Egdon Resources Says Portland Gas Storage Project On Track

Egdon Resources' subsidiary, Portland Gas Limited, says that drilling operations for the Portland-1 borehole have been completed and the BDF Rig 28 is expected to be released within the next 24 hours. The project is located on the Isle of Portland in Dorset.

A total drilled depth of 2929 meters was reached in the Triassic Sherwood Sandstone on June 21, 2006.

The Portland-1 borehole on the Isle of Portland, Dorset was drilled to confirm that a halite sequence with a low insoluble content (called 'S7' by Portland Gas), within a Triassic salt sequence ('Saliferous Beds') of the Wessex Basin, was suitable for the creation of caverns to store natural gas. Initial technical analyses of the data acquired from the borehole, by Portland Gas consultant DEEP. Underground Engineering GmbH ('DEEP') of Germany, indicates that individual caverns of approximately 250,000 cubic meters could be created within the S7 sequence at the Isle of Portland location. This is the same volume used in the pre-feasibility work for the project prior to the drilling of the Portland-1 borehole.

The Saliferous Beds were encountered with a thickness of 470 meters (41 meters thicker than forecast). The top of the target S7 interval was penetrated at a depth of 2365 meters and was found to have a thickness of 135 meters (43 meters thinner than forecast).

DEEP will coordinate the completion of further laboratory work on core samples over the S7 sequence and computer simulation of the proposed cavern leaching program. Final confirmation of project feasibility is expected in August 2006.

Portland Gas has also undertaken feasibility work, with DEEP and RPS Energy at Winfrith, Dorset, looking at the use of brine, rather than gas as a cushion for the gas storage operations. In the case of gas cushion operations a quantity of gas must always remain in the caverns to maintain a minimum operating pressure. If brine were used the pressure would always be maintained close to the maximum operating pressure. Gas withdrawn from the caverns would be compensated by replacement with an equivalent volume of brine at the subsurface pressure. Conversely, when gas is injected into the caverns the brine would be withdrawn. Such operations would offer significant benefits to the Portland project as it would remove the need to purchase gas to maintain the internal pressure. Portland Gas proposes to source the brine required for these operations from the Triassic Sherwood Sandstone aquifer in Dorset. While the Portland-1 borehole confirmed that the properties of the Sherwood Sandstone aquifer are not suitable on the Isle of Portland, feasibility studies have identified an area close to the proposed route of the gas pipeline, which would link the storage facilities on the Isle of Portland to the National Transmission System, where the Sherwood could be used. At this location boreholes could be directionally drilled to withdraw or inject saline formation water. A brine pipeline would be constructed alongside the gas pipeline to the Isle of Portland to support the gas storage operations.

Commenting on the project's progress, Andrew Hindle, Joint Managing Director of Egdon, said:

"We are delighted that the borehole encountered a sequence of salt which appears suitable to create caverns for the storage of natural gas. We anticipate that the results of the remaining technical work will enable us during August 2006 to confirm the feasibility of a gas storage project on the Isle of Portland, and at the same time outline the proposed storage volumes, injection and withdrawal rates and project development timetable from start-up. The presence in Dorset of an aquifer with very saline waters has provided us with the opportunity of replacing very costly gas with brine for the cushion within the caverns. The Environmental Impact Assessment work is now at an advanced stage for the project and planning and pipeline construction authorisation applications are being prepared for submission in Q4 2006."