TIDMINFA
RNS Number : 2792E
Infrastrata PLC
03 July 2019
3 July 2019
InfraStrata plc
("InfraStrata" or the "Company")
Islandmagee Project Update
InfraStrata plc (AIM: INFA), the UK quoted company focused on
the development of natural gas storage capacity, is pleased to
provide an update on recent progress with the Company's Islandmagee
Gas Storage Project (the "Project").
Project Funding Partners & Final Investment Decision
(FID)
The Company achieved a transformational milestone for the
Project on 11 June 2019 when it entered into a Binding Term Sheet
with Vitol SA for the proposed offtake of the entire storage
capacity of the Project for 12 years. The Company announced that it
had agreed a term sheet with Vitol SA that, once converted into a
full gas storage agreement in due course, will underpin cumulative
Project revenues for the first 12 years of operation of the gas
storage facility, expected to be approximately GBP600 million to
GBP780 million before costs at full operating capacity. Over the 40
year lifetime of the facility operations, cumulative revenues are
expected to be between GBP2 billion and GBP2.60 billion before
costs at full operating capacity. The directors of InfraStrata
believe that not only does this outline agreement validate the need
for gas storage for the whole of the UK, but in due course will
also provide an invaluable contribution to the local Northern
Ireland economy in terms of direct and indirect employment. The
Company has now proceeded to the next stage of this process to
draft and agree the Gas Storage Agreement (GSA) with Vitol SA,
based on the binding pricing and capacity terms agreed in the Term
Sheet, and that will cover the entire capacity of the Project,
being 500 million cubic metres across all seven caverns once
constructed and fully operational.
The signing of the Term Sheet has enabled InfraStrata to
continue to progress detailed discussions with potential equity and
debt partners in the UK and Europe for the funding of the
construction of the Project and pre-construction works, and this is
a key priority for the Board. Discussions include proposals for a
convertible debt facility that can be converted to equity at the
Project level. Since the announcement of the Term Sheet, the
Company has been able to provide the potential funding partners
with additional financial modelling, that includes revenue
sensitivities, construction costs and the contracting methodology,
all of which demonstrate the Project's technical and economic
viability.
After receiving and fully analysing all Project construction
offers, InfraStrata has now refined its main construction strategy.
The main focus is to de-risk the Project, as much as possible,
during construction and to better integrate the various
construction services as well as centralise the common requirements
of the selected contractors. This is expected to lead to increased
cost savings, operational efficiencies and ultimately reduce the
impact on the local area within Islandmagee.
The Company remains committed to obtaining a FID to fund the
construction of the Project by the end of 2019, which can then lead
to first injection of gas in 2022 and full commercial gas storage
operations in 2023. This is subject to agreement with the Company's
chosen funding partner. Further details will be announced as soon
as possible.
Marine Licence
The Company continues to make significant progress on the marine
licence and confirms that it has submitted all the reports that
were last formally requested by the Department for Agriculture,
Environment and Rural Affairs in Northern Ireland (DAERA) as
follows:
-- Shadow Habitats Assessment
-- Updated Brine Model
-- Independent Verification of Brine Model
-- Environmental Monitoring Plan
InfraStrata expects feedback on these reports from DAERA in due
course, which is a normal step in the process of being granted a
full marine licence. Further, as an EU Project of Common Interest
(PCI), the Project is entitled to receive expedited processing
timeframes in relation to licencing and permitting. InfraStrata is
working closely with DAERA so that the full and proper process
required for the issuance of a full marine licence can be completed
as soon as possible.
As the Project moves towards the construction phase, the Company
has awarded minor contracts to update environmental baseline
surveys that will be required prior to the construction process
commencing. This piece of work will be completed in due course and
kept ready before construction activities commence. As the Company
has previously stated, it sees no reason why the full marine
licence will not be issued once due process has been adhered to and
been completed.
EU Grants
The final EU application to receive the remaining grant monies
of EUR1.6m for the FEED work that was completed last year continues
to be progressed and the funds are now expected to be received from
the EU later this year after all final audits have been completed.
This is currently an ongoing process and InfraStrata expects to
receive this already-approved grant (which was subject to
completion of the FEED to the satisfaction of the EU and according
to set milestones that the Company believes it has met) once all
the external audit formalities have been duly completed. The
Company is confident of receiving the monies in due course but is
subject to the due process and timetable of the EU.
As announced on the 14 June 2019, an application was made to the
EU for a sum of EUR9,299,446.00 to enable the FEED study in order
to facilitate the reverse flow of the Scottish Northern Ireland
Pipeline (SNIP). The Company expects to hear of the outcome of this
application by the end of 2019. A reversal of the SNIP will enable
the full capacity of the Project to be utilised once all proposed
seven caverns are constructed and ready for operation, expected by
2024/5. Additionally, the Company is considering other strategies
including virtual trading of gas between Northern Ireland and
mainland Britain in order to fully maximise the storage capacity
made available by 2024/25. This will not only increase trading
optionality but will also help in balancing of the two networks
during peak demand days.
John Wood, Chief Executive Officer, commented: "We are now at a
very exciting stage of the Islandmagee Gas Storage Project. Having
underpinned our future revenues with an innovative offtake
structure, we have been able to fully model the future income
streams for the next 12 years. This has assisted in our
negotiations with potential project funding partners. As we did
with the Term Sheet with Vitol, we will take the required time to
negotiate the best long term deal we can so as to ensure our long
term interests and those of our shareholders are protected."
For further information, please contact:
InfraStrata plc c/o Yellow Jersey
John Wood, Chief Executive +44 (0)20 3735
8825
Allenby Capital Limited (AIM Nominated
Adviser & Joint Broker) +44 (0)20 3328
Jeremy Porter / Liz Kirchner 5656
Yellow Jersey +44 (0)20 3735
Tim Thompson 8825
-ENDS-
Notes to editors:
InfraStrata is an independent gas storage company focused on the
UK and Ireland. Further information is available on the Company's
website: www.infrastrataplc.com
Background on the Islandmagee Storage Project
The Islandmagee gas storage project is a proposed salt cavern
gas storage facility located on Islandmagee in County Antrim,
Northern Ireland. The Board of InfraStrata believes that the
proposed 500 million cubic metres natural gas cavern storage
facility will provide over 25% of the UK's natural gas storage once
constructed. The facility will be situated adjacent to the Scotland
Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500 megawatt
electricity interconnector. Work commenced in 2007 with the
acquisition of 3D seismic data to image the Permian salt in the
Larne Lough area. During 2012, planning permission was granted for
the project and a gas storage licence was issued by the Utility
Regulator. In 2015 a well was drilled to core the salt and confirm
the technical feasibility of the project, supported in part by the
European Commission. The Front End Engineering and Design (FEED)
element of the project was completed in November 2018 and the FEED
report was submitted to the European Union in December 2018 in
accordance with the Company's grant conditions. To date
approximately GBP14.5m has been invested in the project.
Further information is available on the company's website:
www.infrastrataplc.com
The Front End Engineering & Design (FEED) and Insitu
Downhole Testing programme for the Islandmagee gas storage project
is co-financed by the European Union's Connecting Europe
Facility.
Disclaimer releasing the European Union from any liability in
terms of the content of the dissemination materials:
"The sole responsibility of this publication lies with the
author. The European Union is not responsible for any use that may
be made of the information contained therein."
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END
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