National Grid has issued a warning over gas supplies after a shortfall emerged due to harsh winter weather and reduced flows from Europe.
Prices were sent soaring as the gas system struggled to keep up with demand, which reached its highest level in six years.
By the end of Saturday, the within-day national balancing point (NBP) price had already risen to 70p/therm in anticipation of this week’s cold snap, having hovered at around 50p/therm throughout the first half of February.
The price briefly dipped on Monday as supplies were drawn in but climbed back up to 80p/therm on Tuesday as Britain was blanketed with snow.
On Wednesday morning, it momentarily spiked to 190p/therm after the cold weather led to an outage at the Kollsnes gas processing plant in Norway.
It began to fall but was interrupted by technical problems with the BBL interconnector between the UK and Netherlands. There were also outages at the Bacton and North Morecambe gas terminals. Nevertheless, the price dropped to 100p/therm over the course of the afternoon.
Then, in the early hours of this morning (1 March), National Grid issued a “gas deficit warning”, urging the market to buy in more gas.
“National gas demand today is high and due to the extreme weather conditions, there have been gas supply losses overnight,” the company said in a statement.
“At 5.45am this morning we issued a ‘gas deficit warning’ to the market. This is an indication to the market that we’d like more gas to be made available to ensure the safe and reliable operation of the national gas network.
“We are in communication with industry partners and are closely monitoring the situation”.
National Grid forecast daily demand of 394 million cubic metres (mcm) and supply of 359mcm, leaving a shortfall of 35mcm. As the market opened, the gas price shot up to 200p/therm and by midday had reached around 275p/therm.
The company issued a further statement in the afternoon urging the public not be alarmed.
“This is a situation that we are always prepared for and a deficit warning is part of our normal toolkit in extreme weather to make sure we can balance gas supply and demand,” it said.
“Protecting customer supplies is always our first priority and we would like to reassure people that their domestic gas will not be affected.”
At the beginning of the day, the volume of the gas stored within the gas network itself – known as the linepack – stood at 340mcm. At the time of publication, National Grid was predicting the figure to be unchanged by the end of Thursday, suggesting the gap was being filled.
A spokeswoman for the company told Utility Week, contrary to some reports, it had not told industrial users to reduce the amount of gas they use, although it had sought offers for balancing actions.