Power game: Standing at the end of the gas pipeline is a risk

European governments have taken swift decisions, including policy U-turns, to address energy security issues. In Ireland, the focus is solely on the impossible task of compensating everyone, aka ‘stressed families’, for higher import prices; and the threat to security of supply, particularly for gas, has been downplayed.
Continental Europe depends on Russia for about 40 percent of its gas, but Ireland appears to be in a happier position. More than two-thirds of Ireland’s volume comes in pipelines from the UK and the remainder from the Corrib field off Co Mayo. Almost all British gas comes from the North Sea and Norway via Scotland, and almost none from Russia.
Things aren’t as rosy as they seem: the security of the gas supply, which provides about half of electricity generation, much of the space heating in the larger cities and the fuel for many large industrial users, is under acute threat.
Ireland has a single gas network operated by a state owned company, Gas Networks Ireland, serving the Republic and Northern Ireland from the Corrib and UK pipelines. Apart from these pipelines, there is no gas storage and no import capacity. These run from Moffat in South West Scotland, one to Antrim and two delivery points near Dublin. Corrib production is in decline and there may be little left within a decade. Emissions from the North Sea have also decreased, and Norway’s ability to increase emissions quickly is limited. If Norwegian gas is diverted to mainland Europe as part of a supply-sharing arrangement, there will be no pipelines connecting Ireland to the EU and no facilities to import liquefied natural gas (LNG) anywhere on the island.
Norway has export pipelines to Sweden, Denmark and Germany, and a new pipeline under the Baltic Sea to Poland will be operational later this year. It is a member of the European Economic Area and thus connected to the European single market, although it is not a member of the EU. The UK opted for a “hard” Brexit and turned down the offer of Single Market membership. If there is an EU-led burden-sharing scheme in cutting Russian gas supplies, Norway could be committed or opt to send more gas south and east, lawyers permitting.
Such proposals do exist, and EU leaders have publicly stated that gas imports from Russia should fall by two-thirds and ultimately to zero within a year. Gas has to stay in the ground somewhere and the intention is that it stays in Russia.
In the longer term, nuclear and renewable electricity, combined with road electrification and space heating, will help reduce European demand for all fossil fuels; and higher prices are part of the adjustment process. Gas is different and actual gas rationing will be difficult to avoid.
Other fossil fuels like oil and coal have already gone up in price, but these are global markets. Europe can pay and find alternative suppliers. Reduced gas imports from Russia cannot be replaced from other countries in the short term, even at high prices. There are no transoceanic pipelines and there is a limited fleet of LNG carriers. The shipyards that build them, in China and Korea, have had brisk new orders in recent months and delivery dates are getting tight. Europe is short of LNG import terminals anyway, even if there were more transport companies to import gas from the US, Qatar and other distant locations where production increases are possible. More trans-Mediterranean and new pipelines in the Middle East are another option, but one that would take years to build.
There is scope to find more gas in European waters and since the invasion of Ukraine, plans have been announced to boost exploration in the North Sea by the British government and in the Adriatic by Italy. There may be no response for the 2022 drilling season, but there will be more exploration activity beginning in 2023. This will not affect supply for several years, even if successful, and it is doubtful whether any truly major discoveries have yet to be made.
More significant is the decision announced by Germany to accelerate the construction of three LNG import terminals that are already in the planning process. But these typically take three or four years to come online, and Germany will pay a price for decisions made over a decade ago to close nuclear power plants early and bet heavily on Russian pipeline gas. The federal government has insisted that construction of the first of the LNG plants will take just two years and that the three remaining nuclear plants are scheduled to close in December next year. Both statements were met with skepticism, and the coalition government, which includes the Greens, has conceded that coal-fired power plants, the biggest emitters of CO2, will remain operational longer than planned.
Germany also needs more grid infrastructure and onshore wind and solar farms, although there have been vocal objections from environmentalists and Nimby community groups. As in Ireland, these are not always readily distinguishable.
The Irish Government has decisions to make and delays will have costs. The Federal Government undoubtedly regrets this energy transition, the combination of anti-nuclear enthusiasm, pipelines from unreliable places and abandonment of the construction of LNG terminals. Sound familiar? There is a current proposal to build an LNG terminal in the Shannon Estuary in Co Kerry and there are exploration companies willing to explore near the Corrib infrastructure for gas that will be built and paid for. Onshore wind projects that look like the cheapest renewable energy available are being held up in the dysfunctional planning process.
Decisions on how to prioritize scarce energy allocations could be inevitable – heavy users include data centers and Aughinish Alumina in Co Limerick. The European Commission last week proposed a joint EU procurement plan for gas in response to Germany’s quick start of bilateral negotiations with Qatar and mirroring the 2020 joint procurement program for Covid vaccines.
This implies centralized mapping and there is a problem. Unlike vaccines, gas cannot be transported by air. If Ireland were allocated a certain share of Europe’s total, there is no physical delivery option from the EU. A A deal could be sought with the UK that would protect Norwegian supplies, and the UK also has a gas link to continental Europe. While EU laws no longer apply, the UK would be aware that supplies to Northern Ireland would require cooperation with the Irish Government, which owns the terminal at Moffat along with the pipeline links to Northern Ireland and is the UK’s partner in the joint operation that is gas and electricity markets.
https://www.independent.ie/opinion/comment/power-play-being-at-the-end-of-the-gas-pipeline-is-a-gamble-41491485.html Power game: Standing at the end of the gas pipeline is a risk