Natural Gas Supply - Demand Strategy In The U.K.
Authors: Whitting Ivan J. 
Published: December 2007

A depletion policy for natural gas has been adopted in the U.K. that gives first priority to premium markets which take advantage of the special premium markets which take advantage of the special qualities of gas. Peak-shaving and seasonal supplies will allow a limit to be set to the sales of non-premium interruptible gas required for load balancing. For the long-term, British Gas is developing the capability to make substitute natural gas from a wide range of oil and coal feedstocks.

Introduction

The development of the British Gas industry has been characterized over the last twenty years by a series of rapid technological changes. Up to the late 1950s, for a period of some 150 years, the industry had produced gas from coal, having started by carbonizing coal in retorts as a method of producing gas for lighting. This fuel had later found application in the home for cooking, space and water-heating and in some specialized uses in industry. However, the process of carbonization had many drawbacks and in the 1950s the industry was in a period of stagnation, losing out to the electricity period of stagnation, losing out to the electricity industry which was paying progressively less than the gas industry for its coal.

At that time research, which had begun in the 1930s into ways of producing gas from cheaper coals by hydrogenation of the coal and catalytic synthesis of methane, was intensified. New developments were made with the coal-based processes but the immediate breakthrough was in methods for manufacturing town gas from the products of oil refining, such as light distillate oil, which were then becoming available at relatively cheap prices.

In parallel with these advances on the manufacturing side, aided by the impetus of the Clean Mr Act and the trend towards higher heating standards in the home, the gas industry introduced modern, efficient and re-styled gas fires. With an accompanying growth in central heating installations, the gas industry began to expand rapidly. In the early 1960s the international trade in liquefied pipeline was constructed to distribute this gas to pipeline was constructed to distribute this gas to other parts of the country. This was the beginning of what eventually became the high-pressure transmission system covering the whole of the country.

Then came the second major technological revolution. In the mid-1960s, before the changeover from coal to oil-based manufacturing had been completed, natural gas was found in the Southern Basin of the North Sea. It quickly became evident that the natural gas reserves were considerable and the decision was taken to convert the whole industry and its customers to the direct utilization of natural gas. In 1967 the Government published a White Paper on Fuel Policy (Cmnd. 3438) which argued for a policy of rapid absorption to enable the country to benefit as soon as possible from the advantages of this new indigenous primary fuel. In the event, supplies and sales of gas grew fairly closely in accord with the plan set out in the White Paper and the thermal output plan set out in the White Paper and the thermal output nearly quadrupled in ten years as shown in Figure 1. With the discovery of gas in the Northern Basin of the North Sea, annual supply has now reached about 1900 × 10-9 MJ (18 billion therms) and is expected to grow to over 2200 × 10- MJ (21 billion therms) in the early to mid 1980s, making a five to six-fold increase since the mid 1960s.

The successful introduction of this valuable, indigenous energy source has provided Great Britain with a supply of gaseous fuel which is extremely flexible in use and with a wide range of applications to the consumer. The value of the fuel, however, brings a responsibility to ensure that this large but nevertheless finite non-renewable resource is deployed and depleted to the best advantage of the nation. The strategy that has been developed for balancing the supply and demand for gas to achieve this aim is described in this paper.

THE MATCHING OF SUPPLY AND DEMAND

It has been the policy of British Gas ever since natural gas was first introduced to give first priority in the use of available supplies to premium priority in the use of available supplies to premium markets.