Yesterydays speech about adoption apologies

This is a link to yesterday's speech about adoption apologies.

Gas Issues in 2013

The cold weather has unsurprisingly highlighted the problems that result from a shortage of gas storage. The LNG stocks are currently quite high, but the system is again close to a gas balancing alert.

Before New Year

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demand is down about 100 mcm/d. However, imports down the interconnector have almost come to a halt whilst gas is still withdrawn from the Long Range Storage.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

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

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

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

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.