InfraStrata plc has submitted a new “grant for works” application in respect of its Islandmagee gas storage project (the "Project") to the EU (European Union) pursuant to the requirements of the Connecting Europe Facility grant reference: “CEF-Energy-2018-2”. It should be noted that this new application does not impact the Company’s existing EU grant for FEED ("Front End Engineering Design") works. As announced on 11 October 2018 FEED is progressing ahead of schedule with almost 70% of the pre-established milestones having been achieved.

The application has been submitted for a grant intervention rate of 33.14%. This equates to a grant amount of circa £40 million towards the total construction cost of the Project’s first phase of an initial two storage caverns.

The Company will receive notification from CEF-Energy-2018-2 in February 2019 (or such later date as publicly notified by the EU) detailing whether the application was successful, and if so, the level of funding granted. The notification timeframe aligns with the Company’s planned H1 2019 programme of activities for final investment decision (“FID”), procurement of a contractor and the commencement of the engineering works.

A key element that must be submitted as part of the grant (for it to be eligible for funding) is an independently prepared Cost Benefit Analysis (CBA) for the Project. The Company duly commissioned this independent report from Energy Reform Consulting Services and the results demonstrated the clear need for the Project. The report highlighted the fact that just a single day’s power outage will cost the UK economy in excess of £1.1 billion at its peak, with an average daily cost of £700 million.

The CBA demonstrates a strong investment to benefit ratio and clearly underpins the Directors’ belief that this Project could be a key piece of strategic infrastructure for the UK. A copy of the CBA will be uploaded onto the Company’s website by the end of the day tomorrow. Whilst a Brexit “No Deal” generally increases uncertainty, the Directors do not believe that it will affect this application as the UK government (as part of the “no deal” papers published) has stated that it will honour PCI (EU Project of Common Interest) project funding in the event of leaving the EU with no deal.

John Wood, Chief Executive Officer commented,
“I would like to thank the team for their extremely hard work and efforts in submitting the grant application by the designated deadline and we look forward to receiving the decision in February 2019. We now continue to focus on the last few elements of the FEED works and the conclusion of key discussions with our preferred offtake partners and project level equity partners”.

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, and 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 is scheduled for completion by the end of 2018. To date approximately £11.5m has been invested in the project.

KeyFacts Energy Industry Directory: InfraStrata