UK Oil & Gas PLC on Wednesday said it agreed heads of terms for its second hydrogen storage facility in Dorset and confirmed it will now work towards completing the final lease agreement.
The London-based energy company executed the heads of terms through its UK Energy Storage subsidiary, covering a 60-year lease of land and subsurface mineral rights for a second hydrogen storage facility in south Dorset.
Chief Executive Stephen Sanderson said: ‘[The] new Dorset site is optimally placed to exploit the thickest part of the onshore Dorset Triassic salt deposit, permitting large underground caverns to be emplaced via a modest sized surface facility. Its proximity to [Scotia Gas Networks Ltd] H2 Connect pipeline is deliberate and will ensure storage can be directly linked to the planned Solent Cluster and wider Southern UK hydrogen networks.’
Each of the two UKES hydrogen storage sites aim to provide around 6.5 to 10 terawatt-hours of working storage per annum.
This equates to approximately 10% to 20% of the UK’s estimated 2050 hydrogen storage demand based on National Grid and Royal Society forecasts of 50TWh and 60-100TWh respectively.
UK O&G will now work towards finalising the lease agreement while also completing salt cavern design studies and beginning other necessary works to submit a ’nationally significant infrastructure project’ planning application to streamline the consenting process for the project.
Additionally, the company is aiming to secure revenue support from the UK government for at least one of the Dorset sites.
UK Oil & Gas shares were up 1.1% to 0.048 pence each in London on Wednesday afternoon.
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