Frequently Asked Questions - National Need

What is the national need for Preesall?

Gas in the UK is used by consumers for domestic heating and cooking and nationally about 30% of our electricity is produced by gas power stations. Heavy industry and businesses are also big users of gas and many British jobs rely on competitive prices to remain viable. The Preesall facility will help avoid interruptions of gas supplies and improve our energy security by increasing the buffer so supply can meet demand.

What is natural Gas used for?

Natural gas is used in our homes, for cooking and heating, and also to generate about a third of the electricity currently used in the UK. This creates the rapidly rising peaks in demand each morning and evening and lower use overnight. It also has commercial significance, both to heat and power businesses, and in energy intensive industries where large quantities of gas are used in processes such as the manufacture of steel, chemicals, glass, paper and construction materials.1

How dependent are we on natural gas?

In the UK, natural gas accounts for around 40% of the fuel used to power and heat our homes and businesses. Some of that gas is used directly, and some is used to generate electricity to provide heat or power.2 Gas consumption can be split into the following categories:

Domestic: 35%
Electricity Generation: 30%
Industrial: 25%
Commercial: 10% 3

Why do we need to store natural gas and what is the effect of a decline in North Sea production?

The Preesall facility helps reduce gas price volatility. Storage also improves our ability to cope with emergencies and seasonal variations.

Since the 1960s, the UK's main supplies of gas have come from the North Sea and Morecambe Bay. The UK was a net exporter of natural gas and thus in control of its internal market. Abundant North Sea gas reserves and excess processing capability have meant that swings in UK demand have been taken up by increasing or decreasing output from North Sea and Morecambe Bay gas fields. UK gas reserves have been rapidly declining: by 2005 UK production had fallen by around 19% since 2000, when it peaked (and the UK became a net importer of gas again in 2004). The UK North Sea and Morecambe Bay fields no longer provide their previous swing or flexibility.4 As a result the government and experts have sought to increase gas storage to ensure greater self sufficiency in an emergency. France and Germany each store 25% and 22% of their annual gas needs the UK's capacity is 4%. The historical rationale used to be the UK's domestic self sufficiency in gas which is now slipping away. By 2020, we could be importing around 80% of our gas and our daily peaks must be supplemented from storage.5

What are the different forms of storage?

In the UK, gas may be stored onshore in two types of underground facilities. It can be stored in the salt strata of former oil and gas fields, where gas is injected back into the reservoir from which oil and or gas has been removed. A second option is salt cavity storage; where cavities are created in underground salt strata by dissolving some salt to form a pressure vessel and filling the vessel with gas - this is what we want to do in Preesall.

Different types of gas storage are used for different purposes. Gas stored in former oil/gas fields takes time to extract and therefore is generally used to help us meet seasonal demand over the winter months. Gas stored in salt cavities can be extracted much more quickly and can be used to help us meet the hourly and daily peaks and valleys as well as seasonal demand needs. (E.g. over a few cold winter weeks as well as the average increased winter use.) 6

Gas storage can be located onshore or offshore. Offshore facilities are much more expensive to construct, operate and maintain compared to onshore facilities and the differential cost will be borne by the consumer.

Security of supply, what do the experts say?

In a report prepared by the British Geological Society for the HSE they state, "The UK will require greater investment in new, timely and appropriately sited gas import and storage infrastructure to provide a balanced portfolio of gas storage facilities meeting market requirements. Larger and longer-term gas storage capacity may be best met through construction of underground gas storage (UGS) facilities in salt caverns, which whilst offering hourly or daily withdrawals, best provide weekly to monthly storage cycles." 8

"Any weakness in infrastructure could result in higher gas prices, or interruptions to supply, with damaging consequences for both UK markets and consumers. To meet these challenges, manage the changes and lessen impacts on UK users, the Government believes that there will be a need to substantially increase the UK's capacity to import, transport and, most importantly, store gas efficiently,9 part of which is likely to include (safe) onshore underground (natural) gas storage (UGS) facilities."10

What does the Government say on improving gas storage for national need?

The key reasons for improving the gas infrastructure are set out by the Government (DTI May 2006) in a Ministerial Written Statement.

  • Great Britain is becoming increasingly dependent on gas imports, and requires new gas supply infrastructure to help ensure security of supply
  • New projects enable extra supply and storage options if they proceed without avoidable delays
  • There are limited locations currently suitable for much needed gas storage projects
  • Will enable gas to be available in times of peak demand, such as daily peaks and seasonal peaks
  • New energy infrastructure projects provide national benefits, shared by all localities

In seeking solutions to the security of gas supply, government policy recognises that there is a need for a whole range of gas storage facilities, large and small, onshore and offshore, utilising both depleted reservoirs and salt caverns and, as far as the geology will allow, geographically spread across the UK. 11

The Secretary of State for the Department of Trade and Industry in 2006 wrote; it is clear that any weakness in infrastructure could push up gas prices, or result in interruptions to supply, with harmful consequences for both UK markets and UK consumers. 12

1 - DBRR “Gas Storage in your Area - Your Questions Answered” July 2007 http://www.berr.gov.uk/files/file40536.pdf

2 - DBRR “Gas Storage in your Area - Your Questions Answered” July 2007 http://www.berr.gov.uk/files/file40536.pdf

3 - BERR Natural Gas and Colliery Methane Production and Consumption Table 4.1.1 www.dtistats.net/energystats/dukes4_1_1.xls

4 - Health and Safety Executive, “An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology”. Prepared by the British Geological Survey for the Health and Safety Executive 2008 P. 1

5 - DBRR “Gas Storage in your Area - Your Questions Answered” July 2007 http://www.berr.gov.uk/files/file40536.pdf

6 - DBRR “Gas Storage in your Area - Your Questions Answered” July 2007 http://www.berr.gov.uk/files/file40536.pdf

7 - Health and Safety Executive, “An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology”. Prepared by the British Geological Survey for the Health and Safety Executive 2008 P. 1

8 - Health and Safety Executive, “An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology”. Prepared by the British Geological Survey for the Health and Safety Executive 2008 P. 1

9 - Health and Safety Executive, “An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology”. Prepared by the British Geological Survey for the Health and Safety Executive 2008 P. i

10 - Health and Safety Executive, “An appraisal of underground gas storage technologies and incidents, for the development of risk assessment methodology”. Prepared by the British Geological Survey for the Health and Safety Executive 2008 P. i

11 - DBRR “Gas Storage in your Area - Your Questions Answered” July 2007 http://www.berr.gov.uk/files/file40536.pdf

12 - Secretary of State for Trade and Industry, Ministerial Written Statement, “Energy Statement of Need for Additional Gas Supply Infrastructure” 16 May 2006 http://www.berr.gov.uk/files/file28954.pdf P.1