UK gas storage project could safeguard business energy prices

15/02/2010

The UK's gas storage capacity could increase by 30 per cent, as the government today issued the first licence under a new regime to encourage the construction of more gas storage.

Energy and climate change minister Lord Hunt issued a statement today (February 15th) indicating that the Gateway Project, located in the east Irish Sea, would create twenty new salt caverns each the size of the Albert Hall.

The news will no doubt soothe business gas customers amid anxieties that a lack of long-term supply would increase the likelihood of the UK entering a period of higher and more volatile prices.

Lord Hunt said: "The successful performance of the UK's gas system, even during the severely cold weather seen this winter, shows that we have one of the most resilient gas systems in the world."

"But we do want to encourage more gas storage capacity, like Gateway, to provide flexibility in the future at times of high demand.

The UK Gas Market Review 2009 noted that although Britain's market is currently well supplied, problems could arise in the long-term as oversupply disappears beyond 2013.

Posted by Emma Noble