GMB and onshore oil and gas industry call for fracking wells after National Grid issues UK gas shortage warning following winter snow storms

Snow-trapped vehicles near Glasgow
Snow-trapped vehicles near Glasgow

National Grid yesterday warned that it may not have enough gas to meet UK demands and has asked suppliers to provide more.

Demand for gas hit a six year high today with the Siberian-style cold weather that the Central Belt in Scotland and parts of England are experiencing.

As a result, large gas users such as industry and large businesses could be asked to use less.

A National Grid spokesman explained:“Due to the extremely cold weather we are seeing very high demand for gas so this morning we issued a “Gas Deficit Warning`’  which is a notice to the gas market that we would like more gas to be made available. 

“This is a situation that we are always prepared for and a Deficit Warning is part of our normal toolkit in extreme weather to make sure we can balance gas supply and demand.  Protecting customer supplies is always our first priority and we would like to reassure people that their domestic gas will not be affected.”

The GMB trade union – which has many members in the energy sector – said the National Grid gas supply warning shows how vital gas is to UK energy-security.

National Grid warned that the UK will not have enough gas to meet demand today as temperatures plummeted and imports were hit by outages.

Stuart Fegan, GMB National Officer for Energy, said: “When the National Grid issues a worrying gas warning like this – you know things are serious.

“When the supply is low, energy companies will inevitably hike prices to make a quick buck – so we all suffer.

“Gas heats 85% of UK homes and provides nearly half of our electricity and we need to make sure our supply is safe, secure, and in our own hands.

“In the real world gas is going to be needed to heat our homes for a long time to come whilst we transition to a low carbon economy.

“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 ( shale and fracking) establish itself to support our energy security, jobs and balance of payments to the UK economy.”

Ken Cronin
Ken Cronin

Ken Cronin, Chief Executive of the UK Onshore Oil and Gas industry association (whose members are banned for exploring for gas by the Scot-Govt moratorium), added:

“The UK is worryingly dependent on gas imports and this is forecast to increase to 80% by 2035.

“Given that nearly 50% of our electricity is produced by gas and 84% of our homes are heated with it, the need to ensure we have our own homegrown source of gas rather than pursuing this continued over-reliance on imports has today become very evident.

We believe that the right way forward is to produce British natural gas from shale onshore and we are working hard to achieve this goal.”

Mike Hughes, President UK and Ireland, at Schneider Electric, commented: “Energy consumption will increase by a factor of 1.5 in the next 40 years due to urbanisation, industrialisation and digitisation. With National Grid already feeling the pressure due to the cold weather, we desperately need a strategy to ensure businesses have plans in place to minimise these risks. 

“We need to be three times more efficient, not only to meet sustainability targets but to ensure we have enough energy for businesses to run, to heat our homes and keep the lights on.

“Worryingly, only 13 per cent of UK businesses feel extremely well prepared to address this rapid growth in demand. Action must therefore be taken.

“Government support for diversifying our energy mix through grants is essential, but the state cannot be expected to pick up all the slack.

“Businesses and consumers must take a hard look at their energy consumption and make the call on where efficiencies can be made. Investment in the latest technologies can help in this and allow them to supplement what comes from the grid.”

A Department for Business spokesperson said “domestic households should not notice any disruption to their supply”, with the gas deficit warning triggered to ensure supply meets demand.

A short-term increase in on-the-day wholesale prices is not likely to feed into household bills, the spokesperson added.

However, the cold snap has increased the number of requests for call-outs for engineers, British Gas said, which is having difficulty coping with the volume of customer queries. Two of the company’s call centres in Scotland have closed due to staff shortages because of transport difficulties caused by the cold weather.

  • Big six energy provider E.On yesterday announced that an average standard variable tariff rate rise which will raise consumer energy bills by £22 a year.

 

EXPERT COMMENT:

‘A cold (Brexit) shoulder from Brussels could be just as damaging as the ‘beast from the east!

Prof. Michael Bradshaw
Prof. Michael Bradshaw

By Prof. MICHAEL BRADSHAW

Even before this winter the industry was warning that things could get difficult.

Because over 80% of UK households use gas to heat their homes, the industry has to handle a huge seasonal swing in demand. Furthermore, during the winter it has to cope with significant fluctuations in demand that require flexible supply, such as extreme weather.

Historically, flexible supply came from simply producing more from the North Sea, but that option has gone.

Instead, flexibility today comes from four sources:

  • Norwegian offshore production
  • Gas in storage
  • Gas in the LNG terminals – of which there are three, and:
  • Gas from Europe via the interconnectors.

What gas comes from where depends on the market price – in the UK, Europe and globally – and the willingness of those that own the gas to sell it.

The reason being that back in June last year Centrica Storage announced that it was closing its long-term storage facility at Rough – a depleted gas field off the Yorkshire coast.

Technical problems were making it increasingly costly to maintain.

Even before then, the UK was short on storage, with capacity equivalent to 5.9% of total consumption in 2016, compared to places like Germany, France and Italy where it covers 20% of demand.

With Rough gone, the UK is left with 1.4 bcm of medium range storage – equivalent to 1.8% of 2016 consumption, which fills and empties many times during the winter.

However, in an emergency such as this it is quickly emptied and won’t refill while prices are high.

Until recently the Government did not seem phased by the closure of Rough, despite industry calls back in November to review the situation: reportedly, they are now thinking again.

With limited storage, the UK is dependent on sufficient gas being in the LNG tanks and on being able to get more gas from Norway and Continental Europe, but there are physical limits on the pipelines that carry that gas.

Furthermore, it puts additional pressure on National Grid to move gas around the system. Back in December, congestion limited the ability of the interconnectors to supply gas.

At present, the LNG tanks are about 35% full, thanks to recent deliveries from Qatar and Russia, and gas is flowing from all three terminals. But it takes two weeks for an LNG tanker to get to Milford Haven from Ras Laffan in Qatar. Thus, we have to work with what we have this week.

With GB demand surging to over 400mcm a day, a loss of capacity from any source of flexible supply, due to technical problems or an inability to attract sufficient gas from European markets, can lead to a supply emergency such as we see at present.

Large industrial consumers are likely to be asked to reduce their consumption, but as the cold spell continues things could get very difficult if there were technical failures on what is an aging infrastructure.

“Going forward, the EU has introduced new policies in relation to gas security, including the so-called ‘solidarity principle’ that requires member states to help one another in an emergency.

What happens if the UK leaves the EU’s Internal Energy Market? Equally, what happens in Ireland which is dependent on the UK for its security of supply.

A ‘cold shoulder from Brussels’ could be just as damaging as the ‘beast from the east!”

Michael Bradshaw of Warwick Business School is Professor of Global Energy and researches UK gas security.

1 Mar 2018

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