7th February 2014 -

Total has announced an investment of £30m in exploration for Shale gas in the UK

Total has invested in two licence areas near Gainsborough, Lincolnshire, which are estimated to hold approximately 12 trillion cubic feet of natural gas . GDF energy has also invested in UK gas, and formed an exploration agreement with Dart Energy last October. Centrica has invested in licences owned by shale gas explorer Cuadrilla in 2013.

Meiya Power bidding for UK coal fired power station

 Meiya Power, a subsidiary of China General Nuclear Power Group is attempting to purchase Eggborough power station in North Yorkshire.
 Because Eggborough is coal-fired, strict environmental regulations under EU directives are likely to force closure within a few years, unless the power station in converted to run on biomass fuel. The current owners of the power station are working on plans to convert it to run on biomass, with a capacity of 1.35GW. This is likely to cost in the region of £500 million.
 If Eggborough is converted to run on Biomass, it should become eligible for a long term subsidy from the UK Government.
 Eggborough has also pre-qualified for infrastructure loan guarantees from the UK treasury.

UK Government and EDF Energy reach agreement for Hinkley

EDF Energy and the UK Government have finally reached agreement on the “ Strike price “ – this is the guaranteed price of electricity produced by the new power station which EDF is intending to build at Hinkley Point in Somerset.

The UK Government will guarantee a price of  £92 per megawatt hour, as against the current wholesale price of approx. £45 / megawatt hour. This strike price is also index linked.
 The new power station will cost £16 billion to build, and is expected to become operational in 2023, when it will supply 7% of UK electricity.

The plant will be built by a consortium, including EDF, Areva,( Who will build the Pressured Water Reactor that will be used at Hinkley )  China General Nuclear Power Group and China National Nuclear Corporation. If the consortium proceed with another nuclear development ( Sizewell B in Suffolk ), the strike price for Hinkley will fall by £3 per MWh to £89.50 per MWh.
 EDF has also qualified for The UK Government guarantee scheme, in case partners were unable to repay loans.

4th April 2014 -


~~THE ATLANTIC ARRAY Plans for an offshore wind farm in the Bristol Channel have been abandoned by RWE Npower, for several reasons : 1) Financial concerns , as the current Government is threatening to cut levies which subsidise the cost of renewable electricity . 2) Technical challenges, such as adverse seabed conditions, strong tides and deep seawater 3) Lobbying by environmentalists concerned about the impact on marine life 4) Local objections to the proposed 240 wind turbines, which were to be 720 feet high. Paul Cowling , Director of Offshore Wind at RWE Innology said that due to the technical challenges and prevailing market conditions, that it was not a good time to proceed with the project. However, he also said that RWE Npower would continue with other less challenging offshore wind projects. This project would have erected 240 Wind turbines, each 720 feet high, theoretically capable of producing 1,200mwh of electricity, enough to power 90,000 homes assuming favourable wind conditions. THE ARGYLL ARRAY Scottish Power has cancelled plans for a wind farm off the west coast of Scotland. The plans were to build up to 300 Wind turbines, each up to 662 feet tall, for the following reasons : 1) The rock on the seabed is too hard 2) Challenging sea conditions – waves and tides 3) The development would have been dependent on high Government subsidies, which are uncertain for political reasons 4) Strong local objections 5) A significant amount of basking sharks in the area CENTRICA SELLS RACE BANK PROJECT Centrica has announced that it is pulling out of the planned Race Bank offshore wind farm , and has sold the option to build the farm to Dong Energy for £50 million. The project is theoretically capable of producing enough electricity to power 450,000 homes, assuming favourable wind conditions. ONSHORE WIND FARM SUBSIDIES The latest strike prices – the prices guaranteed to be paid for renewable energy – were published in draft form in June 2013. However, the subsidies for onshore wind and solar power will be reduced, but the subsidies for offshore wind will be increased. Chief secretary to the treasury Danny Alexander described the change in subsidies as a “ rebalancing “.

British mains gas price now lowest since 2011

U.K. natural gas prices fell to the lowest level since August 2011 last month, due to the following reasons : 1) The mild winter ( Approx 1.5 degrees C above average ) reduced demand 2) UK temperatures in April 2014 are forecast to be 1 or 2 degrees Celsius above average 3) EU storage facilities were 44 percent full in March 2014 4) Offshore maintenance is not expected to interrupt supply until winter 2014 5) Russia is not expected to interrupt gas supplies to Europe at present 6) The pound has strengthened against the dollar ( 2.8% in the last 6 months ) Therefore this is a good time to look at long term gas agreements, as long term prices are now very low.

Directors and Managers - beware of some " Letters of authority ".

Directors and Managers - be very careful with letters of authority. Letters of authority are routinely offered by brokers to clients, to allow them to request and receive information that enables brokers to obtain information from client's gas and electricity suppliers.
These letters are printed on to a company letter head, signed and dated by the client and are then used by the broker when requesting prices, asking for supply information, Half hourly data, contract end dates, etc., and when submitting contracts signed by the client. This is all normal practice and ensures that the client's information is released only to brokers authorised by the client. Unfortunately a small minority of brokers are now asking clients to sign " Letters of authority " which are, in effect, binding contracts in themselves.  EXAMPLES:

1) I / We hereby authorise ___________ ___________ to act exclusively as the utility management company for ( client's name ) . NEVER SIGN ANY AGREEMENT ALLOWING A BROKER TO ACT EXCLUSIVELY ON YOUR BEHALF- YOU CANNOT GO ANYWHERE ELSE FOR PRICES.

2) I / We hereby authorise ___________ ___________ to sign contracts on our behalf .................... NEVER SIGN ANY AGREEMENT ALLOWING A BROKER TO SIGN CONTRACTS ON YOUR BEHALF.  ONLY CLIENTS SHOULD SIGN CONTRACTS.

EXAMPLE OF A NON- RESTRICTIVE LETTER OF AUTHORITY:   09/08/2013 TO WHOM IT MAY CONCERN: This letter authorises ________ ________ to discuss and receive information relating to our Gas and electricity supplies at the address / addresses detailed below. A. Manufacturing Company Ltd. North trading estate Nonchester N1 2YZ.  This letter also allows ________ ________ to issue letters of termination where the letter of termination has been signed by ourselves. Yours, etc. Signed : Mr A. N. Other Director



20th December 2013

Trade body Oil and Gas UK said that despite record investment this year of £13.5bn, it now expected average output to fall to between 1.2m and 1.4m barrels of oil and gas per day (boepd) this year, down from 1.54m boepd in 2012. This represents a fall in output of 19% during 2011 and 14% in 2012. Oil & Gas Uk is also concerned that the cost of extracting the average barrel of oil is rising rapidly. The cost differs across oil and gas fields. It can cost as little as £5 per boe, with an average cost rising to £13.50, some oil fields now cost more than £40 per barrel to produce. A further concern is that the proportion extracted of each potential barrel of oil or its gas equivalent (boe) fell to 60% last year. Only seven years ago, the production efficiency rate was above 80%. Oil & Gas UK predicts capital investment will hit £13.5bn in 2013, up from £11.4bn in 2012. From 2015 the current high level of investment should see output start to rise. Malcolm Webb, chief executive of Oil and Gas UK, said: "There is much more that needs to be done. Despite impressive investment in new developments, the production efficiency of existing assets has been in worrying decline, with a number of fields failing to produce as expected. of existing assets has been in worrying decline,with a number of fields failing to produce as expected."