Government must oblige industry players to store gas, experts warn

The government should make it compulsory for major gas industry players to have a certain level of gas storage available each year, experts have advised.

Following the recent news that developer Halite Energy has been given planning consent to move forward with its controversial Preesall gas storage project, managing director of the Energy Contract Company, Niall Trimble, said: “[The government] should make it mandatory for all the major players in the industry, such as British Gas, RWE and Eon, to have a certain level of gas storage available each year.”

Speaking to Utility Week, he said that getting planning permission after this long time, although “good”, doesn’t necessarily take the project further forward, “as the market circumstances are not particularly favourable for storage at the moment”.

He said it’s generally agreed, even by the government, that “we need a lot more gas storage” because energy policy, which relies heavily on non-gas generation, “is going to depend on tremendous variability in gas supply”.

“I don’t think, and I don’t think anybody in the gas industry thinks, that’s going to come from either imports or UK Continental Shelf production, so it’s going to come from storage,” he said. “If nobody’s going to build it, and we need it, then the government has to do something about it.”

A recent report released by the Energy Contract Company argued that, although the level of gas annual demand may decline over the next two decades, “it does not mean that the demand for gas storage will decline”.

The firm said it believed the development of more gas storage is “critical” for both security of supply and to ensure proper operation of the gas market. However, in 2013 the government “declined to intervene in the market”, a decision which may “rebound savagely on it, or more accurately on gas consumers, in the years to come”.

Energy consultant at Moffatt Associates, Clive Moffatt agreed. He told Utility Week: “The argument we’ve been making is that the easiest solution to implement would be a regulatory change to put an obligation on shippers and suppliers to hold a certain amount of gas and store it before each winter.”

“The market can then decide what kind of storage it requires and how much it’s prepared to pay, but at least it would underpin the demand. It’s impossible to raise financial interest without some form of regulatory support.”