Yves here. It’s maddening to see articles from supposedly expert venues misinform readers, here about gas storage in Europe.
European gas storage facilities were never designed to hold enough to stand in place of a protracted and severe fall in supply. They were meant to serve as short-term buffers and back-up reserves.
The article also fails to mention that the gas that Europe stockpiled came pretty much entirely from Russia. European leaders are now up in arms that the LNG that they counted on as the replacement is super pricey and in scarce supply. They are even going so far as accusing the US of profiteering! To a degree that it true, but it is also shocking to see that Eurocrats failed to work out that sending gas in tankers across the ocean would be inherently more expensive than pipeline gas.
Other wee complicating factors are that France has had to delay the restart of three nuclear reactors, putting even more strain on European energy supplies, and Ukraine is no longer exporting electricity due to Russia’s tender ministrations to its grid.
Let us also not forget that nuclear reactors overwhelmingly depend on Russian uranium.
And the coup de grace…even if Europe squeak through the winter, at the likely cost of more deindustrialization and business closures…it will still be in a chronic energy shortfall. How does it get through the year, let alone winter 2023?
By Irina Slav, a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. Originally published at OilPrice
- Europe has successfully filled natural gas storages ahead of winter, but more is needed to save it from an energy emergency.
- The weather has been particularly mild so far this winter, but fears of increased demand in colder weather can’t be ignored.
- “Just a few freezing cold days are enough for a dramatic increase in gas consumption,” German energy regulator Klaus Mueller noted.
The European Union has spent most of this year importing natural gas from any source available, including sanctioned Russia, after it sanctioned it and began preparing for the time when Russia will turn off the gas tap, which it did, on Nord Stream 1, at least, in the summer. The media have spent that time citing politicians, businesspeople, and commentators and fueling fears that winter in Europe this year will likely be harsh, however much gas there’s in storage. But it seems there’s plenty of gas in storage. If only that were enough for comfort
Earlier this month, Reuters’ John Kemp wrote in a column that Europe had completed a record-long gas storage refill season, saying storage inputs likely peaked around mid-November.
The longest and largest refill season on record, he wrote, was probably over, but over its length, European countries had managed to stock up well on natural gas ahead of winter.
That was certainly good news, especially coupled with a mild October and much of November, which meant naturally lower consumption rather than attempts to mandate lower consumption.
This week, Kemp wrote another column that cited data showing it pretty likely that Europe might end up coming out of winter with some gas still left in storage—quite a bit of it, in fact. But there are conditions.
The mild weather that was a big reason why Europe has the levels of gas in storage it does at this time of year will also be a big reason for Kemp’s forecast to materialize. The problem with the weather is that even if the European winter is mild, it cannot be mild enough in December and January to prompt the same energy consumption in October.
Simply put, it’s never as warm in January as it can sometimes be in October. And this means that demand for heating energy will inevitably increase next month and the month after. And this will mean higher gas consumption in countries that rely on it for heating purposes. And this, in turn, will mean storage drawdowns.
Yet, with record levels of gas in storage, this should not be a cause for worry, although it seems to be for some German officials. The head of the country’s energy regulator, Klasu Mueller, for instance, warned in early October—when a cold spell pushed energy consumption higher—that “We will hardly be able to avoid a gas emergency in winter without at least 20% savings in the private, commercial and industrial sectors.”
“The situation can become very serious if we do not significantly reduce our gas consumption,” he also said, even though Germany was at the time filling up its gas storage facilities steadily and discussing with its fellow EU members emergency measures such as joint gas buying and gas sharing.
Then, in November, Reuters quoted Mueller as saying that Germany’s gas storage could empty in a matter of days if the weather gets very cold. “Just a few freezing cold days are enough for a dramatic increase in gas consumption,” he said. When he said it, gas storage levels in Germany had reached 99.3 percent.
Indeed, everyone who has spent any amount of time in a temperate climate during the winter knows that when it’s cold, few would have the strength of character to freeze instead of turning up the thermostat.
According to Kemp, high prices will be a natural deterrent for gas consumption but, again, when people are cold, the one thing they can think about is getting warm, not what the price of gas is. It’s either that or a lot of people with cold-related health problems all at once.
A lower consumption is also among the factors that Reuters’ market analyst notes as necessary for Europe to end winter with a decent level of gas in its storage caverns. So, the natural deterrent of high prices will not be enough to keep consumption low, and that is, as noted above, to be expected.
The other condition Kemp sees as necessary for Europe’s gas storage comfort in three months is the continued flow of Russian gas via Ukraine. It seems despite its best efforts, Europe still very much relies on Russian gas.
22 comments
Comments are closed.
Tell me where I’m wrong here: it’s not the material shortages, it’s that they turn into industrial flight (‘20% savings’ being devastating). And then, It’s not the industrial flight, it’s the capital flight. At the point that those companies have signed leases in China, USA, and *redacted*, it’ll be too late to woo them back.
(M)arket time moves faster than political time. Market time also moves faster than military time.
So when is the market time drop-dead date? Isn’t that in weeks, not months? It sure isn’t in years.
Oilprice writer Irina Slav says, Europe “began preparing for the time when Russia will turn off the gas tap, which it did, on Nord Stream 1, at least, in the summer.” If I’m not mistaken, that’s when Russia paused the gas while seeking an agreement that repaired equipment (like the seized turbine that Canada refused to return to service after repairing it) would be returned for service. Most reasonable observers would agree that the Nord Stream 1 gas was “turned off” by those who blew up the pipeline on September.
You are perfectly right in my view, but it would not be as convenient as a narrative for our ” leaders”.
As far as I can figure things out, Europe storage capacity is about 25% of the annual consumption. So basically 90 days worth when filled to 100%.
Naturally, the consumption is three times higher during the winter than in the summer, so most of the consumption happens in the winter. That leaves us somewhere between 30 and 60 days worth of gas.
Then again, countries have different amount of storage, so while Hungary has plenty for herself (and a deal to get more of the good stuff, too) Germany may run out around the end of this year or mid January.
I expect EU to deal with “gas redistribution” fairly and openly in the coming months.
Not that gas redistribution is that easy. May be within a part of the bloc there are enough connections while others are isolated from the rest. Sharing shortages if and where this is tried might might result err… problematic should I say.
Yes – this is the additional problem. Just because one area has surplus gas at any given time does not mean that it can be transferred to another country/region with a shortage.
Europe will not run out at one go, there will be lots of localized shortfalls long before there is a continent wide crash.
Wait. Did you just say that the future will not be evenly distributed?
And given our current media censorship/narrative building leadership, you could also say that the (gas shortage) future will not be televised…
I’ll add just two data points here. Not only has France had to delay the restart of three nuclear reactors, they are now restarting a closed coal plant as part of emergency efforts. This was a plant whose operator was so sure that it was going to be leveled that he posted a YouTube video called “Let’s visit a coal plant that’s going to be destroyed!” Having a fleet of nuclear power stations has not saved France from an energy crisis, especially when half of them were out with maintenance problems-
https://www.usnews.com/news/business/articles/2022-11-30/necessary-evil-france-refires-coal-plant-amid-energy-woes
And in what amounts to a clown world story, ‘Germany’s largest gas importer Uniper said on Wednesday it is seeking billions of euros in compensation from Russia’s Gazprom for undelivered natural gas, and has opened an arbitration process.’ So the dodgy repairs for those turbines in Canada and the sabotage of the NS2 pipelines by explosives don’t count – Uniper wants billions from Russia along with a $53 billion bailout from the German government-
https://www.rt.com/business/567432-germany-russia-gas-price-lawsuit/
Let me add yet another data point regarding atomic energy.
The Finnish authorities have had to postpone the commissioning of the brand new Olkiluto power plant — again. In May, it was shut down for repairs on the heating subsystem. In October, water pumps were found to be damaged. The plant is undergoing additional repairs and will not start producing electricity for Finland (which the country desperately needs, as it is now entirely cut off from Russian power sources of every kind) at the earliest towards the end of January 2023.
The tragicomic part of Finland’s energy problem is that a Swedish market court recently ordered Finnish gas distribution company Gasum to keep paying Russian Gazprom according to the agreement – there’s a minimum annual fee regardless of whether gas is delivered or not.
So to punish Russia Finland is refusing gas but is paying for it. That can’t make sense even in the most euro-atlanticist neocon mind…
Yes, Unit 3 of Olkiluoto (an EPR reactor) is a catastrophe for Finland and a lesson for anyone who witters on about wind power and intermittency.
It started construction in 2005 and is still not working correctly. It finally produced its design power output 2 months ago and promptly had to shut down again. At the earliest, it will be producing power by January, a mere 13 years late and who knows how many billions over budget.
The Finns should have been paying attention to the Germans. Siemens was a partner in the EPR but dropped out early, almost certainly because they saw it was going to be a disaster. Everyone likes to blame the Greens for Germany rejecting nuclear power, but the real reason is that the Germans bet on the EPR and their own pebble bed gas reactors, but they couldn’t get the latter to work (the Chinese bought up the tech via the South Africans), and they knew the EPR was a black hole of money. A lot of the problems Germany is facing now comes down to their betting on the wrong nuclear horses.
As for the Finns, it seems they will only manage to get through the winter by depending on their Russian built and designed VVERs.
That last bit. Wouldn’t they have to get their fuel from Russian then? That is certainly true of the three German nuclear reactors still running.
Yes, they get the fuel from Russia since 2007 or so. Mainly because Russian Tvel is the only company producing VVER type fuel anymore.
Changing provider is possible, in a time frame of 3-4 years including all the red tape involved.
As an aside: France does not depend on Russia for uranium: everything comes from Niger (34.7%), Kazakhstan (28.9%), Uzbekistan (26.4%), and Australia (9.9%) and is then processed into actual fuel in France.
However, it is entirely dependent on Russia for reprocessing depleted uranium. The French can perform a first phase (separating plutonium from spent fuel), but their much-touted prowess in turning “nuclear waste” into usable fissile uranium is only possible thanks to the Rosatom reprocessing plant in Seversk.
The last transport with depleted uranium from France to Russia took place in October, and the French firm Orano, which supplies French atomic power plants, does not intend to renew the contract. Which means that spent fuel may soon start to accumulate as genuine waste on the premises of French power plants…
France operates it’s nuclear generating stations differently than we do in the US. They have nuclear do load follow as opposed to base load. That means the cycling in those plants is very different from what we see in the US. It leads to problems that require more maintenance. Simple analogy would be comparing a typical French reactor to a car that is driven 50,000 miles a year compared to one driven 10, miles a year. The lower mileage vehicle will be in much better shape for longer compared to the vehicle you’re beating up.
This is a good example of how crapification of everything combines with massive complexity and interdependency, especially with globalized markets, to make crises/collapses more likely/possible, which is a huge and increasing problem in the face of climate change. As someone pointed out below, low hydro levels matter, and are climate-related i.e. due to this summers epic drought.
I don’t know if the problems at French/Finnish nuclear agencies & operations are due to bureaucratic incompetence and lack of/lower skill of workers caused by the “triumph” of neoliberal capitalism, but I’d bet on it.
Germany is especially vulnerable as 12% of its electricity is from natural gas, but most importantly, it’s used to provide load balancing for renewable energy sources. So, if there is natural gas shortage, the electrical demand will spike and it may destabilize European electrical grid, as European electrical generation doesn’t have much slack, especially since hydro storage is at all-time lows.
European electrical grid is fully integrated and there have been several instances in the past where unauthorized draws from grid would dip the grid voltage across Europe. It will be interesting to see how EU handles the situation where, due to electricity shortage, certain countries who typically import electricity in the winter are told that they will have to do without, imposing rolling blackout on them.
“European leaders are now up in arms that the LNG that they counted on as the replacement is super pricey and in scarce supply. They are even going so far as accusing the US of profiteering!”
IIRC, before the SMO started Putin was getting frustrated that the EU refused to sign long term agreements for provision of gas and, instead, insisted upon buying it through the spot market. I smell something rotten in the state of Denmark: they were doing this to ensure profiteering by gas companies before the SMO and their subsequent sanctions regime, they were not letting a crisis go to waste even then, so now they find themselves hoist by their own petard and cry ignorance?
Not buying it. I doubt anyone else will either.
Just wait until the US decides that they need the LNG more and shuts down exports for “national security” reasons. There will be much complaining!
Oh, and curious silence on NS1 and NS2 continues….
They are even going so far as accusing the US of profiteering!
That’s what we do!!! Geez, it shouldn’t be a surprise. Now, I am looking forward to the fireworks when the Europeans demand energy subsidies from the US for Ukraine support, and what the people in Maine, the midwest, and well, the whole US say when they are paying sky high energy prices….
And why would anyone care what an American in Nowhereville freezing their tuchus off thinks? As far as I can see, our “leaders” don’t care about us. They only care about what they can steal, pillage, and destroy.