BP brings new expertise to gas storage proposal

A NEW partnership could mean that drilling begins by the end of this year on a test bore hole for the Islandmagee gas storage project.

Islandmagee Gas Storage Ltd (IMSL) completed contracts on Friday with BP Gas Marketing (BPGM) in a deal which brings additional expertise to the bid to excavate the largest gas storage facility on the island of Ireland.

BPGM has considerable experience in the construction of salt cavern gas storage on continental Europe. IMSL has carried out the exploratory work to date, including a seismology survey and the submission of a major planning application which looks likely to be decided this spring.

The contract grants BPGM an option to acquire a 50.495 per cent equity interest in IMSL, which is currently owned by InfraStrata UK and Moyle Energy Investments Ltd. Should the option be exercised, InfraStrata’s equity interest in IMSL will become 32.178 per cent and the remaining 17.327 per cent will be owned by Moyle.

Under the terms of the joint appraisal agreement, BPGM has agreed to fund the activities necessary to develop the project, including drilling the test bore hole, up to the point where a decision can be made on whether to proceed with detailed engineering design.

The contract is subject to IMSL being granted satisfactory planning and other key permissions, approvals and consents for the project. It is also dependant on a regulatory and operational framework being adopted by the Northern Ireland and Republic of Ireland governments to facilitate commercial operations of the facility on a level playing field with storage elsewhere in the UK and Ireland.

During this appraisal stage, BPGM will be responsible for managing surface and sub-surface engineering matters. IMSL will be managing the planning, regulatory, land and stake-holder relations, together with drilling and operating the well.

Andrew Hindle, director of IMSL, said: “We are delighted that BPGM will be working with IMSL to develop the project through its next important stage. The BPGM team bring considerable commercial skills to the project and, most importantly, experience from the construction of salt cavern gas storage in continental Europe.”

Dr Hindle added: “Assuming planning permission is granted in the first half of 2012, it is hoped that the well could be spudded (begun) before the end of the year. It is an important milestone for the Northern Ireland gas industry, bringing the development of its first gas storage facilities, with significant security benefits, one step closer to realisation.”