Energy boss blasts Government over lack of gas storage

‘The Government, in their wisdom, chose a “just in time” approach’: Energy boss says he ‘finally gave up’ on building off-shore gas storage unit after years of rejection from ministers – leaving UK with seven days’ back-up compared to Germany with NINETY

• Ministers are under fire for failing to build more gas storage facilities in the UK
• Huge increase in the cost of wholesale gas has caused energy crisis as firms fold
• Germany and France have an estimated 90 day supply of gas in storage facilities
• The UK reportedly only has about seven days amid claims Britain badly prepared
• But ministers claimed increased gas storage would not make any difference

Energy bosses have blasted successive governments for failing to invest more in building gas storage facilities amid a worsening energy crisis. 

The energy sector has been hit by rocketing global wholesale gas prices, causing some firms to fold and raising the prospect of rising bills for consumers. 

Some industry chiefs have suggested the UK is badly-prepared to weather the current storm because ministers chose a ‘just in time’ approach to energy supply which means Britain’s storage capability is much lower than its neighbours.  

Reports suggest the UK has just seven days’ worth of gas storage compared to the 90 days of supply held by France and Germany. 

However, ministers have argued an apparent lack of storage is not ‘relevant’ because ‘there is no way that any storage in the world is going to mitigate the effect of a quadrupling in the gas price in four months’. 

Business Secretary Kwasi Kwarteng said the issue of gas storage is not ‘relevant because there is no way that any storage in the world is going to mitigate the effect of a quadrupling in the gas price in four months’

Data published by the UK Energy Research Centre showed the UK has enough gas storage to cover six per cent of annual demand while Germany and France can cover about 20 per cent of annual demand.  

Statistics from Gas Infrastructure Europe show the UK has less than nine terawatt hours of storage compared to 113 for France and 148 for Germany.

George Grant of Stag Energy, said he had tried but failed to get support for the Gateway Project just off Barrow-in-Furness which would have significantly increased available storage.

‘The proposal was for a salt cavern gas storage facility in what’s been acknowledged by the British Geological Survey as the best salt structure for such a service in the UK,’ he told BBC Radio 4’s Today programme.

‘It was about 12 miles off the coast. The philosophy behind this is that you create caverns within the salt and it’s a very good medium to store gas.’

But he said his firm had ‘finally given up’ on getting the project the go ahead after years of rejection from ministers. 

He said: ‘In 2004, when we first spoke to the government, there was a lot of interest in new gas storage. We got to the financial crash in 2008 when credit requirements on long-term contracts became much more challenging.

‘It was at that point that we really started to engage more with the government about potential support mechanisms or some form of intervention to ensure there was adequate security of supply in the gas sector.

‘The government, in their wisdom, chose to run with a “just in time” approach. There is on an annual basis plenty of gas around the world and lots of liquid gas being shipped around, but the challenge we’re seeing at the moment is a confluence of events including low wind production and the subsequent high demand for gas, supplies being drawn into China and the fertiliser plants going off. 

‘As a result there has been a shortage of supply and prices have risen accordingly. Additional storage in the UK would have certainly helped in this situation.

‘The message we’ve given to the government is that you can’t turn around when there is a crisis and call for a facility like this. The lead time is about ten years from getting sufficient encouragement and structure around financing to actually building it.

Reports suggest the UK has just seven days’ worth of gas storage compared to the 90 days of supply held by France and Germany. Storage tanks are seen at the Dragon Liquefied Natural Gas (LNG) facility at Waterston, Milford Haven, Wales

Two more energy firms with a combined 800,000 customers, Avro Energy and Green Supplier, went into administration yesterday. Dozens of other companies are under threat including Bulb, which supplies 1.7million homes

‘Energy infrastructure is a long term business that goes beyond election cycles.’

Business Secretary Kwasi Kwarteng and Downing Street dismissed the suggestion that increased gas storage would have helped in the current situation. 

Asked if the UK had ‘dropped the ball’ on gas storage, the Prime Minister’s Official Spokesman said: ‘I think Kwasi answered that question quite robustly in the House and he said “I don’t think it is relevant because there is no way that any storage in the world is going to mitigate the effect of a quadrupling in the gas price in four months”. 

‘I’d point to what we have said previously about the importance we place on moving to renewable energy sources as we look to tackle climate change and hit our targets which are well known.’   

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