A coalition of major industrials is stepping up government lobbying to force a gas security inquiry. Gas Security Group member, the British Ceramic Confederation, says members are willing to pay an insurance premium to help finance adequate gas storage.
The British Ceramic Confederation represents some 90 highly gas intensive ceramics manufacturers. Confederation technical director, Andrew McDermott, told The Energyst gas security is their primary concern, with the closure of Rough, the UK’s largest gas storage site, weighing heavily on the collective mind.
It leaves the UK far too exposed to supply disruption, said McDermott, and the Confederation wants government to re-assess both the physical and price risks to gas security.
Though gas prices soared, McDermott suggests the UK was lucky to come through the cold snap in February and March without running out altogether.
“The Beast from the East hit towards the end of the week and temperatures were rising. Had it been earlier in the week and more prolonged, even by a day or two, LNG in the system would have been depleted. And it wasn’t replenished until two weeks after the event,” he said.
McDermott added that Confederation members see “a small increment on gas bills” to pay for new gas storage as a “better outcome” than being forced off the system or at the mercy of massive price spikes.
But first, security needs to be investigated and properly costed.
“The UK had inadequate storage to start with and now we are closing the lion’s share. That leaves us vulnerable,” said McDermott, explaining that it is not just the risk of short-term price spikes, but damage to equipment if the pipes are turned off.
“If we get to a supply emergency, we are the first off the system to protect domestic consumers. But it’s not just the cost of lost production and orders, there is a risk of major physical damage from cooling the kilns too quickly if you receive the dreaded call with just a few hours notice,” he said. “So we, along with other major energy users, are pressing Beis to launch a fresh inquiry into gas supply security.”
The Confederation has aligned with others such as the Confederation of Paper Industries, Major Energy Users Council and the GMB Union to form the Gas Security Group (GSG).
Altogether, members represented by the group account for 40% of all UK industrial and commercial gas demand.
In November last year the GSG wrote to secretary of state Greg Clark warning of the threat of gas supply disruptions to industrial output and employment. Under some political and media pressure since March, Beis has agreed to undertake an internal investigation, but McDermott fears that, with no formal terms of reference or deadline, there is a danger of the issue being kicked into the long grass.
The Confederation, plus aligned parties, is therefore pressing the Beis Select Committee to launch its own inquiry, which would force the debate into the public domain. McDermott hopes it would also produce some tangible recommendations on improving gas security before the start of next winter.
In the meantime, the Confederation is urging members to engage with gas transporters to try and receive earlier warnings of potential shortages to minimise risk of damage.
See the The Energyst’s forthcoming July print issue for more views from large industrials on key energy challenges.