UK Oil and Gas (AIM:UKOG) has raised £500,000 from investors to acquire land for a salt cavern hydrogen storage site.
The company plans to use the funds to buy farmland in East Yorkshire which has direct access to the North Sea. Proximity to the sea will provide the brine necessary to dissolve the caverns.
UKOG said it plans to take advantage of a “unique window of opportunity” to acquire long term purchase and leasehold rights to the property in the UK’s “most extensive and thickest salt deposit” and a “key nationally strategic area for future hydrogen and existing natural gas storage”.
The site is also within the boundaries of East Coast cluster, which takes in a range of low-carbon projects on the Humber and Teesside, including industrial carbon capture and low-carbon hydrogen production schemes.
In March last year, the Department for Energy Security and Net Zero (DESNZ) selected three East Coast cluster projects – Net Zero Teesside Power, H2Teesside and Teesside Hydrogen CO2 Capture to be included as part of its track-1 carbon capture and storage (CCUS) scheme which as since been backed by a £22 billion commitment from the Labour government.
UKOG believes this means its hydrogen storage project sits squarely with in this. It highlights the property lies adjacent to the first construction phase of the proposed Project Union national hydrogen pipeline network, planned to connect hydrogen producers, hydrogen-to-power stations, hydrogen storage and end users in the East Coast cluster and Teesside.
Further to this, UKOG said the area “benefits from strong planning precedence” for similar infrastructure projects, greatly increasing the likely probability of securing planning consent.
The project is similar to another site UKOG plans to develop for hydrogen storage in Dorset.
Stephen Sanderson UKOG’s chief executive said: “The company has decided to call on additional capital to take advantage of the unique and timely opportunity to further its acquisition of a new hydrogen storage development site in East Yorkshire.
“The property is located firmly within the government’s E. Coast Track #1 hydrogen cluster and adjacent to the first phase of connection to Project Union, the planned national hydrogen pipeline network.
“Together with our primary Dorset project, the addition of this site will help grow the company’s hydrogen storage portfolio to one of the largest in the UK and position us to take advantage of the government’s planned hydrogen storage allocation round in 2025.”
The firm raised the funds in a share placing, with the 0.025p issue price representing a 26% discount to its closing price. The company has also launched a separate retail offer aimed existing shareholders, with a minimum subscription of £250 per investor.
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