Gas alert as demand and prices rise

[johnhemming]

LNG is counted as part of NSS (Non Storage Supply). There are flow limits, and it cannot replace storage directly although in as sense it is itself stored gas.

Looking at what happened before Xmas I would not expect a real problem until LRS is depleted.

[mikepepler]

Britain also received an liquefied natural gas (LNG) tanker at its Teesside Gasport, the first in over a year, capping some gains.

Another eight vessels are expected over the next few weeks.

Will this LNG ease the storage situation a bit?

It could - the trouble is that they rarely tell you how big the incoming ships are. The thing to remember is that LNG is needed as part of the daily supply anyway. However, because it is buffered prior to injection into the grid, it could also be seen as short range storage that's frequently topped up, and drawn from daily.

[Andy Hunt]

http://www.platts.com/RSSFeedDetailedNe ... as/8368802

A decrease in UK prompt natural gas prices due to milder weather enabled long-range storage withdrawals to slow Wednesday, with several deliveries of LNG also expected to boost available supply, traders said.

"Flows from Rough have reduced due to lower prompt prices and the expectation of higher LNG flows. Several LNG cargoes are expected over the next few days into South Hook and Isle of Grain. This could restore some bearish sentiment in the market if Rough storage is not used at full capacity," a trader said.

"Weather forecasts are still the dominant driver of demand, especially domestic demand, with the outlook still unclear for the rest of February and March," the trader added.

Gas for immediate delivery was down 0.90 pence a therm on the day at 57.75 p/th at midday London time, while that for next-day delivery had shed 0.70 p/th to 57.70 p/th.

Despite opening around 8 million cubic meters short due to a reduction in flows from Norway and the lower storage withdrawals the system was 1 million cu m/day long on gas by lunchtime at around 374 million cu m/day, National Grid data showed.

Demand was just 1% or 5 million cu m/day above the seasonal normal compared with 25% higher than average in recent weeks, lowered by the milder weather which Customweather forecast at 3-4 degrees Celsius below the 3-8 C seasonal norm for the rest of the week.

Flows of gas from Norway through the Langeled pipeline were down 15 million cu m/day on the the day at 55 million cu m/day, while the contribution from LNG remained high at 95 million cu m/day flowing from all three UK terminals.

Local port data showed a number of LNG tankers expected to berth in the UK from Qatar in the next seven days, including the Al Mayeda on Wednesday, the Onida Friday and the Al Sad on Saturday, all into the largest of the UK's three LNG terminals, South Hook.

The Blue sky carrier is also expected to berth at the Dragon LNG terminal from Trinidad & Tobago on Tuesday.

Meanwhile, storage withdrawals from the long-range Rough facility were still much lower Wednesday at 20 million cu m/day -- over 50% lower than last week -- with flows dropping as low as 15 million cu m/day early in the session.

Traders said that as the lower domestic demand allowed this to happen. the UK was also relying less heavily on imports from Continental Europe. The website showed the UK-Belgium Interconnector was forecast to flow at 12 million cu m/day Wednesday morning, but market sources said this gradually decreased as the session progressed.

On the curve, prices also came off in line with the prompt, with the front-month shedding 0.85 p/th in value to change hands at 57.25 p/th by midday London time while the front-quarter fell 0.90 p/th to 54.20 p/th.

Natural gas for delivery in the summer was trading at a 0.80 p/th discount to Tuesday's close, although traders said the seasonal contracts were supported more further forward.

[emordnilap]

Don't know about you, but the freezing weather is back with us. December was an anomaly. This weather is almost normal for January.

[PS_RalphW]

Demand seems to be stable at slightly above seasonal normal.

Long range storage is being drawn down at about 50% of max rate - which would see us through to early March, if we don't get any colder.

Medium range is not being refilled significantly.

Spot price is still 58p - still high enough to make coal the economic choice for electricity production.

LNG stoarge still 45% of nominal capacity, although capacity is increasing.

The key question is the maximum flow rate available from LNG storage. I haven't seen a figure for that. There are three flow rates to consisder -
how fast can LNG tankers unload the gas, how fast can the system regassify the liquid, and how fast can it be pumped into the pipelines.
Is the storage figure for the liquid or gaseous product, or both?

Another deep freeze and we are right back into GBA territory, but there isn't one on the radar at the moment.

[snow hope]

Another deep freeze and we are right back into GBA territory, but there isn't one on the radar at the moment.

The end of the month may see a return to some real cold stuff again....

[Andy Hunt]

I must admit it feels positively balmy here at the moment, a bit of a relief actually even though I do enjoy the cold weather.

Makes the logs last longer too, although I'm getting another delivery tomorrow. It would be nice if they last me through until the spring but if we get more of this Arctic weather then I doubt they will.

[DominicJ]

Snowing outside my office

[JohnB]

Snowing outside my office

Wot!! You mean in the corridor outside your office? You'd better call maintenance .

[RenewableCandy]

No need: "The Market" will provide a new roof

[Andy Hunt]

http://us.mobile.reuters.com/article/id ... 107?ca=rdt

* LNG capacity doubled since last winter

* At least 12 LNG cargoes scheduled for Jan. arrival in UK

By Karolin Schaps

LONDON, Jan 7 (Reuters) - Britain's largest gas storage site has lost some influence in supplying the market this winter as more flexible sources such as liquefied natural gas (LNG) terminals have gained a bigger role covering peak-time demand.

Centrica's (CNA.L) Rough storage site off the east coast of Yorkshire can hold around 70 percent of Britain's gas stocks and has been a key source of heating gas on cold winter days.

But since last winter, gas supply capacity at two of Britain's LNG terminals has increased by 50 percent each, lifting the potential for more cooled gas to enter the UK.

"Rough is still critical to the UK market but the increase in extra flexible capacity has taken some pressure off," said Andrew Horstead, head of research at energy consultancy Utilyx.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic on Rough supply and within-day price movements, please click here: http://graphics.thomsonreuters.com/gfx1 ... 112937.jpg

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Key LNG supplier Qatar has also recently expanded production capacity by 7.8 million tonnes per year and is set to open another facility within one month's time. [ID:nLDE6AC05A] [ID:nLDE70516W]

"Given the extra capacity coming on stream in Qatar, following delays from last year, there's more supply available to the market and the UK is one of the few markets that has the capacity to absorb it," Horstead said.

On Friday, Britain had already received five January cargoes of LNG and at least seven more are expected over the coming two weeks. [LNG/TKUK]

"We have boats of LNG coming out of our ears so it is possible that we don't need to worry too much about Rough," said a gas trader at a major British utility.

The early onset of wintry weather in Britain prompted gas suppliers to tap storage levels sooner than in previous years, which has spread worries across the market that stocks may run out before the end of winter. [ID:nLDE6AF1VH] [ID:nLDE6AP0WB]

Even though winter gas prices added some risk premium, gains have been capped as storage has become less of a risk factor with the growth of alternative supply sources.

"Rough withdrawals have been at a maximum pretty much since the cold snap hit us. For sure without LNG we would have seen higher prices and supply problems," another British gas trader said.

On Friday morning, gas flows from Rough fell to zero, while the site covered around five percent of gas demand on Thursday, but British gas prices failed to react to the cut in storage supplies.

Here comes the cavalry?

[Totally_Baffled]

Who would of thought it - the gas supply in the UK looks surviving the coldest December for 100 years and the earliest snow for a couple of decades.

I must admit - I thought a winter like the one we have just had, coupled with the declining north sea would of seen some sort of disruption/interruption in supply.

Anyone else suprised?

[Andy Hunt]

It's not over yet. To me, the article above smells of panic. The message seems to be, "Rough is irrelevant now, but thank God for LNG for taking the pressure off at this critical time".

It smells of wishful thinking, of desperately wishing to reassure the Market. But as has been pointed out, LNG can only inject into the system at a certain rate.

We may not be out of the woods yet. Depends if the really cold weather comes back I reckon.

[Totally_Baffled]

It's not over yet. To me, the article above smells of panic. The message seems to be, "Rough is irrelevant now, but thank God for LNG for taking the pressure off at this critical time".

It smells of wishful thinking, of desperately wishing to reassure the Market. But as has been pointed out, LNG can only inject into the system at a certain rate.

We may not be out of the woods yet. Depends if the really cold weather comes back I reckon.

Fair Comment Andy - I think I might have just jinxed the situation with my post!

[Andy Hunt]

I think the last line says it all - despite all these LNG reassurances, prices haven't fallen. The Market is not convinced.