Shares digital

by Simon Keane

It is make or break time for Portland Gas this month when the company’s plans to build huge underground gas storage chambers in Dorset are put to the vote.

The company has revealed that Dorset County Council’s planning committee will consider its proposal on 16 May. Portland Gas was spun out of Egdon Resources in January creating a pure gas storage operation.

Of the DDC meeting, Peter Hitchens from house broker Seymour Pierce, says: ‘Receiving planning permission would reduce much of the perceived risk in the project and allow the substantial discount to our net asset value to close.’

Shares are currently trading at 324p compared to the 550p per share that Hitchens believes the project is worth. Should Portland get permission for the storage units it will have to get further planning approval for a gas pipe to link it up to the national grid.

Permission for the pipe has to come from the Department for Business, Enterprise & Regulatory Reform (BERR). Hitchens, says: ‘The government is aware of the need for additional gas storage projects to protect security of supply and should therefore look favourably on the planning application.’

Portland Gas is one of a number of companies seeking to capitalise on the arbitrage opportunities from stockpiling gas in the summer months and selling it on in the winter. Star Energy – which is utilising disused North Sea oil fields to store gas – was recently taken out by Malaysia’s state-owned oil company Petronas. Meanwhile, EnCore Oil is pushing ahead with separate plans to create its own North Sea gas store.

Shares says: Portland Gas hasn’t run into local opposition to its plans which bodes well for the 16 May meeting.