Memorandum submitted by SBGI's Gas Storage
Operators Group
PLANNING ACT 2008—DRAFT ENERGY NATIONAL
POLICY STATEMENTS
SBGI's Gas Storage Operators Group (GSOG) represents
nearly all of the companies currently involved in the development
and operation of natural gas storage facilities both onshore and
offshore in the UK (16 companies in total as listed in the
Appendix). The views of the GSOG expressed herein have been assembled
through discussion at the Group's meetings and through comment
by Members on a draft of this written evidence.
GSOG would like to thank the Energy and Climate
Change Select Committee for the opportunity to submit written
evidence into the Committee's inquiry into the draft National
Policy Statements (NPSs) for the energy sector.
GSOG has contributed to the development of the
draft NPS and is willing to continue to advise Government of the
industry's views to ensure that the future consenting regimes
for onshore gas storage facilitate the timely delivery of this
much needed nationally significant infrastructure.
GSOG SUPPORTS THE
REFORM OF
THE PLANNING
SYSTEM AND
THE INTRODUCTION
OF ROBUST
NATIONAL POLICY
STATEMENTS
The majority of the onshore gas storage projects
proposed in the UK in the past 10 years have experienced
significant delays through the planning process. For many energy
companies this has deferred, if not completely deterred, investment.
GSOG has therefore long supported the reform of the planning regime
through the Planning Act 2008 which will hopefully enable
more timely and certain investment in gas storage.
In order to deliver the required substantial
investment programme in the UK's energy infrastructure, the UK
needs a stable long-term policy framework, which clearly sets
out the Government's energy policies and priorities for all stakeholders.
GSOG therefore welcomes NPSs as the primary
basis for decisions by the Infrastructure Planning Commission
(IPC) on nationally significant infrastructure projects (NSIPs).
We also support their use as material considerations for both
local planning authorities on smaller-scale energy projects.
The GSOG believes that NPSs are fundamental
to establishing a stable policy framework to enable the significant
programme of investment in onshore natural gas storage that is
needed to ensure the continued security of gas supply in the UK.
We would however like to bring to the Committee's
attention three key issues:
(i) the clear national need for additional gas
storage in the UK;
(ii) the importance of a robust policy statement
as to that need; and
(iii) the geological constraints on underground
gas storage which dictate where it may be located.
THE NATIONAL
NEED FOR
ADDITIONAL GAS
STORAGE
Historically the gas industry in Britain relied
on the flexibility from North Sea fields to provide the additional
gas needed in winter. As a result the level of gas storage was
very low compared with the rest of Western Europe. The figures
in the table below illustrate the level of gas storage in the
UK compared to other European countries. The figures show that
the UK has significantly less gas storage than comparable European
countries with only 16 days of storage compared to almost
three months in France.
|
| Storage Working
Volume (bcm)
| Annual
Demand
| Storage/demand
(% of demand)
| Days of
avg demand
|
|
| UK (2008) | 4.3
| 98.00 | 4.4%
| 16.0 |
| Netherlands | 5.0
| 45.45 | 11.0%
| 40.2 |
| Germany | 20.2
| 96.19 | 21.0%
| 76.7 |
| Italy | 17.5
| 83.33 | 21.0%
| 76.7 |
| France | 11.5
| 47.92 | 24.0%
| 87.6 |
|
The output from the old North Sea fields that provided this
extra winter gas has been declining for a number of years and
is being replaced by gas both from new UK fields and imports,
which offer much less flexibility. A new source of winter gas
will be needed in the future to replace this. The most likely
source of new peak supply is salt cavities or conversions of existing
onshore oil and gas fields.
Historically the role of gas storage was solely to maintain
security of supply by providing additional sources of gas in the
winter. In traded gas markets such as the UK there is now an additional
and equally important role of making the market work efficiently,
both by moderating gas prices themselves and also by reducing
the cost of storage itself. Unless more storage is built, the
lack of competition will mean that costs for the gas suppliers
will rise significantly. Ultimately this will be reflected in
customer's bills.
THE REQUIREMENT
FOR A
ROBUST STATEMENT
OF NEED
NPS EN-1 and EN-4 need to provide a clear and robust
statement of the need for additional gas storage and the contribution
storage makes to both the maintenance of the physical supply to
consumers, both domestic and industrial, and also the moderation
of gas prices within the market as a whole.
The statement of need must be precise, quantitative and unequivocal
in supporting the further development of onshore gas storage to
ensure that future projects do not get bogged down in the need
debate. Such clarity would enable all involved to efficiently
assess proposals' compliance with national policy, and therefore
spend more time on those local issues which could affect the surrounding
community and how best to address them.
THE GEOLOGICAL
CONSTRAINTS ON
UNDERGROUND GAS
STORAGE WHICH
DICTATE WHERE
IT MAY
BE LOCATED
Unlike the Nuclear NPS, the NPS EN-4 dealing with gas
supply infrastructure, including gas storage, is non-spatial in
nature. GSOG suggests that EN-4 should recognise the geological
constraints affecting the location of underground gas storage.
There are two forms of underground gas storage which are
in use in the UK, namely constructed salt caverns and naturally
formed depleted hydrocarbon reservoirs. Both types of storage
require very specific geological conditions and the locations
available for development of storage are very limited.
Salt Cavern Storage
Gas storage caverns can only be created in suitably thick,
homogenous salt strata that are free of major faulting systems.
There are limited onshore locations within the UK where such conditions
are known to exist. These are:
There are thus only four areas onshore in the UK where potentially
suitable salt deposits are found (see map below, courtesy of E.ON).
DEPLETED HYDROCARBON
FIELD STORAGE
Onshore in the UK there are a limited number of oil and gas
fields that have been discovered after many years of exploration
and their location is dictated by the geology. These fields tend
to be concentrated in the Weald Basin, the East Midlands and East
Yorkshire and not all of these are geologically suitable for re-use
as gas stores (see enclosed map courtesy of DECC).
CONCLUSION AND
RECOMMENDATIONS
GSOG strongly supports NPSs as the foundation of the integrated
package of planning reforms so necessary to ensuring the security
of gas supply in the UK.
GSOG makes the following recommendations to the Select Committee:
(i) The Committee should support the suite of energy NPSs,
including EN-1 and EN-4, and acknowledge that they provide
the stable policy framework needed for investment in gas storage.
(ii) The Committee should recommend that a much more robust
and definitive statement of the urgent need for additional natural
gas storage capacity is included in EN-1 and EN-4.
(iii) The Committee should recommend that the geological constraints
over the location of underground gas storage are more explicitly
and fully stated within EN-4.
We trust that these comments will prove to be of assistance.
January 2010
| 
