John Hemming's Web Log John's Reference Website
Wednesday, September 14, 2005
  More jobs for export
I am worried about reports that British Gas may be exporting about 2,000 local jobs. The problem is that if we export industrial jobs and then export service sector jobs then we continue to undermine our long term stability.

An interesting point was also made about Star City at the Council meeting last night. Many of the jobs there are not people from the inner cities, but instead people from Poland.

My biggest concern with all of these things is the rapidity of change and the likelihood of an overshoot. British Gas really should not call themselves British Gas if they have so little commitment to the British economy.

In the mean time I have been quite pleased at how receptive the media have been to the issues of gas depletion. The following letter has been written to Malcolm Wicks:
Re: UK Gas & Electricity Supply Winter 2005/06

I am concerned about UK provisions to ensure energy security through the coming winter period. I fear gas and by association electricity supplies could be insufficient to meet demand.

The UK reliance on natural gas for over 40% of total energy and approximately 38% of electricity generation leaves the UK extremely vulnerable to our declining indigenous natural gas extraction rate. As you are aware this extraction rate peaked in 2000 and has fallen as shown:

Total gas production in million cubic metres (1)
2000 114,557 mcm
2001 112,567 mcm -1.7%
2002 109,816 mcm -2.4%
2003 108,088 mcm -1.6%
2004 100,966 mcm -6.6%


My concern stems from studying Ofgem publications (2) where the following was presented:

§ The winter of 2004/05 was warm, the 6th warmest in the last 77 years, the highest daily demand for gas was down 5.6% on the year before and 7% down on the record reached in during the winter of 2002/03.
§ Despite demand being lower than the previous two years the incidence of supply interruption to customers rose more than 4-fold from the year before. 88% of this shipper interruption was to electricity generating Combined Cycle Gas Turbines (CCGTs), the rest to other industrial customers.
§ During the winter on-the-day gas prices peaked at £1.70/therm, significantly higher than the usual £0.30/therm however this price spike was not met with increased beach deliveries from gas fields or even with increased flow through the interconector since prices were also high on the continent.

The lack of beach deliveries is most concerning. During winter 2004/05 this peaked at 331 million cubic meters per day whereas winter 2003/04 peaked at 338 mcm/d. This reduced flow was not previously expected and the lack of response to the extremely high prices suggests increased flow was impossible. Ofgem are predicting a maximum availability of beach gas for 2005/06 of 351 mcm/d, an increase on the two previous years.

This prediction seems irresponsible in light of limited deliveries last year and depletion rapidly reducing supply. Ofgem are expecting peak daily flow rates to be 6% higher than last year at a time when annual production is falling.

Gas demand could be as much as 10% higher than last year (7% higher due to similar temperatures as winter 2002/03 and another 3% due to three years growth). I don’t see how this level of demand can be met whilst beach gas flows are declining.

Can you explain how if required, a significantly increased gas demand from last year can be met this year in light of likely reduced beach deliveries?

Can you also explain the mechanism through which natural gas will be rationed in the case of a shortage? Last year CCGT’s accounted to for the majority of demand destruction thus limiting electricity generation capacity is there another way to reduce natural gas consumption without significantly compromising electricity generation?

And lastly I understand that despite our acute gas shortage during the later months of winter 2004/05 the interconector was unable to import at full capacity. Why was this and can we expect more gas this year through the interconector is faced with a similar or greater level of shipper interruption during winter 2005/06?

1 DTI Oil and Gas Statisticshttp://www.og.dti.gov.uk/information/statistics.htm

2 National Grid Transco: A Consultation on Winter 2005/06http://www.ofgem.gov.uk/temp/ofgem/cache/cmsattach/11584_14405b.pdf
 
Comments:
Whilst I think you have a valid point about manufacturing industry, I'm not quite clear exactly what point you are making about Polish people working in Birmingham. Are you suggesting some form of immigration controls within the EC? Or that Pole's in particular should be excluded? Or that within a single market economy inner city brummies should have a preference over Polish people? A pretty dangerous argument for a man who boasts about his Irish heritage.
 
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