Britain, which basked in unseasonally mild temperatures until around the second week of November, may be about to experience its coldest winter for a decade. The Meteorological Office is forecasting a two-thirds chance of a colder than average winter. And if that turns out to be the case, there may not be enough gas to go round.

Just a few weeks ago, BP chief executive John Browne was insisting that there was no need to be concerned about gas supplies into the United Kingdom this winter. "All storage is full in the UK," he told BBC Radio 4's Today Program, noting that supplies were moving into the UK both by pipeline from Europe and in the form of LNG. "So we are reasonably well provided [for]," he said. "At the moment we don't see a shortfall of gas to consumers."

That was on Oct 25. The outlook seems to have changed since then, however. The country's main storage facility, Rough, was full just a few days ago. But withdrawals have begun much earlier than usual and Rough is now only 96% full.

And temperatures have plummeted from the balmy numbers in the mid-to-high teens Celsius seen until mid-November.

So concerned is the UK government about gas supply security this winter that on Nov 9 it quietly brought a group of senior manufacturing industry executives to 10 Downing Street, the residence of prime minister Tony Blair, for talks on the issue with energy minister Malcolm Wicks and other government officials. It has also commissioned two groups of consultants to study the situation and report back in December.

Global Insight will look at "demand-side response" -- how large industrial consumers can cut consumption and sell gas back into the system to ensure there is enough gas for domestic users. Oxford-based Ilex will examine the potential "knock-on" effects of demand-side response on the country. Government wants to find out about potential upstream and downstream effects from companies cutting production. For example, if a chemicals company cut production, that could potentially mean shortages of chlorine for swimming pools or shortages of fertilizers for farmers if there were not alternative stocks available. This second study will also examine the consequences for the economy.

Chemicals companies such as Terra Nitrogen, incidentally, say they have already turned down production, but that importing chemicals from abroad to ensure their own customers are kept whole will eat into their profits.

Draft reports will be presented at a meeting with business groups in December and the government has promised to make the reports publicly available soon after.

In a Nov 16 letter to the big industrial users, Richard Abel, director of domestic energy markets at the Department of Trade and Industry, wrote: "We recognize that this is a very difficult time for large gas consumers, and understand that you want to focus, first and forement, on running your businesses as effectively as you can in what is an uncertain environment. However, we believe that it is critical for the government to better understand the situation for this coming winter."

In the meantime, the man in the front line, energy minister Wicks, is trying to dampen the rising concern but has acknowledged that the current situation is "unsatisfactory." Earlier this week, Wicks told a gas conference in London that the government was making every effort to ensure that the country's gas supplies remained adequate to meet peak demand this winter. "No stone has been left unturned to help the infrastructure get [through] this winter," he said.

It's a far cry from the early and mid-1990s "Dash for Gas" when it seemed that Britain's indigenous gas supplies were infinite and power generators switched to gas. But production is declining and the country is increasingly reliant on imports. If the winter does prove as severe as is feared, industry could be forced to cut consumption to keep the system safe.

UK upstream industry group UKOOA, in its submission to the Trade and Industry committee's enquiry into fuel prices, notes that gas production from the UK continental shelf "has met the country_s needs for many years and the UK has been a net exporter of gas since the mid-1990s, during which period there has been an abundant supply of gas." But, it adds, "this gas surplus has gone." The conventional wisdom earlier this decade, expressed in the government's energy white paper of early 2003, was that the UK would become a net importer of gas on an annual basis by around 2006. In fact, the UK became a net importer as early as 2004.

>Gas pipeline operator National Grid says that in a 1 in 10 winter -- that is, the coldest winter one would expect in a ten-year period -- the approximately 1,700 big industrial users which make up the "non-power daily metered gas sector" would have to cut consumption by 30% for 40 days. In the event of a 1 in 50 winter, last seen in the 1960s, these companies would have to slash their consumption by half for 50 days. National Grid also expects power generators to make a substantial contribution to security of supply by switching generation from gas to alternative fuels such as oil.

Daily gas prices, needless to say, have soared from October's average 33 pence per therm to as high as 170 p/th the week of Nov 21. In the forward market the whole of January was priced up to 120p/th, and first quarter 2006 over 100p/th, suggesting this may not be a short-term issue.

The UK does, however, have plenty of import capacity lying idle. Capacity on the Interconnector linking Belgium and the UK was virtually doubled this month from 8.5-bil cu m/year to 16.5-bil cu m/year. But the expanded capacity has not yet been fully used, peak imports since the expansion having reached rates of only 12-bil cu m/year. The new Isle of Grain LNG import terminal, which can import 4.4-bil cu m/year, has also been used below capacity since its opening in July, although it was widely expected one cargo would arrive this week in time for the terminal's official opening ceremony.

High prices ought now to encourage companies to use these import facilities to the full. But that depends on prices not being even higher elsewhere in Europe or the US. If the UK has a cold winter, it is likely much of northwest Europe will too, while the US has seen gas production fall this year due to the disruption of hurricanes Katrina and Rita. Spain is also a competitor to the UK and Belgium in the global market for LNG.

Britain differs from its major European neighbors in that its position as a gas producer has enabled it to hold relatively small volumes of gas in storage. France, Germany and Italy can store some 20-25% of their annual gas demand. Britain, on the other hand, consumes around 100-bil cu m/year of gas and stores around 4% of that volume in its roughly 4-bil cu m of storage. That translates to about 14 days in purely mathematical terms. But because the Rough facility takes 70 days to empty, storage meets part of demand for 70 days rather than all demand for 13 or 14 days.

As consultants Ilex said in a report commissioned by UKOOA, "the amount of gas storage in the UK reflects the past position when the UK was fully self-sufficient in gas." This volume of storage was "probably correct" when Britain had gas production close to its demand centers as well as the ability to vary the level of production, the report said.

New storage facilities are now being built. Star Energy's Humbly Grove gas storage facility became operational at the start of winter 2005. But many projects have been caught up in planning difficulties over the past couple of years and most additions to UK storage capacity will not be until late this decade. Similarly, two new LNG terminals planned for Milford Haven in Wales do not come onstream until the winter of 2007-2008. And like the Isle of Grain, there is no guarantee they will be used at full.

"It is too late for storage to deliver enhanced security for this winter," Ilex said, pointing out that the lead time required to develop and build new storage is at least three years. "...So if the go ahead were given today to build a second Rough then by the time the storage came to market the short-term tightness of supply-demand in the UK will have passed." It believes that gas prices would have been "significantly lower" if a second Rough had been commissioned by the summer of 2005. Ilex noted that the new storage projects currently underway for later this decade were "bite-sized" small storage projects, rather than major offshore facilities of the scale of Rough.