The closure of the UK’s largest natural gas storage facility was at the centre Centrica’s sliding profits.
But what is the Rough storage field and why has it played such a big part in consumer energy demand for the last 30 odd years?
Here Energy Voice gives the low-down on Centrica’s gas giant.
Rough is a partially depleted gas field, 18 miles off the coast of Yorkshire.
Put simply it is a layer of sandstone under the North Sea that English operator Centrica has been withdrawing and injecting gas into and out of through 30 different boreholes, or wells.
The sandstone is covered with a separate layer of impermeable rock, which acts as a natural cap to keep gas from escaping up to the sea.
The facility had the potential to hold 70% of the UK’s gas storage capacity.
It was designed as a store for the fuel since 1985, and provides a resource during winter.
Rough and similar facilities used to make money by charging traders during the summer when utility prices were low and then taking it out in winter when the demand, and the price is usually higher.
Over recent years the facility has encountered technical difficulties, including well degradation, with increasing frequency due to its age and heavy usage.
And in June, Centrica finally called time on the asset.
At the time it said: “Centrica Storage Limited (CSL) has now completed the wells testing programme and has analysed the results of this extensive programme. CSL has also completed a review into the feasibility of returning Rough to injection and storage operations and concluded that, as a result of the high operating pressures involved, and the fact that the wells and facilities are at the end of their design life and have suffered a number of different failure modes while testing, CSL cannot safely return the assets and facilities to injection and storage operations.
“Furthermore, from a commercial perspective, an assessment of both the economics of seasonal storage today, and the costs of refurbishment or rebuilding the facility and replacing the wells, suggests that both pathways would not be economic.”
The lack of repeat cushion gas sales from the facility and reduced storage operations meant Centrica E&P and Storage’s profit fell by £36million compared to the same period last year, a drop of 39%, half year results showed yesterday.
The group was also hit by a £268million post-tax net exceptional charge, relating to its technical troubles with the asset.
Centrica has applied to the regulator the Oil and Gas Authority to release an initial 30.7bcf of gas from the facility in order to reduce pressure on the wells.
If approved, 15bcf is expected to be released in H2 2017 and the remainder in Q1 2018.
The company said this would likely mean Centrica Storage would make a “small” operating loss in the later half of this year.
Centrica said it plans to extract all of the available gas from Rough before final abandonment. The recoverable cushion gas is estimated to total 183bcf and is expected to take several years to produce.
