Britain's gas supply is running out...

[dutchman]

British wholesale gas prices surged to a seven-year high on Friday after one of the country’s main import gas pipelines was temporarily shut due to a technical fault.



The halt in production added to concerns over the UK’s gas stores, which are already running low due to the continued cold weather and few cargoes of liquefied natural gas.

Gas prices for within-day delivery rose to 150p a term, more than 50 per cent above Thursday’s closing price, after the UK-Belgium Interconnector was shut. A water pump failure forced the shutdown of the pipeline at about 7am, the operator said, adding that it “places the highest emphasis on safety and gas supply and is taking immediate action to correct the issue”.

The Interconnector announced it had resumed flowing after midday but at a reduced rate. Within-day gas prices fell back to 102 pence a therm.

The pipeline provides one of the main sources of imported gas for the UK whose domestic supplies are dwindling given the cold weather. An analysis by Reuters showed the country could run out of stored gas by April 8 based on the fall in reserves seen since the cold spell began at the start of March.

The Met Office is forecasting that the cold weather will last until April, fuelling concerns over the UK’s gas supplies.

SSE, one of the largest electricity suppliers, said on Thursday that the government was underestimating the risk of a power shortage in coming years.

“The government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years,” said Ian Marchant, SSE’s chief executive. “There is a very real risk of the lights going out as a result.”

Britain’s heyday as a significant producer of oil and gas from the North Sea is long gone. Energy imports exceeded UK production in 2011 for the first time since 1974, according to government figures. LNG imports, mainly from Qatar, became an increasingly important source of supply. In 2011, they made up nearly half of British gas imports, from 2.25 per cent four years previously in 2007.

However, they dropped sharply in the past year, accounting for 27.7 per cent of total gas imports compared with 46.8 per cent in 2011. The decline was partly due to lower demand because of the recession, but the overriding factor was seen to be LNG cargoes heading east because Asian buyers are prepared to pay more.

Less LNG means the UK has become heavily dependent on imports from Belgium and Norway. Gas prices already spiked to similar levels earlier this month when a power cut at a Norwegian gas processing plant earlier cut production and exports to the UK.

The Department of Energy and Climate Change said it took “gas security and the risk of harmful price spikes seriously”.

“We are working with Ofgem to review our market arrangements to ensure they continue to provide secure supplies to consumers,” it added.

[dutchman]

Gas: UK 'Was Six Hours From Running Out'

Britain was six hours from running out of gas in March, it has been reported.

High demand during record cold temperatures during the month combined with a pipeline fault to drive stores of gas "dangerously low", the Crown Estate said.

But National Grid, which pipes gas around the UK, insisted the nation has "substantial resilience" and diverse supply sources, including access to imports of liquefied natural gas (LNG).

At the time, reports said Britain was two days from running out of stored gas, but the Crown Estate, which manages the Queen's property portfolio - including vast underground gas caverns - said it came even closer to supply interruptions.

The supply squeeze will raise concern over Britain's increasing reliance on energy imports as domestic production falls, and add to fears over rising energy bills.

Rob Hastings, energy and infrastructure director at the Crown Estate, was reported by the Financial Times as saying: "We really only had six hours' worth of gas left in storage as a buffer.

"If it had run any lower it would have meant ... interruptions to supply.

"The bottom line is that in the UK we are in a place where the gas supply is dangerously low."

The Crown Estate owns the rights to gas storage caverns under the UK seabed. Energy firms use these caverns to build up supplies of natural gas during warmer months.

While Britain's storage capacity has increased in recent years, energy watchdog Ofgem says it still lags behind other major European economies on gas storage because of its historic role as a producer.