Uchenna Izundu
OGJ International Editor
LONDON, Feb. 26 -- Centrica PLC plans to lead in converting the depleted Baird gas field in the southern UK North Sea into a gas storage facility after paying £25 million to Perenco to acquire a 70% stake.
When completed by 2013, the project will become the country's second largest gas store after Rough gas field, which is also owned and operated by Centrica. Rough was the world's first offshore gas storage reservoir on the western margin of the southern North Sea basin.
Baird's storage capacity would be 60 bcf, just over half the 118 bcf capacity of Rough, but will be "a faster and more flexible asset" than Rough and capable of capturing more value from market volatility," Centrica said. "Predevelopment studies on the project will run until the third quarter of 2010, before a final investment decision is made," said company officials.
Centrica will spend £12 million on the design and project development before a final investment decision is made. The entire project is expected to cost £1.2 billion.
This is the third gas storage asset for Centrica, following Bains and Caythorpe gas fields last year. Both are expected to have 25 bcf of storage capacity over the next 4 years.
Centrica will continue working with Perenco on Baird, as Perenco will keep its 30% share.
"The impact on gas supplies across Europe following the Russian dispute with Ukraine, coupled with one of the coldest winters for many years, highlights the importance of new storage to the UK," said Sam Laidlaw, Centrica's chief executive.
The UK currently has enough gas storage to cover only 5% of average annual gas demand, or about 16 days of average demand. This compares with 24% or 88 days in France and 21% or 77 days in Germany.
The government has proposed a new simplified licensing scheme to encourage developers to create offshore gas storage and import projects up to 200 miles around the UK.
Energy Minister Mike O'Brien said, "The new system will encourage investment and give companies certainty about the consents required for offshore gas storage and unloading."
The Department of Energy and Climate Change (DECC) has published a consultation document for potential operators, which will close Apr. 23. This also covers the unloading and regasification of LNG offshore.
Under the scheme, developers will need to obtain a lease from the Crown Estate property portfolio for the area they wish to use for gas storage or gas unloading and a license from DECC to explore, operate, or develop the field or facility. Both institutions will coordinate their activities to ensure that the applications run smoothly.
Contact Uchenna Izundu at [email protected].
