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"If we had more gas storage, we wouldn't have had...the gas price rises that we had (in the Beast from the East last March)"
"We should plan for extremes in the weather" Chairman of Select Committee
"Very high likelihood of further disruptions" Laura Cohen
"Storage was the most reliable supply during that event"
"The UK has the lowest levels of gas storage relative to annual demand...2% versus 25% in the rest of Europe".
"To replace Rough would cost around £1.3bn and take eight years to build" Roddy Monroe
"Investment incentive required to encourage new investment in storage" I think, Laura Cohen
"I will be very surprised to see any more seasonal storage capacity, only small scale additions" eg IslandMagee, is her referring to? Roddy Monroe
"Market signals to justify new storage aren't there" Roddy Monroe
My take:
The witnesses (except for the National Grid spokesman who seems to live in La La Land) and the Select Committee members seem convinced that the UK have very clear insufficiency of gas storage, either to cope with a Beast from the EAst again this Winter, or in the future. The closure of Rough has exacerbated this supply constraint but market incentives to replace Rough in scale are not there. The rest of Europe is increasingly facing its own storage problem, as flexible supplies of domestic gas are shrinking (Groningen in the Dutch NS sector), and as NS gas fields mature, with less pressure, pumping out at maximum rates as it is. So the choices are: interconnectivity with Europe via pipelines, LNG, storage. Problems with each, so more gas storage would seem to represent a national strategic benefit.
I am not sure how much this discussion today impacts on IslandMagee, as it will be a short term storage facility, not a seasonal one like Rough. And clearly on its own, it will not solve the UK's storage capacity deficiency. Maybe 2 or 3 IslandMagee's would.
Although not discussed directly, I can envisage, after this session especially, that gas price volatility will increase over any future period, versus historic volatilities under calmer conditions of flexible supply. This will play directly into IslandMagee's strength, and should be a USP to any offtake customer/partner.
Very good summary! The committee seemed amazed that they considered the system "worked" as the price spiked to record levels! Gas storage is very important if even just to prevent so much volatility let alone the security of supply issues. The only LNG tanker inbound at that time was SIX days away ffs!!