National Grid – Gas Deficit Warning

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National Grid have issued a Gas Deficit Warning for gas day 01/03/2018. Demand is expected to soar to over 400 MCM in response to the cold weather, while supply is only forecast to reach 361 MCM. The UK system opened more than 50 MCM short this morning following a number of unplanned outages affecting the UK system, as detailed below. Within-Day gas prices have soared to over 250 p/th as a result. Europe is also experiencing cold weather and low storage stocks, so the UK is unable to pull on significant continental imports and is having to rely heavily on indigenous flexibility. The impact of all these factors is accentuated following the closure of the Rough long range gas storage facility.

UK Gas System Outages:

North Sea: Kollsnes and Entry SEGAL Pipeline outages are restricting a combined 34 MCM of flows into the UK from the North Sea.

BBL pipeline: Flows were reduced yesterday until 16:00 due to problems with a compressor. The pipeline carries gas from the Netherlands to the UK.

South Hook: Currently has zero availability for send-outs due to a technical fault. South Hook recently received an LNG shipment of 182 MCM, which will be stuck in storage as long as the problems persist.

Rough: Despite being closed as a storage facility, Rough still supplies gas into the UK system. Flows have been closed off for ‘essential offshore maintenance’; normal service is expected to resume by tomorrow.

Why does this matter?

The bottom line is that the Gas Deficit Warning will not affect LASER customers. The main impact of National Grid calling for a gas turndown will affect industrial/commercial daily metered contracts. LASER have 6 daily metered customers with predominately domestic requirements and will not be curtailed.

Procurement Strategy

LASER within period gas products (PWP and FSAR) currently do not have any exposure to the Day Ahead market, as the decision was taken at the January Governance Panel meeting, to cease day ahead trading for these baskets with effect from February 2018.

This is obviously a fast moving situation and we will keep you up to date with any further developments that may impact security of supply, but in the meantime if you have any questions relating to the above then please do not hesitate to contact us.