Islandmagee Gas Storage Project Update

RNS Number : 8529W

Infrastrata PLC

06 August 2018

 

6 August 2018

InfraStrata plc

("InfraStrata" or the "Company")

Islandmagee Gas Storage Project Update

InfraStrata plc (AIM: INFA), the UK quoted company focused on the development of natural gas storage capacity, is pleased to provide an update on FEED (Front End Engineering Design) progress having now achieved over 50% of the pre-established milestones.

The FEED commenced in May 2018 and is scheduled to be delivered in accordance with the EU Grant provisions by no later than December 2018.  The FEED is being delivered on time and on budget by our world class supply chain partners.   To date there have been no significant design issues that will prevent the Project being constructed as planned in order to meet its key objectives.

Further information is also provided below in respect of our commercial endeavours including in respect of potential funding partners to enable construction of the Project and the potential for the Company to secure an offtake partner.

John Wood, Chief Operating Officer, who is leading the FEED works on behalf of InfraStrata stated:

'Since I commenced working with InfraStrata in February we have made tremendous progress in terms of contracting and progressing the FEED, which is being undertaken by global experts in their field. 

Reaching the EOI (Expression of Interest) stage is a significant milestone for InfraStrata as we move towards the funding and construction stage of the Project. 

As FEED has progressed, I have been spending time in conjunction with the rest of the Board to realign our processes and procedures to be ready for the construction phase of the Project.'

Set out below is a list of the key milestones and their progress (of notable interest is that milestone 9 has been completed several weeks ahead of schedule):

Current Milestone Progress

Milestone	Month	Description	Responsibility	Status
1	April	Contract Award Costain	InfraStrata	√ - Completed
2	May	Contract Award DEEP	InfraStrata	√ - Completed
3	May	Appointment of Subsurface Expert	InfraStrata	√ - Completed
4	May	Issue FEED schedule, project and quality plans	Costain	√ - Completed
5	May	Current Design Agreed	Costain	√ - Completed
6	June	Current Design Agreed	DEEP KBB	√ - Completed
7	June	Appoint Owners Engineer for FEED	InfraStrata	√ - Completed
8	July	Issue Process Flow Diagrams	Costain	√ - Completed
9	August	Gas & Leaching layout review	Costain	√ - Completed
10	August	All Process & Instrumentation Diagrams	Costain
11	Oct.	Engineering Design Complete	Costain
12	Oct.	All Investigation work on samples complete	DEEP KBB
13	Oct.	Cavern Design & Rock Mechanics Complete	DEEP KBB
14	Nov.	Surface FEED Deliverables & Estimates	Costain
15	Nov.	Subsurface FEED Deliverables & Estimates	DEEP KBB
16	Dec.	Submit Reports To EU	InfraStrata

During the course of the FEED, the HAZOP (Hazard and Operability Study), HAZID (Hazard Identification Study) and ENVID (Environmental Impact Identification) reviews have been undertaken.  These have been chaired by independent industry subject matter experts.  Results and actions from these studies were consistent with FEED projects at similar levels of maturity in design. Whilst progressing through FEED, the Company has undertaken a plethora of further studies (as required by the EU grant); the objective of which is to substantially reduce the 'Project Risk' as it proceeds through to 'construction ready' status.

Regular and positive engagement sessions have, and continue, to be held with the regulatory authorities and Stakeholders (such as the network operator).  This is helping to shape the design of the Project to maximise the connectivity and market share from the known and future gas infrastructure network.

The FEED works are being undertaken to account for the Project's phased approach.  This will ensure it facilitates a simple integration of Phase Two (Caverns 3-8) after the Phase One caverns (1 and 2) are in operation. 

A further study has been commissioned by the Company to review the remaining options and market demand for a potential Phase Three to this project.  This is predicated on the impact of other gas storage facilities being closed and the potential for increased demand for hydrocarbon storage.  Further investigative work is being undertaken, in conjunction with other stakeholders, to ensure additional infrastructure is developed to fully exploit the full potential of the Islandmagee site in the future.

Project Commercial 

The EU grant is being drawn down monthly to pay 50% of all FEED services eligible for payment under the grant.  All grant monies that can be advanced to the Company have now been received.  The final grant claim is expected to be made in December 2018 upon completion of the FEED.

The contractor loan notes have also been utilised to make payment against the requisite FEED services for which they were provided.

The Company has also been in contact with the EU to seek opportunities for further grant funding towards the cost of the construction works by virtue of its "Project of Common Interest" status. Should the Company be able to take advantage of any other EU grants, further announcements will be made as applicable.   

In advance of the Final Investment Decision (FID) before the construction phase can begin, the Company has commenced discussions with a number of major EPC (Engineering Procurement and Contracting) organisations and will be inviting those organisations to issue an EOI (Expression of Interest) for Phase one of the construction project which focuses on the initial two caverns. The chosen contractor will then work on preparing a priced contract in the coming months. This process is being undertaken in compliance with the procurement process stipulated by the Company's EU grant.   

Discussions are ongoing with several potential funding partners within the UK, Europe and internationally. The Board considers that the broad range of potential funding partners and their geographic spread demonstrates the global need for and attraction of gas storage. Such funds would complement the funds available under the UK Guarantee Scheme and the Company continues to utilise the services of CBRE Capital Advisors which has a proven track record of raising capital and working for major financial institutions as financial advisor on large infrastructure projects.  

As previously announced, the Company has held detailed discussions with major gas storage and trading companies with a view to securing an offtake partner for the facility, once it has been constructed, and these discussions continue to progress well with the investment decisions, commercial returns and duration of the relationship being clearly understood by all parties.  Further updates will be made as appropriate.

For further information, please contact:

InfraStrata plc Adrian Pocock, Chief Executive	c/o Yellow Jersey [phone]
Allenby Capital Limited (AIM Nominated Adviser & Joint Broker) Jeremy Porter / Alex Brearley / Liz Kirchner	[phone]
SI Capital Limited (Joint Broker) Nick Emerson	[phone]
Yellow Jersey Tim Thomson	[phone]

-ENDS-

Notes to editors:

InfraStrata is an independent gas storage company focused on the UK and Ireland. Further information is available on the Company's website: www.infrastrata.co.uk.

Background on the Islandmagee Storage Project

The Islandmagee gas storage project is a proposed salt cavern gas storage facility located on Islandmagee in County Antrim, Northern Ireland. The Board of InfraStrata believes that the proposed 500 million cubic metres Natural Gas Cavern Storage facility will provide over 25% of the UK's Natural Gas Storage once constructed, and will be situated adjacent to the Scotland Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500 Megawatt Electricity Interconnector. Work commenced in 2007 with the acquisition of 3D seismic data to image the Permian salt in the Larne Lough area. During 2012, planning permission was granted for the project and a gas storage licence was issued by the Utility Regulator. In 2015 a well was drilled to core the salt and confirm the technical feasibility of the project, supported in part by the European Commission. The Front End Engineering and Design (FEED) element of the Project is scheduled for completion by the end of 2018. To date approximately £11.5m has been invested in the Project.

Further information is available on the company's website: www.infrastrata.co.uk

The Front End Engineering & Design (FEED) and Insitu Downhole Testing programme for the Islandmagee gas storage project is co-financed by the European Union's Connecting Europe Facility.

Disclaimer releasing the European Union from any liability in terms of the content of the dissemination materials:

"The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein."

 

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