The Department of Energy & Climate Change has rejected an underground gas storage application in Lancashire because of a failure to provide comprehensive geological data.
The project, proposed by Halite Energy Group, involved storing 600 million cubic metres of gas in up to 19 underground caverns below the Preesall salt field.
Greg Barker, DECC's minister responsible for planning consents, considered the need for UK strategic gas storage but refused the application because the project failed to demonstrate the suitability of the site's geology.
In a statement, a spokesperson for the DECC said: "Each application for gas storage must be considered on its merits. After carefully weighing up the evidence for a storage site at Preesall in Lancashire, DECC has taken the decision to refuse the application.
"The refusal is due to a specific issue – the application failed to demonstrate the suitability of the site's geology for salt cavern storage.
"This is just one project. The UK has two gas storage sites under construction that will together add 13% to the UK's storage capacity and there are more with planning permission.
"The UK has a diverse and responsive gas market that has ensured the country has been well supplied during the recent cold period. However we recognise the need to increase resilience during peak times to cope with future demand.
"How we best increase our gas storage capacity will be made clear when we publish our report on gas security of supply soon."
Keith Budinger, chief executive of Halite, responded: "We are extremely disappointed by this decision. Halite and its team of consultants have worked strenuously over the past three years, during which our application has been scrutinised through a rigorous planning process.
"We will now need time to examine the reasons behind the turn down carefully before deciding on our next steps.
"I would like to thank all those organisations that we have worked with during this process: the Planning Inspectorate, statutory consultees and the local community."