UK must prioritise domestic gas production, say industry leaders

LEADERS in the UK’s energy industry have called for “pragmatic and forward-looking” changes to the gas network to combat future energy security challenges.

In its responses to the government’s consultation on improving the gas system, National Gas and Offshore Energies UK (OEUK) says that domestic production must be prioritised – namely by providing companies with more competitive subsidies and increasing critical infrastructure.

Windfall tax

OEUK has called for the reform of the much contested Energy Profits Levy, also called the windfall tax, which currently has a headline rate of 78%.

The tax has received push back from energy companies since its inception, with some worrying that it is a deterrent for investment in the UK. It will remain in place, however, until March 2030, according to the last Budget.

Gas storage

Like OEUK, National Gas says the UK should prioritise domestic production and invest more in “future-proofing” infrastructure.

The network operator has specifically called for the UK to expand its gas storage capacity in the North Sea to avoid future energy shortages.

Although the UK has several gas storage facilities across England and Scotland – in salt taverns and depleted oil and gas fields – its capacity is dwarfed by neighbouring EU countries, according to data analysed by Energy UK.

The UK’s largest storage facility, Centrica’s Rough in the southern North Sea, which has a capacity of 54 bcf, is at risk of closure, with Centrica urging the government to provide financial support.

National Gas says the UK should either maintain existing storage capacity or "facilitate expansion” to curb the reliance of imports.

Jon Butterworth, CEO of National Gas, said: “Gas will continue to play a vital role in maintaining Britain’s energy security, keeping the lights on, homes warm and industry powered, particularly during cold weather and periods of low renewable output.”