British gas supplies

Britain 'was just six hours away from running out of gas': And experts say a new power crisis looms

• Senior energy boss Rob Hastings reveals crisis closer than first thought
• 'If it had run any lower it would have meant interruptions to supply,' he said
• Combination of bitterly cold weather and pipeline failures blamed

Daily Mail,

24 May, 2013

Britain came within six hours of running out of gas earlier this year, it emerged yesterday.

The severe winter weather coupled with a faulty import pipeline led to supplies being rapidly used up at the end of March.

The revelation that the country almost ran out of gas came as officials warned there could be a similar crisis next winter.

Household fuel bills, already at record levels, are expected to rise further as a result of the shortage.

Rob Hastings, director of energy and infrastructure at the Crown Estate, the property portfolio managed by the Queen, said: ‘We really only had six hours’ worth of gas left in storage as a buffer [at the end of March]. If it had run any lower it would have meant interruptions to supply.’

The Crown Estate owns the rights to gas storage sites under the seabed.

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With continuing cold weather – this spring is expected to be the coldest since 1979 – reserves could be partly empty heading into next winter.

This could force energy companies to buy gas on the open market at a higher cost, which would likely be passed on via household bills. With eight of the UK’s coal plants shut down last month to meet EU diktats, the nation will be left relying on wind farms and imported gas for power.

Angelos Anastasiou, an independent energy analyst, said: ‘This won’t trigger price rises immediately, but if it causes companies to spend more buying gas over the winter then [energy firms] will definitely recoup their costs later on.’

The National Grid, which pipes gas around the UK, insisted the UK has 'substantial resilience' and diverse supply sources including imports of liquefied natural gas

He added: ‘This is most likely to be felt over the next two or three winters as prices creep higher.’

Peter Atherton, utilities analyst at stockbroker Liberum Capital, said it would be likely to have a ‘significant’ impact on wholesale gas prices.

It comes only days after energy giant SSE, Britain’s second biggest power firm, warned that a price hike of £80 was ‘highly likely’ for its customers because of rising costs.

Leaked documents seen by the Mail, which come from within a government body, assessed the impact of the gas crunch in March.

The document revealed energy firms had to start drawing on emergency gas reserves, which are said to be more volatile than standard gas, after supplies dwindled to almost nothing.

Companies make money by buying gas cheaply in the summer, putting it into gas stores, and selling it in the winter.

But summer prices have been rising, and the difference with winter rates is now so small that it is not economical for investors to build any new gas stores – leaving Britain with a maximum of 20 days of storage.

This compares with more than 100 days in France, 92 days in Germany and 70 days in Italy.

The US protects itself against gas shortages by storing contingencies for up to six months.

It also emerged that the number of ships bringing liquefied natural gas from Qatar – the UK’s other main source of gas – has halved in the last 12 months.

These ships, which are the most expensive way to get gas, take more than two weeks to reach Britain.

It was only because one arrived at the end of March that Britain avoided gas shortages, experts believe.