UK Oil & Gas PLC Announces a Future Hydrogen-Ready Energy Storage Project for Hydrogen Underground Salt Cavern Storage

By May 30, 2022 9   min read  (1710 words)

May 30, 2022 |

Fuel Cells Works, UK Oil & Gas PLC Announces a Future Hydrogen-Ready Energy Storage Project for Hydrogen Underground Salt Cavern Storage

UK Oil & Gas PLC (London AIM: UKOG) is delighted to announce that its wholly owned subsidiary, UK Energy Storage Ltd (“UKEn”) has signed an Agreement to Lease  (“A2L”) with Portland Port Limited (“PPL”) covering two sites at the former Royal Navy port in Dorset, with the intent to develop, subject to new planning consent and securing necessary development finance, a planned integrated Energy-Hub, centred around hydrogen-ready gas storage and a future green hydrogen generation capability.

UKOG’s Portland Energy-Hub concept:

As agreed between the parties, UKEn’s planned Energy-Hub development concept seeks to reinvigorate and build further upon a prior unrealised project by Portland Gas Storage Ltd, granted planning consent by Dorset County Council in 2008, to situate approximately 43 billion ft³ “bcf” (1.2 billion m³ or “bcm”) of underground salt cavern storage beneath PPL’s land. Utilising established engineering concepts, public record planning submissions, publicly available data, UKOG internal studies and technical, engineering and economic modelling advice from Xodus Group (“Xodus”), the planned new Energy-Hub is envisaged to include the following key elements:

  • A strategically located hydrogen-ready Energy-Hub within an active harbour site;
  • Construction of up to 43 bcf (1.2 bcm) of hydrogen-ready salt cavern storage. For context, if this capacity is ultimately achieved it would materially increase the UK’s current reported 61 bcf (1.7 bcm) total working underground gas storage capacity. The envisaged hydrogen-ready build also means the site could hold either hydrogen or natural gas from operational inception;
  • Salt cavern storage would be linked to the national pipeline transmission system (“NTS”) via a new planned hydrogen-ready pipeline. As per the prior 2008 project, the new pipeline would be designed with an envisaged capacity designed to be capable of handling up to 1 bcf/day (28 million m³/day). For context, this throughput capacity, if achieved, would equate to approximately one seventh (14%) of current estimated UK daily natural gas consumption;
  • Pilot scale green hydrogen production and storage, together with hydrogen battery concept investigation. The Company and its consultant Xodus plan to develop future potential to supply renewable electricity for green hydrogen production at the site via an over-the-horizon floating wind farm, an area of Xodus expertise;
  • Addition of a new planned LNG import facility in the port, designed to optimise cavern-fill cycle times and maximise revenues. The Company’s ambition is to source long-term LNG from the USA and other secure suppliers;
  • Development planned to be ‘future-proofed’ by engineering designed to transition seamlessly into green hydrogen production and storage as the ‘hydrogen economy’ evolves;
  • Local high geothermal heat gradient to be investigated for possible local heat network and/or to power green hydrogen production;
  • The Company and PPL will also jointly investigate the potential for using future green hydrogen generation at the port to directly fuel future hydrogen propelled ships. The possibility of future green hydrogen export by ship will also be explored.

Stephen Sanderson, UKOG’s Chief Executive, commented:

“It’s hard to recall a time in recent history in which the critical importance of energy security and the resilience of the UK energy system has been so much in the public and governmental eye. UKOG is therefore delighted to announce the intention to develop an infrastructure project, fully in keeping with the government’s new British Energy Security and Hydrogen Strategies and National Grid’s 2021 Future Energy Scenarios (“FES”), that could both materially strengthen the UK energy system’s resilience to supply and demand shocks, plus provide the foundations for a potentially significant and strategic element of the future green hydrogen economy.”

A2L and Lease: In return for an annual ground rent, a future gas throughput tariff and related LNG vessel berthing charges, the A2L conveys to UKEn the exclusive right to proceed with the development and enter into a 30-year lease should certain conditions be met to UKEn’s satisfaction (namely: final property due diligence, planning and regulatory permits, sufficient development finance and the site being free from significant contamination).

The A2L contains agreed forms of the Lease and Operating Agreements and contains a longstop date which, unless otherwise agreed, will allow UKEn to terminate if the conditions have not been met within 4 years of the effective date. The lease also grants UKEn the discretionary right at 5-yearly intervals to continue or break the lease. At the end of the initial lease UKEn has the discretionary right to extend the lease for a further 30-year lease period on the same terms. The aggregate total ground rent payable by UKEn up to the A2L longstop date is approximately £0.9 million.

Next steps:

The Company intends to complete further detailed engineering and commercial studies, followed by the preparation and submission of a detailed planning application. Where appropriate and to reduce the planning consent cycle time, the Company intends to update and utilise pertinent aspects of the prior consented development in its planning submission.

The Company has been advised by Zetland Ltd, its planning consultants, that the scale and nature of the Energy-Hub development is expected to qualify as a Nationally Significant Infrastructure Project (“NSIP”). This would require planning consent to be sought via an application for a Development Consent Order (“DCO”) directly to the Planning Inspectorate. Ultimate authority over the decision on whether to issue a DCO would rest with The Secretary of State for Levelling Up, Housing and Communities.

UK Oil & Gas PLC

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the “UK MAR”) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company’s obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.


Green hydrogen: a product of the electrolysis of water using a renewable source of electricity such as wind or solar. The 2021 UK Hydrogen and 2021 FES reports provide forecasts for hydrogen production, storage, demand and its use in power generation, energy storage, rail and road transport, fuel for shipping and aviation, domestic and industrial heating and direct air carbon capture.

Green hydrogen storage: Hydrogen as an energy storage medium is envisaged to provide the ability for both short-term and longer term interseasonal storage, which can be rapidly converted to electrical power via clean combustion (i.e., a hydrogen battery). The four modelled 2021 FES scenarios state hydrogen storage as an integral piece of achieving net zero, helping to manage both seasonal swings in demand for heating and capturing excess renewable electricity at times of low demand for subsequent quick release during peak demand.

The FES scenarios envisage UK underground hydrogen storage capacity requirements  by 2050 (predominantly in new salt caverns) to be between 12 and 50 TWh, some 3 to 10 times greater than the UK’s current underground storage capacity (note: that since hydrogen has one third the energy capacity of natural gas, the current underground natural gas storage capacity of c. 14 TWh (61 bcf/1.7 bcm) would reduce to around 5 TWh if filled with hydrogen).

In energy equivalent terms the Portland site as envisaged could provide a material 4 TWh of short to long term hydrogen storage.

Gas storage: is a fundamental element of the current energy system that helps provide the system’s resilience to meet any energy shortfall during periods of extreme demand, adverse weather and/or when other power generation sources aren’t available (such as the nuclear outages and weather-related reduction in wind power of 2021 necessitating coal fired power to be utilised to meet demand). Gas storage helps stabilise the gas market and is an insurance against disruption and price volatility. It can also provide short-term physical security of supply.

The UK ranks 12th in underground storage capacity compared to EU countries and has seen its storage capacity significantly decline since the closure of the offshore Rough field in 2017, which supplied around 70% of the UK’s capacity. Currently UK underground storage contains an equivalent of approximately 8 days UK gas consumption, less than a tenth of  Germany’s supply capacity. Whilst the UK’s low storage capacity is partly offset by gas production and LNG imports, the predicted UK N. Sea production decline and move away from Russian gas imports could expose the UK to the same gas supply vulnerability as its EU counterparts, strengthening the strategic need for increased natural gas storage capacity in the immediate energy transition.

Hydrogen battery: the storage of green hydrogen, generated from surplus seasonal renewable electricity (wind and solar), for future rapid combustion and power generation to meet peak energy demands.

Hydrogen ready: the small size of the hydrogen molecule and its interaction with high grade steels causes the metal to become brittle with time. Consequently, the steel and engineering specifications currently used in today’s natural gas facilities will require modification to be fully compatible for hydrogen. UKOG, therefore, aims to build-in hydrogen compatibility during initial construction, thus future-proofing any Portland Energy-Hub development.

Over the horizon floating wind farm: An offshore wind farm hidden from any shore based visual observation (i.e., located beyond or over the visible offshore horizon). Such a windfarm would be located to prevent any visual impact to Dorset’s Jurassic heritage coastline. Floating turbine installations  are secured to the sea floor by cables and anchors in the same manner as offshore platforms and drilling rigs (see: ).

Salt caverns: man-made caverns constructed by the physical dissolution of naturally occurring halite (rock salt) deposits. The dissolution provides a gas tight cavern space that is permanently filled with gas and/or brine at an equivalent pressure to that within the surrounding rocks i.e., it is not an empty void at any time. Portland Port is ideally situated for the construction of large caverns as it overlies a thick, high quality halite section of Triassic age. Halite deposits with sufficient thickness to accommodate significant caverns are confined to three areas of the UK: S. Dorset (Triassic), Cheshire (Triassic) and the northeast Yorkshire coast (Permian Zechstein age). Thinner Triassic halite deposits are present in areas of the NW and Somerset. Active salt cavern gas storage exists in Cheshire and the northeast.

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