Centrica to proceed with southern North Sea project following government energy announcement

17:20 25 July 2012

A previous project - the Ensign platform 80kms off the coast of Norfolk

A previous project - the Ensign platform 80kms off the coast of Norfolk


British Gas parent Centrica has said today’s announcement on a tax break for developing shallow water gas fields will allow it to proceed with a southern North Sea projects which will create 4,000 UK jobs.

The announcement by the Department of Energy and Climate Change (Decc) saw government backing for the gas industry, including £500m in tax breaks for shallow water gas fields, to boost investment in economically-marginal gas fields.

The government said gas would continue to play an important part in the energy mix beyond 2030, to complement “intermittent” renewables.

But the role of gas will not be restricted to providing back-up to renewables, and in the longer term there would be an important role for gas, with technology to capture and store the carbon from the fossil fuel.

Centrica’s decision to continue with its Cygnus project comes after the first gas from the new Ensign platform off Great Yarmouth flowed to shore.

Centrica said today the allowance would enhance the economics of the £1.4bn Cygnus project in the southern North Sea, which is the largest gas discovery in the area for 25 years, of which 80pc of spend will be in the UK.

At peak production, the field will account for around 5pc of the UK’s total gas production, enough to meet the demand of nearly 1.5m homes.

Sam Laidlaw, Centrica chief executive, said: “As the UK becomes increasingly dependent on imported gas, today’s announcement represents a significant boost to the UK’s long term energy security as well as creating much needed jobs.

“For Centrica, this is an extremely significant project as we look to unlock remaining gas in the North Sea, securing UK gas supplies for our customers.”

The backing for gas comes just weeks after the Government’s advisers on climate change said it should rule out a new “dash for gas”, warning it would push up energy prices and make it hard to meet targets to cut emissions.

But Mr Osborne said gas was the biggest single source of energy in the UK.

“Today the Government is signalling its long-term commitment to the role it can play in delivering a stable, secure and lower-carbon energy mix,” he said.

“At the Budget, we announced an ambitious package of support to stimulate billions of investment in oil and gas production in the North Sea.

“Today’s news is a further sign of the Government’s determination to get the most out of a huge national asset.”

The support for gas was criticised by renewable energy firm Ecotricity founder Dale Vince, who said the Chancellor was presenting the £5 per household support for onshore wind as a cost to consumers, while ignoring the rising cost of gas in the free market which added £120 to everybody’s bill last year.

“It is surely abundantly clear which of these fuel sources is actually a burden to the British public - not to mention contributing to climate change,” he said.


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