Gas Emergency Looms
Posted by Chris Vernon on March 14, 2006 - 1:07am in The Oil Drum: Europe
Topic: Supply/Production
Tags: electricity, gas, united kingdom [list all tags]
Events are transpiring against us now and John Hemming MP, chairman of the Independent Energy Scrutiny Panel has issued this warning:
Sunday's gas consumption was 357 mcm and involved taking 320GWh from Short Term Storage leaving 724GWh. Today's demand according to the National Grid Website is predicted to be 380 mcm. All else being equal this would involve taking the maximum 526 GWh from Short Term Storage leaving just under 200 GWh. Tomorrow's Gas Demand is predicted at 372 mcm which (all else being equal) would require about 400 GWh from a store of Short Term Gas which only has 198 GWh in it. This would cause a Phase 1 Gas Emergency with disconnections of large users.Continued below.
Obviously one would expect some demand reduction as a result of the Gas Balancing Alert. It is also possible that imports via the interconnector will pick up. The cold weather, however, is predicted to last a while longer. Medium Term Storage is likely to be running below 30% by the end of Tuesday's Gas Day. It is, however, now likely that there will be a gas emergency this week (likely estimated as a probability of over 50%)The problems really started Thursday 16th February with an accident at the Bravo gas rig some 18 miles off the East coast of Yorkshire. This platform is a key component in the Rough gas storage facility, the UK's long term gas storage facility holding the vast majority of our stored gas. The facility is not expected back online until at least 1st May now.Prices started rocketing on Sunday and have spiked intraday today at £2.55 per therm. This is symptomatic of the nature of the gas market where most demand is not sensitive to the spot price. That is why the demand reduction from the Gas Balancing Alert is likely to be lower than expected by government and Ofgem.
John Hemming's Gas Issues
With Rough out of the picture daily gas supply over what can be directly extracted from the North Sea gas fields and imported through the continental interconnector has been met from the medium and short term storage. Whilst this storage is capable of meeting all but the most extreme demand daily flow rates (luckily we haven't had any really cold weather) the flow rates can't be maintained for long since the volume just isn't there.
After almost four weeks, the short term storage has been reduced to just 724GWh and medium term to 2,311GWh. At the maximum rate of extraction (likely due to cold weather and long term storage being offline) these reserves will last for 1.1 and 7.6 days respectively. At immediate threat is the short term storage with a maximum flow rate of 526GWh (~48 million cubic meters). That 48mcm represents 13% of current daily demand.
On it's own the accident at Rough and the late cold spell would appear enough to disrupt supplies but there are some other details compounding the problem:
Statoil ASA, Norway's largest oil company, said today its Troll A platform in the North Sea was producing 10 percent below its capacity because of unspecified difficulties.Gaz de France workers this morning seized control of two liquefied natural gas import terminals and eight gas storage terminals.
Malfunctions at the platform, which pumps a maximum of 110 million cubic meters of gas a day, had reduced output in February at Troll, the largest gas field in the North Sea. The field, which accounts for about 60 percent of the gas found off Norway's coast, was slated to resume full output on March 8.
Norsk Hydro said last week that production from the Oseberg field would remain at reduced levels during the weekend after faulty equipment curtailed production.
ConocoPhillips, the third-largest U.S. oil company, said it will shut its Ekofisk field in the North Sea for four days this week, halting some 600,000 barrels a day of oil and gas production.
About 375,000 barrels of crude oil a day from the Ekofisk area will be shut down in the early hours of March 17, Ingvar Solberg, a spokesman for ConocoPhillips in Norway, said in a telephone interview today. Gas production from Ekofisk and oil and gas from several neighbouring fields also will be halted, bringing the daily production loss to about 14 percent of Norway's daily output
Bloomberg
I was also told this morning that the Bruce gas field was experiencing reduced flow rates due to compressor failure and the there was a stoppage at the Britannia field though I haven't been able to confirm this.
On prices:
The price at the National Balancing Point, the main U.K. trading hub rose as much as fourfold to 255 pence a therm, according to broker Spectron Group Plc. The price is the highest since Bloomberg began tracking the market in 1999 and equals $33 per million British thermal units.
Bloomberg
As John Hemming mentioned such dramatic price fluctuations on the spot market are to be expected since most demand is not sensitive to the spot price. Domestic demand is billed monthly or quarterly and even many industrial users will have contracts to fill forcing uneconomic consumption for short periods. It takes a fourfold increase in price to achieve the required demand destruction.
Here's an illustrative graph from the BBC:
Soruce: BBC Online
Looking at the weather reports for the coming week, Wednesday 15th March might be a little warmer but the end of the week is again looking cold.
It's seems clear that business as usual demand will not be met - this will result in demand being cut from industrial customers (the first Gas Balancing Alert of the winter was issued today). These are the heavy gas users such as chemical, fertilizer and glass manufactures but also the largest industrial gas customer, the combined cycle gas turbines (CCGTs). The real sting in the tail of a gas shortage is the impact extremely high gas prices have on the economics of gas power stations. Severe gas shortages could endanger the national electricity supply.
Perhaps the most surprising thing however is that as close as we are to a gas shortage that will at the very least seriously effect industry, costing millions today but also having a longer lasting effect on industrial investment in the UK is that the public aren't being told about it.
If Tony Blair or Malcolm Wicks would record a 3 minute video to be played a few times a night on the major TV channels (Like Silvio Berlusconi did in Italy last month) explaining the problems and asking everyone to turn their heating down just a little bit, have a shower not a bath, ask offices to do what they can to reduce gas and electricity consumption a little the problem might be avoided.
Detailed information on the UK gas status is available on the National Grid's Daily Summary Report.
One last point that must be highlighted is the complete silence on this subject from the DTIs Joint Energy Security of Supply Working Group (JESS).
They are meant to publish a report twice a year, it's description:
A key part of JESS's work is compiling information and making it available to the energy markets via published reports. These reports provide an insight into the work of the Group, information on background to the issues relating to security of supply and an update to the indicators on security of supply that the group is developing.
This was due in November 2005 but didn't appear - I was subsequently promised it by the end of February and it still hasn't been published. The latest promise from them is the end of March. I won't hold my breath.
I suspect it wasn't published last year since they couldn't get the numbers to add up in such a way to instil confidence and admission of 'the challenging situation' was not acceptable. If serious problems do develop JESS might be a good place to start an investigation.
The Pentagon's Weather Nightmare
http://zfacts.com/p/224.html
The climate could change radically, and fast.
That would be the mother of all national security issues.
By David Stipp, FORTUNE Magazine, February 9, 2004
The Complete Report to the Pentagon
All that happened is that after a run of unusually warm winters we now have a winter with a late cold snap. Sods law (if it can go wrong it will go wrong - the toast laways lands on the carpet marmalade side down) has resulted in it happening at the worst possible time, compounding a number of other negative factors.
In the late autumn there were hysterical predictions flying around of a severe winter like 1963; if that had happened then we would have been in crisis mode back in January, even without the problems that have developed with the Rough shutdown.
I know that salt spray along sea costs can be a problem and ice buildup in humid slightly below freezing conditions but please explain the problem with cold weather.
Sweden will be ok as long as we get a few good summer months with a reasonable growing season. Wonder if a shut down gulf stream would get us wishing for more greenhouse gasses?
http://www.bbc.co.uk/climate/impact/gulf_stream.shtml
http://www.bbc.co.uk/devon/weather/the_big_freeze.shtml
OK. Would you believe "50% in the next 100"?? And a "low" probability in the next 20. What's low? I don't know. If its 1 out of 2 in the next 100, couldn't it easily be 1 in 4 in the next 20? Sounds high to me in any case, especially if you consider the Gulf of Mexico just experienced a supposedly 500 year wave height. And, the a typical model of storm frequency of return, it does not say that it CAN'T happen in ANY particular year.
http://www.bbc.co.uk/science/horizon/2003/bigchilltrans.shtml
I do, however, appreciate quotes like "UK energy minister Malcolm Wicks had the audacity to state that the country was 'awash with gas' ".
Its been some years now that I believed any government official (whatever country that was) telling me something about what's going on. But I've got to say, I always thought the UK was a bit more honest than the others, especially the US....
Another false assumption put to bed....
Our esteemed government has been very busy with great matters such as Fox hunt bans, Smoking bans, rogering the house of lords (the bit that works), stuffing
habeus corpus, ID cards, how many vegetables we have each day, 24 hour pubs and casinos in impoverished areas.
Strategic energy issues are simply not important and can be dealt with by the market. I do not think that there is one scientist or engineer in the whole house of parliament.
You see everybody knows that the science guys will invent something nice like fusion or Sooty's magic dust
The difference this has made to his stance on energy issues is refreshing when compared to the majority of political animals who inhabit the house of commons.
Links to his website have already been posted in this thread. In addition, he has raised an urgent question with regard to the gas situation which is due to be answered this afternoon in parliament by the DTI (Department of Trade and Industry). Several hundred more like minded MP's and we might have a chance for some meaningful mitigation strategies.
" He (Vince Cable) says high oil prices will lead to increased production and exploration, thereby improving supply, and to falling demand, as consuming economies slow in the face of higher energy costs."
Declines to answer e-mails questioning his basis for this belief, but that is a common problem with all the respective party energy spokesmen. I suspect they know they are in a hole but just do not wish to admit it.
1/700 , at least its a start.
I wonder how much heat you can get from burning politicians?
It would be nice to chuck a politician on to a wood fire to keep warm when the natural gas shortages bite. It is certainly the most useful thing you can do with a poltician. Or has anyone else got a better idea to make use of a politician?
Pretty much the same on this side of the pond.
speaking of dishonest/moronic politicians, NZ's energy minister today told the country "no rolling blackouts this [southern hemisphere] winter, lads" despite the hydro lakes being the lowest since our last (major) power crisis in 1992. and no rain in sight. and Maui gas field running down fast. etc. etc. his justification for this pronouncement? none. well, one actually. he's God. so he know's we'll be right mate! hope someone told the other God, TB, that he's got competition downunder!
Energy Minister rules out winter power cuts
In the estimates of the investments of generating plant we need to include rapidly rising fuel prices. Techniques that do not seem economic with stable fuel prices might be so with rising prices. Now may be the time to renew research into not just dual cycle (gas and steam turbines) but also triple cycle, magnetohydrodynamic (mhd), gas turbine and steam turbine. 60% thermal efficiency is possible even before considering using the waste heat.
I'm not so sure about this, gas fields tend to produce at the constant rate (constrained by infrastructure) until almost completely depleted leading to a 'gas cliff'. This is leading to official predictions of UK North Sea gas falling to just 10%-20% of current output by 2020. The geology is also compounded by the aging infrastructure with much equipment in the North Sea not expected to be decommissioned within 20 years, the remaining small amounts of oil/gas not warranting new infrastructure. Beyond 2020 (just 14 years away) very little gas is expected from the North Sea. Globally the situation is very different oil since gas will never be as fungible as oil.
Even at that price it is likely that gas will be required as there is no feasible mass energy storage technology available now and applicable to the UK that could scale to cover the intermittency of 100% wind, wave, tidal and solar energy. Nuclear power is not well suited to rapid massive swings in output. A substantial premium will be able to be borne by an energy supply that can be brought on line with muli-gigawatt ratings at 20 or 30 minutes notice.
This is not to deny that we have a massive gas crisis in the UK in the short, medium and long term. Nor that we have to build non-fossil fuel power generation at a rate that dwarfs the efforts so far. Nor that even with these efforts we are going to have to reduce our energy consumption massively and painfully.
My point was only that plant capable of more efficient use of such gas as we have is unlikely to be a poor investment.
That would very well be certain if we lived in the 1980s or 1990s. With energy becoming scarce it is becoming a certainty that we will start seeing hoarding of oil and NG soon after that. As building LNG terminals takes time and huge amounts of capital it is very likely that many energy exporters will resist entering the "Global Market" you are kindly offering them.
In short - try to think in terms of energy security before relying on the hypothetical global market - it may never meet the expectations you are loading it with.
Most homes would rip out their central heating and replace with coal or wood burning stoves.
On a brighter note, all that unwanted packaging from Tescos instant meals (ugh) will provide warmth and light for millions!
Gas prices have risen that amount already on the spot market and still nobody from Europe will sell us any natural gas. Seems the UK is the only place in Europe that believes in the free market. Everywhere else has planned and built gas storage facilities and will not sell it to us at any price. I think there is a lesson in there for economists.
In addition to losing some 60% of the energy value of NG in generation and transmission (compared to nearly 100% efficiency for heating), one also have to account for the ad-hoc availability of NG and the lack of sufficient storages. Thus you potentially destabilize not only the heating grid but the electricity grid too.
While I agree the "dash for gas" was a profound error your figures are a bit pessimistic.
Transmission losses may be high in a big country like America but in the UK they are only 1.5% according to the DTI. Combined cycle electricity only plants have achieved 58% thermal efficiency see here. Still higher gas turbine temperatures will likely raise this to 60%. Theoretical predictions of the use of triple cycle HMD topped systems give 65% efficiency. Whether that will ever be achieved is another matter.
Combined cycle generation combined with use of waste heat can increase the thermal efficiency to 80% but does require there to be a local large user of low grade heat such as large housing estates designed for the purpose or extensive heated greenhouses.
The availability of natural gas is a lot better than wind or solar and if I read Chris Vernon's link right we have 316 days worth of long term gas storage 75 days of medium term storage and 20 days of short term storage. This may not be enough but it is not negligible.
With respect to your earlier post about a world market for natural gas, while countries like Russia and Canada may well chose to horde their natural gas but countries like Oman are likely to be net exporters for some time to come.
With respect to Shifty's remarks about UK manufacturing, yes it may collape but if it is near a world price the competition will have a rough time too. There is not enough wood or in the short term UK dug coal to replace more than a fraction of UK domestic heating.
With regard to Engineer Poet's remarks about Town Gas, I remember this as a boy. I wonder if the safety considerations will allow this directly. Putting your head in an unlit gas oven was a popular form of suicide at the time. I suspect that if we go back to coal generated gas it will be synthetic methane.
A have another figures for transmission losses. From Wikipedia:
http://en.wikipedia.org/wiki/Electric_power_transmission
Of course electricity can be used in much more applications than heating, but NG promises to be tight for heat only in the near future. Again even if your figures are more correct, wasting 50% or even 30% of the energy is obviously a very bad policy, given how many other options for electricity generation we have.
while countries like Russia and Canada may well chose to horde their natural gas but countries like Oman
I think you mean Qatar here. The three countries with some 70% of world NG reserves are Russia, Iran and Qatar. Can you imagine what would happen if the whole world came to depend on them only? I would hardly call that a global free market and we already saw Russia playng hard with the NG card. I don't mean to say the global market of LNG will not help - just that there is a great danger it will not be enough.