The UK economy faces a major challenge as indigenous gas supplies from the UK Continental Shelf (UKCS) decline and there is increasing dependence on imported gas. The country moved from being a net exporter to importer of gas in 2004, and by 2025 we will be reliant on imports for around 75% of our gas.
The need for gas is made all the more pressing as a quarter of the UK generating capacity (coal and nuclear) is being taken off-line in the next ten years. This will mean the UK is simultaneously more dependent on gas for generating our electricity and more dependent on imports for delivering gas to our power stations.
Whilst the Government remains committed to the decarbonisation of power generation in the long-term, coupled with an increase in renewables, there will continue to be a strong demand for gas. The inevitable supply troughs in offshore wind, combined with the inflexibility of nuclear supply, will mean an ongoing need for natural gas to provide essential capacity for electricity generation.
Gas storage is vital as it secures the UK’s energy supplies during demand peaks and helps to insulate consumers from price volatility in international markets.
The UK has historically relied on the inherent flexibility of gas supplies from the UKCS and has required relatively low levels of gas storage. As domestic production declines, this flexibility is disappearing and the need for storage is increasing. This has been highlighted in recent winter cold snaps when gas reserves can run dangerously low. We currently have only 14 days gas capacity compared to France with 87 days, Germany with 69 days and Italy with 59 days. Halite’s project would represent a significant boost to current capacity adding three days, or 20 per cent.
The need for more gas storage was recognised by the Energy and Climate Change (EEC) Select Committee in their report on the UK’s Energy Supply published on 25 October 2011. The Committee said that: “[DECC] should aim to double the UK’s current gas storage from current levels by 2020…to ensure a resilient gas supply.” It also recognised that the Government should develop a strategy for increasing gas storage, warning that: “doing nothing could result in no storage being built, which would diminish energy security.”
Read more about the project in our leaflet, Securing the UK’s Energy Future