A new study on Prospects for UK Gas Supply and Demand by Professor Alex Kemp and Linda Stephen, University of Aberdeen , has just been completed. Key findings are that, while gas production from the UK Continental Shelf will continue its downward trend, and UK demand will continue to grow, the import schemes currently being seriously examined will ensure that in the medium and longer terms, ample supplies will be available for the UK market.
On an annual basis the UK could become a net importer in 2005. By 2010 with a longer term price scenario of $20/bbl and 18 pence/therm, imports could be required to meet 25%-35% of total gas requirements, and by 2020 as much as 70%. If a long-term higher price scenario of $25/bbl and 24 pence/therm prevailed UK gas production would be higher and reliance on gas imports might be in the range 18%-33% in 2010 and 55%-65% in 2020. In the short-term before the import schemes come on stream the market situation will be quite tight, particularly in 2005.
The study also examined the peak winter demand/supply position. This involved the analysis of the effects of a typical January demand and a 1 in 20 winters peak demand. It also involved the examination of the contribution of gas from storage facilities (existing and proposed), and of the (changing) swing actor from production from the UKCS. Key findings are that the market will be tight in the winters of 2004/2005 and 2005/2006, but thereafter the imports and gas storage schemes should ensure that adequate supplies to meet peak demand are available.
Recent winters have been relatively mild and a problem would only emerge if much colder weather than that experienced in recent winters materialised. The study supports the view that wholesale gas prices will be relatively high over the next two winters, even if oil prices were to fall back from their present high levels. In the medium-term, however, the projected increases in import capacity along with UK production will have a major moderating influence on prices both on an annual and peak basis.
It is clear from the study that natural gas can readily play an increasing role in meeting the UK 's energy requirements. Both indigenous production and imports are reasonably diversified, thereby enhancing the security of supply.