Morecambe Bay to run to the end of the decade as Centrica makes £2.3bn

Centrica reported earnings before tax of £2.3 billion in the first half of 2023 as it looks to delay the end date for the Morecambe Bay gas fields.

Chief executive of the British Gas parent company, Chris O’Shea, said that his firm’s “robust balance” enables it to “invest heavily in the UK and Ireland’s energy security.”

The chief executive adds: “Centrica is now a more focused and higher quality business.”

In the first six months of 2022, Centrica reported profits of £1.66 billion, showing a sizeable jump in the firm’s earnings year on year.

In its interim results, the firm announced it would be extending the lifespan of Spirit Energy’s Morecambe Bay gas fields, ensuring that the area will produce to the end of the decade.

© Centrica

Previously, the field was set to cease production by the middle of the 2020s, following the decision, Centrica says its “Infrastructure assets are expected to continue to deliver material cash flows for the Group in the medium term.”

This comes as the business looks to invest in “strengthening the UK’s energy security of supply.”

In addition to an extended lifespan for the Morecambe Bay gas fields, Centrica also announced that it would be “doubling gas storage capacity at Rough.”

The firm writes: “Rough returned to gas storage activities last year, and in H1 2023 we announced an increase in capacity to 54bcf from 30bcf. We now have exclusive use of the asset until at least 2030.”

Carbon storage in Morecambe Bay’s future

Both assets have the potential to be repurposed for green energy and carbon reduction measures, Centrica outlines that Rough could be used for Hydrogen storage in the future, while Morecambe Bay could play a “key role” in carbon capture, utilisation and storage (CCUS).

Centrica claims “Rough could store up to 200bcf of hydrogen.”

Earlier this year, Spirit Energy confirmed plans to repurpose the South Morecambe and North Morecambe fields for emissions storage.

The decision for the fields off the north-west coast of England is set to support “thousands of highly skilled green jobs” in Cumbria and the north-west, as well as positions in Spirit’s Aberdeen offices.

According to Spirit, the Morecambe Bay revamp will provide a multi-billion-pound investment in the local economy, promoting growth and further investment across the region.

Centrica profits highlight the government’s ‘Swiss cheese’ windfall tax

The shadow secretary of state of climate change and net zero and former leader of the Labour party has responded to the news of Centrica’s profits, writing “The Conservatives’ windfall tax has as many holes as a Swiss cheese.”

Ed Miliband appeared on BBC Breakfast this morning and said: “Good luck to these companies if they make investments and make profits but these are unearned, unexpected, profits.”

He continued: “This is because Russia launched an appalling invasion of Ukraine and drove gas prices up.”

For the former Labour leader, the “long-term answer to this” is for the UK to move away from fossil fuels “as quickly as we can.”

Mr Miliband concluded: “That’s why the drive to increase onshore wind, offshore wind, and solar energy, which are cheaper than fossil fuels is the right answer for the country.”

However, the cost of developing offshore wind is rising, as demonstrated by Vattenfall as it put its Norfolk Boreas project on hold due to inflation.

The wind developer claimed to see a 40% rise in costs relating to the project, confirming it had “decided to stop the development of Norfolk Boreas in its current form” and will “examine the best way forward for the entire Norfolk Zone.”