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National Grid expects gas demand to peak this winter

July 11th 2012

According to the National Grid outlook report released earlier this week, it is expecting gas demand in the UK to peak this coming winter at 507 million cubic meters/day. This is a 7% increase compared with the firms forecast for last winter.

National Grid commented in its key points, “The peak forecast now allows for high power generation as well as cold weather.” They also forecasted a “further UK Continental Shelf decline”.

Predictions showed declining figures in average gas demand across all sectors this winter, including industry, power generation, exports and injections into storage sites. Total demand for the October-March period, which makes up the so-called winter gas season, is estimated at 50.9 billion cubic meters, compared with 55.2 billion cubic meters from the previous year, figures suggested.

“The analysis strongly suggests that coal should be the favoured source of fuel for generation for next winter. Other factors may part mitigate this; these include running hours for LCPD and generation portfolios,” it said.

“For gas to become the preferred source of fuel for power generation next winter, the gas price needs to fall by about 20 pence a therm or there needs to be a further increase in the coal price of about $50/tonne,” National Grid said. National Grid is also forecasting declines in domestic production, but suggested imports from Norway – Britain’s largest supplier, would most likely remain stable.

On the subject of liquefied natural gas (LNG), it commented, “LNG imports will remain suppressed due to the high levels of demand in Japan and other Far East markets”. There has been a decline in UK LNG supplies since last March, a key factor of this is the Fukushima nuclear incident in Japan which meant supplies were being re-routed to substitute the loss of nuclear output.

Source: Enzen Global