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UK gas demand to fall nearly 8% this summer

04.08.2014  | 

Demand will decline to 32.3 billion cubic meters from April through September, the network manager said in its Summer 2014 Outlook. That’s down from 35 billion in the same period a year earlier.

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By ISIS ALMEIDA and RACHEL MORISON
Bloomberg

Gas usage in the UK, Europe’s biggest market for the fuel, will fall 7.7% from a year earlier in the six-month summer season, partly because of lower storage demand, according to National Grid.

Demand will decline to 32.3 billion cubic meters from April through September, the network manager said Tuesday in its Summer 2014 Outlook. That’s down from 35 billion in the same period a year earlier, revised to 33.5 billion on a weather-adjusted basis. 

Gas injections will drop 42% to 3.1 billion, the grid said, after the mildest winter in seven years left inventories at higher-than-usual levels for the time of year.

“Overall demand for net storage injection over summer 2014 is expected to be much lower,” National Grid said. “Demand throughout winter 2013-14 has been low and there has been comparatively little use of storage.”

UK gas fell 25% since Oct. 1, the start of the winter heating season, as the six months through March were the hottest for the period since 2007 and the second warmest since 1981, according to forecaster MDA Weather Services. Storage was at 54% of capacity yesterday compared with 3.1% last year, according to data from Gas Infrastructure Europe. Inventories in Europe were at 46% of capacity from 21% a year earlier, the data showed.

Minimum gas demand in the UK will probably be 85 million cubic meters for a mid-summer day and rise to as much as 350 million cubic meters for a cold April day, National Grid estimates. In 2013, the lowest demand during the summer period was 93 million cubic meters and the highest was 348 million cubic meters.

Gas Exports

“Colder conditions are essentially restricted to April, May and, to a lesser extent, September,” the grid said. “Only in these months are the weather sensitive gas demands noticeably influenced by the weather.”

UK gas exports will drop 23% to 2 billion cubic meters in the period due to lower demand for storage in continental Europe and fewer cargoes of liquefied natural gas (LNG) arriving in the country, according to the report. LNG supplies are forecast at 4 billion cubic meters compared with 6 billion a year earlier, the grid forecasts.

“We anticipate potentially more Asian LNG demand with no material change to nuclear power plant re-opening in Japan, hence LNG flows to the UK and Europe may continue to be low,” the grid said in the report. “European LNG demands are expected to decrease in 2014.”

Power Demand

Gas use for power will rise by 1 billion cubic meters to 8.7 billion due to the closing of a coal plant, the grid said. Electricity demand has been falling since 2006 and is likely to keep dropping, it said. Peak weather-corrected demand will be 39.5 gigawatts, the lowest since at least 2011. Power plants typically undergo maintenance in the spring and summer as warmer weather cuts consumption.

Power-generating capacity will be adequate at 76.4 gigawatts, 1.5 gigawatts lower than in winter, the grid forecast. The UK will rely on 29.1 gigawatts of gas-fed power plants, some of which may be at risk of being mothballed during the period, according to the report. National Grid predicts that 25% of UK power plants will close by 2020.



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