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UK expected to avoid gas shortage this winter

Hydrocarbon Engineering,

The National Grid has this month indicated that gas demand in the UK is likely to remain below 450 million m3/d in the winter of 2013/2014, and that usage will not exceed 250 m3/d  in the case of a warm winter.

Britain’s gas supplies are expected to be sufficient to avoid shortage.

Last year cold weather extended well into April, and gas demand was high for an unusually long period of time, almost depleting gas storage sites. Britain had to import LNG at Asian levels of £1.50/100 000 Btu to avert disruptions.

Utilities are behind schedule this summer in refilling storage facilities, however Reuters data suggests that there will still be enough gas to meet coming winter demand, assuming normal weather pattern.

The country’s total storage capacity is approximately 5000 million m3, enough to meet less than two weeks of peak winter demand. Stored gas is currently equal to 3400 million m3/d, 15% less than the level at this time last year as the decline of domestic output has forced Britain to greater dependency on imports of spot gas.

However, the average annual depletion rate since 2009 is also approximately 3400 million m3/d, so there should be enough in storage to avoid shortage.

Gas price rise

Wholesale prices of gas are already higher than a year ago and continue to increase.

Spot prices are already approximately 20% higher than in July 2012 (over £ 0.65/100 000 Btu, a level that it more common during winter months), due to production problems at Norway’s Troll gas field, which has reduced Norwegian gas supplies.

Mai Phan, a gas analyst at Point Carbon, has said that ‘given Troll’s reduction, someone else will have to cover supplies in case of a cold spell, but in order to attract LNG Britain’s prices need to reach closer to Asian levels, so UK gas prices may find a new high this winter.’

Asian spot LNG prices are currently approximately US$ 15.75/million British thermal units (Btu), compared with approximately US$ 9.50 million Btu.

Adapted from press release by Emma McAleavey.

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