UK parliament to probe gas storage adequacy

A House of Commons select committee will carry out an inquiry into whether the UK has enough gas storage after events last winter heightened concerns about supply security, its chair Rachel Reeves said today.

The cross-party Business Energy and Industrial Strategy (BEIS) select committee will take evidence on 31 October to assess whether the government has the "necessary measures" in place to cope with a repeat of last March's gas deficit warning, Labour MP Reeves said.

"Following the closure of Rough there have been issues over our ability to ensure supply in the winter," she said at the Energy UK Annual Conference 2018.

The UK issued its first gas balancing alert in seven years on 1 March, as cold weather and supply disruptions left the system short.

While the system balanced without market intervention, it led to a record NBP prompt price spike and prompted calls from industrial users for a government review including subsidies for new and existing storage facilities.

The UK government said Rough being available at the time would have made little difference to supply security and maintained the UK benefits from diverse supply sources.

Parliament launching an inquiry elevates an issue that died down over the summer, with the BEIS ruling out a formal investigation. BEIS was not immediately available to comment on the announcement.

The committee will also investigate "whether the market is mature and liquid enough to respond in an affordable way", Reeves said.

Within-day gas traded above £3/th on 1 March and the day-ahead market closed at £2.30/th — up from an average 50.2p/th earlier in the winter — as the UK had to outbid continental hubs to secure enough supply.

The Gas Security Group, a lobby group that represents major energy users, said the inquiry was "very timely".

March 2018's events proved the government's arguments that the gas system was robust and could cope with bad weather "was not the case", the group said.

Brexit including the UK's withdrawal from the EU's Internal Energy Market pose additional threats to supply security, it said.

Even if the government changed position and deemed more gas storage was necessary and agreed to fund a new storage site, it could take several years before it could contribute to supply security.

Gateway, one proposed site in the Irish Sea, would take 3-4 years to be built, its developers said.

Critics have called on the government to invest in renewables and battery technology, which could pare power sector gas demand.