UK Gas Security: Current Status and Future Issues, Mike Bradshaw, Warwick University
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UK Gas Security: Current Status and Future Issues, Mike Bradshaw, Warwick University

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By Prof Mike Bradshaw, Warwick University ...

By Prof Mike Bradshaw, Warwick University
Presented at 'UK Energy System in Transition: Technology, Infrastructure and Investment'; an event organised by the UK Energy Research Centre, ClimateXChange and the Edinburgh Centre for Carbon Innovation, on Tuesday 1 April 2014, 14.00-17.00, in Edinburgh, United Kingdom.

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UK Gas Security: Current Status and Future Issues, Mike Bradshaw, Warwick University UK Gas Security: Current Status and Future Issues, Mike Bradshaw, Warwick University Presentation Transcript

  • Warwick  Business  School   Professor  Mike  Bradshaw  
  • Warwick  Business  School   The  Geopoli*cal  Economy  of  Global  Gas  Security   and  Governance:  Implica*ons  for  the  UK   1)  A  two-­‐year  research  project  funded  by  the  UKERC,   end  date  31st  December  2013  (extended  to  end  of   March  2014).   2)  Involves  a  team  of  researchers:   ž  Mike  Bradshaw,  Warwick  Business  School   ž  Gavin  Bridge,  Durham  University   ž  Stefan  Bouzarvoski,  University  of  Manchester   Project  research  assistant:  Joseph  DuUon   Consultants:  Jim  Watson  UKERC/Sussex  and  the  Gas   Programme  at  the  Oxford  InsXtute  for  Energy  Studies  
  • Warwick  Business  School   Why  a  Supply  Chain  Approach  to   Gas  Security?   ž  Provides  a  necessary  anXdote  to  the  current  failings  of   the  literature  on  the  geopoliXcs  of  energy  security  vis-­‐ à-­‐vis  natural  gas.   ž  Provides  a  framework  for  analysis  of  the  different   dimensions  of  gas  security.   ž  Provides  a  framework  for  idenXfying  the  actors,   relaXonships  and  networks  that  influence  global  gas   security.     ž  Provides  a  basis  for  examining  the  interacXons   between  global  trends  and  regional  (EU)  and  naXonal   (UK)  energy  policies.  
  • Warwick  Business  School   Exploration Production Processing Storage Transport- ation Storage Distribution End-use Natural gas reserve base (Conventional/Unconventional) Oil reserve base w/associated gas Oil   Gas Pipeline – Transportation-LNG-ship Storage - LNG Local pipe-grid-Distribution-LNG regasification/distribution To pipeline specification To LNG To oil chain Ethane,  propane, butane Residential & Commercial Electricity generation Industrial end-use Transportation; natural gas, LNG Upstream   Midstream   Downstream   The Natural Gas Supply Chain Source:  based  on  IGU  (2010)  Natural  Gas  Unlocking  the  Low  Carbon  Future.  Oslo:  IGU,  p.  12.  
  • Warwick  Business  School   A  Supply  Chain  Approach  to  Gas  Security   Geopoli*cs Dimensions Issues UPSTREAM               Security     of     Supply     •  Resource  Base   •  Investment   •  Technology   •  Nature  of  proven  reserves   •  Access  to  reserves  for  investors   •  Access  to  investment  to  develop  proven   reserves   •  Availability  with  exisXng  technology  and   prevailing  price   •  Technical  reliability  of  producXon   MIDSTREAM   Security     of     Transport   (Transit)   •  Processing   •  TransportaXon     •  Storage •  Processing  of  associated  gases   •  Pipeline  network   •  Compressor  staXons   •  LiquefacXon  faciliXes   •  LNG  Shipping   •  RegasificaXon  faciliXes   •  Interconnectors DOWNSTREAM   Security     of     Demand     •  Power     •  Industrial  use   •  DomesXc  use     •  Transport •  Role  of  gas  in  the  energy  mix   •  Price  formaXon     •  Price  compeXXveness   •  Contract  structure   •  Energy  policy     •  Carbon  tax   •  Carbon  Capture  &  Storage
  • Warwick  Business  School   The Case of the UK ž  Growing Import dependence ž  The Globalization of UK gas security ž  Growing uncertainty ž  A Supply Chain Approach to UK Gas Security  
  • Warwick  Business  School   Natural  Gas  Flowchart  2012  (TWh)   Source: DECC (2013) DUKES Chart H.3: Natural gas flow chart 2012 (TWh) Note: This flow chart is based on the data that appear in Table 4.1, excluding colliery methane. 148
  • Warwick  Business  School   0.0   20.0   40.0   60.0   80.0   100.0   120.0   1970   1973   1976   1979   1982   1985   1988   1991   1994   1997   2000   2003   2006   2009   2012   UK  Natural  Gas  Produc*on  and  Consump*on:   1970-­‐2012  (BCM)   ProducXon   ConsumpXon   Peak  in  2000   Net  importer  from  2004   In  2012  Imports   accounted  for  47%  of   supply   Source:  BP  2013  
  • Warwick  Business  School   THE UK’S CONTEMPORARY GAS BALANCE VECTORS 1.  UK Continental Shelf 2.  Norwegian Continental Shelf 3.  Interconnectors (IUK & BBL) 4.  Liquefied Natural Gas 5.  Exports to Ireland 6.  Domestic gas storage 7.  Domestic unconventional gas? GAS 107 Map 4.2: The National Gas Transmission System 2010 Source: International Energy Agency and DECC Clair ? *   *   *  
  • Warwick  Business  School   Source:  DECC  (2013)   Natural gas UK trade in natural gas, 1980 to 2012 TWh LNG Imports Exports Pipeline Imports Net Imports -200 -100 0 100 200 300 400 500 600 2012200520001995199019851980 TWh 1980 1990 2000 2010 2011 2012 Natural gas production 404.8 528.8 1,260.2 664.4 526.0 452.1 Imports 116.3 79.8 26.0 589.5 584.4 547.3 of which
  • Warwick  Business  School   Re-orientation of domestic gas flows Source:  NaXonal  Grid  2013   minimum; Figure 2.5A
  • Warwick  Business  School   UK LNG Imports LNG  Facility   Ownership   Capacity   2012  %   Dragon  LNG     (Milford  Haven)   BG  Group:  50%   Petronas:  50%   6bcm   1.2%   South  Hook   (Milford  Haven)   Qatar  Petroleum  Intl.:  67.5%   ExxonMobil:  24.15%   Total:  8.35%   21bcm   73.4%   Isle  of  Grain   (Essex)   NaXonal  Grid  (Sonatrach,  GDF-­‐Suez,   Centrica,  E.ON  Ruhrgas,  and  Iberdrola)   20.3bcm   25.4%   Others Algeria, Egypt, Nigeria, Norway, LNG  =  46.8%  Of  UK  Gas  Imports  in  2011   and  27.6%  UK  Gas  Imports  in  2012  0   500   1000   1500   2000   2500   3000   2005   2005   2005   2006   2006   2006   2007   2007   2007   2008   2008   2008   2009   2009   2009   2010   2010   2010   2011   2011   2011   2012   2012   2012   2013   Million  cubic     metres     Qatar   98%   Others   2%  
  • Warwick  Business  School   Na*onal  Grid’s  Annual  Gas  Demand   Scenarios  2013   025 Our Slow Progression scenario has a fairly flat view of annual demand over the scenario period. There is a further decrease in demand from 2012 due to a slower economy. Total demand then remains broadly flat, until the mid 2020s when total demand starts to decrease predominantly due to the changes in power generation demand. Figure 2.2A Annual Gas Demand Scenarios including history – Slow Progression Source: National Grid Figure 2.2B Annual Gas Demand Scenarios including history – Gone Green Source: National Grid In the Gone Green scenario, there is a continual reduction in annual gas demand throughout the scenario period. This is due to a combined influence of further efficiency savings, a transition to alternative sources of energy in our Gone Green scenario, and power generation being maintained as marginal plant for electricity balancing and reserve. Gas Ten Year Statement November 2013 026 13   Our Slow Progression scenario has a fairly flat view of annual demand over the scenario period. There is a further decrease in demand from 2012 due to a slower economy. Total demand then remains broadly flat, until the mid 2020s when total demand starts to decrease predominantly due to the changes in power generation demand. In the Gone Green scenario, there is a continual reduction in annual gas demand throughout the scenario period. This is due to a combined influence of further efficiency savings, a transition to alternative sources of energy in our Gone Green scenario, and power generation being maintained as marginal plant for electricity balancing and reserve.
  • 14   -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% -20 0 20 40 60 80 100 120 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21 22/23 24/25 26/27 28/29 30/31 32/33 34/35 bcm/y History Future Exports Import Generic Continent LNG Norway Onshore UKCS Import Dependency -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% -20 0 20 40 60 80 100 120 00/01 02/03 04/05 06/07 08/09 10/11 12/13 14/15 16/17 18/19 20/21 22/23 24/25 26/27 28/29 30/31 32/33 34/35 bcm/y History Future Exports Import Generic Continent LNG Norway Onshore UKCS Import Dependency Annual Gas Supply ‘Gone Green’ Annual Gas Supply ‘Slow Progression’ Source: National Grid 2013
  • Warwick  Business  School   A Supply Chain Approach to UK Gas Security Geopoli*cs Dimensions Issues UPSTREAM               Security     of     Supply     •  Resource  Base   •  Technology   •  Investment •  ProducXon  from  UKCS   •  ProducXon  from  Norwegian  CS   •  ProducXon  from  Russia/N.  Africa   •  Upstream  of  LNG  supply  chain  &  access  to   LNG  cargoes   •  DomesXc  unconvenXonal  gas  producXon   (biogas  &  shale)   MIDSTREAM   Security     of     Transport   (Transit) •  Processing     •  TransportaXon     •  Storage •  LNG  RegasificaXon  faciliXes   •  InterconnecXon  (domesXc  and  external)   •  Processing  &  storage   •  Re-­‐orientaXon  of  the  NTS   •  Role  of  NBP  as  a  liquid  market/hub DOWNSTREAM   Security     of     Demand     •  Power  generaXon     •  Industrial  use   •  DomesXc  use   •  Role  of  gas  in  UK  energy  strategy   •  Price  CompeXXveness   •  Contract  Structures   •  Gas-­‐to-­‐Gas  market/hub  evoluXon   •  Gas  intermiUency   •  Carbon  floor  price  and  ETS   •  Carbon  Capture  &  Storage
  • Warwick  Business  School   Globalizing UK Gas Security of Supply •  Globalization of LNG post Fukushima •  Geopolitics of Eurasian Gas Supply •  The Future of Norwegian Gas Production •  The Consequences of the US Shale Gas Revolution •  Prospects for Shale Gas in the UK and Europe
  • Warwick  Business  School   Conclusions   ž  There  is  a  tendency  to  focus  on  the  issue  of  physical  security  of   supply—the  UK  has  a  diverse  gas  supply  system—but  it  is   increasingly  exposed  to  risks  in  global  gas  markets  and  price   security  of  supply  is  the  more  likely  concern.   ž  Most  supply  disrupXons  have  been  technical  failures  in  the   upstream  and  midstream,  but  miXgaXon  measures— interconnecXon  and  storage—can  reduce  these  risks,  but  who   pays?   ž  The  greatest  source  of  insecurity  and  uncertainty  relates  to   ‘security  of  demand’  and  this  is  impacXng  on  investment  in  the   power  generaXon  sector.   ž  How  much  gas,  for  how  long  requires  an  whole  systems   approach.  
  • Warwick  Business  School   Michael.Bradshaw@wbs.ac.uk     18