in action." 

To hit their self-imposed targets, operators are taking a dual-focused approach: deploy advanced equipment and technology to detect and repair leaks; and importantly use gas-proof technologies that help prevent leaks from occurring in the first place. These are important as the time and inconvenience of solving leaks nearer the well upstream, and in particular in the wellbore, can be far more costly and disruptive than those leaks which occur further downstream.

POS-GRIP is one such gas-proof technology. Designed by Plexus to raise wellhead standards to the level of premium tubular couplings, the Plexus POS-GRIP HG seals overcome the shortcomings associated with conventional wellhead sealing technologies, which often lead to expensive life-cycle maintenance fixes, such as injecting wellhead seals with resilient materials, which are unable to deliver permanent solutions.  Prevention, as the answer, requires designs based on aspects of Hertzian stress theory, to ensure that interface stresses are maintained at the required level through-out the life of a well. The Company has explained the gas proof nature of its seal technology in a new paper titled "Gas-Proof by Design" which can be found on Plexus' website: www.plexusplc.com.

Having supplied POS-GRIP wellheads for use on over 350 wells, Plexus has long-standing relationships with operators around the world. Following the sale of its niche jack-up exploration rental business to TechnipFMC, the Company is focused on developing POS-GRIP enabled applications for use in the broader energy sector as well as rolling out its existing family of POS-GRIP products, including surface production and subsea wellheads. It has become clear in recent discussions with potential customers and partners, that increased focus is being directed towards POS-GRIP's superior capabilities in terms of long term performance, reliability and safety within the context of gas and methane containment. The Company is confident that these discussions will in due course lead to additional commercial opportunities for its POS-GRIP product range.

Plexus' CEO Ben Van Bilderbeek said, "If natural gas is going to live up to its billing as the cleanest and most important fossil fuel and go on to play a meaningful role in the ongoing transition to a low carbon global economy, then 'gas-proof' equipment that is proven to minimise the possibility of methane leaks, such as those enabled by our POS-GRIP HG wellhead metal-to-metal seal technology, will have to be deployed. Wherever metal-to-metal sealing is required, we are confident POS-GRIP can provide the optimum solution.

"I am confident that this important industry development heightened by the world increasingly switching to gas consumption, together with an uptick in sentiment and capital investment across the energy industry, means that Plexus is well placed to deliver on its objective to position POS-GRIP as an enabling technology for the energy sector, one that not only raises industry standards, but also generates significant value for our shareholders." 

**ENDS**

For further information please visit www.posgrip.com or contact:

NOTES:

AIM-traded oil and gas engineering services company Plexus (AIM: POS) is an IP-led company that has developed a range of products and applications based on its patent-protected POS-GRIP friction-grip technology. Having proved the superior qualities of POS-GRIP within the niche jack-up wellhead exploration market through the sale of this business to TechnipFMC (Paris:FTI)(NYSE:FTI), in early 2018, the Company is now focused on establishing its technology and equipment in other markets including surface production, subsea and de-commissioning.

Its suite of new products and applications includes: the Python™ Subsea Wellhead (a new standard for subsea wellheads designed as part of a JIP supported by BG, Royal Dutch Shell, Wintershall, Maersk, Total, Tullow Oil, eni, Senergy, and Oil States Industries Inc); the POS-SET™ Connector for the growing de-commissioning and abandonment market; HP/HT dual marine barrier risers which provide an efficient, safe and cost effective solution for use on jack-up rigs; an innovative HP/HT Tie-Back connector product; and a new Well Tree product. Importantly, the Company has entered into a Collaboration Agreement with FMCT, which provides a platform to further develop and commercialise these and other POS-GRIP based applications.