Update on UK Natural Gas Supplies and Storage

This is an update on my series about U.K. natural gas. In the second part of this series, I presented the results from several simulations of the U.K. natural gas supplies situation for this winter which had identified the potential that U.K. might run short of natural gas in storage before the end of this winter.

In this post, I will present status as of now and an update of the simulations of the U.K. natural gas supply and demand for the remainder of this heating season. The present status and the results from the simulations are quite troubling: it appears that there is a significant chance that the U.K. will run short of natural gas in storage before the end of winter.

Unseasonal warm weather in the days leading up to Christmas reduced consumption and allowed for some refilling of the storage facilities.

Status for the storage facilities are now as follows:

  • Short Range Storage (SRS) is now down to approximately 34 % of total working gas capacities. See also Revision to GBA Trigger Level and Review of Safety Monitor Levels
  • Medium Range Storage (MRS) is down to approximately 53 % of total working gas capacities.
  • Long Range Storage (LRS) is down to approximately 54 % of total working gas capacities.


NOTE: All diagrams are clickable and open in a larger version.

In this post, I will briefly give an update on the status of the storage facilities and the simulations of the UK nat gas supplies system. There are several factors that may change the actual outcome from the simulations like weather (most important), changes in the supplies; domestic and imports by pipeline and LNG, remaining flexibility and duration of current natural gas contracts, economic activity, fuel switching and prices to name a few.



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 close to 600 Mcm lower than at the same time of 2007.


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 long range storage levels are more than 200 Mcm lower than at the same time of 2007.


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 medium range storage levels are close to 300 Mcm lower than at the same time of 2007.


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 short range storage levels are close to 100 Mcm lower than at the same time of 2007.


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. January 2009 is average daily flow as of January 20th.


FIGURE 06 The diagram above shows the development of total natural gas in storage for France for the calendar years 2008 and 2009 YTD.


FIGURE 07 The diagram above shows the development of total natural gas in storage for Germany for the calendar years 2008 and 2009 YTD.

The diagrams for France and Germany illustrates that the storage levels for both countries presently now are lower than at the same time last year. The increased withdrawals this year is mostly believed to be due to the recent shutdown of supplies from Russia through Ukraine.


In the simplest form, the results of my simulations show how quickly the storage facilities are likely to deplete, given the estimates the National Grid has made with respect to demand and with respect to supply from U. K. production, and estimates I have made with respect to imports. These indications can be summarized in the graph I showed at the top of the post, and shows again as Figure 08.

FIGURE 08 Expected depletion of U.K. long term (blue area) stacked on medium term (yellow area) nat gas storage levels based on simulation analysis.

Figure 08 indicates that based on my simulations, medium term storage (yellow) is forecast to be emptied by mid February, and that long-term storage (blue) is forecast to be emptied by early March. The amounts shown on Figure 08 are a combination of actual and forecast amounts. The darker shades represent development to date; the lighter shades represent the forecast period.

Figure 08 is only a summary exhibit. To understand better what is happening, it is helpful to view how the parts of the model work together, as illustrated in Figure 09. I start with the demand forecast by the National Grid, and fill in the portion underneath it with expected supply from various sources. During time-periods when the sum of production plus net imports are expected to be less than what is required to meet supply, I draw down nat gas from storage. If there are periods with excess supply, I use the excess to refill storage. In this way, I simulate how the storage facilities are expected to deplete, and can estimate the extent of the shortfall.

It should be noted that even if Figure 09 shows a gap between demand and supplies, this should not be taken to mean that homeowners or electric power plants will experience a nat gas shortfall. The operator of the grid uses models that identify potential shortfalls, and can minimise the effects by reducing flows to or cutting off low priority customers on interruptible contracts. If this is not enough to balance the system, additional customers can be cut off according to priority and/or criticality.

FIGURE 09 How demand can be expected to be filled, based on simulation results.

In Figure 09, the thick dark wavy line shows the forecast seasonal normal demand (SND) by National Grid, and the amount filled in under this line represents the way this demand is expected to be filled from various sources (indigenous production, imports--pipelines or LNG, or storage withdrawals). The green area represents UK's own production; the red area represents net imports (pipeline and LNG combined); the blue area represents withdrawals from long-term storage; and the yellow area withdrawals from medium term storage.

The dotted blue line (maximum demand) and the light green line (minimum demand) give an estimate of expected day to day variability in demand, reflecting changing weather conditions, based on National Grid forecasts. If total supply on any day runs higher than demand, the surplus will enter storage.

Based on storage levels in short term storage facilities and lowered expectations on imports National Grid revised down the GBA (Gas Balancing Alert) to presently 414 Mcm/d. As the storage facilities are further depleted, it could be expected that the GBA levels might be subject to further downward revisions.

In the recent years, maximum demand has reached 410 - 420 Mcm/d during February, 360 - 390 Mcm/d during March and 320 - 350 Mcm/d during April.

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

Is it time to panic yet?

I wonder what affect the Russian-Ukraine gas situation this winter had on drawdown. You can see an insane drop-off on January 1st. Surely now that the situation is resolved, the emergency drawdown can moderate some.

If you look at exports you will see they are around 26 mcm/day so around 800 mcm for January. Add this back to the actual and it takes it back to similar levels in previous years. WTF are our gas companies doing exporting gas ????

Maybe exposing various countries to gas shortages provides a more tangible excuse for future increases in prices? Artificial scarcity seems to have been used for this purpose throughout history.

WTF are our gas companies doing exporting gas ????

Trying to cover the Ukrainian position.

They failed, which is why the Ukraine is now
solidly in the Russia orbit.

Heard much from Yushchenko?

Standard & Poor’s has quashed rumours that it will soon strip Britain of its AAA credit rating. Playing games with Reykjavik on the Thames.

"cabinet minister did not altogether joke when he said: “The banks are fucked, we’re fucked, the country’s fucked."

"Heard much from Yushchenko?"
Last i heard he was still trying to bolster his weak position by claiming he would not ratify the deal since it was a loss as opposed to Prime Minister Tymoshenko who claims it as a victory. Neither of them would accept the Ukraine is now solidly in the Russia orbit. Yushchenko's days look numbered with little chance of retaining his position in the coming election.

I hope the agreement holds for the ten years and I am glad to see the intermediaries have been sidelined, hopefully less corruption. My guess is that the Ukraine will still struggle to pay the market price in 2010 so let's see what happens then. If the Ukraine are being friendly towards Russia then they amy still get "mates rates" for some gas.

Now when will that northstream pipeline be online??

The northstream pipeline will not come online for at least 3 years.
The Finnish authorities have been dragging their feet because of the environmental impacts it will have.
The bottom of Gulf of Finland and the Baltic Sea are covered with all sorts of waste and it is feared that the building process will disturb it and affect the already fragile environment.
Also of concern are unexploded mines at the bottom of Gulf of Finland along the route.

And the sequence of events if we do get a shortfall ? Interruptible industry first ? How bad would it have to be before my boiler cuts out ? That's the bottom line ...
Actually I chose my boiler partly because it can run on LPG without adjustment.
For most people - I would guess the 90% on mains gas - it would be plug-in heaters, propane cylinders ( for the 8 hours the shops have stocks ), wood stoves etc.
Together with a 100A cable, LPG generator and 2 pairs of 47kg bottles I will ( from next year ! ) just about do a whole winter on reduced load without mains gas or electric. Not bad for a stealth behind the shed installation.
I do wonder though - in Bulgaria, for example, the electric grid faltered but did not collapse. There weren't mass deaths by freezing. Things adapt.
Of course we are a) softer and b) don't give a crap about elderly relatives in the UK and will probably see pensioners dying and carbon monoxide poisoning ( as people drag their BBQs indoors ) followed by mass burst water pipes.

According to Interconnector data, natural gas exports from UK to Continental Europe increased with approximately 10 Mcm/d from January 20th to January 21st.

what is the price UK pays for nat gas. Here in the USA the current price is a dismal $4.8

$4.8 per mmbtu or $0.48/therm

But NatGas is not a fungible commodity.

Do you have a pipe running from the gas well to
your home?

If not you're no different than Iceland. Geothermal anyone?

"But Iceland at least had the luxury of letting banks default – shifting losses on to the rest of the world. It refused to honour foreign debts.

“They drew a line,” said Jerry Rawclifffe, who tracks Iceland for Fitch Ratings. “They created new banks, parking the old losses in resolution committees. It is not easy for other governments to walk away. They have a duty of care.”

Indeed, if Britain walked away from UK banks’ $4.4 trillion of foreign liabilities – worth eight times Lehman Brothers – it would destroy the credibility of the City and take the whole world into deeper depression.

“The UK cannot go down that route because it would set off an asset price death spiral,” said Marc Ostwald, a bond expert at Monument Securities. “The Western banking system is already on life support. That would turn it off altogether.”

Via: Telegraph: via cryptogon

Ironically the first countries to go bankrupt will be better off than the later ones - same as banks.
A)other countries will bail them out
B)they get head start on building different, unlevered economy.

Nate, you're right but IMHO it only applies to smallish countries such as Iceland, i.e. the countries left standing have to be able to absord the loss. It's similar with insurance policies whether private or tax payer funded, e.g. the whole population cannot be unemployed and in receipt of benefits.

You are familiar with what happened when Lehmans went under and the whole banking market almost died so imagine something several times worse if the UK went bust. There could be no failout. The trillions being carried on other banks books would have to be written off (mark to market and the market value would be zero) and it would trigger financial meltdown within minutes.

You're both exactly right.

Until critical mass is reached, those on the periphery, opting out
of the system, can avoid the violent vortex crashing
the last hanger's on to the ground.

Option A then becomes the lifeline back to the Titanic
whereas Option B the lifeboat to build on the flotsam jetsam
floating up and out.

reminds me of Asimov's works and the Foundation Trilogy.

Might a government prepare for sovereign default by deploying food stuffs, establishing community shelter centers, prohibiting household evictions and then let the banks fail?

If you are going to panic, better panic early.

Dayahead price is now at 53,25 p/therm which translates into approximately US$7,35 Million Btus.

Henry Hub (US) presently at US$4,87 per Million btus.

1 Therm = 100 000 Btus.

Forward curve favors NBP prices slightly, but USA prices aren't all at 4.80, only at henry hub. Z6 (northeast market area) eg is well above NBP for most peak winter months. Kern River otoh is going to be around 3 USD.

In your previous prediction you showed that the UK could run out of gas in medium storage by the end of the month. Since then a large import boost centered around the 26th of Dec. Where did this gas come from, and is it possible that the UK will just import more to cover this problem?

Given that the spare electrical generation capacity in the UK is only 23% (demand is 65.5 GW,capacity is 85.8GW) is it possible that running short on gas could produce enough extra demand to threaten the electrical grid also?

If the UK does begin to run short on gas I suspect that people switching from gas to electricity would be a problem as about 39% of all electrical generation is done via gas.



This is why using natural gas to generate electricity - and especially using it as a major component of the electric supply - is, to use the technical term 'FacePalm stupid'.

So 85Gw * .61 / 20 million = 2350w peak per household. Probably enough in a pinch - with rolling load shedding.

The UK doesn't have anything remotely close to 85GW capacity available at any one time. Right now in the middle of winter I believe we have less than the 65GW supposed maximum possible demand figure quoted above. On Jan 6th demand hit 59.163GW (highest so far this winter) with National Grid showing an available surplus of only about 2GW. Nat Grid currently projects that was the peak for the whole winter. The max price paid that day (IIRC about 90p/KWh !!) shows they were doing everything short of paying people to pedal bikes attached to generators just to make that.


The import boost came from Norway through Langeled that ran at capacity most of the holidays season.

One way to deal with a potential shortfall is through increased imports (both LNG and pipelined gas).

If a shortage occurs (i.e. demand surpassing supplies) I would assume that industrial users on interruptible contracts would be the first to be cut off.

If that is not eneough to balance demand and supplies I would assume (some) electricity generation plants would be encouraged to switch to distillates, if not some nat gas supplies to electricity generation might be shut down to balance supplies and demand.

I think that everyone would try to do whatever necessary to avoid households being cut off, and that households would be urged to reduce demand (turn down thermostats, put on a sweaters etc.).

A scenario where households are cut off from nat gas and trying to substitute with electricity is something I believe many will go to great lengths to avoid.

I have great trouble with the the UK government's idea that turning off interruptible contracts will reduce total demand. This is rooted in the concept that the UK is an industrial powerhouse that can be turned off. The layed-off workers loafing around their houses will consume more than their workplaces did when they were at work. The UK public has spent the last 4 years buying plasma TVs, PC+Printer+router etc, and 10kW power showers..

Thanks for your work again Rune, it's ironic that British Gas have only this morning announced a 10% gas price cut!

I noticed that the average 7 day withdrawal rate for long-term storage gas at one point was actually higher than the declared max withdrawal rate. How would it affect things if they could withdraw gas at a higher rate? I presume it would just fill the (day) gaps at the end of Febuary, and allow less for march?

Also, have you any idea what kind of temperatures are forecast for the remainder of the winter - compared to the cold/warm demand projections?

It seems like the market does not expect a shortage, or could the market be wrong?

The simulation model fills the gap between forecast demand and (indigenous production + net imports).

What you describe is an alteration of the withdrawals from LRS (Long Range Storage) and MRS (medium Range Storage) which would result in an earlier emptying of LRS and a delayed emptying of MRS.

I will soon revert (have to dig out the diagrams and get them posted in this thread) with the temperatures used by National Grid for the rest of this winter.

In general, it has been observed that actual temperatures have been lower than those used in the National Grids forecasts.

It seems like the market does not expect a shortage, or could the market be wrong?

In the absence of other data (which I could have missed in your presentation), a more likely explanation is your model/simulation is wrong.

I look at your main graph (figure 08) and it looks like the projection is essentially a straight line, based on data of the previous few weeks.

Indeed, extending that line, you hit zero in early March.

But, looking at figure 01, you can do that in previous years and get a similar result ... but the UK didn't run out of gas in those years.

So, have you run your simulation on previous years as a basic sanity check? Does your simulation include the detail noted by Undertow (below), that "South Hook Gas Co. said yesterday a newly built import terminal will receive its first cargo of liquefied gas in the next few weeks."?

A simulation is a model of the real world and is just as good as how accurately it models the real world.

I would be careful to compare one year with another year as many things changes from one year to another.

These are, temperatures (weather), demand changes (nat gas for UK electricity consumption is showing strong growth), indigenous production (which by many now is expected to continue to decline by approximately 10 % year on year), net imports (both pipeline and LNG), economic activity, price differentials between UK markets and Continental Europe to name a few.
The interesting thing is that several simulations (the earliest back to late last summer) came up with the same results. In turns out that actual indigenous supplies so far has closely followed the data assumed for the model.

Net imports (pipelined and LNG) is modeled to be higher at both ends of this heating season (relative to the previous), and so far actual data shows that these are quit in line with modeled assumptions.

Demand is the data as published by National Grid (SND; Seasonal Normal Demand) in their forecast for the contractual year 2008.

The model then uses gas in storage to balance the gap for SND between indigenous supplies and net imports.

But based on your projections from your previous post, your model isn't modeling reality very accurately.


could you be more specific?

I am aware that things happens on the margin and everything else equal a cold snap or warmer period than ususal will impact storage numbers (either withdrawals or injections).

Did you expect that the model would be accurate within 10 Mcm?

I think it was made clear that projected dates may change in either directions as time passes.

For medium-term storage, your last post project the UK would be at 1500 now. They're actual number is around 2200. For short-term storage, you projected around 250. The actual number now is around 500.

Another way to look at it, you projected medium term storage would decline by (3200-1500)/3200 = 53%, whereas it actually declined (3200-2200)/3200 = 32%. Short-term storage was projected to decline (600-250)/600 = 58%, but the actual decline was (600-450)/600 = 25%.

I'm eyeballing these numbers from the graphs, so I may be off a little.

Of course, I'm not suggesting there isn't a problem in the UK. I would think that you do a good job of pointing out a problem that the UK should address, but, when I look at your updated projection, I would have to say I wouldn't hang anything on its numbers, except that maybe they might reflect what will happen if no one changes anything. But, of course, they will change behavior, and so I question the value of the simulation's numbers.

Be aware that the area diagram showing storage numbers is stacked.

During the second half of December a combination of unseasonal warm weather and the holiday season allowed for a net build in storage of close to 200 Mcm while the model expected a net withdrawal of close to 300 Mcm (which mostly is weather related). It is these elements that causes most of the deviation between the forecasts from the post in December and this update.

I never expected the model to accurately predict when storage will reach critical levels, but anyway how the numbers were looked at it seemed like back in summer that this heating season would become very tight with regard to available nat gas in storage.

I never intended to challenge the demand curves derived from National Grid.

The main objective has been to draw attention to the troubling outlook for the UK storage facilities this heating season.

The fact that National Grid has revised down the trigger level for GBA based upon SRS status, and actual depletion of the storage facilities as shown in figures 1 – 4 serves as evidence of the actual situation and January is still not over.

Do you have any data of from earlier years, esp 1996/1997? The current graphs might be a bit misleading considering that 2005 and 2006 were the warmest winters in recent history, and 2007 also was warmer than usual. Obviously current storage levels will look low now, but the really interesting analysis is to compare it with years with a similar heating degree day pattern.

Also, your graphs seem to consider only storage in the UK itself. With the opening op of Langeled and the BBL a lot more import capacity is now available, which gives the UK access to more Norwegian production capacity and to the expanded short term storage capacity in the Netherlands & Germany.

Presently I don’t have data going back to 1996/1997.
I have been of the impression that UK storage facilities have been expanded in recent years.
Back in 2002 – 2004 total UK storage seemed to be like 3 500 Mcm, so the UK storage facilities has been expanded to presently 4 200 - 4 300 Mcm.

If this winter on average turns out to be colder than the recent winters it should be expected that more gas will be used for heating.

My simulations has taken into account the growth in UK imports through Langeled and BBL (it seems now that these are on daily average running close to those used in my simulations), and Norwegian deliveries through Langeled has in times been running at max towards UK.

Time will show if the flow in the Interconnector will reverse later this winter.

According to Interconnector data, natural gas exports from UK to Continental Europe increased with approximately 10 Mcm/d from January 20th to January 21st.

I still believe that UK nat gas prices needs to move closer to 100p/therm before any meaningful volumes starts to flow from Continental Europe to UK.

could you give a brief description of short, medium and long term storage ?
are these depleted oil and gas fields, salt caverns, aquifers, abandoned mines or steel tanks ?
also, i notice from your previous articles that storage is really a small part of uk supply with the bulk from production and imports, both winter and summer. recent data from the us of a shows that on a weekly basis, withdrawals from storage might amount to 1/4 or more of total supply.

Figure 9 in post answers your 3rd question.

U. K. has three types of storage facilities:

1) Long Term (Rough, capacity of 3 340 Mcm and max flow rate of 42 Mcm/d), which is a depleted reservoir.

2) Medium Term (Hornsea, Hole House Farm, Hatfield Moor, Humbly Grove; total capacity of 767 - 837 Mcm and max total flow rate of 37 Mcm/d), which are mostly salt caverns.

3) Short Term (Avonmouth, Dynevor Arms, Glenmavis, Partington; total capacity of 260 Mcm and max total flow rate of 48 Mcm/d) which are LNG facilities.

The UK has opted for a different strategy when it comes to storage, whereas storage is mainly to be used during cold snaps.

thanks for the reply, rune.

i have been working on modeling the us gas production/imports/storage and consumption by end user. my approach was to construct the consumption model on medium term trends (2006 forward) coorelated with heating or cooling degree days.

for the short term, hdd predicts usage, but production plus imports are matched implicitly with the recent weekly storage volumes from the eia. only one week is forecast by combining the mid term consumption model and short term storage model.

U.K. Natural Gas Advances on Concern Storage Levels Are Low

Jan. 22 (Bloomberg) -- U.K. natural gas for next month rose on concern that the amount of fuel held in storage is too low.

The February contract advanced 0.9 pence, or 1.6 percent, to 54.3 pence a therm at 9:08 p.m. local time today, according to broker ICAP Plc. That’s equal to $7.56 a million British thermal units. A therm is 100,000 Btus. Gas for March advanced 1.5 pence to 54.35 pence a therm.

Rough, the U.K. biggest gas-storage site, was 54 percent full as of yesterday morning, according to National Grid Plc data. The facility contains the least amount of gas at this period in the heating season in the last five years. Gas for next week gained 1.25 pence, or 2.3 percent, to 54.75 pence.

Britain can store only 5 percent of its annual gas consumption, compared with France’s 18 percent and Germany’s 20 percent, according to Centrica Plc.

South Hook Gas Co. said yesterday a newly built import terminal will receive its first cargo of liquefied gas in the next few weeks.

Could you indicate the approximate temperatures that would be moderate enough that refilling can take place, what temperatures are considered "normal", and what temperatures would be considered a "cold snap"?

To indicate such a temperature is a tough call as it needs to be seen together with indigenous supplies and net imports and these numbers varies from one day to another.

The diagram below shows UK actual demand in Mcm/d (black line) plotted against the left y-axis and forecast temperature (light green line), actual temperature (blue line) and SNT (Seasonal Normal Temperature) (red line) plotted against the right y-axis.
Note the scaling for the right y-axis.

I assume that the temperatures in the above diagram are weighted averages for UK.
Generally I would consider any temperatures below the red line (normal temperature) a cold snap.

Going thorugh National Grid data on forecast temperatures versus actual temperatures for the years 2006 - 2008 it was found that National Grid on average forecast the temperature to be 1 Centigrade higher than actual temperatures. This will tend to underestimate demand.

Thanks for this graph. It confirms what the public would know empirically, that the last 12 months ALL averaged below the norm in the UK. Thermohaline failing?? Will it be a new norm..??

South Hook is about to receive it's first LNG cargo:

South Hook's First Cargo Heralds Qatar as key U.K. Gas Supplier

Thanks for a fine update!

According to the article, "The ship, one of a new generation of so-called Q-Flex LNG tankers, has a capacity of 211,885 cubic meters of LNG." If it actually has that much on board, how big an impact would it have?

My initial wild quick guess is not much, daily consumption runs at say 400 Mcm/day so say the gas is compressed 1,000 times (I don't know how much so a wild guess to keep maths easy). Then 200,000 cm LNG becomes say 200 Mcm natural gas or half a days' supply. Is this right or have i slipped a decimal or two:-)

Thanks Gail!

1 cm (cubic meter) of methane in liquid state (LNG) is around 300 kg.

The density of methane at atmospheric conditions is 0,678 kg/standard cubic meter.
This means that 1 cubic meter of liquid methane is around 440 – 450 standard cubic meters of methane in gaseous phase.

A shipload of approximately 212 000 cubic meters (like the Q- Flex) would result in a supply of close to 95 Mcm of natural gas.

This is around 25 % of the present UK consumption on an average winter day.