The Directors of Portland Gas plc declaes the results of the 3D seismic programme acquired during October and November 2007 by its wholly owned Northern Ireland subsidiary Portland Gas NI Limited.

The interpretation of the data has indicated that the Permian salt sequence encountered in 1981 in the Larne-2 borehole extends as anticipated under Larne Lough into the area where Portland Gas was granted an exploration licence in 2007 by The Crown Estate. Interpretation of the seismic data indicates that the salt in the target area is at a depth of approximately 1400 metres with a thickness of approximately 200 meters. Portland Gas is now 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.

The Company is also negotiating terms with a strategic partner to take a 25-35% interest in the project. Portland Gas will be the operator of the proposed joint venture.

Portland Gas is now 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.

Portland Gas would ensure that the capacity availability is Third Party Access compliant under Northern Ireland and European legislation. It is anticipated that a proportion of the capacity in the facility would be made available under long-term contracts to facilitate the debt financing of the project, however the majority would be auctioned on an annual basis. Customers could be based in Northern Ireland, the remainder of the UK or the Republic of Ireland.

Commenting on the project Andrew Hindle, the CEO of Portland Gas plc, said: “We are delighted with the results of the seismic programme. The asset would have a significant positive impact on the dynamics of the gas market in the whole of Ireland and add significantly to security of gas supplies. Indeed, in winter, Northern Ireland could become a net exporter of gas from its current position of 100% dependence on imports.”

Tags: Portland Gas plc