UK Gas Crisis issues

Before New Year

2010-12-30T08:14:00.001Z

We have a warm patch of Atlantic Weather now. The gas demand is down about 100 mcm/d. However, imports down the interconnector have almost come to a halt whilst gas is still withdrawn from the Long Range Storage.

This may not matter, but if the weather reverts to Northerly or Easterly over a period of time we could deplete LRS.

Winter 2010-11 - Gas Balance Alert Issued

2010-12-20T10:12:00.003Z

From an engineering aspect if you have a forecast peak demand (as we do) of 514 mcm/d and a maximum delivery of 452.4 then you have a potential problem. Today there is a gas balancing alert because predicted demand is at 461.5.

In fact as I write the system is delivering that sort of volume of gas. However, what we need to keep an eye on is the stored gas.

We are lucky that this is happening around Christmas when industrial demand is relatively low.

However, it remains that we still are effectively exporting from storage. The interconnector was still exporting in late November (see below) when gas was being taken from Long Term Storage.

I am also uncomfortable with the total gas demand going up (from 502 last year to 514 this year) when our domestic supplies are going down.

As usual it is difficult to predict whether a problem will turn into a crisis. That depends substantially on the weather.

Running on Empty

2010-03-08T09:25:00.002Z

At the time of writing about 35mcm/d is coming from LRS and 20 mcm/d is coming from MRS. MRS is now running quite low and should soon be below 200 mcm.

Gas has continued to have been exported from storage, but the government do not seem concerned by this.

Close to the edge of the woods

2010-02-25T16:50:00.002Z

I had a written ministerial answer that demonstrated that gas was being exported from storage. The minister rightly pointed out that some gas was imported from Holland and other gas exported to Belgium.

In a sense we are now in a typical situation. Commercially if anyone takes the risk of reinjecting gas into storage they also face the risk of either keeping it for a year or selling it at a loss.

At the same time we cannot be certain what the weather is going to be. Normally it would not be that cold from now. Hence no-one seems to be reinjecting gas.

On the other hand the weather forecast at netweather now is a bit coldish. However, we cannot be certain that this will either be true or indeed last.

Hence the country faces quite a big risk. It is one of those situations where the importance of the risk is high, but the probability of the risk low. However, the cost of taking preventative action (viz having some stored gas) is actually not that high.

However, this risk is something the market should take as a whole for reasons of energy security rather than individuals taking the risk on the basis of a calculation as to whether or not they will make a return.

Warmer Weather reduces pressure

2010-02-24T09:11:00.002Z

The country is not out of the woods yet, but the warmer weather today (and tomorrow) is reducing the pressure on the gas system.

Medium Range Storage is at a new low, however.

MRS patterns following export from storage

2010-02-21T17:11:00.002Z

The engineer inside me does not like this. The purple is todate (up to 6am this morning). There should be some reinjection today, but actually there should have been more than 0.64 mcm yesterday.

The GBA Trigger is now 428.7 mcm/d.

Trigger should be 400 mcm/d

2010-02-19T20:43:00.002Z

What is missed from the trigger adjustment is that non storage supply is running at around 30 mcm/d below its estimated amount of 363 mcm/d. Hence in fact there should be a lower trigger.

However, given that we have 2 days SRS and 2 days of much of MRS there is quite a bit of leeway. The problem with this, however, is that the system has a tendency not to respond to problems when there is a real problem.

The next 7 days look coldish if not really cold (from NetWeather).

I will know better at 5pm on Tuesday whether an Urgent Question is called for. That will give Tuesday morning's storage figures at 6am.

It still looks like we are exporting gas whilst taking gas from MRS. This is the "perfect storm" that was warned about.

Gas Balancing Alert Trigger down to 428

2010-02-19T16:10:00.001Z

With all the gas taken from MRS we now have two more sites below 2 days of stock at full rates. That takes them out of the GBA alert trigger level.

This comes from exporting gas from storage.

It may be that there is sufficient of a reinjection today to take the Trigger back up, however.

Netweather's 16 day forecast

2010-02-18T05:20:00.002Z

The link is to the current forecast from numerical models of the average temperature across the UK.

At the time of writing it looks as below, but that is recalculated every 6 hours and if you click on the link it will probably look different.

The weather below (if that is what we get) will challenge the energy systems of the UK, but it is not at all surprising if we get something different. In fact that should be expected. How different is unclear.

MRS at 29%

2010-02-17T18:19:00.002Z

Although it looks a bit cold for a week according to Net Weather and NSS is relatively low it looks like the system will scrape through until the end of next week.

It is, however, really risky to have a system that exports from stored gas when there is no real certainty that we have enough provision for the winter.

MRS being exported

2010-02-16T12:14:00.002Z

What has been interesting about the most recent movements has been the export of gas whilst withdrawing gas from Medium Range Storage.

That is the sort of thing that causes me to have engineering type concerns. MRS is now down well below 50%.

Netweather are indicating low temperatures, but the system should be able to cope this week.

Rough out and NSS low over the weekend

2010-02-13T17:11:00.002Z

The Non-storage supply has been quite low recently. Today when demand is not that high gas is still being taken from MRS. The weather forecasts point to colder weather next week which could mean we are topping up SRS, but that won't be clear until Monday.

The long term storage is out as well. Hopefully this is not a long term outage.

MRS used at 400 mcm/d

2010-02-09T16:06:00.000Z

Medium Range Storage is being called upon today. That is with demand at 400 mcm. In theory with 363 mcm/d of NSS and 45 mcm/d from Rough there should be no call on MRS.

The link is to net weather's 16 day forecast that they kindly produced for me. This indicates some relatively cold weather for a week and a half.

MRS is relatively low at the moment, but it depends where things go this week.

Lets hope that Troll is not a problem.

MRS - now below previous low point

2010-01-27T18:30:00.003Z

At 6am on 15th January MRS was at 4,347. We have had relatively mild weather since then, but with a cold day yesterday an additional 37mcm was taken from MRS. That was on top of 17mcm the day before. This takes MRS down below that earlier low point. It is now at 4,298 GWh.

From an Engineer's perspective the failure to reinject gas in substantial quantities in relatively mild weather is a flaw in the system.

The problem is that the decisions are driven not by a desire for resiliance, but on a risk profile and desire to resell the gas later at a profit. Excessive stored gas loses money for those storing it.

Whether this matters in practise depends on a mixture of weather and whether there are any other technical failures - such as the Troll problem.

At least the weather is looking up at the moment.

Colder weather again

2010-01-25T17:32:00.002Z

The weather does not look cold enough as yet to challenge the energy system (although it may do some harm to prices).

What should be noted over the past week or so, however, is how little gas has been reinjected into storage.

Demand has been as low as 352 mcm/d, but non storage supply has gone down as well. Hence there has been only 326 GWh reinjected into MRS. That's only just over 30 mcm.

It is the interrelationship between storage and weather that is particularly problematic. On an aggregate basis the country resorts to stored gas too quickly.
Some needs to be kept firstly to cope with infrastructure failure and then secondly for high demand.

Trigger back up again

2010-01-18T17:02:00.003Z

With the cold snap having ceased demand is now in the comfort zone under 400 mcm/d. From an engineering perspective I am unhappy at the low level of reinjection into medium range and short range storage.

Yesterday, for example, demand was 352, but non storage supply was only 346 with 5 mcm into MRS and 11 mcm out of LRS.

NSS is supposed to be around 363 which should have enabled more injection into storage and nothing to be taken from LRS. However, that is the way the rules fail to work properly.

Malcolm Wicks has spotted this now he is no longer the minister.

As usual, however, this won't do any harm unless we get too much cold weather.

It remains, however, that we cannot cope with the National Grid's estimated peak demand.

Letter to FT

2010-01-13T09:45:00.002Z

Jeremy Nicholson of the Energy Intensive Users Group and Stephen Radley of the Engineering Employers Federation have written a letter to the FT which is published today.

The link gives the letter.

The conclusions are:
Easily accessible gas from British North Sea fields is accounting for an ever smaller share of our supply. The longer and more complex gas supply chains become, the greater the risk a disruption will occur at one link along the chain. There is, therefore, a real risk that disruptions to supply could become more frequent. Further cut-offs would hit manufacturing hard, especially energy intensive industries, and risk damaging the UK's reputation as well as future inward investment.

Short, medium and long-term problems remain with our energy system and need addressing urgently. EEF, the manufacturers' organisation, and the Energy Intensive Users Group are therefore reiterating our long-standing call for an urgent and thorough review of the options available to ensure that adequate gas storage facilities are built and stocked.

GBA Trigger Cut to 447.5 mcm/d

2010-01-12T18:13:00.002Z

The trigger for a gas balance alert has been cut substantially. This has not been explained by National Grid, but I would assume it is because of there being limited stored gas.

As at 6am this morning there was 2 days of Short Range Storage 728 GWh at 57% of capacity. 8 days of Medium Range Storage 4907 GWh (at maximum capacity) with 50% full and 59 days of LRS.

LRS will continue running at 44-45 mcm/d. MRS is not being used at maximum capacity. At a guess the system will become less stressed over the weekend. It may even be possible to reinject gas into SRS and put the trigger back up.

As at now very little MRS is being used and Norway is running at over 70 mcm. We could be over the current hiccup now.

Ormen Lange is back up

2010-01-12T11:39:00.002Z

It looks like Ormen Lange was back up this morning which is why Langeled was running about 65 mcm/d. Sadly we are still taking gas from Medium Range Storage (at a lower rate), but I would not be surprised if gas was being reliquified for the Short Range Storage.

The Telegraph is reporting that the cost of domestic gas bills will rise.

This is the consequence of running a system "on the edge". Domestic consumers cannot respond to short term price signals unlike big gas users and end up being hit by the price implications of shortages.

Langeled back up

2010-01-12T09:38:00.002Z

The following is a chart of flows from the Langeled pipeline. Whilst it remains that high we won't see a reduction in the GBA trigger. However, MRS is still being used.

Exactly what is happening at the other end of the pipeline is unclear. Ormen Lange is thought to be still down at 8am. If that is true then this gas is coming from somewhere else.

Gas Balance Alert No 4 - for today

2010-01-11T17:27:00.003Z

National Grid declared the 4th GBA in less than a fortnight and only the 5th ever today.

This again was caused by a cut in Norwegian imports.

It looks like the GBA trigger is about to be cut. SRS is really short and they cannot rely on that much from Norway.

Saturday's NSS falls to 346

2010-01-10T16:17:00.002Z

With 93 mcm from storage (LRS: 44, MRS: 37, SRS: 11), but only demand of 439 that gives Non Storage supply of 346 which is less than the assumed figure of 363.

We know that a lot of this is from the reduction in Norwegian supplies. It is worth looking at storage usage from 1st Jan as follows. This demonstrates Rough thudding away providing a reliable (apart from in March 2006) 44-45 mcm/d and short term usage of MRS and SRS.

As at now, however, there is a call on SRS at Avonmouth - which really shouldn't be the case and Langeled is running at 27mcm/d. Today's forecast demand is 422.5 and tomorrow 424.

Gas Balance Alert for Saturday

2010-01-10T14:39:00.001Z

These are the system messages over the weekend (non routine). I think they mean 9.10 in the first message. It does seem that Saturday's GBA was caused by the dramatic fall in flows from Langeled.

10/01/2010 10/01/2010 06:03 The GBA for Gas Day 10/01/10 ceased at 05:59 this morning. There is currently no GBA for Gas Day 10/01/10. The GBA Alert Status and Trigger Level for tomorrow will be published as usual on the National Grid website following the 13:00 demand forecast. The GBA Trigger Level assumptions remain under review and any changes to the non storage supply assumptions will be published on the NG website.

10/01/2010 10/01/2010 00:51 :A firm capacity shortfall has been indentified and a request is made for entry capacity buyback offers at Milford Haven.

09/01/2010 09/01/2010 23:55 National Grid is Scaling Back interruptible capacity 100% at MILFORD HAVEN from 0100hrs gas day 09/01/10. ICF= 0. Please see Gemini for details.

09/01/2010 09/01/2010 17:11 GBA National Grid has declared a GBA for Gas Day 09th January 2010.

Langeled over the weekend - New Gas Balance Alert on Saturday

2010-01-10T13:59:00.002Z

This is a chart of Langeled's NTS input figures over the last 24 hours.

Paula pointed out that there was a new GBA on Saturday. The storage figures are released after 4pm and we won't see what has happened to storage until after that.

I won't be able to find out why Langeled dropped until Monday. However, looking at the situation now were are using short range storage today - which we really should not have to.

The problem is the usual one of resorting to storage as the first option rather than importing gas.

What is unsure is whether it is a market decision to stop importing via langeled or whether it is a technical priority (such as a problem with A Troll or something).

The market problem is that if someone owns stored gas and can sell it at a profit they will do so. If the stored gas is cheaper than an import then the stored gas will be sold. However, from a resiliance perspective we need the stored gas to maintain the system.

Today's demand is forecast at a relatively low figure of 421.3 (13.01). We should not be calling on short term storage, but it seems that SRS is being used.

Impressive 401 mcm of NSS

2010-01-09T17:48:00.002Z

Friday delivered an impressive 401 mcm of gas from imports and the north sea. This meant that only 17 mcm was taken from (medium and short range) storage.

This raises the obvious question as to why we keep withdrawing gas from storage when gas is available to import.

That is the basis of my early day motion. In theory it is possible to reinject gas into medium range storage over the weekend, but I don't expect that to happen. The real time supply figures imply a continuing reduction.

However, that is the real problem. We are likely to have a reduction in NSS over the weekend.

MRS had 5862 GWh in storage at 6am this morning. That is over 500 mcm and we only took 17 mcm from storage.

However, it depends where things go from here. The real question is what the maximum real deliverability from NSS is. Supply is coping in part from switching off part of the economy.

As usual everything depends upon the weather.

However, it is more obvious that the real priority is the treatment of stored supplies against non-stored supplies.

Another Rough would solve the storage issues, but the more recent problem has been the over use of stored supplies when non-stored is available/possible. It is important to remember that according to National Grid the weather is currently not that cold and that the peak potential coldness is at the end of Jan rather than now.

10:01 - forecast demand 462.1 GBA trigger 462.2

2010-01-08T10:29:00.001Z

So close.

I think NSS is running above 363 mcm/d, but the system is on another knifeedge.

The Troll question

2010-01-08T09:41:00.003Z

Yesterday's GBA (but not the interruptions) was caused by a problem with the Troll field. Norway face a number of challenges as to what to do with gas. One thing they can do is to reinject it into other fields to maintain pressure for oil extraction. Alternatively it can be piped elsewhere.

The following is a rather badly formatted chart of the flows from the Langeled pipeline in 2010. The National Grid website will do nice charts, but it is a very unreliable website that often crashes. Hence I have had to do this from the data instead.

Note the variability. Remember that 70 mcm/d is a large proportion of the 450 or so that we are using. The variability is what causes problems in the UK.

Todays Gas Balancing Alert

2010-01-07T15:31:00.002Z

There is Gas Balancing Alert as well today. At 11.56
National Grid has declared a GBA for Gas Day 07/01/2010. National Grid is now seeking offers for single day trades on the OTC or multiple day trades on OCM and/or OTC. Please note OTC offers can only be made by non OCM subscribers.
It looks like the tap was turned down on Langeled from around 70 mcm/d to about 20 mcm/d. Other sources are being turned up. One question people have been looking at is whether Norway will send gas to the Continent or to England.

National Grid Invokes NTS Interruption

2010-01-07T08:19:00.002Z

The following message was issued at 6.45pm last night.
:GENERAL NOTIFICATION OF National Grid INVOKED NTS INTERRUPTION. NTS sites affected: yes. Gasday: 06/01/2010. Start time: 00.00 hrs. Affected shippers will be advised of details shortly.
This is a step up from a Gas Balancing Alert. It means that some sites which draw gas directly from the National Transmission System have been cut off.

The gas day starts at 6am. Hence one presumes that this happened at midnight last night.

Thursday looking close for Gas Balancing Alert

2010-01-06T16:01:00.002Z

As at 13.05 the GBA trigger for Thursday is 461.20 and the forecast demand is 459.6.

The problem is, however, that the current estimate for Non-storage supply (NSS) is slightly higher than the NSS actually is.

The system will cope because there remains some storage with less than 2 days supply that can be used (as well as the linepack).

However, the system is facing a severe challenge. I have tabled a motion to get the government to have a serious and urgent review of the use of stored gas. However, they are in a bit of an internal crisis at the moment so I am not sure they will give this the appropriate attention.

Storage Figures Analysis

2010-01-05T17:59:00.004Z

The figures for Monday's gas usage have now been released.


Range Before  After  usage   days left
Short 1,123 875 248 3.528225806
Medium 7,498 7,068 430 16.4372093
Long 30,472 29,990 482 62.21991701

The figures are in GWh. Although demand has gone up, the use of short term storage has gone down. Personally I would prefer to do some wider demand management. I think we are far too close to the edge for safety. However, this is so massively weather dependent that it may not be a problem. At the time of writing it looks like only around 30 GWh of srs will be used today.

Obviously there is a problem some days out with Medium Range Storage

GBA Trigger Revision

2010-01-05T15:37:00.002Z

National Grid have now reviewed the GBA trigger upwards to 461.20. That is not unreasonable as the trigger should include all the available storage sources. The underlying supply via the various pipelines, from LNG and from the UK Continental Shelf is variable. There is a working assumption from Winter Outlook, but an alternative approach is to look at demand and subtract the figures from storage then add the storage capacity back on.

The problem, however, is that if we are using Short Term storage then there is only a few days of that and medium term is only 20 days. Long Term Storage from the Rough field is essentially a relatively reliable supply source over months.

At the weekends gas demand goes down. That may allow a reinstatement of some storage, but it also may not.

2.4 mcm/d off another GBA

2010-01-05T13:34:00.002Z

What that means is that the trigger for another Gas Balancing Alert is 449.6 million cubic metres of gas per day and today's forecast demand is 447.2. Tomorrows forecast as at now is 447.8. The margin of safety is about half a percent. Admittedly that is safety before a GBA rather than something more extreme.

You can see from the previous post that some short range storage is being used. At some point that reduces the GBA trigger level.

When figures are released later today I will do some estimates. I am hoping to get into Justice Questions, but have been held back a bit by the snow.

The big storage question

2010-01-05T09:42:00.002Z

The following is a storage usage report for a period from 4th Jan to 5th Jan. This is after the Gas Balancing Alert. On this there is still some gas being taken from Partington and there has been gas taken from the other short term storage sites (Avonmouth and Glenmavis) although Dynevor has not been used.

The problem is that the main variability of demand is linked to the weather. The actual storage used figures will not be available until 4pm (for up to 6am in the morning) although a guess can be made from these figures.

Gas cannot be cut off in the same way as a power cut. One large industrial use is for electricity generation. Some of this can transfer to using oil, but electricity usage also goes up in cold weather.

Things are not as bad as from 2005-7, but a prolonged cold spell will cause difficulties.

Gas Balancing Alert Trigger: Maximum Supply 10% less than Peak Demand

2010-01-04T20:38:00.002Z

Knowing politics as I do I am not surprised that nothing has been done to improve storage levels in the UK.

Every day there is a calculation as to the maximum supply possible. Strictly that is not the maximum possible supply as storage sites with less than 2 days storage are excluded from the calculation.

The figure as to maximum supply is then compared to estimated demand and if the forecast demand seems too high a Gas Balancing Alert is issued.

That happened today (for the second time ever).

The problem we face is that there are only 5 days of short term storage which is being used up each day.

When you look at national grid's prevailing view, however, it makes it clear that (even now with most of the storage still in the GBA trigger) the peak demand is 502 mcm/d, but the GBA trigger is 449.6 mcm/d. This means that we cannot cope with 50 mcm/d ie 10% of peak demand.

I have been concerned about this for a number of years. It is still uncertain whether there will be a problem that people notice this winter. It is all about risk analysis really. There is a risk that demand will be too high. Most of the time, however, it won't be. However, we have not built resiliance into our gas supply system.

Gas Balancing Alert Issued

2010-01-04T17:35:00.004Z

Interestingly a GBA was issued today. Although the capacity of the network has been increased by the LNG facilities there remains the problem with storage and the direction of flow for the interconnector.

The problem is that we face some really cold weather. The system would not have coped in 2005-7. It is unclear as to whether it can cope now, but I will do some analysis over the next few days.

The gross inputs are running at just under 500 mcm/d. That includes from short term storage. Short term storage is called short term storage because it lasts only a few days. Much of this is stored liquified natural gas.

This then drives down the limit that the system can cope with.

445 Million cubic metres of gas

2009-01-06T18:30:00.002Z

Today's estimated demand is a massive 445 mcm. The linepack is quite a bit higher than normal so that provides a good reserve. Furthermore demand is forecast to fall below 400 mcm by the end of the week. However, this is the sort of challenge we would not have coped with in 2005-7. With the dispute between Russia and Ukraine there are further problems.

Still there are lots of options for demand reduction as it stands.

Cold Weather makes heavy demands on MRS

2007-12-21T16:24:00.000Z

The Cold Weather is resulting in quite high demand levels (probably because of the need for CCGTs) and also substantial demand on MRS. MRS is being called upon at far too early a stage in terms of increasing demand.

LRS is as to be expected running at full steam, but it can for some time. The government does need warm weather, but we won't be able to make good predictions as to the situation in Jan-Mar until the new year.

Colder weather calls on MRS

2007-12-18T08:33:00.000Z

The current levels of demand are resulting in a small call on MRS. Demand seems higher (probably as a result of a need for gas for the CCGTs). LRS is now running at top speed as it can until about 21st Feb 2008.

The Interconnector is, however, delivering quite well.

The underlying problem is that we call upon stored gas before calling upon imports. That wouldn't be such a problem if LRS could last about a month longer, but it cannot.

The infrastructure is stronger than in Winter 5/6, but the uncertainty is whether there is sufficient gas given pan-European demand to put into the infrastructure.

Gas issues winter 2007 - 2008

2007-11-19T21:27:00.000Z

I had expected things to run reasonably smoothly in Winter 2007-8. However, Milford Haven is not on line and we encounter the usual about 24mcm/d of depletion from the North Sea. That actually makes things tighter than last winter.

As usual the system is starting out by taking gas from long term storage. Strategically for the UK that is bad news as we are not using that much gas at the moment and the Rough reserve is more readily available for the UK than gas down Langaled, Vesterled or the Interconnector (where it needs to go in at the other end).

At the rate of depletion currently Rough runs out in late Jan and Medium Range storage is already being used.

MRS being used heavily

2007-01-24T08:58:00.000Z

Medium Range storage was used quite heavily yesterday and looks like taking a hit today as well. A small amount of SRS is being used as well.

We are likely to have a cold thursday and a cold friday. MRS is quite full and can last some time at peak output. If the SRS demand goes up that can cause some concerns.

24 mcm from MRS

2007-01-04T20:28:00.000Z

On what wasn't particularly a cold day with consumption of 322 mcm 24 mcm was taken from MRS yesterday. We just have to hope it stays warm.

MRS @ 88%

2006-12-24T17:46:00.000Z

At the end of Gas Day 23rd Dec (a Saturday) Medium Range Storage was at 88% having taken another 7mcm from MRS.

At this rate MRS would deplete in January.

As expected LRS should be OK except for the fact that it passed through the same capacity constraint at Easington as Langeled (96-98 mcm/d). Bacton I am told has a capacity constraint of 158 mcm/d. I am not sure it is that high from the actions of NG on capacity - see the ANS messages.

After Christmas we will do a review of the flows to find out what is going on. Weather forecasts point towards warmer weather, but the control on GFS is going for a cold end of December.

The recent frosty weather has not been that cold. Demand has been high probably because 2Gw of AGRs are offline. Making an assumption of 50% efficiency (supposed to be 55%), that would be 96 GWh of gas which is only about 9 mcm so it looks as if there are other reasons for the relatively high demand.

MRS withdrawal on Tuesday

2006-12-21T09:08:00.000Z

244 GWh (about 23 mcm) was withdrawn from Medium Range Storage on Tuesday. This was probably a bit higher because Rough had to be scaled back - I will check the detailed figures on this later.

The point about this is that it is not actually that cold as yet.

I really don't like the way the GBA calculations are done as they don't seem to adjust for reality. It also remains that we take gas from storage rather than importing it.

Rough is most likely to last the winter without problems simply because there is so much gas in it. The challenge this winter is MRS and LRS because the demand is higher because the AGRs are offline and we need the CCGTs to generate electricity.

Whoops - and this a big whoops

2006-12-20T11:35:00.000Z

It looks like there are capacity constraints at both Easington and Bacton. This means that the key sources of substantial amounts of gas (Rough, Langaled, BBL and the Interconnector) are now constrained to a physical maximum.

What effect this has on total supply has not as yet been calculated. Luckily it looks like it is getting a bit warmer.

Biggest gas test so far this winter today

2006-12-19T08:56:00.000Z

Forecast demand is 373 mcm/d which is substantially higher than any other time this winter. It is a starting test of how the new infrastructure will react. At the time of writing it looks like only 350 mcm/d is going into the pipes. This means either that the predicted demand will come down or that there will be an extraction from linepack - not sustainable.

A warm december

2006-12-14T11:08:00.000Z

If it wasn't warm then there would be concerns. The big issue is that there are a couple of gigawatts of AGRs out this winter. This means that there is less space for the CCGTs to go off line. Rough at its maximum rate now would have until late Feb. The question is, therefore, what happens when demand shoots up.

If it gets cold we will find out.

Ofgem Meeting Monday

2006-11-11T12:44:00.000Z

Amidst warnings of a number of cold spells the Chairman of the Independent Energy Scrutiny Panel (John Hemming MP) is to meet Ofgem on Monday to press for action to ensure that the UK imports more gas from Europe so that gas stores are not used up.

"Over the recent cold spell", said Mr Hemming, "the country started using stored gas both from long term and medium term storage as soon as consumption went over 290 mcm/d. This is far too low. Only about 7 mcm was imported via Belgium. Considerable quantities of gas are coming in via the new pipeline, but the gas we should get from the Continent is not flowing sufficiently."

"This creates the hazard that supplies will be constrained in cold spells. Langeled's import levels indicate that gas we previously obtained via the interconnector is now coming via Langeled. "

"I am still trying to get figures for the imports via Vesterled which comes into the Total sub-terminal at St Fergus. We have some figures, but cannot reveal the source. The Norwegians are refusing to consider providing us with information unless we reveal our sources. We are not willing to do that. A proper transparent market requires that information."

"With electricity generation from Nuclear Power way down this winter it has been difficult to predict how much safety margin the country has. There are two key variables. One is gas imports from the continent and the other is the weather. The weather warnings are now worrying. The imports from the continent are also worrying. "

"I am meeting Ofgem on Monday to discuss the issue of the use of gas from storage in preference to import. I take the view that they should launch a formal competition inquiry to encourage those companies that straddle the channel to import gas rather than take from storage."

Gas prices caused 1 million tonne jump in winter 2005/6 carbon emissions

2006-10-11T16:08:00.001+01:00

Figures obtained from the Government by the Chair of the Independent Energy Scrutiny Panel John Hemming MP showed a 1 million tonne increase in Carbon Emissions between Winter 2004/5 and 2005/6. This was as a result of a shift from gas power generation to Coal and Oil power generation.

"It is not surprising", said John Hemming "that more carbon was emitted by burning pure carbon rather than a mixture of carbon and hydrogen. The government's failures in the gas market do not only hit people's gas bills, but they also hit the environment."

"This winter faces uncertainty from Norway. The Langeled Pipeline is feeding gas to the UK, but we are getting none in from Belgium at the moment. It is quite likely that the UK is being used to feed gas from Norway to Europe. What will happen when it gets colder remains unclear. I am still worried about the decisionmaking of those companies that straddle the channel. Last winter gas was kept for the Continent when it should have come to the UK. This must not happen again."

ENDS

Figures from DTI.

The amount of Gas used in Power Stations fell by 15.26%. Gas fired power stations emit an average of 99 Tonnes of Carbon per Gwh of electricity.
The amount of Coal used in Power Stations rose by 13.05%. Coal Power Stations emit 238 Tonnes of Carbon per Gwh of electricity.
The switch from Gas to Coal and Oil electricity generation meant that Carbon emissions rose by 1687853 Tonnes (6.27%) between winter 2004/05 and winter 2005/06.
The increase of Carbon Emissions in the Electricity generating sector equates to an increase of 1.85% of total winter UK emissions.

Note that the winter period is calculated on the basis of Q4 and Q1 (October-March)

Information about the carbon efficiency of power station:http://www.dtistats.net/energystats/dukes06_c5.pdfInformation about the electricity generation in the UK.http://www.dti.gov.uk/energy/statistics/source/electricity/page18527.html

Gas prices caused 1 million tonne jump in winter 2005/6 carbon emissions

2006-10-11T16:08:00.000+01:00

Gas in via Langeled out via Interconnector

2006-10-05T09:41:00.000+01:00

It is a bit odd to be taking gas from Rough in October, but after Sunday's negative gas prices anything is possible.

Imports Winter 2006-7

2006-09-13T08:11:00.000+01:00

One big uncertainty is what gas will be imported in winter 2006-7. At the time of writing this is the picture.

It remains the case that it is likely that shippers will use gas stored at Rough in preference to imported gas. This will cause uncertainties in the market and drive up prices.
There probably remains some form of bottleneck coming through from German and Holland into Zeebrugge. It is difficult to find out what the full situation is. ALthough IUK have increased their capacity to 68 mcm/d we probably won't see that much gas being imported.
There probably will be some gas come in via langeled. The Ormen Lange field that it is supposed to be primarily supplied by is not avialable until late 2007, but
the Norwegians will probably provide something.
Excelerate will probably manage coming up to 10/11 mcm/d with their two LNG ships.
BBL is not expected to provide that much gas.
National Grid's expectation for Beach is 267.

It is not worth spending time trying to do a detailed alternate forecast for supply until October and the IESP is trying to clarify further the situation on the Continent (and in the North Sea.)

Submission to OFT on Gas Market

2006-09-03T12:36:00.000+01:00

The attachment is the actual submission to the Office of Fair Trading about trading policies in the UK Gas Market.

Gas looks tight for Winter 2006-7

2006-08-23T16:29:00.000+01:00

That, of course, is not news. What is news is Malcolm Wicks recognising that the answer given to my question about imports earlier this year was misleading.

Nov, Dec, Jan and Feb could be quite tight particularly December.

As usual, however, it depends upon the weather. I will be reviewing the figures later this year.

Foundry Gas Problems

2006-03-16T21:47:00.000Z

I have been told that some West Midlands Foundries are not getting the gas they are supposed to get. I need to check this further.

In the mean time Wednesday actually saw a small amount of gas back into storage although today's demand is estimated at ~30 mcm greater than yesterday.

Demand down by 20-30 mcm

2006-03-16T15:54:00.000Z

For each 10 mcm of demand reduction that is 70 mcm fewer taken from storage over a week. It looks now as is potentially the increase in price has reduced demand by about 25-30 mcm or even over 30 mcm.

The job losses and layoffs caused by this will be substantial. The upside is that we are probably safe from a gas emergency until beyond Tuesday next week. After then, however, depends upon the weather - as usual.

It, obviously, asks the question as to whether this is really a sensible way to handle imbalances of supply and demand.

Price reduces demand ... a bit

2006-03-15T14:43:00.000Z

That is not surprising. You would expect an increase in price to reduce demand. As a very rough estimate demand is down by about 10-20 million cubic metres as a result of the price going up by a factor of 4-5. (ie 400% increase in prices).

That is a reduction in demand of about 3-6%. When the market is as tight as it is then that is important, but the big question is whether it is enough. The CCGTs will have moved to dual shifting where they only cover the peaks in demand and possibly started going through their stocks of oil.

This demonstrates how unresponsive to the spot price short term demand is.

The weather forecasts for next week are cold as well. The North Atlantic Oscillation is negative.

The largest demand from the local delivery zones is 335 mcm (on 2nd February).
Average production from Beach and IOG over the last 7 days (from 2 days ago) is 295 mcm. Average imports via the interconnector have been 34 mcm. This gives a total of 329 mcm. If, therefore, we hit a really cold day next week we would need some gas from storage to even provide the LDZ gas requirements.

Still the situation will be clearer over the weekend. Current forecasts of tomorrows demand imply that tomorrow will be OK.

Gas Urgent Question in House of Commons

2006-03-15T09:27:00.000Z

The link is to the Urgent Question debate that I called for yesterday in the House of Commons. I am not going to extract anything from it as it is best read as it is.

There are two views in the high energy industry (people that study gas issues in depth). One is that we will just scrape by and not have an emergency, the other is that we will have an emergency.

In a sense that demonstrates how we are on a knife edge. Tomorrow will be colder. We may encounter constraints on extract from storage by Friday - which will cause more rapid depletion of short term storage as MRS will only cope with 10 mcm/d.

As usual it depends upon the weather.

Gas continues to be taken from storage, emergency still 'likely'

2006-03-14T20:27:00.000Z

John Hemming MP, Chairman of the Independent Energy Scrutiny Panel, challenged the government over their failures in dealing with gas supply in the House of Commons.

As a result of Mr Hemming's "Urgent Question", the Secretary of State for Trade and Industry was summoned to the house to answer MPs questions about the crisis in the gas market.

"When people get their gas bill", said Mr Hemming, "they need to understand that it has gone up through the failures of Tony Blair and the Labour Government. Their cavalier attitude to the security of energy supply is hitting people hard in their pockets. Many thousands of people will be losing their job as a result of the UK having gas prices for April something like 50% more than the USA."

"The government have failed to ensure that the market rules established by Ofgem ensure that people import gas on milder days and put it into storage. On the colder days, then, we can neither import gas nor can we get it from storage because it has not been stored."

"Yesterday another 425 GWh (38 mcm) was taken from Medium and Short Term Storage leaving only 2610 GWh (a seventh was taken out in one day). As the gas continues to be depleted from storage the maximum output is also depleted. We have perhaps 3 more days at maximum from Medium Range Storage before MRS is limited to 10 million cubic metres a day."

"Whether we have a formal gas emergency or not depends almost entirely upon the weather. The current cold snap is expected to continue through into the weekend. The North Atlantic Oscillation is also expected to be negative for some time. This will also encourage colder weather."

"We are cutting our safety limits to the bone. I do not expect us to have to disconnect any domestic customers, but I am very worried about the risks the government and regulators are taking with the UK's energy supplies. The problem with delaying action until the last minute is that the action that is taken has to be more severe."

Tuesday looks OK now

2006-03-14T11:42:00.000Z

The situation for gas supply remains tight. Prices have rocketed both for this week and next week.

It looks like about 180 GWh was taken from Short Term supply on Monday's Gas day (we will be certain later today). This leaves about 550 GWh. MRS will have been running at max although as this gradually gets depleted its ability to deliver reduces.

The interconnector is reported to have picked up a bit. The weather, however, is still predicted to be coldish.

GBA Trigger shows error

2006-03-13T21:43:00.000Z

The fact that Tuesday could see a Gas Emergency, but does not stimulate a Gas Balancing Alert shows that somewhere in the system of monitoring gas supply and demand there are serious problems.

The Trigger for a Gas Balancing Alert should be that beach, imports plus medium term storage is insufficient and there is a call on Short Term Storage. However, even a 320 GWh call on STS from Sunday did not cause a GBA.

It is all rather odd really.

More background information

2006-03-13T18:24:00.000Z

There are always a mixture of problems in supply. That is why caution is needed before people assume guaranteed levels of supply.

Statoil ASA, Norway's largest oil company, said today its Troll A platform in the North Sea was producing 10 percent below its capacity because of unspecified difficulties.

Malfunctions at the platform, which pumps a maximum of 110 million cubic meters of gas a day, had reduced output in February at Troll, the largest gas field in the North Sea. The field, which accounts for about 60 percent of the gas found off Norway's coast, was slated to resume full output on March 8.

Norsk Hydro said last week that production from the Oseberg field would remain at reduced levels during the weekend after faulty equipment curtailed production.

ConocoPhillips, the third-largest U.S. oil company, said it will shut its Ekofisk field in the North Sea for four days this week, halting some 600,000 barrels a day of oil and gas production.

About 375,000 barrels of crude oil a day from the Ekofisk area will be shut down in the early hours of March 17, Ingvar Solberg, a spokesman for ConocoPhillips in Norway, said in a telephone interview today. Gas production from Ekofisk and oil and gas from several neighboring fields also will be halted, bringing the daily production loss to about 14 percent of Norway's daily output

(from bloomberg)

Phase 1 Gas Emergency 'likely' this week

2006-03-13T17:24:00.000Z

A Phase 1 Gas Emergency is now looking likely and may occur as soon as Tuesday 14th March according to John Hemming MP, Chairman of the Independent Energy Scrutiny Panel.

"Sunday's gas consumption was 357 mcm and involved taking 320GWh from Short Term Storage leaving 724GWh. Today's demand according to the National Grid Website is predicted to be 380 mcm. All else being equal this would involve taking the maximum 526 GWh from Short Term Storage leaving just under 200 GWh. Tomorrow's Gas Demand is predicted at 372 mcm which (all else being equal) would require about 400 GWh from a store of Short Term Gas which only has 198 GWh in it. This would cause a Phase 1 Gas Emergency with disconnections of large users."

"Obviously one would expect some demand reduction as a result of the Gas Balancing Alert. It is also possible that imports via the interconnector will pick up. The cold weather, however, is predicted to last a while longer. Medium Term Storage is likely to be running below 30% by the end of Tuesday's Gas Day. It is, however, now likely that there will be a gas emergency this week (likely estimated as a probability of over 50%) "

"Prices started rocketing on Sunday and have spiked intraday today at £2.55 per therm. This is symptomatic of the nature of the gas market where most demand is not sensitive to the spot price. That is why the demand reduction from the Gas Balancing Alert is likely to be lower than expected by government and Ofgem."

Gas Balance Alert Declared

2006-03-13T07:51:00.000Z

A Gas Balance Alert has now been declared. Lets see what that does to demand.

GBA should be declared for Monday

2006-03-12T20:57:00.000Z

The demand prediction at 4pm is 385 mcm and the trigger level is 377. There should be a gas balance alert. I have emailed National grid to ask them why there isn't one.

This, I suppose is the big test.

Import into Storage - current status

2006-03-11T08:13:00.000Z

The figures are available on the National Grid website which is good, but does not seem to fully reconcile. Some day I may talk to them about this to try to find out where the variations are.

The Country is currently in a position whereby the real risk of cold weather beyond that which the gas supply can cope with is being ignored by the formulae used to handle safety margins.

Furthermore certain assumptions built into determining when we should declare a gas imbalance are wrong. Hence last week when there should have been a gas balance alert declared it was not.

The final point is that there are no market forces which encourage people to import gas into storage. Noone wants to take unreasonable risks with their money so importing gas into storage does not happen in any real quantity. I raised this on Monday with Ofgem who indicated that they did not see this as a problem.

I look at it on the basis of a risk analysis. The risk for the country of having insufficient stored gas warrants a bit of insurance. The insurance is a premium for import into storage.

A further issue, of course, is that long term storage is offline and likely to stay so beyond the end of April. Not a predictable situation, but the country should never have all of its eggs in one basket.

During March a net 1,516 GWh has been withdrawn from Medium Term Storage taking it down to 2,713. 664 GWh has been taken from Strategic Short Term Storage taking it down to 1,044.

The 7 day average from Beach and IOG runs at a lowish 295 mcm/d.

Now it appears possible that the weather may turn coldish again.

Weds Demand low, but still gas taken from storage

2006-03-09T17:32:00.000Z

Wednesday's gas day is a good example of things not really working as they should. Demand was a relatively low 319 mcm (although I have found that this is never as clearcut as you would expect). Imports, however, dropped to 303.5 Gwh (about 27 mcm). This meant that 30 GWh (about 3 mcm) was still taken from storage.

It is not certain that this will be a problem. Again, however, there are risks where the upside is negligable, but the downside of a gas shortage is material.

Short Term Storage (LNG) is now at 1044 GWh (about 95 mcm). The maximum extract rate is at 526 GWh/d. Hence it is now below the 2 day threshold even if the safety monitor is zero.

Medium Term Storage is at 2645 GWh (about 250 mcm). This is about 36% of capacity.

Long Range Storage is still not working properly although 5GWh came out yesterday.

Wot no Gas Balance Alert

2006-03-07T17:31:00.000Z

The interesting thing about yesterday and today is that at times when short term storage has less than 2 days above Safety Monitors then there should be a gas balance alert when the amount of gas used is above the trigger.

The trigger is supposed to be calculated on the basis of what gas comes from sources other than short term storage. However, we are below 2 days and gas is being withdrawn from short term storage.

Hence there should be a GBA, but there isn't.

Luckily the weather looks good enough ... just about.

GBA Trigger should fall to 376 mcm/d

2006-03-05T17:01:00.000Z

With the removal of gas from Short Term Storage on Saturday (only 50 GWh actually), the number of days at max rate above Safety Monitorof STS is now 1.9. This takes the GBA Trigger down to 376 mcm/d. Monday's predicted demand, however, is 365 so no Gas Balancing Alert as yet.

The NAO is still quite negative although the ensembles are trying to pull it positive. Thursday and friday might be cold (although not that cold)

One question is how much gas can be stored to bring up the levels in storage. The figure for Saturday's demand looks anomalous.

GBA Trigger Adjustment Close

2006-03-03T21:14:00.000Z

If 172 GWh is now taken (possibly today) from Short Term Storage then the gas balancing alert trigger figure should be reduced from 425 mcm/d to 376 mcm/d. The leeway on this is only 172 GWh (although the Safety Monitor will continue being reduced)

That means a gas balancing alert would be close on any of the colder days of this week (but just inside the figure).

Thursday continues extraction of Strategic Storage

2006-03-03T21:06:00.000Z

172 GWh (about 10% of it if it were full) from Short Term and 255 GWh from Medium Term. Probably the weekend will see a drop in imports and continuing use of Medium Term. Luckily for the UK the weather gets warmer next week.

NTS Demand reduced by 20mcm/d?

2006-03-02T21:24:00.000Z

It looks like NTS Demand is running at more like 55 mcm/d rather than the normalish 75 mcm/d. The figures never seem to properly reconcile (one of the problems with the gas market, partially linked to the main unit being volume rather than energy).

This means that aggregate demand probably doesn't do the normal weekend shift during the current circumstances. That causes a bit of concern, but even if we end up using 50% of Emergency Gas by next Wednesday we will still have 50% left and things should start getting warmer.

Imports are looking a bit low. I have always thought some shippers could end up having financial problems that would cause odd activity. Still although I would not allow this level of risk, we have to rely on Lady Fortune because that is government policy.

First material call on emergency gas

2006-03-02T21:17:00.000Z

The Gas supply situation remains "tight" according to John Hemming MP, Chairman of the Independent Energy Scrutiny Panel.

"We have been lucky that the weather was not as cold as was expected", said Mr Hemming, "The North Atlantic Oscillation is, however, negative. This is having the effect of continuing the cold weather into next week. It is predicted that the NAO will move in a positive direction soon, however. This will allow milder weather to return."

"The bad news is that Long Term Storage will remain offline until at least May. Efforts to restore full power to the Rough facility are continuing. Although bad weather is hampering safe access to platform 3b, and adversely affecting Centrica's ability to continue investigations and plan detailed recovery works, their initial assessment of the site has revealed that a significant amount of the cabling in the vicinity of the fire has been damaged and will need to be replaced before normal operations can resume. "

"The gas market will remain tight, however, going into March. Interruptions of gas supply started on 28th February and gas has now been taken out of Short Term Strategic Stores of Liquid Natural Gas. 6 Gigawatt Hours were withdrawn on Tuesday. 131 GWh on Wednesday and probably about the same will be withdrawn today. This would mean about a quarter of the emergency gas supply will have gone by the end of Friday's gas day. Over the weekend, however, we should be able to relax and it is now unlikely we will run out of emergency gas next week. However, as usual this depends upon the weather."

"It is unusual to draw on short term strategic supplies this shows the fragility of the UK gas supply situation."

"National Grid have also updated the Safety Margin Calculations (Safety Monitors). I welcome the fact that they have done this. I raised concerns about this earlier this week with the Health and Safety Executive and National Grid updated the calculations on 1st March."

"I am unhappy that the country is getting so close to a gas emergency without recognition from government that the market is operating at times in a perverse manner. When the weather gets warmer we should aim to refill our storage, but instead imports are cut."

Sunday keeps on withdrawing

2006-02-27T17:00:00.000Z

Net Demand was 347 mcm. Imports dropped again to 27 mcm and 13 mcm was withdrawn from storage.

Forecast demand for today is actually only 370 mcm (at the time of writing), but the weather is still forecast to be bitterly cold for a number of days - starting really tomorrow, but then getting colder and staying cold until after the weekend.

I am really not sure about the methodology of calculating the safety monitors in this circumstance - there is some elasticity in the storage in the pipes, but that is under a day's usage.

The key safety issue with Gas is that people have to be cut off rather than have low pressure (low pressure gas may go out or create CO rather than CO2). Hence there is a need for backup storage to keep up the pressure. The trunk demand of about 60-70 mcm can be cut off quickly, but generally the rest is not differentiated.

If demand really rockets, therefore, we end up in a situation in which the total demand can tax supplies. This is where short term storage gets used.

Saturday reverts to Type

2006-02-26T19:39:00.000Z

Saturday's demand was relatively low for this cold period at 343 mcm. Imports sadly dropped, however, to 31 mcm which meant that still 11.2 mcm was taken from Medium Term Storage.

Although the real problem we face this week (if one happens, which depends upon the weather) will be the depletion of short term storage and possibly a threat to the capacity of the system, it remains that had we imported the maximum so far of 46 mcm then we could have injected 5 mcm rather than withdrawn 11 mcm.

Today is forecast to have a higher demand at 357 mcm. Tomorrow is currently forecast at 382 mcm. Later in the week could see a record demand for this winter which so far has peaked at 402 mcm.

Will JIT become JTL

2006-02-25T17:25:00.000Z

Just in Time is a good mechanism for reducing the capital requirements for any activity that requires stock. JIT can, however, become Just Too Late under some circumstances.

We will not know what will happen this week with any certainty in part until it has happened.

Collating the different figures for the gas supply market occurs slightly in arrears. I normally have a reasonably good view about 60 hours after the end of a gas day. The first figures released are the storage and linepack figures.

Yesterday a small amount came from short term storage and a teeny bit from long term storage (flushing the pipes still) and 159 GWh came from Medium Term Storage.

I am really not sure that the methodolgy currently used for calculating the safety monitors is reliable in the cirumstances and have made that point to National Grid and the Health and Safety Executive.

All in all I think we really sail far too close to the wind and as a consequence could capsize. This, however, will not be come widely clear unless there is a serious problem beyond the prices going haywire (which is already a material problem).

With a bit of luck we might even inject something into storage today and tomorrow. Then comes the real challenge (according to the weather forecasts)

Forecast Temperatures

2006-02-25T16:07:00.000Z

At the time of writing the following is forecast for the UK average temperature (see link which is updated every 6 hours).

On this basis Weds/Thurs/Fri next week go into uncharted territory.

25/02/06	26/02/06	27/02/06	28/02/06	01/03/06	02/03/06	03/03/06	04/03/06
4.19	3.25	4.04	1.83	-0.3	-1.13	2.04	-0.07
05/03/06	06/03/06	07/03/06	08/03/06	09/03/06	10/03/06	11/03/06	12/03/06
4.62	3.71	6.01	7.4	6.78	6.91	9.29	9.3

Statements by Centrica Storage

2006-02-24T22:18:00.000Z

These explain where a small amount of gas may have come from.

Force Majeure Update 24 February 2006 Part 1 Published: 24.02.2006 12:02

Rough Update

Update on Rough Incident

The purpose of this notice is to update Customers and Market Participants on the progress of the investigation into the cause of the incident at Rough on 16 February 2006 and our current plans to repair the plant and resume normal operations.

Four separate teams have been established and are working on:

• Investigation of the incident and establishing its root cause,
• Restoring power and support services to platform 3b,
• Damage assessment and
• Development of recovery and reinstatement plans.

Further temporary generators are also being shipped to the platform as part of the plan to restore full power and services. Full power will allow us to increase manning levels and provide the services required for the detailed damage assessment, implementation of recovery plans and, ultimately, reinstatement of normal operations. We have now purged and depressurised gas from the Rough platform into the NTS.

At this time we have no more definitive information on the possible duration of the outage. Our initial estimate that Rough is unlikely to be available for one month remains unchanged. We would re-emphasise our statement of 20th February that this estimate is based on a preliminary assessment of the scene and is subject to change.

Force Majeure Update 24 February 2006 Part 2 Published: 24.02.2006 12:02

By the end of next week (3 March 2006) we hope to be in a position to report further on our recovery plans. If so, we will then be able to provide an updated assessment of the likely period of the outage.

In any event we will continue to keep you updated of any material changes or developments as appropriate.

Prior to the resumption of normal operations, integrity and verification checks will take place. Appropriate sign-off will be required from the Independent Competent Persons involved and the Health and Safety Executive. We can confirm that the Health and Safety Executive visited the platform yesterday, and will continue to be involved pending the resumption of full operations.

The nature of the incident, and indeed the nature of investigations into all such incidents, means that it is not possible at this time to accurately predict the duration of the investigation into the root cause or its outcome.

Bruce Walker
Managing Director
Centrica Storage Limited

Safety Monitor Calculations

2006-02-24T22:14:00.000Z

I had a response from the Health and Safety executive today about the Safety Monitors. They said that National Grid are not recalculating them. That does not seem sensible. 45 mcm is not much of a safety cushion if we enter into emergency mode. 200 mcm (the total of the Long and Medium term) is more reasonable.

The weather forecasts are pointing to particularly cold weather next week still. A very small amount of gas appears to be coming from Long Term Storage, (1 mcm). That, however, could be some form of recording error.

Rough Closure an analysis

2006-02-22T19:00:00.000Z

The link is an analysis of the impact of the closure of Rough. Basically we managed 402 mcm with Rough whilst cutting into Short Term Storage. Peak supply including short term storage is about 380 mcm for a couple of days.

In particular there is a safety problem without the cushion of storage. However, we need to keep an eye on weather predictions on Mon/Tues/Weds. I think we will cope through the weekend particularly as the interconnector is doing quite well.

Rough closed for a month !!!

2006-02-22T18:46:00.000Z

The fragility of the UK Gas Supply system has been highlighted by the closure of the Rough Storage Facility possibly for a month.

"The weather next week is predicted to be cold enough to challenge the normal gas supply situation," said John Hemming MP, Chairman of the Independent Energy Scrutiny Panel. "However, with the cessation of supplies from the Rough storage facility we are now in a much tighter situation."

"The interconnector from Belgium is actually doing quite well importing 45 mcm/d which is far more than was previously the case. This demonstrates that the arguments about market liberalisation are not the key arguments. However, knocking out Rough cuts supply by about 45 mcm/d. This means that yesterday 280 GWh (compared to a quoted maximum of 284 GWh) was taken from Medium Term Storage."

"We have 19.3 days of Medium Term Storage but far less short term storage. I expect that today there will be gas taken from Short Term storage. This has a maximum flow rate of 526 GWh, but there is only 1724 GWh in Medium Term Storage. A rough guess would indicate that today 150 GWh (10%) of Short Term Storage will be used. We will know that figure late tomorrow."

"Parliament is currently on half term, but it could quite likely return to quite a serious gas supply problem."

Massive Gas Price increases

2006-02-17T19:49:00.001Z

Unsurprisingly the price increases in the wholesale market are now feeding through into the retail market.

We are now encountering the next phase in pricing of fossil fuels. As they become scarcer then the prices increase. What is needed is serious effort to bring demand properly under control so that there is a balance between supply and demand.

In the case of the UK market for gas, however, there are particular problems that drive gas prices up beyond that on continental Europe.

I am expecting fuel and the pricing of fuel to become one of the key political issues starting this year. The government have been lucky to avoid a real emergency in gas supply. Although it is still in theory possible for the weather to turn really cold and an emergency occur I would be quite surprised given the weather so far if this happened this winter.

Next winter, however, is a different issue. There will not be any substantially greater supply and the North Sea supply will go down.

Energy Crisis Hits Plastics Industry Hard

2006-02-12T17:36:00.000Z

The United Kingdom's Plastics industry today laid bare the full
consequences of continuing rises in its energy input costs.

Peter Davis, Chief Executive of the British Plastics Federation, the
industry's top trade body, said that a survey recently carried out
amongst member firm revealed that 44% of companies were not able to pass
on the increased costs to their customers in their selling prices.
"Last October member firms incurred average increases of 58% for gas and
56% for electricity. Many firms were faced with a staggering 100% rise.
Companies will go to the wall if they cannot secure any relief from
this. Meanwhile our competitors in Europe, with unliberalised energy
markets are paying less and are rubbing their hands at our loss of
competitive advantage".

The UK's Plastic Industry, a strategic sector for the UK economy,
supplying all branches of business ranging from automotive and
construction to the retail sectors is a reliable indicator for the
performance of British business as a whole. "This is a £20 billion
turnover sector whose products help customer industries become more
efficient'', said Davis, ''yet recent energy increases with more in the
pipeline are pushing it to the edge of a precipice".

The BPF's survey also reveals a loss of jobs on a large scale directly
attributable to sharp energy cost rises. 48% of respondents to the
survey said that they were being forced into making redundancies by an
average of 6.5% of their workforce. Davis said "This is an industry
largely of small and medium sized firms. Any one company making
redundancies on such a scale will not make headline news but the
cumulative force of the losses is remarkable. We are looking at over
7,000 job losses nationwide in the plastics industry''.

Investment in the future has also been hit hard. The survey revealed
that 54% of companies have scaled down their investment plans by an
average value of 31% as they struggle to pay their energy bills. Davis
commented that investment in the industry had already declined to
historically low levels and that many companies were cutting costs to
the bone just in order to survive.

Not surprisingly some companies are losing faith in the UK and, where
they have some flexibility, are seriously examining re-locating their
manufacturing to elsewhere in Europe or the rest of the world. Some
10.5% of firms were in this category. Davis concluded by saying that
"International groups based in the UK, and which have made the UK
Plastics Industry a world leader, could well chose an offshore location
for new investments. This will take the edge off growth in key sectors
of the business and will further underline the lack of a level playing
field between the UK and the rest of the Europe".

(release dated 9th Feb)

Consumer Gas Price Increases - why it is the government's fault

2006-02-05T13:41:00.000Z

The Consumer Gas Price increases arise from the increases in the spot and forward prices of gas. The increases in the spot and forward prices are because the government have abdicated responsiblity for balancing supply and demand to the market. Supply is too little and demand is not managed. Hence we have massive spikes in the price and increases in spot and forward prices.

It is very easy to demonstrate perverse market reactions. At the time of writing the National Grid's website is not giving out all of the information.

The odd thing is that if there was an effort in the market to ensure stability then the prices would be on average much lower. Gordon Brown's solution, however, is to zap on another tax.

Personally I prefer a scheme of managing demand through a tradeable domestic quota that would be far fairer than price rationing of domestic consumption.

That, however, is not the issue today. The issue today is a complete mess in the gas market. This is causing:
a) Job Cuts,
b) Price increases for commercial and domestic customers
c) The risk of interruption.

The weather forecasts today seem to let the government off the hook. However, we really don't know yet where things will end up. The real problem (and one of the causes of the price increases) is that when demand goes down we reduce imports and keep taking out stored gas.

This could cause a substantial problem in March and I am not sure that the methodology used by National Grid for calculating safety monitors will stand up to that process.

Still it remains that February is likely to be quite cold, but it does not ... at the moment ... look like it will get as cold as last Thursday or the Thursday after Christmas. It is, however, a silly risk for the government to take.

Arctic Blast possible

2006-02-04T15:35:00.000Z

The numerical forecasters are now inclined towards Arctic Northerly winds from Wednesday(ish). Clearly that is in the not so reliable part of the forecast. However, it has the potential of tightening supply.

The important evidence is that we start hitting short term storage at 400 mcm. In theory the maximum withdrawal from STS is 48 mcm (and that's for 2 days).

When National Grid do their calculations for the firm and safety monitors they also look at maximum demand.

The calculates in December were
Max demand 4481
Non storage 3799
Storage 1201
ie supplies of 5000 GWh (divide by 11 for mcm roughly)

The problem is that in practise it looks more like 443 is the max supply dropping to 398 after 2 days.

I have contacted the Health and Safety executive about this. I still don't think we need to panic as yet, but I really am unhappy about the risks the government are taking.

First call on Short Term Storage - peak demand, peak imports

2006-02-03T16:26:00.000Z

The cold weather currently hitting the UK has resulted in the first call on Short Term gas Storage yesterday according to John Hemming MP, the Chairman of the Independent Energy Scrutiny Panel.

"We managed to import a pleasing winter maximum of 41 million cubic metres of gas from Belgium. That is substantially more than has been the case previously. However, for some reason Medium Term Storage was unable to run at its maximum quoted rate of 284 GWh with only 235 GWh taken from Medium Range Storage. 62 GWh (6 mcm) was, therefore, taken from Short Term Storage."

"The total demand was 402 which is a maximum for this winter. "

"Where the UK goes from here depends, of course, on the weather. The North Atlantic Oscillation is currently slightly negative and numerical forecasting is predicting weather that gets slightly milder before falling cold in the middle of next week."

MPs generate enough Hot Air

2006-02-02T17:25:00.000Z

The Italian Government has called upon Italians to turn down their thermostats by 1 degree centigrade. John Hemming MP the Chairman of the Independent Energy Scrutiny Panel has said that "we should consider what the Italians are doing."

"I shall be writing to the Seargeant at Arms to ask for the temperature to be turned down on the parliamentary estate. After all MPs generate so much hot air themselves I wonder if we really need that much heating."

"The government do not want to admit that there is a gas problem. There have been some adverts running on the TV talking about turning down thermostats. It is important that the government come clean and admit that there is a danger that the UK could be short of gas. If they are honest with people then there is a greater chance of a public response."

"One degree centigrade can reduce demand by 20 million cubic metres in a day. Yesterday's demand was lower than forecast at 392 mcm, but it was still a record for this winter. Today's forecast demand is 20 mcm greater than that. We coped yesterday in part by reducing the amount of gas in the pileline by 7.3 million cubic metres. We did take 14 mcm from medium term storage as well as the maximum from Long term storage."

"Today's predicted demand is 413 mcm, but we don't know as yet what it will end up as. This will only be clear by the end of the gas day which is 6am tomorrow."

"It remains possible that the government will get through this winter without having to admit the truth. They are "in denial" about the severity of the situation which is on a knife edge. If I were to bet on an evens bet as to which way things would go I would think that we will cope. However, the risk is not worth taking."

Gas Supplies being Interrupted

2006-02-02T13:36:00.000Z

The big day for interruptions was in fact 31st January 2006 with almost 3 GWh of interruption. Although peak demand so far was on 1st Feb there were fewer interruptions.

These interruptions are "business as usual" interruptions where people who have interruptible contracts are interrupted.

The problem in London was not about gas supply, but instead about a problem with a water main. The impact of shutting off 1,500 domestic consumers shows the importance of security of supply, however.

Weather is expected to get milder. Today's demand is predicted to be over 400 mcm, but may tail off at the end of the gas day (the gas day ends at 6am).

Gas Supply quite tight today

2006-01-30T18:02:00.000Z

Predicted demand is 397 mcm (which is very high). Yesterday at 361 still used up a small amount of Medium Term Storage. If the reality turns out as predicted we could start on short term storage. Difficult to tell at the moment.

It does not feel that cold a day.

Medium Term Storage remains the challenge

2006-01-29T19:59:00.000Z

Although Long Term Storage is being depleted rapidly the tension will probably be around medium term. Long Term is at 68% following Saturday, but Medium term is at 72%. A small amount of gas was moved from Long to Medium term on Saturday. However, a lot of gas was still taken from Long Term.

Saturday and Sunday have substantially less demand than weekdays. This week looks cold, but not particularly cold. It is particularly cold weather that will cause the challenge, but we have avoided that since the thursday after Christmas.

The prognoses, however, are that there is little that can be done to rebuild storage now and it all rests on the weather.

NAO Goes Negative

2006-01-25T15:21:00.000Z

The North Atlantic Oscillation has now gone negative. (See link) This is more likely to bring colder weather than average. The various models are still quite variable.

Gas consumption has started eating into Medium Term Storage.

Iran cuts Gas Supplies to Turkey

2006-01-23T21:28:00.000Z

That's 20 mcm/d less going towards Europe. I don't know the pipeline configuration from Turkey, but it could be relevant.

GFS moves back to Atlantic

2006-01-21T16:27:00.000Z

On the midnight and 6am (GMT) runs the Global Forecast System has the UK back in realtively mild Atlantic Weather. However, the midday run is moving a bit colder.

The other models still indicate cold weather.

Gas Imports Crash to 1.6 mcm on Thursday

2006-01-20T18:28:00.000Z

Gas Imports Crashed to their lowest at since 7th November 2005 on Thursday 19th January 2006 according to the Chairman of the Independent Energy Scrutiny Panel.

"Only 17,765.675 MegaWattHours of gas was imported yesterday", said Mr Hemming, "this is under 2 million cubic metres. We have been peaking on cold days at importing 34 mcm. This is why we are not storing sufficient gas on what should be a pretty "awash with gas" day."

"We were worried that cold weather on the continent would lead to reductions in imports and even exports of gas. It does look that this is happening. This is not helpful."

Numerical Models Come together

2006-01-20T17:33:00.000Z

Numerical Weather Forecasting models are pointing towards a cold February according to the Chairman of the Independent Energy Scrutiny Panel, John Hemming MP.

"Those people who don't think we are already in a gas crisis should ask those people who are losing their jobs through gas prices what they think." said John Hemming

"However, for the gas supply issues to hit the wider british public will require a sustained period of cold weather. Numerical weather forecasting is unreliable beyond 7 days although the Global Forecast System issues forecasts up to 16 days. However, a number of models are now coming together to forecast a sustained period of cold weather starting at the end of next week."

"Russia is already suffering gas problems, but they are really having a problem with the cold. Our own cold weather will not be as cold, but we are not used to it."

"This would imply supply challenges from 29th January through to 4th February. If we start having to use short term supply then there is only 2 days supply before we hit the safety monitor buffers and have to start switching off the Combined Cycle Gas Turbines (electricity generators)."

"I talked to the government this week about the situation. They seem complacent and have misunderstood some of the figures. It is touch and go. If the weather is mild we will cope this winter, but it is looking like there is going to be a cold spell. If thte cold last for long enough then National Grid will need to run 'Exercise Ostrich' for real."

"Industry are unhappy that they are subject to disconnection without any compensation. This will exacerbate the economic damage caused by the govenment's abdication of its responsibility."

Will February be Siberian?

2006-01-19T12:37:00.000Z

The big question is whether late January or February will see the effects of some Siberian equivalent weather. Of course it will not be as cold as Moscow, but some GFS forecasts have suggested quite cold temperatures (colder than just after Christmas).

This, of course, is the issue that will affect whether or not there will be a gas crisis that affects more people than those in high energy industry.

Gas Speech

2006-01-14T16:39:00.000Z

I am always of two minds as to whether or not to write a speech. For the Energy Security debate on Thursday, I wrote a speech, but was unable to use it. Hence here it is.
=====================================================================================
We are looking at the issue of Security of Energy Supply. Energy Supply is critical to the country. If we don’t have enough energy it is like driving off a cliff.

The government’s policy on this has been as if they are driving along a cliff, wearing a blindfold and they throw away the steering wheel. Responsibility for the different elements of energy security has been divided between the DTI, Ofgem, National Grid and the market. The market does have a role, but government has a role that it has abdicated.

I have been working with various industry and energy specialists who comprise the Independent Energy Scrutiny Panel to review the assumptions behind government calculations.

One key aspect of Energy Security is the interface between Gas supply and Electricity Supply.

The reason why Gas is used for electricity generation is that it is energy efficient. Something like 55% of the energy input goes into electricity because there are two generators, one a turbine and the other a condenser system. Normal condensers manage at about 33%. The CCGT (Combined Cycle Gas Turbine) comes close to the optimum efficiency of a carnot cycle heat engine which is linked to the ratios of the absolute temperatures of the cold and hot parts of the engine.

Most gas during winter is used for heating. The contracts that people are on are generally fixed price. Hence there is no sensitivity to the spot price. The vast majority of heating gas is supplied through the Local Delivery Zones.

The consumption through LDZs is quite variable and linked primarily to temperature. On Christmas eve 209 mcm was supplied through the LDZs. The spot price was 1.0596 p/kWh. Less than a week later on 29th Jan 333 mcm was supplied through the LDZs. The spot price was 3.592 p/kWh.

The vast majority of demand is not sensitive to the spot price. Hence the spot price moves massively when the market is tight. The market is tight because of over optimistic assumptions.

Heating gas is essential for health reasons. Hence if the demand for heating gas goes up beyond what can be supplied we have to cut off industrial users.

National Grid’s figures from December gave a market leeway for electricity generation of 21%, but at the time 30% of electricity is used for gas. Hence if we had to shut off the gas generators we would end up with either brownouts or rolling blackouts.

Our first real problem is overoptimistic assumptions.

Every year a Winter Outlook report for Gas is prepared by National Grid. One of the difficulties is that the initial assumptions were over optimistic. The National Grid recognised this and reviewed their assumptions on 22nd December.

There are three main sources of gas. One is the North Sea (this includes imports from Norway) another is the Interconnector from Belgium and the third is the gasification plant at the Isle of Grain.

The table I am referring to is uses figures from the 7 days Tuesday 3rd Jan to Monday 9th Jan.

Original Review 7 day average
Max Ave
Beach 327 303 303 293
IOG 17 13 13 3
Interconnector 48 42 30 29
Total 358 346 325

It is important to note that on each of those days gas was taken from storage. Although we are not talking about massive demand they are not low demand days.
This is a shortfall of 21 mcm/d from the reviewed figures.

The Review of 22nd December accepted that the UK does not have enough stored gas to meet firm demand for the first time.

So we start out with overoptimistic assumptions.

The next problem is perverse market reaction. We do not have enough stored gas so we should be trying to store gas whenever possible. However, what actually happens is that stored gas is used before people increase imports.

There is a lot said about “liberalising the European Markets”. This is a red herring. In the past week on colder days we have been able to import 34 mcm/d. On the cold Thursday we imported 30 mcm/d. The problem is simple.

When it is warmer we should be still importing and injecting into storage. Furthermore we should be importing gas in preference to taking it from storage.

On Wednesday last week we imported 19 mcm and took 30 mcm from storage. If we can import 34 mcm then that is what should have happened. We would then have only taken 15 mcm from storage.

Storage as at yesterday morning at 6am had a total of 34 TWh of gas in it. 26 TWh in Long term and the rest in Short and Medium.

There are limits to the rate at which gas can be put in or taken out of storage. That affects how much gas the country can consume on any one day. If we hit certain limits that depend entirely on weather then we start having to cut off the gas generators with the knock on effects.

This brings me to Exercise Ostrich. National Grid ran an exercise about cutting off gas supplies because of a shortage of gas supply in September. It was called “Exercise Ostrich” – I wonder why?

We are where we are. The country is on a knife edge. If there is a patch of relatively cold weather we could end up with rolling blackouts.

The same problems exist for next winter as Milford Haven does not come on stream until much later.

It is not sufficient for the government minister to pray for warm weather. There is a responsibility for the government to ensure that we have security of gas supply. Although there is a short term cost to requiring that gas is imported rather than taken from storage, this reduces the spot price on the market and therefore, reduces the long term price of gas.

We also need contingency plans for a cold snap on how to minimise the effects of insufficiency of supply.

In the medium to long term we need to look at other demand reduction measures, but on this issue the government have abdicated their responsibility.

UIOLI - means in theory loose it.

2006-01-08T19:30:00.000Z

BP have missed using the berth at Isle of Grain. Grain LNG gasifactions have been quite low.

The saving grace is that imports via the Interconnector have run at 34 mcm/d for two days. This only happens, however, once gas in the long term storage is on maximum withdrawal.

Why Are We Failing to Re-Fill our Storage Facilities?

2006-01-06T12:30:00.000Z

When the UK’s supply of gas from its offshore facilities (Beach), from the continent (via the Interconnector) and from ships from elsewhere in the world (LNG) don’t match the UK’s total gas demand gas is taken from the various gas shortages facilities around the country. On particularly cold days, such as those over the Christmas period, using gas from storage is a necessity.

The major concern for the security of gas supply this winter has been the total amount of storage available to meet those periods of exceptional demand is less than ideal. As the winter progresses and more and more gas from the storage facilities is used we may come to the point where there isn’t enough gas in storage to meet further demand.

Thus the UK needs to take every opportunity to re-fill its storage facilities when the opportunity is presented. This can happen on warmer days when gas demand is lower than the total available from Beach, LNG and the Interconnector.

For some reason this isn’t happening to the extent that it should. On days when gas demand is lower gas companies are choosing not to put gas into storage but simply import less, and bring less in from the North Sea. Clearly there is no commercial merit in re-filling the storage facilities.

This is explained in the graph below. It is evident how the opportunity to put gas into storage is lost because as the total gas demand (the blue line) drops so too does the total gas brought into the UK (the pink line). The yellow bars represent the change in the total amount of gas in storage, and thus the difference between the blue and the pink lines.

Clearly the market is failing the UK. This doesn’t mean that we should look for alternatives to the market, but that we should look at ways of changing the ways in which the market operates in order to ensure that there is, at least in times of potential shortage, a commercial incentive to bring as much gas into the UK is possible, regardless of that day’s demand.

The Labour Government has enjoyed sitting back and explaining that the market will solve the UK’s problems, failing to realise that the market cannot achieve what we need it to without the right set of rules and regulations governing its operation. The market exists to serve the people, not the other way around: the government would do well to remember that.

What Can We Learn From the Winter Fuel Crisis of 1946/47?

2006-01-05T16:34:00.000Z

The winter of 1946/47 was a particularly severe one, the worst since 1880. Had it not been so severe supply of coal to the UK’s power stations and industry would have been tight, but no-where near as tight as it was. The wintry weather increased demand for electricity and coal for heating, decreased the productiveness of the pits, and made difficult the transportation of coal from the pits to the factories and power stations. In the 1940’s coal was used for almost the same purposes as gas is today: electricity generation, chemical processes and domestic heating (both in fires and through electricity).

The are a great many similarities between the build up to the 1947 coal crisis and the build up to this winter; from the warnings of industry and experts going back as far as the preceding summer, the concerning storage deficit going into the winter months and the lower than predicted raw-material output, the use of coal in 1947 and gas in 2006 for heating and electricity generation and industrial processes, to government’s blithe assurances that everything was going to be OK.

It would be incorrect, however, to hold up the example of 1947 and try to draw some lessons from it without noting some massive differences between that winter’s coal industry and this winter’s gas industry. Two major differences are that: today the UK is reliant upon imports of gas from the continent, whereas in 1946 the government attempted to import skilled miners from Poland; and on the 1st January 1947 the coal industry was nationalised, creating a wildly different set of market conditions to Britain’s liberalised gas market, there was no price mechanism to help reduce demand and government had considerable power at its fingertips to cut off supplies to certain industries.

Throughout the summer of 1946 a wide range of sources, including some within government, had warned over a potential coal shortage during the following winter. Predicting whether the winter would be difficult or not was a tricky business, as one would have to include in one’s prediction factors as diverse as: the rate of coal extraction and the ability to import coal if needs be; total coal demand and how that demand was split between domestic, government and industrial users; and the weather. Previous winters had been difficult due to poor supply, and following the war demand was increasing rapidly. On the 24th October 1946, however, the Minister for Fuel and Power, Emanuel Shinwell, said in a speech that:

“Every one knows that there is going to be a serious crisis in the coal industry, except the Minister of Fuel and Power, I want to tell you there is not going to be a crisis in coal, if, by crisis, you mean that industrial organisation is going to be seriously dislocated and that hundreds of factories are going to be closed down.”

These reassuring words were based on poor assumptions about the weather and how much coal could be mined. Events transpired to punish Britain for these optimistic assumptions.

On the 4th December, after it became clear that supply of coal was not meeting demand as he had expected it to in October; Shinwell wrote a letter to industry asking for a 5% reduction in coal use that he predicted would make sure Britain faced no crisis. This is the final paragraph:

“If, as the Government hope, industrial consumers (other than the industries which will be totally exempted) at once curtail their consumption by five per cent., the consequent improvement in the stock position, assisted by the reduction in the consumption of coal by electricity undertakings and gas works, should suffice to enable industry as a whole to get through this winter without any serious interruption in activity.”

By February 1947, however, the really cold weather and snowy conditions hit, and coal deliveries to ‘non essential’ industries dropped right down, and industries started to close down, amongst them Austin’s Longbridge plant. This is taken from The Times of the 3rd of February 1947:

“Announcing that the Austin Motor Company’s Longbridge factory at Birmingham, which employs 17,000, will close tonight because it has only two working days’ supply of fuel, M. L. P. Lord (chairman and managing director) on Saturday said that they were faced with the alternative of working one in 10 working days or one full-week in every 10.”

On the 10th of February 1947 Emanuel Shinwell announced that there wasn’t even enough coal for the power stations: power cuts to most of industry and some domestic customers were enforced. Members of the public were asked to stop their power usage wherever possible. Such restrictions continued for the rest of the month. By the 17th February 2 million factory workers were idle due to lack of coal. This is taken from The Times of the 10th of February 1947 under the headline “Unemployment for Several Millions”:

“The drastic cutting off of electricity to industry began at midnight, and it is feared that several million workers will be idle. Except for essential services, no electricity is being supplied to industry over wide areas. Domestic customers will be without electricity between 9a.m. and noon and 2 p.m. and 4p.m. to-day”

With hindsight it is clear that had the government taken more dramatic steps in October and November to in order to reduce demand the stockpiles of coal could have been built up to provide for February. In the event the government were afraid of frightening people and did there level best to reassure the public, even though that meant using optimistic predictions. Predictions should always provide a set of scenarios across a range of factors, including potentially damaging ones, and take account of factors not performing as predicted.

In the future they may look back at the speeches of this Labour government and have similar thoughts. Do you remember the Minster for Energy, Malcolm Wicks, saying that the UK was ‘Awash with Gas’, despite warnings about the tightness of supply? As each day passes, however, a gas crisis in 2006 becomes less and less likely: although that depends upon the weather. Though the winter has been cold so far, it hasn’t been really cold. Though Beach, Interconnnector and to some extend LNG have all performed below the level expected of them in the National Grid’s Winter Outlook Report, they haven’t underperformed really badly.

We must, however, ask the government why they have failed to take demand reduction measures during October, November and December 2005. Demand reduction measures vary in their impact upon the economy and upon people’s lives. Public appeals for people to check their heating carefully would have little or no effect on the economy or on the public, but would make the government look a bit silly having to admit that they have made a miscalculation and that there are dangers ahead.

Shutting down industry is one form of demand reduction used in the 40’s. Had the government been more open about the dangers facing the UK in this winter in 2005 there would be no chance of such industry shut downs in February 2006. As it is there is still a slim chance that we will see dramatic shortages in a month’s time.

Our government is not mature enough to admit when things are getting tight, and we can assume that their plan has been to sit by and hope that the winter isn’t too cold and beach supplies don’t dwindle too rapidly. Let us hope that British business will not have to pay for their gamble.