CCGT to boost British gas demand this summer – National Grid

Author: Ben Samuel

2016/04/07

British transmission system operator (TSO) National Grid expects higher natural gas demand this summer than last year, with more combined-cycle gas turbine (CCGT) generation predicted to push up consumption, according to an outlook on Thursday.

In total the TSO forecasts 36.5 billion cubic metres (bcm) of gas will be used from 1 April to 30 September, an increase of 1.3bcm compared to the equivalent period in 2015.

Lower gas prices and higher coal costs indicate that CCGT use is likely to rise year on year, with National Grid predicting this to account for just over 12bcm. This compares to 8.3bcm used in the summer last year.

The operator suggested this will lower available volumes for export through the bi-directional Interconnector pipeline, which should fall from 5bcm to 4bcm this year.

The fact that Britain was a net exporter through the pipeline over the winter and recent changes to entry fees make it less profitable to flow volumes the other way (see ESGM 30 March 2016). This casts some doubt on the TSO’s expectation.

Exports to Ireland should fall following the commissioning of the Corrib gas field last year. National Grid expects output to ramp up from this field following a pipeline inspection.

This means flows to Ireland could fall to 1.5bcm over the six months, a drop of 1.3bcm compared to the same period last year.

Domestic demand, which was higher than expected in the 2015 summer due to prolonged below-average temperatures, is expected to drop by 800 million cubic metres year on year to 10.5bcm.

Supply

National Grid expects a far higher volume of LNG in the supply mix this year, with the report suggesting it could provide 8.2bcm of the gas requirement, up 2bcm.

Normally at the start of the summer LNG deliveries from the Middle East to Britain rise as demand in East Asia wanes. This is usually followed by a dip mid-summer, but the TSO does not expect this in 2016 due to falling consumption in East Asia and an increase in Pacific basin supply.

Domestic North Sea production is expected to be up a touch, due to the start-up of several new fields, the most significant of which is the Total’s Laggan. The impact of this will be partially offset by declining output from older fields.

Imports from the Norway are expected to fall fractionally, whereas deliveries from the Netherlands through the BBL pipe are expected to be unchanged. ben.samuel@icis.com