In the first development of its kind in the UK, ScottishPower has signed an initial agreement with Edinburgh Oil and Gas (EOG) to convert a near-empty Yorkshire gas field into a giant storage facility for ScottishPower gas. The project is subject to feasibility studies currently underway.

The Hatfield Moors underground reservoir, which can store enough gas to support almost half a million households, will give ScottishPower a competitive edge in managing the volatile swings that affect gas demand and prices both seasonally and daily.

The project will allow approximately 4.1 billion cubic feet of gas to be stored and released when required. It will provide an ideal staging facility for gas from ScottishPower's North Sea supplies en route to domestic customers.

Gas processing equipment and a 13km pipeline connecting the site to BG Transco's national grid will also be built as part of the project which, subject to statutory and regulatory consents, is due to be completed next year.

EOG has extracted gas from the Hatfield Moors field for the past 13 years and the reservoir is now reaching the end of its commercial life.

Ken Vowles, ScottishPower's Executive Director - Generation, said: "Aside from our business customers, around 250,000 households throughout the UK have signed up for our gas supplies and the Hatfield Moors facility will play a vital role in maintaining the keenest prices in the market.

"Our large-scale use of gas for generation as well as supply in the deregulated market allows ScottishPower to broker the best deals through managing 'swing' to the benefit of all our customers."

Alf Bissett, EOG's Managing Director, said: "The prospect of extending the life and enhancing the value of this gas field is an exciting development for the company and we are pleased to be working with ScottishPower on the project."