UK's InfraStrata eyes FID on N Irish gas storage project by end-H1

UK-based InfraStrata -- developer of the planned 0.5 Bcm Islandmagee gas storage project in Northern Ireland -- expects to take the final investment decision for the facility by the end of the first half, the company said Monday.

The company said it is just waiting for the award of a marine license related to the project, after which it will be ready to begin construction.

"On award of the marine license, the project will be construction-ready, thus enabling it to provide an immediate boost to the Northern Irish economy in a post COVID-19 environment once the final investment decision is implemented," CEO John Wood said in a statement.

If Islandmagee is approved as planned it would be the first firm commitment to a new UK gas storage project since 2008.

The UK has only limited, medium-range gas storage since Centrica moved to close the seasonal Rough gas storage facility off the east coast of England in June 2017.

InfraStrata said the public consultation on the marine license was now closed and that it expects to receive a request for clarifications from the Northern Irish Department of Agriculture, Environment and Rural Affairs (DAERA) shortly.

The company will then respond to any clarification requests made by DAERA after which it said it expects a recommendation to be made by DAERA to grant the license.

"The company understands that DAERA is still fully functioning at this time, whilst observing the government's COVID-19 advice," it said.

The license is required due to expected brine discharge from the facility.

Government financing

In December last year, InfraStrata said it had abandoned plans to enter into a partnership with a preferred equity partner for Islandmagee given the new government-backed financing options likely to be made available after Brexit.

As a result, InfraStrata opted to delay taking a final investment decision on the project, which it had hoped to reach by the end of 2019.

InfraStrata had been in "intensive" talks with an unnamed company that would have funded the project by taking equity in it.

Instead, InfraStrata said it had opted not to enter into a binding agreement with its preferred equity partner because of the potential new funding options the UK government could afford it.

It said the preferred equity partner was "understanding" of the position taken given that a government-supported funding program would likely de-risk project economics significantly for all shareholders, both at the company and project levels.

As much as 3.9 Bcm of storage capacity is planned across numerous sites in the UK, but none has reached a final investment decision.

InfraStrata has also been in talks about the development of a planned 5 million mt/year LNG floating storage and regasification unit at Barrow-in-Furness, northwest England.

The UK currently has three operational LNG import terminals -- two in Wales (Dragon and South Hook) and one in southeast England (Isle of Grain).

A fourth site at Teesside in northeast England is currently idled, although trader Trafigura has a license to redevelop the facility.