U.K. Natural Gas Advances as Total Cuts North Sea Production

By Ben Farey

Aug. 27 (Bloomberg) -- U.K. natural gas advanced after Total SA said production from its Elgin-Franklin North Sea oil and gas fields was reduced at the request of Forties pipeline operator BP Plc.

Gas for immediate delivery advanced 9.5 percent to 56.5 pence a therm as of 10:36 a.m. local time, according to broker ICAP Plc. That's equal to $10.42 a million British thermal units. A therm is 100,000 Btus.

``Production on Elgin-Franklin has been reduced at the request of the Forties pipeline operator,'' Brian O'Neill, Total's spokesman in Aberdeen, Scotland, said in an e-mail yesterday. BP's spokesman in Aberdeen, Richard Grant, wouldn't immediately comment today on the status of the oil pipeline.

A reduction in Elgin-Franklin oil supply to the pipeline would force Total to cut gas production. Maximum gas output at Elgin-Franklin is 15.5 million cubic meters a day, according to Total's Web site. The field is able to pump 175,000 barrels of condensate, a light oil that's produced in association with natural gas.

Gas from the fields arrives in the U.K. at the Bacton Seal terminal in Norfolk. Flows at the terminal were recorded at 14.5 million cubic meters at 9:29 a.m., according to network manager National Grid Plc. That's 10 million cubic meters lower than on Aug. 25.

The next-week contract jumped 17 percent to 53.75 pence. Gas for next month increased 5.1 percent to 57 pence a therm.

Deliveries into Total's St. Fergus terminal in Scotland dropped as much as 10 million cubic meters to a rate of about 29 million a day at 9:15 a.m. today. The terminal receives gas from Norway through the Vesterled link and from North Sea fields including Total's Alwyn Area and BP's Bruce and Rhum fields.

Interconnector (U.K.) Ltd.'s pipeline, linking Britain and Belgium, is now closed until 6 a.m. on Sept. 11 for planned annual maintenance. The closure will reduce daily gas demand during the period. About 26 million cubic meters of gas flowed to Belgium yesterday.

U.K. gas demand in the 24 hours through 6 a.m. tomorrow is forecast at 187 million cubic meters, according to National Grid. That's the lowest this year.

About 324 million cubic meters of the fuel will remain in the pipeline system at that time, National Grid said, 1 million fewer than at the start of today.

Contracts to deliver gas in the future also increased. Gas for the six months through March 2009 increased 2.8 percent to 102.50 pence a therm. That's equal to $18.92. Gas for next summer, the six months through September 2009, increased 2.6 percent to 84.90 pence, according to Spectron Group Ltd.

To contact the reporter on this story: Ben Farey in London at bfarey@bloomberg.net