SSE to mothball some UK Hornsea gas storage site withdrawal capacity

(Adds details on usable space and deliverability up to and from May 1)

LONDON, March 26 (Reuters) - SSE (LSE: SSE.L - news) has decided to mothball a third of the natural gas withdrawal capacity at its Hornsea gas storage facility in Britain due to unfavourable market returns, it said on Thursday.

Hornsea, located in east Yorkshire, accounts for about 5 percent of the total gas storage capacity in Britain.

"SSE has identified that the costs of operating, maintaining and upgrading the older withdrawal plant at its Hornsea facility are not currently supported by market returns," SSE said.

"It has decided to mothball 33 percent of the withdrawal capacity of the site (6 mcm/day) with effect from May 1, 2015," the firm said in a statement.

Gas storage operators are faced with low operating returns due to unfavourable market conditions and increasing costs as the UK's Valuation Office Agency has increased business rates for most gas storage facilities in Britain, SSE said.

Until April 30, the site's usable space is 264 million cubic metres (mcm) and its typical physical daily deliverability of gas is 18.03 mcm. From May 1, usable space will be 241 mcm and maximum physical daily deliverability will be 12 mcm, the firm said in a later statement.

In a separate announcement, SSE said it has signed an agreement to sell its 16 megawatt (MW) Langhope Rig wind farm in the Scottish Borders to GE Capital for an undisclosed sum.

Construction of the wind farm is due to be completed this spring. (Reporting by Nina Chestney and Nerijus Adomaitis; editing by Gunna Dickson)