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Saturday, June 15, 2024

Importance of shale gas production significantly increased as the largest UK gas storage facility is to be closed

Centrica, the owner of British Gas, has just announced that it will make “all relevant applications to permanently end Rough’s status as a storage facility”. The Rough storage facility, off the Yorkshire coast, is Britain’s largest storage site for natural gas. It supplies up to 10 per cent of the UK’s daily gas needs.

Reviewing the implications, Dan Lewis, Senior Energy and Infrastructure Adviser at the IoD observed: “With the closure of Rough, we have just lost 70% of the UK’s gas storage capacity. So, there has never been a better time to accelerate UK shale gas exploration and move forward with new gas storage projects. We may be going through a heatwave right now, but in winter time, a lack of storage will inevitably start to detrimentally impact prices, when prolonged cold spells draw down our meagre reserves even faster.”

Echoing these views, a Lancashire For Shale spokesman said: “Centrica’s announcement today has significantly increased the need for shale gas production to start asap. Without the Rough facility, the UK’s buffer against future gas supply shortages will be dramatically reduced. As a result, the country could become even more dependent on imports, particularly in the winter when demand is highest.

“Furthermore, there is now a risk that UK winter gas prices could become the most expensive in Western Europe, especially if prices spike during any cold snaps.

“But there is good news on the shale gas front. At a Lancashire For Shale event last night, Francis Egan, CEO, Cuadrilla confirmed that shale gas production in the Fylde is on track, with the first gas to be produced next year.

“This is a very timely development, which vindicates all the efforts to secure planning permission and subsequent progress towards starting shale gas production in the Fylde, against a very vocal minority opposition, led by national protesters.

“Clearly, shale gas production will benefit the UK’s economy; the people of Lancashire and ultimately, reduce our reliance on expensive imported gas. Without the benefits of shale gas production increasing the onstream supply of gas, the cost of gas to the UK consumer could potentially continue to rise, particularly during the cold winter months”

Added Peter Atherton, one of the UK’s leading energy analysts and Associate Director at Cornwall Energy: “The Rough gas storage facility has been a critical part of the UK’s energy infrastructure for decades. Even before its closure, the UK has the lowest level of gas storage capacity of any major western economy. Following its closure, the UK will become very reliant on LNG imports for both supply and for storage capacity. The current political situation around Qatar shows that the uninterrupted supply of LNG cannot be guaranteed.”

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