Rough Storage is an ageing gas storage facility located off the coast of Yorkshire. Centrica Storage Ltd bought the facility in 1985 and it makes up around 70% of the UK’s gas demand. This June, Centrica announced that all of its wells required urgent maintenance due to wear and tear over time which had caused issues during the injection and withdrawal processes. This prevented the build-up of gas storage over summer months in preparation for this winter, and as a result winter gas prices increased rapidly. Furthermore, Rough has only just been opened, as of the 9th December, withdrawing only at reduced capacity during peak times.
The overall impact of the current situation at Rough has been quite damaging to the UK’s gas supply. Six of its wells have been permanently shut down due to severe damage, which has affected its capacity anyway. Having been shut down and incapable of injecting all summer has reduced its capacity further. Thomas Rodgers from ICIS noted that:
This winter, gas storage has been extremely tight, are as been dependent on imports of gas from Europe to make up the lack of gas available from Rough. This has called for urgent action, and the Government has begun auctions for funding increased Capacity in the UK energy market.
Centrica are one of few companies who won the bidding process, and plan to invest in additional onshore gas storage located in Roosecote in Cumbria. What this implies is that the UK is in desperate need of obtaining gas from a variety of sources, rather than depending only on Rough as it comes to the end of its natural life, and on European imported gas. Liquefied Natural Gas tankers are docking sporadically at UK shores, which does not give any strength or security to our gas supply.
In an attempt to relieve some of the pressure form the shortage of gas, Centrica have invested £180 million in gas storage facilities and gas-fired power under the Capacity Market scheme. This includes funding a quick response gas station in Lincolnshire and a CCGT (Combined Cycle Gas Turbine) station in Norfolk, both due to begin construction in 2017. These investments will go towards increasing gas and power supply in the next coming winter seasons, and to avoid closing the gap between supply and demand.
Sources: Energy Live News, the Telegraph, Npower, the Guardian, SSE, Engie, EDF, Gazprom Energy