UK: Report fuels imported energy fears

Fears have been raised of potential gas shortages

Fears have been raised of potential gas shortages - Credit: PA

Fears over the UK’s reliance on imported energy were fuelled today after a report claimed Britain was just six hours away from running out of stored gas in March.

High demand during another freezing month combined with a pipeline fault to drive stores of gas “dangerously low”, the Crown Estate said.

But National Grid, which pipes gas around the UK, insisted the UK has “substantial resilience” and diverse supply sources including imports of liquefied natural gas (LNG).

At the time reports said Britain was two days from running out of stored gas, but the Crown Estate, which manages the Queen’s property portfolio including vast underground gas caverns, said it came even closer to supply interruptions.

The supply squeeze will raise concern over Britain’s increasing reliance on energy imports as domestic production falls, and add to fears over rising energy bills.

Rob Hastings, energy and infrastructure director at the Crown Estate, was reported by the Financial Times as saying: “We really only had six hours’ worth of gas left in storage as a buffer.

“If it had run any lower it would have meant... interruptions to supply.

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“The bottom line is that in the UK we are in a place where the gas supply is dangerously low.”

The Crown Estate owns the rights to gas storage caverns under the UK seabed including Rough off the coast of East Yorkshire. Energy firms use these caverns to build up supplies of natural gas during warmer months.

Centrica recently said that the extended cold weather saw volumes at Rough - which it leases from the Crown Estate - reach a record low level in April.

While Britain’s storage capacity has increased in recent years, energy watchdog Ofgem says it still lags behind other major European economies on gas storage because of its historic role as a producer.

The March supply squeeze was caused by problems at a processing plant in Norway that supplies gas to Britain through the Langeled pipeline, plus disrupted supplies between Belgium and the UK. Gas storage levels were already low after an exceptionally cold winter.

However, the FT reported Nick Winser, executive director of National Grid, as saying: “It is true that there wasn’t a huge amount of storage left - but there never is at the end of winter.

“The UK has low storage levels by international standards, but there is a large diversity of (supply) sources. Our gas supply resilience is quite substantial.”

He added the UK attracts shipments of LNG when stored natural gas supplies are low, ensuring it is not reliant on gas storage.

Energy giant SSE this week warned higher wholesale power prices will push up household bills as it reported a 5.6% rise in underlying annual profits to £1.4 billion.

It said: “Unless there is a sustained reduction in prices in wholesale gas and electricity markets, it is highly likely that these additional costs will eventually have to be reflected in higher prices for household customers.”

Total energy imports reached a record high of 173.7 million tonnes of oil equivalent in 2012, according to the Department of Energy and Climate Change (DECC).

The UK’s net import dependency rose to 43%, its highest level since 1976, DECC added.

However, high gas prices pushed gas demand 5.5% lower than a year earlier and gas imports were 6.5% lower.

Gas was used to generate 27.5% of the UK’s electricity in 2012, compared with almost 40% from coal.