UK Natural Gas Problems

27 January 2009

Photo: clawzctr

Businesses should prepare contingency plans

The dispute between Russia and the Ukraine has long term conseqences for British businesses and consumers, which have been missed by almost all newspaper commentators. The UK is likely to be vulnerable to gas shortages in the next few winters. Britain has a low level of storage available – for historic reasons we were a natural gas exporter from the North Sea fields, so didn't need storage. UK Natural gas peaked in 2000. Since 2004 we have been a net importer.

The UK does not receive natural gas from Russia via Ukraine. Most of the gas this country imports comes from Holland and Norway. As the UK's gas market is the most liberalised, and Russia's gas is expected to decline, we will be competing with other European countries for the remaining supply. The UK is projected to import 27% of its natural gas in 2015 as Liquefied Natural Gas, from countries like Indonesia and Algeria. Many countries will also be competing for LNG. If the pound is weak, then the UK will have to pay very high prices, or more likely, be outbid for supplies of either natural gas or LNG.

Photo: An LNG Tanker by chablis2008

Britain's energy industry is highly dependent on gas. Many of our coal-fired power stations, apart from being an environmental disaster, are old, so they have to be closed because they do not meet current EU emissions standards. Our nuclear power stations are reaching the end of their lives, and being decomissioned. Despite current government policy – no nuclear power stations are likely to be built in the near future because they are uneconomic, and take a very long time to build (the Finnish Oilkiluto 3 station is years behind schedule).

So gas fired power stations will have to provide the bulk of the UK's electricity. If they can get the gas. Legally businesses can be cut off first. This is another large problem that will affect British business in the years to come. Natural gas is also used for making fertiliser so competition for the remaining supplies will be fierce.

There is an obvious, easy, and relatively cheap solution: build more alternative energy to reduce the UK's dependence on natural gas. Building wind turbines, as well as solar energy, increasing insulation, and putting more money into researching wave, tidal and other green energy sources such as air-, water- and ground- source heat pumps would go a long way to reducing the problem. This would be a proper Green New Deal that could help Britain weather the recession. It is a myth that the “intermittency” of wind energy has to be backed up 100% by other energy sources. The National Grid has to account for interruptions in energy flow from many sources – turbines break down, power lines fail, nuclear power stations need to be shut down for refuelling. It always has reserve capacity. Windpower can be quite predictably incorporated into this delivery system, particularly if we are upgrading to smart grids in the future, and - looking a bit further ahead - if there are significant numbers of electric cars plugged into the grid so their batteries can act as a storage facility.

Businesses should start making contingency plans for shortages of natural gas, either in the form of power reductions, or the shortages of the gas as a chemical feedstock.

http://europe.theoildrum.com/node/4929#more

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