Star Energy Regulatory News (STAR)

18 Oct 2006 07:00

Star Energy Group PLC18 October 2006 18th October 2006 Star Energy plc("Star Energy" or "the Company") Gas Storage Update Star Energy, the integrated energy group, announces an update to its gas storagedevelopment activities. During the past year, the UK has changed from being a gas exporter to a net gasimporter, and this reliance on imported gas is likely to increase such thatapproximately 50% of the UK's gas requirement will be imported by 2010. Recentreports by the DTI together with independent studies have confirmed that thistrend will lead to an increasing requirement for gas storage to provide securityof supply as well as manage variations in demand. The UK currently has only 4%of annual consumption in gas storage capacity, compared to over 20% in Franceand Germany. Star Energy remains committed to becoming a significant multi-site gas storageoperator, and following recent frustrating delays in obtaining planningpermission for new facilities, we have reviewed both our approach to planning inthe UK and the potential for European storage facilities that can service the UKand Western European markets. In reviewing our approach to UK planning submissions, we have soughtclarification from the DTI about certain procedural issues as well as seekingappropriate legal and expert opinion. Following these discussions, the Company has decided to withdraw its appeals tothe Planning Inspectorate with respect to the Welton gas storage project andre-apply for consent using the 1965 Gas Act. We expect this will provide a morecertain timeline and cost for this application and will now form the standardapproach for consenting and permitting all of the Company's future UK projects. The Company has worked with the DTI for the last two years to enable the use ofthe 1965 Gas Act for gas storage applications, this Act never having previouslybeen used. This legislation provides specifically for the storage of gas innatural porous strata such as partially depleted hydrocarbon reservoirs.Applications under the 1965 Gas Act are submitted to the Energy Minister ratherthan local planning authorities. All relevant authorities are involved asconsultees in the application with the DTI as the determining authority. The following is an update on each of our current projects: Welton Star Energy Group plc initiated appeals in June 2006 against Lincolnshire CountyCouncil's refusal of the Company's planning applications to build a gas storagefacility at Welton, Lincolnshire and a pipeline connecting the proposed storagefacility to the National Transmission System. The Planning Inspectorate has setan inquiry date for the end of February 2007. The Company has appointed legal advisors, including Queen's Counsel, in itspreparation for the appeals. In discussions with legal advisors over the lastseveral weeks, it has become clear that the County Council's case against theappeals will focus on detailed issues of procedural correctness as well as themerits of its proposals. The County Council's Statement of Case, dated 29thSeptember 2006, has made it clear that the County Council intends to raiseprocedural objections that it could have raised while Star Energy waited overtwo years for the planning applications to be determined. In order to avoidfurther delays and risking costs that may run into several millions of pounds,and in order to standardise its applications for gas storage under the 1965 GasAct, the Company has decided to withdraw its appeals and has informed thePlanning Inspectorate of this. The Company will make an application to the DTI for the Welton gas store usingthe 1965 Gas Act. The Company has the advantage of being able to use most of itsprior engineering and preparatory work for the application. The new application will be submitted as soon as practicable and it is hopedthat the period of determination will be in the order of 6 months, subject tothe requirement to hold a public inquiry. Albury The Company has been conducting consultations with the local community and thelocal council via a liaison panel and this has resulted in the Company'sdecision to drill its Albury appraisal well from its existing drilling sitethereby reducing disturbance to the local community to a minimum. The Companyhas also informed the liaison panel of its intention to submit a 1965 Gas Actplanning application for its Phase 1 Albury project during the first half of2007. Bletchingley Immediately following the Albury appraisal well the Company plans to drill anappraisal well on its Bletchingley gas field to evaluate the rock properties ofseveral horizons in anticipation of a 1965 Gas Act application for an up to 30bcf gas storage facility. Gainsborough The Gainsborough gas storage project has been progressed with reservoirmodelling and consultation with landowners to identify a suitable location forthe surface facilities. As soon as the facility location plans have beenfinalised, the Company will undertake the necessary preparatory work inanticipation of a 1965 Gas Act application. Further Storage projects The Company continues to evaluate further potential projects both within itsextensive portfolio of oil and gas reservoirs and also via potential acquisitionand joint venture. In particular, the Company is actively pursuing a number ofpossible asset acquisitions in Western Europe. The Company's acquisitionpriorities include existing storage operations and producing gas reservoirs withpotential for storage, that are strategically located to complement theCompany's UK market position as well as servicing their local markets. Enquiries: Star Energy 020 7730 6663 Roland Wessel, Chief Executive College Hill 020 7457 2020 Nick Elwes / Paddy Blewer This information is provided by RNS The company news service from the London Stock Exchange