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UPDATE 1-Disruption at UK's Rough gas storage site to extend beyond April
February 6, 2017 / 9:17 AM / in 8 months

UPDATE 1-Disruption at UK's Rough gas storage site to extend beyond April

(Adds more detail, background)

LONDON, Feb 6 (Reuters) - Britain will not be able to inject additional supplies to its largest gas storage site after six of its wells failed tests, delaying a plan to have them back in service by the end of April, operator Centrica Storage Limited (CSL) said.

Concerns about integrity of wells at the Rough site, off England’s east coast, prompted Centrica to impose limits last year on how much gas could be stored there as a safety precaution.

Following investigations, Centrica shut down the facility for injections and withdrawals of gas. Withdrawals resumed in December but injections were on hold until April.

“The return to injection operations in 2017 remains subject to successfully completing well testing on all wells and confirmation that Rough can be safely returned to service,” it added.

Gas is injected usually in the summer months when demand and prices are low. Britain depends on stored gas reserves to help manage winter demand spikes and to ensure security of supply.

Rough usually provides more than 70 percent of Britain’s gas storage capacity. The site is more than 30 years old and repeated outages have highlighted its vulnerability.

In a review by the Competition and Markets Authority last year, CSL said Rough was an ageing asset which had outlasted its original design life of 25 years and that its reliability was likely to worsen over time.

If there is reduced injection capacity over the summer months at Rough, other, smaller storage sites will have to be used.

There could be a risk of low levels of gas in storage for the winter 2017/18 season, traders said. Britain could have to pay for more liquefied natural gas deliveries and imports from Norway and the Netherlands.

Market reaction was muted. The Summer 2017 wholesale gas contract was down 0.55 pence at 45.95 pence per thermo.

CSL said it had completed calliper surveys on 20 out of 24 wells at the site and completed pressure testing on 12 of those 20 wells.

Eight of those 12 passed the tests but two will need further work and will not be able to return to service by April 30.

Four out of the 12 did not pass the tests and will not return to service by that date either, CSL said.

“All 6 wells that are not capable of returning to service by 30 April 2017 have been isolated from the reservoir,” the firm said in a statement.

The firm said it is evaluating the consequences of the test results and will provide another market update as soon as it can. CSL is still testing remaining wells.

“The return to injection operations in 2017 remains subject to successfully completing well testing on all wells and confirmation that Rough can be safely returned to service,” it added.

Withdrawal operations remain unaffected, CSL said. (Reporting by Nina Chestney and Apeksha Nair; Editing by Adrian Croft/Keith Weir)

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