WIREDGOV

Energy security boost as DECC licenses major gas storage project

News Release issued by the COI News Distribution Service on 12 February 2010

****UNDER STRICT EMBARGO UNTIL 0001 GMT MONDAY 15 TH FEBRUARY***

The UK’s gas storage capacity could increase by 30%, as the Government today issued the first licence under a new regime to encourage the construction of more gas storage.

The Gateway Project, located in the east Irish Sea, would create twenty new salt caverns each the size of the Albert Hall.

Energy and Climate Change Minister Lord Hunt said:

"The successful performance of the UK’s gas system, even during the severely cold weather seen this winter, shows that we have one of the most resilient gas systems in the world.

"But we do want to encourage more gas storage capacity, like Gateway, to provide flexibility in the future at times of high demand.

"This shows the Energy Act 2008 is proving its worth by enabling the Government to license an important new gas storage project."

Chairman of Gateway Storage Company George Grant said:

"The support and encouragement given by DECC to bring the Gateway Storage project forward through the new consenting process has been invaluable, as was the Crown Estate’s agreement of the offshore site licence.

"We are now fully engaged with the project’s engineering design and are targeting 2014 for the start of commercial storage operations."

The Crown Estate, which has already agreed and issued the lease for the Gateway project, welcomed the decision.

Notes to Editors

1. As North Sea oil and gas supplies decline, there is a greater need for gas import capacity and storage.

2. Since 2006 there has been a sharp increase in our gas supply capacity, including the opening of the Langeled pipeline connecting the UK to Norway, the BBL pipeline connecting the UK to the Netherlands, as well as LNG import terminals at the Isle of Grain, Teesside, and Milford Haven (the South Hook and Dragon terminals). The LNG terminals have enabled Liquefied Natural Gas to be imported from global markets, including such countries as Algeria and Qatar.

3. The UK’s gas import capacity is now about 125% of our annual gas consumption, which represents a 500% increase during the last 10 years.

4. Gas storage helps the UK’s gas market to meet seasonal and short-term peaks in demand, and to respond to price volatility. In recent years, Centrica’s Rough field has been the UK’s only offshore gas storage facility and our largest single facility, but a number of new projects are now coming forward, both onshore and offshore.

5. The Energy Act 2008 created a regulatory framework, in which Crown Estate controls the exclusive rights to use geological structures beneath the seabed for gas storage, and DECC operates a licensing system that allows us to regulate storage for environmental and other purposes.

6. Gateway Storage Company Limited is the name of the licensee of the project, in which a number of salt caverns would be created below the Irish Sea to store 1.5 billion standard cubic meters of gas.

7. Gateway would be built in salt caverns approximately 750m beneath the surface of the seabed and located 15 miles offshore, south west of Barrow-in-Furness. The Gateway company propose to connect the facility to the National Gas Transmission System (NTS) via a new pipeline to a gas compression station adjacent to the existing Morecambe gas terminals at Barrow.

8. The Department of Energy and Climate Change is central to the UK Government’s leadership on climate change. We are pushing hard internationally for ambitious effective and fair action to avert the most dangerous impacts. Through our UK Low Carbon Transition Plan we are giving householders and businesses the incentives and advice they need to cut their emissions, we are enabling the energy sector’s shift to the trinity of renewables, new nuclear and clean coal, and we are stepping up the fight against fuel poverty.

Contacts:

Department of Energy and Climate Change
Phone: 0300 068 5219
nds.decc@coi.gsi.gov.uk

Erica Herrero-Martinez
Phone: 0300 068 5226
erica.herrero-martinez@decc.gsi.gov.uk