Why Britain is running out of gas

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Why Britain is running out of gas

Britain has always cared about the weather, but this week’s “dunkelflaute” – a spell of low temperatures and plummeting wind speeds – shows how vital it is to the economy as well as its conversations.

Freezing temperatures drove

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to a high of 50 gigawatts (GW) on Wednesday, well above the 44.4GW peak demand predicted by Neso, the National Energy System Operator in its winter

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report last autumn.

However, spotty renewables output and a long-term decline in nuclear power have exposed Britain’s reliance on natural gas reserves –

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.

Unreliable energy mix

Just as the cold snap bit on Wednesday, low wind speeds drove down output from Britain’s 12,000 wind turbines – which theoretically offer 30GW of generating capacity – to just 3GW, roughly enough for just 2.2m of Britain’s 28m homes.

Solar showed the same issue of intermittency. Its output equates to 1.5GW through the year, enough electricity for nearly 1m homes. But when the sun went down that vanished, too – so what was left?

Once, the answer would have been coal and nuclear. Back in 1980, coal provided 76pc of the ***’s electricity. But Ratcliffe-on-Soar in Nottinghamshire, the ***’s last coal-fired station, was

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as part of reaching net zero.

The ***’s

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. Nuclear output peaked in 1995 at about 13GW or around a quarter of *** needs – but has dwindled ever since as ageing power stations were shut down and politicians dithered over replacing them. It now provides just 5GW.

All those losses have made Britain’s energy security ever more dependent on just one fuel – natural gas. And now the country’s winter reserves are running low, triggering the warning from British Gas owner Centrica that there is only enough in storage to last for a week if supplies from outside Britain were cut off.

Last year the *** consumed around 75bn cubic metres of gas, roughly equivalent to 1,100 cubic metres per person.

Imagine 14 double-decker buses following you around for a year. Their collective volume is equivalent to the gas consumed per person in the ***.

About a third of that gas is used for generating electricity, while the rest feeds the 25m homes and businesses that rely on gas boilers for heat and hot water.

Where does Britain’s gas supply come from?

So the *** needs a lot of gas – but where does it come from? Unfortunately Britain’s dependence on gas for generating electricity has grown at roughly the same rate as its

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.

Two decades ago, the *** was producing about 100bn cubic metres (bcm) of gas a year. But as offshore operators drained the biggest fields, supplies naturally dwindled.

By 2012, North Sea gas production had fallen to around 38bn cubic metres and it stayed around that level till 2022. Gentle declines averaging 5pc a year were predicted from 2022-30 as fields became depleted.

Then came the

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, when the Conservative government raised taxes on the profits of offshore operators from 40pc to 75pc – later increased to 78pc by Labour.

It meant the investment needed to maintain production plummeted, and *** output fell to 26bcm last year. About 180 of the ***’s 280-odd offshore fields are now predicted to close by 2030.

It means gas output is predicted to reach 12bcm in 2030 and just 6.5bcm by 2035 – when the country will still need up to 42bcm.

Import problem

Britain is already reliant on imports. So where is it getting all that extra gas from?

Mostly, it’s Norway. Last year the *** imported 29bn cubic metres of Norwegian gas via subsea pipelines. That compares to the 26bn cubic metres the *** produced from its own continental shelf.

That makes Norway the ***’s primary source of gas – and leaves Britain increasingly vulnerable to anything from

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to the Norwegian voters’ increasing fondness for green politics and net zero.

At least three of its leading political parties are committed to “transitioning” away from oil and gas.

The immediate problem, though, is that the pipelines from Norway are maxed out, which along with the shrinkage of the North Sea, leaves the *** with a shortfall of around 15bn cubic metres of gas each year.

Britain makes up that shortfall by importing liquefied natural gas (LNG) – mostly from the United States and Qatar. Some of it the *** re-exports to Europe via pipelines. But in 2023, LNG provided a vital 15bn cubic metres of gas for domestic uses.

As the North Sea shrinks further, so that proportion will surge – and Britain will be increasingly dependent on the giant LNG tankers that ferry the fuel around the world.

Such tankers typically carry about 174,000 cubic metres of LNG – enough to meet the ***’s needs for half a day.

Britain increasingly dependent on giant LNG tankers that ferry fuel around the world

But in times of crisis, it may not be possible to rely on these shipments. LNG is largely traded on the global “spot market” meaning cargoes go to the highest bidder.

LNG tankers are notorious for changing course in mid-voyage as new buyers outbid the last – a phenomenon that reached a peak when

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buying and price surges.

The *** and Europe found themselves in an LNG bidding war with north-east Asia, meaning China, South Korea and the Indian sub-continent.

Back then, energy prices surged but in the west the lights mostly stayed on. The worst losers were countries such as Bangladesh which, unable to compete, faced power cuts.

The lesson, though, was clear. Living hand-to-mouth by relying on LNG shipments was a huge risk – what countries also needed was storage.

One week’s gas left

Unusually, the European Union moved fast – passing the EU Gas Storage Regulations that demanded all reserves be 90pc full by November each year. Two months ago the EU had about 100bn cubic metres squirrelled away. Germany’s storage was enough for 89 days, France had 103 days and the Netherlands 123 days.

By contrast, the ***’s total capacity was about 3.2bn cubic metres – of which Centrica’s offshore Rough facility provides about half.

Centrica’s offshore Rough facility provides about half of the ***’s total gas capacity – Centrica

The 40-year-old facility off the Yorkshire coast was shut down completely in 2017 after owner Centrica deemed it uneconomical, before being

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, during the height of the energy crisis.

Centrica wants to expand operations there but is seeking state support which the Government has been reluctant to provide.

The upshot is that storage in Britain is limited, and after the latest cold weather we have about a winter week-worth of gas stored.

The gamble successive ministers have taken is that Britain will always be able to buy enough LNG to keep our lights on and our homes warm.

It’s a gamble that has paid off so far, but as the ***’s dependence on LNG, and global demand, increases, so the risk of shortages will grow with it. Whoever is energy secretary when that happens will pay a heavy price.

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#Britain #running #gas

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