 
.gif)
|
Signature Sponsor
By Stuart Elliott, Henry Edwardes-Evans, and Alisdair Bowles
March 2, 2018 - The UK's gas system operator National Grid has issued a rare gas deficit warning for Thursday and called on industrial users to turn down consumption as demand is set to significantly outstrip supply due to a number of supply outages.
UK gas demand is now forecast at 404 million cu m on Thursday -- up from an initial forecast of 396 million cu m -- while supply is forecast at just 376 million cu m, leaving a deficit of just under 30 million cu m.
The system had opened more than 50 million cu m short Thursday after an unplanned outage at the South Hook LNG facility added to other outages affecting UK domestic production, with NBP within-day prices trading at 12-year highs at 200 p/th.
"This warning has been issued in response to a series of significant supply losses resulting in a forecast end of day supply deficit," National Grid said.
At 0854 GMT, National Grid said it had a requirement to buy locational gas and invited shippers to post offers on the on-the-day commodity market (OCM) locational market "at all locations" in a bid to reduce demand.
Earlier, National Grid said it would consider any user offers for single or multiple day trades via the over the counter (OTC) or OCM, and any Demand Side Response offers made via the OCM.
"We are in communication with industry partners and are closely monitoring the situation," National Grid said.
Calling for gas turndown from gas users is unusual and has been raised before as a concern by the UK Major Energy Users Council (MEUC) due to the loss of the Rough gas storage facility.
"At present we have not heard of any member being interrupted, but I have had some contact me to say their supplier has been in touch requesting a 'voluntary' reduction in demand," Eddie Proffitt, MEUC technical director, told S&P Global Platts Thursday.
National Grid has flexible contracts with users for occasions where gas turndown might be necessary, and calling on those users to turn down gas is a real sign of the short-term stress.
"It is highly likely that National Grid will have to interrupt supply to industrial consumers as it struggles to balance the system as UK flexibility remains limited and the Continental temperatures are set to remain well below normal into the weekend," S&P Global Platts Analytics' Simon Wood said.
Outages
National Grid also said it was scaling back off-peak exit capacity within all system exit zones for Thursday's gas day effective time 1300 GMT.
The UK was suffering from a number of outages, including at the North Morecambe Barrow terminal and Bacton SEAL terminal, on Thursday.
In addition, LNG sendouts from the South Hook LNG facility were reduced to zero early Thursday but have since resumed.
The Kollsnes gas processing plant in Norway is also impacted by 16 million cu m/d Thursday, and the SEGAL pipeline has an 18 million cu m/d impact due to processing problems caused by cold weather.
"NBP within-day prices have traded at 200 p/th this morning as the system opened short and National Grid issued a gas deficit warning," Wood said.
"Prices are rocketing for the second day running as, with the system short, National Grid attempts to incentivise strong storage withdrawals and imports from the Continent," Wood said.
But with the Continent also experiencing cold weather and low storage stocks -- the lowest since 2013 -- the UK is unable to pull on significant continental imports, and is having to rely on purely indigenous flexibility.
With the loss of Rough, UK storage stocks are at their lowest levels on record for the start of March and LNG sendouts have stepped up to record highs after a winter of low deliveries left storage stocks at record lows.
The UK NBP day-ahead price spiked to a 12-year high on Wednesday, and was assessed by S&P Global Platts at 116 p/th (Eur44.72/MWh).
Power Impact
For the UK power market, coal-fired generation is currently maxed out, meeting around 25% of UK power demand.
Gas-fired power is currently making up some 25% of UK power demand, with another 10 GW+ of CCGT offline.
Wind is up at 10 GW, which is taking some of the strain off CCGTs.
"We are fortunate that it is windy and that coal has increased generation," Proffitt said.
"This has limited gas generation to 25% of electricity demand, which is about half of the amount normally generated by gas and of course half of the gas needed," he said.
The GMB union urged the UK government to urgently review its energy policy.
"When National Grid issues a worrying gas warning like this you know things are serious," Stuart Fegan, GMB National Officer for Energy, said.
"Our government needs to wake up to the reality that an urgent inquiry in costly gas price hikes caused by interrupted supply is needed. The Department for Business, Energy, and Industrial Strategy needs to get off the fence with numerous planning applications it is presiding over and help the UK onshore gas industry establish itself to support our energy security," Fegan said.
CoalZoom.com - Your Foremost Source for Coal News |
|