Jenny Haworth: UK adding to energy problems with lack of gas storage

Monday, July 28, 2008

With more warnings of higher gas prices, industry sources are asking what needs to be done to avert a looming energy crisis.

Some are now calling on the government to do more to increase gas storage facilities in the UK.

A gas company source told The Scotsman that the UK currently has the capacity to store imported gas for only 19 days, compared with 99 days in France.

That means the UK is forced to sell surplus gas – usually to the rest of Europe. Then, when the supplies run out, UK gas companies have to buy it back for higher prices, pushing up costs, reducing stability in the market and putting the UK at a disadvantage in terms of energy security.

"It's absolutely imperative that we have more storage," the source said. "We could use storage in the North Sea but the planning needs to be speeded up dramatically in order to do that.

"We are now at a crisis point. The lights will start to go off in 2015. If we do nothing, by 2015 we won't be producing enough energy for the UK."

The industry insider said her company has had a planning application lodged for the past five years that would increase storage by 4 per cent, but said the government had been slow to act.

She said that in addition to the storage problem, only a quarter of all orders for gas placed by UK companies from countries such as Nigeria and regions including the Far East arrive because it gets diverted to countries such as Japan that are willing to pay more.

"There just isn't enough coming through at the moment and as we look to the future we are going to become even more reliant on gas," she said.

"We were importing 20 per cent last year, and it will be 40 per cent this year."

This story was featured on the Scotsman website.

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