Gaz de France to develop large gas storage facility in England

Energy Trade

Gaz de France has signed an agreement with INEOS Enterprises for the commercial development of a proposed salt cavern storage facility at Stublach in North-West England.

Total capacity could reach 400 million cubic meters of natural gas. The Group will operate the infrastructures under a 30 year lease agreement running until 2037. First caverns will be commissioned in 2013. INEOS Enterprises will provide solution mining services for the creation of the caverns. This new facility, which will be one of the main UK storages, will enhance the security of supply to the UK market. The total development investment budget is estimated at around £350 million (€500 million, $704 million). This major operation gives Gaz de France the opportunity to extend its international storage portfolio in an expanding market by applying its 50 years of experience and expertise in the different storage technologies. The Group currently has Europe’s second largest storage capacity with facilities in France, Germany, Slovakia, Romania and henceforth in the UK.

The UK gas market is the largest in Europe with a forecast growth of some 2% per year, and with imports of natural gas to increase as UK’s North Sea production declines. This means that new gas storage capacity, which brings flexibility to manage security of supply, will develop rapidly. Currently, storage represents around 4% of annual consumption, as compared with 24% in France and 19% in Germany. 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 annum since 1989, as compared with the world average of 1.7% over the same period. This pattern of growth underpins Gaz de France’s drive to expand further in this sector, by improving existing sites, by creating new facilities and by acquiring European sites.

Gaz de France is a European leader in this sector and one of the few operators with the technical know-how to take advantage of all the different storage possibilities, whether in salt caverns, aquifers or depleted gas fields. This expertise gives the company a major competitive advantage when it comes to exploiting the full potential for growth in new storage facilities. Gaz de France is already active in the UK and intends to continue its profitable growth in this country. The Group produced approximately 13 million barrels of oil equivalent from Britain’s Continental shelf. Its subsidiary, Gaz de France ESS, is the second largest supplier of natural gas to the industrial and commercial market, with a market share of some 15%. The project, which is located in Cheshire, will be developed in three phases between 2013 and 2018, in up to 28 caverns. This makes it one of the largest salt cavern projects in Europe. At Stublach, the withdrawal and injection rates and the number of days required to empty the facility completely are also very favorable.

INEOS, the world’s third largest chemicals firm, created in 1997, will continue to be involved in the development of the facility. The technique used for the development of the caverns will be leaching, where the salt is dissolved by injecting water. INEOS Enterprises will manage the injection process and handle the brine - a mixture of salt and water - produced by the leaching operations. It will use this brine for industrial purposes.

Given the rapid growth in the gas market and the need for new gas storage, there are a number of projects in the pipeline. In June 2006, Cheshire County Council granted planning permission for the Stublach project, with the government giving its go-ahead in December 2006. The first phase of the Stublach gas storage facility remains on track to commence cavity development in 2009. (

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