Centrica plc has taken the decision not to proceed with its new-build gas storage project at Baird in the UK Southern North Sea and to put its project at Caythorpe in East Yorkshire on hold indefinitely.
This decision was taken in light of weak economics for storage projects and the announcement by the UK Government on 4 September ruling out intervention in the market to encourage additional gas storage capacity to be built.
As a result of this decision, Centrica will write off all costs incurred and committed on these projects and expects to recognise impairments and provisions totalling approximately £240 million as an exceptional cost in the Group’s 2013 preliminary financial results.
Centrica will continue to own and operate Rough, the largest gas storage facility in the UK and capable of meeting approximately 10% of the UK’s current peak demand.
Caythorpe is a depleted onshore gas field in East Yorkshire. Centrica acquired a 100% interest in the Caythorpe gas storage project from Warwick Energy in September 2008.
Baird is a largely depleted gas field in the Southern North Sea. Centrica acquired a 70% interest in the Baird gas storage project from Perenco in February 2009, with Perenco retaining the remaining 30% interest.
Press Release, September 24, 2013