Transition Culture

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20 Mar 2006

It’s Peak Gas we need to worry about, not Peak Oil…

gas1It seems despite all the talk of peak oil, that the UK’s downfall might actually end up coming about from peak gas. This last week has been quite extraordinary, with the beginnings of a real crisis for the UK energy sector, not that, unless you were reading the Guardian over the last week, you would actually have heard much about it. Even there, most of the coverage has missed the point and glossed over the larger picture. The place I have learnt the most about what is happening over the week has been from the just-launched UK version of The Oil Drum, which promises to do for the UK what The Oil Drum has done for the US and the rest of the world. Chris Vernon’s insights on the gas crisis have been very illuminating and I recommend it highly. So why is peak gas a more pressing issue than peak oil?

gas3Maybe we should first rewind and look at how the current gas crisis came about. Last week the National Grid issued its first ever Gas Balancing Alert, which in effect asks business to start conserving and to brace itself for shortages. The problem is that, as has been discussed before at **TransitionCulture**, there is very little slack in the fuel supply system, so what would previously have been small and inconsequential problems now have the ability to cause large upheavals.

fireOn Feb 16th there was a fire that has put the Bravo Gas rig, which stored 80% of UK gas stores out of action. Also, the weather has been very cold, one of Norway’s main gas fields has been experiencing drops in output, and there have been strikes in France… oh and the UK only has 8 days emergency storage of gas, compared to 75 days in Germany and Italy and 66 in France. So the immediate problem was an unpredicted drop in supply from the North Sea due to a fire, and also to the fact that North Sea gas production is falling far faster than anyone predicted.

gas2The longer term problem, however, is that due to the fact that North Sea gas has peaked and production is in sharp decline, the UK is having to rely more and more on imported gas. That gas has to come through the pipeline from Europe. Gas prices in the UK have quadrupled in recent months, and the high prices mean that the UK is prepared to pay over the odds for gas from mainland Europe, but still UK gas companies are struggling to find supplies. Most of the gas available in Europe is already committed under contract, so suppliers have no incentive to seek out new supplies for the UK. Add to this the vulnerability in supply and the fact that most of the gas now comes from Russia, Iran or Qatar, and you get a sense of the precariousness of the supply system.

Chris Vernon at The Oil Drum UK sums up the problem very well;

>I think about it like this. If we in the UK were short of oil we could import oil from the other side of the world – moving oil is cheap and easy. We could also afford to outbid many poorer countries. So assuming (perhaps unreasonably!) the whole global economy stays reasonably intact the UK will be okay for oil, demand destruction will come from elsewhere. Also, virtually all oil is used in transport in the UK, most in personal cars. It wouldn’t be hard to cut our oil use in half and still maintain a resemblance of business as usual.

>Gas on the other hand, we can’t import it from the other side of the world since it is very expensive and hard to move, we operate in a much smaller regional gas market of Europe and Russia. Unlike with the global oil market we can’t afford to outbid all the other countries in Europe. Gas is mainly used for heating and cooking domestically and generating electricity industrially. It would be very hard to cut out gas use by half, much harder than cutting our oil use.

>So – it’s easier for the UK so source more than it’s fair share of oil than it is for gas and we’re more reliant on gas than oil. That’s why I think gas is the UK’s problem not oil.

gas4There, in a nutshell is our dilemma. There are other things we can learn from the crisis too. The whole thing offers a few pointers as to how those that run the show will respond when the larger looming energy crisis arrives. Indeed, this may well be the beginnings of that crisis. Rather like after 9/11 where everyone started saying “well, who could have predicted that such a thing would ever happen” despite their desks being littered with such warnings, a cold winter has triggered a gas crisis, and even the usually reliable Guardian writes “the British gas supply market has been caught out by unexpectedly cold weather”. Funny that, I’ve been reading reports in the media, the Guardian included, predicting that this was to be a particularly cold winter since the early Autumn. Rather than, at that point, deciding to do something to actually address the problem (not that his list of options was exactly lengthy), UK Energy Minister Malcolm Wicks decided, no doubt after in depth deliberation, to stick his head in the sand, telling the nation in November that “the UK is awash with gas”.

jonesI also found myself for the first time in my life (it must be my age), agreeing with Sir Digby Jones, the CBI’s director general (isn’t that a great picture?) who said that the fiasco underlined the fact that warnings The Confederation of British Industry gave about shortages last November were well founded and should not have been dismissed by ministers as “scaremongering”. He said;

>”UK energy supplies are seriously overstretched. We have got away with it so far but surely the energy policy of a major economy should not rely on ‘getting away with it’.”

Indeed. Of course, like most things (again, it’s my age…) , it’s all Thatcher’s fault. The ‘Dash for Gas’ which fortuitously means the UK not having to try to hard to meet its Kyoto Protocol commitments, was not introduced for environmental reasons, but to break the National Union of Mineworkers but reducing UK dependence on coal. As a result the UK has become over dependent on gas, without thinking ahead to the time beyond its cheap availability. As with oil, we have wasted this precious once-off gift, and now, we are looking a future of rapidly depleting fuel reserves square in the face. Even Ken Livingstone’s visionary and bold plan to decentralise London’s energy system uses gas to power the combined heat and power systems, although it does of course use that gas far more efficiently than at present.

So here we are, with a 50% probability of a gas emergency over the next few days. As it is, some industry has had to start reducing production. Terra Nitrogen has suspended some UK manufacturing (nitrogen fertilisers for agriculture use a lot of natural gas to make) and other large manufacturers are following suit. The wholesale price of gas quadrupled when the Gas Balancing Alert was issued, meaning bills to domestic customers will almost certainly rise yet again.

Keep an eye on this over the next couple of weeks. It promises to be very interesting. The most reliable sources of information are The Oil Drum UK and the Gas Issues blog. It turns out however, that the real thing we have to worry about is not peak oil, peak gas, or peak uranium, but peak chocolate. The Times reports;

>With chocolate consumption increasing at a rate of 25 per cent a year in the Asia-Pacific region, and 30 per cent in China, chocolate makers fear that coco- bean growers will not be able to keep up with demand. The unstoppable growth of China has aroused fears of future conflicts over natural resources such as oil, gas and water. Now a new and unforeseen catastrophe presents itself: global chocolate wars.

Aha … **now** I’ve got you worried….

Categories: Energy, Peak Oil

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15 Comments

Gareth_Doutch
20 Mar 11:53am

Interesting what you say about the “dash for gas”, Rob. It seems that nobody ever imagined that private companies would be in it to extract maximum profit, and leave the taxpayer to pick up the tab for them once it was over.

Also, in the parliament discussion on gas issues (Parliament Debates Gas Situation – link at bottom.) Alan Johnson (Secretary of State, DTI) came up with this gem:

“The hon. Gentleman asks what Government are doing. The one thing that the Government should not do is interfere in the market.”

The industrialists want the government to fix it, and the government doesn’t want to interfere with the market.

It’s like watching tennis doubles, where both partners leave the ball, because they think the other has it covered. eek!

James
20 Mar 9:38pm

It’s peak everything. Of course, it was chocolate that sealed it for me.

Time we hit Peak People and went into baby production decline.

Too many people chasing too little of everything.

ding dong
20 Mar 10:33pm

Or the good ol game of singles tennis where both opponents decide to quit the game while the poor paying spectators look on impotently……….and the buggers still get paid!

Clive
21 Mar 12:06am

Time to get building those wind farms, if we are to have any chance of keeping the lights on until cheap, abundent and safe atomic power comes on line, we need those turbines like no tomorrow!

Clive :-))

Gareth_Doutch
21 Mar 12:33pm

Well said ding dong.

My comment implied some sort of responsibility towards the people of the nation on behalf of the government / utilities. Which, I suppose, is the perception of most people in this country.

Peak oil & gas will expose the truth.

Prof. Goose (TOD)
21 Mar 3:35pm

Rob, thanks for the kind words…we’re doing what we can!

Kudos to you on making Transition Culture a good read. Keep it up.

Randy Park
21 Mar 4:04pm

Let us know (here in Canada) when you have this figured out – looks like we will be (or are at) peak gas real soon too.

Gareth_Doutch
21 Mar 4:21pm

Can carrier pigeons fly that far? 😉

Junkbox
21 Mar 10:07pm

Uh, Gareth they might, but I think that would take a few years…lol…
Peak Oil, Peak gas, either way we are up a creek without a paddle. The thing to do is just survive the best you can, because the opt.’s are to sink or swim. Me I’ll swim until I just can’t swim no more. In other words prepare for the worse.

Nullabor
22 Mar 1:39am

What concerns me is that most people overlook the fact that we will have to use our depleting oil reserves to bring the alternative energy sources on line. Wind farms are fine, but what about the power to produce the steel to make the columns and blades, the power for the trucks and cranes to move and erect the turbines into place, the power to build the infrastructure to deliver the electricity, its the same with oil that will be used to build a nuclear power station or heating cane to produce a litre of ethanol. I think more people need to grasp this point.

Jason Cole
22 Mar 8:37am

Julian Darley made the point a few years ago in his book “High Noon For Natural Gas”. It’s an excellent read.

W.G. Carr
22 Mar 6:47pm

The UK is getting what it so richly deserves for supporting the US invasion of Iraq. Payment for Arab oil and gas should be in gold and silver only for the UK and the US, at the rate of 1 ounce of gold per barrel of oil, or 60 troy ounces of silver per barrel of oil, with similar pricing for natural gas. The world does not need the US-UK parasites sucking up all the good stuff in exchange for paper money that is printed by the ton for next to nothing. Let the Limmy’s freeze.

Gareth Doutch
22 Mar 9:21pm

The people who will be affected worst by this will be the poorest.

They are the ones with the least democratic voice in the UK & USA.

They are also the ones who opposed the invasion.

It’s the wealthy & powerful who pushed for the war.

They are the ones out of the danger of sliding into poverty, they may even further consolidate power.

Peak oil & gas will not be poetic justice.

bunter of greyfriars
24 Mar 9:10am

If we could trap and use the gas coming out of our MPs proverbial butts maybe we can delay peak gas by some 2 weeks?! Food for thought.

P Shaw
29 Aug 12:58pm

HEating or Eating Or Driving or generally living this winter – what to do what to do