Gaz de France to convert salt caves into gas store

Gaz de France has unveiled a £350m deal to develop salt caverns in the north-west of England to store gas, as the Government grapples with Britain's mounting energy crisis.

Under the deal, signed with the chemical company INEOS, the plans will see the development of a site that could store up to 400 million cubic metres of gas – making it the second biggest in the country, although still only one-seventh the size of the Rough facility under the North Sea.

The UK desperately needs to develop more storage space so that there is fuel available to top up supplies on cold winter days when demand is at its highest.

Production from the North Sea fields is falling, leaving the country increasingly reliant on imports and sparking concerns about a consistent supply being available during peak times. Storage is seen as an important way to ensure a steady supply.

But according to Gaz de France, Britain's storage space amounts to just 4 per cent of annual consumption compared to 24 per cent in France and 19 per cent in Germany.

A recent report suggested demand for gas in the UK could exceed supply by up to 20 per cent by 2015 on the coldest days of the year in a cold winter, although a warming climate would be likely to mitigate this.

The space at the project will be created by pumping water down boreholes to dissolve parts of the vast salt deposits in Cheshire. The brine created will then be pumped out to leave space to store the fuel in 28 caverns hundreds of metres below the ground.

Privately owned INEOS will handle the brine extraction, which will be used by the chemical industry for industrial purposes, along the lines of similar facilities operated by Gaz de France in its home country. The latter usually handles all aspects of such projects, although planning permission for the Cheshire facility was secured by INEOS, which wants to retain involvement in the project.

Gaz de France said the UK gas market was forecast to grow at 2 per cent a year, with imports set to increase significantly as the North Sea fields are used up. It said new storage capacity "brings flexibility to manage security of supply".

"Storage is a crucial link in the gas chain. Europe is currently the part of the world that offers the greatest growth potential in this area: average storage capacity has been growing by more than 5 per cent per annum since 1989, as compared with the world average of 1.7 per cent over the same period," it said.

Gaz de France said it wanted to continue growing in Britain, where it will operate the Cheshire facility at Stublach, under a 30-year lease. The UK is currently Europe's largest market for natural gas. The caverns will be fully operational by 2018.

A smaller facility is being constructed nearby at Byley, and it will be ready next year. Several such plans are in the offing, although some have encountered planning difficulties.