UK Energy Trends: the decline continues

A couple of days ago the latest UK government Energy Trends publication was released by DECC. As is now normal, it does not make cheery reading...

Production

Here's the headline figures for 2012 UK energy, compared to 2011:

• Total energy production down 10.5%
• Oil production down 14.5%
• Gas production down 14%
• Coal production down 10%
• Hydro, wind and solar generation up 21%

So, bad news on fossil fuel production, but at least renewables are growing. But note that even after this growth, renewables only supplied 11% of electricity in 2012, and a much smaller percentage of total energy, so there's still some work to do there!

There are also figures focused on the fourth quarter of 2012, comparing it to Q4 2011. The results there are even worse than for the year as a whole:

• Total energy production down 14%
• Oil production down 20%
• Gas production down 21%
• Coal production down 10%
• Hydro, wind and solar generation up 7.5%

Gas production was much lower due in part to the leak at the Elgin platform, which is now gradually coming back into production, so hopefully the decline through 2013 won't be quite so severe. However, gas demand will be increasing, due to the closure of coal-fired power stations.

Imports

Here's the figures for how much we were importing, given for 2012 as a whole and then for Q4 2012:

• 43% of all energy was imported through 2012, rising to 48.7% in Q4
• About 39% of oil demand was met by imports, falling to 36% in Q4 as refinery demand reduced after the closure of Coryton refinery
• About 47% of gas demand was met by imports, rising to 55% in Q4
• About 70% of coal demand was met by imports, falling to 64% in Q4

Of course, the declines in oil and gas production are not just down to depletion, there have also been various technical problems and accidents, as well as maintenance. But these events are not one-offs, they happen every year as our energy infrastructure ages...

We're also a net importer of petroleum products, such as petrol, diesel and jet fuel, after the Coryton refinery shut last year - so the reduction in oil import dependency was offset by an increase in dependency on imports of the finished products.

Electricity

Looking at electricity in more detail, a few key points are worth noting:

• Coal's share of electricity generation increased from 29.5% in 2011 to 39.3% in 2012, while gas went in the opposite direction, from 39.9% to 27.5%. This was due to price variations and upcoming carbon taxes for burning coal, combined with the remaining hours left to run on coal plants opting out of compliance with the LCPD. As many of these plants are closing during 2012 (some have already closed), the balance may be expected to swing from coal back to gas again in 2013.
• Net imports of electricity doubled from 2011 to 2012, and represented 3.4% of total supply.
• Installation of renewable energy capacity is still going ahead quickly, and new record generation was recorded, but it is still a relatively small proportion of overall energy.

Summary

Well, what can I say? We're producing less, importing more, but only using a little bit less energy. With the various ongoing gas supply problems I've been reporting on this blog, it is imperative that the whole of the UK takes action to reduce energy use, particularly for heating and electricity, before we get to winter 2013/14. The alternative is that we pay more. A lot more.

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UK gas stores running down in continued cold weather

Lots of gas was drawn out of storage in the past two days. The previous lowest storage level on record was 17 March 2010, when we had a total of 4,932GWh, split as Long Range Storage (LRS) 2959, Medium Range Storage (MRS) 1357, Short Range Storage (SRS) 616

The 4pm update on 28 March 2013 showed 3,399GWh in storage, split as LRS 1150, MRS 2200, SRS 49, so that's a new record low.

Also, by 28 March 2010, over 3,200GWh had already been reinjected to stores after the low, whereas this year it looks like we won't be putting much back in through the whole of April...

Even if we scrape through the remainder of this winter, we are not in a good position already for next winter...

Get the latest data here: http://marketinformation.natgrid.co.uk/gas/frmPrevalingView.aspx

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LNG to the UK's rescue this week?

Some positive news on UK gas supply from Reuters today:

The first of a trio of tanker loads of super-cooled gas from the world's largest LNG exporter docked at the Isle of Grain terminal near London on Sunday, with a second due in Wales on Monday and a third on Friday, tracking data on Reuters shows.

The Qatari tankers could supply a total of around 430 million cubic metres (mcm) of gas to Britain over the next week, compared with daily gas demand of around 370 mcm, while another tanker has set sail from Trinidad on Saturday after UK gas prices leapt on Friday when a key supply link from Belgium shut unexpectedly for 8 hours.

Of course, the key is that it's only because wholesale gas prices have been so high in the past few weeks that it's arriving:

But it may take sustained high UK wholesale gas prices to lure many more gas tankers away from consistently higher paying buyers in Asia to the UK.

I expect this will enable the UK to scrape through this week's cold weather, and no doubt the government will declare that the market has 'worked'. I imagine many customers will question how well it is 'working' though when their inflated gas bills arrive later this year...

We'll need to keep prices high to keep the LNG arriving and the import pipelines flowing, as the weather is expected to stay colder than average for a few weeks yet. And there's that Norwegian shutdown looming next Monday as well...

Fundamentally we are now in an international bidding war, and we either pay up or the lights go out next winter. Of course, we could always try using less energy, but that doesn't seem to be a very high priority for the government right now...

Mike

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Bacton gas outage - how well did we cope, and what next?

Earlier today I wrote about an outage at the Bacton Interconnector, which imports gas from Belgium to the UK. The outage was caused by the failure of a simple pump, but couldn't have come at a worse time, given the low amount of gas in UK storage and the ongoing cold weather. So how did the UK and National Grid cope with the outage, and what are the consequences? The following graphs were all screen captured from National Grid's Instantaneous Flows Report in 24-hour view at about 7:30pm on Fri 22 March 2013.

This first one shows the problem - the blue line represents gas entering the UK via the Bacton Interconnector. From about 7am to 2pm there was little or no gas coming through, compared to the rest of the day when the flow was about 70mcm/day. So that's about 20mcm that had to be found from other places to meet today's UK gas demand (which is high, due to the cold weather). Demand today was around 350mcm, so this was just under 6% of the day's demand that went missing.

Well, clearly the lights didn't go our (remember that about a third of our electricity is generated by burning gas), so what happened? Well, the first thing was that gas started flowing out of Long Range Storage, which is actually an old gas field called Rough. There was no gas coming out of this prior to the Bacton outage, but about an hour after it, flows started and ramped up close to maximum for the duration of the outage, and stayed a bit above half maximum afterwards. To put this in context, if gas was drawn from LRS at maximum rate continuously, we only have enough in it right now to keep going for about 5 days.

A little bit later on, extra gas started flowing from one of the Liquefied Natural Gas (LNG) terminals. This is gas that arrives on tankers from Qatar and other places, is pumped into storage vessels and released gradually as required. However, we've not been able to import much LNG in the past year, as Japan is buying a lot of the global supply, to replace the output of the nuclear power stations that were shut down after Fukushima. There's about 65% more gas in the LNG stores than there is in LRS right now. At the time of writing the flows coming out of LNG were about 18mcm/day, at which rate the stocks would last about 21 days - but with more cold weather coming, the withdrawal rate could increase.

As the outage continued, gas also started flowing from the Medium Range Stores. There's currently about the same amount of gas in MRS as in LRS, but it can be released faster when required - though clearly that would only then give us a few days' supply.

This final graph was from one of the links on National Grid's Prevailing View page. The black line indicates actual flows, and the orange line indicates the estimate for the day's gas demand at that point in the day. The effect of the Bacton outage is clear, as is the increased supply post-outage to compensate for what went missing.

So the good news is that the 'market' worked, and enough gas arrived despite the outage. The bad news is that the extra supply came out of storage and LNG, reducing stocks. This is a problem because the coming week is forecast to be unseasonably cold for March - check out the 'feels like' temperature map at the Met Office. Add to this the fact that one large coal power station shut for good today (Didcot A, 2,000 MW), and others are to follow - so that means more gas being burned to generate electricity.

So, we have a tight week ahead for gas and electricity supply in the UK, with the cold weather. What about after that? I'm sure we're all hoping Spring will arrive eventually, and be followed by a decent summer. But even if everywhere is lovely and warm, there's still a job to be done - refilling the gas storage and getting the LNG stores back up to a decent level. This will be expensive work - we need to import a lot of gas to do this, and ultimately it's you and I who are going to pay for it, one way or another. But it's not even that simple sadly... Norway needs to take about 40 mcm/day of production offline from 1 April to 2 August to carry out maintenance. This is bound to reduce availability to some extent in the European gas market, so can only push prices higher, and perhaps even limit what it is possible for us to put back into the gas stores before next winter.

Let's hope the summer is a warm one...

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Problem with gas imports at Bacton Interconnector?!?!

OK, this is a bit scary - I just finished writing my previous post, and then went to the National Grid web page that shows live data about gas flow, and was alarmed to see this graph:

What it shows is imports from the Bacton Interconnector falling from nearly 80 million cubic meters (mcm) per day down to zero. To put this in perspective, UK demand today is expected to be about 327 mcm, so that's a quarter of today's gas supply gone missing.

No new response at the time of writing from storage sites, and nothing in the news yet... Let's hope they get it back online soon, or we really may have a problem right now...

UPDATE: the mainstream media has caught up with me:

Britain's wholesale gas prices surged to a record high on Friday, after one of its three gas import pipelines shut down unexpectedly.

The operator of the UK-Belgium Interconnector pipeline said a technical problem had forced the shutdown, without giving more details.

If the pipeline remains shut for a number of days, Britain's grid operator will be forced to trigger all emergency supply options, including reducing demand from contracted users, which will cause an even higher price spike, traders said. source

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The media wakes up to the current energy shortage

Today Reuters and the BBC realised we don't have much gas left in UK storage. I've been blogging about this on and off for some years now, and in particular over the past month or so, and finally it's deemed important enough to be in the news.

Britain is grappling with a potential gas supply crisis as a late blast of winter depletes stored reserves, coal power plants close and pending maintenance in Norway threatens to further squeeze supply.

The country risks running out of stored gas by April 8 based on the fall in its reserves seen since the cold hit at the beginning of March, Reuters calculations show.

Gas storage sites have been depleted by 90 percent, with the equivalent of less than two days' consumption remaining, data from Gas Infrastructure Europe shows.

If the cold persists, as is forecast, the UK may need to cut gas supplies to some big industrial customers, as it did in 2010 at a time of severe gas shortages. source

The BBC starts with a message from SSE about the impending electricity crunch, and mentions the gas issue later on:

The boss of the energy firm SSE has warned that "there is a very real risk of the lights going out" in Britain.

Ian Marchant said the government was significantly underestimating the scale of the capacity crunch facing the country.

He was commenting on the company's decision to cut back on power generation at five sites.

The energy regulator, Ofgem, has also warned of an increased risk of a blackout.

In February it predicted power station closures could mean a 10% fall in capacity by April alone.

SSE points out that the regulator did not take into account its plans to cut power generation when the warning was issued and that therefore, makes the warning even more stark.
...
SSE is reducing its energy generation by 2,000MW over the next year. The power stations affected are Ferrybridge, Keadby, Slough, Uskmouth and Peterhead. It is also postponing further investment in gas-fired electricity generation until at least 2015. source

Just to make matters worse, the current cold snap comes just as Didcot A coal power station shuts down - it will stop generating at 2pm today,  so that's 2,000 MW of capacity which will need to be replaced by gas from this afternoon.

Aerial view from Paramotor of Didcot Power Station, Dave Price, from wikimedia

Don't forget you can keep an eye on the current gas supply situation on the National Grid website. The next few days are forecast to be very cold - more news to follow as it happens...

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What does the future hold for UK gas supply?

The gas crunch in the UK continues, with the current cold weather pushing demand up and very low storage continuing to be a concern. An article yesterday in the FT explains the situation very well (note, you can go via Google to avoid the paywall):

When a power cut at the Nyhamna gas processing plant in Norway hit production this month, prices in the UK soared 50 per cent in one day. The plant feeds the 1,200km Langeled pipeline that exports gas from the vast Ormen Lange field to Britain.

The loss in output was shortlived but for many in the UK it was indicative of a more worrying trend: an increasing exposure to new supply risks as North Sea production declines and competition for imports of liquefied natural gas increases.

Coming at a time when ageing coal-fired plants are being retired and new nuclear power faces delays, it raises questions over energy security, as the industry undergoes its biggest changes since privatisation in the 1980s. Alistair Buchanan, chief executive of Ofgem, the electricity regulator, warned of higher energy bills last month ahead of a “horrendous” gas supply crunch.

These are all issues I've written about recently on this blog, here and here. Just to summarise, these are the key problems that affect the UK at present or in the near future:

• Gas production from our own fields is falling, often by around 10% a year.
• Gas supplies from Norway (18-22% of UK winter demand) are subject to interruption, such as the storm-induced power cut mentioned above, and a technical problem in 2010.
• Gas supplies from Europe by pipeline are subject to political problems, such as past disputes between Russia and Ukraine. They can also be affected by cold weather in Europe increasing demand there.
• LNG imports have fallen dramatically since Fukushima, as Japan is outbidding the UK for gas.
• Several of the UK's coal power stations will shut down for good in twelve days, with more to follow in the coming year. Some of our nuclear plants are also nearing the end of their lives.

The situation right now is that UK gas storage is at its lowest level for this time of year since 2010, and we may yet go lower than that, setting a new record. The difference is that our own gas production now is 37% lower now than it was then, comparing Q3 2012 with Q3 2010.

So while we may scrape though the tail end of this winter without any major panics on gas supply (though it's not over till the fat lady sings...), the low level of storage and limitations on supply mean that we are going to have to pay for a lot more gas imports over the coming months to refill the stores ready for next winter. So, we are virtually guaranteed to see higher domestic gas prices this year, and because about a third of our electricity is generated from burning gas, we will see prices rise there too, especially due to the shift of generation from coal to gas that will happen shortly.

If you've not already insulated and draught-proofed your home, now might be a good time to start...

Mike

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UK gas crunch...

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 live gas info at http://marketinformation.natgrid.co.uk/gas/frmPrevalingView.aspx

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UPDATE: UK Gas Jumps to Seven-Year High as Norway Cuts Supply

Quick update to my earlier post, prices have gone even higher, and there's more info on what's going on from Bloomberg this time:

U.K. natural gas for within-day delivery jumped to the highest level since March 2006 as Norway cut supplies following a power failure at its Ormen Lange gas field in the North Sea.
...
Production from Royal Dutch Shell Plc (RDSA)’s Nyhamna gas processing plant in northern Norway, which handles fuel from Ormen Lange, is reduced by 53 million cubic meters a day today and 37 million tomorrow after storms caused a failure in the national power grid, according to Gassco AS. Output was cut by 57 million yesterday and 32 million on March 2, it said.

“The timing and extent of these offshore outages has unsettled a lot of people,” Craig Lowrey, a consultant at The Utilities Exchange Ltd. in Ipswich, England, said in a telephone interview today. “It highlights the nervousness of traders that we have seen this response.”
...
Inventories at Rough, the U.K.’s largest gas-storage facility, were at 6,909 megawatt-hours yesterday, the lowest level for the time of year since at least 2004, National Grid Plc (NG/) data show.

Start saving for your new gas bill now...

Mike

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UK gas hits five-year high as unplanned outages squeeze supply

Just when you thought that there would be no gas supply problems, as winter was over...(see my earlier post on this)

Norway's Nyhamna gas plant connected to Shell's giant Ormen Lange field in the North Sea, which primarily exports gas to Britain, had an outage on Saturday after stormy weather, with production still down by around 53 mcm/d on Monday. The capacity of the plant is 70 mcm/d.

"It's the Nyhamna outage, Ormen Lange's processing plant. With storage so low and Norway running 100 percent it's gone mental," said one British gas broker.

In addition to the Norwegian outage, flows through Britain's St. Fergus terminal were reduced by around 7 mcm/d on Monday, creating an extremely tight supply situation.

Read the full story at Reuters, and keep an eye on the situation here and here.

Mike

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