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Baseefa Ltd

Centrica abandons plans for two gas storage projects

23 September 2013

British Gas owner Centrica has shelved plans to convert the depleted Baird gas field in the North Sea into a gas storage site, and to transform the smaller Caythorpe gas field in East Yorkshire into a "fast-cycle" storage facility. The energy giant blamed the Government's decision not to subsidise investment in new gas storage and "weak economics" for axing the projects.

Centrica abandons £1.5 billion plans
Centrica abandons £1.5 billion plans

The group has written off £240m in wasted costs after scrapping the plans, which would have cost a total of £1.5bn. In March the prolonged cold spell saw Britain's stored gas supplies fall dangerously low, with warnings of supply interruptions fuelling calls for extra capacity.

Centrica's decision leaves the UK increasingly reliant on imported gas. The UK has less than three weeks of gas storage supply, much less than Germany and France, which is used to help meet demand spikes during cold weather.

The Department of Energy and Climate Change (DECC) ruled out subsidising investment in new gas storage earlier this month, saying it was unfair for the burden to fall on taxpayers.

The Government says storage accounts for just 7% of the UK's gas supply, with around half coming from the North Sea and the balance from pipelines from mainland Europe and Norway and shipments of liquid gas.

Centrica originally planned to use the Baird depleted gas field in the southern North Sea to store 108 billion cubic feet of gas, becoming Britain's second-biggest gas storage site behind Centrica's Rough facility, which has 118 billion cubic feet of capacity.

The depleted Caythorpe field would have held up to 7.5 billion cubic feet of gas to rapidly meet demand spikes at a price of more than £100 million.

Centrica said: "This decision was taken in light of weak economics for storage projects and the announcement by the UK Government on September 4 ruling out intervention in the market to encourage additional gas storage capacity to be built."

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