Egdon Resources seals commercial terms with SembCorp for on-shore UK Gas production at Kirkleatham

Egdon Resources (AIM: EDR) has signed commercial agreements for the sale of the Kirkleatham Gas Field production to SembCorp’s (SINGAPORE SGX: U96) Utilities unit, which operates the Wilton International manufacturing site in Teesside.

The Kirkleatham Gas Field, located in the North Yorkshire and Teeside licence PEDL068, is targeting its first gas production at the start of the winter 2010 gas season. Under the terms of the Gas Sales Agreement all Kirkleatham gas will be sold to SembCorp. The Anglo-Asian utilities group owns the power station and much of the land on the Wilton International site.

"This is a significant milestone for the Kirkleatham project”, Egdon MD Mark Abbott said. “We have been working to monetise the Kirkleatham gas field since its discovery in early 2006 and are delighted to have reached agreement with SembCorp”.

In addition to the gas sales terms, the commercial agreements also relate to the lease of a gas processing site, the granting of way-leave rights for pipelines and also for the operation and maintenance of Egdon’s facilities on the Wilton site. Furthermore, SembCorp has been granted certain rights to participate in any future gas storage project that may be developed at Kirkleatham.

Planning consent was received for the Kirkleatham development in August 2009.  The consent enables production from the existing Kirkleatham-4 well site and for the drilling, testing and production from up to two additional wells at the site. 

The gas production will be transported from the well site via a six hundred metre long underground pipeline to the Wilton site boundary and then via an above ground pipeline to a processing site within Wilton.  On the processing site, water and all hydrocarbon liquids will be removed and the gas heated and metered prior to delivery via an above ground pipeline to a SembCorp-owned combined heat and power plant. The SembCorp power station generates electricity for both the Wilton site and for export use.

Also today, Egdon announced that it has appointed Stockton-on-Tees based K Home International Ltd as the Engineering, Procurement Services and Construction Management (EPCM) contractor for Kirkleatham. “KHI is a local company with experience of operating on the Wilton site and we look forward to working with them to secure first gas and cash flow for the coming winter”. KHI will manage the detailed design, procurement and construction phase of the development under the oversight of Egdon's engineering consultants and project managers, Vision Oil & Gas of Guildford.

The company will now focus on securing the remaining regulatory approvals and to begin the construction phase of the project.

http://www.proactiveinvestors.co.uk/companies/news/13591/egdon-resources-seals-commercial-terms-with-sembcorp-for-on-shore-uk-gas-production-at-kirkleatham-13591.html