InfraStrata plc, the UK quoted company focused on the development of natural gas storage capacity, announced that work on the FEED (Front End Engineering Design) for its Islandmagee gas storage project has now been completed by the engineers and consultants, both for the surface and subsurface elements, and the final reports received by InfraStrata.
FEED commenced in May 2018 and has been completed in full as contracted, having been delivered on budget and ahead of time. In accordance with the EU grant provisions for the FEED study, the required reports will be submitted to the EU in December 2018.
The Owners Engineer teams, WSP (surface) and Atkins (subsurface), have been working tirelessly, ensuring the technical elements of the FEED studies are in keeping with InfraStrata's expectations as FEED has been reaching a climax in recent weeks. Whilst it will take InfraStrata some time to fully analyse the studies, it is clear that nothing material has been uncovered during either the surface FEED works carried out by Costain or the subsurface FEED works carried out by DEEP KBB that should physically prevent construction of the gas storage facility.
As part of the FEED studies, a "P90" cost estimate has been undertaken for delivering the Project determined by probabilistic analysis. P90 values are established to provide a high level of confidence (90% confident) such that the Project outturn cost will have a 90% chance to be below this estimate and a 10% chance above. The P90 estimate is consistent with the economic modelling undertaken on the Project and therefore InfraStrata proceeds into the next phase of development with a high level of confidence from a technical, cost and economic basis.
The economic modelling undertaken was on a range of cost estimates of £100m - £120m for delivering Phase 1 (2 caverns) and £300m - £330m for Phase 2 (adding an additional 6 caverns, resulting in a total of 8 Caverns). The combined FEED studies have delivered P90 cost estimates of £114m for Phase 1 and £265m for Phase 2, with an additional risk allowance for a total of £11.6m for both phases. The schedule has confirmed an expectation of injection of first gas for storage in 2022 with full operations (withdrawal and injection) expected in Q1 2023 assuming FID (final investment decision) is taken by the end of H1 2019. The Company continues to work with various potential partners in relation to providing funding for the Project and updates will be provided as appropriate.
The engineering design that has been completed will position InfraStrata's Islandmagee facility as a globally competitive and technologically advanced, fast cycle, pioneering gas storage facility. Costain, Deep, Atkins and WSP have all worked together seamlessly to ensure the best possible outcome for InfraStrata.
John Wood, Chief Executive Officer commented: "Completing FEED successfully and receiving independent confirmation that the Project can be constructed within our financially modelled ranges is a credit to the entire team that has worked on the Project. We are now working on planning the next development stages of the project whilst ensuring all elements come together for a successful final investment decision before the end of H1 2019. I would like to thank Costain, Deep KBB, Atkins and WSP for the delivering the FEED study in the time available to realise the EU Grant."