Northern ambitions

Andrew Hindle, CEO of UK independent petroleum exploration and gas storage company InfraStrata, outlines the company’s projects for exploring for oil and gas in the Larne-Lough Neagh Basin and its development of a natural gas storage facility beneath Larne Lough.

InfraStrata was awarded a petroleum exploration licence by the Department of Enterprise, Trade and Investment (DETI) in March 2011. The licence area, which covers the Larne-Lough Neagh region of County Antrim, has been under-explored for petroleum due to the presence of thick basalts near the surface, which in the past prevented an accurate imaging of the subsurface using seismic technology.

Over the past two years, InfraStrata with its JV partners has used the latest technology to obtain and process 400km of new seismic data which has provided a unique insight into the geology of the area. Interpretation of this new seismic data has identified a number of geological structures which may have trapped oil and gas in the sub-surface within the licence area.

Previous deep drilling in the area for petroleum, coal, salt and geothermal exploration has established that potential reservoirs for oil and gas are present within the Triassic, Permian and Carboniferous sandstones.

The company plans to drill an exploratory well this coming winter at a site two miles north west of Carrickfergus. The well site at Woodburn Forest has been carefully chosen to minimise the impact on the local community while being suitable to reach the subsurface target area which is 6,500 feet below the forest. The well will provide new data to improve the understanding of the deep geology of the area.

The planned exploration activity – and any subsequent approved development – would be undertaken by conventional methods and would not involve hydraulic fracturing methods.

Benefits for Northern Ireland

If oil and gas is encountered and successfully developed in County Antrim – following the relevant approvals – it would have a positive impact on the local and regional economy, with job creation and other economic benefits. Northern Ireland has a long tradition of engineering industry and indeed, the Harland and Wolff shipyard has focused on the offshore energy sector in recent years. The development of a local oil and gas sector would build on the progress made in recent years.

In the short term, site construction contracts for the exploratory well will be placed in County Antrim and local accommodation providers and retail businesses will benefit from the drilling rig and associated services personnel.

In the longer term, any oil and gas production would provide a significant number of local jobs and provide local income in the form of business rates and benefit the wider economy through tax payments and royalty payments.

Islandmagee Gas Storage Project

InfraStrata is also developing a natural gas storage project in Northern Ireland. The project, which is a joint venture with local energy infrastructure company Mutual Energy Limited, will store enough gas to satisfy Northern Ireland’s gas demand for around 60 days.

The proposed 500 million cubic metres gas storage facility will also make a significant contribution to the security of gas supplies for the whole island. Ireland is dependent on gas for around 60 per cent of electricity generation with 90 per cent of the island’s gas imported via a single pipeline from Scotland.

Additionally, salt cavern gas storage provides much-needed flexibility when compared to other storage methods. The facility will be able to switch from injection to withdrawal quickly to cater for short-term spikes in demand such as a cold spell or a period of low wind generation which increases the load on gas fired generation.

Northern Ireland, through its connection to Scotland, relies on North Sea gas to meet its average demand and provide the flexibility to meet peaks in demand. North Sea gas supplies are depleting and increasingly relying upon imported LNG from terminals located in the south of GB. Salt cavern gas storage will protect Ireland against the effects of a weakening GB connection point.

Strong transmission infrastructure is already in place at Islandmagee to link the facility to all demand locations. Gas from the facility will be able to feed the Ireland onshore network via the South-North pipeline and via the Scotland to Northern Ireland pipeline and through the existing subsea interconnectors.

In addition to securing gas supply, the storage project will facilitate the development of renewable energy. A shift to renewable energy sources is likely to result in an increasing reliance on gas-fired power stations to support the fluctuations in supply from the intermittent nature of wind. Rapid cycle gas storage facilities, such as this planned project, will be important to respond to the rapidly fluctuating gas supply demands for electricity generation.

Ideal location: unique on the island

Gas will be stored in seven caverns within a layer of Permian-age salt, greater than 200m thick, located almost a mile beneath Larne Lough in County Antrim. Data acquired shows that the Permian salt at this location is particularly suited to natural gas storage. The Larne area is the only location in Ireland where suitable Permian-aged salt exists.

The proposed site already possesses the two main supporting infrastructural

requirements for a gas storage facility – a source of power (adjacent to Ballylumford power station where the electricity grid is very strong) and a connection to the main gas network (the Ballylumford pressure reduction station is the connection point to the Scotland-Northern Ireland gas pipeline).

Economic benefits

The project will create more than 20 skilled permanent jobs, with construction activities generating temporary employment for over 200 people and knock-on indirect business for support services and many more. Gas storage also has the potential to reduce volatility in energy prices – with the option of purchasing gas for storage when prices are low for use or sale when prices are higher. The project is being developed as a commercial venture, with no cost incurring to energy consumers.

Gas storage operation

Seven storage caverns, each approximately 80m in diameter and 160m in height are proposed at Islandmagee. The caverns are created by a technique known as ‘leaching’ or ‘solution mining’, which dissolves the salt, under controlled conditions, and creates a cavern deep underground in the salt layer in which gas can be stored. The facility expects to have an injection capability of 12 million cubic metres per day of gas and a withdrawal capability of 22 million cubic metres of gas per day.

Deep underground storage is one of the safest and most environmentally-responsible methods of storing large quantities of natural gas. The use of salt strata to create underground storage caverns is a well-established technology which has been in use for more than 40 years. There are currently more than 70 salt storage facilities in operation around the world, with more under construction. Currently about one third of the operational facilities are located in Europe, with the majority in Germany. The cavern wells are constructed using conventional oil and gas drilling techniques.

Project progress

The estimated timescale for the whole project is approximately seven years, although this actually covers three almost separate construction projects of 2-3 years each in different locations on Islandmagee. The first cavern would

become operational after four years. In the intervening period much more wind generation is planned for the island and North Sea gas supplies will further deplete, making it even more important that this facility is developed without delay.

It is planned to drill the first test well for the gas storage project just after the company drills its conventional oil and gas exploration well at Woodburn Forest. In addition to securing planning permission, the project is required to gain further consents from agencies including the Northern Ireland Environment Agency, the Department of Enterprise, Trade and Investment (DETI) and the Northern Ireland Health and Safety Executive in relation to licensing for the construction and operational phases of the project. These consents cover the marine elements of the project, incorporating the brine discharge and dispersion during the leaching of the caverns, as well as other issues such as safety and gas storage operations.

Regulatory support

The strategic benefits of a project such as the Islandmagee Storage project have long been recognised. A 2007 report jointly commissioned by the Department of Enterprise, Trade and Investment and the Department of Communications, Energy and Natural Resources in Dublin concluded: “The principal conclusion of this report is that the consequences of any major failure of supplies from GB would be as significant for the power sector and thus the island of Ireland economy as a whole, as for the domestic gas market. Thus this situation needs to be addressed in an integrated and holistic way so as to provide an element of security to both sectors… It is recommended that the island of Ireland should not have proportionally less gas storage than GB.”

In 2013 the project was given ‘Project of Common Interest’ (PCI) status by the European Commission and included on a Europe‐wide list of the most important energy projects. ‘Project of Common Interest’ status means recognition by the European authorities that the Islandmagee gas storage project brings benefits not only to the Member State in which it is located, but to a much wider area. It means confirmation that the project is important at a European level.

PCI status means that the project must be given priority and quick passage by relevant Member States in the permitting process, and cooperation in its development. It also means the project is eligible to apply for significant financial support from the European Union – this may be in the form of direct grant or other forms of financial backing from institutions such as the European Investment Bank.

The progress of the project hinges on a regulatory and operational framework being adopted by the Northern Ireland and Republic of Ireland authorities to facilitate commercial operations of the facility on a level playing field with storage elsewhere in the UK and Ireland.

In particular arrangements need to be in place to allow access to spare capacity in gas transmission pipelines within Ireland to allow the security of supply benefits to be accessed across the island. In addition a tariff structure needs to be developed to allow the Islandmagee facility to compete fairly with storage facilities in Great Britain.