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Parliament Debates Gas Situation

Posted by Chris Vernon on March 15, 2006 - 12:11pm in The Oil Drum: Europe

Yesterday (Tuesday 14th March 06) John Hemming MP was granted permission to ask an 'Urgent Question' in the house.  His question sparked an interesting and long overdue debate on the current gas situation.  

John Hemming (Birmingham, Yardley, LDem)

The country is on a knife edge. What will the Secretary of State say to the 7,000 people who may lose their jobs in the plastics industry? What will he say to domestic consumers, who have seen price increases and are likely to see more? What have the Government done since long-term storage went out on 16 February?

If there is too little storage, as I think we all accept, why do we not import more on mild days? Why is the trigger for a gas balancing alert so high? On Sunday 319 GWh was taken from short-term storage, but there was no gas balancing alert. Had the same rate been taken on Monday and today, we would be in a gas emergency now. How can the Government expect UK industry to cope with energy prices in this country that are 50 per cent. greater than those in the United States of America?

Why do the Government do so little about energy security and reducing demand? The Prime Minister says, "Not me, guv--nothing we can do." Cold weather is now predicted. Short-range storage has approximately 50 million cu m and the Hornsea facility has 48 million cu m. Why do the Govt not do something about demand and supply?

The full transcript of the subsequent debate can be read here: They Work For You

Parliament Debates Gas Situation

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6 comments

Stuart Staniford on March 16, 2006 - 5:48am Permalink | Comments top
I don't have too much of a dog in this political fight any more, not having lived in the UK for many years. From the across-the-Atlantic perspective, it looks to me like the government has been extraordinarily lax to get itself into a situation where the strategic reserve is as small as the Rough facility sounds like, and that facility is a single point of failure. No doubt the minister has no choice but to defend his conduct as best he may, but "knife edge" certainly sounds appropriate when one is having to worry about balancing supply and demand on a day-by-day basis, with prices having gone through the roof.

Does the UK have any strategic reserve for oil?

haggisbasher on March 16, 2006 - 9:15am Permalink | Parent | Comments top
The answer given in parliament by Malcolm Wicks, Secretary of State for Trade and Industry, on 19th Jan, describes the situation in the UK quite well.

Malcolm Wicks: The UK meets its international obligations to hold stocks of oil for use in the event of disruption of supplies by imposing obligations on companies. We believe that stocks held by companies are, in the event of an emergency, likely to be where they will be needed and capable of being quickly processed into the supply chain. The release of stocks following Hurricane Katrina has shown that the UK system was able to respond well to the disruption which occurred.

The UK is currently required to hold stock equivalent to 67.5 days annual consumption, both in total and also in each of the three categories into which the total is divided. Obligations are based on sales. Changes in the market, with small companies below the threshold for the obligation entering a supply chain previously
dominated by oil companies, meant that between March 2000 and October 2004, although the UK met the total obligation in all but two months, in 41 of the 56 months we did not hold the full level of stocks necessary to meet that part of the obligation relating to category 2 (gas oil, diesel oil, kerosene and kerosene based aviation fuels). In order to return to full compliance with the UK obligations the Government agreed increases in company obligations with industry, and the UK has been fully compliant with the obligations since November 2004.

We must, however, consider future needs. The UK's obligation will increase as our domestic production of oil declines. We have, therefore, consulted the oil industry and others about a new system which will ensure that the UK can continue to meet its obligations in future. We propose that this system should be based on products from refineries or entering the UK as imports. As we work with the industry to establish the system, we have agreed to explore the long-term potential of establishing an agency to ensure that stocking obligations are met.

There have recently been calls for a EU strategic reserve on similar lines to that in the US, led by Laslo Kovacs, Energy Commisioner for the EU, but whether this will get beyond the talking stage remains to be seen.

Chris Vernon on March 16, 2006 - 6:34am Permalink | Comments top
I think the current situation can mostly be explained by one single mistake - failure to recognise and accept that North Sea gas would peak in 2000 then fall away as fast as it has.  If the peak had been 2005 then we would still be exporting today and lots of storage and import infrastructure would be in place by the time we became a gas importer in 2010.

The more recent mistakes have been small compared to that past mistake.

The challenge we face now is two-fold. We don't have the infrastructure (pipelines, LNG, storage) to be a major importer and the market doesn't have a several billion cubic meters to spare at reasonable prices.  The infrastructure will be there within a few years, there are new or upgraded pipelines from Belgium, Norway and Netherlands and LNG at Milford Haven all due by 2008 with several 10s of billion cubic meter capacity.  There still looks to be a long term storage shortage though.  Whether the market will supply enough gas to maximise this new infrastructure is far more uncertain though.

PaulusP on March 16, 2006 - 10:37am Permalink | Parent | Comments top
Hello Chris,

You are actually (also) refering to the Bacton-Balgzand pipeline http://www.bblcompany.com/

As a resident of Den Helder, NL, the place where they want the pipeline to penetrate the dunes is 7 miles south from where I live.

from the above site: "The section of the onshore pipeline that crosses the dunes of Noord-Holland will require special attention. The 'horizontal drilling method' will be used for that purpose. This method makes it possible to lay the pipeline under the dunes without damaging the landscape. In September and October 2005 the execution of the drilling started. As the drilling got stuck, the drilling will have to be done once again."

Point is that 2 tries to drill through the dunes failed. Presumably because they struck some WWII German-build bunkers. At present the factual site looks messy; will see if I can get you some pictures of the site in the weekend.

They were not allowed to do the drilling in winter, as that is when the dunes are most vulnerable. They will resume work this spring.

Due to the above the entire project is delayed, with, I think, obvious  consequences for the UK gas situation.

Please note the irony that Hitler is still succesfull at harming the British.

nrgyman2000 on March 16, 2006 - 8:05pm Permalink | Parent | Comments top
To my knowledge the Ormen Lange field offshore Norway will start flowing by fall 2007 and will gradually build towards a plateau by 2009 of approximately 20 Bcm/a, and most of this is intended for the UK market.

In addition a project to prolong the economical life of Statfjord includes a new pipeline link (Tampen Link) to be connected to the UK system. This development could add 4 Bcm/a for the UK market by fall 2007.

As for the cotractual year 2005 (now) STATOIL has a contract of 5 Bcm/a with Centrica, this in addition to 3-4 Bcm/a from NCS delivered through the Frigg system and landed in St. Fergus.

All of this could add a total of 25-30 Bcm/a from Norway by 2009, or 25-30 % of present UK nat gas consumption.

Further as I know there is under construction a new pipeline from Russia (crossing the Baltic Sea) that could be operational by 2010, and has the potential according to the owners to add up to 30 Bcm/a to the European and UK market.

The present tightness in the UK market is mostly due to the fire at one of the Rough installations, making it inoperable till May, that presently acts as the main storage facility for the UK market.

By browsing the historical data from DTI (Department of Trade and Industry)I found that actually UK have had sufficient flexibility in its nat gas supplies system.

Given the present situation, it would take a lengthy cold snap to completly empty the operable storage facilities. After all we are heading for spring and (hopefully) warmer weather.

Essex Land Rover Man on March 16, 2006 - 1:52pm Permalink | Comments top
We get what we deserve. We refuse to pay for anything and we get nothing in return.

Parliament Debates Gas Situation

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6 comments