Centrica gas storage projects face axe
31 Jul 2013
Centrica today revealed that its two planned gas storage projects worth a combined £1.5 billion are unlikely to go ahead without government support.
The utility has plans to build the £1.4 billion Baird offshore gas storage project off the Norfolk coast in joint venture with oil and gas firm Perenco, plus the £100 million Caythorpe onshore storage scheme in Yorkshire.
Baird would have the capacity to store 1.7 billion cubic metres of gas in the reservoir of an existing offshore gas field, while Caythorpe could hold 212 million cubic metres.
However, in its interim financial results today, Centrica stated that neither project was financially viable without some form of support.
“In gas storage, we have two potentially attractive projects, Baird and Caythorpe, although under current market conditions a support mechanism is likely to be required to underpin investment in new storage facilities,” says the results report.
“We are currently awaiting the results of DECC’s review into possible intervention mechanisms to encourage new storage investment.”
The Department of Energy and Climate Change (DECC) told Process Engineering that it will shortly publish its conclusions of its review into the need for more gas storage in the UK.
However, despite the country currently only having around 15 days’ worth of gas storage, it is expected that DECC will rule out any form of support for such schemes, especially given its rejection in April of planning permission for a 900 million cubic metres facility to be built by Halite Energy in Lancashire.
Centrica’s subsidiary Centrica Storage currently operates the UK’s largest gas storage facility, the 3.7 billion cubic metres Rough field offshore Yorkshire.
