REG - UK Oil & Gas PLC - UK Economic Impact of Dorset H2 Storage

UK Oil & GasAnnouncement

17/03/2025 07:15

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RNS Number : 8933A  UK Oil & Gas PLC  17 March 2025

The information contained within this announcement is deemed by the Company to
constitute inside information under the Market Abuse Regulation (EU) No.
596/2014, as it forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018. Upon publication of this announcement, this information
is now considered to be in the public domain.

 

UK Oil & Gas PLC

("UKOG" or the "Company")

 

UK Economic Impact of Dorset H2 Storage

 

UK Oil & Gas PLC (London AIM: UKOG) is pleased to announce that its
wholly owned subsidiary UK Energy Storage ("UKEn") has received a report from
economic impact specialist Quod, forecasting the potential socio-economic
impacts of UKEn's planned South Dorset salt cavern storage facility.

 

The report highlights that, if the project is constructed and operated as
envisaged (see RNS of 28 January 2025), it could contribute the following
material benefits to the UK economy during its lifetime (the Gross Value Added
or "GVA", a measure of the value of goods and services produced in an area,
industry or sector of an economy):

 

·    £2.28 bn overall annual GVA during its potential 30+ year
operational life, comprising:

i. £1.5 bn annual GVA via its contribution to the wider UK national 'green
economy'

ii.          £780 million annual GVA directly and indirectly from
projected operations;

·    £665 million further GVA of direct and indirect/supply chain
economic benefits could result from the planned 4-year construction phase
involving a facility Capex of ~£0.8 bn;

·    Support New Job Creation:

i. Up to 2,100 direct and 5,100 jobs in the supply chain during facility
construction

ii.          Up to 135 new skilled direct and indirect jobs in Dorset
during facility operations.

 

It should be noted that the project is in its engineering design stage and
there is no guarantee it will be constructed or operated as envisaged. The
project will also require funding for the estimated ~£0.8 bn Capex to be
secured, plus customary planning and regulatory consent. In preparing their
economic impact report Quod have utilised the calculated storage volumes and
annual hydrogen cycling capacities stated in DEEP.KBB Gmbh's 2025 cavern
design report and as announced by the Company on 28 January 2025.

 

The report was commissioned as a required element of both UKEn's proposed
submission for funding via government hydrogen storage revenue support and for
its application for a Development Consent Order under the Nationally
Significant Infrastructure Project planning regime.

 

To place the potential GVA contributions in perspective, the overall estimated
project GVA contribution of £2.28 bn would be approximately equivalent to a
substantive 24% of Dorset's current estimated £9.5 bn annual GDP. Similarly,
the estimated £1.5 bn GVA add to the overall UK 'green economy' would equate
to between 2.6% and 4.0% of that overall sector's expected growth of £37-57
bn per year by the early 2030s. The project therefore has the potential to
make significant economic impacts at national, regional and local scales.

 

The study also highlights the facility's potential role in helping decarbonise
power generation and industry within the South and Southwest of England,
notably via enabling Hydrogen to Power ("H2P") for electricity generation and
helping reduce the inherent intermittency of planned new wind power (see RNS
of 11th February 2025).

 

It also emphasises the important role hydrogen storage could play in the
decarbonisation of the adjacent Solent Cluster, containing one of the UK's
largest trading hubs and the UK's fifth largest industrial CO2e emitter, to
which it is planned to be linked via SGN's H2 Connect pipeline. UKEn is an
active strategic partner of the Solent Cluster.

 

South Dorset's proximity to the UK's largest airports at Heathrow and Gatwick
and the aviation fuel production, pipelines and import facilities within the
Solent Cluster which supply much of their fuel, also means it could play a key
enabling role in decarbonising UK aviation, a vital UK industrial sector.

 

Quod estimate that South Dorset's envisaged maximum annual dynamic storage
capacity of up to ~900,000 tonnes of hydrogen (~30TWh) would exceed the
~700,000 tonnes overall hydrogen requirement necessary for Heathrow Airport to
support its 2040 Sustainable Aviation Fuel Requirements ("SAF") under the
government's SAF Mandate.

 

Proximity and planned pipeline access to the major ports and trading hubs of
Southampton and Portsmouth also means UKEn's South Dorset storage could play a
significant enabling role in decarbonising the UK marine sector, a key UK
industrial sector requiring access to hydrogen and its carrier liquid ammonia.

 

The report cites South Dorset's dynamic storage capacity as being
substantively more than the requirement of Southampton and Portsmouth's
combined 26,500 annual tonnes hydrogen demand necessary to meet International
Maritime Organisation (IMO) 2030 fuel targets.

 

The role of UKEn's proposed facility in assisting the development of the UK
hydrogen network, including National Gas' proposed UK hydrogen backbone
pipeline system, Project Union, is highlighted. Material scale hydrogen
storage could not only help to provide hydrogen to help maintain pipeline
operating pressures but also provide necessary resilience and buffering
against peak hydrogen demands for hydrogen producers, H2P and other primary
users.

 

The Quod report and also a parliamentary Question Time transcript referencing
the potential of South Dorset are available on the Company's website
www.ukogplc.com (http://www.ukogplc.com) .

 

Notes:

 

Stephen Sanderson UKOG's Chief Executive commented:

This timely and positive report should assist in the Company's proposed
submission for government revenue support and provide confidence that UKEn's
South Dorset hydrogen storage project does indeed have significant potential
to play a key part in helping establish the UK as a clean energy superpower.

 

We are also encouraged that last week in Parliament, the Prime Minister
responded to local MP Lloyd Hatton MP's question regarding planned substantive
clean energy projects in Dorset and referenced the "huge potential of South
Dorset to become home to a (hydrogen) storage hub".

 

About Quod:

 

Quod is an independent planning and economics consultancy, specialising in
modelling the economic impacts of major infrastructure projects using
Government guidance and appraisal techniques, including the Green Book.
Recent projects include airports (Heathrow, Gatwick, Luton and City), nuclear
power stations (Hinkley Point C, Sizewell C, Bradwell B and Wylfa Newydd),
transport (Lower Thames Crossing, Holyhead Freeport, Crossrail 2) and mining
projects (Woodsmith (potash) and Curraghinalt (gold)).

 

For further information, please contact:

UK Oil & Gas Plc

Stephen Sanderson / Matt Cartwright
 
                            Tel: 01483 941493

Zeus (Nominated Adviser and
Broker)

James Joyce / James Bavister / Andrew de Andrade
                                 Tel: 020 3829 5000

CMC Markets (Joint Broker)

Douglas
Crippen
                                         Tel:
0203 003 8632

Communications

Brian Alexander
                                                                                                    Tel:
01483 941493

 

 

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