National Grid declare Force Majeure on Milford Haven Gas Pipeline

10/04/2007

Following the High Court decision to set aside Neath Port Talbot Council’s decision to grant planning consent for Cilfrew pressure reduction installation (PRI) and confirmation that they are unlikely to re-vote on National Grid’s application until 15 May 2007 at the earliest, the company will be unable to provide or may be delayed in providing the full amount of capacity that has been allocated to gas shippers using the two new LNG terminals at Milford Haven.

Due to these circumstances outside of National Grid’s control, the company has today issued a force majeure notice under its contract with the shippers, in relation to the shortfall. Work on Cilfrew PRI has been suspended until the Council approve the application.

National Grid is currently assessing how much and for how long capacity will be reduced. Whilst this work is ongoing, it is currently thought that the reduction in the amount of capacity available through the Milford Haven natural gas pipelines will be reduced by a small amount. Early indications are that this may be in the region of approximately 40GWh a day, based on the delay to the construction of Cilfrew PRI.

Cilfrew PRI is required to meet the full capacity requirements. This was given planning permission by Neath Port Talbot Council on 19 September 2006.  However, the decision by the Council was judicially reviewed on process grounds and on 30 March 2007, the consent was set aside by the High Court and the application was sent back to the council for a re-vote.

The Milford Haven to Aberdulais gas pipeline is now more than 95% complete and work is well under way on the connecting Felindre to Tirley gas pipeline.

The pipelines and associated works form a significant project that will transport around 20% of the UK’s gas. The project is being delivered according to a strict timetable and the Cilfrew PRI is essential for providing the required contracted capacity. 

The judicial review decision, and the Council’s indication that they are unable to revote until mid-May at the earliest, amount to force majeure events and National Grid has today issued a force majeure notice to shippers.

A force majeure event under the contract between National Grid and shippers relieves the party affected by the event (in this case National Grid) from any liability for any failure or delay in performing its contractual obligations, if the failure / delay is caused by events outside of its control.  It also means that the wider gas shipper community (and therefore gas consumers) will not be exposed to any financial liabilities that they otherwise would be.

Work on the pipeline continues and the company will be progressing the construction of other parts of the project as quickly as it can.

-ENDS -

Media contacts:

Caroline Davidson – 07785 254696
Chris Mostyn – 01926 655275 / 07879 668025

Notes to Editors:

  • The construction of these natural gas pipelines (and their associated infrastructure) from Milford Haven to Aberdulais and Felindre to Tirley (Gloucestershire) is vitally important to meet the UK’s growing demands for energy. The pipelines will reinforce the National Gas Transmission System, transporting natural gas from the two Liquefied Natural Gas terminals under construction at Milford Haven.  Once complete, the 320 km pipelines will carry around 20% of gas needed to meet the UK’s growing demands. 
  • Over 95% of phase one (Milford Haven-Aberdulais) is already constructed having received DTI consent in December 2005.  Phase two (from Felindre to Tirley) received consent in February 2007 and work is progressing according to schedule.
  • Cilfrew PRI will allow gas from the Milford Haven to Aberdulais pipeline to flow into the South Wales gas network, meaning that for the first time, South Wales will be at the ‘front end’ rather than the ‘tail end’ of the UK gas transmission network. At present, gas flows west into Wales from England.
  • The Milford Haven pipeline project and Cilfrew PRI will secure Wales’ energy supply for many years to come, and will allow further economic development in South Wales – with new power stations and industrial expansion possible, and the potential to meet rising demand and connect more homes to the gas distribution network.   The second pipeline, from Felindre to Tirley is needed to reinforce the existing gas transmission network to the north. 
  • National Grid is one of the world's largest utilities, focused on delivering energy safely, reliably, efficiently and responsibly. We own and operate gas and electricity transmission and gas distribution networks in the UK and US and electricity distribution networks in the US. Other businesses operate in areas such as Metering, LNG Importation, Interconnectors and Property.
  • The company owns the high-voltage electricity transmission network in England and Wales, which includes some 4,500 miles of overhead lines and 341 substations, and also operates the system across Great Britain.
  • National Grid owns and operates over 6,800 kilometres of high pressure gas transmission pipeline across Great Britain. It also has 132,000 kilometres of gas distribution pipelines in the North West, Midlands, East Anglia and North London – owning more than half of Britain’s gas transportation network, to deliver gas to around 11 million homes, offices and factories.