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Gateway natural gas storage pushed back further on DECC delay

29 Jul 2013 15:57:27 | esgm


A final investment decision on Gateway Storage's natural gas storage facility in Britain has been further delayed until the UK government unveils its plans for the storage sector.

The delay has come amid increasing industry frustration over the UK Department of Energy and Climate Change's (DECC) failure to decide whether it will introduce new measures for gas storage before parliamentary recess began on 18 July (see ESGM 18 July 2013).

"For development companies such as ourselves, we can't move forward with our project unless appropriate interventions are introduced," said George Grant, chairman of Gateway Storage.

"It is becoming farcical quite how the government can continue to defer. We are unable to move forward, and nor is anyone else, until there is some clarity given either way," he added.

The Gateway site received planning consent in 2008. The company previously reported a difficult financial climate as a reason for delaying its investment decision.

The facility - which would be based in the East Irish Sea approximately 25km southwest of Barrow-in-Furness - will comprise of 24 man-made underground caverns which could store a total of 1.52 billion cubic metres of gas.

Developers Centrica storage and King Street Energy also have their projects on hold at the moment, and DECC's delay is likely to push back final investment decisions on the operators' respective facilities.

Energy market consultant Patrick Heather said that while the government has been somewhat "wish-washy" in reaching a decision, the fact remains that if the economic climate for gas storage were sufficient the need for government interventions would disappear.

"If the Gateway project, or any other proposed storage project, stood on its own two feet financially, a decision would have been made by now," said Heather.

"But with market conditions as they are, how can you reach investment decisions, when you have no idea what the political regime is?" he questioned.

The debate over whether interventions should be introduced for storage to curb price spikes and to ensure security of supply, or whether the market should be left to function freely, will likely persist until at least 2 September, when parliament returns from its summer break. Jack Elliott

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