Government States Gas Storage Matter of National Energy Security

The compelling economic case for speeding up planning decisions on new gas import and storage facilities was set out yesterday by the U.K. Trade and Industry Secretary Alistair Darling.

With the UK becoming increasingly dependent on imported gas and concerns growing about delays to vital new facilities, Mr Darling laid a new 'Statement of Need' in Parliament encouraging planning professionals and local decision makers to consider the national interest when looking at planning applications.

In a connected statement on winter energy supply, Mr Darling also announced the formation of a new Business Energy Forum to be co-chaired by the Energy Minister Malcolm Wicks and incoming CBI Director General Richard Lambert. The National Grid Winter 06/07 Consultation Document and the Joint Energy Security of Supply (JESS) report are also published yesterday.

Mr Darling said:

"Supplies of gas were maintained by the market throughout the past winter, there were no power cuts, the lights remained on. But this is cold comfort, not least to energy intensive businesses and low-income households who have faced price hikes.

"The reasons are well rehearsed but real. As a net importer of gas we're now more exposed than before to global price increases - fossil fuel prices have gone up by 50% in just three years - and the lack of a fair and open market in supplies within the EU.

"We need to continue working with industry to do what we can to mitigate the impact of another potentially tight winter this year. Most immediately we are establishing a high-level Business Energy Forum bringing together representatives of heavy industry, the energy sector, other users and regulators. Our eye will be fixed squarely on security of supply this coming winter.

"Looking further ahead, the Statement of Need is critical. The UK gas market is evolving. Our island is being connected up to the international supplies of energy demanded by our homes and industries.

"Energy industry investment to the tune of £10 billion is bringing forward vital new infrastructure such as gas storage at Humbly Grove and the Liquefied Natural Gas import terminal on the Isle of Grain. But the Government is increasingly concerned that developers are facing unnecessary uncertainty and additional costs through avoidable delays in the planning system.

"This has to change. Local democracy and local involvement in decision-making are important, and contribute significantly to the quality of decisions made, but a balance has to be struck. New energy projects may not always appear to confer any particular local benefit, but they provide crucial national benefits, which all localities share.

"Ten significant new gas storage projects are presently coming forward. If they all go ahead on time we could see our storage capacity more than doubling by 2010. There are also proposals for a number of important new gas import projects. The Statement of Need will help these developers make their case more effectively.

"Most of all it should been seen by local authority planners, in particular in the limited number of areas suitable for gas storage, as a material consideration of considerable weight, leaving them in no doubt that the decisions they make are critical to our national energy security."

Details Statements and Reports:

1.   Parliamentary Energy Statement of Need for Additional Gas Supply
       Infrastructure published 16 May 2006

2.   The Annual DTI/Ofgem Joint Energy Security of Supply (JESS) report
       published 16 May 2006

3.   National Grid's Winter 06/07 Consultation Document published by Ofgem
      16 May 2006.

4. The Business Energy Forum will be jointly chaired by the CBI and DTI and will involve National Grid, Ofgem, the Engineering Employers Federation, the Energy Intensive Users Group and other key industry bodies. The group will meet regularly and will build on the productive discussions with industry over this past winter.

5. The market is already responding to the need for more gas supply and storage by developing new infrastructure online for next winter, listed below. If they all go forward, these projects would increase GB's gas import capacity by over 100mcm/day for this winter. The utilisation of the facilities will depend on technical and commercial factors.

* Full availability of the new Humbly Grove storage facility

* The new Langeled pipeline from Norway (due to commission in the autumn)

* Further expansion of the Belgium-GB Interconnector (due 1 December 2006)

* The new BBL pipeline from the Netherlands to Bacton (due 1 December).

* New LNG import project into Teesside (subject to regulatory consents, due December)

Posted 17/05/06

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