Centrica Storage Ltd

Rough witth the smooth

Centrica Storage Ltd is a wholly owned subsidiary of the Centrica Group, and is the operator of the Rough gas storage facility, located in the North Sea.

The Rough offshore site has a long history, dating back to the 1970s. It was under the British Gas Corporation that Rough was converted to a natural gas storage facility in 1984, enabling gas to be stored within a reservoir 2700 metres beneath the seabed. Following British Gas’ privatisation, the site was eventually acquired by Dynegy, who subsequently sold the storage asset to Centrica in 2002. The Centrica Storage business unit came into being in 2003, legally, physically, and financially separate from the rest of the Centrica organisation.

Managing director of Centrica Storage Bruce Walker elaborates on the specifics of running the Rough facility: “We operate separately from the rest of the Centrica Group, and our position within the market is as a provider of storage services to companies that require them. Centrica’s acquisition of the Rough asset wasreferred to the Competition Commission because of the company’s position in the gas market. As a result of this inquiry, and negotiation with Ofgem and the OFT, we were required to give undertakings to the Secretary of State to maintain Centrica Storage as a separate business unit. We do deal commercially with the rest of the Centrica Group, on an arm’s length basis, and only share certain specified services with them – most importantly, reservoir engineering expertise and subsurface geology knowledge.”

Bruce explains the renewal process planned for Rough, and the ambitions of the company: “The acquisition of Rough was part of Centrica’s significant ongoing investment in upstream assets. Our first task was to restore and maintain the integrity of the Rough facility. Since we have taken over, we have spent over £50 million on repair and replacement projects, and on increasing capacity. The ambition of Centrica Storage is to progress from what was essentially a single asset, single product business to increase the range and scope of services we can offer to the market, and increase our flexibility in providing them.

“Our investment in Rough will ensure the facility’s position within the gas storage industry of the future.” Bruce describes the physical attributes of the site: “The Rough asset consists of the original two platform complex with six producing wells. A larger three platform complex was installed when Rough was converted to a storage facility, with a further 24 wells, each capable of producing and injecting gas. There is a 36-inch pipeline to shore, which allows us to receive gas from the NTS and inject it into Rough, located 25 kilometres out to sea, and reverse the process when withdrawing from store. Physically, the asset can hold 3.3 billion cubic metres of gas, and is capable of producing up to 45 million cubic metres a day, and injecting up to 20 million cubic metres per day. To put this into scale in regard to the UK market, we deliver around ten per cent of total UK gas used on a typical day in winter. Incidentally, we also account for around ten per cent of UK gas demand in summer, taking gas off the system and injecting it back into Rough, meaning we fulfil our role in not wasting gas when it is less needed.

“The asset had suffered some years of underinvestment before we took over,” Bruce continues. “There was a fairly major catch-up process to restore the asset to its optimum performing level, with work required for example to upgrade the fire and gas detection, emergency protection, and control systems, and a major programme to replace corroded caissons below the platform which provide sea water for and protect fire and cooling water pumps. We have also invested in increasing the capacity of Rough, including installing sand monitoring equipment on all of the wells, which enables us to maximise our production rates. We are also this winter undertaking a major renewal of both offshore compressor trains, which will increase Rough’s injection capacity.”

An incident at Rough in 2006 has led Centrica Storage to review some of the methods of operation at the facility, as Bruce comments: “We had a major fire on the Three Bravo platform, which is the central processing structure within the main platform complex. This was caused by a catastrophic failure of a cooler unit on the production train, and the fire engulfed the central platform area.

“Fortunately, the emergency shutdown and deluge systems worked extremely well, with only relatively minor injuries to personnel,” Bruce states. “There was nevertheless a significant amount of damage to the installation, and the dehydration trains within the production unit required full replacement, as did much of document management service. the cabling and electronics across the site, effectively shutting us down for four months. We have changed the method of our operations to some extent following the incident, as before we removed most of the condensate and water within the gas at the offshore location, whereas we now minimise the amount of liquids removed offshore, and complete this instead at the onshore terminal.”

The gas storage market is on the threshold of a period of growth, as Bruce is keen to point out: “As the UKCS North Sea production declines, there will be an increased dependence on importing gas supplies. This being the case, over the next ten years, there will be a substantial growth in investment in storage facilities in the UK, as the nation can only currently store four per cent of its annual gas volume. So there are a number of UK storage projects, both in onshore salt caverns and offshore fields like Rough, which are currently in development Centrica is certainly exploring some of these developments as areas of potential expansion.”

Bruce concludes by re-affirming the company’s aims for the future: “Centrica Storage is moving from being a single product, single asset company, to a business that offers a diversified portfolio of services to the market. Last year for example we successfully launched VStore, a virtual storage service based on NBP trades, which is not linked directly to the performance of Rough or other physical assets”.

Centrica Storage Ltd

Services Gas storage facilities