December 12 2013 Latest news:
Friday, September 6, 2013
Far-reaching plans to build a gas storage site off the coast of north Norfolk have been dealt a blow by the government after it ruled out providing any subsidies.
Britain’s gas supply came under the spotlight in March when the wintry weather – and a fault at Bacton’s terminal – saw storage stocks dwindle and prices rise.
At the time, the government quelled fears that the UK was facing an energy crisis. It said supplies were not running out and the markets were resilient.
But the price rises did spark increased pressure on the government to back new gas storage projects – a move which has failed to materialise.
This means energy companies will now be forced to assess whether proposed storage projects are still economically viable without subsidies. And in turn, Centrica Storage bosses may seek to review the Baird project, which could lead to further delays on work starting.
For those opposing the project, there will be hopes that the government’s decision will see the Baird project scrapped altogether. But the implications of this could see north Norfolk miss out on an economic boost.
It is expected that around 1,000 workers will be needed to deliver the proposed gas storage site – many of which would use services in the local area.
But either way, is likely to be many weeks – if not months – before further clarity emerges on the project’s future.
• Ben Woods, Business writer
Project coordinators Centrica Storage and energy-giant Perenco were hoping for financial help to build the Baird gas storage site, about 53 miles from Bacton, to boost the UK’s gas stocks.
But the Department of Energy and Climate Change poured cold water on the idea of subsidising new storage projects, amid claims that the market was already coping and it would cost taxpayers £750m over the next decade.
Last night, Centrica Storage said it might review the Baird project, as it investigated how its proposed storage sites would be effected by the decision.
However, industry leaders called for more clarity from the government on energy strategy, while North Norfolk District Council (NNDC) feared the region would miss out on economic benefits if the project did not go ahead.
Simon Wills, managing director of Centrica Storage, said: “We are obviously disappointed by the announcement and the government’s decision not to introduce measures to promote more seasonal gas storage.
“However, we welcome the clarity that this decision has given us and we will now be considering the effect of this decision on the future of our storage projects.”
The government’s announcement provides another hurdle for Centrica Storage, which has faced opposition from some villagers in Knapton, Paston, Bacton, Eding-thorpe and Swafield over proposals linked to the Baird project.
Concerns were raised about plans to send around 14 buses a day along country lanes near their homes. The buses would be filled with Bacton Gas site construction workers being taken to or from a proposed park-and-ride car park at the former Crane Fruehauf site on North Walsham’s Cromer Road.
But Simon Gray, chief executive of the East of England Energy Group, said extra storage sites were necessary to bring greater energy security to the UK.
He said: “I am slightly surprised that the government has taken the decision not to subsidise the construction of gas storage sites. Obviously they have confidence in the supply they can get from mainland Europe and Russia.
“But even if they can tap into Russia to get gas, it still raises the issue of security. We could, in theory, be held by these countries when it comes to gas supply, which could cause prices to rise even more.
“The government may be making this about turn in its gas strategy because its eyes are attracted towards the fracking projects being carried out in America. But that procedure is still up for debate in the UK as to whether it is the best way forward.”
A study commissioned by the government reported that the gas market was functioning well in the UK, with storage providing only 7pc of supplies last year.
A spokesman for NNDC said it would be disappointed if the project did not go ahead because of the potential benefits it could bring.
Two hundred jobs are set to be created after one of west Norfolk’s largest businesses was granted permission to expand its King’s Lynn facilities.