Updated: Irish natural gas exports enter British supply mix

13 May 2016 11:17 Source:ICIS
A natural gas pipeline

Shippers in Ireland are nominating to export gas into the British supply mix following the first commercial flows into the Moffat point, data from British system operator National Grid showed.

The first nominations to deliver gas from Moffat to the British grid were recorded on 25 March. Since then, Moffat entry nominations have been commonplace with daily flows peaking at 2.4 million cubic metres (mcm) on 30 April.

Statoil Exploration Ireland, a subsidiary of Norwegian major Statoil, was granted a British gas shipper license on 16 May, just nine days before the first volumes were backhauled at Moffat, according to British energy regulator Ofgem. The company owns a 36.5% stake in the Corrib gas field.

In 2014, Statoil said in a letter to Irish system operator Gas Networks Ireland (GNI) that it considered it “imperative that there be an ample regime for virtual reverse flow (VRF) to allow ample flexibility for shippers.”

We believe the service should ensure the capacity for VRF is maximised, on an as firm as possible basis and with attractive tariffs,” the producer said.

The interconnector pipeline that connects the British system, at Moffat, to the Republic of Ireland is unidirectional, with the physical flow of gas only possible towards Ireland. However, shippers are able to nominate virtual reverse flows on the pipeline. The nominated gas is not physically sent to Britain, but subtracted from the gas flowing in the Britain-to-Ireland, or ‘forward’ direction. Therefore, virtual reverse flows are only possible when sufficient gas is flowing in the forward direction.

Corrib impact

The new flows come almost four months after the start-up of the Corrib gas field off the north coast of the Republic of Ireland (see ESGM 30 December 2015). The start-up of the field, operated by Shell E&P Ireland - a subsidiary of Anglo-Dutch major Shell, represented the first new gas field directly supplying the island of Ireland since the opening of the Kinsale fields in the 1970s.

At peak production, the field is expected to produce around 7mcm/day, according to Statoil.

In Q1 2016, production averaged at a rate of 5.0mcm/day, according to data from GNI.

This broadly lines up with figures from Canadian firm Vermilion Energy, which owns a 18.5% stake in Corrib via its subsidiary Vermilion Energy Ireland. The company produced gas from Corrib at a rate of 1mcm/day through the first quarter of 2016, according to the producer’s quarterly results.

Assuming equity-based production, Statoil would have owned around 1.9mcm/day of produced volumes while Shell’s 45% stake would have accounted for 2.3mcm/day.

Currently, five of the field’s six wells are being tapped with the sixth well expected to be brought online in the third quarter of 2016, according to Vermilion.

Statoil Exploration Ireland and Vermilion Energy Ireland both hold British gas shipper licenses.

Statoil and Vermilion were asked by ICIS whether they were responsible for the reverse flow nominations. The Norwegian producer confirmed that it was trading volumes from Corrib at the Irish balancing point. Vermilion would only say it sells its gas onward at the onshore plant linked to Corrib.

Following the start of production at Corrib, Ireland has become less reliant on gas supply from Britain via the Moffat interconnector, which had supplied almost all of the island’s gas. Physical deliveries into Ireland dropped to their lowest daily volume on 2 May when just 6mcm was shipped. The average flow rate in 2016 was 16mcm/day. thomas.rodgers@icis.com

By Thomas Rodgers