Gas alert as demand and prices rise

[RenewableCandy]

What (I mean, physically) is the medium range storage (I mean, if the long-range is porous rock and the short range is ships)? Is it the collection of "gasometers" all over the country?

[biffvernon]

It's a bit like car parks. You have short-stay and long-stay. They look the same but one is nearer to the shops.

(Milford Haven is street parking and the stuff actually in the pipes is on a double yellow line.)

[Little John]

It's a bit like car parks. You have short-stay and long-stay. They look the same but one is nearer to the shops.

(Milford Haven is street parking and the stuff actually in the pipes is on a double yellow line.)

No, that's the point I was getting at. It's not like that. To logically extend your analogy would be to suggest that when people park up for the day, they leave their car in the long term car park at one end of town for the first three quarters of the day. Then they go an pick up their car at 3pm and drive it all the way across town to the short term car park to leave it there for just a couple of hours.

In the case of gas, one might presume this is precisely what does happen of course. The point I am getting at and that Adam has not quite addressed for me is that if long term storage is low (undersea reservoirs), then they should be filled up as quickly as is possible. Presumably, then, the medium term store (ships and storage facilities at ports?) get its gas from the reservoirs. Therefore, I fail to understand how the replenishment capacity of the medium term store can be treated as somehow independent of those reservoirs. In other words, the medium store's capacity to replenish, is directly consequential to what is held in the reservoirs is it not?

The only way what Adam is saying makes any sense is if the medium term storage facilities and the long term storage facilities are obtaining their gas independently from each other from sources as yet to be specified. In which case to imply they are different parts of the same supply chain by calling them "long term storage" and "medium term storage" is incorrect. In other words, they are independent storage systems and the typical size of storage and replenishment capacity each of them has, though strategically important to understand, is also conceptually independent.

However, if the source of gas for the "medium term store" is not the "long term store" (the reservoirs), then what, precisely, is the "long term store" for? In the absence of an answer to that question I will, at this point, hazard the guess that the "medium term store" obtains its gas from at least two sources; namely the reservoirs and also some other source/s as yet unspecified. Presumably, then, the reservoirs must be there to provide a supply buffer to the "medium term store" at times when the usual supplier of the "medium term store" gets a bit skinny (I'm having to guess here). This, then, begs the question as to why the non-reservoir-supply of gas to the "medium-term-store" is not simply all sent to the "long-term-store" in the first place instead, meaning it is less likely to run low, in turn meaning the "medium term store" can always look to obtain all of its gas (or, all that is physically available) from the "long-term-store". The only exception to the above would be if the "long-term-store" was at full capacity, in which case the supply could be rerouted directly to the "medium-term-store".

Adam has mentioned that the LTS has some kind of limit on the speed at which it can be replenished as compared to the MTS, which has a faster capacity to replenish and that this means the MTS must be allowed to run low while the LTS replenishes. However, I don't see how this helps in any way with ultimate supplies. Either the MTS runs so low that it has to dig into the LTS, in which case, the LTS empties no more or less quickly than it was ever going to. Or, the MTS is allowed to run out, in which case, there will be power cuts. The alternative is to let the supplies go straight to the MTS, in which case, if external supplies do not keep up with MTS demand, then the MTS is going to have to dig into the LTS reserves, in which case, the LTS empties at the rate it was always going to. Or, the LTS also runs out/the LTS is not called on, in which case, there will be power cuts.

In either of the above two scenarios, I fail to see what ultimate difference shuttling supplies backwards up the storage chain makes to supply security. As long as it is in the storage system, it is part of our stored reserves and is going to get used. If there is insufficient in the system, then it makes no ultimate difference where in the system it is stored (or not stored). The lights still go out at some point.

Some combination or version of the above may be precisely the situation that pertains (or not). Consequently, I need that situation spelling out because it's unclear at the moment and your analogy does absolutely nothing to provide any clarity.

In other words:

This?



Or this?



Or this?



Or something else?

[kenneal - lagger]

What Adam has said sounds perffectly logical to me. We have a limited amount of storage capacity; not as much as we really require. The long term storage (LTS) has a set rate of replenishment, while the medium (MTS) and short term stores (STS)can be filled much more quickly.

So you fill the LTS as quickly and as often as you can to maximise the amount that can be held there. If there is more than enough gas arriving to fill the LTS you divert some to the MTS as well while keeping the STS to handle excess supplies that cannot be put down the pipes quickly enough.

While the cost of the imported gas is high you only buy enough to fill the LTS but should/when the gas price drop you fill the MTS as well as the LTS. You have to put gas into the LTS at whatever price you can get it at because it has a defined slow rate of fill. The MTS and STS can be filled at a much higher rate when the gas price is lower.

[biffvernon]

With the added proviso that, other things being equal, you fill the nearest storage first. Don't store Norwegian gas at Milford Haven or Gulf gas in Rough. (Park at the first car-park you get to rather than driving through the town centre to park in the far one, even if it looks cheaper when you get there.)

[Little John]

What Adam has said sounds perffectly logical to me. We have a limited amount of storage capacity; not as much as we really require. The long term storage (LTS) has a set rate of replenishment, while the medium (MTS) and short term stores (STS)can be filled much more quickly.

So you fill the LTS as quickly and as often as you can to maximise the amount that can be held there. If there is more than enough gas arriving to fill the LTS you divert some to the MTS as well while keeping the STS to handle excess supplies that cannot be put down the pipes quickly enough.

While the cost of the imported gas is high you only buy enough to fill the LTS but should/when the gas price drop you fill the MTS as well as the LTS. You have to put gas into the LTS at whatever price you can get it at because it has a defined slow rate of fill. The MTS and STS can be filled at a much higher rate when the gas price is lower.

Yes, I get all that, in which case, fine. But, also, in which case, they should not really be conceived of as LTS/MTS within a unitary supply chain. (I'm not suggesting that's necessarily Adam's Idea. I've no doubt he is merely using the official terms for these different stores). They are entirely different stores who can also supply each other as well as the end consumer. So, the fact that the "MTS" is running lower than usual while the "LTS" is building back up its reserves is neither here nor there unless the "LTS" also has a problem with speed of supply as well as speed of replenishment. But, that has not been made clear here, so I will assume, unless I am informed otherwise, that such a problem of speed of supply does not exist with the LTS. And that's the point I have been getting at; if the only thing that marks the so-called "LTS" out as being different from the "MTS" is its capacity of speed of replenishment, then that does not mark it out as a "long term store". It just marks it out as a less efficient store.

If, however we assume that the LTS also has a problem of speed of supply as well as of replenishment, then I would be interested to know if its supply capacity is able to keep up with typical or, even, excessive demand by the MTS.

The point is, I am being forced to make long and convoluted guess here in the absence of some key information. I'm not having a go at Adam at all here by the way. He has been kind enough to explain the situation so far. I am merely needing to know more and I think you are incorrect in thinking that the information provided so far answers the issues I have raised.

Even if I assume the simplest case linear supply system; namely that all gas is delivered to the LTS, which then passes it on the the MTS, which then passes it on to the STS. Then I still don't see what the fuss is about if the MTS is being allowed to run low by not allowing as higher flow rate from the LTS. If the MTS gets tot the point of running out, then the LTS will be allowed, at that point, to increase its flow rate to the MTS to make up the shortfall in the MTS.

However, additionally, I don't even see the point in allowing the MTS to run low in order to fill up the LTS. If the gas is going cheap, then you would ant to fill up all/any parts of the storage system in order to take advantage of that. In which case, filling up the MTS first would make more sense since, as I've been told, you can fill it up faster. Only when all fast replenishment parts of the storage system had been filled would you then start to fill up the slow replenishment parts of the system surely? If, on the other hand, the gas is going expensive, then it won't make any difference where you put it into the storage system, it is still expensive. And, in any event, all of the gas in the system is the gas in the system and it is all going to get used. So, why would you want to create an hole in that chain half way down it at the MTS?

[adam2]

LTS is limited not only in the rate of filling, but also the rate of emptying.
MRS can be emptied OR filled more quickly
SRS can be emptied quickly, but only filled at a relatively modest rate.

The national grid gas "prevailing view" webpage shows both the present and recent past actual stock levels, and also shows the maximum potential discharge rates.

Incoming gas supply can be put into whichever store is expediant or used directly.
Gas demand can be supplied directly from any store, or from incoming supplies.

We have a potential problem with both the total volume of storage being insufficient, AND with rates of filling and emptying being insufficient.

http://marketinformation.natgrid.co.uk/ ... 03/06/2013

[Little John]

LTS is limited not only in the rate of filling, but also the rate of emptying.
MRS can be emptied OR filled more quickly
SRS can be emptied quickly, but only filled at a relatively modest rate.

The national grid gas "prevailing view" webpage shows both the present and recent past actual stock levels, and also shows the maximum potential discharge rates.

Incoming gas supply can be put into whichever store is expediant or used directly.
Gas demand can be supplied directly from any store, or from incoming supplies.

We have a potential problem with both the total volume of storage being insufficient, AND with rates of filling and emptying being insufficient.

http://marketinformation.natgrid.co.uk/ ... 03/06/2013

Brilliant, thanks Adam. I'll take a look at the link as well.

[Little John]

One final thing that is impeding my understanding Adam; do the terms LTS, MRS and SRS relate to the size of these different stores or to their different replenishment/discharge capacities?

[adam2]

The long range storage is the largest and can be emptied relatively slowly over a fair bit of the winter so as to supplement other supplies, it then takes most or all of the Summer to fill.

The mid term storage is less in capacity than the LRS and can be emptied relatively quickly, useful perhaps for exceptional demand on the coldest days of the day, or if unforseen events disrupt other supplies.
Can be filled at about the same rate.

The short term storage should be considered more as an emergency reserve that can be emptied very quickly in an emergency, for example if something breaks.
Filling is a lot slower than emptying, and carries a significany energy cost as at least part of the SRS is liquified gas, IIRC.

[PS_RalphW]

Refill of LRS stalled on 9/6/13, although MRS filling continued.

This cool cloudy weather is keeping demand up, wereas NS deliveries are well down.

[PS_RalphW]

Gas price at a 12 month low of 56p per therm.

I remember about 5 years ago a long term forecast of gas prices, where 50p/therm was the 'high price' scenario.

Medium storage is now being filled fast. Short term storage still nearly empty. Too late to refill long term storage completely.

[adam2]

Yes, the LRS simply wont be filled in time.
The MRS still has a long way to go but should be filled in time, given enough gas, and there seems plenty at present.

The present price though high by the forecasts of 5 years ago, is low compared to the recent past, suggesting no near term shortage.

[adam2]

The gas price has dropped to under 40 pence a therm.
I doubt that it will stay that low for long, and find the fall suprising even in the short term.

MRS filling well.
LRS filling steadily, but as previously noted, wont be full in time for an early or cold winter.
No progess on filling SRS which seems a bit suprising at the low price.

Edit to add, it did not stay at 40 pence a therm for more than a day or so !

[adam2]

Total storage now about 60% full, this has taken just over 4 months, from mid April to late July. So about 14% a month filling so far.
At that rate, to fill the remaining 40% would take about 3 months, say until late October.

Unfortunatly the rate of filling will slow down once the medium range store is full, and before late October it is likely that demand will increase such that filling ceases and emptying may well start.