Natural Gas: A Long Track Record
Making a case for natural gas, Stuart Bradford, Head of Strategy, Marketing & Analysis at Shell Energy Europe was a bit of a romantic in how he portrayed it to delegates at the European Autumn Gas Conference in Paris, France.
It was time, he said, for Europe to make plans for 2050, and that would most definitely involve natural gas.
“When we take decisions in our personal and business lives, we very rarely take decisions without also looking backwards. You don’t invest in a business that’s losing money without thinking very hard. So I’d like to start the case for gas by looking back and celebrating a bit of an anniversary,” he said, showing an old black and white photograph, with a windmill in the background, of the construction of the Groningen natural gas field development.
He asked, “So what has the track record of the gas industry been over the past 50 years? I believe there’s been a long list of successes. I think gas provided clean and economic alternatives to oil products and coal for domestic heating, and for industrial applications.”
Then, he said, gas had been developed as an economic alternative for power generation. “Introduction of combined cycle technology further improved the economic attractiveness of gas and further enhanced its environmental credentials as a low emissions fuel.”
“Most recently the high flexibility of this capacity has been essential in enhancing power production in those countries with a high proportion of solar and wind in the energy mix,” said Bradford, who added that demand for natural gas had grown rapidly over the years, stimulating development of a variety of sources of supply: North Africa, Russia, various sectors of the North Sea and production in mainland Europe.
He noted that as technology had evolved, LNG shipments had arrived from far corners of the globe to Europe.
Mr. Bradford remarked, “Hardly a day goes by without some new announcement about coal bed methane, tight gas, shale gas.”
He explained that happenings in natural gas, like the inherently flexible usage of gas in the power sector, were helping the European market successfully deal with a variety of supply/demand shocks, like the war in Libya. He said: “The market coped with all of these.”
“Over 50 years, far from needing subsidies, gas has contributed billions of dollars to public finances and created thousands of jobs in the manufacturing and production sectors. So gas has a great track record.”
Regarding the scenario for gas going forward, he said that Shell believed gas would continue to be as abundant, acceptable and affordable in the future as it had been in the past 50 years.
“Abundant conventional and unconventional gas resources account for over 250 years of current production,” explained Bradford. “And roughly 70% of those resources are within reach of the European market as potential supply sources.”
He said it was also an acceptable power generation solution as closed cycle gas turbine capacity resulted in 50-60% less CO2 emissions than older coal fired capacity and 14-15% less than newer coal fired capacity. “With the introduction of CCS to gas fired power production, you can effectively have very low emissions technology.”
“Gas has contributed billions of dollars to public finances. Gas has a great track record. We believe it will be as abundant, acceptable and affordable as it has been in the next 50 years. With such a strong case, the question we should really be asking ourselves is not so much why gas now belongs at the center of the European policy agenda but instead how gas can be used as a part of a long term to solution to Europe’s energy needs – how to use gas going forward.”
He said that it was possible to see that gas would be the convenient fuel of choice for industrial and commercial applications. In the power sector, he said, he believed the swiftest, most cost effective way to reduce CO2 emissions was to replace coal-fired generation units with gas generation.
“Gas plants are quick to build, they don’t require subsidies.”
He concluded: “In the future with carbon capture and sequestration, gas will be part of the long term solution, a destination fuel.
“It’s an obvious first step on the route to a low carbon economy and gives policymakers critical options for the execution of cost effective future policy: If, as projections indicate, gas and CCS is the most cost competitive competitor of renewable energy, they can pursue this route; if new technology costs drop fast in respect to the renewables area, a smaller number of gas units providing backup mix for a higher proportion of renewables can be adopted,” he explained.
“In summary, gas has a fantastic track record of reliable supply, clean energy, creation of jobs and contribution to public finances that goes back over 50 years, which we should celebrate. I don’t really believe any competing energy solution can offer the same track record that gas can.”