John Hemming MP - National Grid/Ofgem predict 20,000,000 cubic metres of gas less per day this winter

6.20.31pm BST (GMT +0100) Thu 6th Oct 2005

John Hemming MP (Liberal Democrat/Birmingham Yardley) has written to Malcolm Wicks, the energy minister, raising concerns about rumours of shipments of Liquid Natural Gas (LNG) being redirected from the UK to the USA and the ability of the UK electricity generation sector to handle an unprecedented demand for cuts in gas usage in the event of a cold winter."

He said "In the National Grid's Winter Outlook report 2005/6 (released 5th October 2005) it states that even with the Liquid Natural Gas imports from the Isle of Grain terminal (estimated at 17mcm/d max) the UK will have 20 mcm/d less natural gas than last winter".

[note for editors - this para needs standing up]

"I have heard (but not been able to confirm) that the first scheduled shipment for commissioning the Isle of Grain LNG terminal has been redirected to the USA. This is about 122 mcm of gas (about 10 days supply via the Isle of Grain). In isolation this is not a problem. However, if LNG tankers continue to be redirected to the USA it could exacerbate the tightness of supply this winter."

"National Grid predict that if the winter is as cold as 1985/6 (1/20) that to satisfy domestic demand and those other people not metered for gas on a daily basis that a reduction in demand of 2,200,000,000 cubic metres (2.2 bcm) will be required."

"They also say that only 0.6 bcm can be found easily as a result of higher prices, but would require a reduction in demand from certain customers for 2 months which they would not be happy to provide."

"They forecast a normal demand for electricity of 61.9 GigaWatts (GW) and a cold winter (1/20) demand of 64.9 GW. They expect 72.6 GW UK capacity including 2 GW possible import."

"A potential reduction of 944 MW from high energy users could lead to a 2 mcm/d reduction in gas demand from Combined Cycle Gas Turbines (CCGT), but NG recognise that 'the level of price responsiveness experienced and required to date has only been a fraction of that required to ensure a supply-demand balance in a 1/50 winter."

"Para 122 indicates that electricity supply would be sufficient provided there is not a substantial shutdown of CCGT as a response to high gas prices, but that they would handle electricity shortages by reducing the voltage."

"There are 39 CCGTs using a maximum of 97.8 mcm/d generating 23.8 GW although 5.7GW can be generated on backup fuel and 3.2 GW are not fueled via the NTS pipelines."

"NG do say, however, that 'the scale of potential demand response ... is far in excess of that either required to date or seen to date.' (para 140) This involves a reduction of 5GW in electricity generation."

"The minister, therefore, has two challenges. FIrstly, to consider the issue of redirection of LNG tankers and how that will impact supply which is recognised, but not considered in the National Grid's analysis. Secondly, to look how CCGT demand can be handled given that there is for a 1/50 cold winter weekday an unprecedented requirement for cuts in demand from electricity generation. It would be helpful for NG to perform daily demand modelling for a 1985/6 winter as well."

ENDS

National Grid's response released yesterday is available at:

http://www.ofgem.gov.uk/temp/ofgem/cache/cmsattach/12493_214_05.pdf?wtfrom=/ofgem/index.jsp