Centrica’s Rough storage site, Britain’s largest which can cover around 10 percent of its peak-day gas demand, has already lost significance in supplying gas in winter as more liquefied natural gas (LNG) capacity can cover high demand levels when Britons turn up their heaters.

At the same time the narrower spread between summer and winter prices has made it less profitable for gas shippers to buy summer gas, when demand is typically low, to put into storage facilities for use in winter, when demand rises.

“With current summer and winter forward spreads narrower than in recent years, this indicates a substantially lower SBU (standard bundled units) price for 2011/12, which would have a material impact on 2011 profitability,” Centrica said in its preliminary results announcement.

The utility said it was keeping plans on hold to convert a depleted gas field into a storage site at Caythorpe as gas prices are less volatile and construction costs are soaring.

“We would like to do more storage but only if the economics work,” a spokesman said.

“For short-term projects like Caythorpe you’re looking for volatility, which isn’t there at the moment.”

The company said in July the project, equivalent to around 6 percent of Rough’s capacity, would be postponed indefinitely due to low profitability and regulatory risks.

Nevertheless Centrica is looking to buy land rights to be able to continue with the project and expects to review its position on Caythorpe toward the end of this year.

The 1.7 billion cubic meter Baird storage project in the East Irish Sea could be operational for the 2016/17 storage year if a positive investment decision can be made this year.