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King Street natural gas storage decision delayed until end of year

02 Sep 2013 16:17:00 | esgm

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A final investment decision (FID) on UK-based King Street Energy's proposed natural gas storage project in northwest England is not expected to be reached until the end of the year, ICIS has learned. The delay means that a decision could be reached a full year after the initial target of late 2012.

While the necessary funding has been raised for the facility, the company is reluctant to proceed until the UK government reaches a decision on possible interventions for gas storage.

"The problem is that if you fund a storage project now, then you will miss out on any interventions that the government might introduce," Mark O'Brien, managing director of King Street told ICIS.

"Our planning is fully in place, and the funding is there. Whatever DECC [the UK's Department of Energy and Climate Change] decides, we'll move forward with the project," he added.

DECC has yet to decide whether to introduce interventions to encourage further gas storage in the UK (see ESGM 18 July 2013). A decision was expected before parliament took its annual recess on 18 July, but O'Brien said that he now does not expect an outcome to be reached until the end of the year.

The King Street project is a fast-cycle storage facility that will have a daily delivery rate of between 20-30 million cubic metres/day (mcm) and a maximum capacity of 348 million cubic metres.

O'Brien noted that, unlike with long-range facilities, such as Centrica's proposed Baird project, the entire capacity of the King Street facility could be emptied in just over a week. As such, narrower winter-summer spreads - which have made less economical long-range gas storage - will not adversely affect the King Street project.

"Shippers only need one or two price spikes to make a profit on a fast-cycle facility, as the movements can be fully exploited immediately for profit," said O'Brien. Jack Elliott

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