Centrica: UK Caythorpe Gas Storage Facility On Hold For Now

28th Jul 2010 10:07

LONDON (Dow Jones)--U.K. utility Centrica PLC (CNA.LN) said Wednesday it had decided not to proceed, at least for now, with its Caythorpe gas storage project in northern England due to regulatory uncertainty and reduced profitability. Centrica has also delayed an investment decision on the Baird gas storage project by one year. In February, Centrica said it had planning permission and had mostly completed the front-end engineering design, or FEED, for the Caythorpe facility, had begun the FEED for Baird and had permission for the Bains facility. The three potential projects would add around 85 billion cubic feet of storage capacity. "Very recently [U.K. energy regulator] Ofgem have indicated that they are minded to consult on revoking the existing Third Party Access exemption associated with the facility, and as a result of the regulatory uncertainty this creates for the project [Caythorpe] we have decided not to proceed at the current time," Centrica said in its earnings statement. Centrica said that engineering studies continue on Baird and Bains. "These are complex offshore projects which have slower cycle times than Caythorpe, and significant work is required to ensure that satisfactory returns on investment can be achieved. A decision on both projects is now expected in 2011," Centrica said. Company website: http://www.centrica.co.uk -By Selina Williams, Dow Jones Newswires +44 207 842 9262; [email protected] (END) Dow Jones Newswires July 28, 2010 05:07 ET (09:07 GMT)