Environmental Engineering Reference
In-Depth Information
4 Existing Natural Gas Supplies in the UK
The UK at present gets its gas from a variety of sources, including the UK
Continental Shelf (UKCS) where production has been in decline since 2000,
and in 2012 it was 38% (43 bcm) of the level produced in 2000 (114 bcm).
Since 2000 the rate has declined on average by about 8% per annum, but the
decline varies each year depending on operational issues and the price of gas
on the world market, which determines the viability of marginal production.
In 2012 production was 14% lower than in 2011. This was largely due to
operational issues where a leak on the Elgin platform in the North Sea in
March 2012 reduced production for the rest of 2012.
The UK imports natural gas by pipelines from Norway, Belgium and the
Netherlands, and liquefied natural gas (LNG) via ships. The UK has been a
net importer of gas since 2004, with net imports in 2012 accounting for 47%
of supply. In 2012 the UK imported approximately 50 bcm. In 2012 total LNG
imports to the UK via the four import terminals at Dragon (Milford Haven),
Isle of Grain, South Hook (Milford Haven) and Teesside GasPort were ap-
proximately 13.5 bcm (see Figure 7).
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With the two interconnecting pipes to mainland Europe, the UK gas net-
work is integrated with the wider continental gas network, with gas pipelines
extending into Russia, the Middle East and North Africa. These pipelines
enable gas to be moved around from various locations internationally and
enable the gas producers to buy and sell gas on the international market
without the need to liquefy and ship it. This reduces costs and therefore
ensures that the UK can not only import gas via pipelines from a wide
geographical area but also allows UK producers to export UKCS gas to
Europe.
It is against the background of international trade, which contrasts with
the situation in the US that any shale gas production in the United Kingdom
needs to be considered.
5 World Energy Environment: Is Shale likely to be a Game
Changer?
In North America, which has very limited export markets for the shale gas it
produces, with pipelines extending into Mexico and no LNG export term-
inals, any shale gas produced is used predominantly within the US. This led
to a dramatic reduction in the cost of gas within the US, with gas prices today
(in 2013) at about a third of the peak energy price in 2008 (see Figure 8).
The US is now in the process of converting liquefied natural gas (LNG)
import terminals into LNG export terminals. A recent deal between the BG
Group and the US energy firm Cheniere Energy Inc. may allow 3.5 million
tonnes per year of LNG to be exported from the US to Europe from 2015
onwards at prices lower than Asian or European gas.
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It will be interesting
to see whether the exporting of LNG from the US to the world market will
impact on the price of shale gas within the US and, more importantly for the
