10. NATURAL GAS

(CPF), the price of gas, and the impacts of EU environmental directives, significantly displaced the use of coal.

Gas consumption in power generation saw a large fluctuation over time; the share fell rapidly from 31 Mtoe in 2010 to 18 Mtoe in 2013. Since 2016, gas power generation has picked up again and, in 2017, gas power accounted for 41% of the total power generation. This is slightly below the peak share of 46% in 2010, but higher than 27% in 2013.

Natural gas infrastructure

The United Kingdom has an extensive natural gas supply infrastructure (Figure 10.5). This includes the production capacity offshore, which provides about half of the United Kingdom’s demand, and an extensive import infrastructure from Norway and continental Europe, capable of importing around 100 billion cubic meters per year (bcm/yr) compared to actual imports of less than 40 bcm/yr. The United Kingdom has a LNG import capacity of around 49 bcm/yr but the actual annual imports are around 10 bcm. Besides having a significant export capability to continental Europe (20 bcm/yr) and to Ireland (11 bcm/yr), the United Kingdom has gas storage of a total capacity of around 1.4 bcm or around 2% of annual demand. Total storage deliverability is at over 116 mcm/d and thus capable, in principle, of providing nearly one-quarter of the gas supply on 1-in-20 peak days.

NGG is the system operator that owns and operates the National Gas Transmission System. Ownership unbundled, NGG has the right to buy, sell, and store gas only to keep the system in balance across Great Britain. Besides NGG, there are four other certified transmission system operators in the United Kingdom that own and operate an interconnector:

Balgzand Bacton Leiding Company (BBL) operates the Balgzand Bacton Line, a gas interconnector between Julianadrop near Balgzand in the Netherlands and Bacton in GB. The interconnector provides services for physical gas flow from the Netherlands to Bacton in Great Britain and non-physical interruptible reverse flow services from Great Britain to the Netherlands.

Interconnector (UK) Limited (IUK) owns and operates a subsea pipeline and terminal facilities that link Bacton in the United Kingdom and Zeebrugge in Belgium.

Premier Transmission Limited (PTL) owns the gas interconnector between Twynholm in Scotland and Ballylumford in Northern Ireland, otherwise known as Scottish Northern Ireland Pipeline. PTL is a wholly owned subsidiary of Mutual Energy Limited.

GNI (UK) is the owner of the high-pressure interconnector between Moffat in Scotland and the end of the UK Territorial Waters. GNI (UK) is a wholly owned subsidiary of Gas Networks Ireland, which is within the Ervia Group.

185

ENERGY SECURITY

IEA. All rights reserved.

IEA. All rights reserved.

10. NATURAL GAS

In 2018, there were 27 gas distribution system operators (DSOs) – eight regional, regulated monopolies, owned and managed by four companies after National Grid (NG) sold its majority stakes in distribution activities in 2016, as well as 19 smaller gas DSOs:

Cadent Gas Ltd – West Midlands, North West, East of England, and North London

Northern Gas Networks Limited – North East England (including Yorkshire and Northern Cumbria)

Wales & West Utilities Limited – Wales and South West England.

SGN – Scotland and Southern England (including South London).

Cross-border connection and gas pipelines

Besides import pipelines from Norway (Vesterled, Langeled and Tampen Link, Gjøa, SAGE, and CATS), the GB gas system is well interconnected with neighbouring countries – Belgium, the Netherlands, Northern Ireland, and the Republic of Ireland. Great Britain has bidirectional capacity (around 20 bcm/yr) with Belgium via the IUK, and import capacity from the Netherlands through the interconnector BBL, and exports gas to the Republic of Ireland via the Moffatt Interconnector. Since 2011, the Moffatt Interconnector has virtual reverse flows (around 30 mcm/d) from Ireland to Great Britain on an interruptible basis. In 2017, the BBL changed its access regime to support the market merger between BBL and Gasunie Transport in the Netherlands.

Gas storage

In 2017, the United Kingdom had a total gas storage capacity of 1.44 bcm/yr or 1.6% of the country’s annual gas consumption (Table 10.1). This is a significant decline from the UK gas storage capacity five years ago, which was 4.5 bcm or 6% of annual demand, as illustrated in the total gas storage compared to a six year average (Figure 10.6). Moreover, all of today’s capacity comes from short-range gas storages, after the closure of Rough seasonal gas storage.

Owing to the lower seasonal spread in prices, higher maintenance costs, and the lower integrity of the wells, Centrica Storage Ltd decided in 2017 to end operations permanently at Rough storage, the United Kingdom’s only long-range seasonal gas storage. Rough was also the United Kingdom’s largest gas storage facility with 42 mcm/d deliverable gas during winter (Table 10.1). Centrica will be gradually drawing down the remaining cushion gas from the facility.

In 2018, Électricité de France (EDF) announced the withdrawal of the Hole House Farm storage facility (the smallest gas storage in the United Kingdom) from commercial operation. BEIS concluded in its recent assessments of gas security that Great Britain has adequate gas supplies to meet a high gas demand even in the absence of Rough (UK Government, 2017a).

187

ENERGY SECURITY

IEA. All rights reserved.

IEA. All rights reserved.