Britain’s shortage of gas storage capacity is driving up wholesale prices, leaving businesses and consumers facing higher bills in the future, energy analysts have warned.
During the recent cold snap, the gas price on the wholesale market leapt to 62p a therm, up 55 per cent from 40p in November. It eased on Friday to 45p.
Ian Parrett, of Inenco, the energy consultancy, said that the price changes reflected the fact that Britain had been drawing almost the maximum daily flow from its largest gas storage facility, at Rough in the North Sea – about 45 million cubic metres a day – to help to meet total UK demand of about 380 million cubic metres a day.
At the same time, the UK has had to compete with the rest of Europe for extra gas supplies piped in from the Continent. Supplies from both storage and piped-in imports are more expensive than the dwindling supplies from the North Sea, Mr Parrett said.
Boosting the total of storage would cut the premium on stored gas and cut Britain’s reliance on imports during periods when prices are at their highest. The Rough storage facility is down to 31 per cent of its total capacity at present.
John Hall, an independent energy analyst, said: “Compared with other European countries, the UK has hardly any storage at all. Whenever there is unusually cold weather, this becomes a problem.”
Britain’s gas storage capacity is 4.3 billion cubic metres, providing no more than 15 days of supply, against 99 days in France. The facility at Rough, 18 miles off the East Coast, accounts for most of it – three billion cubic metres of the total – but it can pump only 45 million cubic metres a day, meaning that in periods of peak demand the UK could run out of gas relatively quickly as demand outstripped supply.
Mr Parrett said that the shortage of storage is likely to force Britain to top up domestic supplies by importing gas via pipeline or ship as liquefied natural gas. In both cases, this would involve paying at a premium, pushing up costs for British consumers.
During the recent cold snap, the gas price on the wholesale market leapt to 62p a therm, up 55 per cent from 40p in November. It eased on Friday to 45p.
Ian Parrett, of Inenco, the energy consultancy, said that the price changes reflected the fact that Britain had been drawing almost the maximum daily flow from its largest gas storage facility, at Rough in the North Sea – about 45 million cubic metres a day – to help to meet total UK demand of about 380 million cubic metres a day.
At the same time, the UK has had to compete with the rest of Europe for extra gas supplies piped in from the Continent. Supplies from both storage and piped-in imports are more expensive than the dwindling supplies from the North Sea, Mr Parrett said.
Boosting the total of storage would cut the premium on stored gas and cut Britain’s reliance on imports during periods when prices are at their highest. The Rough storage facility is down to 31 per cent of its total capacity at present.
John Hall, an independent energy analyst, said: “Compared with other European countries, the UK has hardly any storage at all. Whenever there is unusually cold weather, this becomes a problem.”
Britain’s gas storage capacity is 4.3 billion cubic metres, providing no more than 15 days of supply, against 99 days in France. The facility at Rough, 18 miles off the East Coast, accounts for most of it – three billion cubic metres of the total – but it can pump only 45 million cubic metres a day, meaning that in periods of peak demand the UK could run out of gas relatively quickly as demand outstripped supply.
Mr Parrett said that the shortage of storage is likely to force Britain to top up domestic supplies by importing gas via pipeline or ship as liquefied natural gas. In both cases, this would involve paying at a premium, pushing up costs for British consumers.
Source: The Times
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