British gas reserves could run dry in 36 HOURS after freezing householders turn the heating up
- Plunging temperatures forced millions to turn up their heating
- Shortfall could add more than £200 to family bills, analysts warn
- Gas stores at their lowest level for three years with snow forecast
- Government insists gas needs are 'continuing to be met'
- Britain relying on pipelines from Norway and shipments of liquefied gas
- Energy giant SSE was of 'very real risk' of lights going out
- Downing Street spokesman said: 'It is absolutely clear that supplies are not running out'
PUBLISHED: 16:39, 22 March 2013
Running low: Britain's gas reserves could run out in 36 hours - leaving the country dependent on costly foreign imports.
Britain's gas reserves could run out in 36 hours – leaving the country dependent on costly foreign imports.
The UK’s gas stores have less than two days’ supplies remaining after plunging temperatures forced millions of householders to turn up their heating.
And today there were warnings from energy giant SSE of the 'very real risk' of the lights going out in Britain.
With more snow forecast today and the unseasonable freeze to continue into next week, the UK could be left relying on expensive imports from Norway through an under-sea pipeline.
The shortfall is likely to push up the long-term price of gas and could result in household tariffs rising by up to 15 per cent before next winter, adding more than £200 on to family bills, analysts warned.
Gas stores were at their lowest levels for three years last night, sending UK gas prices soaring to near-record highs.
‘There is no other Western economy of our size that uses as much gas as we do but has so little storage,’ said energy analyst Peter Atherton at Liberum Capital.
The UK has only 15 days of storage capacity – less than a sixth of its European neighbours. The US, in contrast, has six months’ worth.
Companies pump gas into stores during summer months when it is cheaper, then draw it down to sell on in winter. British stores were 86 per cent full at the turn of the year, but had less than 20 per cent remaining at the start of the month.
Now just 10 per cent is left – not even enough to meet the UK’s needs for two full days. Last night the combined stores across Britain had 491million cubic metres (mcm) of gas, according to official data from Gas Infrastructure Europe.
But the average daily use in the UK is 327.1mcm – more than a fifth higher than the average for this time of year.
The stores would not hold enough to keep Britain warm for two days if other supplies – such as the Norwegian pipeline – were to develop faults.
Price rise: The shortfall is likely to push up the long-term price of gas and could result in household tariffs rising by up to 15 per cent before next winter
A Downing Street spokesman said: 'The absolute key thing on this is that supplies are not running out.
'The gas market is how we source our supplies and that market continues to function well.
'The Prime Minister’s key concern is that gas supplies continue. It is absolutely clear that supplies are not running out.'
Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: 'Absolutely confident.'
However, Andrew Pendleton, head of campaigns at Friends of the Earth, said: 'This is a glimpse of a miserable and worrying UK energy future and shows the folly of depending on gas for so much of our electricity generation.
'Increases in the wholesale gas price are the main reason that our energy bills have rocketed in recent years - and this latest concern shows George Osborne’s judgment in backing gas to provide the bulk of our power for the next generation is seriously flawed.
'We should wean ourselves off this dirty fossil fuel by producing the majority of our power from renewable energy, which the UK has in extraordinary abundance and is becoming cheaper and cheaper to harness.'
‘The UK gas market has yet again been exposed to its deep-rooted supply problems,’ said City analyst Sabine Schels at Bank of America Merrill Lynch.
Already Centrica, which owns British Gas, has begun rationing supplies from its own storage facility Rough, off the Yorkshire Coast, which holds around three quarters of the UK’s entire supply.
Stocks at the site have been ‘depleting rapidly,’ Mrs Schels said.
She warned 11 days ago that, ‘at the maximum withdrawal rate, supply at this facility would run out in 13 days’.
Analysts said soaring prices now could mean traders – who set energy prices up to a year ahead – would raise their forecasts for next winter.
It would leave energy firms, which buy a lot of their gas in advance, facing rises of up to 15 per cent, which they would pass on in higher tariffs.
Adding to the sense of crisis, Ian Marchant, the head of energy giant SSE, accused the Government of underestimating the challenge of keeping Britain's lights on.
He announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.
He said: 'It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result.'
He said the energy watchdog Ofgem had recently expressed real concern about the tightening of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1:12 chance of the lights going out
Mr Marchant added: 'It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis, which highlights that the situation is likely to be even more critical than even they have predicted.'
The average family’s dual-fuel bill has more than doubled over the past nine years, from £522 in 2004 to £1,352 this year. A rise of 15 per cent could add £200 on to that.
What is more, in April Norway will reduce the capacity of its pipeline for maintenance work – further increasing pressure on the system.
It means the UK may need to cut gas supplies to some big industrial customers, as it did in 2010 at a time of severe gas shortages.
Today the government was forced to deny that the UK was on the brink of running out of gas altogether.
The Department of Energy and Climate Change admitted that the long, cold winter had hit supplies but insisted imports from overseas would help Britons to stay warm this weekend.
A spokesman said: 'Protracted cold weather increases demand but the UK gas market is responsive and our gas needs are continuing to be met.
'Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage.'
She said that while half of the nation's gas needs were supplied from the North Sea, there were also pipelines from Norway and elsewhere in Europe, shipments of liquefied natural gas and storage.
'Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight,' she added.
'But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly. For example in recent weeks gas has been flowing in from continental Europe in high volumes.
'We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall.'
It came as the Office for Budget Responsibility warned green levies will add at least two per cent to electricity bills every year until 2020.
Dr Doug Parr, chief scientist at Greenpeace, said: 'As shortages drive up prices for consumers George Osborne must be the only man in Britain who thinks the answer is a gamble on gas power.
'Fracking won’t lower prices and significant production is more than a decade away.
'North Sea gas production may be falling - but offshore wind is already helping to fill the gap.
'The Government must act to stabilise bills, secure supplies and create jobs by supporting clean, renewable technologies like offshore wind and a European super grid.'
