Strategic Partners

RNS Number : 1315U

Portland Gas plc

12 May 2008

 

For Immediate Release                                               12 May 2008





                                  Portland Gas





                                 PRESS RELEASE





                   Strategic Partner joins the Larne project





The Directors of Portland Gas plc (AIM: PTG) ('the Company' or 'Portland Gas')
are pleased to announce that its Northern Ireland subsidiary Portland Gas NI
Limited has agreed Heads of Terms with Moyle Energy Investments Limited, a
subsidiary of Northern Ireland Energy Holdings Limited ('NIEH'), operator of the
Scotland to Northern Ireland Pipeline (SNIP), for NIEH to participate in the
Larne Lough gas storage project. Under the terms of the agreement NIEH have an
option, following completion of a due diligence process and consultation with
their stakeholders, to become a joint venture partner taking a 35% equity
interest in the Larne Lough project and paying their share of the development
costs.



Commenting on the project Andrew Hindle, CEO of Portland Gas plc, said:



'NIEH have been assisting Portland Gas for over a year and their involvement is
integral to the success of this strategically important project. They own the
gas infrastructure into which the Larne Lough gas storage project would be
connected. With their long-term approach and intimate understanding of local
customer, regulatory and government needs, the mutual energy infrastructure
company is an ideal partner for Portland Gas NI Limited.'





For further information please contact:



Portland Gas plc


Andrew Hindle, Chief Executive Officer                            020 8332 1200
Craig Gouws, Chief Financial Officer


Investor Relations - Buchanan Communications                      020 7466 5000
Ben Willey

Corporate PR - Watershed                                          01308 420785
Sara Hudston

Jet PR (Northern Ireland Public Relations Consultant)             07803 722322
Jacqui Thompson

Nominated Advisor and Broker - Seymour Pierce                     020 7107 8000
Jonathan Wright




Notes to Editors:



Background on Portland Gas plc



Portland's business focuses on the development of gas storage projects in the
United Kingdom and internationally. It currently has two projects in its
portfolio: an advanced project on Portland, Dorset, which has been under
development for over three years, and the Larne Lough project in Northern
Ireland, which was announced in July 2007. Further information is available on
the Company's website www.portland-gas.com.



Background on Northern Ireland Energy Holdings ('NIEH')



NIEH is a company limited by guarantee. Its principal objective is to own and
operate energy infrastructure assets in the interests of the energy consumers of
Northern Ireland.  The company is a mutualised entity and therefore has no
shareholders and its primary stakeholders are energy consumers.



NIEH subsidiary Premier Transmission Limited operates the Scotland to Northern
Ireland natural gas transmission pipeline ('SNIP'). The 24-inch diameter
pipeline is 135 kilometres long and runs from Twynholm in Scotland to
Ballylumford in Northern Ireland. It transports gas to Ballylumford Power
Station which generates over half of Northern Ireland's electricity needs and
feeds the natural gas distribution system in Belfast and the Greater Belfast
area. NIEH also operates the 500 megawatt Moyle interconnector to Scotland.



Background on the Larne project



The interpretation of a 3D seismic data acquired in 2007 has indicated that the
Permian salt sequence encountered in 1981 in the Larne-2 borehole extends under
Larne Lough into the area where Portland Gas was granted an exploration licence
in 2007 by The Crown Estate. The salt in the target area is at a depth of
approximately 1,400 metres with a thickness of approximately 200 meters.
Portland Gas is planning to drill a borehole later in 2008 on Islandmagee to
confirm the seismic interpretation and to take cores of the salt sequence to
complete the design of the caverns to store natural gas. The Company is seeking
a suitable site from which to drill the borehole within the area of its onshore
mineral licence, awarded in 2007 near Ballylumford by the Department of
Enterprise, Trade and Investment.



Portland Gas is undertaking an Environmental Impact Assessment with the
intention of submitting a full planning application for the gas storage project
in 2009, subject to concluding any necessary landowner agreements. The Company
will liaise closely during 2008 with all stakeholders to ensure that the surface
facilities, required to create the caverns and compress the gas into store, are
located in the most appropriate place and designed to minimise visual and
environmental impact. The caverns would be created within the salt sequence
below Larne Lough but accessed from directionally drilled boreholes on the land.
The nearest point of connection to the national gas infrastructure is at the
Scotland to Northern Ireland Pipeline above ground installation at Ballylumford.



Network, market, technical and economic analyses are also underway to determine
the most appropriate storage capacity and the gas injection and withdrawal rates
for the facility. Initial studies indicate that the facility could have a
storage volume of up to 500 million cubic metres (18 billion cubic feet) of gas.
In this case some reinforcement of the current gas infrastructure will be
required to manage the injection and withdrawal of gas and provide sufficient
flexibility to meet demand spikes for customers.



Background to gas storage



Natural gas is an extremely important source of energy, currently contributing
39 per cent of the UK's energy needs.  For many years, the UK has relied heavily
on its North Sea gas fields. That resource of secure and sustainable gas flow
has limited the need to provide significant storage volumes since daily and
seasonal demands for gas have been accommodated by the flexibility of supplies
close to shore.  This relative luxury is becoming less and less sustainable as
the UK becomes increasingly reliant on less flexible imported gas, the outcome
of which is that in order to maintain control of supply and demand requirements,
the need for a substantial portfolio of natural gas storage facilities is now a
national issue.



Gas storage plays an important role in managing swing demand and mitigating the
need for (expensive) emergency imports. Gas storage facilities can be filled
during times of lower demand to be available during periods of higher demand,
either on a daily basis or seasonally.



Opportunities for a safe and environmentally friendly method of storing gas are
relatively few. One of the safest and most environmentally friendly methods of
storing large quantities of gas is deep underground within caverns created
within salt sequences.  This is a tried and tested method in use all over the
world for more than 40 years.

 

END

 

 

MSCILFSEEAIAIIT