Vital Trivia

It would appear that I’m not alone in my concerns. The last couple of days have seen a flurry of media activity on the subject of gas shortages and the energy crisis this will bring to the UK. In some ways this is encouraging but fundamentally I think it reflects poorly on the news industry that the coverage is so reactionary. This has been an important story for several years yet has gone untold, if it had been given the deserved attention several years ago we wouldn’t be in the mess we are now and Tony Blair wouldn’t be calling emergency meetings at the eleventh hour.

Here’s a sample of recent coverage:

Jeremy Warner’s Outlook: A wholly predictable energy crisis looms - but at least it might make the case for nuclear
Crisis, what crisis? The Government can hardly be blamed for the weather but it is responsible for the country’s energy policy. Having denied for months that we are in danger of running out of gas this winter, there is a sudden sense of panic in the Downing Street air now that the temperature has begun to drop.

The National Grid reckons that in the event of a Siberian-style winter, the like of which Britain experiences only once in every 50 years, industrial consumption would need to halve for the best part of two months. Even a one in ten type winter would require a 30 per cent reduction in demand for 40 days. The Met Office, for its part, reckons there is 65 per cent chance of a colder than average winter this year and a 35 per cent chance of it being a severe one.

Could the Government have done more to prepare for this eventuality? Yes, it could. Indeed, the looming power crisis this winter was entirely predictable. Ministers have known for years that North Sea supplies were running out, turning the UK into a net importer of gas.
The Independent

The phrase I like from Jeremy’s report is wholly/entirely predictable and he’s absolutely right. I and many others have been banging on about this problem for ages - it doesn’t take a genius to pull apart the data from National Grid Transco and the DTI to see we have a problem yet for some reason the Government, Malcolm Wicks and Ofgem just don’t seem to want to see it. What do we pay these people for!

Blair orders gas inquiry as fears mount of winter supplies crisis
The Government has ordered an inquiry into whether there will be enough gas to keep Britain going this winter and what the impact on the economy could be if large swathes of manufacturing are forced to close down.

A number of factors lie behind the surge in spot rises over the past week. Operators have begun to draw supplies from Centrica’s Rough gas storage facility in the North Sea unusually early. It holds enough gas to supply one-tenth of the country for three months. Second, shipments of liquefied natural gas into the new Isle of Grain terminal in Kent, which can meet 4 per cent of UK demand have been diverted to the US and Spain, where they have been commanding higher prices. Third, technical problems have halved the capacity of the gas pipeline between Bacton on the east coast and Zeebrugge in Belgium which is used to import gas from the Continent.
The Independent

Those last two points are particularly interesting to me since they are just what I wrote about last month.

And from the BBC we have:

Supply fears amid gas price surge
Prices of wholesale gas have almost doubled during the past week, prompting fears about winter supplies to the UK.

Prices hit an eight month high of 80p a therm, sharply higher than last week’s price of 43p, before dipping slightly.

“We don’t have enough additional facilities we need to get the gas in that we need at the moment,” BBC correspondent Russel Hayes explained.

“The trouble is we actually don’t have a God-given right to buy gas from elsewhere. Liquefied natural gas is in a tanker, it can go anywhere in the world and other people at the moment have been paying more for it.”
BBC Online

To summarise I think these are the key points from the week:

• It’s been cold which has increased daily consumption.
• This increase in consumption hasn’t been met by beach deliveries.
• Draw downs from storage have caused a step change in price.
• The price spike has had analysts (including the Government) looking a little closer at the underlying problem.
• It’s been seen that interconnector flow rates aren’t all they could be.
• LNG shipments haven’t arrived in the volume they could have.
• And to top it all off looking at the long range forecast today, it seems that last weeks cold weather is set to continue for at least another week

This post was written by Chris Vernon

This entry was posted on Saturday, November 19th, 2005 at 11:57 am and is filed under Hydrocarbon Depletion. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.