Britain not reliant on gas from storage

July 16 [Tue], 2013, 10:04
LONDON (Reuters) - Britain's natural gas supply mix of domestic production and diverse import sources means it is far from reliant on storage sites, Secretary of State for Energy and Climate Change Ed Davey said on Monday.

Pressure mounted on the government earlier this year to increase gas storage capacity after high winter energy demand depleted storage levels and exposed the country's growing reliance on imports.

"Few countries have the amount of gas (we have) from domestic production and via pipelines from countries with secure supply like Norway. In the UK we are not reliant on gas from storage, far from it," Davey told a House of Lords' committee.

He said it was not easy to compare Britain's storage capacity figures with those of other countries.

Because of historically high domestic reserves in the North Sea, Britain's storage capacity can hold just 15 days' worth of demand, compared with over 100 days in France or Germany, which have very little of their own gas.

Falling production and rising demand has made Britain a net importer of natural gas since 2004. Its own reserves now cover barely half its needs.

British gas prices shot to near record highs in March on the National Balancing Point (NBP) gas hub as storage levels fell by more than 90 percent, triggering worries about possible outages.

In response to concerns about a lack of investment in gas storage, the Department of Energy and Climate Change (DECC) is looking at possible ways to encourage greater gas security of supply.

This could include forcing suppliers to hold a minimum level of storage volume to meet a defined security of supply standard, something which many continental European governments do already.

Other measures could include government subsidies to give utilities an incentive to invest in storage.

Davey said he would not comment on the exact nature of DECC's work as it was due to be published shortly.

"All the work done shows in broad terms the gas market works very well. We have pipelines from Norway and from the Continent, we have our own production and we can import LNG (liquefied natural gas)," he said.

"The reason we are taking a look at this is you can't say there is no risk at all. It would be completely wrong to be complacent."

It would also be wrong to suggest the market was not already investing in gas storage, Davey said.

"New gas storage has come online recently and there are 12 major projects with planning consent," he said.

(Reporting by Nina Chestney; editing by Jason Neely)