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Memorandum
submitted by SBGI's Gas Storage Operators Group (NPS 83)
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:
1. The
clear national need for additional gas storage in the UK;
2. The
importance of a robust policy statement as to that need; and
3. 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 3 months in France.
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:
· Lancashire
· Dorset
· Cheshire
· Yorkshire
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:
1. 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.
2. 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.
3. 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
Appendix
List of Members of
the Gas Storage Operators Group
Bord
Gais Eirerann
Canatxx
Gas Storage Limited
Centrica
Storage Limited
E.ON
Gas Storage UK Limited
EDF
Trading Gas Storage Limited
ENI
UK Limited
Gateway
Gas Storage Company
INEOS
Enterprises Limited
Infrastrata
plc
National
Grid LNG Storage
Scottish
Power Energy Management Limited
SSE
Hornsea Limited
Star
Energy Group plc
Statoil
(UK) Limited
Storengy
UK Limited
WINGAS
Storage UK Ltd
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