Petrofac takes stake in Gateway Gas Storage

Petrofac, the international oil & gas facilities service provider, has acquired a 20% interest in Gateway, a client of Taylor Keogh since 2005. Petrofac has joined Gateway as the technical project operator and will be jointly responsible for developing the project ahead of a Final Investment Decision later this year. The front end engineering and design phase of the project has been completed and the focus is now turning towards finalising the consortium of storage capacity holders and investors. Gateway Storage is targeting 2016 for the commencement of storage services to the UK energy market.

When built, Gateway Storage will be one of the UK’s largest salt cavern storage facilities and will add nearly 30% to the current gas storage capacity in the UK market, sufficient to meet five days of Britain’s average gas demand. 

Investment in new storage capacity as a means to bolster the UK’s long-term energy security has been a recurring issue within Parliament for some time. The Government’s Energy Bill, currently proceeding through Parliament, proposes to give additional powers to OFGEM to ensure that this capacity enters the market, but a number of politicians in both Houses have expressed the view that an enhanced Public Service Obligation on gas suppliers would be a better way to incentivise the investment that needs to be made if Gateway and other storage projects are to be built in good time.

For additional information on Gateway, please visit www.gatewaystorage.co.uk

Client News- GATEWAY GAS STORAGE SECURES NEW INVESTOR: PETROFAC ACQUIRES 20% INTEREST

Gateway Storage Company Ltd, the developer of the 1.5bn cubic metre salt cavern gas storage facility in the East Irish Sea, is pleased to announce that Petrofac, the international oil & gas facilities service provider, has acquired a 20% interest in the company.

Petrofac will join Gateway as the technical project operator and will be jointly responsible for developing the project ahead of a Final Investment Decision next year (2011). Petrofac will be represented on the Gateway Board. The company’s investment in Gateway is based on a cash consideration of up to £33million over time, funded from cash resources. This is split into a fixed upfront payment and additional contingent payments subject to key project development milestones being achieved, including the outcome of a further successful equity sales process.

The front end engineering and design (FEED) phase of the project is nearing completion and the focus of Gateway Storage will now turn to project execution and finalisation of the consortium of storage capacity holders and investors. Gateway Storage is targeting 2016 for the commencement of storage services to the UK energy market.

When built, Gateway Storage will be one of the UK’s largest salt cavern storage facilities and will add nearly 30% to the current gas storage capacity in the UK market. It secured the UK Department of Energy & Climate Change’s first ever Storage Licence in February 2010 after obtaining the main planning and environmental consents and permits in late 2008.

George Grant, Chairman of Gateway Storage Company Ltd said: “Gateway is the most advanced gas storage project in the UK that has not yet committed to construction, so we are delighted to have an organisation with the execution and operational track record of Petrofac to take the project forward through to financing and into construction. As one of the world’s leading service providers to the oil and gas industries, Petrofac’s experience will be invaluable in realising the project’s significant and strategic benefits to the UK and Irish energy markets.”

Rob Jewkes, Managing Director, Petrofac Energy Developments commented: “Petrofac is pleased to join with Gateway to progress this strategically important and well advanced storage project. With FEED activities largely complete, we are entering the project at this stage to bring confidence to the investor group that execution and delivery objectives for the complete facilities can be met, and will utilise the full capabilities of our group to optimise the facility design and deliver the project.”

For further information contact:

Gateway Storage Company Ltd (www.gatewaystorage.co.uk)

George Grant, Chairman +44 (0)131 550 3380

ggrant@stagenergy.com

Paul Taylor (Taylor Keogh Communications) +44 (0)203 170 8465 / 07966 782611

paul@taylorkeogh.com

Petrofac

Tulchan Communications Group Ltd +44 (0)20 7353 4200

James Bradley

David Allchurch

petrofac@tulchangroup.com

Notes to Editors

Gateway Storage (www.gatewaystorage.co.uk)

Gateway Storage Company Limited plans to build an underground natural gas storage facility in the East Irish Sea, approximately 25 km (15 miles) offshore, south west of Barrow-in-Furness. Storage caverns will be developed in a natural salt structure below the seabed and will enable gas to be delivered, stored and then returned to the UK’s national transmission system.

The offshore facility will provide a significant boost to the security of energy supply in the UK gas market and will help to meet the strategic energy policy objectives of the UK government. When completed, the caverns will have a working capacity of 1.5 billion standard cubic metres (~560 million therms), adding nearly 30% to the current gas storage capacity in the UK market.

Gateway Storage is a company that was formed to develop the gas storage project and is managed by Stag Energy. Stag Energy (www.stagenergy.com) is an independent company, headquartered in Edinburgh. The company, established in 2002, has extensive experience of managing the development, construction and operations of gas storage and power generation projects in the UK and overseas.

Petrofac (www.petrofac.com)

Petrofac is a leading international provider of facilities solutions to the oil & gas production and processing industry, with a diverse customer portfolio including many of the world’s leading integrated, independent and national oil & gas companies. Petrofac is quoted on the London Stock Exchange (symbol: PFC) and is a constituent of the FTSE 100 Index.

The group delivers services through seven business units: Engineering & Construction, Engineering & Construction Ventures, Engineering Services, Offshore Engineering & Operations, Training Services, Production Solutions and Energy Developments.

Through these businesses Petrofac designs and builds oil & gas facilities; operates, maintains and manages facilities and trains personnel; enhances production; and, where it can leverage its service capability, develops and co-invests in upstream and infrastructure projects. Petrofac’s range of services meets its customers’ needs across the full life cycle of oil & gas assets.

With around 12,500 employees, Petrofac operates out of six strategically located operational centres, in Aberdeen, Sharjah, Woking, Chennai, Mumbai and Abu Dhabi and a further 19 offices worldwide. The predominant focus of Petrofac’s business is on the UK Continental Shelf (UKCS), the Middle East and Africa, the Commonwealth of Independent States (CIS) and the Asia Pacific region.

Client News-GATEWAY SECURES FIRST GAS STORAGE LICENCE FROM UK DEPARTMENT OF ENERGY

Monday, February 15th 2010

GATEWAY SECURES FIRST GAS STORAGE LICENCE FROM UK DEPARTMENT OF ENERGY

The £600m Gateway Gas Storage project has today received the first gas storage licence to be issued by the UK Government under a new regime designed to encourage the construction of new storage facilities in this country. The licence has been issued under the auspices of the 2008 Energy Act and it consolidates the main environmental and planning consents that were given to the project by the Department of Energy & Climate Change and the UK Marine & Fisheries Agency in November 2008.

George Grant, Chairman of Gateway Storage Company said: “The support and encouragement given by DECC to bring the Gateway Storage project forward has been invaluable, as was the Crown Estate’s agreement of the offshore site licence. We are now fully engaged with the project’s engineering design and are targeting 2014 for the start of commercial storage operations.”

The Gateway facility will add new capacity equal to approximately 30% of current UK storage capacity, sufficient to meet five days of Britain’s average gas demand. Gateway will be built in 20 salt caverns, each the size of the Albert Hall, and sited approximately 750m beneath the surface of the seabed. Located 15 miles offshore, south west of Barrow-in-Furness, the storage scheme will be connected to the National Gas Transmission System via a new pipeline to a gas compression station adjacent to the existing Morecambe gas terminals at Barrow.

Last month (January 21st 2010), Gateway announced that AMEC, Parsons Brinckerhoff and Senergy had been appointed to undertake the detailed engineering design work for both the offshore and onshore elements of the scheme. Their work will support a commitment to construction of the facility at the end of this year (2010) and enable the commencement of gas storage services for the UK market in 2014.


Notes to Editors:

1. The Energy Act 2008 created a regulatory framework in which DECC operates a licensing system that regulates storage for environmental and other purposes whilst the Crown Estate controls the exclusive rights to the seabed and the use of geological structures beneath the seabed for gas storage.

2. Gateway Storage (www.gatewaystorage.co.uk) is a company that was formed to develop the gas storage project and is managed by Stag Energy. Stag Energy (www.stagenergy.com) is an independent company, headquartered in Edinburgh. The company, established in 2002, has extensive experience of managing the development, construction and operations of gas storage and power generation projects in the UK and overseas.

For further information:

Gateway Storage Company Ltd

Andrew Stacey / George Grant

T: +44 (0)131 550 3380

E : astacey@stagenergy.com

ggrant@stagenergy.com

or

Paul Taylor (Taylor Keogh Communications)

T: +44 (0) 20 3170 8465

E: paul@taylorkeogh.com

Client News-ENGINEERING DESIGN PROGRAMME START FOR GATEWAY GAS STORAGE FACILITY

Press Release

Thursday, January 21^st 2010

For media enquiries, please contact Paul Taylor (Taylor Keogh Communications): +44 (0)20 3170 8465 / +44 (0)7966 782611

ENGINEERING DESIGN PROGRAMME START FOR GATEWAY GAS STORAGE FACILITY

2014 targeted for commercial operation

Detailed engineering work on the Gateway gas storage facility, to be built offshore in the East Irish Sea, has started. AMEC, Parsons Brinckerhoff and Senergy have been appointed by Gateway Storage Company to undertake the front-end engineering design (FEED) work for both the offshore and onshore elements of the 1.5bn cubic metre underground storage scheme.

The work over the next 12 months will support a commitment to construction of the facility at the end of 2010 and enable the commencement of gas storage services for the UK market in 2014.

The £600m storage facility will add new capacity equal to approximately 30% of current UK storage capacity, sufficient to meet five days of Britain’s average gas demand.

Gateway will be built in salt caverns approximately 750m beneath the surface of the seabed and located 15 miles offshore, south west of Barrow-in-Furness. The Gateway facility will be connected to the National Gas Transmission System (NTS) via a new pipeline to a gas compression station adjacent to the existing Morecambe gas terminals at Barrow.

AMEC’s work will include offshore installations, pipelines, the onshore compression station at the Morecambe terminals and the connections into the National Grid. Parsons Brinckerhoff will advise Gateway on the salt cavern design and construction, and Senergy’s work will concentrate on the offshore infrastructure, installation, logistics and well designs. The project team has been mobilised and is based in Aberdeen.

Andrew Stacey, Director of Gateway Storage, said: “The detailed engineering design work, and the tender process for the main construction contracts that will follow later this year, will support a commitment to construction at the end of this year and the start of storage services during 2014. We are delighted to have the depth of experience that AMEC, Parsons Brinckerhoff and Senergy offer us and look forward to working with them in order to deliver the much needed Gateway facility.”

“Given the scale of the project, there is much work to do but Gateway Storage will bring storage capacity and deliverability to the UK energy market, and so help reduce price volatility and risk.”

Notes to Editors:

1. Gateway Storage (www.gatewaystorage.co.uk) secured consent from the UK Government in November 2008 and from Barrow Council in June 2008, and a site licence agreement from the Crown Estate in 2007.

2. Gateway Storage is a company that was formed to develop the gas storage project and is managed by Stag Energy. Stag Energy (www.stagenergy.com) is an independent company, headquartered in Edinburgh. The company, established in 2002, has extensive experience of managing the development, construction and operations of gas storage and power generation projects in the UK and overseas.

3. Storing gas in salt caverns enables firms to retrieve gas rapidly to cope with spikes in peak demand. The British Geological Survey, in a report commissioned by BERR, highlighted a number of offshore areas suitable for salt caverns, including the Irish Sea and the Southern North Sea. In its report, the BGS specifically noted that Gateway’s site was located in one of the very best areas in the UK.

4. Senergy (www.senergyworld.com) is a circa £80million ($120million) revenue energy services company with headquarters in Aberdeen, UK, and a network of global offices in the UK, Norway, Middle East, South-East Asia and Australia. Established in 2005, Senergy provides integrated energy services encompassing geosciences, reservoir engineering, geohazard assessment, marine site surveys, rig positioning, wells engineering and operations, project management and alternative energy solutions.

5. AMEC (LSE: AMEC) is a focused supplier of high-value consultancy, engineering and project management services to the world’s natural resources, nuclear, clean energy, water and environmental sectors. With annual revenues of over £2.6 billion, AMEC designs, delivers and maintains strategic and complex assets for its customers. AMEC's Natural Resources, Power & Process and Earth & Environmental businesses employ almost 22,000 people in around 40 countries worldwide (www.amec.com).

6. Parsons Brinckerhoff (www.pbworld.com) develops and operates infrastructure around the world, with 13,000 employees in the Americas, Europe, Africa, Middle East, Asia and Australia-Pacific regions. PB offers skills and resources in strategic consulting, planning, engineering, program/construction management and operations for all modes of infrastructure including transportation, power, community development, water and the environment.

For further information:

Gateway Storage Company Ltd

Andrew Stacey / George Grant

T: +44 (0)131 550 3380

E : astacey@stagenergy.com

ggrant@stagenergy.com

or

Paul Taylor (Taylor Keogh Communications)

T: +44 (0) 20 3170 8465

E: paul@taylorkeogh.com

Industry News-Ofgem report calls for more investment

Ofgem releases a wide-ranging and comprehensive review of the UK energy market, warning that a £200bn investment is needed for new power generation and infrastructure.

Both energy supply and energy security are areas of concern raised by the report, with north gas supplies declining, increasing the need for more gas storage.

With many European countries becoming increasingly dependent on gas imports, recent events such as the Russia-Ukraine crisis raised concerns about the security and price of future gas supplies, the regulator said.

This investment will lead to a 14 to 25 % increase in energy bills in the next 10-15 years.

See the report here.

Industry News-Commission tables EU winter gas storage plan

The European Commission yesterday (16 July) proposed a new regulation on the security of gas supplies, obliging member states to take pre-emptive measures to avoid disruptions in the wake of a January dispute between Russia and Ukraine.

Background:
In November 2008, the European Commission presented a revised version of a 2004 directive on the security of gas supplies as part of the Second Strategic Review, aiming to reduce Europe's reliance on foreign energy imports.

The January gas dispute between Russia and Europe's main transit country Ukraine made the revision of the existing 2004 directive on gas supply security imperative, as it revealed the EU's inability to respond to emergencies. The row led to widespread supply disruptions for a fortnight in Eastern Europe, reducing the EU's gas supply by 20%.


"We have known for some time that the existing arrangements to deal with gas emergencies are insufficient […] All member states recognise that we need common standards for security of gas supply for the whole EU," said the bloc's energy commissioner, Andris Piebalgs.

The proposal authorises the Commission to declare a Community emergency at the request of a single member state, or when the Union loses more than 10% of its daily gas import from third countries. It also entitles the EU executive to coordinate member-state actions between one another and towards third countries.

EU states have a three-year transitional period until the end of March 2014 to ensure that they have either enough gas storage capacity or diversified energy supplies to handle a 60-day supply disruption in extreme winter weather.

But unlike the proposal for a revised directive on oil stocks approved by ministers last month (EurActiv 15/06/09), the gas regulation does not require compulsory strategic stocks as it is replaceable in most uses, the Commission said.

Instead, the document sets common standards for member states to define "serious gas supply disruptions", called 'N-1'. This refers to the preparedness of a country to satisfy its total gas demand during 60 days of exceptionally high gas demand if there is a disruption in the largest gas supply infrastructure.

In order to meet the N-1 standard, member states have to designate a competent authority to assess risks and establish both preventive and emergency plans.

The Commission reserves the right to require that plans be revised if they do not comply with the regulation.

To meet the infrastructure requirements, the regulation obliges transmission system operators to ensure reverse flow capacity on all interconnections within two years after the entry into force of the directive, if it would enhance the security of supply of a member state.

Piebalgs said Baltic nations would face the biggest challenges in meeting the standards, with the largest investments needed in Lithuania and Slovenia,where gas consumption is significant. Denmark, on the other hand, is best placed with its own production, while Germany and Belgium have "decent storage capacity" and are doing fine, he added.

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