£1.5bn Gas Storage Plants Cut By Centrica
By Anne Lewis-Schneider
Weak British Economy to Blame
Government decided to cut subsidies to boost the storage of gas on September 4th and this has resulted in two storage projects which would have boosted reserves of gas in Britain being axed by Centrica to the tune of £240 million worth of investments. Centrica has also sighted weak economics in Britain for the cancellation of the project which would have increased storage capacity for gas. They have stated that both sites would have required a combined investment of £1.5bn to be economically viable.
Shares were initially bought in the financial year of 2008-2009 when gas delivery was compromised due to disagreements between Russia and the Ukraine which left Britons in the lurch as far as gas supplies were concerned. One of these sites is off the coast of Norfolk in Baird, the other being Yorkshire plant in Caythorpe. This prompted imports of gas from the USA and Qatar through the winter months, at a cheap price that prevented an increase in gas prices at a time when they were expected to climb steeply and impact on consumers.
The capacity of the Baird plant alone would have added the capability to store enough gas for thirteen days usage. Centrica’s other facility has the capacity to meet gas usage to the tune of 10% in present peak demand. The Baird project would have been the second largest storage project. Other European countries like Italy, Germany and France have the ability to store enough gas to supply adequate gas for around 97 days, which leaves Britain somewhat lagging in storage. The UK has the ability to store only 19 days of the projected gas demands and this highlights Britain’s susceptibility to energy shortages.
With the continued controversy surrounding fracking and no end in sight of protests by environmental agencies over the exploratory fracking that commenced in Essex, and government inability to gain foreign investment to build new nuclear plants, with older plants being phased out and shut down there would appear to be a lack of concrete guidelines that would encourage foreign investments. Government has been slammed for what has been called the mismanagement of the nuclear industries privatisation in the UK. The shelving of the two projects could see British consumers being left out in the cold as the winter, which is fast approaching and looks to be a very cold one. Gas storage is relatively small when compared to other countries in the EU.
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