12.03.10 Gas storage facility given approval
The UK’s gas storage facilities have just been given a massive boost by the government. It has just provided a licence for the construction of a natural gas storage facility under the Irish Sea that will cost in the region of £660 million.
The Gateway Project, as it is known, is being developed by Gateway Storage Company. The salt deposits under the sea are a perfect place in which to store natural gas, and once completed they will improve the UK’s gas storage capacity by an incredible 30%.
The actual storage facility will be made up of 20 vast caverns. Each of these will be built between 750 and 1,025 metres below the sea floor. Together they will have a combined storage capacity of 1.5 billion cubic metres.
The new facility will be situated about 15 miles from Barrow-in-Furness. Now that the licence has been granted it is expected that construction work will begin as early as this year. Commercial operations are billed to begin in 2014.
The main aim behind the new facility is to improve the flexibility of gas supplies, especially when prices go up or there is particularly high demand. The salt caverns are perfect for storing gas because they can withstand the incredibly high pressures that are generated.
The chairman of Gateway, George Furness, said that they were now “fully engaged with the project's engineering design and are targeting 2014 for the start of commercial storage operations."
With fears over the security of the UK’s gas supplies in the future, and the constant threat of gas being used as a political weapon by such countries as Russia, this is a positive move for gas supplies in the country.
05.03.10 BP: Gas is the answer, not wind
The chief executive of BP, Tony Hayward, hit the headlines recently after stating that Britain should put less emphasis on developing its wind power options and work instead on utilising its gas supplies by improving its storage and infrastructure.
In an interview on BBC Radio 4, he said that in Britain gas comes with "a very unreasonable paranoia”. Instead, he called it an “opportunity”, highlighting its low-carbon qualities and suggesting it could be the best way to “bridge between where we are today and where we want to be in 20 or 30 years' time”.
He also made similar comments in an interview in The Guardian newspaper, highlighting that gas is the best strategy at the moment for the UK’s energy needs and that we should make much more use of it.
In comments that are sure to prove controversial, he also called for the scaling down of green energy programmes as these were not going to help the UK in the short term. He highlighted wind in particular, criticising it as being too ambitious. He said that wind schemes may struggle to reach even half of their set power goals, and that as a result we should move into wind power generation much more slowly rather than jumping straight in.
Gas, on the other hand, gets a bad press, but is the best way to beat global warming in the short term. He said that if Britain used its own North Sea reserves with imports from many different sources then this would be the best way to deal with our energy problems. He also highlighted the fear surrounding Russian gas, saying that the possibility of Russia using gas as a political weapon was "massively exaggerated".
26.02.10 Tax breaks to encourange offshore exploration
Alistair Darling has just announced a tax break for energy companies involved in oil and gas exploration in the North Sea. The industry has been reluctant to search for Britain’s remaining oil and gas supplies, and this move is expected to provide them with a friendly shove.
The Chancellor has announced £160 million in tax relief for each field to the west of Shetland. This huge incentive could lead to investment in the region of £14 billion, not to mention the creation of a possible 600 new jobs.
It is thought that the stormy seas off Shetland hold about one fifth of the remaining UK oil and gas reserves. But the waters here are some of the most hostile in the world, and so the 170,000-square-mile area has yet to be explored properly. The encouragement needs to come from somewhere, and it has been decided that tax breaks are the way forward.
The government is hoping to push through the legislation quickly, by the end of March at the latest, so that everything is in place in time for the upcoming general election. This will prevent further time being wasted and shows just how seriously the government is taking the issue.
It is estimated that the UK has £750 billion in revenues locked up under the sea that will go to waste unless the government does something to encourage the exploration firms.
The Chancellor said that the tax breaks provided a “significant boost to the industry” and a “major step forward”. The Scottish Secretary, Jim Murphy, said that it will “improve security of supply, sustain jobs, encourage investment and build skills”.
26.02.10 British Gas launches new energy challenge
Fourteen communities across the UK have started to compete in a contest where they will each attempt to become the greenest community in Britain over the course of the year. The 14 finalists were selected from 100 applicants and the race is now on to see who can set the standard.
It is called the Green Streets challenge, and it was launched by British Gas. The energy provider wants to see which community can save the most energy and reduce carbon emissions through generating its own electricity. The winning community will be given over £100,000 for environmental investment in a local project.
The challenge was launched on a slightly smaller scale in 2008 with eight streets competing. In the end it was a street in Leeds that won through managing to cut its energy use by an impressive 35%.
British Gas is to help the communities by providing microgeneration and energy efficiency measures worth in the region of £2 million. Energy options for the communities will involve solar and wind power, as well as a micro hydro scheme, a heat pump, biomass systems and better insulation.
Engineers from British Gas will then assess the energy efficiency to rule on the winning project. The project will provide the company with insight into how it can develop the most efficient small-scale energy generation systems across the country.
Celebrity Ben Fogle is backing the scheme and said that there is a “groundswell of communities wanting to learn how to save money and go green by developing plans around saving and generating energy locally.” He added that the scheme will help to create a blueprint for a more sustainable Britain in the future.
19.02.10 Low oil prices halve BP's profits
BP has released details of its annual profit for the last year, but the picture is bleak. In 2009 BP only managed to achieve a profit of $14.4 billion. Although this may seem large, it pales in comparison to the previous year’s profit of $25.6 billion – a fall of 45%. It is the lowest annual profit that BP has reported since 2003.
The main reason for the poor profit margins is the fall in the global price of crude oil over the course of the year. When the July 2008 price of $147 a barrel is compared to the January 2009 price of $40, it is easy to see why the company has suffered so badly.
It was clear that such disastrous results were going to hit BP’s shares hard, and indeed they fell 4% on the news, dropping 22.6p at the close to 572p. The results were worse than had been expected, so this was hardly surprising.
The amount of profit per barrel also clearly displays why BP has been hit so hard. In the last quarter of 2009, BP said that it was only making $1.49 profit on each barrel of oil that it refined. This is compared to $5.20 profit on each barrel the previous year.
Despite the huge fall in profits, there was some good news. The oil and gas production for the company went up by over 4% in 2009, which is higher than its long-term target to increase production by between 1% and 2% every year. However, despite this rise, BP confirmed that it is expecting to produce less oil and gas in 2010.
