Britain may face mass gas supply shortage of winter gas: NGT

Britain may face mass gas supply shortage of winter gas: NGT

Kenilworth (Platts)--1Jul2005


Britain could face mass gas supply shortages and potential industrial
shutdowns to curb demand if the coming winter is severe, National Grid
Transco's forecasting manager Duncan Rimmer told a gas networking conference
Thursday. 

Even the start up of Britain's first liquefied natural gas import
terminal at Kent's Isle of Grain, owned by NGT and expecting first imports by
early July, would be unlikely to ease supply/demand tightness in an average
winter. "This winter is going to be a critical year because gas from the North
Sea continental shelf is running out much faster than anticipated," Rimmer
said. "It all depends on what operation level Grain achieves by the winter."
In the worst case scenario, which sees Grain operating at 75%, Rimmer said
industrial response would have to be matched with full flows from the
continent, but even that would unlikely fill the supply gap.

Rimmer added gas prices could rise to levels where industry found it more
cost-effective to suspend operations altogether. "They would either have to
shutdown, or those that could, might have to switch to alternative fuel
sources such coal," Rimmer said. 

NGT's group director Steve Holliday said that although loading operations for
Grain's first expected import had begun in Algeria, there was no guarantee on
the volumes to be expected and that loading delays had been occurring. NGT has
been in consultation with industry to determine potential response strategies
but Rimmer said that switching to more carbon heavy fuels such as coal could
prove unattractive for companies keen to keep carbon emission levels low to
satisfy EU carbon emission requirements. He said the supply crunch would
likely be alleviated by 2006 when alternative gas supply projects come on
stream serving the UK. A cargo of Algerian LNG is due to arrive at the Isle of
Grain terminal on Jul 3, the first to be supplied under a 20-year 5-bil cu
m/yr contract between BP and Sonatrach.

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