UK-based Infrastrata will reduce the size of its proposed Portland natural gas storage site and increase deliverability rates in order to enhance its chances of receiving investment. Primary operations had been based on storage along with a small exploration business , but there is little interest in large storage sites. The proposed 1 billion cubic metre Portland site is therefore likely to be scaled down, according to Infrastrata CEO Andrew Hindle, in favour of a smaller, more flexible site with higher injection and withdrawal rates.
"The investment climate for bigger, seasonal storage sites has cooled off recently because of tighter Summer/Winter spreads at the NBP, and none have received investment recently and that has been the case with Portland," Hindle told ICIS on Monday. "The ones really benefitting are the high-cycle sites like Holford."
Consequently, Hindle believes that the potentially smaller Portland site would appeal more to investors because greater flexibility would attract more capacity holders. "If the demand for a bigger site proved to be there later on, if the spreads widened, then it wouldn't be too hard to expand from there, as long as we have a foot in the door." No specific details on a potential new capacity were given.
Infrastrata's other planned storage site is the 500 million cubic metre capacity Islandmagee project in Northern Ireland.
A decision is expected by Northern Ireland's Utility Regulator later in 2012 on whether planning permission will be granted, although Infrastrata is convinced the project will be given the go-ahead.
"There is just one small site in the south of Ireland, so Islandmagee is integral. We are looking to connect to both to the Irish network and the NBP, so the project has its merits," said Hindle, suggesting that investment may prove less problematic to obtain given the recent tie-in with BP.
Infrastrata is also planning a bid for the UK's Carbon Capture Storage (CCS) competition.
"The change will provide stronger backing for the Portland gas storage project to submit a bid in the CCS project. The CCS would make use of existing permissions and consents for the Portland project and allow synergies with the gas storage project," Hindle said.
Infrastrata registered interest in the competition by the 13 April deadline and is expected to form a consortium and plan a bid before the July deadline. In doing so, they are expected to be among at least eight entrants in the competition.
Infrastrata had previously received consent to build a gas pipeline to connect a potential storage site to the British grid, along with power generation facilities at Portland.
After a prolonged period of being unable to find investment for the site, Infrastrata has attempted to approach the plans from a different angle, to bring forward power generation in order to enable the project to advance during 2012.
"We have a lot of permits, and as such, it only required a few very small modifications to enable us to go ahead with CCS", Hindle said. "Unlike the other North Sea projects, we will look to store the CO2 in adjacent caverns". JT
Copyright 2012 Heren Energy Ltd. All Rights Reserved.
(Originally published April 30, 2012, in European Spot Gas Markets.)