Setback for Bacton gas storage scheme

Bacton gas terminal; picture by Adrian Judd; for EDP

Bacton gas terminal; picture by Adrian Judd; for EDP - Credit: Archant

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.

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.'

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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.