Project Funding Update

RNS Number : 8353W

Infrastrata PLC

26 November 2010

 



26 November 2010                                                                             For Immediate Release

InfraStrata plc

("InfraStrata" or the "Company")

Islandmagee Storage Project Funding Update

The Directors of InfraStrata plc (AIM: INFA), the independent gas storage and infrastructure specialist, today provide an update on the status of the equity sale in its gas storage project in Northern Ireland.

On 8 November 2010 the Company announced that it would be continuing to discuss a potential participation in the Islandmagee Storage Project with eCORP International, LLC, but on a non-exclusive basis. The Company has now opened an online data room for the project and in conjunction with project partner Mutual Energy Limited, is entering into discussions with several major companies who have expressed an interest in a potential equity participation in the project. The process is intended to be short with a target for completion within Q1 2011.

Commenting on the update, Andrew Hindle, CEO of Infrastrata plc said:

"Good interest is being shown in the project. It is timely given the concerns about security of gas supplies in the UK. This year gas storage levels are at a lower level entering winter than at the same point in any of the past 4 winters¹. This is despite overall UK storage capacity having grown by 10% during this period.

The global oversupply of liquefied natural gas (LNG), caused largely by unconventional gas production displacing import demand in the US, has been depressing forward winter gas prices and reducing the volatility in prices. This has created a poor environment for gas storage investment, despite the creation of new capacity being of strategic national importance to the UK. However, LNG is fundamentally a base load supply and once increasing global demand absorbs the excess capacity, the Company expects the volatility to return to the gas market to provide the price signals for renewed investment. Gas storage is economically a more efficient way of providing global seasonal swing compared to the alternatives of increasing long-distance pipeline capacity or running the LNG supply chain on an intermittent basis. Gas storage is also very efficient at managing shorter term demand variations in the market."

¹ See chart under Market Data at www.infrastrata.co.uk 

For further information please contact:

InfraStrata plc

Andrew Hindle, Chief Executive Officer                                                            020 8332 1200

Craig Gouws, Chief Financial Officer

Financial PR - Buchanan Communications

Richard Darby                                                                                              020 7466 5000

James Strong

Nominated Advisor and Broker - Seymour Pierce

Jonathan Wright/ Jeremy Porter - Corporate Finance                                      020 7107 8000

Richard Redmayne - Corporate Broking

Notes to Editors:

Background on InfraStrata plc

InfraStrata plc is developing two gas storage projects in the United Kingdom at Portland, Dorset (50% interest) and at Islandmagee, County Antrim, Northern Ireland (65% interest). The two projects could between them provide over 10% of the total UK and Ireland peak daily demand in the latter part of this decade. 

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

Background on the Islandmagee Storage Project

The proposed 500 million cubic metres ("mcm") facility would be the largest on the island of Ireland and the first for Northern Ireland. It would make a significant contribution to the security of gas supplies. The facility is being designed to inject gas at 12 mcm and withdraw gas at 22 mcm per day. The cost of construction has been estimated at circa £250 million, including cushion gas. The project is owned by Islandmagee Storage Limited ("IMSL"), an independent Northern Ireland registered company. Its two shareholders are a wholly owned subsidiary of Mutual Energy, an operator of existing key gas and electrical infrastructure in Northern Ireland, and a wholly owned subsidiary of InfraStrata plc.

A planning application for the Islandmagee Storage Project was submitted in March 2010. The submission of the planning application followed more than two years collating information and carrying out very thorough investigative studies into the development of a natural gas storage facility within a Permian salt sequence a mile beneath Larne Lough, including a 3D seismic survey carried out in 2007. Since then IMSL has been consulting extensively with stakeholders and local resident groups and held two well attended public exhibitions during 2009.

The storage of natural gas in salt caverns occurs throughout the world and facilities have been operating safely in the UK since the 1970s. Salt storage facilities can store and retrieve gas very quickly. This will be important for the availability of gas supplies for power stations to respond to intermittent wind generation in the future greener energy mix in Northern Ireland. The Larne area is the only area on the island of Ireland where a suitable salt sequence is present. In addition to the favourable geology of the area, Islandmagee already contains the main gas and electricity network required for a gas storage project, along with access to the water required to dissolve the salt to form the caverns. The proximity to this important infrastructure reduces the environmental impact of the facility.

In addition to the security benefits, the project would also result in the creation of more than 20 high quality permanent jobs for the Larne area, and bring in benefits for local businesses (e.g. support services, accommodation, retail etc.) during the construction phase.

Further information is available on the project website www.islandmageestorage.com.

 

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