MONDAY APRIL 23 2001 UK faces power cut threats BY CARL MORTISHED, INTERNATIONAL BUSINESS EDITOR BRITAIN could be at risk of power cuts because the nation’s gas industry is no longer able to meet peak demand in a harsh winter. Concern is mounting that a Californian-style power shortage could emerge because the gas industry may not be able to deliver enough volumes to satisfy extended periods of peak demand. A dearth of new gas supplies and a shift to gas in the power sector has put the industry in jeopardy of breaching licence requirements, should the country face extraordinary cold.

According to research by Energy Contract Company (ECC), the supply of North Sea gas available at the beach combined with available storage capacity would fail to meet demand in a “one in 50 winter”, the coldest winter one could expect in a 50-year period.

Using a forecasting model developed by Transco, the operator of Britain’s gas grid, ECC reckons that if temperatures fell to “one in 50” levels in the coming winter, storage gas and liquefied gas stocks would run out in six days and Transco would have to operate emergency procedures. That would mean reducing consumption by about 14-15 million therms per day.

Under Transco’s emergency procedures, power stations would be the first to be cut off from gas supplies. “We would cut the largest users first,” said a Transco spokeswoman, with domestic users the last to be affected.

The weakened supply line is because of the tight gas market and a recent slowdown in investment in North Sea exploration. Niall Trimble of ECC said the chance of a one- in-50 winter is very small. However, he gave warning of serious consequences if we experience a winter with prolonged cold weather.

“It is very dependent on temperature but there are some weather conditions which have a reasonable probability of occurring, which could produce gas market conditions reminiscent of the California energy market.” According to Mr Trimble a ten to 20-day period in which temperatures fell 3 degrees below seasonal normal levels could push gas prices above £1 per therm, four times current levels.

The warning over a winter gas shortage follows deepening concern in the gas industry about the level of domestic supplies. In its most recent ten-year forecast Transco gave warning of a “deterioration” in the gas supply outlook and a “tightening of indigenous supplies”. It says Britain could become a net importer of gas in a few years and industrial gas consumers are up in arms over prices which have doubled in the space of a year.

By the winter of 2005-06 Britain will have a future gas requirement of 4.6 billion cubic feet per day. Mr Trimble says the industry has always included gas from sources not yet known in its calculations. “What is different this time is the sheer scale of development needed. The market needs additional new gas within the next four-five years of around three times the output from planned new developments.”

http://www.thetimes.co.uk/article/0,,5-118516,00.html

-- Martin Thompson (mthom1927@aol.com), April 23, 2001