Brexit and UK site closure boosts gas storage project

THE uncertainty caused by Brexit and the closure of Rough, the UK’s largest gas storage site, has been a boon for a project in the North.

London-listed InfraStrata is developing a gas storage facility on the peninsula of Islandmagee. It has been in the planning for more than a decade, and construction of what would be Ireland’s only operational site may start next year. That would help offset volatility caused by the unified Irish market’s reliance on fuel shipped in from the UK.

“Rough closing was really the game-changer, had it not been for Rough closing, our project would have struggled,” said InfraStrata CEO John Wood. “And you look at Brexit, it increases volatility in the market.”

So-called fast-cycle facilities such as Islandmagee can quickly switch between storing gas and supplying it to heat homes or offset swings in renewable power generation.

That will bolster supply security in Ireland, which may find itself isolated from the EU’s internal energy market after Britain leaves the bloc. There may be room for two or three more similar-sized or larger sites, Mr Wood said.

InfraStrata proposes to store as much as 500 million cubic metres of gas in salt caverns, enough to meet 15 days of Irish peak demand. Already linked to the gas network that feeds Northern Ireland, the facility would also be connected to the Scotland-Northern Ireland pipeline to allow for exports to Britain when the interconnector is upgraded to accommodate two-way flows.

The company is in advanced negotiations with offtakers, traders who are “willing to pay to justify the economics of the project”, Mr Wood said. He didn’t disclose the potential customers, but said InfraStrata planned to update the market on the commercial arrangement in the fourth quarter.

The EU- and UK-backed project has all the permits and licences to begin construction and the front-end engineering design is nearing completion.

The storage developers bet on higher demand for gas in Ireland, which can increase as much as 23pc by 2026, Mr Wood said. Other developments such as strained relations with Russia, Europe’s biggest gas supplier, also boost the prospects of such projects, he said.

Gas is used to generate about 50pc of Ireland’s electricity, and a push toward greener energy means the fossil fuel could account for more than 90pc of generation at times of very low renewables generation, according to the Irish Academy of Engineering.

Dependency on UK supplies will rise again in the 2020s when production at the domestic Corrib field begins to fall and demand increases, BMI Research said last year.

Corrib started production in 2015 and will help meet about 60pc of Ireland’s demand for the fuel, but its production will likely cease by around 2030.

InfraStrata is also considering building a liquefied natural gas import terminal. Shannon LNG terminal in August signed a deal to develop a facility in Kerry, which may become operational by the end of 2020.

NextDecade, a US LNG export project developer, last year signed an agreement with the Port of Cork on the development of a floating storage and regasification unit and related LNG infrastructure.

‘Had it not been for Rough closing, our project would have struggled’