UK Approves Rough Gas Storage Closure

The UK's 3.3bn m3 capacity Rough storage facility, a key source of flexible gas supply, will no longer operate once its cushion gas has been extracted, as its operator Centrica has now secured the necessary approval from the UK's competition regulator to shut it down.

It was no longer economic to keep repairing it, as the summer-winter price difference, the key indicator for such projects, has for years been too thin. Many commercial storage operators have been running plant at a loss too, and capacity is being mothballed on the continent.

The undertakings which Centrica gave, as the dominant UK gas retailer, have therefore been cancelled, said Centrica December 12. The decision came from the UK's Competition & Markets Authority (CMA), which approved the undertakings when Centrica bought the plant from Dynegy early last decade. The CMA had said in October it would consider lifting the requirements from Centrica by the end of 2017.

Centrica is seeking all relevant consents and approvals to extract the recoverable gas from the reservoir, it said, although it has already said it is marketing the gas and it is expected to be used up soon. If it runs at maximum, it will be nearly all gone by the middle of January 2018.

CMA's Rough inquiry chair Martin Cave said December 13: "After a public consultation on our provisional findings the CMA has made the final decision based on the age and degradation of the gas wells and other facilities at Rough. These mean it is no longer capable of safe operation for gas storage without substantial refurbishment." Its final report is published here.

Profile for withdrawals at UK's sole long-range storage facility Rough

Source: National Grid

Following extensive tests on Rough’s well stock, CSL concluded that investment required to meet the legal obligation to operate Rough safely was not economically viable. Its decision was based in part on the economics of seasonal storage, which had reduced how much it can earn from selling out capacity. 

The closure leaves the UK relying more on imports through the Belgian and Dutch interconnectors, and on deliveries of LNG to meet price spikes such as those seen this week as a combination of very cold weather and supply problems on and offshore sent prices rocketing.

Source: Competition and Markets Authority's final Rough report