Star Energy Group - Gas Storage Update

RNS Number:6189K
Star Energy Group PLC
18 October 2006

18th October 2006


Star Energy plc
('Star Energy' or 'the Company')

Gas Storage Update

Star Energy, the integrated energy group, announces an update to its gas storage
development activities.

During the past year, the UK has changed from being a gas exporter to a net gas
importer, and this reliance on imported gas is likely to increase such that
approximately 50% of the UK's gas requirement will be imported by 2010. Recent
reports by the DTI  together with independent studies have confirmed that this
trend will lead to an increasing requirement for gas storage to provide security
of supply as well as manage variations in demand. The UK currently has only 4%
of annual consumption in gas storage capacity, compared to over 20% in France
and Germany.

Star Energy remains committed to becoming a significant multi-site gas storage
operator, and following recent frustrating delays in obtaining planning
permission for new facilities, we have reviewed both our approach to planning in
the UK and the potential for European storage facilities that can service the UK
and Western European markets.

In reviewing our approach to UK planning submissions, we have sought
clarification from the DTI about certain procedural issues as well as seeking
appropriate legal and expert opinion.

Following these discussions, the Company has decided to withdraw its appeals to
the Planning Inspectorate with respect to the Welton gas storage project and
re-apply for consent using the 1965 Gas Act. We expect this will provide a more
certain timeline and cost for this application and will now form the standard
approach for consenting and permitting all of the Company's future UK projects.

The Company has worked with the DTI for the last two years to enable the use of
the 1965 Gas Act for gas storage applications, this Act never having previously
been used. This legislation provides specifically for the storage of gas in
natural porous strata such as partially depleted hydrocarbon reservoirs.
Applications under the 1965 Gas Act are submitted to the Energy Minister rather
than local planning authorities.  All relevant authorities are involved as
consultees in the application with the DTI as the determining authority.

The following is an update on each of our current projects:

Welton

Star Energy Group plc initiated appeals in June 2006 against Lincolnshire County
Council's refusal of the Company's planning applications to build a gas storage
facility at Welton, Lincolnshire and a pipeline connecting the proposed storage
facility to the National Transmission System. The Planning Inspectorate has set
an inquiry date for the end of February 2007.

The Company has appointed legal advisors, including Queen's Counsel, in its
preparation for the appeals. In discussions with legal advisors over the last
several weeks, it has become clear that the County Council's case against the
appeals will focus on detailed issues of procedural correctness as well as the
merits of its proposals. The County Council's Statement of Case, dated 29th
September 2006, has made it clear that the County Council intends to raise
procedural objections that it could have raised while Star Energy waited over
two years for the planning applications to be determined.  In order to avoid
further delays and risking costs that may run into several millions of pounds,
and in order to standardise its applications for gas storage under the 1965 Gas
Act, the Company has decided to withdraw its appeals and has informed the
Planning Inspectorate of this.

The Company will make an application to the DTI for the Welton gas store using
the 1965 Gas Act. The Company has the advantage of being able to use most of its
prior engineering and preparatory work for the application.

The new application will be submitted as soon as practicable and it is hoped
that the period of determination will be in the order of 6 months, subject to
the requirement to hold a public inquiry.

Albury

The Company has been conducting consultations with the local community and the
local council via a liaison panel and this has resulted in the Company's
decision to drill its Albury appraisal well from its existing drilling site
thereby reducing disturbance to the local community to a minimum. The Company
has also informed the liaison panel of its intention to submit a 1965 Gas Act
planning application for its Phase 1 Albury project during the first half of
2007.

Bletchingley

Immediately following the Albury appraisal well the Company plans to drill an
appraisal well on its Bletchingley gas field to evaluate the rock properties of
several horizons in anticipation of a 1965 Gas Act application for an up to 30
bcf gas storage facility.

Gainsborough

The Gainsborough gas storage project has been progressed with reservoir
modelling and consultation with landowners to identify a suitable location for
the surface facilities. As soon as the facility location plans have been
finalised, the Company will undertake the necessary preparatory work in
anticipation of a 1965 Gas Act application.

Further Storage projects

The Company continues to evaluate further potential projects both within its
extensive portfolio of oil and gas reservoirs and also via potential acquisition
and joint venture. In particular, the Company is actively pursuing a number of
possible asset acquisitions in Western Europe. The Company's acquisition
priorities include existing storage operations and producing gas reservoirs with
potential for storage, that are strategically located to complement the
Company's UK market position as well as servicing their local markets.

Enquiries:

Star Energy                           020 7730 6663
   Roland Wessel, Chief Executive

College Hill                          020 7457 2020
   Nick Elwes / Paddy Blewer


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            The company news service from the London Stock Exchange
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