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(Sharecast News) - Zephyr Energy said on Tuesday that it had completed a key pipeline inspection process at its Paradox project in Utah, marking a major step towards first gas exports.
The AIM-traded company said the in-line inspection of the 20.9-mile pipeline running from its Powerline Road Gas Plant to the Northwest Pipeline had been completed under the supervision of Enbridge, the owner and operator of the export pipeline.
Zephyr said Enbridge's technical review confirmed the pipeline was structurally sound at the current system operating pressure, with no repairs required and no immediate integrity concerns.
To support the higher operating pressure needed to export Zephyr's gas to the Northwest Pipeline, four short sections of pipeline totalling 25 feet have been identified for visual inspection.
The company said Enbridge viewed the inspections as routine and not a risk to achieving first gas export, even if any section required repair.
Completion of the inspection process has allowed the formal start of the regulatory approval process needed to increase pipeline operating pressure and transport gas to the Northwest Pipeline.
Zephyr said it would update the market on the expected timing of first gas once it received further guidance from Enbridge on the regulatory schedule.
Alongside the regulatory process, Enbridge has continued operational work, including piping and mechanical upgrades needed to move Zephyr's gas to market.
Zephyr and its third-party infrastructure consultants are also expected to finalise the design and initial capacity of the project's gas processing solution in the coming weeks.
The company said planning for additional Paradox wells was also underway, alongside detailed discussions on potential asset-level funding opportunities.
Zephyr added that the successful inspection results were expected to have a positive impact on its farm-out and hydrocarbon marketing efforts, both of which had advanced significantly in recent months.
Chief executive officer Colin Harrington said the inspection was "a major step" towards ensuring significant new natural gas volumes could be safely transported from the field.
"With the pipeline integrity largely confirmed, we can now finalise our offtake agreements and advance the farm-out process, and will provide updates on these two critical milestones in due course," he said.
At 0914 BST, shares in Zephyr Energy were up 7.46% at 3.17p.
Reporting by Josh White for Sharecast.com.
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