Centrica cancels £1.5bn gas storage plants Centrica has written off £240m in investment after cancelling plans to build two gas storage facilities in the UK, blaming "weak economics for storage projects" and the government's decision earlier this month to rule out subsidies to boost storage. The move reflects a shake-up in the UK's gas supply, with increased supplies of cheap gas from Qatar and the US helping to reduce price spikes in winter. Centrica said on Monday that the two storage projects - a seasonal storage facility in Baird, off the Norfolk coast, and a trading plant in Caythorpe, Yorkshire - would have required at least £1.5bn in investment, and were no longer economically viable. "The returns simply aren't there," said John Musk, an analyst at RBC Capital Markets. If you can get the gas by pipeline or ship, you don't really need gas storage. Centrica bought the stakes in Baird and Caythorpe in 2008-09, when the UK's gas supply was disrupted by disputes between Russia and Ukraine. Despite the new sources of gas supply, fears about the security of Britain's gas supply have again come to the fore in recent months. The country came within six hours of running out of natural gas in March, according to a senior official, after a crucial import pipeline was shut down by a technical fault. The Baird project, which had an estimated cost of £1.5bn and would have created an estimated 100 permanent jobs, would have stored enough gas to supply the UK for 13.5 days. Caythorpe would have required considerably less investment, Centrica said. The energy group had appealed for government intervention to render the investments viable. However, Michael Fallon, business minister, said on September 4 that the government would not intervene, citing an estimated cost of £750m over 10 years - a figure disputed by the industry. Centrica, whose shares have risen this year to a record high, is currently investing heavily in exploration and production in North America. The £240m costs that Centrica is writing off include preliminary work at Baird and signed gas contracts. The company will now speak to France's Perenco, which owns 30 per cent of the Baird site, about ending its stake there. There remains a slim chance of the Caythorpe facility becoming viable at a later date, it said.