North Sea gas drying up faster than hoped
Scotsman.com Business - Energy & Utilities - North Sea gas drying up faster than hoped
JAMES KIRKUP
WESTMINSTER EDITOR
NORTH Sea gas reserves are being used up faster than anticipated, MPs said yesterday, warning that energy shortages will be impossible to avert in the event of the predicted harsh winter.
Taking evidence from government ministers and energy industry experts, the House of Commons trade and industry committee heard that Britain's gas is being depleted well ahead of schedule.
That will make the country more dependent on imported gas, and sharpen the problems caused by Britain's lack of storage capacity.
The natural gas reserves in the UK "Continental Shelf" area are about 600 billion cubic metres, and production is declining from its peak in 2000.
According to current official estimates, the UK is expected to be 50 per cent dependent on imported gas by 2010, and 80 per cent dependent by 2020.
But during their inquiry, the MPs heard that "supplies of gas from the UK Continental Shelf had continued to decline at a faster rate than anticipated, leaving a larger shortfall to be made up from imports".
More imports will necessitate more investment in pipelines and storage capacity, but the MPs also heard that current construction plans were not accelerating at the same pace as gas depletion.
With forecasters estimating that there is a two-in-three chance of an unusually cold winter, the prospect of gas shortages has been the subject of intense political argument.
Ministers have accused business leaders of scaremongering over the situation by warning of industrial shut-downs, but admit that some large companies could indeed experience shortages and supply interruptions.
The MPs confirmed that bleak outlook in their report.
"Although it is extremely unlikely that domestic customers and the majority of businesses will suffer any interruptions to their gas and electricity supply, it is very likely that the largest industrial and commercial customers will, if they have the relevant contracts, suffer interruptions," they warned.
And because Britain does not have sufficient storage capacity, they found, "it is, unfortunately impossible to do anything to change the situation now". Energy analysts say that colder weather is just one reason the price of gas is soaring. Other causes are market nerves and the apparent refusal of some European countries to sell as much gas as Britain wants to import.
While householders are unlikely to experience interruptions of supply this winter, they will be hit by rising prices.
The MPs calculated that for every 10 per cent increase in fuel prices, an extra 400,000-500,000 households in England and 60,000 in Scotland fall into "fuel poverty", spending more than 10 per cent of their income on energy.
Despite government attempts to downplay talk of a gas crisis this winter, Scottish MPs of all parties yesterday insisted there could be severe problems ahead.
In the Commons, Brian Donohoe, the Labour MP for Central Ayrshire, said that three of the five biggest users of gas in Scotland had warned him that they would have "immense difficulties" sustaining business over the winter.
About 2,000 jobs in Ayrshire could be affected, he said.
Michael Connarty, the Labour MP for Linlithgow and East Falkirk, accused gas suppliers of operating an "invidious monopoly", declaring: "We are being manipulated by the owners."
David Mundell, the new Conservative shadow Scottish secretary, also raised concerns.
"Given that we have more severe weather in Scotland, it is even more important that the government get it right on ensuring major businesses are not driven out by high rises in gas prices and that more vulnerable people are not driven into fuel poverty," he said.
Responding for the government, Alistair Darling, the Scottish Secretary, said ministers were aware of concerns and were negotiating with the European Commission to put pressure on EU suppliers to make more gas available to Britain.
JAMES KIRKUP
WESTMINSTER EDITOR
NORTH Sea gas reserves are being used up faster than anticipated, MPs said yesterday, warning that energy shortages will be impossible to avert in the event of the predicted harsh winter.
Taking evidence from government ministers and energy industry experts, the House of Commons trade and industry committee heard that Britain's gas is being depleted well ahead of schedule.
That will make the country more dependent on imported gas, and sharpen the problems caused by Britain's lack of storage capacity.
The natural gas reserves in the UK "Continental Shelf" area are about 600 billion cubic metres, and production is declining from its peak in 2000.
According to current official estimates, the UK is expected to be 50 per cent dependent on imported gas by 2010, and 80 per cent dependent by 2020.
But during their inquiry, the MPs heard that "supplies of gas from the UK Continental Shelf had continued to decline at a faster rate than anticipated, leaving a larger shortfall to be made up from imports".
More imports will necessitate more investment in pipelines and storage capacity, but the MPs also heard that current construction plans were not accelerating at the same pace as gas depletion.
With forecasters estimating that there is a two-in-three chance of an unusually cold winter, the prospect of gas shortages has been the subject of intense political argument.
Ministers have accused business leaders of scaremongering over the situation by warning of industrial shut-downs, but admit that some large companies could indeed experience shortages and supply interruptions.
The MPs confirmed that bleak outlook in their report.
"Although it is extremely unlikely that domestic customers and the majority of businesses will suffer any interruptions to their gas and electricity supply, it is very likely that the largest industrial and commercial customers will, if they have the relevant contracts, suffer interruptions," they warned.
And because Britain does not have sufficient storage capacity, they found, "it is, unfortunately impossible to do anything to change the situation now". Energy analysts say that colder weather is just one reason the price of gas is soaring. Other causes are market nerves and the apparent refusal of some European countries to sell as much gas as Britain wants to import.
While householders are unlikely to experience interruptions of supply this winter, they will be hit by rising prices.
The MPs calculated that for every 10 per cent increase in fuel prices, an extra 400,000-500,000 households in England and 60,000 in Scotland fall into "fuel poverty", spending more than 10 per cent of their income on energy.
Despite government attempts to downplay talk of a gas crisis this winter, Scottish MPs of all parties yesterday insisted there could be severe problems ahead.
In the Commons, Brian Donohoe, the Labour MP for Central Ayrshire, said that three of the five biggest users of gas in Scotland had warned him that they would have "immense difficulties" sustaining business over the winter.
About 2,000 jobs in Ayrshire could be affected, he said.
Michael Connarty, the Labour MP for Linlithgow and East Falkirk, accused gas suppliers of operating an "invidious monopoly", declaring: "We are being manipulated by the owners."
David Mundell, the new Conservative shadow Scottish secretary, also raised concerns.
"Given that we have more severe weather in Scotland, it is even more important that the government get it right on ensuring major businesses are not driven out by high rises in gas prices and that more vulnerable people are not driven into fuel poverty," he said.
Responding for the government, Alistair Darling, the Scottish Secretary, said ministers were aware of concerns and were negotiating with the European Commission to put pressure on EU suppliers to make more gas available to Britain.
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