UK Oil & Gas PLC UK Economic Impact of Dorset H2 Storage

RNS Number : 8933A

UK Oil & Gas PLC

17 March 2025

 

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014, as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon publication of this announcement, this information is now considered to be in the public domain.

 

UK Oil & Gas PLC

("UKOG" or the "Company")

 

UK Economic Impact of Dorset H2 Storage

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that its wholly owned subsidiary UK Energy Storage ("UKEn") has received a report from economic impact specialist Quod, forecasting the potential socio-economic impacts of UKEn's planned South Dorset salt cavern storage facility.

 

The report highlights that, if the project is constructed and operated as envisaged (see RNS of 28 January 2025), it could contribute the following material benefits to the UK economy during its lifetime (the Gross Value Added or "GVA", a measure of the value of goods and services produced in an area, industry or sector of an economy):

 

·    £2.28 bn overall annual GVA during its potential 30+ year operational life, comprising:

i. £1.5 bn annual GVA via its contribution to the wider UK national 'green economy'

ii.          £780 million annual GVA directly and indirectly from projected operations;

·    £665 million further GVA of direct and indirect/supply chain economic benefits could result from the planned 4-year construction phase involving a facility Capex of ~£0.8 bn;

·    Support New Job Creation:

i. Up to 2,100 direct and 5,100 jobs in the supply chain during facility construction

ii.          Up to 135 new skilled direct and indirect jobs in Dorset during facility operations.

 

It should be noted that the project is in its engineering design stage and there is no guarantee it will be constructed or operated as envisaged. The project will also require funding for the estimated ~£0.8 bn Capex to be secured, plus customary planning and regulatory consent. In preparing their economic impact report Quod have utilised the calculated storage volumes and annual hydrogen cycling capacities stated in DEEP.KBB Gmbh's 2025 cavern design report and as announced by the Company on 28 January 2025.

 

The report was commissioned as a required element of both UKEn's proposed submission for funding via government hydrogen storage revenue support and for its application for a Development Consent Order under the Nationally Significant Infrastructure Project planning regime.

 

To place the potential GVA contributions in perspective, the overall estimated project GVA contribution of £2.28 bn would be approximately equivalent to a substantive 24% of Dorset's current estimated £9.5 bn annual GDP. Similarly, the estimated £1.5 bn GVA add to the overall UK 'green economy' would equate to between 2.6% and 4.0% of that overall sector's expected growth of £37-57 bn per year by the early 2030s. The project therefore has the potential to make significant economic impacts at national, regional and local scales.

 

The study also highlights the facility's potential role in helping decarbonise power generation and industry within the South and Southwest of England, notably via enabling Hydrogen to Power ("H2P") for electricity generation and helping reduce the inherent intermittency of planned new wind power (see RNS of 11th February 2025).

 

It also emphasises the important role hydrogen storage could play in the decarbonisation of the adjacent Solent Cluster, containing one of the UK's largest trading hubs and the UK's fifth largest industrial CO2e emitter, to which it is planned to be linked via SGN's H2 Connect pipeline. UKEn is an active strategic partner of the Solent Cluster.

 

South Dorset's proximity to the UK's largest airports at Heathrow and Gatwick and the aviation fuel production, pipelines and import facilities within the Solent Cluster which supply much of their fuel, also means it could play a key enabling role in decarbonising UK aviation, a vital UK industrial sector.

 

Quod estimate that South Dorset's envisaged maximum annual dynamic storage capacity of up to ~900,000 tonnes of hydrogen (~30TWh) would exceed the ~700,000 tonnes overall hydrogen requirement necessary for Heathrow Airport to support its 2040 Sustainable Aviation Fuel Requirements ("SAF") under the government's SAF Mandate.

 

Proximity and planned pipeline access to the major ports and trading hubs of Southampton and Portsmouth also means UKEn's South Dorset storage could play a significant enabling role in decarbonising the UK marine sector, a key UK industrial sector requiring access to hydrogen and its carrier liquid ammonia.

 

The report cites South Dorset's dynamic storage capacity as being substantively more than the requirement of Southampton and Portsmouth's combined 26,500 annual tonnes hydrogen demand necessary to meet International Maritime Organisation (IMO) 2030 fuel targets.

 

The role of UKEn's proposed facility in assisting the development of the UK hydrogen network, including National Gas' proposed UK hydrogen backbone pipeline system, Project Union, is highlighted. Material scale hydrogen storage could not only help to provide hydrogen to help maintain pipeline operating pressures but also provide necessary resilience and buffering against peak hydrogen demands for hydrogen producers, H2P and other primary users.

 

The Quod report and also a parliamentary Question Time transcript referencing the potential of South Dorset are available on the Company's website www.ukogplc.com.

 

Notes:

 

Stephen Sanderson UKOG's Chief Executive commented:

This timely and positive report should assist in the Company's proposed submission for government revenue support and provide confidence that UKEn's South Dorset hydrogen storage project does indeed have significant potential to play a key part in helping establish the UK as a clean energy superpower.

 

We are also encouraged that last week in Parliament, the Prime Minister responded to local MP Lloyd Hatton MP's question regarding planned substantive clean energy projects in Dorset and referenced the "huge potential of South Dorset to become home to a (hydrogen) storage hub".

 

About Quod:

 

Quod is an independent planning and economics consultancy, specialising in modelling the economic impacts of major infrastructure projects using Government guidance and appraisal techniques, including the Green Book.  Recent projects include airports (Heathrow, Gatwick, Luton and City), nuclear power stations (Hinkley Point C, Sizewell C, Bradwell B and Wylfa Newydd), transport (Lower Thames Crossing, Holyhead Freeport, Crossrail 2) and mining projects (Woodsmith (potash) and Curraghinalt (gold)).

 

For further information, please contact:

UK Oil & Gas Plc

Stephen Sanderson / Matt Cartwright                                                                              Tel: [phone]

Zeus (Nominated Adviser and Broker)                                                            

James Joyce / James Bavister / Andrew de Andrade                                                      Tel: [phone]

CMC Markets (Joint Broker)

Douglas Crippen                                                                                                                    Tel: [phone]

Communications

Brian Alexander                                                                                                                     Tel: [phone]  

 

 

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