UK Oil & Gas (AIM:UKOG) has raised funds to push the development of its South Dorset hydrogen storage project as it eyes bidding into the UK’s first hydrogen allocation round.
The group brought in £400,431 through a private placing of new shares worth 0.0102 pence each to a small number of professional investors.
The placing follows UK Oil & Gas’s recent meetings with representatives of the UK government’s Hydrogen Storage Business Model (HSBM) team in recent months.
In addition to developing the South Dorset project, the funds will help the company participate in the first HSBM Procurement Round, scheduled for later this year.
The company recently received a preliminary project design the underground hydrogen storage facility located west of Weymouth in Dorset.
The hydrogen will be stored in 24 salt caverns at a depth of around 1,330m below the surface, with the capacity to hold 1.01bcm of hydrogen.
The site lies near the planned H2 Connect hydrogen trunk pipeline, designed to connect South Dorset to the UK hydrogen transmission pipeline system and the main hydrogen clusters in the South, East Coast and Northwest.
The funds will help create a conceptual design and the preliminary metrics of a joint venture green hydrogen generation and import project at the nearby deepwater Portland Port.
This will provide import capacity for Middle Eastern green hydrogen carrier fluids and associated material green hydrogen production for transmission into the South Dorset storage site and onwards to the wider UK via SGN’s H2 Connect pipeline.
Additionally, UK Oil & Gas is continuing discussions with several energy infrastructure investors regarding joint venture participation in its South Dorset and Yorkshire projects.
UKOG chief executive Stephen Sanderson commented: “These funds are aimed squarely at strengthening the company’s ability to make a competitive bid for government revenue support in the forthcoming HSBM Procurement process, currently in its market engagement stage.
“The addition of potential substantive green hydrogen production at Portland Port, adjacent to the South Dorset site, would create one of only three such hydrogen ‘cohort’ projects within the UK, providing integrated substantive hydrogen production, storage and onward pipeline transmission to identified users. It could be the key to kick starting a widespread hydrogen system in Southern England.”
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