Gas alert as demand and prices rise

Mean Mr Mustard · Post by **Mean Mr Mustard** » 21 Dec 2010, 18:13

Andy Hunt wrote:It's increasingly looking like we may be stuffed.

Is that a technical term?

Andy Hunt · Post by **Andy Hunt** » 21 Dec 2010, 19:21

Mean Mr Mustard wrote:
Andy Hunt wrote:It's increasingly looking like we may be stuffed.
Is that a technical term?

Mean Mr Mustard · Post by **Mean Mr Mustard** » 21 Dec 2010, 19:52

Mmmm.... Gas mark 7 for a few hours!

JohnB · Post by **JohnB** » 21 Dec 2010, 20:35

Mean Mr Mustard wrote:

Mmmm.... Gas mark 7 for a few hours!

Assuming you've got the gas

Andy Hunt · Post by **Andy Hunt** » 22 Dec 2010, 20:13

You read it here first.

http://af.reuters.com/article/energyOil ... WM20101222

* Statoil shuts Snohvit LNG plant, restart time unknown
* UK gas storage could run out early Feb - trader

LONDON, Dec 22 (Reuters) - British gas futures climbed on
Wednesday with concerns over storage levels and Norwegian
liquefied natural gas (LNG) production pulling prices up.
Gas for January was up 1.15 pence at 59.15 pence per therm
($9.16 per mmBtu) at 1128 GMT while Summer 11 contracts were up
0.75 pence at 53.45 pence.
Forward prices were firm following an outage at Statoil's
(STL.OL: Quote) Snohvit LNG plant due to a technical problem, with no
restart date confirmed.
"It's really worrying as it comes at a time when there's
likely to be a lot of ships potentially coming to the UK from
Norway. This now leaves the UK a bit shorter for the coming
month," one gas trader said.
Britain received two LNG tankers from Norway in late
November and early December, with high prices making it an
attractive destination for spot cargoes. [ID:nWLA8681]
[ID:nWLA9373]
Traders also said UK gas storage was still being used, which
was also raising prices for contracts further out.
"Storage is still withdrawing, prices are still telling
people to withdraw. Assuming there're no injections over the
Christmas period, we'll have around 36 days of storage come the
begining of January," another gas trader said.
Traders said thin trade was also making prices volatile,
with volumes down as market participants closed positions before
the Christmas break.

Post by **mikepepler** » 22 Dec 2010, 22:05

Thanks Andy. From the entry on wikiepdia, it looks like the average daily LNG output from this field should be equivalent to 15mcm of gas.
http://en.wikipedia.org/wiki/Sn%C3%B8hvit

So, not a massive amount, but possibly still significant in a tight gas market?

More interesting is that this is the first media comment on the fact that at current rates of use our storage will be empty in early Feb. I wonder if more people will catch on over the coming weeks?

Andy Hunt · Post by **Andy Hunt** » 22 Dec 2010, 22:23

Well I have sent the story to Sky News via my iPhone app, I doubt they will pick up the significance though.

It all seems slightly surreal. Apparently the UK does have more storage capacity planned, but it won't come online until 2016. A lot can happen (and might have to!) in six years.

lurker · Post by **lurker** » 23 Dec 2010, 10:49

https://www.decc.gov.uk/en/content/cms/ ... t_oil.aspx

Andy Hunt · Post by **Andy Hunt** » 23 Dec 2010, 12:02

lurker wrote:https://www.decc.gov.uk/en/content/cms/ ... t_oil.aspx

The Gas Balancing Alert (GBA) is a tool that National Grid use to make sure there is enough gas in the system. The GBA has the effect of signalling:

to shippers to increase supplies onto the network e.g. by increasing flows through imports and releasing gas from storage; and

Isn't this a bit disingenuous? I mean, aren't both of these things happening in any case?

And what about managing these 'low probability, high impact' events? Is this a hint that the government is aware of the storage situation? And what would management look like - rolling power cuts?

Andy Hunt · Post by **Andy Hunt** » 23 Dec 2010, 13:10

http://www.thisislondon.co.uk/standard- ... project.do

Horse. Bolt. Door. Stable.

biffvernon · Post by **biffvernon** » 23 Dec 2010, 13:52

My Tory MP, Sir Peter Tapsell, led opposition to planned gas storage in his Lincolnshire constituency.

Andy Hunt · Post by **Andy Hunt** » 23 Dec 2010, 13:57

biffvernon wrote:My Tory MP, Sir Peter Tapsell, led opposition to planned gas storage in his Lincolnshire constituency.

Maybe you should write to him asking if he is still confident he made the right decision. It would be interesting to have his reply in writing, you could sell it to your local rag to raise money to pay for your next gas bill.

Post by **mikepepler** » 24 Dec 2010, 22:04

I've written a blog with some graphs and explanations on the gas situation. If you spot any errors, tell me and I'll fix them.

http://peakoilupdate.blogspot.com/2010/ ... -2011.html

Adam1 · Post by **Adam1** » 24 Dec 2010, 22:34

Excellent blog posting Mike. How bad would things have to get before we got to Stage 4?

Mike P. wrote:Stage 4 (System isolation): parts of the gas network will be isolated, resulting in no gas supply to any user in the affected areas.

I've always assumed that power cuts would cut demand for gas so much that they'd be very unlikely ever to reach that stage: if the gas supply was cut but electricity was still working, people would immediately turn to it for heating.

Andy Hunt · Post by **Andy Hunt** » 24 Dec 2010, 22:41

Absolutely excellent Mike, everything we need to know, in a nutshell.

I didn't realise that not enough gas had been injected over the summer to make up for last winter, but now I look at it I see we only started the winter at 95% or so of capacity.

A very worrying scenario if storage cannot recover over the summer, especially if we are in for more hard winters.

PowerSwitch

Gas alert as demand and prices rise

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