Asked by
To ask Her Majesty’s Government what progress they have made to
reopen storage capacity for North Sea gas that has been closed
since 2017.
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy () (Con)
My Lords, Great Britain has 1.5 billion cubic metres of gas
storage capacity, which equates to approximately five days of
peak January demand. Energy security is an absolute priority for
the Government, and therefore we welcome Centrica taking the
necessary steps to reopen the Rough storage facility this winter,
which is its commercial decision. Last week, the North Sea
Transition Authority granted its approval to Centrica to open
Rough. Centrica has also received approvals from the Health and
Safety Executive and Ofgem.
(Lab)
I thank the Minister for what I consider to be quite a positive
Answer. However, does he agree that it is not alarmist to point
out the bad decision of the then Chief Secretary, a former Shell
employee, in 2017 to refuse the public contribution to
maintaining the modest amount of gas storage in the Rough field?
On the other hand, if it can be reopened this winter, Centrica
was not telling the truth in 2017 about the safety and economic
aspects of it. They cannot both be right. Is it not the case that
we relied on the stock market and just in time, and this has cost
the UK dear? We have a very low level of storage, as the Minister
said, and Rough would give us an extra 10 days, compared to Italy
which has 157 days. We are miles behind, and it is much better to
have some security rather than the minimal amount that we have
now. My final question is: can we stay part of the EU system for
gas networks, if only for the fact that Ireland gets its gas via
the UK?
(Con)
The noble Lord has made a number of points that deserve an
answer. First, it was a commercial decision for Centrica to close
the Rough storage facility. Secondly, the reason that the UK has
traditionally had lower levels of underground storage than the
likes of Italy or Germany is precisely because 45% of our own
capacity is from our own domestic resources, which is essentially
a huge gas storage facility. We also have 20% of all the LNG
unloading facilities in Europe, and in fact the UK has been
taking the opportunity during the summer to help the EU,
including Germany and other countries, to refill their storage
capacities using our LNG import facilities, because they did not
have enough of them. So it is a complicated picture, but energy
security is a great priority for us, and we are well placed for
it.
of Headley (Con)
My Lords, I want to pick up on the final point that my noble
friend just made and on the point that the noble Lord made in his
question on the role of the interconnectors. I am sure that my
noble friend will have read the Economic Affairs Committee report
on energy which was published at the end of July. One of our main
conclusions on the short-term issues was:
“There is no agreement in place between the UK and its European
partners to manage energy supply emergencies. The Government
should urgently seek an agreement with its … partners on energy
cooperation.”
This concern has been echoed by many in the industry during the
summer. Can my noble friend please tell us whether such an
agreement is now in place and whether, as was pointed out
earlier, the British Government will be sending a Minister to the
emergency energy summit on Friday in Prague?
(Con)
As I intimated in my previous answer, we are co-operating closely
with the European Union, and as I said, throughout the summer, in
the quiet months, the UK’s LNG terminals—we have 20% of the
entire European capacity—have been working overtime precisely to
help our European friends to refill their storage capacity in
time for the winter months. Therefore, security is a top priority
for us, and of course we work very closely with other suppliers
such as Norway, with LNG suppliers, and with our European
friends.
(LD)
My Lords, it is incredible to me that Centrica, a private
company, was just able to close our national gas storage facility
without, it would seem, any consultation or intervention by the
Government. What will stop that happening again in two or three
years’ time?
(Con)
We have received proposals from Centrica, which we are closely
examining at the moment. I point out that the market in 2017 was
in a very different position. A number of independent reports
were produced by experts at the time, supporting that decision
from Centrica. However, the situation is very different now,
which is why it is now looking at reopening it.
(Lab)
My Lords, following on from that answer, I welcome the
Government’s approach to reopening the gas storage facility in
the North Sea. However, as the Minister just touched on,
questions persist with regard to the safety of Rough wells, and
these concerns, as he mentioned, are shared by many, including
energy consultants and safety experts. This raises real concerns
over the safety of reopening without extensive remedial work. Can
the Minister say what measures the Government are putting in
place to ensure the safety of both the facility and the workers,
to make sure that they are protected?
(Con)
As I said, the facility was closed in 2017 for commercial
reasons, and that was not a decision for BEIS or Ministers at the
time. The Government understand that Centrica is seeking all the
necessary regulatory approvals to reopen the facility. The
decisions to grant any and all approvals are of course taken by
independent safety regulators; health and safety is their top
priority.
(CB)
My Lords, we are in the process of discussing an Energy Bill. I
am sure the Government are correct when they say they take energy
security very seriously. However, we are 85% dependent on gas for
heating our homes and we in Britain have some of the leakiest
homes. Just because we produce 45% does not mean we will actually
be able to afford to buy it, so we need more intervention. In the
Bill, there is a power to intervene in the market to secure core
fuels. However, that applies only to oil products: petrol and
diesel. Is it time to consider gas as a core fuel?
(Con)
Gas is clearly a very important fuel. As I said, our sources of
supply are diverse. We have 45% from our own North Sea
production; we have secure supplies from Norway; we have 20% of
the entire EU capacity of LNG storage regasification facilities.
So we are well served, but we are not complacent about these
matters. We keep a very close eye on what is a fast-evolving
situation and take energy security as our top priority.
(Con)
My Lords, my noble friend asked a very specific question
about representation in Prague at the end of this week. My noble
friend did not reply to that. Can he tell the House whether the
UK will indeed be represented?
(Con)
I do not know the answer to that question.
(Lab)
My Lords, is it not the case that it is not up to a private
energy company to decide whether it provides a facility to
safeguard British gas to the customers? It is the Government’s
responsibility, and it is the Government who have failed to make
sure that there is sufficient gas in case of an emergency.
(Con)
We have not failed to make sure there is sufficient gas in case
of emergency. As I just said, we get 45% of our supplies from our
domestic sources; we have extensive LNG terminals; we have a good
relationship with Norway, which has another part of the North Sea
and supplies gas to the UK. We are much better served than the
rest of the European Union in these matters.
(LD)
Is the Minister really serious about this, and will what he
advocates be in the plan which we receive tomorrow? There is so
much concern, not only among ordinary families, who are
desperately concerned in many cases, but among businesses. Only
this morning, I had a message from a local businessman in my town
of Conwy. He said that the amount his energy is going to cost
this coming year is six times what it was in the past year, from
£148,000 to £790,000. When we have businesses that are going to
breach nearly £1 million to keep their business going, no wonder
there is great consternation. What will the plan be about
tomorrow?
(Con)
I totally agree with the noble Lord. Of course, the issue of
energy security is completely different from the issue of being
able to afford it, and we are all, of course, all too painfully
aware of the tremendous increases in gas prices in particular
that have taken place recently. There will be important
announcements tomorrow. The noble Lord will understand that I
cannot tell him what they are at this stage, but he will not have
long to wait to find out.
(Con)
My Lords, following on from the questions of my noble friends
and , I ask my noble friend to
relay back to his department the concerns that have been
expressed about the UK’s potential non-attendance at the meeting
on Friday, and perhaps report back to interested Peers whether it
is possible for the UK to be represented in the middle of an
energy crisis in a meeting that is so important?
(Con)
To be honest, this Question was the first I have heard of this
meeting. I do not know the answer. I do not even know if we have
been invited to it, but I will find out.
(Lab)
My Lords, the Rough gas storage facility was closed because the
Government refused to subsidise the repairs, which means that the
Government made the decision. I therefore have two questions for
the Minister. First, was a cost-benefit analysis conducted from
an energy security and public interest perspective? If so, will
he now publish it?
(Con)
Indeed, the reports written at the time were published. There was
one report by Cambridge academics studying precisely this matter.
It is easy to be wise after the event. If that facility had been
retained, the cost would have gone on to gas bill payers—Peers in
many parts of the House are criticising us for the high level of
prices—and that would have been an additional cost. That was the
decision taken at the time. The world looks very different now,
so we have received proposals from Centrica, and we are closely
examining them. These are important matters; we take the security
of supply incredibly seriously; and we will look at it.
