Government should loosen gas rules amid price spike, North Sea firm says

Neptune Energy said it could supply much more gas if UK rules were slightly relaxed

North Sea gas producers meet a significant part of the UK’s demand. (Jane Barlow/PA) (PA Archive)

One of the biggest gas producers in the North Sea has said it could likely supply the country with large amounts of extra gas if the Government eases restrictions on what is allowed to be used in the grid, amid a spike in prices.

Neptune Energy said that last year it could have produced around an extra 10.7 billion cubic feet of gas if restrictions on calorific value – which measures how much energy is in the gas – had been lowered.

Executive chairman Sam Laidlaw, who used to head British Gas owner Centrica wrote to business secretary Kwasi Kwarteng on Monday.

In the letter, he said that the Health and Safety Executive (HSE) had already looked at the issue.

We have been clear that this is not a question of security of supply. We have sufficient capacity to meet demand, and do not expect gas supply emergencies to occur this winter

Government spokesman

If companies produce gas with too low or too high calorific content they have to blend it with other gas to change its make-up, otherwise it cannot enter the grid.

But sometimes there is not enough appropriate gas to blend with, meaning oil and gas companies leave gas in the ground that they could otherwise have extracted.

“Enabling the proposed relaxation of the specification immediately under emergency powers would allow the use of gas at a lower calorific value, which has already undergone technical review by HSE,” he said.

“This would enable producers to supply more gas because it would reduce the requirements for blending needed under the current regulations.

“The change could be put in place immediately and remain in place for the gas year 2021-22, which begins in October.”

In response the Government said: “We have been clear that this is not a question of security of supply. We have sufficient capacity to meet demand, and do not expect gas supply emergencies to occur this winter.”

Some countries in Europe, including the Netherlands, Germany and Hungary already use gas that is below the UK’s accepted range.

“For context, had the change been introduced last year, it would have enabled Neptune to produce an additional 10.7 billion cubic feet of gas from (gas field) Cygnus – around 13% more than actual produced volumes,” Mr Laidlaw said.

Any such decision would need approval from National Grid and the Health and Safety Executive to make sure it is safe to go ahead.