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Page added on March 24, 2013

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“Gas supplies are not running out”, says UK government

“Gas supplies are not running out”, says UK government thumbnail

The long cold winter that shows no sign of ending as we head towards the end of March means that the UK is very close to running out of its own gas supplies and could be forced to buy more expensive imports from Norway and Russia.

However, the government has strongly denied that the UK will run out of gas supplies despite reserves being down to just 1.5 days of gas.

A spokesman for the Department of Energy & Climate Change said: “Gas supplies are not running out. Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days’ supply is in storage.

“We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall.”

In a further development a vital pipeline from Belgium to the UK used to transfer energy to Britain was shut down due to a technical error. The problem has now been fixed.

This means if the cold spell stays for a prolonged period there is a possibility that energy supplies will need to be rationed.

Businesses would see supplies rationed first, but it is possible that rationing could be extended to households because of the difficulties in securing further gas supplies quickly.

Ann Robinson, Energy Analyst from uSwitch said: “Rationing would be inevitable, for businesses and domestic users and maybe for gas-powered electricity producers as well, so we might be looking at electricity rationing too.”

It is predicted that the UK could run out of its own gas supplies by April 8th if the cold weather continues as expected. The UK only ever holds 15 days of reserves because of a lack of storage facilities and an inability to attract investment to build new ones.

The concerns prompted the government to issue a statement strongly denying that the UK could run out of gas.

Because of the cold weather, demand for gas has increased by 20 per cent on what would be expected in March normally and with the cold snap likely to continue the pressure on the UK’s energy supplies and infrastructure is reaching critical levels.

A spokesman for National Grid, the energy network operator, backed up the government statement by saying that the market is responding to extra supply demands.

He said: “There is no reason to think that a prolonged spell of cold would lead to the country running out of gas or needing rationing. There is every indication that the market is responding to the low storage supplies and that there is plenty of gas.”

The prediction is made on the day that one of the “big six” energy suppliers warned that the UK may face blackouts within three years. SSE says that it is reducing the amount of power it creates at five of its power plants.

The firm blamed the government for a lack of clarity over energy policy that has influenced its decision. Earlier this year British Gas pulled out of a partnership with EDF Energy over building a new nuclear plant, citing the same concerns and accusing the government of moving the goalposts.

SSE Chief Executive Ian Marchant said: “It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result.

“It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

“Which highlights that the situation is likely to be even more critical than even they have predicted,” he added.

SSE is to shut down or reduce production at some of their power plants as the plants come to the end of their lives. These plants could have supplied energy to up to two million homes.

The coldest March for 50 years has seen a big increase in demand for heating which means the UK now has as little as two days; supply of gas in reserve. The situation has been exacerbated by the declining levels of North Sea Oil and a lack of gas storage facilities.

The cold winter has highlighted the insufficient planning and lack of energy infrastructure that is required to provide the UK with what it needs over along and cold winter.

The closure for maintenance of some North Sea oil gas fields has had an influence on GDP levels and the public finances and has also meant that the UK produced less of its own energy this winter.

A lack of gas storage facilities, and rapid depletion at the UK’s North Sea gas fields, has led to the UK having as little as two days’ supply of the fuel in reserve. Demand spiked during the coldest March in 50 years.

Experts have been warning about the problem for years but there has been little progress in increasing gas storage capacity in the UK.

Other firms are also planning to take power stations out of service, including many of the UKs nuclear reactors which increases the likelihood that demand for electricity will exceed supply.

It means that energy prices are likely to continue to rise with the government predicting another set of increases this winter adding around £100 to the average households’ dual fuel energy bill.

Mr Marchant urged the government to bring forward reforms favouring gas over coal.

He said: “The government can reduce this risk [of power cuts] very easily, by taking swift action to provide much greater clarity on its electricity market reforms.”

Energy firms buy gas at cheaper rates in the summer to store and then sell on in the winter. UK stores were 86 per cent full at the start of the year but had less than 20 per cent remaining at the start of the month and now there is just ten per cent left, i.e. less than two days reserves.

With snow predicted in much of the UK this weekend and the cold weather set to continue into April, the situation is severe.

If other supplies, such as the gas that is piped in from Norway, were cut off for any reason then it is possible the UK could experience blackouts.

The government said that it will ensure UK gas reserves don’t run out and will use the current energy bill to make sure enough power is still available.

Energy Minister, John Hayes said: “We’re alive to the challenge facing us. The bill before parliament will set the conditions for the investment needed to keep Britain’s lights on in the long-term. The amount of spare power available today is currently comfortable. As old infrastructure closes over the coming years we expect this margin to reduce but we will make sure it stays manageable.”

The shortfall in reserves is likely to result in an increase in the long-term price of gas with tariffs expected to rise by 10 per cent this winter. Analysts believe this crisis will influence traders to raise their forecasts for the gas needed for next winter which will mean rises for energy firms of up to 15 per cent which they will pass on in higher tariffs to customers.

Industry experts are suggesting that households sign up to the cheapest fixed price deal before the end of the summer to try and fix prices over the next two or three winters.

Npower has just launched its price fix December 2015 tariff that costs an average household £1,305 and is fixed until the end of 2015.

The average household’s dual duel energy bills have more than doubled over the past nine years, from an average of £522 in 2004 to £1,352 this year. An increase of 15 per cent would see them triple.

The Department of Energy said: “Our market has spare import capacity built in. However, we take gas security and the risk of harmful price spikes seriously and monitor price and supply developments working closely with National Grid.”

Paul Smith, managing director of SSE said: “The kind of decisions SSE is taking, to close existing generation plant on the one hand and delay investing in new plant on the other, is likely to be reflected across the industry in the coming months.”

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6 Comments on "“Gas supplies are not running out”, says UK government"

  1. BillT on Sun, 24th Mar 2013 2:25 am 

    Platitudes from government and the mention of lack of storage capacity seems to be the guts of this article. Stupid Brits deserve to freeze. This is only the beginning of the collapse folks. Be patient. Consider how many other power plants in the world are worn out and shutting down. Then think about how many sources of energy are also ‘shutting down’ all over the world and you will begin to grasp the future.

  2. Beery on Sun, 24th Mar 2013 4:21 am 

    BillT, the fact is, Britain doesn’t get that cold. It barely ever gets cold enough to snow. When I was a kid, living in the north of England in the 1960s, we didn’t have central heating – we didn’t need it. Instead of heating a cold house, we wore woolen clothing. So the idea that low gas reserves means Britons will freeze is quite simply nonsense.

    Sure, Britons may have become used to central heating over the last 40 years, but it’s a luxury, not a necessity. Britain is not Alaska.

  3. Arthur on Sun, 24th Mar 2013 11:33 am 

    Adding to the comments of Beery, I have central heating in all five rooms of my house as well as kitchen and entrance and bathroom, but they are always shut off, except for the living room. In countries like Britain or Holland you do not really need central heating. In case of freezing cold the only extra measure I take is opening the hot water shower five minutes before entering the bathroom. Combined with double glass this results in low energy bills. I am considering investing in solar panels on the roof soon and possibly later a heatpump with heat extraction from the garden.

  4. rollin on Sun, 24th Mar 2013 2:59 pm 

    Thank goodness for the Gulf Stream warmth, if it ever shuts down GB will be like Labrador. Great Britain and other nearby countries have an unusual climate due warm ocean currents hiting their shores.

    Insulation and some solar should take care of the heating problem, but since the electricity is dependent on nat gas then that could be a problem.

  5. Kenz300 on Sun, 24th Mar 2013 4:40 pm 

    Might be time to think about diversifying their energy sources and types.

    A mix that includes wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste can all be produced LOCALLY.

    Energy and biofuels can now be made from trash or waste. Every landfill can be converted to produce energy, biofuels and recycled raw materials for new products.

    It is time to stop the fixation on the fossil fuels of the past and move to the energy sources of the future.

  6. a NY auto insurance on Tue, 1st Dec 2015 10:43 am 

    As Charlie Sheen says, this article is “WINNING!”

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