WHY WE’RE SO VULNERABLE TO ENERGY SHOCKS

THE huge Forties pipeline was opened in 1975 to transport oil from BP’s Forties, the UK’s first major offshore oil field, deep under the North Sea. Now the 235-mile system links 85 oil and gas fields in the central and northern North Sea and several Norwegian fields on behalf of 21 companies.

Last year, it carried an average 445,000 barrels of oil and 3,500 tons of raw gas a day, and delivered 40 per cent of the UK’s North Sea oil and gas production.

Given such volumes, it is little wonder that the prospect of the historic pipeline being closed for up to three weeks while a crack is repaired has led to consternation.

This is part of what analysts have called a ‘perfect storm’ that threatens our ability to meet our energy needs.

As well as the shutdown of the pipeline, the explosion at a natural gas hub in Austria and the cold weather in Britain (which has pushed up demand for gas for domestic heating) has highlighted our vulnerability to sudden falls in energy supply.

Critics have long held that the UK does not have large enough capacity for storing gas, widely regarded as vital insurance against restrictions in supply.

Storage facilities can be either large containers or old fields under the ocean into which gas can be pumped. Gas is stored in the summer during times of low demand and is then available for use when consumption rises in the winter.

Other countries including the Netherlands and the United States have huge gas storage facilities.

In Britain, however, our biggest storage is in the process of being closed down.

In June, Centrica, the parent company of British Gas, revealed its plan to shut down Rough, a natural gas storage facility located 18 miles off the coast of Yorkshire.

The reason given was that it was no longer viable because of safety concerns, with Centrica ruling out a refurbishment costing ‘hundreds of millions of pounds’ because it would be too expensive. Rough’s total closure would wipe out 70 per cent of the UK’s natural gas storage capacity although it does still have some gas reserves which could be extracted to help the system cope with a sudden drop in demand.

HOWEVER, it is of limited use now that the used-up gas is not being replenished. The lack of storage has heightened our reliance on imported gas to make up for falls – such as that caused by the shutdown of the Forties pipeline – in our own domestic production.

Around half of Britain’s gas supplies come from our own North Sea gas fields. The remainder is imported from a variety of sources including pipelines linking us with europe. The principal sources of these imports are Norway, followed by the Netherlands and Belgium.

we also import liquefied natural gas (LNG) shipped in from around the world.

But these are links that, as we saw yesterday, can also be vulnerable to disruption. The explosion at Baumgarten in Austria, a major hub for Russian gas imported into europe, caused significant supply problems for countries such as Italy and Slovenia. Britain was not immune from the subsequent spike in gas prices.

we have also been effected by the rising price of Liquified Natural Gas, which is currently in high demand in Asia as China and other countries seek to switch to gas-fired heating from using coal.

Last night wayne Bryan, of analysts Alfa energy, said: ‘At the moment, about 9million cubic metres (mcm) per day is being withdrawn from Rough. Before it was about 30 to 40 mcm per day. So we have an overreliance on import.

‘If we had a fully working Rough we would not be in this position. If Rough was available we would not be held hostage for such high price imports.’

A recent Department for Business report on our gas supply said: ‘The GB gas system is undergoing a transition as domestic supplies decline… Diversity rather than domestic supply has become the basis of our security of supply.’

with so many threats to our energy security, diversifying supply may prove to be a lot less reliable than traditional gas storage facilities.