ENERGY
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| • | Bord Gáis Energy is the retail arm of Bord Gáis, selling gas and electricity to all market segments, with related activities including call centre management, billing and sales and marketing. It announced a new energy efficient Home Services range of products and services for customers in 2009, building on its successful appliance servicing business. Bord Gáis Energy entered the residential electricity market in Ireland in February 2009 and now serves over 330,000 electricity customers as well as nearly 620,000 gas customers. |
| • | Bord Gáis Trading is responsible for the procurement of gas and electricity, risk management and hedging strategies. Gas and electricity are bought on wholesale markets by a dedicated Energy Trading team operating 19 hours a day. Bord Gáis Trading operates in line with best international practice, is benchmarked against the market on a regulatory formula and has been proven to procure energy efficiently. |
| • | Bord Gáis Investments is responsible for pursuing and developing growth opportunities in assets in the energy markets in Ireland, underpinning the strategy to become the leading dual-fuel energy company. The unit is currently constructing a 445MW gas-fired power plant, operating 218MW of wind generation with a further 565MW of wind generation being developed, and investing in up to 300MW of peaking plants to support renewable energy. It is also evaluating the viability of developing a salt cavern gas storage facility in Northern Ireland. |
BORD GÁIS ENERGY
Electricity Sales
Bord Gáis Energy first entered the business electricity market in 2001 and had gained about 8% share of the electricity supply market by volume to the end of 2008.
A key objective of the Bord Gáis corporate strategy was to enter the residential electricity sector in order to achieve critical scale in the retail energy markets and to do so by leveraging its well-regarded brand, customer service systems and marketing expertise. This objective was achieved extremely successfully in February 2009, with a customer acquisition rate far in excess of that experienced in deregulated energy markets in other countries: over 300,000 electricity customers switched in the first 10 months from a market of 1.8m homes.
At the end of 2009, Bord Gáis Energy held about 12% of the electricity supply market, having increased its share by 50% during the year. Apart from its residential market entry, Bord Gáis Energy defended its share in the highly competitive large industrial/commercial sector during 2009 despite a very volatile market and it continued to invest in the SME segment where customer numbers increased to a record 25,000.
Residential Electricity Supply Market Entry
The Bord Gáis Energy residential electricity supply offering was thoroughly researched and proved to be highly attractive to customers, particularly given the context of the decline in the economy and customer price sensitivity. Bord Gáis Energy offers a minimum of 10% reduction off ESB rates (the incumbent electricity supplier) in year one, with a further 2% for Direct Debit customers and an additional 2% for existing Bord Gáis gas customers in the first year. Discounts of a minimum of 5% are guaranteed for years two and three.
Prior to the launch, Bord Gáis Energy updated its visual identity to give it a fresher, friendlier and more contemporary appearance, while maintaining the heritage of the parent brand.
The residential electricity launch marketing campaign was hugely successful and incorporated many innovative elements:
| • | Very simple, yet extremely effective campaign name – The Big Switch; |
| • | Highly memorable integrated multi-media advertising campaign, featuring RTE personality Lucy Kennedy; |
| • | Standalone interactive website – in excess of 50% of customers choosing to switch used this low cost route; |
| • | Pre-campaign briefing with the blogging/social networking community; |
| • | Dedicated take-on customer contact unit; |
| • | Outbound sales centre and highly trained door-to-door sales force. |
The level of web based take-on of customers is without precedent in Ireland and has defined a new, efficient approach to customer marketing and communications.
Bord Gáis Energy Performance in 2009
Bord Gáis Energy’s external turnover decreased by 4% to €1,161 million in 2009, as increased electricity sales were offset by depressed gas demand coupled with reduced gas prices following a series of price reductions.
Bord Gáis Energy’s result for the year was a loss before interest and tax of €4 million. This compares to a profit of €13 million in 2008. The difference arises from a number of variables, including the cost of entering the residential electricity market. The volume of gas sales decreased by 3% over 2008 volumes. This reflects reduced economic activity and greater energy efficiency awareness.
Within Bord Gáis Energy, residential gas sales accounted for 35% of gas volumes sold, with industrial/commercial sales at 33%. The remaining 32% was accounted for by sales to the power generation sector.
Residential Sector – Gas
Bord Gáis Energy’s residential customer numbers grew by 1% to just over 600,000 in 2009. Residential sales volumes decreased by 5%, reflecting a difficult economic environment, energy efficiency measures and a slightly warmer year than in 2008.
Industrial/Commercial Sector – Gas
In the Industrial/Commercial sector, Bord Gáis Energy’s gas customer numbers declined to 17,000 at the end of 2009, a 22% net decrease compared to the previous year. Lower volume sales of 13% reflected reduced market share and the general economic downturn.
In the larger industrial/commercial sector, the Regulated Tariff Formula (RTF) and CHP sector, volume sales were down 14% reflecting further customer attrition as regulatory restrictions limit the company’s potential to regain lost market share in this important market sector. Bord Gáis Energy now holds less than 26% of the RTF market.
Retail Gas Prices in 2009
In 2009, there were two successive gas price reductions of 12% in May and 9.8% in October to households and small businesses. A further reduction in prices of 8% was announced in December 2009 to apply from February 2010. The reductions result from lower commodity costs and the implementation of internal efficiencies.
The cumulative reduction of over 25% means that retail gas prices in Ireland are now 5% below the prices charged in 2005.
A report published by the Sustainable Energy Authority of Ireland (SEAI) in January 2010, ‘Understanding Electricity & Gas Prices in Ireland January-June 2009’, showed that gas costs in Ireland were generally below the EU average. Business gas prices in Ireland for the first half of 2009 were below the average for Euro Area States in mid-range consumption levels by up to 15%. In purchasing power parity terms, Ireland is cheaper in all gas consumption bands for residential customers, ranging from 15% to 30% below the EU average.
Gas Supply Competition
Bord Gáis Energy sold 42% of gas used in Ireland in 2009, up slightly from a 38% share in 2008, due to increased sales to the power generation sector offsetting reduced volumes to the residential and industrial/commercial sector. Apart from the power generators who typically procure and ship their own gas supplies, there are three gas suppliers actively competing with Bord Gáis Energy at present. There is a high degree of fuel switching among users in the industrial/commercial segment where Bord Gáis Energy sells on an RTF basis, with over 74% of gas sales in this sector now provided by new entrants.
The Irish gas market was opened fully to competition in July 2007, enabling alternative suppliers to compete against Bord Gáis Energy in all market segments, including the residential sector. However, the CER continues to regulate Bord Gáis Energy’s tariffs for all customers other than those who consume greater than 9 million therms/year (mainly the Power Generation sector and very large industrial customers). While Bord Gáis Energy understands the CER’s wish to encourage the development of competition, it does not believe it should occur at the expense of customers. Bord Gáis Energy believes that the current restrictions on its product offerings are contrary to the interests of many customers and it will continue to seek regulatory change for the benefit of customers.
Energy Customer Service
Bord Gáis Energy is committed to providing customers with exemplary customer service. It operates an outsourced model, with its contact centre managed by Fexco, one of its strategic partners. Fexco provide a flexible and committed workforce who deliver an excellent service to our customers in line with our standards and values.
Despite the huge increase in customer contact in 2009, as a result of the Big Switch campaign, Bord Gáis Energy maintained its best-in-class standards of customer service. An average call answering time of 95% within 20 seconds was well achieved, while complaints accounted for less than 0.5% of contacts, which is a very low level by utility standards where the average is 1.5%. Given that the number of customer accounts increased by c. 50% during the year, with a similar increase in customer calls, maintaining these standards was an excellent achievement by committed and well-trained staff. This performance was also facilitated by the new Customer Care & Billing system implemented first at the end of 2008, provides a first class platform for dual-fuel and other offerings from Bord Gáis Energy.
In 2009 at the Irish CCMA awards, Bord Gáis Energy took first place in the Best Sales or Telemarketing campaign for its work on The Big Switch campaign.
Data Protection Breach
Unfortunately, there was a breach of data security during 2009 when four laptops were stolen from a Bord Gáis Energy office. One of these laptops was not encrypted, a lapse in implementing company policy that was immediately addressed. This unencrypted laptop contained names, addresses and bank account details of over 90,000 customers who had applied to switch to Bord Gáis for electricity supply.
The Gardaí and Data Protection Commissioner were each notified as soon as the theft and contents of the laptop were discovered. Bord Gáis conducted comprehensive investigations into the causes of the breach in data security with external experts and implemented the changes necessary to ensure that there would be no recurrence of such an incident. The three recommendations from the Office of the Data Protection Commissioner that followed the completion of its investigation were accepted and acted upon.
All affected customers were informed by mail and a special helpline established to deal with queries and concerns. Bord Gáis Energy apologised to its customers and offered to provide compensatory measures should any breach of customer information or identity occur as a result of this event. No such breach has occurred to date and the matter continues to be monitored.
Energy Affordability
Bord Gáis Energy is very conscious that some of its customers experience difficulty from time to time in meeting their energy bills. The company works closely with and supports organisations such as the Society of St. Vincent de Paul (SVP), MABS and ALONE, who work with those in financial difficulty by offering practical advice and/or monetary support.
Following the prolonged cold weather over Christmas 2009 and New Year 2010, Bord Gáis made additional donations totalling €1 million to SVP and ALONE to enable them to offer additional assistance to those in most need who are facing higher energy bills. The availability of these extra funds was communicated to customers in an effort to ensure that elderly and vulnerable customers maintained adequate heating levels in the knowledge that assistance with bills would be forthcoming.
Sponsorship
As part of developing its profile, particularly in the context of the move into residential electricity, Bord Gáis Energy invested in a number of commercial sponsorship programmes during 2009. These sponsorships are part of a coherent strategy with a focus on youth, well-being and community based activities, while supporting organisations that have a significant volunteering element.
Bord Gáis Energy also seeks to enhance the programmes it sponsors, through applying its marketing and product development expertise to initiating support activities to encourage greater numbers of people to participate. These sponsorship programmes have proved very successful in terms of meeting exposure and brand values awareness targets. Bord Gáis Energy plans to continue investing in the favoured activities of communities throughout the country.
Sponsorships undertaken in 2009 included: GAA Hurling U21 Championship; Cork City Marathon; Ladies Football League; Capture the Power photography competition for young people; IRUPA awards; Irish Media Awards; RTE TV ‘Heat’ programme; and Christmas Lights for traders in Dublin, Cork and many towns around the country.
Energy Efficiency Services
In 2009, Bord Gáis announced that it was developing a new Home Services initiative that will provide customers with a one-stop-shop for an initial range of 22 energy efficient products and services. Ranging from thermostats to solar panels and BER ratings to insulation, these products and services enable homeowners and businesses to retrofit more energy efficient products, thereby reducing energy costs and lowering carbon emissions. The range will be rolled out in 2010 through outsourced partners and is a timely extension of the company’s trusted appliance servicing business.
Bord Gáis also announced a €1.8 million deal in 2009 with UK based Ceres Power to provide small scale Combined Heat and Power (Micro CHP) products to the residential market. These Micro CHP products are based on state-of-the-art fuel cell technology and operate on natural gas. Development and trialling of the products in Ireland and Northern Ireland is expected to begin in 2010 with a full market rollout in 2012.
BORD GÁIS TRADING
Bord Gáis Trading is responsible for the procurement of gas and electricity, risk management and hedging strategies. Gas and electricity are bought on wholesale markets by a dedicated Energy Trading team operating 19 hours a day. Bord Gáis Trading operates in line with best international practice, is benchmarked against the market on a regulatory formula and has been proven to procure energy efficiently.
The Bord Gáis Energy Trading procurement policy has evolved over time and is based on many years of trading experience. With the increasing complexity and volatility of wholesale international gas and electricity markets, the company continues to diversify its supply mix and sources of gas and electricity supply.
Gas Supplies
In terms of gas supply, Bord Gáis Trading procures a proportion of its gas supply requirements from the Kinsale Head field, where it also operates a storage agreement with Kinsale Energy Limited. The storage agreement enables Bord Gáis Energy to inject gas during summer months to meet peak demand in the winter. There is also a strong reliance on procurement of gas supplies from the UK gas market, where Ireland sources over 90% of its gas requirements. Bord Gáis Trading has a portfolio of gas purchase contracts with a variety of gas producers and traders operating in the UK wholesale gas market. The unit also utilises gas storage products at facilities in the UK to optimise the management of peak demand and seasonal price volatility.
Bord Gáis Trading has developed sound hedging and risk management strategies to both mitigate exposure to short-term volatility and to enable Bord Gáis Energy to take advantage of price developments over a longer period.
Wholesale Gas Prices
With over 90% import dependency on gas supplies from the UK, the wholesale price of gas in Ireland is naturally dictated by and indexed to the traded price and market developments/influences in the UK gas market. The UK gas market is the largest market in Europe with demand of c. 95bcm/annum. By comparison, Ireland uses c. 5bcm/annum.
The UK now operates as a net importer of gas throughout the year, not just during the peak winter months. While the average import dependency stands at 33%, the actual dependency on a day varies between c. 25% and 50%, so any changes to import flows, both positive and negative, can have a significant effect on the market.
Gas Market Developments in 2009
Historically, the wholesale gas price in the UK has been strongly linked to prevailing oil prices, due to high interconnectivity with the continental markets where long term gas contracts tend to be indexed to oil on a lagged basis, typically six months.
The global economic recession has caused reductions in global energy demand. As a result of this, there have been a large number of spare Liquefied Natural Gas (LNG) cargoes available to the spot markets. The UK has benefited substantially from this additional supply, with strong flows evident at the new LNG reception facilities at Milford Haven in South Wales. When coupled with reduced demand, this led to daily gas prices falling significantly in the UK and the year was marked by a clear de-linkage of UK spot prices from the prices implied by oil indexed contracts in the continent.
The spring and summer periods of 2009 saw strong increases in LNG flows to the UK and a consequent fall in wholesale prices. While ‘On the Day’ spot gas prices in the UK averaged 57p/therm during 2008, this average fell to 30p/therm during 2009. The graph above illustrates the contrast in spot prices over the 2008-2009 period.
Many factors influenced wholesale gas prices during 2009. While in 2008, the UK struggled to attract LNG cargoes, endured significant production problems both at home and in Norway, and had to compete against high oil indexed continental prices, 2009 saw a major change in the market. The 2009 gas market was characterised by excess supply, lower demand due to the recession and a clear de-linkage from continental long term oil indexed prices.
The list below illustrates some of the key issues that arose during 2009:
• Russia – Ukraine Gas Dispute
The start of 2009 saw the ongoing dispute on gas supply between Russia and Ukraine escalating, leading to the suspension of supplies of Russian gas through Ukraine. Russia provides about one quarter of the natural gas consumed in the EU and 80% of the Russian gas going to the EU is channelled through Ukraine. The dispute resulted in 18 European countries reporting major falls or curtailments in gas supplies from Russia that were transported through Ukraine. Amidst cold weather and strong demand, the shortfall in European gas supplies was met through withdrawals from storage and, as shown in the graph over, UK spot prices failed to rise over 70p/therm.
• A tightening demand/supply scenario in the UK gas market
Reductions in supplies from ageing indigenous gas fields in the UK continued during 2009, but these were offset by reduced gas demand and an increase in LNG flows to the UK market. With an ageing profile of indigenous gas fields, the UK has witnessed year on year declines in indigenous production. In October 2009, the system operator, National Grid, published a report indicating that peak supplies from the UK Continental Shelf (UKCS) would fall by 6% in 2009/10 compared to 2008/09. Reliability of UKCS fields was quite high (85%-95%) during 2009, albeit at lower production levels.
• Impact of Global Economic Recession
The ongoing global economic recession led to significant reductions in energy demand globally. The UK’s system operator, National Grid, forecast in October 2009 that UK gas demand would fall by c. 5% in winter 2009/10 compared to winter 2008/09, under normal weather conditions. The three largest world consumers of LNG (Japan, South Korea and Spain) have seen reported year on year reductions in LNG imports of between 7% and 11% compared to 2008.
• Strong LNG Deliveries to the UK
Two key LNG facilities at Milford Haven were commissioned during 2009 and there was expansion in late 2008 of capacity at the existing Isle of Grain LNG facility. While 2008 saw the UK struggling to attract LNG cargoes against higher priced Asian markets, and having effectively no LNG deliveries to the UK between February 2008 and September 2008, 2009 saw a significant change in fortunes for the UK on the LNG front. A significant increase in the availability of international LNG supplies, at a time of global recession and reduced LNG demand in key economies, led to a large rise in LNG deliveries to the UK. The graph below illustrates the step change increase in LNG flows to the UK over the course of 2009.
• De-linkage of UK spot prices from Continental oil indexed prices
Traditionally, as the UK competes with continental Europe for gas supplies, the UK gas price would typically reference the oil indexed price implied by continental contracts. Otherwise, the UK would fail to attract the relevant gas supplies to meet its own demand. However, the glut of LNG during 2009 allied to significant falls in gas demand globally led to UK spot prices clearly de-linking from continental long-term contracts throughout 2009. While UK spot prices averaged c. 30p/therm during 2009, the estimated equivalent average for continental oil indexed contracts stood at c. 55p/therm. The UK forward curve, i.e. for future delivery in the coming months/years etc, also witnessed this de-linkage from oil indexed patterns.
• Recovery in Crude Oil Prices
During late 2008, amidst the fall-out from the financial crises and clear evidence of a global recession and lower energy demand, crude oil prices slumped to a low of $36/barrel. During 2009 however, in contrast with falling gas prices, crude oil prices have recovered to the $70 - $80/barrel level, amidst tentative signs that the worst of the global recession is over and that energy intensive economies are beginning to recover. The graph over illustrates the strong recovery in oil markets over the course of 2009. A doubling of oil prices would normally lead to a rise in gas prices in the UK on the forward market. However, the subdued gas market and glut of gas supplies has given rise to very little response from gas markets to the recovery in oil markets. While crude oil rose from $45/barrel in January 2009 to $78/barrel in December 2009, the price for 2010 gas on the UK market slumped from 58p/therm to 36p/therm in the same period.
• Demand/ Weather
Winter 2008/09 witnessed a series of cold snaps, notably in early January 2009, when UK gas demand hit a near record high of 442 million cubic metres (mcm). The price impact of colder weather was restrained however by the ongoing recession and ample gas supplies. During December 2009, a further cold snap across the UK led to demand again hitting the 440mcm level, before finally breaking previous records in January 2010 when it hit a new high of 462mcm on 8 January 2010. The healthy supply position in the UK, however, meant that the system coped well with the increased demand and spot prices did not rise significantly, in contrast with previous years.
As outlined above, the UK gas market for 2009 saw significant price falls in both the spot and forward markets. As a consequence, Bord Gáis Energy was in a position to introduce three successive tariff reductions for residential and SME customers in the space of the twelve months between February 2009 and February 2010.
Gas Prices Outlook
The current outlook for 2010 gas prices suggests that the subdued market will persist as the global recession continues to have an impact on energy demand and ample supplies are available to the UK. However, strong signs of economic recovery globally may lead to rising gas prices in the UK.
The availability of LNG imports is a critical factor in the supply-demand balance for 2010. The current high availability of LNG is due to reductions in global gas demand combined with new production capacity. A key issue for 2010 will be the performance of the global economy and the extent to which global gas demand will return, particularly the Asian appetite for LNG. If global demand does return, the amount of LNG arriving into the UK could decline as other countries with contracts for LNG take precedence and/or the UK is out-priced by competitive markets in Europe, US and Asia.
Oil prices will again be vulnerable to spikes during 2010, but the impact on the UK gas market is uncertain, given its clear de-linkage from oil price developments at present.
From an infrastructure point of view, the UK supply position should improve again during 2010 with planned increases in capacity at existing LNG reception facilities.
Electricity Procurement
The largest development for Electricity Procurement in 2009 was the success of The Big Switch campaign under which over 300,000 residential electricity customers switched to Bord Gáis Energy for their electricity requirements.
The level of trading activity has naturally increased with the enhanced customer base in electricity and Bord Gáis Trading is actively involved in the yearly Contract for Difference (CFD) Auctions to secure power supplies. Bord Gáis Trading imports a proportion of its power supply requirements from the UK through the Moyle interconnector. This has enabled it to diversify its power supplies and procure competitive supplies from the UK.
Further power supplies are secured through offtake agreements with indigenous windfarms and Combined Heat & Power (CHP) units, and also tolling arrangements with Combined Cycle Gas Turbine (CCGT) power stations. These tools have helped to mitigate Bord Gáis Trading’s exposure to daily pool prices on the Single Electricity Market (SEM). They also enable it to offer its larger electricity customers the opportunity to hedge price risks within the SEM and for Bord Gáis Energy to offer competitive rates for residential customers.
A critical aspect of the Bord Gáis strategy is to invest for sustainable balance sheet growth. The company established a dedicated division to identify, pursue and execute growth opportunities in the energy markets across the island of Ireland. The investments pursued are those that facilitate the provision of safe, reliable and competitive energy to its customers. Bord Gáis is committed to developing its own source of energy products so that the organisation can manage and control energy costs in an efficient and aggressive manner.
2009 saw the achievement of significant elements of this investment programme, giving Bord Gáis a very strong and diversified portfolio of energy assets. Within a few year’s, Bord Gáis will own and operate c. 1,500MW of electricity generation assets. These assets will be a mix of highly efficient natural gas plant, a large wind generation portfolio and gas-fired peaking plants that will support Ireland’s renewable generation targets.
In addition, Bord Gáis is examining the feasibility of developing a gas storage facility on the island, through utilising disused salt caverns in the Larne area of Northern Ireland.
This mix of energy assets will enable Bord Gáis Energy to meet the needs of its customers with sustainable and competitive electricity offerings.
Wind Generation Portfolio
In December 2009, Bord Gáis Investments acquired the wind generation assets of SWS Natural Resources, one of the largest wind generators in Ireland, in a transaction worth over €500 million. The SWS Natural Resources business comprises 179MW of operating wind farms and over 450MW of development projects that can be built out over the next three to four years. In addition to the SWS Natural Resources portfolio of projects, Bord Gáis also secured a further 106MW of wind farm development projects in 2009. These acquisitions represent a realisation of Bord Gáis’ ambitions to become a green generator of scale on the island of Ireland.
In total, Bord Gáis has a potential wind portfolio of 783MW at various stages of development, making it one of the largest investors in renewables projects in Ireland. Bord Gáis will invest a further c. €950 million constructing its wind development projects, significantly enhancing the asset quality of its balance sheet.
Whitegate Power Plant
In 2007, Bord Gáis Investments started construction on a €400 million state-of-art 445MW CCGT power plant at Whitegate, Co. Cork. The plant can achieve efficiencies of up to 58% which ensures customers can rely on competitive energy from the most environmentally-sound conventional power generation facility available in the world today. The output of the plant can provide power for up to 400,000 homes and will be the base platform from which Bord Gáis Energy will source and supply electricity to the Irish market for many years to come. The project reached several significant milestones in 2009, was 93% complete at year-end and is on time and on budget. ‘First Fire’ of the plant was accomplished in February 2010 and the project is on schedule to achieve its Commercial Operations Date in July 2010.
Throughout the course of 2009, Bord Gáis Investments worked closely with all the local partners and agencies to ensure the construction project was pursued in the most sustainable manner achievable.
Peaking Power Plant
In addition to the development of its power plant at Whitegate, Bord Gáis continues to pursue power generation solutions that can provide flexible, efficient delivery of power to the Irish electricity system. It is seeking to invest in Open Cycle Gas Turbine (OCGT) developments that will provide a fast and flexible means of responding to its customers’ fluctuating usage requirements.
Furthermore, flexible, efficient OCGT plants will complement the intermittency of wind, maximising the amount of wind generation that can be accommodated on the Irish electricity grid. Gas turbine plants of this type offer major carbon savings, compared to less efficient diesel fuelled flexible plant and as a consequence they will support the achievement of the Irish Government’s target in relation to renewables (40% of energy requirements to be met by renewables by 2020).
In 2009, Bord Gáis entered into a 50/50 Joint Venture with Mountside Properties to form Greener Ideas Limited (GIL) to progress the OCGT project. Mountside Properties has significant power generation experience and operates the Tynagh Power Plant.
In 2009, GIL secured full planning permission for flexible plant on three sites (Athlone, Kilkenny and Cahir) and also signed Grid Connection Offers on the same sites. The Joint Venture acquired two of these sites in 2009 with the purchase of the third site currently being finalised. GIL plans to actively progress the projects during 2010.
Gas Storage Facility
In 2008, Bord Gáis Investments established the North East Storage consortium with Storengy (a company of GDF-Suez) to progress the development of a salt cavern gas storage facility in the Larne area of Northern Ireland. The use of salt caverns for gas storage has long been recognised across the world as the most efficient and effective manner by which gas can be stored and extracted in response to peak demand. An indigenous storage facility of this scale would address security of supply concerns for energy customers in Ireland, north and south, and bring competitive advantages to the all-island energy market.
In 2009, the North East Storage consortium completed a comprehensive seismic survey covering an area of 25km2. Consents were received from over 200 landowners to access their land to lay cables and drill a total of 1,758 holes. The purpose of the survey was to determine the depth, thickness and characteristics of the salt layer that had already been identified by previous geotechnical surveys in the area.
The data from the survey is being processed and analysed by experts in France. The results of the survey are expected in Q2 2010 and will determine the feasibility of developing the caverns for gas storage. If results prove encouraging, the consortium will conduct a test drill to a depth of one mile to obtain a core sample of salt.
Further details and regular updates on the project can be found on the dedicated project website www.northeaststorage.com.