UK Gas and Electricity Crisis Looming

[mikepepler]

The ODAC newsletter put me onto this story in the Times:
http://business.timesonline.co.uk/artic ... 62,00.html

GAZPROM may not have enough gas to supply Europe over the next decade, the head of the International Energy Agency (IEA) said yesterday. Studies by the IEA concluded that the Russian gas utility was not investing enough in its own resources to ensure continued adequate supplies in coming years.

?We are afraid that Gazprom will not have enough gas to supply even their existing customers and existing contracts. This is our data,? Claude Mandil, the IEA executive director, said at a Reuters energy summit in London. He said that Gazprom disputed the IEA?s data but had declined a request that it participate in a workshop to discuss the issue.

Concern over Gazprom?s output has been mounting in recent years as evidence emerged of the company?s flat indigenous production profile.

While Russia has the world?s largest gas reserves, the giant utility relies on a small number of giant gasfields and has not yet invested in developing new resources in the Arctic.

Gazprom has growing commitments to export gas to Europe. The utility is able to make up the difference between its export commitments and the dwindling output of its ageing giant gasfields in Western Siberia with increased imports from Central Asia.

Gazprom is the monopoly buyer of gas for export from Turkmenistan, which is used to supply the utility?s domestic customers in Siberia, while the Siberian gas is shipped to Europe.

Gazprom?s monopoly over Central Asian gas exports is a deterrent to new investment by those countries, Mr Mandil said. He is urging G8 summit leaders to discuss the creation of a Russian energy regulator to help to avoid a supply crunch.

[skeptik]

He said that Gazprom disputed the IEA?s data but had declined a request that it participate in a workshop to discuss the issue.

This is odd, because according to Vedomosti ( the Russian equivalent of the FT - a reputable source) Gazprom admitted this last month. Now they seem to be backtracking. Article below from the Novosti web site - Russian equivalent of Reuters or AP.

Looks like somebody has slapped Ryazanovs wrist and told him to STFUP in the national interest.


Opinion & analysis
What the Russian papers say
MOSCOW, April 21 (RIA Novosti)

http://en.rian.ru/analysis/20060421/46808586.html


Gazprom owns up to gas shortfall

Russian energy giant Gazprom openly conceded Thursday that it had little natural gas left and in a few years' time Russia would not be able to meet the demands of all consumer countries.
In the view of its deputy head Alexander Ryazanov, constraints will most likely hit those paying non-market prices, i.e., Russian consumers.
Before commercial production begins on the northern Yamal Peninsula (which at best can occur in 2012-2013), the gas monopoly has no serious resources to compensate for the declining output of extensive fields that have been in operation since Soviet times. Ryazanov even said Gazprom had the unprecedented intention to pipe the resources of independent producers, such as LUKoil, TNK-BP, Novatek, and even Yukos. By 2010, these companies can boost output by 45-55 billion cubic meters in the Nadym-Purtazovsky region - the principal incubator for new fields. However, the necessary pipeline capacity will become available only in three years' time.
What Ryazanov classifies as the last largest deposit (with an annual output of over 25-30 billion cubic meters) in the Nadym-Purtazovsky region - the Yuzhno-Russkoye field - will go into operation in 2008. The monopoly will then be left only with reserves that are difficult to develop (the Achimovsky deposits of the Urengoi and Zapolyarny fields contain wet gas with a high percentage of heavy hydrocarbons), which call for special technologies and specific outlays, as well as Yamal resources. They have been in the planning stage for years and require at least $80 billion in capital costs.
Vladimir Milov, the president of the Energy Policy Institute, said that fuel shortages would only become worse. "Gazprom's top managers have not acknowledged gas shortages so openly before," he told the paper, "even though experts pointed to low-running levels three years ago. Now Russia is facing huge problems: the shortages will become greater, most evidently at consumption peaks, or in winter when supplies will be cut."
"Not only Russia, but everybody down the line, will suffer," Milov said. "Gazprom has wasted 15 years over Yamal without investing."

Vedomosti

[skeptik]

I used to think I was completely and utterly anti-neclear. Now I'm even more so.

Not that it matters, Biff. Nobody involved in the decision making process ever pays any atention to what we think. Only what they think they can get the majority of us to swallow. From TBliars recent comments it looks like the decision has been made. It just has to be smarmed out onto the public in clean green 'Save the planet from global warming' terms. Stand by for a new generation of nukes.

Wonder whos going to get the contract? My money is on Areva (formerly Framatome) European solidarity and all that. Gives us big 'you owe me' points with the French and Germans. And Im sure the Govt likes the sound of what they've been saying about costs

http://www.areva.com/servlet/ContentSer ... 6746863523

[mikepepler]

Doing some research for my MSc project, I came across the CBI submission to the energy review here
There's a variety of interesting quotes, but the key ones in here for gas and electricity are:

The risk is that the UKCS will experience too rapid decline over the next 10 to 15 years unless we sustain a material rate of investment (currently around ?5 billion per annum, the highest of any industrial sector in the UK economy). New field developments take 2-5 years to bring on stream and can produce for 5-15 years. A stable fiscal regime is a pre-requisite to attract investment in this mature basin. There have been two significant increases in taxation since 2002, over a period where production has declined by 20% and this is unlikely to encourage new investment over the long term. The fiscal and regulatory regime must reflect the competitive challenge facing the UKCS with increasing costs and diminishing opportunity.

If the current rate of investment can be sustained, the UK could still be producing 25% of its gas needs from the UKCS in 2020, but if investment is deterred, we could be producing less than 10% of our needs by that date.

Independent economic regulation of monopoly gas and electricity networks has worked well to drive down costs and improve efficiency, while resulting in sufficient investment to ensure network reliability in the short term. However, significantly more investment will be required over the next two decades for a number of reasons:
? significant replacement required of the ageing gas transportation system
? gas distribution companies are required by the HSE to replace metal with plastic pipes
? most of the electricity transmission system was built in the 1960s and 1970s and, with lifetimes of between 40 to 50 years, is coming to the end of its natural life
? more investment will be required in networks to allow for distributed generation.

Sounds like a lot of work to do with a diminishing supply of energy...

I'm finding this is an interesting side-effect of the Energy Review - you can find out exactly where everyone stands with a view to energy...

[Totally_Baffled]

http://www.sky.com/skynews/article/0,,3 ... 81,00.html

This story had some interesting stats.

One that stood out was :

"83% of dometic energy use in 2003 was for central heating or gas powered central heating"

So even if we got rid of all electrical appliances in the home we would only save 17%.

Looks like we are going back to the days of one heated room per household like when we were kids...........

[mikepepler]

I'm going to lock this thread now, we have a new one for the coming winter: http://www.powerswitch.org.uk/forum/vie ... php?t=2428