Gas industry and (shrinking) critical mass

It may seem quixotic to pick on any one highly suspect facet of the vague ‘Net Zero’ plans we, along with every other western nation, have to pay lip-service to these days.  But here’s one that occurred to me recently: natural gas is essential for balancing the grid – but what if that’s the only use it’s wanted for?  Would the industry have critical mass in such a scenario?

The UK gas industry is huge (40% of our primary energy) and has been for a very long time, back into Victorian times.  We’re really good at it.  Modern UK gas history starts with the first North Sea gas coming ashore in 1967, and the rapid (if chaotic) conversion of the nation’s gas system from town gas to natural gas.  As production ramped up we started importing (from Norway, and a small amount of LNG) and have done ever since, although for a brief period – the absolute heyday of our own production – we were net exporters, the export routes being pipelines to Ireland (now horribly dependent on us as their own supplies dwindle) and the Continent**.  Meanwhile, gas had become an entirely new source of fuel for electricity generation (residential heating had previously dominated gas demand, and power generation using gas had been prohibited!); and in several phases the ‘Dash(es) for Gas’ brought about a substantial new sub-sector: gas-fired power, which systematically ate coal’s lunch over a couple of decades, and still hasn’t been squeezed out by burgeoning renewables.

And that’s because … it can’t be!  At least, not if we’re to enjoy electricity on demand, which most of us are quite keen on.  No other source has yet been devised which can so flexibly, easily, cleanly and at scale give us the balance of what we need when the wind doesn’t blow and the sun doesn’t shine, and the nukes and biomass aren’t anywhere near enough to cover the rest.  Yes, there’s pumped hydro and an ever growing army of batteries, and a bit of demand-side response: but gas it is, for as far into the future as anyone can credibly see (notwithstanding Ed Miliband’s ‘no gas-for-power by 2030′ blather).

Right now, gas-for-power isn’t only needed for ‘peaking’ – i.e. as a standby resource for days when wind is minimal, sometimes across the whole of northern Europe at the same time – it’s needed for a material share of baseload, too.  If (a very big if) government plans for new nukes come to fruition, and the biomass farce is perpetuated, it’s fair to say the baseload amounts needed from gas could diminish over time, as reflected in annual total numbers: that’s certainly the ‘intention’ of both Tory and Labour policy-makers.  (I say ‘could’, but there are other policy-contingency scenarios I’ll come to at the end.)   But let’s suppose also that in parallel with the (gradual) big increase they all see in nuclear,  wind and solar power come to pass, they also somehow (gradually) manage to electrify home heating, the other massive demand for gas.  They’d still, like it or not, need gas for peaking, by which we mean, stepping into the breach for days at a time in winter.  Batteries just aren’t credible for this at the necessary scale; nor (in this country) pumped hydro; nor imports; nor demand-side management.

Today, given the sheer scale of the routine business of meeting residential (and commercial & industrial) gas demand, the entire industry – from offshore production, pipeline and LNG import facilities, storage facilities, vast and flexible high-pressure grid and extensive distribution network, with engineers to match – can take on the task of providing reliable supplies for peaking in its stride.  But eliminate the regular demand for gas – by electrification, de-industrialisation, “conversion to hydrogen” etc – and it’s a very different story.  Intuitively, it’s not at all clear a rump gas industry maintained purely for the purpose of sitting on its arse for 300 days in the year, then periodically springing into really large-scale action at relatively short notice to cover a vast shortfall in power generation for maybe a week, is remotely viable.  That’s an incredibly small small cost-base to sustain a hugely expensive, capital-intensive standby facility.

We’ve had a variant of this discussion before, in a very different context.  Yes, the UK is famed for the excellence of its Special Forces.  But many don’t adequately recognise that this can only be maintained on the back of conventional forces of a certain critical mass.  Shrink the Army too far, and there’ll be no SAS.   I contend that the same is true of the gas industry: without critical mass of day-to-day gas throughput for whatever uses, there’ll be no peaking when kalte Dunkelflaute sweeps Europe.

What are the other scenarios I mentioned?  (i) Efforts to electrify home heating are a miserable failure.++  This both reduces power demand from the utopian scenarios, and retains critical mass in the gas industry (I disregard dreams of hydrogen entirely).  (ii)  Gas is still needed for baseload power because the nuke strategy comes to nothing, haha!  

Maybe these latter contingencies are so probable that we can rest easy on everything else I set out…

ND

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**When indigenous production decline started in earnest, as I’ve recounted before, the industry  invested in substantial new LNG import facilities and associated infrastructure in a timely fashion (spontaneously and without subsidy – hey, market mechanisms can work if you let them!); so that the production decline, and then the Putin-induced European gas supply crisis, were both managed rather well. 

++Nobody need doubt their ability to de-industrialise further, of course.