The Rough storage facility in the North Sea off Easington, Yorkshire. Photo Centrica plc.
The government is still failing to decide to save the Rough gas storage facility off the East coast. Its future has been insecure since 2017, so it’s not exactly news that the government needs to act to help to keep it open.
When full, Britain’s reserves hold less than eight days of average winter demand. In mid-October the level was less than half that. By comparison, Germany has six weeks of reserves, France and Italy more than ten. A prolonged cold snap in the later winter months, a likely occurrence, would leave Britain extremely vulnerable to a gas crisis.
In the face of a volatile marketing and shipping situation, the Rough facility should be a key link in the chain of Britain’s resilience. Centrica, which owns British Gas, has proposed to invest £2 billion to develop capacity at Rough. It is seeking government support via a “cap and floor” pricing model, which guarantees minimum returns but limits profits if prices go up.
Despite generous price guarantees forthcoming for other national infrastructure businesses, defence minister Luke Pollard has stated that “…this is a very clear commercial decision for the company.” He then said that the government wants greater energy security and less reliance on overseas suppliers. Clearly, though, it’s not prepared to invest in this.