A subsidiary of Italian gas-grid manager Snam SpA is considering building a $1 billion natural gas storage site off the UK coast, betting a new facility would see strong demand amid efforts to guard against geopolitical risks.
While storage operators across Europe have struggled to remain profitable this year, dCarbonX Ltd. is planning for first injections into the depleted Bains field in the East Irish Sea in 2030, according to Chief Executive Officer and co-founder Tony O’Reilly. Its capacity of 1.4 billion cubic meters would cover about six days of the UK’s winter demand.
Britain currently has some of the lowest gas storage capacity in Europe, and is able to cover only 12 days of average winter needs compared with 89 days in Germany and 103 in France. That leaves the country exposed to prolonged demand spikes, supply interruptions or geopolitical shocks.
At the same time, its biggest offshore storage site has struggled to make money, according to operator Centrica Plc. It decided not to inject fuel into the Rough site for the upcoming winter due to losses and is considering closing the aging facility entirely.
O’Reilly said the economics will be more favorable for Bains as its facilities will be new. His firm – based in London and Dublin and majority-owned by Snam – estimates investments of GBP 830 million (about $1.1 billion) and a construction time of up to three years. It will be partially funded by debt and more infrastructure investors could join, he said at a briefing with reporters, adding the storage will be built in such a way that it can be switched to hydrogen.
dCarbonX is also in talks with the government on “business model options” to support the storage activities – with state consultations on the gas network taking place this autumn – though the company plans to proceed with the project either way, he added.
Bains is not the first gas-storage project to be proposed in the UK in recent years, but many have failed or been delayed. Last month, EnergyPathways Plc said the industry regulator did not approve its application for a storage site due to “changed circumstances” and it’s now reviewing options. Various proposals to add floating LNG terminals, which can act as storage for the super-chilled fuel, also haven’t advanced.
dCarbonX also has a gas-storage license for a separate UK project called Gateway and is considering another one in Ireland.
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