Britain's gas price soars to record on pipeline closure
LONDON (Reuters) - Britain's wholesale gas prices surged to a record high on Friday after one of its main gas import pipelines shut down unexpectedly, exposing the country's vulnerability to foreign supplies.
Britain is already grappling with a potential gas supply crisis as a late blast of winter depletes stored reserves, coal power plants close and pending maintenance in Norway threatens to further squeeze supply.
Gas prices for within-day delivery spiked at 150 pence per therm early in the day, more than 50 percent above Thursday's close, after the pipeline from Belgium that facilitates gas imports from Europe unexpectedly shut down.
"I don't think the price has ever been higher. It's certainly super spike territory," a gas trader at a utility.
The UK-Belgium Interconnector is one of Britain's main gas import pipelines and on Wednesday set a new record by delivering 783 gigawatt-hours of gas from Belgium to Britain.
A water pump failure forced it to shut down at around 0700 GMT, unexpectedly leaving the UK market short of supply.
The operator repaired the fault and restored normal operations at around 1500 GMT and flows surged to about 70 million cubic metres (mcm) by 0350 GMT, National Grid data showed.
Britain's demand was seen at 345 mcm on Friday. After the interconnector resumed flows, within-day gas prices fell to around 95 pence per therm, near Thursday's close of 97.50.
During the outage the long dormant Dragon liquefied natural gas terminal in Wales resumed pumping gas from its storage tanks into the transmission system, supplying around 15 mcm, National Grid data showed.
To help in the coming days, Britain's interconnector linking it to the Netherlands for the first time ever committed all its capacity to flowing gas to the UK between March 23-28, operator BBL Company said on Friday.
The pipeline is currently flowing 40 mcm to Britain, which is around its maximum rate.
The British gas market has been under severe strain due to a cold snap which has drained gas storage levels and more cold is forecast.
Britain risks running out of stored gas by April 8 if reserves continue to fall has they have this month, Reuters calculations show.
Gas storage sites are 90 percent depleted, leaving Britain with the equivalent of less than two days' consumption, data from Gas Infrastructure Europe shows. (see chart)
Despite the interconnector outage and low storage levels, the Department of Energy and Climate Change (DECC) on Friday said demand would be met, with sufficiently diverse capacity to cover unplanned interruptions.
National Grid said it was monitoring the situation.
Supply interruptions from Norway in recent weeks have highlighted the country's dependence on foreign imports while Britain's domestic gas supply is dwindling.
Britain's 2,000-megawatt Didcot A coal-fired power station was closed on Friday after more than 40 years of operation.
Around one fifth of Britain's old and polluting power capacity is expected to shut by 2020 and the head of Britain's energy regulator has warned of a looming power supply crunch until new replacement capacity is built.
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