Prospects for Gas Storage16 Jun 2018 09:36
The Prospects for Gas Storage
helenwest1
2 weeks ago
Speakers: Roddy Monroe, Independent Chair of the Gas Storage Operators Group; Nick Perry, Senior Advisor, Timera Energy; Will Webster, Energy Policy Manager, Oil and Gas UK
26th May 2018
All-Party Parliamentary Group on Energy Costs
Prospects for Gas Storage
Chair: Lord Palmer .............relevant points from meeting.......................
This afternoon we are examining the prospects for gas storage.
The closure of the Rough facility, imports of Russian LNG, and the Beast from The East have together raised concerns over security of gas supply. ............
This winter National Grid indicated to the market that more supply was needed and some industrial customers and power stations were paid to reduce their loads. ...........
Providing Flexible Gas
Mid-range storage (or huff and puff storage) provides the market with a high degree of short term flexibility (inter day, intra day and inter week) It has capacity to fill (relatively) quickly when prices are low and empty quickly when prices rise. ...........
Providing summer priced gas in the winter
Seasonal gas storage i.e. Rough (and to a lesser extend mid-range storage) moves summer priced gas to winter reducing average cost of gas
............
Some assets are aging therefore increase in cost to operate safety & re-investments shelved/abandoned given economic environment for operators (ie. Hornsea has mothballed 1/3 of its delivery capability, Rough has now closed) .............
Why should policymakers care? So what if more storage closes and no more is built? ..............
Tightness predicted for mid-2020s
Existing supplies of flexible gas are set to reduce:
Groningen: 2013 supplied 50 bcm (70% in the winter), by 2020 it is forecast to supply 12 bcm flat
Interconnectors: CAM is restricting product offerings, aging infrastructure may result in less EU storage being available
UKCS: on a continuous decline with aging assets / fields (FES predicts by 2030 fully depleted)
LNG: demand pull to Asia/China
NCS – offers some flex but production expected to start to decline in 2020s
Demand may increase
Coal to be phased out by 2025 to be replaced with gas generation
Large number of gas peakers being built – even if we have little new CCGT capacity coming on stream as yet. The point is that the peak electricity price setters are likely to be gas – so gas price spikes will often ‘knock on’ into electricity price spikes as well.