GAS SHORTAGES
January 2010
Commenting on the second gas balancing alert (GBA) issued by the National Grid this week, director general of the Institution of Civil Engineers Tom Foulkes said:
“The UK’s gas policy needs urgent re-thinking. We are far too dependent on gas, with over 70% of the UK’s homes reliant on gas for domestic heating.
“This dependence is a throw-back to the 1990s when we had an abundant supply of gas in the North Sea and it was cheaper than other sources. However, nowadays we depend heavily on international markets and as the last few days have shown, they are not reliable and will end up costing us dearly.
“The UK has the biggest demand for gas in Europe but we have very little storage capacity in comparison. It makes sense commercially and for ongoing security of supply to focus on urgently redressing this imbalance.
”To achieve this, the regulation of the UK gas industry must be adapted to reflect our gas storage requirements.”
For more information:
Emily Beadon,
ICE Media Relations Officer,
t: 020 7665 2261,
e: emily.beadon@ice.org.uk
The Institution of Civil Engineers (ICE) was founded in 1818 to ensure professionalism in civil engineering. It represents 80,000 qualified and student civil engineers in the UK and across the globe. The ICE has long worked with the government of the day to help it to achieve its objectives, and has worked with industry to ensure that construction and civil engineering remain major contributors to the UK economy and UK exports.
GAS CHIEFS ISSUE SECOND SUPPLY ALERT
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Page 1: 13:25
National Grid issued its second gas alert in three days today as the UK's freezing weather pushed demand to record levels.
The operator's gas balancing alert (GBA) came with gas demand expected to hit 454 million cubic metres today - higher than the all-time record of 449 million in January 2003.
A National Grid spokeswoman said technical problems had led to a 52 million cubic metres shortfall in supplies from the Langeled pipeline, which pumps in gas from Norway.
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Page 2: 14:08
In response to the gas alert, National Grid said other suppliers were putting more gas into the network and major customers were cutting back usage.
The move was triggered by technical problems at Norwegian operator Statoil's huge Troll A platform. A Statoil spokesman said these had since been resolved.
The alert lasts until 6am and will be reviewed tomorrow. Wholesale gas prices rose following the GBA but eased back later.
Nick Campbell, an analyst with energy consultant Inenco, said the market had responded quickly to "extraordinary" events.
"As long as the cold weather is here, if we see any more supply glitches there is the potential for more alerts," he added.
The UK is more exposed to wholesale prices than other countries due to its much lower levels of gas storage - accounting for around 5% of the country's needs, compared with around 24% in France and 21% in Germany.
Rough is the UK's biggest gas storage facility, accounting for around three-quarters of the country's storage capacity.
Energy Secretary Ed Miliband conceded today that the UK needed more gas storage, but accused the Conservatives of "playing politics" and scaring people with "meaningless" statistics about supplies.
The Tories said earlier this week that the UK only had eight days of gas storage left, but Mr Miliband said this ignored the role of imports and the North Sea.
City analysts expect the cold weather to boost the coffers of energy companies.
Cazenove analyst Edmund Reid forecast that British Gas parent Centrica was making around £1.5 million extra a day in January due to the increased demand.
He said: "In our view, the main beneficiary of the recent cold snap is Centrica, which should see a material increase in sales in its residential gas supply business."
He added: "We believe that, when Centrica announces full-year results for 2009, it is likely to beat expectations based on higher gas demand in December."
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