In the last 10 days, we’ve had a surprising amount of news about gas that requires some digestion.
Starting with yesterday’s discovery of shale gas near Blackpool by Cuadrilla Resources – the best news that town has had in a long time.
Then there’s the ongoing cold snap in the UK combined with a long acknowledge inadequate storage capability. As I wrote a year ago in Securing Our Energy Future Chapter 3: Don’t Bet on Gas – The UK Way, our storage capacity then stood at 4.34 billion cubic metres (bcm) when OFGEM recommended in 2004 that it should be 10 bcm in 2009. No suprise then that The Sunday Times reported on the 5th December that in this exceptionally long period of cold weather so early in the winter, gas storage levels have been depleted (to 75% rather than a more typical 97% for this time of year), big industrial users were almost forced to shut down, spot prices are rocketing and the consumer is beginning to to pay – big time.
So it speaks volumes about the government lack of energy policy prioritisation that they are so disinterested in Scottish & Southern Electricity’s plans to defer investment in gas storage a month ago because of regulatory uncertainty but very excited about CCS and a shiny new Green Investment Bank. Price stability will only come with long-term contracts and adequate storage which we manifestly do not have.
For all that, it’s good news to hear that the Gateway storage scheme received a sizeable investment from Petrofac as this is a project that could significantly boost UK storage, by up to 1.5 bcm. Although that will still be way short of what we really need to be secure – about another 4 bcm.