Major gas store shutdown prolonged

Centrica storage facility

Wholesale gas prices have jumped after British Gas owner Centrica said it had been forced to shut a major storage facility for the winter.

The Rough facility accounts for about 70% of all UK gas storage.

Tom Marzec-Manser, an analyst at market information provider ICIS, said the gas price “rocketed” to 12-month highs after the announcement.

“To ensure security of supply is maintained… companies are going to have to pay a premium,” he said.

They will will be “reliant on storage on the European mainland”, he added.

“Technical problems have been ongoing at Rough for a while, but the market clearly did not anticipate this.”

Centrica said it is working to return a third of the capacity to operation by November, in time for colder months when gas demand by energy companies climbs.

There have been problems at the Rough facility since March 2015, when Centrica imposed restrictions on storage levels because of an issue with its wells.

Last month following testing on the wells involved, Centrica said, it had “identified an additional issue” on one of them and Rough facility would close until 3 August for further tests.

Enhanced testing

Centrica issued a statement on Friday saying it had ended those tests early and had plugged the affected well.

“However, the affected well has identified potential uncertainties in the remaining untested wells,” it said.

It would continue with an “enhanced” testing programme. “We estimate completion in March to April 2017. In the meantime because of the uncertainty as a prudent and safe operator (Centrica) cannot inject or withdraw gas from Rough,” it added.

Centrica also said it was examining whether some wells could return to service in time for the coming winter.

“(Centrica) currently anticipates that at least four wells will return to service for withdrawal operations by November 1, 2016,” it said, which would make up a third of the shortfall resulting from Rough’s closure.

Major gas store shutdown prolonged

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