Threat of gas price rise as reserves run dry

Pipeline breakdowns and cold weather leave yawning breach in nation's energy security
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The Independent Online

Britain faces an energy crisis next month as vital gas reserves run dry, top energy analysts warn. The unprecedented emergency, which exposes a gaping hole in the country's energy security, is expected to lead to sharp price increases.

Centrica, which owns British Gas, told The Independent on Sunday late last week that, on present trends, its main reserve would be totally depleted in a little over three weeks. And though extra gas can be imported from Norway and the Netherlands to make up any shortfall, serious breakdowns have hit pipelines from both countries in the past week.

The crisis reveals an extraordinary failure to plan for the future as supplies of gas from the North Sea have run down, turning Britain into an importer of the fuel. Though now dependent on overseas supplies, it keeps only about a quarter as much gas in reserves as France, Germany and Italy, making it uniquely vulnerable to shortages and price hikes.

Three-quarters of the country's reserves are stored by Centrica in an old North Sea gas field, called Rough, some 9,000ft below the seabed off the East Yorkshire coast. Surplus fuel is injected into the reservoir in the summer when demand is low, and withdrawn between October and late March.

This year – thanks largely to the cold weather – its gas has been pumped at record rates. It is now 24 per cent lower than at this time last year, and 49 per cent less than the year before.

Centrica said: "Rough is being drawn down at a very fast rate. As of now, it would just last 22 days." Everything depends on the weather and – though depletion has slowed with milder conditions – the Met Office expects the cold back by the beginning of March.

The crisis is compounded by failures in vital pipelines. A compressor on the one from the Netherlands broke down a week ago and is expected to be out of action for a long time. Though the pipeline can still operate with two remaining ones, there is now no safety margin against further failure.

Late last week an electrical failure shut down a pipeline from Norway to Scotland. Extra gas has been sent down another one that comes ashore in Yorkshire, but again Britain is precariously vulnerable to further interruption.

Craig Lowery, of the EIC energy consultancy, said: "We could see the price of gas rise quite sharply." Consultants McKinnon and Clarke, who advise businesses on energy costs, said: "If the contribution from Rough is exhausted before the winter is out then, at best, things will be very tight and subject to price volatility."

The National Grid said: "We are not really seeing anything to cause us concern".

But David Hunter of McKinnon and Clarke retorts: "It is the coldest winter in the past 13 years and there is still a month and a half left of the traditional withdrawal period from reserves. There must be cause for concern."