Centrica to shelve gas strorage plans
December 6, 2010 at 2:12 pm
The coalition government’s plans to improve the country’s gas security have received a significant blow after Centrica announced it would probably have to give up on its plan to construct a pair of gas storage facilities, with the current economic climate having a severe impact upon the scheme.
Centrica, which owns both British Gas and Scottish Gas, had intended to build one gas storage facility in the North Sea, with another constructed in the Irish Sea, with both facilities expected to cost around £1.5 billion.
The first unit would have been capable of holding a significant total of 1.7 billion cubic metres of gas, whilst the one in the Irish sea would have been able to hold 570 million cubic metres.
With the government looking to ease the worries that over-reliance upon imported gas brings over the next ten years or so, and Centrica’s proposal potentially able to increase Britain’s gas storage capacity by approximately a third, officials at the company have announced that they’re unwilling to begin construction unless the coalition government can subsidise the entire proposal.
Whilst a final investment decision is not due to be made until the start of the New Year, the noises emerging from the Centrica camp won’t be music to the ears of the government, with the company’s decision likely to be used by the opposition to highlight a failure of the coalition to deal with a problem that could endanger the old and vulnerable in the UK if supplies run too low in the future.
The last thing that Britain needs is to be held to ransom by gas suppliers over gas prices, as happened in the Ukraine back in early 2006, but if the government and Centrica fail to cut a deal, that is precisely what we may be left facing in the not so distant future.
