15th Dec 2006 07:58
Star Energy Group PLC15 December 2006 Star Energy Group plc Offshore Gas Storage Feasibility Study Star Energy Group plc ("Star Energy") announces that it has entered into anagreement with Virgo Energy Limited ("Virgo") to farm into Virgo's UKCS Block 43/8 Forbes field in order to undertake a feasibility study and a 3D seismicsurvey to determine the Forbes field's suitability as a gas store. Under the terms of a farm out agreement, Star Energy will undertake afeasibility study, and, if the feasibility study proves positive, a subsequentFront End Engineering & Design (FEED) study. In addition, Star Energy will pay£1m towards the cost of a 3D seismic survey on the Forbes field and assign 50%of its interests in the Eskdale (PEDL 002) onshore licence to Virgo. The farmout agreement allows Star Energy to earn up to 50% of the Forbes licence and tobecome operator if the field is developed into a gas storage facility. The Forbes field was originally developed by Hamilton Oil and produced via atie-back to the Esmond field. The field produced approximately 48 bcf of gasprior to abandonment. The original gas in place was in the order of 100 bcf andthere are believed to be approximately 20 bcf of contingent resources. Preliminary studies undertaken by Star Energy indicate the field has thepotential to be developed into a high performance gas store with up to 50 bcf ofworking gas capacity. Under the agreement with Virgo, the feasibility study mustbe completed by the end of June 2007. Roland Wessel, CEO of Star Energy, said: "Star Energy has an operational 10 bcf gas storage facility at Humbly Grove inHampshire and a further 80-90 bcf of onshore projects under development. If allof our projects and our competitors' projects are built in the next 5 years, theUK will still only have gas storage capacity amounting to less than 10% ofannual consumption. The UK is expected, at that stage, to be importingapproximately 50% of its gas. In order to approach the 15-25% gas storagecapacity enjoyed by our import-dependent European peers, the UK would need toadd at least another 200 bcf of storage capacity over the next 5 years.Accordingly, we continue to explore opportunities to expand our existingportfolio. Forbes is an excellent candidate technically; the reservoir is high quality, ithas cushion gas in place and is close to major infrastructure. We believe therewill be sufficient industry support for a 50 bcf offshore gas store thatjustifies the much higher capital costs associated with offshore projects. " 15th December 2006 Enquiries: Star Energy 020 7925 2121 Roland Wessel, Chief Executive College Hill 020 7457 2020 Nick Elwes Paddy Blewer This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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