Tuesday, September 4, 2018

The UK Will Be Burning A Lot Of Coal This Winter -- Platts -- September 4, 2018

Previously posted, but this could be a most interesting UK story this winter. At Platts. The UK is going to be burning a lot of coal this winter.

The concluding paragraph of the article:
The coal switching price was surpassed during the so-called "Beast from the East" weather system in March (2018) when the gas system came under considerable strain and pushed gas prices up to such an extent that coal was more profitable. With this threshold already having been reached in September, the outlook for coal looks favorable should the capacity and flexibility exist for this type of generation.
Wow.

In light of the earlier story about Mexico and NG storage this is most interesting and something that completely blows me away (what are/were the Brits thinking?):
The absence of long-term storage in the UK following the closure of Rough, coupled with the option for storing gas in continental Europe greatly diminished with higher transportation costs in both directions, has meant the UK's import dependency has suddenly come into focus.
In order to source gas for the winter, buyers have increasingly been looking to European hubs in order to hedge positions, and consequently are at the mercy of European prices.
And this:
In terms of gas fundamentals, the expiry of long-term interconnector transportation contracts at the end of September, as well as declining domestic production and a bullish fuels complex, have pushed up the price of gas for this forthcoming winter, with both Q4 18 -- of which front-month October is a component -- and the Q1 19 contract climbing 44% and 37% since April, respectively.
In order to source gas for the winter, buyers have increasingly been looking to European hubs in order to hedge positions, and consequently are at the mercy of European prices. Transportation costs are also being passed on to buyers, for those buying in the UK from those supplying at the interconnector.
Search "UK natural gas" for much more."

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