N Ireland Walks Away from Storage Project
Northern Ireland's publicly-owned networks firm Mutual Energy has walked away from its loss-making investment in the Islandmagee gas storage project, selling a 10% interest stake it had held for a decade.
UK-listed InfraStrata said December 20 it had acquired the remaining 10% in the Islandmagee project for £35 ($47), and now owns 100% of Islandmagee Storage (IMSL).
Mutual Energy held the interest through Moyle Energy Investments (MEI), which filed an annual loss for the year to March 31 2017 of £3.55mn ($4.75mn), bigger than the £3.1mn lost the preceding year.
MEI's primary purpose was understood to be as owner of the 10% stake. It had been Infrastrata's partner in the Islandmagee project since May 2008. The project, to create a 0.5bn m3 working storage facility, could cost some £300mn ($400mn) but has yet to take an investment decision and is seeking vital EU grant-funding amid the uncertainty of the run-up to the UK's scheduled exit from the European Union in March 2019. It hopes that the project's possible value to gas-balancing in the Republic of Ireland might keep funding open, but the future of inter-Ireland gas trade has yet to be fully worked out.
Mutual Energy CEO Paddy Larkin acknowledged this December 20, saying: "We have been continuing to work to ensure that we are well prepared for the changes that are coming in the European internal market for electricity and for gas and for any possible changes resulting from Brexit. On the gas side of the business, and as part of previous changes agreed with the [Northern Ireland] Utility Regulator, we have established, along with Gas Networks Ireland (UK), the gas market operator for Northern Ireland, a joint venture which will make it easier and cheaper to move gas in, out and around Northern Ireland. The joint venture operations successfully started up October 1 and will continue the Mutual Energy ethos of delivering efficiency and cost savings on behalf of consumers”
Adrian Pocock, who took over as InfraStrata CEO after ousting its previous management in July, said: "Mutual Energy has confirmed that it will continue to be supportive of this project, together with the proposed physical reversal of the Scotland Northern Ireland Pipeline (Snip), which will enable natural gas to flow back to Scotland, making the facility more attractive to energy traders."
Infrastrata is among the companies lobbying the government for support for storage projects, as the UK is losing its biggest such asset, the Rough Field. It does have Project of Common Interest status with the European Commission, although the related funding might not materialise if the UK is out of the European Union.
Larkin added: “There has been some company restructuring at InfraStrata and that, combined with our increasing focus on our expanding core business, including Gas to the West [project], makes this a good time to release our 10% holding in Islandmagee Storage. This leaves InfraStrata with complete control of the project. We very much continue to support the project as gas storage can undoubtedly bring significant long term benefits to energy consumers in Northern Ireland and beyond.”
InfraStrata said it will make an extra payment of £200,000 (indexed to the UK Consumer Price Index) to MEI upon the first storage of gas "following completion of the gas storage project."
Drilling at Islandmagee (Source: Infrastrata)
