Lender’s Subsurface Advisor for Northern Endurance Partnership
Sproule ERCE acted as the Lender’s Subsurface Advisor, supporting sponsors and financial advisors to secure debt financing from a syndicate of banks for the Endurance carbon storage site, offshore UK. Our primary responsibility involved translating complex technical information into clear insights for Lenders. Our report included detail on the subsurface storage capacity, injectivity, containment, and associated subsurface risks. We then engaged in Q&A with various banks, ultimately enabling the Endurance store to become the first project financed CO2 storage site globally.
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Project Highlights
- Clear Communication of Technical Risks to a Non-Technical Audience
- Analysis Supported FID for a Novel Project Financing Arrangement
- Independent View of Technical Assessments
- Stakeholder Collaboration and Regulatory Engagement
Challenges:
First of a Kind Project: The UK government has set ambitious CCS targets as part of its climate action commitments. To support the delivery of these goals, it established a new CCS business model designed to attract private sector investment in the country's first CCS clusters. Financing was to be secured through syndicates of multiple banks, spearheaded by Société Générale in the case of NEP.
Clear Presentation of Technical Risks: As banks are traditionally risk averse, they require comprehensive third-party due diligence on which they can rely before they commit to provide funding. Specifically, they need to have a clear understanding of the subsurface risks and uncertainties related to the project.
Complex Data Sets: Many of the Lenders did not have a background in the subsurface, and so required explanations of technical risks associated with carbon storage capacity, injectivity, and containment in a robust but concise manner for a non-technical audience.
Clear Presentation of Technical Risks: As banks are traditionally risk averse, they require comprehensive third-party due diligence on which they can rely before they commit to provide funding. Specifically, they need to have a clear understanding of the subsurface risks and uncertainties related to the project.
Complex Data Sets: Many of the Lenders did not have a background in the subsurface, and so required explanations of technical risks associated with carbon storage capacity, injectivity, and containment in a robust but concise manner for a non-technical audience.
Solutions:
Third Party Due Dilligence: To facilitate this, the Northern Endurance Partnership (NEP) commissioned an independent third-party due diligence assessment to Sproule ERCE. This process was essential to allow private capital to fund the project.
Customized Technical Report: We worked closely with the lead technical and commercial banks to develop customized technical reports tailored to meet the requirements of a non-specialist audience. These customizations ensured that the reports directly addressed lenders’ concerns while conveying the technical complexity in an accessible manner.
Review of Risks and Controls: Multidisciplinary analysis and comprehensive review of key risks impacting capacity, containment, and injectivity to close gaps in understanding.
Customized Technical Report: We worked closely with the lead technical and commercial banks to develop customized technical reports tailored to meet the requirements of a non-specialist audience. These customizations ensured that the reports directly addressed lenders’ concerns while conveying the technical complexity in an accessible manner.
Review of Risks and Controls: Multidisciplinary analysis and comprehensive review of key risks impacting capacity, containment, and injectivity to close gaps in understanding.
Values:
Clear Communication: Sproule ERCE gave particular attention to delivering clear communication of subsurface information. This required translating complex technical data into formats and language easily interpreted by non-subsurface experts, including members of the banking syndicate. We also addressed follow-up queries diligently to ensure clarity throughout the financing process.
Trusted Opinion: An independent and comprehensive evaluation covering the subsurface storage capacity, injectivity, containment security, and associated subsurface risks. Our report included our opinion on the various work element carried out by NEP.
Investment Decision: Through our expert guidance and reporting, NEP successfully reached Final Investment Decision (FID) and financial close. This milestone solidifies the projects as not only the first CCS initiatives in the UK to secure such approval but also the first of their kind globally to achieve project-financed CCS stores.
Trusted Opinion: An independent and comprehensive evaluation covering the subsurface storage capacity, injectivity, containment security, and associated subsurface risks. Our report included our opinion on the various work element carried out by NEP.
Investment Decision: Through our expert guidance and reporting, NEP successfully reached Final Investment Decision (FID) and financial close. This milestone solidifies the projects as not only the first CCS initiatives in the UK to secure such approval but also the first of their kind globally to achieve project-financed CCS stores.