Golden age of natural gas in the United Kingdom is here

Question should be: “how best to exploit our huge shale gas resource?”

By John Baldwin, Managing Director, CNG Services

It has never been a better time to work as a gas man in the UK. Our great rival coal is vanquished with the last few coal fired generation plants having to close by 2025.

The recent electricity capacity auctions have launched a new wave of gas generation in the UK to provide the back-up when it’s not sunny and not windy.

There is now a consensus in the UK that low load factor gas generation must be on standby to support an electricity grid that will have high levels of wind generation by 2025.

New gas generation being built in the UK will be mainly based on 0MW gas engine generation plants with around 42 per cent efficiency which can happily run at <10 per cent load factor with no staff and limited maintenance.

The combined cycle gas turbine (CCGT) was a great baseload technology in the UK in the period from 1993 to 2015, but is not appropriate at low load factor.

It may be that many of the UK CGTs find a second life generating overseas in places that still need baseload generation.

In addition to back-up generation, there has been a major breakthrough in the compressed natural gas (CNG) for trucks market with the launch of a dedicated CNG tractor with a range of 500 miles. This uses 250bar storage (as opposed to 200bar) and composite tanks, with American company Agility bringing its CNG storage technology from the booming US market.

The UK has an incredibly attractive gas grid as far as CNG is concerned with around 10,000 miles of high pressure gas pipelines that run close to most of our major distribution centres.

Making CNG when the gas pipeline pressure is 30bar requires only 10 per cent of the electricity compared to making it from a 200mbar pipeline, plus the high flow-rates possible mean low unit capital and maintenance costs.

The UK biomethane market is also booming with an estimated 300,000 tonnes of biomethane being injected into the grid in 2017.

The combination of dedicated CNG tractors, high pressure pipelines and biomethane means that companies in the UK can take carbon out of their logistics as well as having trucks with near zero NOX and particulates.  So, CNG for trucks in the UK will boom.

In industry, the lower pound following Brexit could lead to a resurgence in UK industry and we are already benefiting from investment by Ineos (Grangemouth) and Tata Steel (Port Talbot). Developments such as these may arrest the steady decline of the gas industry.

After back-up power, trucks and industry, the other main use of gas in the UK is heating. We are a cold country. For all the concern about electricity, which is funding the gas generation back-up, it’s no big deal to lose power occasionally.

Having no gas, however, is a life or death issue as around 85 per cent of the UK population relies on gas central heating. Since 2008, the UK has invested significant sums in heat pumps and biomass boilers, but these have tended to focus on ‘off-grid’ customers who are on oil.

There continues to be 100,000 new gas consumers added each year with no alternative apart from biomethane and Bio-SNG (a pilot project is underway to demonstrate this on a close to commercial scale).

So, the demand for gas is set to be high in the UK to 2050. It may fall from the current 800 TWh/annum to around 400TWh, but that is still a huge amount of gas. By 2050, even Norwegian production is forecast to be low and so around 80 per cent of this gas is expected to be imported as LNG.

There is no such thing as low greenhouse gas (GHG) LNG because of the high-energy input required to reduce the gas temperature to -160°C. The second major drawback from LNG is that it is imported from the US and Qatar.

Every billion pounds spent on LNG is a billion pounds that has left the UK economy with no UK jobs and no UK tax receipts. It’s the economy, stupid – as well as the GHG.

The combination of continuing high gas demand, high greenhouse gas LNG and balance of payments/taxation provides the business case for shale gas developments in the UK. It is estimated that there is around 1,500 trillion cubic feet (tcf) of gas in place in the Bowland Shale Formation.

Even if we can only recover 20 per cent of this resource, that’s 300tcf or around 60 times the gas from our largest gas field at South Morecambe, most of which has been consumed.

The source rock for South Morecambe is Bowland shale and we can now get the gas directly from that source in a way that avoids any methane leaking into the atmosphere – all the gas will go into some form of appliance to realise the trapped sunlight stored for 300 million years.

The last few months have seen the start of the UK shale gas industry with planning consents for Third Energy, Cuadrilla and iGas. The Cuadrilla approval to produce gas from Bowland shale as part of a testing programme will allow the benefits of shale gas to be appreciated by the public and politicians.

With high standards of gas husbandry in the UK overseen by the environmental and safety regulators, we will be able to establish the “well-head to burner” carbon footprint of shale gas.

It will be very low; the energy used to get this gas to market will be a fraction of the comparable energy from LNG or for long distance pipeline gas. There will be opponents of shale gas looking for any methane leaks, but they won’t find any because there won’t be any.

Why would you allow methane to leak when the entire point of the exercise is to sell it? Gas industry safety standards developed over 150 years have taught us that gas at >1000 psi can be dangerous if high standards are not maintained in relation to pipework and pressure vessels.

There will be no leaks. Cuadrilla’s first shale gas will be injected into the National Grid Distribution 23bar pipeline system next to their proposed Preston New Road facility.

This is expected in 2018 and will take advantage of the major process improvements that have taken place during work to develop the UK biomethane industry. My company, CNG Services has worked on all 28 of the biomethane-to-grid projects in the National Grid distribution area and we will take the lessons from these projects to support the Cuadrilla project.

The UK gas grid is a great asset for the shale gas industry as the processing and pipeline infrastructure required in the UK is minimal. The £20 billion high pressure gas grid that works so well for CNG trucks is also a perfect asset
for shale gas developments.

Once the Cuadrilla plants are operating and there are no adverse environmental impacts, I look forward to a change in the debate in the UK. The question should be: “how best to exploit our huge shale gas resource?”

The answer is: encourage it, tax it, displace gas imports, run all trucks on gas, fund domestic gas demand reduction and fund renewable gas. This answer is inevitable and it’s great.

The golden age for UK gas is here.