Gas alert as demand and prices rise

[Tarrel]

That'll be one-nil to the Rowan Berries then!

[adam2]

Gas storage now down to about 17% with withdrawals continueing due to strong demand.
Spot prices over £1 a therm which I suspect to be a record.

Should still be OK for this winter which is virtually over.
I would predict that significant imports, probably at high prices, will be needed all summer to fill the store for next winter.

I would also expect significant increases in retail gas and electricity costs.

Insulate, insulate, stock up on wood, LPG bottles, and heating oil, and for the longer term plant more trees.

[clv101]

Negative temps are forecast widespread for next week. It'll be tight, with the knock on that during the summer we'll have to import a record amount of gas to restock.

[emordnilap]

I would predict that significant imports, probably at high prices, will be needed all summer to fill the store for next winter.

Why would they be high, compared with buying it in now? Surely prices for gas are lower in this region during summer, no?

[adam2]

I would expect that summer prices for natural gas will be lower than present prices, this is normally the case that prices drop at times of lower demand.

I would however expect that prices this summer will be appreciably higher than in previous summers.
We will need to purchase large volumes in order to fill the nearly empy storage, and that alone will tend to drive up prices.
I would also expect that neighbouring countries will have depleted reserves and will be buying more than usual for refilling.

UK gas demand is liable to be high this summer as compared to previous summers due to the closure of coal burning power plants and consequent increase in gas burning for electricity production.

Any brief interuption to imports, as might be caused by industrial disputes, bad weather or accidents, will require a still higher level of imports for the rest of the summer to "catch up"

[Blue Peter]

We will need to purchase large volumes in order to fill the nearly empy storage, and that alone will tend to drive up prices.

"Large volumes"? Isn't the issue that we don't actually have much in the way of storage (only 4% of annual use). Or are things that tight that even a few % difference will make a huge difference in price?


Peter.

[clv101]

We're going to have to buy/import significantly more gas this summer than ever before (remaining reserves low and UK North Sea production low).

[mikepepler]

Gas supply is looking very tight for the next few days...

Forecast demand is:
Sat: 300mcm
Sun: 320mcm
Mon-Wed: 360-370mcm

Bearing in mind how low storage is, and that the margin notice trigger level is currently around 400mcm but will drop as storage depletes, I wouldn't be surprised if we have a gas demand warning by the end of next week...

More info at http://marketinformation.natgrid.co.uk/ ... gView.aspx

[ujoni08]

Good call, Mike. It's looking a bit nasty:



EDIT by adam 2, note that this chart does not update, it is a picture of the position on the date of the post, and is now of only historical interest. Up to date data may be found on the national grid website.

[cubes]

I expect by this level the rate they can remove gas from storage reduces due to pressure drop?

[adam2]

I expect by this level the rate they can remove gas from storage reduces due to pressure drop?

One might expect this to be the case, but the national grid data suggests that the maximum withdrawal rate is constant until empty, rather than declining at nearly empty.

[mikepepler]

I expect they have to actively pump it out, as the national gas grid is at pressure anyway.

There have been significant imports in the past few days, so the stores haven't dropped a lot yet, though I expect the 4pm update today will show some falls. But this will come at a price, to be paid through our energy bills over the coming year... It's still meant to be colder than average for the coming 4 weeks, but if we are able to keep imports at these levels it will be OK, just expensive. Of course, it only needs another unexpected outage, whether political or technical, and we'd be in trouble.

[adam2]

Here is a problem in the making

Do you think any politician of any colour -- under current economic reasoning -- will allow the UK to have power blackouts just because of the piece of paper?

If we need the juice you can bet those plants will keep smokin' after their 20,000 hours are up.

We dont know until it happens of course, but a lot depends on the timing.
Had the permitted lifetime of the plants expired during a cold winter with power cuts resulting from closure, then I agree that they would probably have been kept running.

In fact though, the permitted lifetime or operating hours are in effect finished at the end of this winter, for several power stations.
I therefore consider it likely that the rules will be followed.

There is unlikely to be any urgent need to run these power stations until next winter. To maintain them in running order throughout the coming months will be expensive in both labour and materials/supplies.
This expense is of course known about and faced every summer, but is justified if profits are expected in the coming winter.
Under present circumstances though, the owners may be unwilling to maintain equipment at considerable expense if furthur use is both illegal and considered unlikely.

I consider it likely that at some large coal burning plants, that staff have already been found other work or issued with redundancy notices, and that plans for dismantling for component recovery or scrap metal are already in hand.
Some equipment is probably already long past its best, especialy remembering that due to the short remaining lifetime of the plant that only the most basic repair and maintenance has been carried out.

If there is a gas shortage next winter, I can forsee TPTB suggesting running old coal burning power stations in defiance of EU rules, and the owners saying "we cant. YOU said that furthur use was illegal so we laid off the staff, cancelled the boiler inspection and insurance, and have started knocking it down"
Headlines in papers shortly afterwards "wicked fat cat power bosses demolish power stations to drive up prices paid by families"

[clv101]

If there is a gas shortage next winter, I can forsee TPTB suggesting running old coal burning power stations in defiance of EU rules, and the owners saying "we cant. YOU said that furthur use was illegal so we laid off the staff, cancelled the boiler inspection and insurance, and have started knocking it down"
Headlines in papers shortly afterwards "wicked fat cat power bosses demolish power stations to drive up prices paid by families"

A sadly plausible, if ridiculous situation.

[ujoni08]

A bit more here:
http://oilprice.com/Latest-Energy-News/ ... l-Gas.html