Centrica to close Rough gas storage facility

Shutdown will leave Britain without any long-term gas storage

Centrica Storage is permanently shutting its Rough gas storage facility due to concerns over safety and the commercial viability of the site.

The closure will leave Britain without any long-term gas storage and increase the country’s reliance imports over the coming winters.

The decision was reached following an “extensive” programme of testing on the wells used for injections and withdrawals. The facility consists of a partially depleted North Sea gas field located off the coast of Yorkshire along with an onshore gas processing terminal at Easington near Hull.

In July 2016, Centrica Storage announced the complete shutdown of the site over the winter season after it extended the timetable for the testing programme through to spring of this year. The following month it decided to reopen 20 of the site’s 30 wells for withdrawals from the beginning of November 2016.

The company has now completed a review into the feasibility of resuming normal service. It concluded that the firm “cannot safely return the assets and facilities to injection and storage operations” due to the high operating pressures involved and the numerous failures uncovered during testing as the facility nears the end of its intended lifetime.

“Furthermore, from a commercial perspective, an assessment of both the economics of seasonal storage today, and the costs of refurbishment or rebuilding the facility and replacing the wells, suggests that both pathways would not be economic,” the company said in a statement.

“As a consequence, [Centrica Storage] intends to make all relevant applications to permanently end Rough’s status as a storage facility, and to produce all recoverable cushion gas from the field, which is estimated at 183 [billion cubic feet].”

Matt Osborne, principal risk manager at energy consultant Inenco, described the closure as “disappointing”.

“The UK remains reliant on gas, and this will continue well into the future,” he added. “This vulnerability makes it essential to store as much gas as possible within the UK – and a strong plan of action will be required to compensate for the loss of Rough, the largest flexible gas storage facility in the UK.

“Britain has seven other major gas storage sites, but they offer shorter injection and withdrawal times and less stock.”

Osborne said there has not yet been a material impact on gas prices, most likely because there is still a significant amount of gas to be recovered from the field. But, he added, “the pressure could come in the winter months, especially if we experience very cold conditions.”

UK Onshore Oil and Gas chief executive Ken Cronin said the closure will strengthen the case for developing domestic shale gas supplies: “The solution for the UK in the medium term cannot be to transport gas across oceans and continents.

“The UK needs to ensure that whatever gas replaces that from Rough comes from sources that can deliver the same high levels of environmental and regulatory standards. Only the development of the UK’s onshore resources just a mile under our feet can do this”.

Centrica Storage had already announced the permanent closure of six of the wells at the Rough site in September last year. Several months ago, the owner also extended its moratorium on new injections until April 2018.