March 10, 2006 – 15:00
Force Majeure Update on 10 March 2006
Further to our update notice of 1 March 2006, Centrica Storage Limited (CSL) undertook to report further to our Customers and Market Participants by the end of the week (10 March) as to any material changes in the status of the Rough facility or developments as appropriate.
Power is now operational and other life support systems established to enable the build up to full 24 hour manning. As a result manning levels have been increased over the last week and damage assessment and investigations into the cause of the event are now fully underway. Terms of reference for the forensics and root cause analysis have been agreed with the HSE. Some of the damaged equipment has also been sent to a laboratory for forensic examination.
CSL's current understanding, based on the information available to us at this time, is that there appears to have been a catastrophic failure of a cooler unit situated on one of the four glycol dehydration units. Recovery plans to enable resumption of normal operation depend to some extent on the outcome of the root cause analysis of the incident. We remain of the view that it is not possible at this time to accurately predict the duration or outcome of the investigation into the incident. Our efforts are therefore focussing on both possible like for like repairs and replacement and re-engineering of our processing offshore to bypass the damaged equipment and enable resumption of normal and safe operation as soon as possible.
Given the uncertainty surrounding the resumption of normal operation we confirm that all Additional Space as defined in clause 3 of the Undertakings for the storage year 2006/2007 has been sold. In the event that CSL identifies more space operationally available during the storage year then CSL will release this to the market as Further Additional Space as defined in clause 4 of the Undertakings. In addition CSL will set the interruptible space price for May to 0p/kWh per day.
CSL has previously given an indication that the annual Rough maintenance was planned for the first 2 weeks in September 2006. Whilst our primary focus is on returning Rough to safe operation as soon as possible, we are also identifying any work planned for the September maintenance period that can be brought forward in order to limit requirements for maintenance at the Rough facility later in the year. There are a number of long lead items required to complete the planned maintenance work and the extent to which we will be able to complete the work during this period of force majeure will be restricted by the delivery dates of the long lead items and the availability of resources. We will make an update in due course on the requirement (if any) for a September maintenance shutdown.
Based on our current state of knowledge as to the extent of the damage at this time, we still estimate that the Rough facility will be unavailable for both injection and production until at least 1st May 2006. We emphasise that this assessment remains preliminary and is subject to change.
By the end of next week (17 March 2006) we hope to be in a position to report further on our recovery plans and may then be able to provide an updated assessment of the likely period of the outage at that time.
Centrica Storage Limited