National Grid UK Gas Deficit Warning 1 Mar 2018 - LNG supply problems

I woke up to an interesting text and email this morning:

National Grid NTS has issued a Gas Deficit Warning
Please see Prevailing View for the latest information.
The Gas Deficit Warning will remain in place until it is withdrawn by National Grid NTS.

A quick glance at the Entry Zone Graphs in 24-hour mode shows why. Yesterday evening, with demand of a bit under 400mcm/day, over 100mcm was coming from LNG supplies stored at Milford Haven and Isle of Grain, about and nearly 80mcm from medium range storage. Long range storage (Rough)  is pumping out the dregs prior to shutting down for good, and was supplying 8mcm.

But early this morning, all four supplies of LNG into the gas network dropped significantly, and the smaller supply from Rough dropped to zero as well:

Of course, the immediate question is why? The REMIT website for South Hook LNG shows that the regasification plant went out of action at 05:23, though it's strange that output from Grain and Dragon dropped too, as they don't say much about it yet. South Hook does say that normal operations resumed at 06:55, so maybe things will get back to normal soon - output is indeed rising there, and at Dragon. 

Still, it should serve as a warning as to just how little slack there is in the UK's energy supply system right now, and the Grain LNG flow still looks to be staying low, so we may not be out of the woods yet. The REMIT section at Isle of Grain website simply says: "Grain LNG Terminal are currently experiencing capacity and gas flow restrictions." Let's wait and see what happens...

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Centrica has given up on Rough UK gas storage

Centrica has finally given up on Rough, the UK’s only long-term gas storage facility, after two years of problems. This will mean increased prices averaged over a year, as we can no longer store significant quantities of gas in the summer to be released in the winter, and will make us more susceptible to international incidents that affect gas supplies, whether by pipeline or LNG tanker. It’s worth noting that we import a lot of LNG from Qatar, which is currently in the middle of a diplomatic crisis. The only ameliorating factor is that the ‘cushion gas’ that is currently in Rough can still be produced, so although no new gas can be put in, there will still be some to take out for a few years – but this will be at a lower flow rate than when the store was full, which would have been the case at the start of each winter in the past. To sum up the numbers:

• Rough represented 70% of the UK’s gas storage volume.
• It was able to supply 300 GWh of gas per day, which represents 6% of the peak daily winter demand in 2010 of 5,000GWh
• It could hold over 40,000GWh – so could supply gas at peak rate for 4 months (though in practice the flow rate dropped as it emptied).
• The remaining gas stores can supply a higher daily rate, but can only do it for a much shorter period, as their total capacity is just over 14,000GWh
• About 14,000 GWh of LNG can be stored, but depends on a stream of tankers to top it up, and we have to bid on the world market to get them.
• There is perhaps up to 57,000 GWh of gas still in Rough, which will provide supplies for several years at a progressively declining flow rate.

In some ways this could be good news, creating more incentive for renewable energy and alternative forms of energy storage, but it could also increase demand for fracking in the UK, which would be a bad thing environmentally...

News stories on this: Guardian, FT, Reuters.

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UK winter energy supply 2016-17

Following on from my previous post on gas supply, here's an update on the overall energy situation in the UK this winter.

The good news is that the gas storage site at Rough is due to come back online by 9 Dec, according to Centrica. Of course, it's still only 1/3 full, so we're not out of the woods yet.

The bad news is that several nuclear power stations in France have been offline for safety checks for some time now, and the result is that instead of importing up to 2GW of electricity from France, the UK is importing less, or even exporting to France. You can see this live on the graphs at Gridwatch. This extra power is largely coming from our CCGT (gas) power stations, which of course means increased gas use - this was already showing up in the graph I posted a few weeks ago, and has continued since then. (The red line is 2016 - click for a larger version)

 

It's also proving to be a colder than average winter so far in the UK, so we'll have to wait and see how things turn out over the coming months...

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Outlook for UK gas supply in winter 2016/17

The UK Met Office has released it's long range outlook for Nov 2016 to Jan 2017, and it's expecting at least the first part of the winter to be a bit colder than average - there's some in depth discussion of it in this BBC video. So now's a good time to review what shape UK gas supplies are in.

A few months ago I commented on the news that the long range storage at Rough was out of action and only about one third full. At the time Centrica was expecting withdrawal from Rough to be possible by 1 Nov, but the latest statement on their website now says second half of November. The graph below (click it for a larger version) shows the storage level in Rough over the past decade, with 2016 in red. As you can see, no gas has been injected for some months, leaving the store short of about 26,000 GWh of gas, which is unprecedented in the past decade.


To be fair, the operators of the medium range storage sites have done their best, with gas stored at record levels - but this only equates to an extra couple of thousand GWh compared to recent years, so does not offset the missing gas from Rough.


LNG stocks are at a fairly typical level, but these fluctuate as imports arrive periodically - the hope will be that more LNG tankers will arrive this winter than a year ago.


The impact of Rough's outage and low stock is showing up in wholesale gas prices, which have more than doubled over the past two months - this has yet to feed through into consumer bills.


The other important factor to bear in mind is what's happening with electricity generation. A significant number of coal-fired power plants have closed in the past year or two, and this is good as they are high emitters of CO2. But the slack has been taken up by gas-fired power plants instead, rather than solely renewable energy or nuclear power. The graph below shows how power station demand for gas is at a multi-year high for this time of year.


So what's the conclusion? Well, if it doesn't get too cold, Rough comes back online as planned, nothing else breaks and we get enough LNG deliveries, then we'll just see prices rise. If one or more of those factors doesn't work out favourably, then it may become necessary to restrict industrial gas or electricity usage, to ensure that gas supply to homes can be maintained. Let's hope and pray that we don't get another winter like 2010/11:


Mike

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Bad news for UK gas supply winter 2016/17

If Rough was a car, you'd scrap it and buy a new one. But it's actually the UK's biggest gas storage facility, and supplies up to 10% of peak winter demand for gas. A few weeks ago I wrote about how planned maintenance was preventing Rough being filled with gas until early August. Well, the news has now got worse. The BBC summarises it here, but here's the detail straight from Centrica's website:

On 22 June 2016, CSL announced that in the course of conducting the testing works it had identified an additional issue with one of the wells. This resulted in CSL ceasing all injection and withdrawal operations pending the further testing in relation to the issue identified. This program of testing was estimated to last at least 42 days.

CSL has now ended the 42-day testing program early and has plugged the affected well. However, the affected well has identified potential uncertainties in the remaining untested wells. CSL will therefore continue with an enhanced version of its original calliper run and seal testing program. We estimate completion in March to April 2017. In the meantime because of the uncertainty as a prudent and safe operator CSL cannot inject or withdraw gas from Rough.

CSL is also examining the feasibility of returning a number of wells to service for the Winter 2016/2017 withdrawal season. CSL anticipates it will complete this study by 30 October 2016. CSL currently anticipates that at least 4 wells will return to service for withdrawal operations by 1 November 2016. In respect of injection CSL cannot increase the Rough reservoir pressure during the testing programme.

If you're wondering how big an impact plugging one well is, and what possibly having four wells open in November means, the Operational Guide to Rough from 2015 says that it had 24 operating wells for injection, and 29 for withdrawal. Rough is currently about a third full, so opening some wells for withdrawal in November is of some use, but with no chance to inject any new gas, the UK is going to be left exposed to any further malfunctions or international incidents, and may even struggle to cope with a moderately cold winter. The ability to import LNG will be crucial to maintaining supply over this winter - this may work fine, but will cost us more, as we will have to outbid other countries to make sure we get what we need.

It's worth remembering that in Q1 2016 38% of the UK's electricity was generated by burning gas - this represents 25% of total gas use in the UK (data from here). So a shortage of gas implies a potential shortage of electricity, especially with more of our ageing coal plants having shut down over the past year.

One slightly odd thing is that National Grid's Prevailing View website is missing information on gas storage. One could be forgiven for thinking they're trying to avoid scaring people...

We may get more news, good or bad, on Rough over the coming months, but the key thing to look out for now will be long range winter weather forecasts. Time to start praying for a mild winter I think...

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While you were watching the EU referendum, something happened at Rough...

While we were all caught up in the EU referendum this week, there was an item in the news about the UK's largest gas storage facility, Rough:

Wholesale gas prices have been volatile following news that the UK's largest gas storage facility is being shut down for 42 days.

Normally, gas would be being injected into Rough right now, and was being until a couple of days ago, as you can see from the first graph on this page. The update on Centrica's website says:

In March 2015, CSL began conducting testing and verification works on the Rough wells. In the course of conducting these works, CSL has identified an additional issue on one of the wells tested. As a consequence, CSL has ceased all Rough injection and withdrawal operations. CSL will seek to expedite testing on the issue identified and expects this period of testing to last at least 42 days.

The current restart date is 3 August, but of course it could be later, given the above update says "at least 42 days". If storage isn't filled quickly enough over the summer, we'd better hope for a mild winter, or we might run into difficulties... One thing that's clear is that Rough is showing its age, and has had several mechanical breakdowns in the past 10 years. Worth keeping an eye on over the summer...

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UK gas supply outlook for winter 2015/16

It was back in April that I blogged about the cut Centrica had made in the capacity at Rough, due to problems with some of the wells limiting the maximum operating pressure. At the time, Centrica hoped that by now the capacity would have been restored, but a press release in July said that they now didn't expect to know if this would be possible until some time between September and December 2016! The net result is that the capacity of Rough has been reduced by 25%.

Clearly this presents a problem for UK winter gas supply, so it's not surprising that another July press release stated that the Oil and Gas Authority had given Centrica permission to reduce the minimum operating pressure of Rough, thus 'converting' some of the cushion gas (which would normally be left in the store) into working gas, which can be withdrawn and re-injected. This shows up on the chart below (black line = 2015), where a sudden jump up in July can be seen, due to the addition of about 4,625 GWh (or about 400 mcm). The same trick was pulled in 2013 (red line in chart below), after dipping into the cushion gas in April 2013, capacity was increased arbitrarily in the October 2013. It's a bit like keeping driving your car after the fuel gauge has gone into the red - it works OK for a while, but you can't do it for long...

Despite this bit of creative accounting, the chart below shows that we are still going into this winter with a record low amount of gas in storage, and National Grid's Winter Outlook notes this on page 43, saying storage is reduced by 14%, from 4.9 bcm to 4.2 bcm. It would have been 22% less if Centrica hadn't fiddled the figures by dipping even further into the cushion gas.

Medium range storage is looking better, with increased capacity and a record amount in storage, but nowhere near enough to make up for the shortfall at Rough.

So, the big question has to be about demand. We have fewer coal power stations than we did a year ago (which is a good thing, of course!), which could in theory mean that more gas gets burned to generate electricity. But the big factor will be the weather as always, which is hard to predict at this stage, as there are several extra factors to bear in mind:

• El Nino is in full swing, but it's not clear whether that will make much difference in the UK. 
• We're heading towards the low point of an already anaemic 11-year solar cycle, which can lead to colder weather in Europe, and some scientists are suggesting that lower solar activity could be a theme for several decades. The Met Office has commented on this too.
• There's a persistent area of unusually cold water in the North Atlantic, which has the potential to affect the UK this winter, and could even be a sign of slowing ocean currents, which could spell cooler weather for many years for the UK and NW Europe.

Time will tell, and we'll soon see if this winter looks like this:

or like this:

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