Oil & Gas

14 Oct 2021

Northern Ireland Gas Storage Project Secures Greenlight as Prices Skyrocket

14 Oct 2021  by   

The UK government has approved the construction of a gas energy storage project in Northern Ireland amidst an energy crisis caused by natural gas supply constraints.

Various sentiments have been expressed by industry as the main cause of the energy crisis in the UK and Europe. These include a reduction in natural gas exports to the bloc by Russia, the re-opening of economies from COVID-19 restrictions resulting in a surge in energy demand, the failure by the UK to fill up its gas reserves due to supply chain disruptions during the pandemic, Brexit, and an increase in coal prices.

However, the new gas energy storage project that has been granted a Marine Construction licence is expected to play a key role in helping the UK alleviate the crisis and avoid the situation from happening again in the future.

Islandmagee Energy will develop and operate the project. The plant will provide seven more gas storage caverns, store around 500 million cubic meters of natural gas and hold up to 25% of the UK’s storage capacity. The project will store enough gas to provide Northern Ireland with enough energy for 14 days during peak demand.

John Wood the CEO of Harland & Wolff, the parent company of Islandmagee Energy, said: “This is good news for consumers and businesses in the UK who are currently experiencing distressing hikes in energy prices and fears of potential blackouts as gas and power grids face peak demand stresses during the winter months.

“With the current energy supply crisis, everyone now understands just how important gas storage is to secure supply and protect against extreme volatility in gas and power prices in the UK.

The UK has one of Europe’s lowest gas storage capacities at just 1% of its annual demand in storage, leaving the UK much less resilient to supply issues than other European countries that hold as much as 20-30% of annual demand in storage, according to a statement.

The storage caverns will also be used to store hydrogen, a vital energy resource for the UK to accelerate its energy transition. The lack of hydrogen infrastructure including storage facilities has been identified as one of the main barriers to the transition to a hydrogen economy.

Wood, added: “The existing power grid cannot always accept all of the electricity generated from wind farms during periods of surplus wind power generation. It is during these frequently occurring periods that wind farms are temporarily scaled back as there is no way to store the excess electricity produced.

“Production of large-scale hydrogen and its storage is the long-term solution to this. Excess wind generated power can be used to produce green hydrogen which can then be stored in salt caverns for future use during peak demand periods.”

The project is expected to create 400 direct jobs and between 800 and 1,200 indirect jobs during the construction stage and inject £7 million ($9.5 million) into the local economy annually. Some 60 direct jobs will be created during operations, between 120 and 180 indirect jobs per annum and around £1 million ($1.3 million) invested into the local economy per year.

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