Portland Project Investor Inv

RNS Number : 5261W

Portland Gas plc

30 July 2009

 



For Immediate Release

30 July 2009

Portland Gas

Invitation to participate in the Portland Project

The Directors of Portland Gas plc (AIM: PTG) ('the Company') are pleased to announce that Infrastrata UK Limited ('IS-UK'), a wholly owned subsidiary of the Company today launched a process which will lead to the offer of shares in Portland Gas Holdings Limited ('PGL'), the developer of the Company's proposed large and flexible gas storage facility at Portland in the UK ('Portland Project').

The terms of the process are contained within an Information Memorandum ('IM') which is available to qualifying companies who sign a confidentiality agreement, and where the issue of the IM to such companies benefits from an exemption to the rules relating to financial promotions. The proposal is that each investor will acquire a minimum of 10% of the shares in PGL together with an equivalent amount of firm capacity, injection and withdrawal rights. The investors would also benefit from access to interruptible capacity in the facility resulting from other holders of capacity not using their firm rights or through a net off of nominations. IS-UK will use a proportion of the proceeds from the sale of shares to invest alongside the other shareholders to construct the facility.

Following the introduction of new investors, PGL will be operated independently of IS-UK and run by a board of Directors nominated by shareholders. PGL will be the storage operator for what is planned to become the largest onshore gas storage facility in the UK designed to store 1,000 million cubic metres of gas (35 billion cubic feet, or 365 million therms).

Potential investors are being asked to express interest by the end of September 2009 to join a Co-operation Group ('Group') which will facilitate the sharing of due-diligence activities and costs. PGL's legal advisor, Field Fisher Waterhouse LLP, will draw up a Shareholder Agreement and a separate Capacity Agreement in consultation with the Group. In parallel, PGL's project finance advisor, BNP Paribas, will work with the potential funders on the development of the financing structure. In Q1 2010 those who have participated in the Group will then have an opportunity to make a firm commitment to invest. At this point a process will take place to select investors and determine their shareholding in PGL.  

A base case assumption for the first gas storage operations target is March 2014. However, IS-UK is working with contractors, Hydrock and CB&I, to try to enable first stored gas to be available for the winter of 2013/14 by fast-tracking the preparation of the wellpad for drilling operations (where work starts tomorrow 31st July 2009) and the specification of long-lead equipment. For this accelerated target, the offshore pipeline across Weymouth Bay would be constructed immediately following the Olympic and Paralympic Games in 2012.

Commenting on the news, Andrew Hindle, CEO of Portland Gas plc and a Director of ISߛUK said:

'Following a period of informal discussions with potential interested parties, and the development of the commercial structure, we are pleased to be in a position to offer the major players in the UK gas industry an opportunity to share in the development of storage capacity important for the UK market.' 

'The Portland Project is 'shovel ready' for development and poised to take a key position in the gas supply chain in the UK. With the rapid decline in UK production from the North Sea, more gas storage is required to handle gas demand variation. With a high gas injection rate the project should be well positioned to support the new LNG suppliers (set to supply around 50% of UK gas supply by 2020*), through the injection of gas unloaded at the new terminals, and other importers of long-distance gas arriving by pipeline. The high withdrawal rate from the facility is projected to provide up to 7.5% of UK demand on a peak day.'

* Source: Wood Mackenzie, Increasing LNG value using Portland Gas storage, July 2009. 

  Available for download at www.portland-gas.com.

For further information please contact:

Portland Gas plc Andrew Hindle, Chief Executive Officer  Craig Gouws, Chief Financial Officer	020 8332 1200
PR - Watershed Sara Hudston	01308 420785
Investor Relations - Buchanan Communications  Ben Willey	020 7466 5000
Nominated Advisor and Broker - Seymour Pierce  Jonathan Wright  Sarah Jacobs  Richard Redmayne	020 7107 8000

Notes to Editors:

Background on Portland Gas plc

Portland Gas' business is focused on the development of two gas storage projects in the United Kingdom at Portland, Dorset and at Islandmagee, County Antrim, Northern Ireland. The two projects could between them provide over 10% of the total UK and Ireland peak daily demand in the latter part of the next decade. The Company is also developing new projects in mainland Europe initially focussing on Germany and Spain. The Company is one of only a few in Europe focused specifically on gas storage development, a sector with significant growth potential in Europe over the coming decades. In order that the 'Portland Gas' name can remain with the Portland Project where it is very well established in Dorset, the Directors intend to seek approval at the next Annual General Meeting of the Company, scheduled for December 2009, to change the name of Portland Gas plc to 'Infrastrata plc'. The project company, Portland Gas Holdings Limited, would then be renamed to 'Portland Gas Limited'.

Portland Project

At a projected 1,000 million cubic metres ('mcm') or 35 billion cubic feet ('bcf') of working gas, the facility would be the largest onshore gas storage facility in the UK. Planning permission was granted by Dorset County Council in May 2008 and Pipeline Construction Authorisation was granted by the BERR (now known as the Department of Energy and Climate Change) in July 2008. The gas storage facility is designed to inject or withdraw gas at 20mcm per day. On peak demand days the design allows for the withdrawal rate to be boosted to 30mcm per day. The current estimate of total development cost for the project is £456m. The project will use brine compensation technology and will not require cushion gas. 

Background on Field Fisher Waterhouse LLP

Field Fisher Waterhouse LLP ('FFW') is a substantial European law firm with over 130 partners and over 300 other lawyers and offices in London, Paris, Brussels, Hamburg and Manchester and associated offices in a number of Spanish and Italian cities. The firm is used to, and has extensive experience of, advising in relation to major projects and joint venture structures, both in the energy sector and in other fields. In particular FFW acted in relation to the UKߛContinent Gas Interconnector project from its inception in the early 1990s, providing independent advice to the project company in establishing the structure of, and documentation for, the project in conjunction with the project participants. FFW continue to act for Interconnector (UK) Limited today. FFW have much other relevant experience, including in relation to gas storage projects.

Background on BNP Paribas

BNP Paribas Group is one of the world's largest Banking groups with a strong balance sheet of over €1,517 billion and a market capitalization of approximately €27.6 billion (as of December 2008). With over 205,000 employees and an active presence in over 83 countries, it is a leading international institution operating in the world's seven largest financial centres and engaged in structured financing worldwide. BNP Paribas' franchise in Project Finance relies on an experienced team of over 100 professionals. BNP Paribas has been awarded Best Global Infrastructure & Project Finance House by Euromoney in 2009.

Background on CB & I

CB&I (Chicago Bridge & Iron Company) combines proven process technology with global capabilities in engineering, procurement and construction to deliver comprehensive solutions to customers in the energy and natural resource industries. With more than 70 proprietary licensed technologies and 1,500 patents and patent applications, CB&I is uniquely positioned to take projects from conceptual design, through technology licensing, engineering and construction and final commissioning. Drawing upon the global expertise and local knowledge of approximately 18,000 employees in more than 80 locations, CB&I safely and reliably executes projects worldwide.

Background on Hydrock

Hydrock is a construction services group providing consultancy and specialist contracting services across a number of sectors including energy, regeneration, waste, development and mining and quarrying. The group's head office is at Almondsbury, near Bristol and has nine other offices throughout the UK. The Company has built a strong reputation for solving complex (and interesting) engineering problems from the ground up. Hydrock Group employs approximately 400 people and the highly prestigious 'Sunday Times Best 100 companies to work for Survey' has placed Hydrock amongst the top companies to work for in the UK for the fourth year running.

Further information is available on the Company's website www.portland-gas.com. 

 

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