As a result of 10 years of government inaction, Britain is one of the most vulnerable countries in Europe to turbulence in gas supply. Germany has 99 days of gas storage capacity, France has 122 days, while Britain has just 15 days. As a result, British consumers pay the price because we are more exposed to volatile gas prices than our neighbours.That is a truly astonishing - and very worrying - statistic. I've heard of 'just in time delivery' for retail goods but energy supplies are rather different. Surely the energy regulators should have been making some sort of contingency?
Thursday, January 01, 2009
Britain Has Only 15 Days of Gas Supply
Greg Clark, the Shadow Energy Secretary, has just released a statement on the Russian decision to deny gas supplies to the Ukraine. Among other things, he said this...
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42 comments:
If true, I find that very shocking. One would hope that our beloved PM knows something we don't?
This has been in the public domain for some time, the regulators are entirely toothless here, and Government just blow hot and cold about it (if you'll excuse the pun). What makes this all worse is the silly gas-fired power stations that Hesseltine signed off, we should have gone nuclear a long time ago to properly protect our energy surpluses.
Nonsense, Glorious Leader Brown has assured us that Britain is best placed, anyway, its all Thatcher's fault.
Is that ok Dolly?
The dash for gas does look quite shortsighted in retrospect. We burned through the North Sea reserves in a few short years when perhaps we should have been saving the gas for cooking and heating.
Still, if Ukraine steal gas from the Russians that is destined for EU countries then what are we or the EU going to do about it?
Storage is expensive and customers won't pay for it.
Perhaps France and Germany have some communist system where the government looks out for things that private business can't in a competitive market.
Don't blame the regulators. Energy POLICY is a matter for government.
Fundamentally, we should have had new-build nuclear, which would have meant our North Sea gas supplies could have been saved for heating and cooking, rather than for electricity generation. Interestingly - recognising that it is far more efficient to pipe gas to the end user and consume it there rather than to use it to generate electricity (inefficiently) and then transmit electricity (inefficiently) to the end user - there was once an EU ban on the use of gas for electricity generation, but it was withdrawn.
And as Nick Drew pointed out when I blogged about this back in October, our storage isn't even onshore; gasometers aren't gas stores but pressure regulators. The UK's entire onshore reserve - all the gas in the pipes and in the gasometers - is about one day's supply. We don't have any other onshore reserve stores.
Nor, unlike the US and others, do we have a national strategic petrol / diesel reserve, heating oil reserve, marine fuel oil reserve or aviation fuel reserve.
Our power stations are running maxed out and a single failure could trip the entire system as almost happened last year - in May.
The criminal negligence and stupidity of this government is beyond belief. Food security and energy security are fundamental functions of the State, yet they have been grossly overlooked in favour of lunatic social engineering experiments that have cost us hundreds of billions since 1997.
Brown and his morally corrupt cabal better pray nothing happens - or the wrath of the people may see them facing Bills of Indictment for the consequences.
Our true vulnerability is far, far greater than Greg Clark is letting on.
Raedwald said... "The criminal negligence and stupidity of this government is beyond belief."
Agreed.
This shouldn't be news to anyone. A number of people have been banging on about this for years.
I recall Digby Jones giving an after dinner speech in 2005, where this very subject was the main topic.
a little while ago I posted on the sheer ignorance of NuLab adopting a laissez-faire attitude to all this, citing the excellent case of (Tory) Tim Eggar who as Energy Minister truly understood the way of the world in these matters (see case-study here) and acted with appropriate forsight and determination
slight correction to Raedwald above: there are some (relatively small) UK onshore gas storage facilities, with some more (again small) under construction; and a heap more caught up in tortuous permitting processes
but even if all of these were developed we'd still be bottom of the heap in terms of % in store
it's partly to do with geology: every UK offshore gas field that has come to the end of its productive life has always been examined carefully for potential to be converted to a gas storage facility - no operator wants to incur the huge cost of abandoning an offshore facility if it can possibly be avoided
but by no means every reservoir is suitable - to date, only 1 (one) has proved so, though there are plans for a couple more
and of course, anything you do offshore is hugely expensive
Is this Gordon Brown's cunning plan to cut energy bills?
What do you mean the energy regulators should have made a contingency? Are you kidding?
Energy supplies are a matter of national security - energy stores, plans for distribution and rationing during emergencies, etc. would have to be coordinated at the high echelons of government - Ofgem would have a part to play, but you can't be seriously suggesting that they're accountable for it?
If it's true that we only have 15 days of gas reserves then there ought to be an effort post haste to find the fastest way of growing stocks - if France can stockpile 122 days worth then I'd suggest we go for slightly more - probably 365 to be on the safe side!
I believe there have been some technical advancements in moving great quantities of liquified gas by sea - perhaps those same technologies can be adapted for storage on land?
back in the eighties the dash for gas was seen by engineers as an insane policy, to burn such a valuable fuel/chemical feedstock for base-load generation is nothing short of criminal waste. It was done to avoid a decision on nuclear and was a political rather that an engineering decision. Until we get people understanding real science rather than 'political science' the cock-ups will continue
example windmills, same political nonsense instead of engineering..... I rest my case.
Andy - France's reserves-holding is not a relevant comparator because they have almost zero indigenous gas production (and half their imports come from Algeria and Russia) whereas we still produce by far the greater part of our own, and the bulk of our modest imports come from friendly-and-broadly-reliable Norway
added to which, France's consumption of gas in absolute terms is much less than our own (they use nuclear electricity for space-heating, which is a pretty extreme thing to do)
we could no more build storage capacity for 122-days worth of our level of gas consumption than land a man on the moon
LNG does indeed represent a form of gas storage but it is phenomenally expensive to use it for this purpose: every operator of LNG import facilities (which include LNG storage tanks as a buffer for the offloading process) looks at using it for pure storage - because otherwise the tanks are idle for months at a time in summer - and concludes it ain't economic
let's be clear, the key to this is creating a true, free, interconnected gas market across Europe - which is official EC policy, but is resolutely blocked, particularly by German 'interests' and also by France
that's how security has been delivered, with complete success, in oil markets since the Arab oil embargo of 1973 and the establishment of the IEA: this completely thwarted the 'blacklisting' of certain oil importing countries by the Arab exporters, and could do so again with gas
fact: only 6% of W.Europe's primary energy comes from Russian gas (OPEC oil is >10%, by contrast): yet we allow Russia to divide-and-rule, giving them far greater influence than this % should allow (the Germans and Italians are the primary culprits)
BTW I predict this situation is about to be prized open by a big fall in wholesale natural gas prices, which will give a once-in-a-lifetime opportunity to get the European gas market functioning properly
Yes the Labour government was busy with far more important things, like banning fox hunting and smoking and drinking
Is the Bacton Interconnector still our only 2-way grid link with continental gas supplies? A single pipe always seemed hugely vulnerable to me. Also the inward-only pipe SEAL from the working fields is about 350 miles long from memory. That's a lot of pipe. And LNG tankers depend on the safety of the seas.
And of course 51% of the food we eat is imported, the UK not having been able to feed itself since the early 19th century. Most comes by sea. And we don't hold food reserves, either.
The security of the seas around the UK, and critical pinch points such as Gib and Suez, are vital for our national security. Yet Labour have run the Navy down to a force smaller than France's - and France doesn't depend on sea trade to eat and sea routes to keep warm. Criminal.
So, no energy or food security. A nation massively vulnerable to foreign interference, against which even third-world navies in last generation vessels such as minelayers can succeed. And the Bacton interconnector is helpfully marked on marine charts lest we accidently rupture it by dragging an anchor across it.
It is the fault of the Thatcher/Major governments and their quickie privatisations and "dash for gas" to crush the miners and our coal industry. (We have since imported most of our coal, massively adding to our huge trade deficit).
Still, NuLab have done nothing to fix it, simply dicking around with a few things on the consumer end, like the toothless watchdog ofgas, which serves the private corporations.
And if this isn't all bad enough, most of our energy companies are now controlled from Germany and Russia.
Well done Maggie! Well done John! Well done Tony! You must feel proud that we are in such good shape.
Radewald there are now two 2-way pipes, both with landfall @ Bacton - the original (ex Zeebrugge) and the newer (ex Balzand in Holland)
(also, 2-way trade 'by displacement' is possible using Norwegian infrastructure that can landfall either in UK or continental Eu)
your point is well made: Bacton is a vulnerable point if ever there was one
Please, nobody act surprised.
Iain
You need to get out of the Westminster village more and look at the reality of the country.
Just start with the basics. Why do you think food is any better? etc etc etc
Well we have very little storage because the private companies are more interested in dividends than spending money. Why is it that all the Tory Commentators blame the Labour govt for mistakes due to their Tory business friends.
Why has France got reserves for 122 days when they are 80% Nuclear? Is that so they can "sell" it to us via Eon at a vastly inflated (if you'll excuse the pun) price?
I'm reaching for my passport even as I read this. How can any government sanction this?
Sorry, that should have read EdF, though no doubt e.on call sell us some of the reserves/excess they have in Germany!
The crazy thing is that we have enough coal to supply this Island with energy for the next 600 years. Yes, that includes gas from coal, as it used to be before cheapo North sea natural gas took over from town gas.
Since mining of coal in the UK became much of the past, technology has moved on and it is now perfectly possible to turn this solid fuel into liquid and gaseous form at no great cost. No doubt mined by robotic machines rather than humans.
I thought maybe that we were waiting for the Mid east and Russia to use up thir cheapo reserves before we finally used ours.
I do fear though that the UK's coal is now Europe's coal, just as our fish stocks belong to European countries as far away as the former Soviet Union.
Mr Mr - it isn't a national issue, it's an issue of global capital. Our energy companies and energy assets were sold off cheap by a Tory government - these cheap shares were then snapped up by large corporate interests ultimately owned by Arabs and Russians.
This corking plan is known as "people's privatisation" and served as the template for Yeltsin's Russia and other unfortunate countries.
Meanwhile, German and French governments carried on with their (derided by UK neocons like the Pinochet-loving Lamont who was on the radio earlier today pontificating brainlessly about the Euro) social democratic policies of building up large home-based and heavily-subsidised energy and transport structures.
Today, they are in a vastly stronger position than Britain, whose slavish admiration for the get-rich-quick barrow boy mentality has now come home to roost.
Quite honestly 15 days looks on the high side to me.
Till a few years ago the UK effectively stored its gas in the reservoirs in came out of, each day deciding how much to produce. Due to the decline in the North Sea production ( hastened in part caused by the Luddite tax changes Gordon Brown brought in as Chancellor when getting his stealth taxes in ) we now need to import.
We have some LNG facilities and the Rough Gas field as storage ( there are some smaller storage facilities, but the usual local planning permission rows slow down their development.
I assume the govt will have to shut down swing gas users - glass furnaces etc and of course power. ( Those coal power stations the green fascists campaign against will be all that's keeping pensioners from a freezing death ).
This is just a harbinger of the real crunch to come as Labour criminally irresponsible, and perhaps intentionally treasonous, energy policy bring the country to its knees.
Provided one controls them, the cheapest (and safest) place to store any mineral reserve (and that's all that natural gas is) is right where it's found - in the ground. Britain has large natural gas reserves (bigger than 122 days anyway) as do our main suppliers, the Norwegians. Short of theft by the eu, invasion or revolution those reserves are safe from every threat and the storage costs are damn near zero.
France and Germany, on the other hand, have very few gas reserves of their own and rely on imports from Russia or North Africa. Since they do not control these reserves and hence the supply they have to maintain artificial storage facilities. This exposes those countries to greater cost and higher risks (environmental, safety and security).
There are many aspects of this government's energy policy (or the lack thereof) that could and should be legitimately attacked, but a lack of man-made gas storage facilities is not one of them. That journalists can't grasp this is sad but predictable. That the Shadow Energy Secretary misses this rather crucial point is worrying in the extreme. Indeed one is tempted to think Mr Clark may not be up to the job in which he finds himself.
This is nothing more than a silly season scare story.
This is absolute rubbish. I work for a leading energy supplier and we store gas for 6 months. This is why oil price rises/drops don't affect gas customers for 6 months
@ Benny
Where do you store it, exactly?
Benny, I'm afraid you may be a victim of corporate spin to employees. There is no 6-month storage. Prices for gas rose almost immediately that oil did, but have not fallen correspondingly. I leave you to do the math as they say in the States.
Man in a Shed, the treasonous act was selling off our valuable national assets at knockdown prices during the privatisations of national industries in the 80s and 90s. If we were going to privatise, we should at least have gotten a good price. The result has been higher government deficits and tax burdens and lower national wealth. The direct beneficiaries of this were wealthy international capitalists. Some of whom, by an amazing coincidence, were either friends of Mrs T or friends of her friends.
Benny, storing something for 6 months (which I'm sure you do) is not the same as 6 months' worth of supply !
You definitely don't do the latter. What you may well do, is buy forward 6 months' worth, which - if you do it at a fixed price, and your entirely unilateral pricing policy was so inclined - could have the effect of delaying a price increase
That's right Nick, but the underlying problem is the de-facto monopoly/cartel operated by the biggest energy giants. They collude at a European level to price-fix and manipulate markets to the enrichment of their shareholders. An utterly craven European Commission investigation surprise surprise found them doing nothing wrong.
DL, Nick et al
Beware confusing two seperate industries. Petroleum production requires quite a long processing "pipeline" of refineries and transportation. This means a high volume of inventory is booked as work in progress. Natural gas, particularly in Britain, needs a lot less processing between underground reservoir and final consumer; hence the pipeline is much lower.
I don't know if the oil industry's claim of a six month pipeline is accurate, but I'd guess the natural gas industry's work in progress inventory probably amounts to a lot less. Something like Mr Clark's 15 days perhaps.
DL - agree on all points, see comment @4:28 yesterday
RM - the nat.gas situation is even more extreme than your guess; at high pressure it travels at about 25 mph in pipelines, essentially with no residence-time in processing
so onshore 'working-pressure' reserve in UK is about 1 day's worth (600 miles @ 25 mph), see Raedwald's initial comment @2:50 pm
(of course the electricity situation is even more extreme, electrons travelling at even more than 25 mph ...)
the 15 days gas inventory figure relates to max capacity of the quite large 'Rough' depleted reservoir in the N.Sea, used for storage, plus some onshore salt caverns, plus some very tiny onshore depleted reservoirs
towards the end of winter, inventory is usually a lot lower than this, of course
Incidentally, the UK regulatory system essentially leaves inventory holdings to commercial judgement; whereas in France there is a mandated and irrational inventory regime (likewise in Italy) which means that sometimes when spot prices are spiking (due to some incident or other) - and market economics suggest that inventory-holders should be drawing down to sell in response to the price-signal - the French are busily buying to top up their inventory, making the spike even worse
(France is still essentially a handful of regional monopolies, so they don't care about the cost of these crazy actions)
and who sells it to them at these spike prices? why, UK energy companies ! free market, doncha know !
Thanks, Nick, and yes, free markets do seem to manage things so much better than the state, don't they.
@ Nick Drew
"electrons travelling at even more than 25 mph ..."
Not round here they don't... Still, the oil lamps are very pretty, and we usually manage to scrape the frost off the inside of the windows by about mid-day. Must fell a few more trees before next winter, though.
Fascinating Nick - so it would appear that the end result of the marvellous and much-envied Tory privatisation campaign has been to enrich French companies and deprive us of secure energy supplies?
Iain, if you're interested in pursuing the detail further, try here. There is at least now an all-party group starting to explore the mess that our energy policy is in (APPGOPO.)
FWIW nuclear isn't a long term answer (not enough uranium, and we've missed the boat on that to be honest), and there isn't enough coal - let alone gas and oil. Conservation and renewables are the only things that offer any hope, and there's little of that.
DL,
Those insecure energy supplies? Ours and the Norwegians? Please don't tell me another ostensibly peaceful nordicv nation is about to be declared an enemy of the state. I've only just gotten over the shock of hearing the Icelanders were all terrorists.
DL - not how I would summarise it !
rather, the privatisations and market liberalisations (Tory AND Labour, credit where it's due) of the 1990's showed just how much can be done to eliminate the enormous waste inherent in monopoly provision: but this needs urgently to be replicated across the EU (and wider)
at the same time, we need people a lot more savvy about the limitations of markets than Gordon johnny-come-lately-to-laissez-faire Brown
to hear him call the Tories the 'do-nothing party' is a bad joke: we shall all suffer when the lights start to go out
Britain has 15 days worth of offshore gas storage in the North Sea (in the Rough field and operated by Centrica), but we also have about 30 years worth of supply in the North Sea.
We have very little exposure at present to Russian gas because at present there is only one route for that into the UK, through the Bacton Interconnector, which is used for most of the th year to export gas to the continent, although it does have capacity to import. At present we import gas in the summer, mostly from Norwegian gas fields, but increasingly through LNG terminals.
Greg Clark misses the point. Our North Sea gas is cheaper than Russian gas piped to the continent. The reason we have no storage is because we export nearly all of our excess gas in the summer to the continent via the Bacton interconnector (built at the time of the last Conservative government) where it gets a better price than it would get if it was held in storage for 6 months and sold at the same price as gas extracted in the winter. This has meant that gas storage is not economically viable and no laerge projects have been built sine the Rough field was turned into a storage field.
British gas prices might be more volatile than continental prices but they are also generally lower.
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