ADRL - New contract in United Kingdom: Drilling of gas storage caverns

Ability Drilling has been awarded a contract with an estimated value of NOK 100 million for drilling of gas storage caverns with Scottish and Southern Energy plc ("SSE"). The contract is for drilling operations related to the Aldbrough Gas Storage Project II, Eastern York. The project is a 50/50 joint venture between SSE and StatoilHydro.

The Aldbrough Gas Storage Project II is the second project for storage of natural gas underground in the area by the two companies. The development of the gas storage area was started in 2002, and the actual project is the second phase of the total development. The contract covers drilling of nine wells, which will subsequently be leeched to caverns (so far not part of the contract). The leaching contract will be awarded during drilling of these 9 wells. The caverns will have a storage capacity of 420 million cubic metres. This equals to the supply of gas in one day to more than 6 million homes. Ability Drilling's operations in this project will commence in Q4 2009 and will last for approximately two years with one rig.

CEO in Ability Drilling Hans Petter Eikeland comments: "We are proud to be awarded this important contract with such a well-reputed company as Scottish and Southern Energy. It is also a pleasure for the management and crew in Ability Drilling to again work with StatoilHydro, who we know very well from the Norwegian Continental Shelf".

Gas storage is a central part of the UK's strategy for handling more imports of gas. It secures the required flexibility in reserves for the country. Strategically, gas storage also increases energy independence. Other countries also evaluate development of more gas storage caverns. Says Mr. Eikeland, "we experience growing interest for the storage concept and believe this market will grow rapidly."

The gas storage caverns are created using well known and proven technology and drilling processes. Directional drilling is used from a central area down to the salt strata. In Aldbrough, this area is about 1700 metres underground. After drilling is completed, the leaching process starts by pumping seawater into the boreholes to dissolve the salt and form the cavern. The natural gas will then be pumped into the caverns and stored under high pressure.

"Some of Ability Drilling's competitive edges, high focus on QHSE and more environmental friendly operation, were crucial in winning this contract," says Mr. Eikeland, who expects the contract will pave the way for new opportunities in the gas storage market.

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