UK gas storage levels 'concerningly low' on weather, power demand: Centrica

UK gas storage has fallen to "concerningly low" levels on the back of cold weather and high gas demand for power generation, Rough gas storage operator Centrica said Jan. 10.

Gas storage was already lower than usual heading into December as a result of the early onset of winter, Centrica said, and combined with high gas prices this has meant that it has been more difficult to top up storage over Christmas.

"The UK's gas storage levels are concerningly low. We are an outlier from the rest of Europe when it comes to the role of storage in our energy system and we are now seeing the implications of that," Centrica's CEO Chris O'Shea said.

As of Jan. 9, UK storage site inventories were 26% lower than last year's level at the same time, leaving them around half full, according to Centrica.

"This means the UK has less than a week of gas demand in store," Centrica said.

Despite being full ahead of winter, current gas inventory at Rough -- the country's largest gas storage site -- is 20% lower than at the same time last year, the company said.

Grid assurance

However, domestic gas grid operator National Gas sought to minimize the tight situation around the country's gas supply Jan. 10.

"The overall picture across Great Britain's eight main gas storage sites remains healthy -- with average levels at just over 60% across the board," a National Gas spokesperson told S&P Global Commodity Insights.

"Britain obtains its gas from a diverse range of sources beyond that already in storage, meaning we are well placed to respond to demand this winter," the spokesperson said.

Centrica said Rough had also played a crucial role so far this winter by supplying almost 420 million cu m of gas since early November.

Following the reopening of Rough as a gas storage asset in the second half of 2022, Centrica nearly doubled its capacity to 54 Bcf (1.5 Bcm) in June 2023, boosting UK energy supply security.

Before it was closed in 2017, Rough provided some 150 Bcf of storage capacity, and Centrica said in November that the site's current capacity was the highest it could safely go without redevelopment and expansion.

"If Rough had been operating at full capacity in recent years, it would have saved UK households GBP100 from both their gas and their electricity bills each winter," O'Shea said.

Upgrade, redevelopment

O'Shea said Centrica stood ready to invest GBP2 billion of its own money in upgrading and redeveloping the Rough gas storage facility.

"But we urgently need the cap and floor model recently announced for long duration energy storage to be applicable to Rough," he said.

"Without that, UK consumers will continue to have higher energy bills than is necessary."

Centrica said that without Rough's gas, UK consumers would face even higher prices, more imports and potential energy shortfalls.

"The UK is heavily reliant on LNG imports, but these shipments come with challenges," it said.

"The UK is competing directly with other nations, particularly in Asia and Europe, for these vital shipments which can head for another destination at any time if other countries bid more than the UK," it said.

Wholesale gas prices in the UK and Europe remain high. Platts, part of S&P Global Commodity Insights, assessed the UK NBP month-ahead price at 113.05 pence/therm ($13.90/MMBtu) Jan. 9.

Meanwhile, Greenpeace UK's policy director, Doug Parr, said in response to Centrica's warning that the best way to increase the UK's energy resilience and risks related to strained gas supplies was to "get off gas."

"A fully renewable energy system, with sufficient storage, wouldn't encounter these issues and, more importantly, it would cut emissions helping to tackle the climate crisis," Parr said.