October 1990 will be recorded as a turning point in the short but dynamic history of competition in Britain's industrial gas market.
At the beginning of the month ARCO British Ltd. brought first gas ashore from the small Welland field in the southern basin of the U.K. North Sea.
Welland is the first field developed under new guidelines that restrict the purchasing power of the former British Gas plc monopoly by making 10% of reserves in new contracts available to other buyers.
A FLURRY OF ACTIVITY
The British government's decision to break up the British Gas sales monopoly in Britain, starting with the industrial market, created a flurry of activity among oil companies and independent entrepreneurs anxious to take up the challenge.
Gas supply organizations have been set up, the market has been investigated, sales plans formulated, and access assured to the nationwide, high pressure, transmission system operated by British Gas.
The only thing that has been missing is gas. Operators in the U.K. North Sea can produce as much as 7 bcfd, but almost all of that volume is tied up in long term contracts with British Gas.
Large scale supplies covered by new contracts will not start to move into the market until the end of 1992 and 1993 to coincide with start-up of new gas fired cogeneration plants.
Welland will give a tremendous physiological boost to the new breed of gas suppliers. It also will show industrial companies that competition is a reality, not just a theoretical exercise.
Welland holds reserves of 240 bcf and a plateau production rate of 100 MMcfd. Three organizations will be selling Welland gas on the industrial market: AGAS Ltd., which is the first independent gas wholesaler in the U.K., and gas trading companies set up by BP Exploration and Mobil North Sea.
Welland gas could have been sold 10 times over to industrial buyers, who are rapidly discovering the benefits of a competitive market and do not want to wait until 1993 for new supplies.
KINETICA'S PLANS
Filling the gas gap during the next 23 years is producing some enterprising thinking.
Kinetica, the gas transmission venture of Conoco U.K. and PowerGen plc, signed an agreement with four of the partners in Anglia field to purchase production for the first 2 years of the field's life. Kinetica poses a threat to British Gas because it is one of two competitors in the profitable gas transmission business.
Kinetica will build its first line to link a new power station to Conoco's Theddlethorpe terminal next year. It also plans a long distance pipeline to the buoyant markets of Southeast England.
Under the new deal Kinetica will purchase 57% of the Ranger Oil operated Anglia field starting in late 1991 until a new cogeneration plant at South Denes, Great Yarmouth, starts up in 1993. Kinetica will market about 37 MMcfd of Anglia gas. The rest will be sold by BP and AGAS.
Copyright 1990 Oil & Gas Journal. All Rights Reserved.
