Paramount Energy Trust announces its wholly-owned subsidiary Warwick Gas Storage Inc. will proceed with the development and commercial operation of its natural gas storage facility in the Warwick area near Vegreville, Alberta.

Including all drilling and testing, land, facilities and seismic activities, total project expenditures to the end of the first quarter of 2010 were $20 million. WGSI expects to spend an additional $37 million during the final three quarters of 2010 related to the purchase and installation of two compressors and associated surface facilities designed to allow for the withdrawal of natural gas.

The storage reservoir is ideally suited for commercial operations because of its proximity to extensive mainline transportation infrastructure, the low pressure nature of the reservoir, the cushion gas in place and the injection and withdrawal capability of the reservoir.

Revenue generation for the WGSI Facility is projected at $6 million for 2010 and is forecast to ramp up to $15 to $20 million in 2011, dependent on the storage capacity being increased. Upon future expansion of the facility to utilize the full storage capacity of the reservoir, revenue is expected to exceed $20 million annually.

The related funding arrangements for the facility have been entered into and are presently held in escrow.

Paramount Energy Trust is a natural gas-focused Canadian energy trust.

Source: Paramount Energy Trust