Britain, the world's third biggest consumer of natural gas, but also one of Europe's main producers, will experience a `supply deficit' next year as output from its North Sea fields declines. Without new supplies or imports, this deficit could widen to 30-40 bcm/yr, said Andy Lane, BP's business development director for global LNG at CWC's recent UK Gas Challenges conference in London.
In reality, sanction for new LNG imports at the Isle of Grain terminal east of London, and at Milford Haven in South Wales, should help keep the UK on an even keel for the time being, despite a forecast growth in demand of 1.6%/yr. Sonatrach/BP are partners in one of the Isle of Grain schemes, and as Sonatrach's business development director Bouali Mohand, pointed out, Algeria is ready to step up gas exports in Europe to a new level. As an example, he cited the planned Medgas and Galsi export trunklines between Algeria and Spain and Algeria and Sardinia.
Larry Robinson, ChevronTexaco's Global Gas regional manager, claimed that UK North Sea production, currently at 10 bcf/d, would dip to 6 bcf/d by 2015. However, that shortfall could be made up through the construction of new North Sea trunklines from Scandinavia, such as the Langeled lined carrying Ormen Lange gas to Easington, eastern England, and a planned second Interconnector in the southern North Sea bringing gas from The Netherlands to Bacton in Norfolk.
Steve Smith of government body Ofgem predicted a new dash for cleaner, gas-fired electricity generation in the UK, to meet the European Union's Emissions Trading requirements. Another factor likely to increase gas use in Britain, he claimed, was the National Air Quality Directive, which affects NOx emissions from coal-fired plant.
David Odling, Gas and Commercial Issues Manager at the UK Offshore Operators Association (UKOOA), hoped some of the shortfall could be met through the drillbit in UK waters. However, exploration and appraisal well numbers have been falling, he said, with last year's total across the UK shelf being 30% down on 2000-01 levels, according to UKOOA's estimates. This was due in part to unfavorable petroleum tax changes in 2002.
There were eight significant discoveries across the shelf last year, he added, one of which was a high pressure, high temperature well. "But this well cost £50 m to drill," he pointed out, so the prospective deeper gas horizons cannot be addressed lightly.
As for storage consultants' views over the UK's `swing' capability during peak/off-peak periods (i.e. the ability to ramp up or ease production), Odling commented that this has historically been easier to achieve in the dry gas fields in the southern gas basin and the Irish Sea, but less so now as these fields get older. "In the northern North Sea, the reservoirs are much more complicated: they don't like being `cycled', and also many have associated condensate." And from a producer's point of view, he added, associated gas in these areas is less economic to harness, as it typically brings in only two-thirds of the revenue of produced crude.