U.K. Winter Gas Slips From a Record as BP Returns Bruce Field

By Ben Farey

Aug. 21 (Bloomberg) -- U.K. wholesale natural gas for the coming winter fell from a record after BP Plc started its North Sea Bruce field, boosting supplies of the fuel and easing cost pressure for utilities.

Gas for delivery in the six months through March 2009 slid 0.3 percent to 100.25 pence a therm at 1:03 p.m. local time. That's equal to $18.70 a million British thermal units. A therm is 100,000 Btus. The contract earlier climbed to a record 109 pence after StatoilHydro ASA said it may halt gas exports from a North Sea field until spring. The U.K. price remains more than double the cost of U.S. gas.

``We plan to ramp up to normal production levels at Bruce over the next few days,'' Joanne McDonald, BP's spokeswoman in Aberdeen, Scotland, said today in a telephone interview. The resumption of output at the field, which was shut for maintenance June 21, had been delayed after a remote-controlled hydraulic device became stuck in a pipeline.

StatoilHydro said yesterday Norway's Kvitebjoern deposit may not produce gas this winter while repairs to a leaking pipeline are carried out. The field, which holds Norway's eighth-largest gas reserves, sends the fuel to the Kollsnes processing plant on the country's west coast, from where it's sent to the U.K., Germany, France and Belgium.

Gas prices doubled in the past year after U.K. North Sea production fell 9.5 percent, leading Britain's six biggest energy suppliers to raise customer prices.

E.ON Raises Rates

E.ON AG said today that climbing wholesale costs had forced it to increase U.K. household prices for gas and power by 26 percent and 16 percent respectively. The change, effective tomorrow, will cost the average customer buying both gas and electricity an additional 226 pounds ($422) a year.

Soaring energy bills have curbed consumer spending in the U.K., raising concern that the economy will fall into a recession. The British Chamber of Commerce said this week Britain's gross domestic product will either stagnate or contract in the next two or three quarters.

Gassco AS, operator of Norway's offshore pipeline system, said the Vesterled link into the U.K. opened following three weeks of maintenance. The Kollsnes plant in Norway has also returned from planned maintenance.

``All the work is done,'' Kjell Varlo Larsen, Gassco's spokesman in Norway, said by telephone today. Kollsnes normally processes gas from Kvitebjoern.

The 340-kilometer (211-mile) Vesterled pipeline can transport as much as 36 million cubic meters of gas a day from Norwegian North Sea deposits, including StatoilHydro's Heimdal and Oseberg fields.

St. Fergus Flows

The link arrives in the U.K. at Total SA's St. Fergus terminal in northeast Scotland. Gas was flowing into the terminal at a rate of about 18.6 million cubic meters a day at 12:55 p.m., National Grid Plc data show, about 190,000 cubic meters more than yesterday.

About 317 million cubic meters of the fuel will remain in the U.K.'s pipeline network at 6 a.m. tomorrow, 4 million cubic meters fewer than at the start of today, National Grid data show.

Same-day gas fell 1.8 percent to 56.25 pence a therm at 1:02 p.m., according to ICAP Plc.

U.K. baseload electricity for delivery in October dropped 1.5 percent to 86.20 pounds a megawatt-hour, ICAP data showed.

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