Life after Rough

Life after Rough

Centrica has confirmed what many had earlier suspected: that the Rough storage site – the UK’s only long-range storage facility – will not return to operation and instead permanently close. Henceforth the UK will be without the security and flexibility of supply offered by a large scale storage facility.

Life after Rough – Part 1

How did Rough come to be?

The Rough storage facility started life as a regular North Sea gas field, beginning operation in 1975. British Gas purchased the field in 1980 having already withdrawn one-third of the field’s reserves. The company then converted the site into a natural gas storage facility which began operation in 1985. Given the large capacity of the Rough storage facility, it operated on a seasonal long-range basis, as opposed to smaller mid-range or short-term facilities. Seasonal storage sites seek to take advantage of a wide variance in gas prices between the summer and winter seasons, created by changes in seasonal demand and the availability of supply flexibility.

Gas within the site comprises of working gas (the volumes which are transferred in and out) and cushion gas. Cushion gas stays in the site to maintain the operating pressure required to allow working gas to be injected and withdrawn. The maximum volume of working gas is around 36TWh. Total cushion gas accounts for an additional 97TWh, of which around 54TWh is classed as recoverable.

Problems with an aging site

As the site aged and reached the end of its initial operational life, maintenance work became more frequent and impactful on operations. During routine testing in March 2015, Centrica identified a problem with one of the site’s wells. As a consequence, all injection and withdrawal operations ceased from June 2016. Centrica continued with testing and in September that year permanently closed its smaller 47/8A platform. This closed off six of the site’s 30 wells and subsequently reduced the facility’s overall withdrawal rate by 8%.

Unable to build up supplies, reserves in the Rough site started winter 2016/17 at around 40% of capacity. Withdrawals returned at the site in mid-December helping the UK gas system through the 2016 winter season. However, the site was unable to re-inject gas and by the end of winter virtually all of the working gas volume had been withdrawn.

Short-term gas windfall?

On 20 June Centrica confirmed the permanent closure of the facilities. After announcing the permanent closure of Rough, Centrica applied to the Oil and Gas Authority for the right to withdraw cushion gas from the site, during the decommissioning of the field. With injections unavailable, Centrica is eager to produce as much of the gas in store as possible before the site is fully decommissioned. The volume of recoverable cushion gas is estimated by Centrica to be 54TWh. This is around 15TWh higher than the maximum volume reached in any of the previous five years of operation. As a consequence the cushion gas could sustain at least two further winter seasons if recovered.

However, there is still a high level of uncertainty surrounding the possible recovery of the cushion gas and further details are needed from Centrica. The rate of withdrawal slows as stocks at the site dwindle and Centrica may be unable to withdraw the gas as fast as seen in previous years.

In the second part of this blog, Utilitywise will look at the UK gas supply system going forward, assessing the impact, if any at all, of the recent announcement. We ask what will the gas system do now, will the loss of Rough really make a difference, and how will the possible use of cushion gas at the site affect supply in the short-term?

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Ross Moffat

Posted by on Friday, the 7. July at 9.11

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.