Portland Project Investor Invitation

 

TIDMPTG 
 
RNS Number : 5261W 
Portland Gas plc 
30 July 2009 
 

 
 
 
 
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| For Immediate Release                 |                          30 July 2009 | 
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Portland Gas 
 
 
Invitation to participate in the Portland Project 
 
 
 
 
The Directors of Portland Gas plc (AIM: PTG) ("the Company") are pleased to 
announce that Infrastrata UK Limited ("IS-UK"), a wholly owned subsidiary of the 
Company today launched a process which will lead to the offer of shares in 
Portland Gas Holdings Limited ("PGL"), the developer of the Company's proposed 
large and flexible gas storage facility at Portland in the UK ("Portland 
Project"). 
 
 
The terms of the process are contained within an Information Memorandum ("IM") 
which is available to qualifying companies who sign a confidentiality agreement, 
and where the issue of the IM to such companies benefits from an exemption to 
the rules relating to financial promotions. The proposal is that each investor 
will acquire a minimum of 10% of the shares in PGL together with an equivalent 
amount of firm capacity, injection and withdrawal rights. The investors would 
also benefit from access to interruptible capacity in the facility resulting 
from other holders of capacity not using their firm rights or through a net off 
of nominations. IS-UK will use a proportion of the proceeds from the sale of 
shares to invest alongside the other shareholders to construct the facility. 
 
 
Following the introduction of new investors, PGL will be operated 
independently of IS-UK and run by a board of Directors nominated by 
shareholders. PGL will be the storage operator for what is planned to become the 
largest onshore gas storage facility in the UK designed to store 1,000 million 
cubic metres of gas (35 billion cubic feet, or 365 million therms). 
 
 
Potential investors are being asked to express interest by the end of September 
2009 to join a Co-operation Group ("Group") which will facilitate the sharing of 
due-diligence activities and costs. PGL's legal advisor, Field Fisher Waterhouse 
LLP, will draw up a Shareholder Agreement and a separate Capacity Agreement in 
consultation with the Group. In parallel, PGL's project finance advisor, BNP 
Paribas, will work with the potential funders on the development of the 
financing structure. In Q1 2010 those who have participated in the Group will 
then have an opportunity to make a firm commitment to invest. At this point a 
process will take place to select investors and determine their shareholding in 
PGL. 
 
 
A base case assumption for the first gas storage operations target is March 
2014. However, IS-UK is working with contractors, Hydrock and CB&I, to try to 
enable first stored gas to be available for the winter of 2013/14 by 
fast-tracking the preparation of the wellpad for drilling operations (where work 
starts tomorrow 31st July 2009) and the specification of long-lead equipment. 
For this accelerated target, the offshore pipeline across Weymouth Bay would be 
constructed immediately following the Olympic and Paralympic Games in 2012. 
Commenting on the news, Andrew Hindle, CEO of Portland Gas plc and a Director of 
IS?UK said: 
 
 
"Following a period of informal discussions with potential interested parties, 
and the development of the commercial structure, we are pleased to be in a 
position to offer the major players in the UK gas industry an opportunity to 
share in the development of storage capacity important for the UK market." 
 
 
"The Portland Project is "shovel ready" for development and poised to take a key 
position in the gas supply chain in the UK. With the rapid decline in UK 
production from the North Sea, more gas storage is required to handle gas demand 
variation. With a high gas injection rate the project should be well positioned 
to support the new LNG suppliers (set to supply around 50% of UK gas supply by 
2020*), through the injection of gas unloaded at the new terminals, and other 
importers of long-distance gas arriving by pipeline. The high withdrawal rate 
from the facility is projected to provide up to 7.5% of UK demand on a peak 
day." 
 
 
* Source: Wood Mackenzie, Increasing LNG value using Portland Gas storage, July 
2009. 
  Available for download at www.portland-gas.com. 
 
 
 
 
For further information please contact: 
 
 
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| Portland Gas plc                            | 020 8332 1200                   | 
| Andrew Hindle, Chief Executive Officer      |                                 | 
| Craig Gouws, Chief Financial Officer        |                                 | 
|                                             |                                 | 
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| PR - Watershed                              | 01308 420785                    | 
| Sara Hudston                                |                                 | 
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|                                             |                                 | 
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| Investor Relations - Buchanan               | 020 7466 5000                   | 
| Communications                              |                                 | 
| Ben Willey                                  |                                 | 
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|                                             |                                 | 
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| Nominated Advisor and Broker - Seymour      | 020 7107 8000                   | 
| Pierce                                      |                                 | 
| Jonathan Wright                             |                                 | 
| Sarah Jacobs                                |                                 | 
| Richard Redmayne                            |                                 | 
|                                             |                                 | 
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Notes to Editors: 
 
 
Background on Portland Gas plc 
 
 
Portland Gas' business is focused on the development of two gas storage projects 
in the United Kingdom at Portland, Dorset and at Islandmagee, County Antrim, 
Northern Ireland. The two projects could between them provide over 10% of the 
total UK and Ireland peak daily demand in the latter part of the next decade. 
The Company is also developing new projects in mainland Europe initially 
focussing on Germany and Spain. The Company is one of only a few in Europe 
focused specifically on gas storage development, a sector with significant 
growth potential in Europe over the coming decades. In order that the "Portland 
Gas" name can remain with the Portland Project where it is very well established 
in Dorset, the Directors intend to seek approval at the next Annual General 
Meeting of the Company, scheduled for December 2009, to change the name of 
Portland Gas plc to "Infrastrata plc". The project company, Portland Gas 
Holdings Limited, would then be renamed to "Portland Gas Limited". 
 
 
Portland Project 
 
 
At a projected 1,000 million cubic metres ("mcm") or 35 billion cubic feet 
("bcf") of working gas, the facility would be the largest onshore gas storage 
facility in the UK. Planning permission was granted by Dorset County Council in 
May 2008 and Pipeline Construction Authorisation was granted by the BERR (now 
known as the Department of Energy and Climate Change) in July 2008. The gas 
storage facility is designed to inject or withdraw gas at 20mcm per day. On peak 
demand days the design allows for the withdrawal rate to be boosted to 30mcm per 
day. The current estimate of total development cost for the project is GBP456m. 
The project will use brine compensation technology and will not require cushion 
gas. 
 
 
Background on Field Fisher Waterhouse LLP 
 
 
Field Fisher Waterhouse LLP ("FFW") is a substantial European law firm with over 
130 partners and over 300 other lawyers and offices in London, Paris, Brussels, 
Hamburg and Manchester and associated offices in a number of Spanish and Italian 
cities. The firm is used to, and has extensive experience of, advising in 
relation to major projects and joint venture structures, both in the energy 
sector and in other fields. In particular FFW acted in relation to the 
UK?Continent Gas Interconnector project from its inception in the early 1990s, 
providing independent advice to the project company in establishing the 
structure of, and documentation for, the project in conjunction with the project 
participants. FFW continue to act for Interconnector (UK) Limited today. FFW 
have much other relevant experience, including in relation to gas storage 
projects. 
 
 
Background on BNP Paribas 
 
 
BNP Paribas Group is one of the world's largest Banking groups with a strong 
balance sheet of over EUR1,517 billion and a market capitalization of 
approximately EUR27.6 billion (as of December 2008). With over 205,000 employees 
and an active presence in over 83 countries, it is a leading international 
institution operating in the world's seven largest financial centres and engaged 
in structured financing worldwide. BNP Paribas' franchise in Project Finance 
relies on an experienced team of over 100 professionals. BNP Paribas has been 
awarded Best Global Infrastructure & Project Finance House by Euromoney in 2009. 
 
 
Background on CB & I 
 
 
CB&I (Chicago Bridge & Iron Company) combines proven process technology with 
global capabilities in engineering, procurement and construction to deliver 
comprehensive solutions to customers in the energy and natural resource 
industries. With more than 70 proprietary licensed technologies and 1,500 
patents and patent applications, CB&I is uniquely positioned to take projects 
from conceptual design, through technology licensing, engineering and 
construction and final commissioning. Drawing upon the global expertise and 
local knowledge of approximately 18,000 employees in more than 80 locations, 
CB&I safely and reliably executes projects worldwide. 
 
 
Background on Hydrock 
 
 
Hydrock is a construction services group providing consultancy and specialist 
contracting services across a number of sectors including energy, regeneration, 
waste, development and mining and quarrying. The group's head office is at 
Almondsbury, near Bristol and has nine other offices throughout the UK. The 
Company has built a strong reputation for solving complex (and interesting) 
engineering problems from the ground up. Hydrock Group employs approximately 400 
people and the highly prestigious "Sunday Times Best 100 companies to work for 
Survey" has placed Hydrock amongst the top companies to work for in the UK for 
the fourth year running. 
 
 
 
 
Further information is available on the Company's website www.portland-gas.com. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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