Gas “Supply Emergency” as UK’s storage deficit finally bites
1st March 2018 | Residential Energy
Michael Bradshaw, of Warwick Business School, who is Professor of Global Energy and researches UK gas security, explains a chronic lack of storage infrastructure is partly to blame:
Historically, flexible supply came from simply producing more from the North Sea, but that option has gone. Instead, flexibility today comes from four sources: Norwegian offshore production, gas in storage, gas in the LNG terminals – of which there are three – and gas from Europe via the interconnectors.
What gas comes from where depends on the market price – in the UK, Europe and globally – and the willingness of those that own the gas to sell it. Even before this winter, the industry was warning that things could get difficult. The reason being that back in June last year Centrica Storage announced that it was closing its long-term storage facility at Rough – a depleted gas field off the Yorkshire coast. Technical problems were making it increasingly costly to maintain.
Gas Supply
Even before then, the UK was short on storage, with capacity equivalent to 5.9% of total consumption in 2016, compared to places like Germany, France and Italy where it covers 20% of demand. With Rough gone, the UK is left with 1.4 bcm of medium range storage – equivalent to 1.8% of 2016 consumption, which fills and empties many times during the winter.
However, in an emergency such as this it is quickly emptied and won’t refill while prices are high. Until recently the Government did not seem phased by the closure of Rough, despite industry calls back in November to review the situation, reportedly, they are now thinking again.
With limited storage, the UK is dependent on sufficient gas being in the LNG tanks and on being able to get more gas from Norway and Continental Europe, but there are physical limits on the pipelines that carry that gas. Furthermore, it puts additional pressure on National Grid to move gas around the system. Back in December, congestion limited the ability of the interconnectors to supply gas.
More information available on the website below
https://www.poundsterlinglive.com/commodities/8616-gas-supply-running-out-uk-reasons