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Decline of UK's Rough storage site to raise gas import costs

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LNG Industry,

According to the latest Reuters report, the decline of Britain's biggest gas storage site and the lack of new-build to replace it will increase dependency on imports over the next few years, boosting wholesale market volatility and consumer gas prices.

Seasonal gas storage provides security and flexibility of supply. At times of low demand and therefore low gas prices in the summer, gas is injected into storage to be kept for when demand rises in the winter.

Rough – the country's only seasonal gas storage site – can usually meet around 10% of Britain's peak daily gas demand but is currently capable only of handling 5%.

At over 30 years old, the depleted gas field off England's east coast has undergone prolonged outages over the past year due to problems with well pressure; six wells have permanently closed and there are plans to reduce storage capacity.

Without Rough, Britain would be more vulnerable to winter price shocks. Wholesale prices would have to rise to attract more gas from Norway, Europe or LNG suppliers, which would have a knock-on effect on consumer prices.

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