Thursday 22 June 2017

Gas Storage: Rough Old Business

One of our esteemed Anon's asked what's up with Centrica closing down the Rough storage facility.  It wasn't a complete bolt from the blue.  But it's not small !  Rough represents getting on for 75% of UK's gas storage inventory - though a smaller % of total deliverability from storage, because Rough is a slow old beast and can't pump out very fast.  The new generation of 'fast cycle' facilities are smaller but can fill and empty in a couple of weeks, vs Rough which more or less took all summer to fill up, then months to blow down in winter.  'Seasonal storage' in the terms of the trade.  (Rough trade, geddit?)

Well, it used to be ...            graphic from Centrica

I wrote about some of this at fair length a few years ago when M.Fallon called Centrica's bluff and declined to subsidise them to build a new one.  So they didn't.  It was unusual for a politician to spurn a request of that sort in 2013, and it's even more unusual these days.  No-one builds a power station of any kind today without public money (via electricity consumers) being sent their way.

Rough was always an artificial thing, built by the old BG in the early 80's - the closing days of their monopoly, when they could just pass through the costs.   It's very debatable whether it was needed then: but they just did it anyway - because they could.  Engineers love building things.

Seasonal storage is not much wanted these days either - the spread between summer and winter wholesale gas prices is at an all-time low, which signals as much.  It's one of the reasons Centrica can't justify restoring Rough to health.  That and the one-off revenues (half a billion quid over a few years) they will make as they blow down the rather substantial amount of 'cushion gas' for the last time - the opposite dynamic to most offshore field abandonments, which only cost money and are therefore typically put off as long as possible.

How will we cope in winter?  We nearly found out in March a few years back when Rough temporarily conked out during a cold spell.  Extra LNG cargos should do the trick: we have very substantial LNG regas facilities in the UK - built by Mr Market Mechanism between 2000-2010 with narry a subsidy in sight - just a bunch of companies willing to follow through on the obvious fact that UK gas production started its terminal decline at the start of the century.  Glory be.  One of the great examples of the market being left to run its course that I often like to cite.  (It helps that regas is really cheap and quick to build.)

Come that freezing March month, and it may not be cheap in the spot market, though ...  then you find out who's hedged and who's shorts are dangerously exposed.  Chilly, it can be.  And of course if our good friends in Qatar are still in bother, well, hmmm.

ND

8 comments:

dearieme said...

Did you see the blessed Ambrose in this morning's Tel? Molotov-Ribbentrop, Stalingrad ....all in the context of gas politics.

http://www.telegraph.co.uk/business/2017/06/21/germanys-gas-pact-putins-russia-endangers-atlantic-alliance/

James Higham said...

Brrrrr, don't speak of March.

Electro-Kevin said...

Off topic. Frederick Forsyth is right. Students should be made to vote from their parent's home and not university as they can organise to unseat good MPs.

I am living with two students at the moment. I've woken up from nights and she's at work.

The place is a mess - nothing has been done, there are industrial levels of shopping coming into the house, industrial levels of rubbish flowing out of bins, dirty pans, no cups (stacked in bedrooms) and industrial piles of adult washing/ironing and absolutely no help. Dog not walked/cat not fed... today's alarm clock.

I will frog march my sleeping giants to the sink but it's tiring.

I'm constantly saying WTF ? when I go into a room and find yet more jobs undone - or worse, HALF done.

No lack of enthusiasm when it comes to helping with the JD or Talisker though.

My point here. These people have the vote but absolutely no common sense, no sense of responsibility or shared duty.

As it happens one voted Tory the other Labour but I know most are left leaning.

It's all very well saying 'Remain voters are better educated' but that is no indicator of common sense nor a sense of fairness.

Anonymous said...

The place is a mess - nothing has been done, there are industrial levels of shopping coming into the house, industrial levels of rubbish flowing out of bins, dirty pans, no cups (stacked in bedrooms) and industrial piles of adult washing/ironing and absolutely no help. Dog not walked/cat not fed... today's alarm clock.

I blame the parents .... but we've all been there. In a few years they'll come up to you and say "we wasn't (uni education) as bad as [inset here]". How you answer that question will decide the next 20 years.

Brexit? A piece of **** compared with dealing with your offspring.

Steven_L said...

I blame the parents ....

You beat me to it! Sounds to me like they need a summer job. No strawberries needing picking down your way EK?

E-K said...

I kicked their arses out yesterday to find work.

They are 19 year-old men, not children.

Anonymous said...

This is infuriating, every single high ball the Lions put up, there's the AB #14 or #12 drifting in front and blocking off the receiver. Come on ref!

Anonymous said...

Perhaps we should go back to attaining our legal majority at age 21, just like it was when I was 19. Back then I thought it archaic to wait that long, so convinced was I of my own maturity! Now, I think I see the wisdom of our ancestors.