Former Energy Minister Charles Hendry has issued a statement claiming that the British government is currently ‘relying on luck’ to deliver gas supplies, suggesting that investment in gas infrastructure to provide more storage facilities is something to be strongly considered.
However Mr Hendry’s opinion has been questioned by one of his successors, fellow Conservative Michael Fallon, refused to partake in increasing gas storage, despite the fact that a government investigation proved it could save consumers £1bn.
At current Britain can only hold around 15 days of gas supplies in long-term storage, whereas our European counterparts could sustain gas supply for over 100 days if production was cut. This puts Britain at an extreme disadvantage as the recent low oil and gas prices will quicken the decline of the North Sea production, pushing consumers to become more dependent on gas imports.
Looking back on the past nine winters there has been several times where UK gas storage reserves fell to “disturbingly low”, Britain was lucky on these occasions however Hendry notes that “we cannot build an energy policy on luck; it has to be built on energy security”.
The recent oil price decline means that our luck may have run out and dependence on the North Sea may not be as viable in the future as we had hoped. Despite Britain’s low gas storage capacity, investment in big new sites has not proved commercially feasible. Increased storage has been demanded by many, putting pressure on suppliers to ensure more is built arguing that this would help to protect gas consumers from price spikes or shortages.
With the troubles that have been faced by the gas sector in recent times, it is time to consider the options for its future and ensure that every effort is made to safeguard domestic gas production. Increasing storage is a strong contender in ensuring this protection, Mr Hendry said “this is so central to our national security that we now need to go further and require more capacity to be built. It is an insurance programme, with little downside, and many benefits.”
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