Infrastrata PLC (LSE:INFA) provides an update on the final milestone for the Front End Engineering Design (FEED) of its Islandmagee gas storage project. The FEED and in-situ Downhole Testing programme for the project is co-financed by the European Union’s ‘Connecting Europe Facility’ (CEF). The company confirms the FEED report has now been submitted to the European Union in accordance with the grant conditions.
Infrastrata’s wholly owned subsidiary Islandmagee Storage Limited (IMSL) was granted planning permission for the natural gas storage facility at Islandmagee, Co Antrim, in October 2012. The plan is to create up to eight caverns, capable of storing a total of around 450 million cubic metres of gas in Permian salt beds approximately 1,300 metres below Larne Lough in the Islandmagee peninsula. The facility has the potential to provide 25% of the UK’s natural gas storage capacity.
Adjacent to the proposed site is Northern Ireland’s main gas-powered power station at Ballylumford. The station provides half of the province’s power, and is also the terminating point of the existing Scotland-Northern Ireland gas pipeline, making it an ideal location for a project of this type.
The Islandmagee-1 well was successfully drilled in May/June 2015 and confirmed the feasibility of the project, by obtaining wireline data and core samples of the Permian salt.
The proposed facility is unique in being the only gas storage project in North West Europe to be awarded ‘Project of Common Interest’ (PCI) status by the European Union, confirming its strategic importance to the entire continent. PCI status unlocks EU grant funding and accelerated permitting procedures, as well as incentivised regulatory conditions.
The submitted FEED report will now be reviewed by the EU to ensure it complies with all the required conditions. InfraStrata expects it will receive its final payment from the EU sometime in the second quarter of 2019 after this verification process has been completed.
Now the report has been submitted, the company will concentrate on completing negotiations that are underway with three potential equity providers that have provided the company with term sheets for equity funding at Project or subsidiary level. The term sheets are currently non-binding, however, Infrastrata states discussions are detailed and advanced in today’s update. The company expects to provide a further update before the year-end.
The next phase of the Project is planned enabling works, which are scheduled to start in January 2019. A couple of studies to develop the project further have been undertaken. The company has commissioned a Concept Development Study by Costain to assess the technical implications of twinning the pipeline that runs between Northern Ireland and Scotland. This includes investigating the restrictions of connecting any new pipeline into the existing network and the necessary regulatory framework.
In addition, the company has instructed Atkins to provide a Concept Development Study on developing additional caverns on Islandmagee, as previous advice received indicated that an additional 15 caverns could be possible on top of the 8 already planned. Infrastrata stresses in its update that there are no guarantees that it will be possible to develop any further caverns at this stage.
John Wood, Chief Executive Officer, commented: “It is testament to the team that we are building at InfraStrata that we have managed to deliver these milestones in a timely manner. As we progress through to the end of 2018, we are working hard to close out the equity funding for the Project. We are working through the process methodically to ensure we create maximum shareholder value. We are working to ensure we hit the ground running in 2019 with many work streams in progress”