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Alan Jones: Dash For Gas Would End Recession Almost At A Stroke

To the dismay of the Greens and their political, business and media allies, there are signs that HMG is slowly turning back towards a new dash for gas, the UK has reserves for centuries to come, and exploiting them now would end the recession almost at a stroke.

Dr Alan Jones is a physicist and engineer who has worked for the BBC and the UK Civil Service. He currently consults for various Commonwealth and British Crown Dependency governments. He is a passionate follower of technology and technology history and understands that context and perspective is key in understanding what’s happening with energy now and what choices we need to make for the future. He volunteers this history of the adoption of natural gas in the UK, with all the attendant lessons relevant to us today.

In the late 18th century the English learnt that coal [town] gas could easily be piped and stored to provide a brilliant light: so it spread quickly wherever coal could be moved by sea, river or canal. With the coming of the railways gas companies [Co‘s] sprang up along their routes. Many Co’s were private or public concerns, others owned by local councils eager to bring gas light to their communities.

The Co’s continued to expand until the 1880’s when they met a check in the electric lamp. They turned to Welsbach’s incandescent mantle which gave as good a light and, since burners could be retrofitted, was much cheaper. But it also used far less gas than an open flame so the Co’s ended up with serious overcapacity at a time when the chemical byproducts of gasification were becoming more valuable than the gas and coke themselves.

Their response was to grow by reaching new customers and providing new uses for gas, beginning with the gas geyser which gave hot water on demand: later followed by the gas cooker, the gas fire for room heating and even the gas refrigerator. By the 1950s they supplied almost all urban and suburban areas of the UK and began to run short of gas so they imported liquefied methane [LNG] by sea to enrich supplies.

By then they had been nationalised, over 1000 Co’s had been merged into regional boards [Boards] with no effective central authority. Whereas electricity had been increasingly regulated to prevent overcapacity by creating the National Grid and finally nationalised under the Central Electricity Generating Board [CEGB] which competed fiercely with gas.

But a new spectre haunted the Boards. that of cheap oil and petrochemicals. Moreover the CEGB had a successful nuclear programme offering inexpensive off peak power. It was the nightmare of the 1880’s all over again.

Nothing daunted, the Boards answered knowing there were vast reserves of natural gas under the North sea and they had the infrastructure and expertise to distribute it very cheaply. The only question was how to get at it and convert the whole nation to it. So they set up their own joint committee, a very powerful one initially independent of the British government, [HMG], to consider the ways and means.

The Committee reported in 1962 and its views were straightforward and, with hindsight, both trenchant and prescient. They observed:

A] That the oil majors who had the technology to do this saw no profit in gas nor in oil given cheaper fields elsewhere. To induce them to drill the Boards would have to offer them long term contracts at a price which would reward them.

B] That methane had about twice the calorific value of coal gas by volume which would double the capacity of the existing infrastructure: and furthermore under low pressure could be supplied to new customers cheaply using plastic pipes.

C] That since the Boards already had the necessary expertise the only problem was the sheer scale of the task: not only new pipelines but also that some 200+ million burners would have to be converted or replaced.

D] Nevertheless they thought this practical if it were done in stages so the methane would reach each region step by step. They estimated complete conversion would take ten years.

E] They assessed the likely overall economic benefit to the economy from cheaper energy as a one off gain of between ten and twenty percent in GDP over the ten years of conversion and might well create growth of half a percent per annum thereafter for many years as new customers came on line.

F] But they also cautioned: ‘No such major change in the energy base of a great industrial power in so short a time has ever been attempted before’.

It has never been attempted since either. But it was done.

HMG accepted the Board‘s report in 1963 and in 1964 the rig Sea Gem struck gas in abundance although due to political turmoil the reorganisation of the industry was not finalised until 1967 when the project was well underway and virtually complete by 1974. By then the first oil shock had sent energy prices soaring but not gas because the enabling Act only provided for a cost plus pricing basis: and the supply contracts were fixed price.

The results were astonishing: wherever and whenever the new gas arrived. Demand for fuel oil and paraffin [kerosene] declined rapidly as boilers were converted to gas. Central coal fired boiler houses, often producing electricity as well as district heating, quickly vanished: it was far cheaper and more efficient to pipe gas directly to where heat was wanted. Electric space heating almost disappeared. Even the mighty CEGB started to explore gas to meet peak loads and later dual phase gas/steam plant.

This latter changed HMG policy, which in the early 1980’s had been that a new generation of nuclear stations would be wanted but only one was built, the CEGB argued successfully that gas/steam stations were far cheaper than nuclear both in terms of capital and fuel cost. Indeed when the utilities were privatised in the 1990’s they opted to replace coal fired stations rapidly in the ’Dash for Gas’.

And still the gas marched on: over the sea to Ireland, North and South, and elsewhere. Its advance was temporarily slowed at the turn of century with HMG imposing taxes, havering about new permissions and such which led to a hiatus and short lived price spikes. But despite this UK consumers still enjoy some of the cheapest gas in Europe even with ‘green’ taxes on it.

Finally and at last, to the dismay of the Greens and their political, business and ‘meeja’ allies, there are signs that HMG is slowly turning back towards a new dash for gas, the UK has reserves for centuries to come, and exploiting them now would end the recession almost at a stroke.

3000 Quads, 29 March 2012