The move to re-open Centrica’s Alpha offshore platform in the Rough gas field is aimed at securing supplies threatened by the fall-out from the ongoing Russian invasion of Ukraine and curbing soaring energy prices which NHS bosses today described as a looming “humanitarian crisis”.
Rough gas field to reopen
Situated 18 miles off the coast and opened in 1985, the Rough site previously provided about 70% of Britain’s gas storage capacity, with gas being brought ashore at a huge terminal in Easington. Its closure was announced five years ago due to safety concerns after the government ended subsidy funding for the maintenance and upgrades needed to keep it going.
At the time, ministers said its closure would save the UK £750mn over ten years by switching the focus for securing the country’s energy needs to different ‘cleaner’ alternatives, including the importation of liquid gas from the Middle East. However, critics warned the move would leave the UK at the mercy of the potentially volatile global gas market while forcing it to compete with other countries to attract imports.
The shutdown has left the UK with one of the lowest gas storage capacities in Europe. The country currently holds enough gas to meet high demand for five winter days whereas the Netherlands has a capacity more than nine times the UK’s, while Germany’s is 16 times the size.
Kwarteng U-turn
Just over a year ago, business secretary Kwasi Kwarteng dismissed concerns raised by MPs on a parliamentary select committee over rising gas prices and a reliance on Russian gas. He said he was not convinced by calls for more domestic gas storage and described criticism of the closure of the Rough storage facility as “a bit of a red herring”.
Now, with average household energy bills set to increase to over £3,600 in October with forecasts of them reaching as high as £5,000 in April, moves are underway to re-open the Rough storage site which lies 2.7km below the seabed. Under the plan, capacity will be brought back gradually.
In a U-turn, Kwarteng has asked for the Rough site to be brought back into operation amid renewed fears of winter shortages. He met with Centrica officials in Hull last month during a visit to the city to perform a ground-breaking ceremony for a new £150mn precious metals processing plant at Saltend.
Speaking to confirm the move, Centrica’s chief executive Chris O’Shea recently said had the site been operational last winter it could have saved households about £100 on their annual energy bills. He added: “There’s a whole bunch of things that we need to go through and we are working on it right now. We are doing the engineering to make sure that it can physically happen and we are doing that at our own cost.”
Gas vs hydrogen storage
Centrica, which owns British Gas, is believed to be looking for longer-term guarantees from the government on price as part of the plan to restart large-scale gas storage at the site. It had been planning to eventually use it for hydrogen storage.
A new licence to store gas at the site was approved last month by the North Sea Transition Authority (NSTA), marking the first step in the process of bringing it back to life. In a statement, the NSTA said: “The award of a licence allows Centrica offshore UK Ltd to progress with seeking the further regulatory approvals required before gas storage operations can commence, including further approvals required from the NSTA.”
Earlier this month industry regulator Ofgem also approved a new application submitted by Centrica to re-use the facility. In its decision letter, Ofgem’s head of energy security supply Dr Adrian Richardson said:
“Allowing gas storage operations at Rough will provide approximately an additional 28 billion cubic feet of gas storage capacity for the winter of 2022/2023 and 59 billion cubic feet for the winter of 2023/2024. We consider that this provides a significant increase in gas storage capacity for GB for the next two winters and, consequently, promotes security of supply.”
He said Centrica had confirmed that “significant capital expenditure” will be required to restart gas storage operations at Rough for this winter before expanding capacity for winter next year.
