BBL to boost forward flows and promises virtual reverse flows
BBL Company, the operators of the Netherlands to UK pipeline, has launched an open season with a view to expand forward flows through the pipeline. Depending on the response to the open season, BBL Company said the first potential stage of the expansion plan would be constructing a fourth compressor at Balgzand on the Dutch side, to increase the current 15 Gm3/year pipeline capacity by 3 billion cubic meters a year (Gm3/year). According to a second option, this fourth compressor would be reinforced by an additional pipeline, boosting total capacity by some 8 Gm3/year.
Transmission capacity would be available to the market between 2010 and 2012, depending on the different options, BBL said. The capacity would be sold under long term contracts, as it is currently the case, a spokesman added.
The operator stressed it would offer interruptible services, both for forward flows (from the Netherlands to Britain) and non-physical reverse flows (from Britain to the Netherlands). The BBL spokesman confirmed there is currently no netting off against the physical flows from the Netherlands to Britain, although this is outlined in BBL’s interconnector license (see EGM 14.04.2, page 6).
“This depends on contractual arrangements with National Grid. They can’t provide this service at the moment, but we are in talks currently and we expect to offer this service in the near future,” he said.
The BBL expansion plan has come as a response to market signals, the BBL Company said. “The question is not anymore whether there will be enough supply gas to the market,” BBL Company said. “The question is which gas will respond to the gas price signals of the UK market…The Dutch market is connected with cheaper gas resources, be it indigenous Dutch gas, surplus Norwegian Gas in Emden or future Russian gas through the Nord Stream,” the operator said.
Some market players have expressed skepticism, however. “Why would anyone want to flow gas into the UK when the TTF is EUR 1.00/MWh above?” one participant active in both the UK and the Netherlands asked.
This month, Calendar ’08 at the Dutch hub, TTF, was pegged at EUR 20.275/MWh, above the NBP price of EUR 19.93/MWh. Calendar ’09 outturned at EUR 21.275/MWh at the TTF, around EUR 1.30/MWh above the NBP price of EUR 19.96/MWh.
“I can’t imagine there will be much interest,” a source at a Dutch utility said.
Market players have until 1st July to express their interest in the BBL expansion and be added to a list of candidates. According to an indicative timeline, BBL expects to sign transport agreement with binding capacity bookings on 1st November. A final investment decision is to be made at the earliest by the end of the year.
The pipeline capacity is currently held by Germany’s E.On Ruhrgas, Dutch supplier GasTerra and German Wingas.
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