£270m Islandmagee gas project gets EU funding boost

Department of Environment artist's impression showing how the multi-million natural gas storage site will look. INLT 49-999-CON

Department of Environment artist's impression showing how the multi-million natural gas storage site will look. INLT 49-999-CON

Plans to store natural gas deep below Larne Lough have taken a crucial step forward, after the project secured an EU cash injection.

Oil and gas exploration company InfraStrata intends to create seven huge underground caverns to store 500 million cubic metres of natural gas, enough to satisfy Northern Ireland’s demand for 60 days.

And the firm has secured a €1.75m grant from the EU, which is co-financing the £270m Islandmagee project.

InfraStrata plans to place the funds into an escrow account as security to cover a short-term loan it received last year from fellow London-listed Baron Oil. The company will be due to make its first repayment to Baron Oil on August 1 .

Planning permission for the above ground facilities at Islandmagee was granted in 2012, but the project suffered a major set back in 2014 when its main investor, BP Gas Marketing Ltd decided to withdraw.

However, the scheme was subsequently given a substantial boost after it was recognised as an EU Project of Common Interest (PCI).

The planned Islandmagee facility is the only gas storage project in northwest Europe to be awarded PCI status, which means it will also benefit from accelerated permitting procedures and improved regulatory conditions.

Andrew Hindle, CEO of InfraStrata said the receipt of the grant was “the conclusion of a highly successful programme of work to complete the feasibility phase of the Islandmagee gas storage project”.

He added: “The continued availability of EU grant funding for the next phase of the project, the Front End Engineering and Design, is a testament to the strategic importance of the project and to InfraStrata’s ability to deliver these work programmes.”

The gas storage project is being managed by Islandmagee Storage Limited, a joint venture between InfraStrata, which holds 65 per cent, and Moyle Energy Investments, which owns the remaining 35 per cent. Baron Oil has the option to convert the loan balance into a 15 per cent equity interest in the project.

The gas storage project has attracted hundreds of objections, with environmentalists fearing the firm’s intention to pump brine out to sea from the excavated caverns will harm marine and bird life in the area.