The small pipeline playing an oversized role in the energy crisis

Published

3 years ago

December 8, 2022

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The chances are you haven’t heard of the BBL pipeline.

It’s a 235km steel tube which runs under the North Sea between Balgzand in the northern tip of the Netherlands and Bacton in Great Britain.

It’s one of those bits of innocuous infrastructure which, most of the time, no-one except energy analysts pay all that much attention to.

But let’s spend a moment pondering this pipe, because it could prove enormously consequential for all of us in the coming months.

Indeed, BBL has already played a silent but essential role in the Ukraine war and, for that matter, the fate of Europe, because this is one of the two main pipelines transporting gas between the UK and Northern Europe.

Actually, BBL is the smaller of the two pipes, the other of which is the rather unimaginatively-named “Interconnector” pipe. But the reason it’s worth focusing on BBL is because in the past few days something rather interesting happened there.

Before we get to that, though, it’s worth reminding ourselves of the big picture here, the challenge facing Europe: a desperate shortage of energy.

Here’s the best way of understanding it: this time last year, Europe (including the UK) was consuming roughly 85 billion cubic metres of natural gas a month. Of that, about 21 billion cubic metres (bcm) – roughly a quarter – came via Russian pipelines.

That gas didn’t just go into our boilers and gas-fired power stations.

It was a feedstock which helped us manufacture chemicals and fertilisers.

It fed us, it fuelled industry, it helped keep the lights on.

In the wake of the Russian invasion of Ukraine, suddenly Europe couldn’t take that 25% of its energy for granted any more. And indeed, most of the Russian supply has since dwindled (it’s now down 81% to about 4bcm a month).

And so much of what might today be categorised as economic news – the rocketing rate of inflation, the squeeze on household incomes and the recession we’re now sliding into – really comes back to this gap, between the gas we used to consume and the gas we can now lay our hands on.

And the short answer is that getting hold of that extra gas isn’t easy at all.

Partly that’s because most of the non-Russian sources which are already pumping gas into European pipelines (which is to say: mainly Norway but, to a lesser extent, the UK, Netherlands and Algeria) are already producing about all they can.

These days you can ship gas (in the form of Liquefied Natural Gas (LNG), a supercooled liquid) across the ocean from Qatar and the US, but that depends on a few things.

The first is actually getting hold of that gas. The UK on Wednesday published details of a new “US-UK Energy Security and Affordability Partnership” which aims to provide more LNG to the UK. That matters because Britain and Europe are essentially competing with China and other Asian nations on global markets for these cargoes.

The second (and perhaps even more important) factor is having terminals where you can receive and re-gasify the LNG and then feed it into your domestic pipeline network.

But there are only so many of these ports and regasification facilities in Europe. Germany, for instance, has none (though it’s got some temporary capacity coming up soon). The UK has lots. Indeed, it has more LNG capacity in its three ports (two at Milford Haven, one at Isle of Grain) than Belgium and the Netherlands have in total.

The logic of this was that back at the start of the conflict, it looked quite plausible that the UK would become a sort of energy “land bridge” across which gas could be transited to Europe. And that indeed is precisely what happened, which brings us back to the pipeline crossing from the UK to the north of Europe.

Over the past year, a stupendous amount of LNG has been coming into UK ports, drawn in by the stupendously high gas price, from where it has been transferred across the UK’s pipeline network and thence into the European system.

To put this into perspective, in the four summers since 2017, the average amount of natural gas transferred from the UK was around 5.7 trillion cubic metres. This past summer the total was 20.5 trillion cubic metres.

It’s worth dwelling on this for a moment, for it represents one of the under appreciated stories of the Russia-Ukraine war.

Much of the gas which replenished the storage facilities in Europe, which should help them survive the coming winter while keeping homes heated, despite the absence of Russian gas, came via the UK – via the BBL and Interconnector pipelines.

And that’s actually understating it, because those pipelines were only so wide, and so could only carry a certain proportion of the LNG flowing into the UK, but what also happened this summer is that UK gas power plants went into overdrive, burning that gas and turning it into electricity, which was also fed via undersea cables into Europe.

This mattered. Much of France’s nuclear power fleet was out of action this summer as water levels in French rivers ran too low to provide the necessary coolant. British electrons were part of the explanation for why the lights never went out in France.

This astounding flow of gas (which of course has its own climactic consequences) caused some interesting price fluctuations this past year. As we reported earlier in the summer, it helped suppress UK day-ahead gas prices down to surprisingly low levels.

For a period in May and June, the UK wholesale gas price was less than half the level in continental Europe – because the UK was awash with all these natural gas molecules trying to fit themselves into these steel pipes coming out of Bacton.

But in recent weeks those flows have begun to drop, which brings us to the interesting thing that changed in the past few days.

For the first time since the Russian invasion of Ukraine and the extraordinary rollercoaster in the gas market, a small quantity of natural gas begun to flow back into the UK.

It’s important not to overstate this. The numbers are very small indeed. But it’s a reminder that actually, in “normal” times, these pipelines serve a very different purpose from the one they’ve served in recent months.

Britain doesn’t have much domestic storage for natural gas. While Germany has about 266 terawatt-hours of storage capacity, the UK has only 53, barely enough to keep boilers going for more than a week or two.

However, the UK strategy in recent years has been to use Europe as a kind of storage system. Think of these underground caverns as a kind of bank.

You deposit gas in them in the warm months and take it out when it gets cold. And in “normal” times the UK has “deposited” its gas in Europe in the summer, sending much of the stuff that came out of the North Sea (and some stuff from those LNG terminals) across the two pipelines and those molecules went into European storage.

And in winter, the UK would typically “withdraw” the gas from Europe when it got cold and it needed a little more for peoples’ boilers. Into Europe in the summer; out of Europe in the winter.

But that brings us to this winter. The UK has put an extraordinary amount of gas into European storage in the summer. What happens if it gets really cold? In any normal winter, it would need to get that gas out of Europe via those pipelines. But this, of course, is not a normal winter. There is a chance that the remaining flows of gas from Russia dry up further, meaning there could be a real shortage. In such circumstances, what happens?

If the market carries on working, then that would push up prices high on continental Europe, but the logic is that in order to attract that gas across the channel, the UK would have to pay even higher prices than continental Europe. In other words, while prices in the UK have been lower than Europe for most of the summer, they could well be higher than Europe for most of the winter.

There is a sign that this is already happening.

In the past couple of days, those prices have converged. But there is also a scarier question: what if the market doesn’t function, because of political interference? What if European nations decide that storage in, say Germany (or for that matter the European Union) cannot leave? Where does that leave the UK, which tends to rely on those pipeline flows from Europe in the event of a cold snap.

The short answer is that no-one really knows. What we do know is that this story isn’t over yet. Gas prices are already eye-wateringly high, especially when you consider that the Government is effectively subsidising them. It’s not implausible that they get even higher.

Business

Ofwat could be scrapped in water reforms

Published

6 hours ago

July 18, 2025

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Ofwat could be scrapped in water reforms

An independent review of the water industry is to recommend sweeping changes to the way the sector is managed, including the potential replacement of Ofwat with a strengthened body combining economic and environmental regulation.

Former Bank of England governor Sir Jon Cunliffe will publish the findings of the Independent Water Commission on Monday, with stakeholders across the industry expecting significant changes to regulation to be at its heart.

The existing regulator Ofwat has been under fire from all sides in recent years amid rising public anger at levels of pollution and the financial management of water companies.

Campaigners and politicians have accused Ofwat of failing to hold water operators to account, while the companies complain that its focus on keeping bills down has prevented appropriate investment in infrastructure.

In an interim report, published in June, Sir Jon identified the presence of multiple regulators with overlapping responsibilities as a key issue facing the industry.

While Ofwat is the economic regulator, the Environment Agency has responsibility for setting pollution standards, alongside the Drinking Water Inspectorate.

Sir Jon’s final report is expected to include a recommendation that the government consider a new regulator that combines Ofwat’s economic regulatory powers with the water-facing responsibilities currently managed by the EA.

In his interim report, Sir Jon said options for reform ranged from “rationalising” existing regulation to “fundamental, structural options for integrating regulatory remits and functions”.

He is understood to have discussed the implications of fundamental reform with senior figures in industry and government in the last week as he finalised his report.

Environment Secretary Steve Reed is expected to launch a consultation on the proposals following publication of the commission report.

The commission is also expected to recommend a “major shift” in the model of economic regulation, which currently relies on econometric modelling, to a supervisory approach that takes more account of individual company circumstances.

How water can teach Labour a much-needed lesson

Liz Bates

Political correspondent

@wizbates

On Monday, the government’s long-awaited review into the UK’s water industry will finally report.

The expectation is that it will recommend sweeping changes – including the abolition of the regulator, Ofwat.

But frustrated customers of the water companies could rightly complain that the process of taking on this failing sector and its regulator has been slow and ineffective.

They may be forgiven for going further and suggesting that how Labour has dealt with water is symbolic of their inability to make an impact across many areas of public life, leaving many of their voters disappointed.

This is an industry that has been visibly and rapidly declining for decades, with the illegal sewage dumping and rotting pipes in stark contrast with the vast salaries and bonuses paid out to their executives.

It doesn’t take a review to see what’s gone wrong. Most informed members of the public could explain what has happened in a matter of minutes.

And yet, despite 14 years in opposition with plenty of time to put together a radical plan, a review is exactly what the government decided on before taking on Ofwat.

Month after month, they were asked if they believed the water industry regulator was fit for purpose despite the obvious disintegration on their watch. Every time the answer was ‘yes’.

As in so many areas of government, Labour, instead of acting, needed someone else to make the decision for them, meaning that it has taken over a year to come to the simple conclusion that the regulator is in fact, not fit for purpose.

As they enter their second year in office, maybe this can provide a lesson they desperately need to learn if they want to turn around their fortunes.

That bold decisions do not require months of review, endless consultations, or outside experts to endlessly analyse the problem.

They just need to get on with it. Voters will thank them.

Sir Jon has said the water industry requires long-term strategic planning and stability in order to make it attractive to “low-risk, low-return investors”.

The water industry has long complained that the current model, in which companies are benchmarked against a notional model operator, and penalised for failing to hit financial and environmental standards, risks a “doom loop”.

Thames Water, currently battling to complete an equity process to avoid falling into special administration, has said the imposition of huge fines for failing to meet pollution standards is one of the reasons it is in financial distress.

Publication of the Independent Commission report comes after the Environment Agency published figures showing that serious pollution incidents increased by 60% in 2024, and as Thames Water imposes a hosepipe ban on 15m customers.

Ofwat, Water UK and the Department for the Environment all declined to comment.

Business

Post Office Capture IT system conviction referred to Court of Appeal for first time

Published

20 hours ago

July 18, 2025

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Post Office Capture IT system conviction referred to Court of Appeal for first time

The first Post Office Capture conviction is to be sent to the Court of Appeal, Sky News understands, in a “breakthrough” moment in the IT scandal.

The Criminal Cases Review Commission (CCRC) has decided to refer the case of sub-postmistress Patricia Owen, who was convicted in 1998 of theft.

Mrs Owen was found guilty by a jury based on evidence from the faulty IT software Capture, which was used in 2,500 branches between 1992 and 1999, before the Horizon Post Office scandal.

It comes after Sky News revealed that a damning report into Capture, which could help overturn criminal convictions, had been unearthed after nearly 30 years.

The decision to refer the first-ever Capture case to the Court of Appeal has been made on the grounds that Mrs Owen’s prosecution was an “abuse of process”.

The development has been described by victims’ lawyer Neil Hudgell as “hugely pivotal”.

“The Court of Appeal don’t receive that many referrals that start at the CCRC, and most get turned away, so it’s a very high bar to even get cases from the CCRC to the Court of Appeal…”

“I think it will be a real shot in the arm to all the other Capture victims who are waiting for their cases to be determined by the CCRC.”

Mr Hudgell described the report found earlier this year – written by computer experts in 1998 and highly critical of Capture – as “significantly tipping the balance”.

Sky News found that the Post Office knew about the report at the time and continued to prosecute sub-postmasters based on Capture evidence.

Pat Owen always maintained her innocence but died in 2003 with a criminal record before the wider Post Office scandal came to light.

Her daughter Juliet Shardlow said she cried when she heard the news that her mother’s case would be referred to the Court of Appeal.

“I feel angry that she is not here because she died before her time… we will be there – we will be sitting there in that front row.

“I can’t put it into words because it’s still all a shock that we are where we are and that later this year, or next year, we might have what we set out to get… justice for her.”

The CCRC is currently investigating 30 cases potentially related to the Capture software system.

Twenty-seven of those cases are now assigned to case review managers and under “active review”, with a further three cases in the preparatory stages.

The CCRC has described a “challenge” over determining “whether cases involved the use of Capture at the time of the alleged offences”.

In a letter written to Liam Byrne, chair of the Business and Trade Committee, and seen by Sky News, it said that information the Post Office has provided “does not, in most cases, show whether it was installed and in operation at the time of the alleged offending”.

It also mentioned that the Post Office is reviewing “a significant amount of data which may contain further information”.

A Post Office spokesperson said: “While it is not appropriate for us to comment on specific cases, we have been very concerned about the reported problems relating to the use of the Capture software, and we are sincerely sorry for past failings that have caused suffering to postmasters.

“We are determined that past wrongs are put right and continue to support the government’s work in this area as well as fully co-operate with the Criminal Cases Review Commission.”

Business

Serious water pollution incidents in England up 60% last year – with three companies blamed for most

Published

21 hours ago

July 18, 2025

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Serious water pollution incidents in England up 60% last year - with three companies blamed for most

The number of most serious water pollution incidents rose by 60% last year, according to data covering England, with three companies responsible for the bulk of them.

The Environment Agency (EA) – under fire for its own oversight of water firms’ pollution performance – said that more than 80% of the 75 instances of pollution in its two most serious categories were the responsibility of Thames Water (33), Southern Water (15) and Yorkshire Water (13).

But the body added it had found “consistently poor performance” across all nine water and wastewater firms in the country – a similar summary to that of 2023.

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According to the report, reasons behind the 2024 results included persistent underinvestment in new infrastructure, poor asset maintenance, and reduced resilience due to the impacts of climate change.

The period was dominated by spells of intense rainfall, which overwhelmed storm overflows and resulted in sewage discharges.

The EA reported 2,801 pollution incidents in total during 2024 – a hike of almost a third.

Thames Water, which has almost 16 million households on its books and is struggling to shore up its very future, was fined a record £105m by the regulator Ofwat in May for breaching wastewater rules.

Fast-forward to 2025 and England is experiencing its driest start to the year since 1976.

Hosepipe bans are expanding as drought conditions are declared.

The data was released as a committee of MPs called for regulation of water companies to face a “complete overhaul” amid a lack of public trust and anger over surging bills to pay for long overdue infrastructure improvements.

The Public Accounts Committee said that Ofwat and the EA had failed to secure industry compliance and warned that even the high bill settlements to 2030 would only result in 44% of sewage overflows being overhauled.

The Independent Water Commission, established by the government last year and led by former Bank of England deputy governor Sir Jon Cunliffe, is due to make final recommendations on the regulatory framework next week.

He warned when the interim report was published last month: “There is no simple, single change, no matter how radical, that will deliver the fundamental reset that is needed for the water sector.”

Alan Lovell, the EA’s chair, said: “This report demonstrates continued systemic failure by some companies to meet their environmental targets.

“The water industry must act urgently to prevent pollution from occurring and to respond rapidly when it does.

“We have made significant changes to tighten our regulation of the water industry and ensure companies are held to account.

“With a dedicated larger workforce and increased funding, our officers are uncovering and acting on failures to comply with environmental law.”

A spokesperson for industry group Water UK responded: “While there have been some improvements it is clear that the performance of some companies is not good enough. The Environment Agency is right to highlight underinvestment in infrastructure and maintenance as the major causes of these results.

“Investment in the sector has been suppressed with Ofwat prioritising short -term cuts to people’s water bills over the long-term resilience of the network. This is finally being put right, with a record £104bn investment over the next 5-years to secure our water supplies, support economic growth and end sewage entering our rivers and seas.

“However, fundamental change to regulation is also needed. We hope that the recommendations of the Independent Water Commission next week will ensure the sector continues to get the investment it needs to drive down pollution incidents.”