L-gas stocks insufficient to match 2016/17 withdrawal rate

20 October 2017 07:53 Source:ICIS
A natural gas pipeline

Low-calorific natural gas (L-gas) stocks in the Netherlands, Germany and France are not quite sufficient to support the same volume of winter withdrawals that were recorded in gas year 2016, data shows.

As the Groningen L-gas field is no longer able to ramp up production to meet peak winter demand, L-gas storages and Dutch high-calorific gas (H-gas) conversion assets have become the primary sources of L-gas supply flexibility in recent years.

As of 16 October, a total of 77.5TWh (7.9 billion cubic metres – bcm) of L-gas was held in reserve in the three countries combined, across seven different sites. This is just shy of the 77.8TWh total that was withdrawn between 16 October 2016 and the end of March 2017.

Winter 2016/17 was the coldest since 2012/13 according to the Dutch government’s heating degree days measurement, but actually a little warmer than the 10-year average.

Similar conditions this winter could stretch the wider fundamental picture in northwest Europe by increasing H-gas demand for conversion to the L-gas network, with no recourse to increase the aggregate draw on L-gas stocks and with Groningen production set to fall year on year.

The cap on Groningen gas production in gas year 2017 has been reduced by 10% to 21.6bcm, although there is a provision to increase output in the event of below-average temperatures across the year (click here for story).

French shortfall
The L-gas shortfall this year is largely due to lower stocks at France’s only L-gas store: the Sediane B facility.

A net total of 11.3TWh was drawn from the site between 16 October 2016 and 31 March 2017, but only 9TWh is currently in reserve in France. Some 294GWh has been stored at Sediane B so far in October, but there have been no injections since 8 October.

Lower stocks in France raises the prospect of increased imports from the Netherlands via Belgium, assuming similar conditions and demand this winter as in the previous gas year. The Netherlands delivered 6.1bcm of L-gas to Belgium and France during winter 2016/17 according to GTS data, which was in line with the five-year average.

In the Netherlands, Norg stocks currently stand at 48.7TWh, but NAM data indicates that 52.4TWh was drawn from the site last winter. The deficit at Norg this year has been offset by ample stocks at the smaller Alkmaar and Zuidwending sites.

A total of 3.8TWh was drawn from these secondary sites last winter, but just over 7TWh is currently held in reserve.

The picture is more comfortable in Germany. Some 10.5TWh was drawn from three German stores controlled by Uniper, Innogy and EWE last winter, with 12.8TWh currently held in reserve ahead of this year’s withdrawal cycle. jake.horslen@icis.com

By Jake Horslen