National Grid commented that while gas supplies from the North Sea are set to decline further, new sources of gas due to come on stream during 2007 will be able to deliver an extra 50 million cubic meters of gas a day. The utility added that this was over 10% of the gas Britain would use on a very cold day.
These new gas sources include the connection of the Langeled pipeline to the new Norwegian Ormen Lange gas field which is due to take place this winter. Once connected, this source alone could deliver a fifth of Britain’s gas needs on an average winter day.
National Grid also reported that the expansion of the new interconnector pipeline with Holland has increased capacity from 10 billion cubic meters (bcm) a year to 15 bcm a year, and that two new LNG terminals in Milford Haven will add another 16 bcm of potential gas import capacity.
The utility added that a new storage facility is being constructed at Aldbrough and that the existing Hole House Farm gas storage facility is being expanded to increase the UK’s gas storage capacity.
In its consultation, National Grid commented that the UK is becoming increasingly linked to the wider European gas market and the emerging global LNG market; connections that will greatly impact gas supplies to the UK. While this would appear to be positive, National Grid also warned that if there are supply shocks in other countries, prices in the UK may have to rise to continue to attract LNG and piped gas from Europe.
Commenting on the report Steve Smith, Ofgem’s managing director of markets, said: While National Grid’s preliminary report forecasts an increase in gas supply compared to this winter, there can be no grounds for complacency. No one can predict next winter’s weather, so customers and the industry must prepare for all eventualities.
