When people think about energy storage, their minds tend to leap to electricity storage technologies like batteries or pumped hydro, however energy is also stored in raw material form…piles of coal by a power station or as gas.

In July Centrica announced the closure of its 2.7 Bcm Rough gas storage facility until Spring 2017 due to the extension of a well testing programme. Winter-summer price spreads and gas price volatility have steadily fallen in recent years, making it increasingly difficult for traders to profit from using the facility, impacting the value of the storage units Centrica was able to sell.

Falling profitability inevitably leads to under-investment in maintenance as well as a wider reluctance to invest in new sites, leading to the current situation with the UK’s gas storage capacity being cut by 78% in the wake of this closure.

Subsequently, in August, Centrica announced that 20 of the 30 wells would be available for withdrawal of gas from 1 November, so that gas already in the reservoir could be delivered during the winter. The volumes in question are small compared with the usual available withdrawal volumes for the winter.

So what’s next for the UK gas market and what if any impact will this development have on the coming winter?

 

Continued…

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