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UK NAT GAS WINTER 2009, FEBRUARY UPDATE
Posted by Rune Likvern on February 20, 2009 - 11:05am in The Oil Drum: Europe
This is an update of my series about U.K. natural gas. In the second part of this series, I presented the results of several simulations of the U.K. natural gas supply situation for this winter. Using these simulations, I identified the possibility that U.K. might run short of natural gas in storage before the end of this winter.
In this post, I will provide the current status and a forecast for the U.K. natural gas supply and demand for the remainder of this heating season. The present status and the outlook suggest that this heating season will end with little natural gas in storage.
INTRODUCTION
NOTE: All diagrams are clickable and open in a larger version.
Status for the storage facilities are now as follows:
- Short Range Storage (SRS) is now down to approximately 28 % of total working gas capacity.
- Medium Range Storage (MRS) is down to approximately 36 % of total working gas capacity.
- Long Range Storage (LRS) is down to approximately 24 % of total working gas capacity.
In this post, I will briefly give an update of the status of the storage facilities and the outlook for the remainder of this winter. There are several factors that may change the actual outcome, including weather (most important), changes in the supply--domestic production and imports by pipeline and LNG, remaining flexibility and duration of current natural gas contracts, level of economic activity, fuel switching and prices to name a few.
STORAGE STATUS AS OF THURSDAY 19th FEBRUARY 2009
TOTAL STORAGE
FIGURE 01 The diagram above shows the development of total natural gas in storage for the contractual years 2005 - 2008 YTD (Year To Date). A contractual year starts on October 1st one year and lasts until September 30th the following year. Presently total storage levels are around 800 Mcm lower than last year. Total natural gas in U.K. storage as of February 19th was 1 140 Mcm, which is below the low of 1 155 Mcm reached April 20th in 2008.
- The unseasonably warm weather in the days around last Christmas allowed for some reinjection into storage and is estimated to have reduced net withdrawals by 300 Mcm.
- In the article UK gas demand falls as recession bites, it is reported that demand this winter is down 4 % compared with the same period last year. This amounts to a total estimated 700 Mcm less demand between January 01st and now.
Last year saw net withdrawals of an additional 800 Mcm between this time and April 20th. If net withdrawals of natural gas from storage follow roughly the same pattern as last year, this would suggest that total natural gas in U.K. storage would end with a low of 3 - 400 Mcm.
LONG RANGE STORAGE (LRS)
FIGURE 02 The diagram above shows the development of total natural gas in Long Range Storage (LRS) for the contractual years 2005 - 2008 YTD. Presently LRS levels are more than 500 Mcm lower than last year.
MEDIUM RANGE STORAGE (MRS)
FIGURE 03 The diagram above shows the development of total natural gas in Medium Range Storage (MRS) for the contractual years 2005 - 2008 YTD. Presently MRS levels are more than 200 Mcm lower than last year.
SHORT RANGE STORAGE (SRS)
FIGURE 04 The diagram above shows the development of total natural gas in Short Range Storage (SRS) for the contractual years 2005 - 2008 YTD. Presently SRS levels are close to 100 Mcm lower than last year.
VOLUMES AND DIRECTION OF FLOWS IN THE INTERCONNECTOR
FIGURE 05 The diagram above shows the average daily flow and direction through the Interconnector between Bacton (U.K.) and Zeebrugge (Belgium) for the contractual years 2007 and 2008. February 2009 is average daily flow as of February 18th.
Presently U.K. natural gas prices are around 40 p/therm (day ahead), and the higher prices in Continental Europe suggests that the Interconnector will continue to flow natural gas from U.K. to Europe.
STATUS OF STORAGE IN FRANCE
FIGURE 06 The diagram above shows the development of total natural gas in storage for France for the calendar years 2008 and 2009 YTD. Presently storage levels in France are more than 1 100 Mcm lower than last year.
STATUS OF STORAGE IN GERMANY
FIGURE 07 The diagram above shows the development of total natural gas in storage for Germany for the calendar years 2008 and 2009 YTD. Presently storage levels in Germany are more than 2 200 Mcm lower than last year.
The diagrams for France and Germany illustrate that the storage levels for both countries are now lower than at the same time a year ago. The increased withdrawals this year are mostly believed to be due to the recent shutdown of supplies from Russia through Ukraine and colder than normal weather.
Expectation of lower natural gas prices towards the summer may also have motivated higher storage withdrawals.
More posts on U.K. nat gas supplies:
Will UK face a nat gas crisis during this winter (Part 1 of 2)
Will UK face a nat gas crisis during this winter (Part 2 of 2)
Why UK Natural Gas Prices Will Move North of 100p/Therm This Winter
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US storage values reported in the EIA weekly reports include what's in pipelines and local storage tanks. This means 1 tcf in storage is effectively empty. http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp
I was wondering if your storage levels posted in the charts were above and beyond MOL?
They are presently above MOL.
I don't know the MOL for the different storage classes, but it is almost certainly a very low figure. The maximum extraction rate from (long and medium range) storage probably drops off as the storage level and therefore pressure falls toward zero.
The national pipeline infrastructure also has a minimum operating pressure. In the winter months, the operating pressure is raised, so that gives a little extra leeway as the extra gas in the pipes can be consumed before MOL is reached.
Not mentioned in this thread is the supply from the UK LNG terminals. Without LNG imports, the UK would have already run short of gas this winter. LNG is expensive, and the supply even more of an open market, but the LNG regasification terminals themselves can act as short term gas storage if they have a delivery at the critical time.
With respect to LNG I don’t have actual data available yet, but as of now I would expect LNG to be up by approximately 5 Mcm/d since early January.
I guess the big question is whether storage levels will decline to the point that supplies will be constrained, and it would appear that the answer is probably not - at least for this year.
I don't know why the UK isn't going crazy for airsource heat pumps. We rarely have temps below freezing so they would always be operating at high COP's. They would also be a good to roll out alongside an expansion of wind power due to heating demand in the winter. It would also be more efficient to use the gas in combined cycle power stations to power heat pumps than to use the gas for central heating.
1kWh gas -> 0.5kWh electric -> 1.5 kWh of heat (using a heat pump with COP of 3)
1kWh gas -> 0.9kWh of heat.
IMO the UK needs to adopt a wedge stratergy of developing a new generation of nuclear power stations ~25GW from 15-20 new plants to on exisiting nuclear/large coal power station sites.
Build 10-15GW of wind, focus on geographicaly spread onshore wind much cheaper than offshore.
Move to heat pump heating instead of gas fired central heating systems.
Add pumped storage where possible
Gas injection of stationary diesel engines would be well suited for CHP able to run on 90% gas with small amounts of diesel for ignition.
Some gas storage would be a pretty smart idea.
Four reasons why there are no ASHP's
1: They are largely incompatible with the expensive installed "wet" central heating system we all have in our homes. We use radiators which need 65C temps and above. ASHP's prefer to deliver below 40C preferably closer to 35C. To rip out all one's radiators and piping to replace with underfloor tubing or air ducting is prohibitively expensive.
2: Why would anyone purchase ASHP system when the final running costs be within 10% of a gas central heating system?
Gas is about 2.8p/kWh. So through a 90% boiler, your heat will be 3.1p/kWh.
Electricity is about 11p/kWh, so through a HP, with COP 3 = 3.6pkWh
3: If we all used ASHP's it would put more load on the grid. You're right, burning the gas in a CCGT station is more efficient, but at winter peak demand we'd need more power stations if we had a significant number of ASHP's. Granted, we'd have some spare gas we'd have saved from the ASHP's but it doesn't get round the fact we'd need more infrastructure.
4: If its not broke don't fix it. Most people wouldn't replace their tried and tested boilers with what (to most people) is a completely unknown technology.
Although all that said, if I was building a new house from scratch, I'd specify high levels of insulation + triple glazing and underfloor heating with a ASHP + solar hot water. That way I wouldn't have to pay for a gas connection to the mains gas system as part of the build costs.
Andy
Hi Andy,
With respect to your first point, we have an oil-fired hot water heating system, but two 4.0 kW ductless heat pumps now supply virtually all of our space heating needs; the boiler only kicks on when temperatures remain below -10C for an extended period of time. An air-to-water system would be nice, but air-to-air units are far more affordable (the installed cost of our two units was $4,100.00 CDN/£2,270) and having two fully independent heating systems allows us to switch between fuels based on relative price.
Regarding your second point, ductless mini splits offer the added benefit of air conditioning and dehumidification. Our cooling requirements in Atlantic Canada are quite modest, but living in a maritime climate we would often run our dehumidifier non-stop from mid April through September. Dehumidifiers are loud, guzzle a tremendous amount of electricity and generate waste heat during the times of the year when you least need it. You also end up emptying the collection bucket every one to two days. Now, I run our heat pumps in "dry" mode -- no noise, far lower power consumption, no unwanted waste heat and, as an added bonus, no bucket to empty.
There would be some additional grid demand, but it should be manageable. Our newest ASHP is a high efficiency inverter system that constantly adjusts compressor speed in response to changes in heating demand. I have it plugged into a power monitor and it draws 200 to 300-watts under light load and as much as 1,500-watts when operating at maximum capacity. Continuous operation eliminates standby losses and makes for a smoother load curve. Also, for much of the winter, daytime temperatures are typically several degrees higher than what you would experience overnight; all else being equal, the highest ASHP demands occur during the overnight hours when overall demand is low and daytime COPs would presumably benefit from higher ambient air temperatures.
Last point and forgive me for stating the obvious. If I have a natural gas heating system, 100 per cent of my needs are met by natural gas, whereas with an ASHP, my needs are likely derived from a mix of fuel sources, some no doubt more desirable than others. A growing number of customers also have the option to purchase green power, so that nudges us a little further in the right direction.
Edit: Mini splits are fairly simple to install, but the work should be performed by a qualified technician. This video provides a good overview of what's involved: http://www.youtube.com/watch?v=PdMRVO_NOz4
Cheers,
Paul
Thanks for the update. This has been an interesting story to watch!
It sounds like the recession is a big part of the reason that the UK is doing as well as it is this year.
I wonder what next winter will be like. The decline rate will affect UK production, and the economy will likely still be in terrible condition (or worse). Any thoughts?
Thanks Gail.
With respect to LNG I don’t have actual data available yet, but as of now I would expect LNG to be up by approximately 5 Mcm/d since early January.
National Grid has the recession as its main suspect for the lowered demand/consumption.
For next year, it remains to refill the storage facilities and expectations are that indigenous production will continue to decline.
As of now the outlook is that Norwegian deliveries will be up (3 - 5 Mcm/d) a little next contractual year and then there is LNG where South Hook and Dragon operational the LNG receiving capacities will grow.
Chances are that the need for storage withdrawals next winter will be lower and the lowered economical activity will eat into demand.
I suspect another factor in gas demand reduction is that the UK has recently been running its coal fired power stations pretty much flat out (on some days the share of coal generation has even approached 50%) and has managed to bring nuclear capacity back up to 20% of current daily supply.
Rune - as an off the wall comment, stock levels will normally be funded by debt. So I wonder to what extent stock level policy might drift - not with the cost of debt but with the availability of debt (new capitalism at its best making a commodity in short supply very cheap).
I have a subliminal feeling that stock levels in the retail sector are also being cut, and I suspect this contributes to the very sharp drop in output.
Euan,
You make an interesting observation. It is the Sellers that normally buy/lease storage services.
We may get an indication to this during this summer (during the refilling season).
What you say, suggests that JIT (Just In Time) is moving towards JIT (Just Isn't There). ;-)
I notice that storage in Germany and France is continuing to drop at a faster rate than last year even after restoration of Russian gas. Poland just complained to Gazprom that it is still only receiving 75% of contracted gas via the Yamal-Europe pipeline. Do we know if this is the case with any other countries supplied by Gazprom?
A continued reduction in Russian gas supply could explain why French and German storage is continuing to drop so rapidly despite the recession led demand destruction. But perhaps it's just the cold weather.
I've no idea if it's just Poland being hit so does anyone know of any current data for any other country supplied by Russian pipelines?
Undertow,
well observed. I have been wondering myself why there still is high storage withdrawals in France and Germany.
Compared to last year the total withdrawals (as of this week) is more than 5 Bcm higher as reported by GSE and more than 4 Bcm is identified to France, Germany and UK.
If France and Germany were not receiving in full from Russia, my guess is that they would have spoken out about that by now and I have not seen anything mentioned about this in the media.
It could be colder weather and the expectations of declining prices this summer that has motivated them to increase storage withdrawals.
Well, I have lived in Germany for the last 23 years and the last time we had a winter like this was more than 10 years ago. I collect rain water from the roof into plastic barrels. I never empty them in winter, but this winter that was a mistake. They froze solid an cracked the barrels.
At the moment it is not freezing, but it is much colder every day than the last winters.
I expect my natural gas usage to have increased by a substantial amount this winter.
My natural gas usage for the period 09.11.08-09.02.09 was 24% higher than the perious year. This was despite the fact that I had increased loft insulation from 250 to 450mm and put in an additional 20 vacuum tubes on my solar water heating system.
Bizarrely I have used about 15% less electric in this quarter than the previous year.
Commission a high efficiency wood burner yesterday. I hope this cuts at least 5000 kwh from my gas consumption. However I have also replaced the electric cooker with a gas one so the saving is more likely going to be from the electric bill.
Ps - Im in Cambridge - UK
Hi. anyone know why UK prices are falling 40-50% in a couple weeks with inventories in europe way below last year and the rate of inventory reduction still high?