Total U.K. gas supplies for winter 2007-2008 are seen rising 14.9%, or 52 million cubic meters a day, to 402 mcm/day as a string of new pipeline and liquefied natural gas imports projects come on stream, said U.K. gas and electricity network operator National Grid PLC Tuesday. The rise in imports is seen more than making up for the expected 7% fall, or 16 mcm/day, in gas production from the U.K. continental shelf to 224 mcm/day, National Grid said in its Winter 2007/2008 Preliminary Consultation Report. These figures exclude gas flows from storage. But the report noted that if current low gas prices continue into next winter, then demand may rise faster than the 1% per annum predicted, particularly in the power generation sector. “As this level of supply will exceed the level of demand on most days within the winter, it is reasonable to expect major variations in the supply pattern,” said the report. Despite the good supply outlook, Steve Smith, Managing Director of Markets and U.K. gas and electricity regulator Ofgem said: “There can be no grounds for complacency. No one can predict next winter’s weather, so customers and the industry much prepare for all eventualities. “Questions remain about how much gas will be available from Europe and Norway. It is therefore vital that both British and European energy suppliers provide National Grid with accurate information about potential energy supplies for next winter.” National Grid’s assumption for gas imports from Norway is 70 mcm a day, an increase of 45.8% from the current winter. Additional flows from the new Ormen Lange field, which is due to begin commercial deliveries of 30 mcm a day on Oct. 1 will make up most of the increase, the report said. The Tampen Link, which is due to connect Norway’s Statfjord field to the St. Fergus terminal in Scotland is expected to bring in only modest quantities of gas, the report said. Gas flows through the Bacton-Balgzand pipeline connecting the U.K. to the Netherlands are expected to be little changed at around 25 mcm a day. National Grid sees import flows through the Interconnector pipeline to Belgium at 30-40 mcm per day. The biggest proportional increase in imports will come from new liquefied natural gas import terminals, the report said. LNG imports are seen more than doubling to an average of 46 mcm a day over the winter. The majority of the increase will come from the new LNG terminals at Milford Haven in South Wales, which National Grid said could to import a maximum of 65 mcm a day of gas. The extent to which this capacity will be utilized is not clear, the report said. “There is uncertainty over whether the U.K. will attract LNG next winter in preference to alternative markets, notably the U.S. where current forward gas prices are higher through to next winter and broadly similar for the key winter months,” it said. The report gave an initial assumption for flows of 20 mcm a day from each of the new Milford Haven terminals once operational, and a combined 13 mcm a day from existing LNG terminals on the Isle of Grain and Teesside. The report assumed weather-corrected peak power demand for next winter to be unchanged at 60.8 gigawatts, although this forecast was tempered with the acknowledgment that National Grid is still unsure why peak power demand fell by 0.5 gigawatts from winter 2005/2006 to 2006/2007. “Likely causes include increased demand management due to high end-user prices, increased embedded renewable generation and continued energy efficiency” the report said. “We would welcome views on…whether demand might be expected to decline further,” the report said. Available power generation capacity is anticipated to be 74.8 gigawatts, assuming a wind-farm load factor of 35%. This is lower than the previous winter due to the closure of nuclear reactors Dungeness A and Sizewell A and reduced capacity at the Hinkley Point and Hunterston reactors, representing a total loss of around 1.6 gigawatts of capacity. National Grid’s analysis assumes average weather conditions with overall temperatures across the winter at 7 degrees Celsius.

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