Star Energy and the Albury gas field

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Star Energy and the Albury gas field
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What is Star Energy?

• Public company listed on AIM in 2004
• Market capitalisation 245m
• 19 owned by Malaysian government
• 2nd largest onshore oil gas producer in UK
• 26 producing fields

A small company with big ambitions
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Star Energys business strategy in their own words

• Current primary focus
• to build a significant multi-site gas storage
  business
• current oil and gas production business
  incorporates depleted reservoirs, which will form
  the basis of future onshore gas stores
• expertise in operating onshore oil and gas
  fields responsibly and safely in environmentally
  sensitive areas provides a core competence base
  for future storage operations
• reviewing opportunities to expand asset base in
  the UK
• believes continental Europe also offer
  opportunities

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Onshore gas Storage -

• Star Energys real agenda

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What is Gas Storage?

• Use of depleted oil or gas fields for the
  seasonal or strategic storage of natural gas
• The North Seas huge Rough gas field is used for
  this purpose by Centrica
• Only 1 onshore depleted field is in service in
  the UK, (although gas is being stored in man-made
  caverns created in salt formations)
• Developers will rent capacity in these facilities
  to speculators and suppliers who buy cheap gas in
  the summer and sell it back into the grid in the
  winter

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Whats this got to do with Albury?

• Star Energy plans to develop the Albury gas field
  as a permanent gas storage facility
• Current appraisal planning application
  represents the last step in process of
  determining if field geologically suitable
• Star Energy says the Group has detailed
  knowledge of the producing reservoir
• If results favourable, (which is the expected
  outcome), Star will apply for permission to build
  the facility ASAP

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Albury Gas Storage Project

• ALBURY PHASE 1
• 50 million cost
• Connection to the national gas grid west of
  Clandon by new pipeline
• ALBURY PHASE 2
• capital expenditure requirements expected to be
  approx 84 million
• 2nd connection to the national gas grid by new,
  very high pressure pipeline laid to Godstone
• 2 further potential reservoirs could form
  basis of a storage facility of up to 9,500 GWh
  (30 billion cubic feet)

ONE OF THE LARGEST FACILITIES IN UK!
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What does a gas storage facility look like?

• Click here to see photos of the
• Humbly Grove facility on
• Star Energys website

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A Humbly Grove in Albury Park?

• Star Energy says that to exploit the Albury gas
  field
• we would need to set up a gathering station
  with compressor facilities and a pipeline link to
  the national gas pipeline 1
• Where?
• anywhere between Albury Ripley 1
• but
• our preferred site is Albury Park, adjacent to
  the existing site 2

1, 2 Sources Star Energy, Community Liaison
Group meetings 2006
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National need?

• Government is encouraging development of an
  onshore, private sector, storage market in
  attempt to reduce winter gas supply problems
• Enormous capacity in the old, depleted North Sea
  gas fields not being utilised
• Many alternative sites exist nationally,
  including those within Star Energys extensive
  portfolio (source Star Energy press release 18
  October 2006)
• Albury believed to be only prospective facility
  in an AONB

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Current gas storage facilities - existing, in
development, or in planning process

• ACTIVE
• Centricas Rough gas field (offshore) - may be
  acquired by Gazprom
• Hornsea (artificial salt caverns)
• Holford, Cheshire Scottish Power
• Humbly Grove Star Energy
• Hatfield Moor
• Hole House 1 (salt caverns) phase 2 under
  construction
• UNDER CONSTRUCTION
• Byley (artificial salt caverns) - owned by
  Gazprom rejected by Cheshire CC over-ruled by
  ODPM
• Aldbrough (salt caverns) - (planning application
  for extension in process) Statoil Scottish
  Southern
• IN PLANNING PROCESS
• Welton, Lincs depleted gas field - Star Energy -
  planning application rejected on safety grounds
  by Lincs CC Star announced withdrawal of appeal
  intention to reapply under 1965 Gas Act
• Caythorpe, E Yorks Warwick Energy
• Saltfleetby, Lincs - owned by Gazprom
• Fleetwood, Lancs - in public enquiry
• Preesall owned by Cantaxx
• PRE-PLANNING
• Albury Phase 1 2 - Star Energy
• Bletchingly - Star Energy

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What does Star Energy know about gas storage?

• Star Energy is 19 owned by the Malaysian
  government
• Star Energy have NO experience of engineering or
  operating a depleted gas field facility
• Star Energy have operated 1 depleting oil field
  facility since February 2006
• Humbly Grove (Hants) - one of largest individual
  gas storage facilities in UK approx 8 of all
  current capacity
• 65m, 10 billion cubic feet 3,146 GWh capacity
• 60 acre site 27km pipeline to connect to grid
• Star rents 50 of Humbly Groves capacity to
  Gazprom (controlled by Russian government)

Malaysian Russian interests securing the UKs
gas supply?
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How safe?

• Risk factors explosions, industrial accidents
  and health hazards Injury, environmental damage
  and legal liability old well bores could leak
  and result in an explosion (source Star Energy)
• Star Energys track record in safe management of
  gas storage facilities?
• 9 months of operations
• Stars first facility (Humbly Grove) opened on
  1st February 2006, 3 months late and 21 over
  budget
• Gas storage industry safety record
• History of loss of life catastrophic damage
  from well head leaks, gas migration through
  natural faults high pressure pipeline
  explosions. For example-
• Yaggy, Kansas, Jan 2001 - 2 deaths, many
  explosions, buildings damaged, billions cubic
  feet gas released
• Moss Bluff, Texas, Aug 2004 - 6 bcf gas escaped
  burnt 1000 ft high flames 1 mile radius
  evacuated

Nearest Albury residential property 250 metres
Albury Shere villages 1 km
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A terrorist target?

• Security measures in force at the rear of the
  Humbly Grove gas storage - an open gate and no
  visible personnel