BRITISH GAS PLANS TO DOUBLE GAS FLOW IN MORECAMBE AREA

British Gas plc plans to double gas production from the Morecambe area in the Irish Sea.

It recently installed two compressor modules on the central platform of South Morecambe field.

The modules, weighing more than 3,000 metric tons, will help increase production from South Morecambe to 1.8 bcfd from about 1.2 bcfd.

The company also is developing North Morecambe field, with first production scheduled in October 1994.

Output will be about 600 MMcfd from a usually unmanned platform, connected by a new pipeline to a new gas reception terminal at Barrow.

Enhancement of South Morecambe and development of North Morecambe will cost 800 million ($1.5 billion).

Formed by British Petroleum Co. plc, Statoil, and Norsk Hydro to target the newly deregulated U.K. market, Alliance has joined with Manweb, a regional electricity generator, to sell gas in Merseyside and North Wales.

For the next 4 years, Alliance's gas will come mainly from the U.K.'s Hyde field, but from 1996 it will import 200 MMcfd of gas from Norway.

Total Gas Marketing has bought Conoco Ltd.'s 35.1% share of gas from Anglia field in North Sea Blocks 48/19b and 48/18b.

This will boost Total's effort to establish a significant presence in the U.K. gas market. First delivery is scheduled for the fourth quarter of 1993.

The estimated 6.7 billion cu m of recoverable gas will be transported via the Loggs gathering and transportation system to Theddlethorpe, U.K. Anglia field partners are Ranger Oil U.K. Ltd. 35.6% (operator), Conoco 35.1%, Elf U.K. plc 16.5%, and Amerada Hess Ltd. 12.8%.

Amerada Hess Gas Ltd., the U.K. gas marketing wing of Amerada Hess, has signed an agreement with South Wales Energy Ltd., a subsidiary of South Wales Electricity plc, to sell gas to customers in South Wales.

AHGL aims to take 5-6% of the U.K. industrial and commercial gas market in the next 5 years. Amerada Hess produces 150 MMcfd at present, largely from Leman and Indefatigable fields in the southern North Sea. The company has reserves exceeding 1.5 tcf, which it says will last well into the next century.

AHGL was set up in August 1991 and currently supplies gas to more than 200 sites around the U.K.

BRITISH GAS' OUTLOOK

British Gas plc plans to expand in other areas of the business to compensate for the loss of its monopoly in marketing.

It recently won a contract in Kazakhstan, which effectively doubled its reserves (OGJ, July 13, p. 24).

In the wholesale gas business, the company says it wants a higher margin than the one used for the recent release of its gas to competitors, as required by the government's Office of Fair Trading. The 0.20/Mcf (38/Mcf) margin would not be economic for a wholesaling operation of 8-9 tcf, British Gas says.

Thirty-two applicants in total applied for gas, to be sold in competition within British Gas into the industrial and commercial sector, and all were offered contracts.

From October, therefore, 500 bcf will be made available over the course of a year. The applicants will receive a minimum of 10 bcf each.

Another 500 bcf will be released in 1993-94, at least the same volume in 1994-95, and at least 250 bcf in 1995-96.

GOVERNMENTS PLANS

Michael Heseltine, Secretary of State for Trade and Industry, recently outlined the British government's ambitions for gas now that Britain has temporarily increased its influence within the EC.

"Trying to convince our European partners of the urgency of accelerating progress on the liberalization of Europe's gas and electricity markets, as the natural counterpart to the energy liberalization that has already occurred in this country, will ... be one of the main priorities of our presidency," he said.

"The European Community has of course adopted some welcome proposals for the creation of an internal market in gas and electricity which would offer the 350 million customers within the community access to cheaper energy.

"But further liberalization continues to be vigorously opposed by the monopolistic elements in Western Europe's electricity industry and by many of the leading gas producers and the European transmission and distribution companies, in which the producers are often major shareholders."

Heseltine spelled out the essential steps in his liberalization process. First, statutory monopolies need to be removed, he said, so that other players can enter the market.

Second, there has to be greater transparency between production, transportation, and supply, so that cross-subsidies are exposed and eliminated and new entrants can see what they have to compete against. Third, new suppliers need to be able to gain access to the existing pipeline or transmission infrastructure.

Current political and economic changes in Europe will inevitably have some important implications for the North Sea, and in particular the gas market, he said.

"But of course the prospects for gas production in the U.K. continental shelf are also closely linked to developments in the European gas market, which could offer some potentially major new opportunities for the offshore gas industry."

RUSSIA'S INFLUENCE

With this reference to the break up of the Communist Bloc in Eastern Europe, Heseltine echoes a recent Cambridge Energy Research Associates study of the European natural gas business.

"Whatever the fate of the (European) Commission's proposals in 1992, developments in Britain and in Russia will ensure that the question of competitive use of pipeline space stays on the agenda for Europe's gas industries," the study says.

The analyst says the first signs of a structural surplus of gas in Russia may begin to emerge in 1992. It would indicate that pressure will grow for competitive access to transmission capacity in Europe.