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UK's EnCore seeks Esmond offshore gas storage project investment

https://www.chemnet.com   Aug 11,2010
UK independent EnCore Oil is hoping to find investors for its UK North Sea Esmond gas storage project, the company said Tuesday.


It has engaged investment bank Jefferies to market the project, and the work is "ongoing," EnCore said in a financial results statement. "The marketing of our 100% owned Esmond gas storage project continues, and we will update shareholders when further information becomes available."


The long-running project to build a major new offshore gas storage facility for the UK, matching or exceeding the capacity of the UK's Rough gas storage site, was struck a major blow at the end of 2008.


A pressure test well in November 2008 revealed that the reservoir was more complicated than initially expected, and in January 2009 EnCore's then partner, Star Energy, pulled out of the project.


Star Energy is owned by Malaysian oil and gas giant Petronas, which is making inroads into the UK market with its stake in the Dragon LNG import terminal. The company would have had the financial capacity to make the GBP 1 billion investment needed in the 4 billion cubic meter Esmond facility.


But EnCore said it continued to think storage was possible in the field.It said Tuesday that it had now received the results of a reservoir simulation study carried out by Senergy, and that the study had "confirmed thesuitability of the Esmond field for gas injection and withdrawal in both the upper and lower reservoirs."


EnCore has now updated a 2007 feasibility study carried out by AMEC to take into account changes in the development concept following the November 2008 pressure test well.


The UK's main current storage is the 3 Bcm Rough field, operated by Centrica Storage. The only new storages in recent years have been onshore,such as Aldbrough and Humbly Grove, and some believe the UK needs another big new offshore storage site.


Apart from Esmond, Italy's Eni is considering building a major offshore storage of up to 5 Bcm based on the North Sea Deborah gas field.


Centrica Storage is considering developing the North Sea Baird gas storage project of 1.7 Bcm capacity and the East Irish Sea Bains project of 570 million cubic meters.


But Centrica recently pushed back final investment decisions on its projects from late 2010 to 2011, citing uncertainties over the economics of major new seasonal storage projects because of narrowing spreads between summer and winter gas prices.
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