InfraStrata plc (AIM:INFA), the independent gas storage and petroleum exploration company, is pleased to announce that its wholly owned subsidiary, InfraStrata UK Limited (“InfraStrata”), together with Moyle Energy Investments Limited ("Moyle"), has entered into agreements with BP Gas Marketing Limited (“BPGM”) regarding the appraisal of the Islandmagee gas storage facility development project in County Antrim, and the grant of an option to BPGM to acquire a 50.495% equity interest in Islandmagee Storage Limited ("IMSL"), the gas storage developer in Northern Ireland currently owned by InfraStrata (65%) and Moyle (35%). Should the option be exercised InfraStrata’s equity interest in IMSL will become 32.178% and the remaining 17.327% will be owned by Moyle.
Under the terms of a Joint Appraisal Agreement, BPGM has agreed to fund the activities necessary to develop the project up to the point where a decision can be made on whether to proceed with a detailed engineering design. The greatest item of the expenditure during the appraisal period, is the drilling of the first well. The drilling of the well is subject to IMSL being granted satisfactory planning permissions and other key consents and approvals for the project, and a regulatory and operational framework being adopted by the Northern Ireland and Republic of Ireland authorities to facilitate commercial operations of the facility on a level playing field with storage elsewhere in the UK and Ireland.
During this appraisal stage of the project, BPGM will be responsible for managing surface and sub-surface engineering matters. IMSL will be managing the planning, regulatory, land and stakeholder relations together with drilling and operating the well.
In consideration for the work undertaken in developing the project to date, IMSL will receive an amount of up to £400,000. £200,000 was paid on signature of the Joint Appraisal Agreement and a further £200,000 will be paid if planning permission for the project is granted. These funds will be used to repay a portion of the InfraStrata loan account to IMSL.
Commenting on the agreements, Andrew Hindle, CEO of InfraStrata plc said:
“We are delighted that BPGM will be working with InfraStrata and Moyle to develop the project through its next important stage. The BPGM team brings considerable commercial skills to the project and, most importantly, experience from the construction of salt cavern gas storage in continental Europe.
Assuming planning permission is granted in the first half of 2012, it is hoped that the well could be spudded before the end of the year.
The announcement today represents an important milestone for the Company and recognises the considerable effort that the InfraStrata and Moyle teams, and their consultants, have expended over the past four years.
It is also 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.”