Page 8 - Gi flipbook May 2018

NEWS | GOVERNMENT

Ministers were told closure of

Britain’s largest North Sea storage

would make the UK vulnerable

MINISTERS WERE
WARNED last year that the
closure of Britain’s largest
North Sea gas storage
facility could lead to
shortages and price spikes,
reports the Daily Mail.
Industry leaders warned
that the closure of Rough
without plans to replace
it would make the UK
vulnerable to the price spikes
and shortages reported by
National Grid in March.
The Rough site was
responsible for 70 per The Beast from the East put a strain on gas supplies
cent of the UK’s entire gas
storage capacity at its peak. anticipated by the market...” gas purchased and delivered on gas and developers of
Run by British Gas owner Gas currently stored at on the same day. new storage projects met
Centrica, it was converted Rough is being removed at The figure spiralled to a officials from BEIS on 16
into a storage facility in low daily rates by Centrica 12-year high – jumping from March, but the government
1985 based on the concept in a four-year plan to run 54p a therm earlier to 200p. declined to open an inquiry,
that during the summer down the site off the The National Grid said saying market forces would
cheap gas would be Yorkshire coast. an ‘outage’ at the South ensure there was enough
pumped in to be held for Emergency measures Hook LNG terminal in gas, according to Reuters.
use later. were necessary during Wales meant its entire The government says
After the closure decision March to mitigate a gas daily output of 60mcm was it is up to the market to
last June, the Energy and shortage brought on by a unavailable. At the same determine whether it makes
Utilities Alliance (EUA) sudden cold snap. time, the flow of gas from sense to invest in new gas
wrote to MPs on the After a spike in demand two sources in Norway storage and if there are any
Commons Business and caused by the ‘Beast from was cut by 50mcm due to supply shortages, prices will
Energy Select Committee in the East’, coupled with a technical issues. rise sufficiently to attract
August, supporting requests lack of storage and import Dr Jonathan Marshall, more gas from elsewhere.
for an inquiry. failures, National Grid Energy Analyst at the “There is still a level
At the time, its Chief was forced to issue a gas Energy and Climate of complacency in the
Executive Mike Foster deficit warning asking major Intelligence Unit, said the government that despite
warned: “The closure of industrial gas users to scale gas deficit warning was as a recent events the best
Britain’s largest storage back usage. result of a ‘perfect storm’ of course of action is to
site for natural gas gets The freezing temperatures unrelated short-term issues. just accept these price
rid of a vital supply buffer caused a surge in demand “But underlying it is shocks,” said Clive Moffatt
which allowed us to reduce for gas which meant the another set of issues of consultancy Moffatt
reliance on gas imports. forecast need was put at that speak to a failure by Associates, who attended
This almost certainly means 395 million cubic metres successive governments to the meeting and represents
greater volatility for gas (mcm) of gas – about a third map out a secure gas future several storage developers
prices this winter.” higher than normal for the in the way that they have and industry associations.
But the government’s time of year. done so successfully for The surge in gas prices
Department for Business, National Grid said electricity,” he added. at the start of March came
Energy and Industrial that the amount of gas The government has since days after the government,
Strategy (BEIS) waved away available was just 355mcm, rebuffed calls from the which is under pressure to
fears, saying: “The decision creating a shortfall of gas industry for an urgent lower heating bills, introduced
to close Rough will not some 14 per cent. review of the country’s gas a law in Parliament that
have a material bearing The recent cold weather storage capacity. would cap energy costs for
on current UK gas prices also led to a surge in the Operators of gas storage 11 million households for up
because it was widely so-called spot price of gas – sites, industries reliant to five years. ■

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News.indd 3 19/04/2018 12:43