UK Oil & Gas strikes lease deal for Dorset hydrogen storage site

UK Oil & Gas announced the execution of a heads of terms agreement for a 60-year lease on land and subsurface mineral rights on Wednesday, for a second underground hydrogen storage facility in south Dorset.

The AIM-traded firm said the new site, managed by its subsidiary UK Energy Storage (UKEn), is strategically located above the thickest part of the Dorset Triassic salt deposit and near SGN's planned H2 Connect hydrogen pipeline, which would link the storage caverns to the proposed Solent Cluster and the broader southern UK hydrogen super-cluster.

It said the facility was expected to provide between 6.5 and 10 terawatt-hours (TWh) of hydrogen storage annually, representing 10% to 20% of the UK's projected hydrogen storage needs by 2050.

That was aligned with the UK government's target to decarbonise the national power system by 2030.

UKEn would now move forward with finalising the lease agreement, designing the salt caverns, and preparing to submit a Nationally Significant Infrastructure Project planning application.

The company also planned to seek government revenue support for at least one of its Dorset sites, as part of its strategic energy infrastructure development efforts.

“UKEn's 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,” said chief executive officer Stephen Sanderson.

“Its proximity to SGN's H2 Connect pipeline is deliberate and will ensure storage can be directly linked to the planned Solent Cluster and wider Southern UK hydrogen networks.

“We look forward to continued collaboration with the government to develop these strategic UK energy infrastructure assets and to help make the 2030 UK power decarbonisation target a reality.”

At 1211 BST, shares in UK Oil & Gas were up 5.26% at 0.05p.

Reporting by Josh White for Sharecast.com.