In 1986 we still had an Elfstedentoch (Eleven Cities Tour), how different is it now in 2019 with the hottest February month ever.
February has been particularly warm, in fact the hottest winter's day ever has just been recorded in February 2019; this is in stark contrast to 26 February 1986 when Evert van Benthem won the Elfstedentocht (eleven cities tour). Also an entirely different scenario to last year when we were still talking about ‘the beast from the east’: a period of extremely cold weather in February and March 2018. What a difference now, in 2019, with a (much) warmer than average February.
How does this affect GasTerra's Planning Department? We ask Mark van Dijken, Portfolio Planner for GasTerra.
Mark van Dijken: “As far as our Planning Department is concerned, such scenarios need to be anticipated because changes occur in our portfolio. Every day we put together a new plan to harmonise both short-term and longer-term supply and demand. The situation we envisaged in January for the month of February turned out to be considerably different. Full storage facilities in Europe, a plentiful supply of LNG and warmer weather than predicted are factors that have an impact. We have been seeing a lot less gas than normal being consumed in Northwest Europe, making physical gas requirements much lower than this time last year.”
How do you implement such factors into your daily planning? “Warmer weather leads to less degree days, which is a determining factor for the quantity of gas we are offered by NAM. We stick to the degree day formula and ensure that we do not exceed the permitted production limit. It is a dynamic continuous process, in which plans are monitored from day to day and adapted where necessary.”
How does such a warm winter month affect gas exchange prices?
“External factors such as reserves and temperatures also have an effect on gas price trends, of course, which in turn have an impact on our portfolio. Prices are volatile; at the end of 2018 we saw that the level lay well over 20 euros/MWh, while in February it hovered around 17 to 18 euros/MWh. Furthermore, we are noticing a negative summer-winter spread; in other words, the gas is now cheaper in this ”winter” month than in the usually warmer summer months. This is exceptional and unusual for this time of year. Many gas contracts make flexible purchasing possible; our customers' contracts allow them to decide how much gas they buy per hour or per day. Of course, market prices play a big part in such decisions. The Planning Department faces a new challenge every day in matching supply and demand as effectively as possible and in trying to stay in balance!