Power Engineering - National Grid faces $70m gas penalty

16 January 2007 - National Grid faces penalties of up to £36m ($70.6m) as Britain's biggest gas infrastructure project for decades risks falling behind schedule owing to planning delays and protests.

The two pipelines across Wales, connecting the new terminals for liquefied natural gas at Milford Haven to the national gas transmission system, are due for completion by October 2007, but the prospect of gas flowing on time looks increasingly remote.

The first phase, across 75 miles from Milford Haven to Aberdulais, near Swansea, is almost complete, but it is being obstructed by -protesters.

The second phase, of 120 miles from Aberdulais to Tirley, Gloucestershire, is even more controversial, because it passes through the Brecon Beacons national park. The scheme is still waiting for approval of its environmental impact from the Department of Trade and Industry.

A decision had been expected this month but the timetable has slipped and the DTI is not expected to make an announcement until February. The department said yesterday that "discussions with relevant parties" were continuing.

A decision in February would leave National Grid with just eight months to complete the project. Construction began on the first phase in March 2006. Protesters have occupied a public footpath on part of the route, blocking access to construction vehicles. No excavation work has been carried out since the protesters moved in last week.

If the project is late, National Grid faces penalties beginning at £2m and rising every month to a maximum of £36m in October 2008. However, if the delay is caused by the DTI's failure to approve phase two of the project, then the clock is stopped, giving National Grid more time to complete it.

The pipeline, with a projected cost of £838m, will have the capacity to supply more than 20 per cent of Britain's demand for gas. New terminals are being built at Milford Haven by Qatargas 2, a consortium led by Exxon Mobil, and by Dragon LNG, led by BG Group, to import LNG from the Middle East and elsewhere.

Fears have been raised about the safety of pressure reduction installations used to manage the flow of gas in the pipes, and the pipeline itself.

At Corse, Gloucestershire, National Grid is appealing against Forest of Dean council's rejection of its plan for a gas pressure reduction plant. The issue will go to public inquiry, probably in the spring. Opponents, some of who have threatened to camp on the site, claim the plant is "a potential timebomb", although it was turned down on landscape rather than safety grounds.

Plans for another pressure reduction plant at Peterstow, Herefordshire, were rejected by county councillors in August.

National Grid is appealing there, too, but has also put in an application for an alternative site.

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