Results: Searching for 'UK Gas Market'

This briefing is based on two propositions.

First, that gas security matters, because today in the UKgas plays a dominant role in the provision of energy services, accounting for almost 40% of total inland primary energy consumption in 2017. Thus, a shortrun failure of gas security would undoubtedly have significant political and economic consequences.

Second, that the current measure is far too narrow to offer a comprehensive assessment of UK gas security, particularly in a post-Brexit context. Discussions at the Gas Security Forum suggested that:the measure of gas securityfocuses only on infrastructure capacity and not supply (capacity does not equal flow); it fails to take account of the time-lag for gas delivery; it does not measure diversity or spare capacity; it ignores the impact of multiple asset failures; and, does not consider the costs associated with ensuring greater security.

It is in this context that this paper seeks to address the following questions:

• What are the constituent factors to consider in assessing gas security?
• What alternative measures exist?
• What potentially threatens gas security in the UK?
• What would a better approach to gas security look like?

The thinking behind this paper is that a more extensive approach to measuring UK gas security is needed to address the less dramatic challenges that face UK gas security, as well as the chance of managing a Black Swanevent.

This report assesses the currently available evidence on the size of unconventional gas resources at the regional and global level. Focusing in particular on shale gas, it provides a comprehensive summary and comparison of the estimates that have been produced to date. It also examines the methods by which these resource estimates have been produced the strengths and weaknesses of those methods, the range of uncertainty in the results and the factors that are relevant to their interpretation.

Natural gas plays a critical role in the UK’s energy system, providing twice as much energy as electricity, thus the secure and affordable supply of natural gas is an essential element of UK energy security and a key objective of Government policy. The starting proposition for this report is that Brexit is coming at a time when there are already major challenges to the UK’s future gas security.

This report deploys two aspects of previous UKERC research on UK gas security: first, a supply chain approach to assessing UK gas security; and second, a whole systems approach that places current and future gas demand within the context of the decarbonisation of the UK’s energy system. This is because there are key uncertainties in the wider system that have important implications for future gas demand. It is in this context that the Brexit decision has created additional uncertainty at a time when the UK energy sector needs to make critical investment decisions. In the current situation we can conceive of a ‘Brexit Interregnum’ whereby important decisions and policies are delayed because of the demands of the Brexit negotiations.

This report has three objectives:

• To identify the key challenges facing the UK’s natural gas market;
• To understand the role that EU policies and institutions currently play in the operations of the UK’s natural gas market; and,
• To identify the potential impact of Brexit and the key issues that should be addressed in a post-Brexit ‘UK Gas Security Strategy.’

Midstream Infrastructure

The Midstream Infrastructure briefing considers the critical infrastructures - both hard and soft - that are necessary to link gas suppliers to end users. In many ways this is the most complex, least studied and most important part of the UK's gas supply chain. This briefing describes the various elements of the Midstream, assesses their current status, considers the potential impact on Brexit, and the challenges they pose in relation to future UK gas security.

The key challenge that the Midstream has to manage is the strong seasonality of UK gas demand, which is driven largely by winter demand for domestic heating. However, in recent years the growth of low-carbon generation (wind and solar) has introduced the additional complexity of intermittency, which is resulting in swings in gas demand on a much shorter time-frame. This is a challenge that is only going to increase in the future as coal-fired generation closes (by 2025) and intermittent low-carbon generation continues to grow.

The Future Role of Gas

The majority of studies of energy security focus on upstream security of supply. More recently, as the low-carbon transition has gathered momentum, there has been increasing interest in security of future demand as a challenge to the integrity of the gas supply chain. 

This briefing is divided into five sections. The first section examines the current role of natural gas in the UK energy mix, as well as recent trends in power generation. The second section reports on recent research by UKERC on the future role of gas in the UK. The third section examines what National Grid’s (2017a) most recent Future Energy Scenarios have to say about the future role of gas. The fourth section reviews other industry analyses about the future role of gas. The fifth, and final section, examines the ways in which Brexit complicates the situation. The briefing concludes by highlighting the policy challenges in relation to future

This briefing reports the findings of the first UK Gas Security Forum, which brings together a range of stakeholders
from government, business, think-tanks and academia to consider the impact of Brexit on the UK gas industry. The aim of the Forum is to inform the Brexit negotiations and the formulation of a Post-Brexit UK Gas Security Strategy.

The Forum builds on previous research funded by UKERC on:The UKs Global Gas Challenge(Bradshaw et al. 2014) andThe Future Role of Natural Gas in the UK(McGlade et al. 2016). The approach adopted combines a supply chain analysis of energy security with a whole system approach, that places gas security within the wider context of the decarbonisation of the UK energy system. In keeping with the wider framing of UK energy policy within the energy trilemma, it is assumed that a future UK gas strategy must de

The report also focuses on the broadly ‘physical’ factors that may restrict the rate at which conventional oil can be produced, including the production profile of individual fields and the distribution of resources between different sizes of field. While these are invariably mediated by economic, technical and political factors, the extent to which increased investment can overcome these physical constraints is contested. Global oil supply is also influenced by a much wider range of economic, political and geopolitical factors (e.g. resource nationalism) and several of these may pose a significant challenge to energy security, even in the absence of ‘below-ground’ constraints. What is disputed, however, is whether physical depletion is also likely to constrain global production in the near-term, even if economic and political conditions prove more favourable. In practice, these ‘above ground’ and ‘below ground’ risks are interdependent and difficult to separate. Nevertheless, this report focuses primarily on the latter since they are the focus of the peak oil debate.

The report does not investigate the potential consequences of supply shortages or the feasibility of different approaches to mitigating such shortages, although both are priorities for future research.

• Firstly, questions around the configuration and cost of representative (or ‘generic’) networks applicable to particular situations.
• Secondly, questions around the potential impact of selected, identified innovations on specific types of network.

This UKERC working paper reviews the literature on modelling natural gas demand and supply. This includes modelling natural gas markets in isolation, and as part of its role in the wider energy system.

This review is part of the work on a new, global gas model at the Institute for Sustainable Resources at University College London, through a UKERC PhD Studentship. The focus of the new model is on global gas production and trade, and its coupling with the TIMES Integrated Assessment model at University College London (TIAM-UCL) to represent gas demand.

Trade-offs: simplifying complexity without diverging from reality

The main section of this working paper provides a review of existing methods which model both supply chain and demand dynamics of natural gas (Part 1: recoverable volumes and corresponding costs of natural gas; Part 2: wider energy-system models; Part 3: natural gas market models). As with any modelling, it was found that there is always a trade-off between necessary simplifications, and the uncertainties and complexities which surround energy-economic-environmental systems.

In Part 1, this paper reviews a range of studies that have estimated recoverable volumes of natural gas. This includes both deterministic (e.g. a single point estimates of natural gas) and stochastic (e.g. probabilistic estimates including ranges of uncertainty) modelling methods, and the strengths and limitations of the approaches employed. The overall conclusion is that some level of probabilistic assessment is required when estimating recoverable volumes of natural gas and the cost range of extraction, particularly given the huge uncertainties inherent in the development of these resources (techno-economic, geological, environmental).

A key contribution of this review, in Part 2, is how natural gas is represented in energy system and integrated assessment models. This represents how gas supply and demand dynamics are also driven by wider developments in energy and environmental systems. Standalone natural gas models, described in Part 3, include gas market complexities. These have more disaggregated time-slices/temporal horizons in order to capture seasonality and the interaction between market agents. However, there is a trade-off between the temporal disaggregation, and the overall scope of the model. In short, the decision to take gas consumption from TIAM-UCL yields the benefit of a whole systems approach in the long-run, whilst limiting seasonal disaggregation in the short-term.

Introducing a new bottom-up global natural gas production and trade model

In section III, the paper introduces a new natural gas production and trade model, which is linked to TIAM-UCL. This linkage includes an aggregation of supply cost curves from a field-level gas volume and cost database, into the regions in TIAM-UCL. The gas model is able to account for aspects of gas markets which TIAM-UCL does not have in its architecture; e.g. fiscal regimes, take-or-pay contracts, price indexation.

Given the proprietary nature of cost data for natural gas extraction, a linear regression model was used to assign supply costs (the capital and operating expenditures required to get the gas out of the ground) to gas fields where no public information was available. This gas model aims to provide insights by quantifying various parameters which determine supply costs for individual natural gas fields, both developed and undeveloped; these include water depths, reservoir depths, the levels of hydrogen sulphide or carbon dioxide, and assumed risks to investment (e.g. due to location, political conditions, etc.).

The combination of the two models is intended to model scenarios, providing new insights into future natural gas price formation mechanics and longer-term policy developments which could alter/influence supply and demand.

A UKERC Research Report exploring the UK's global gas challenge. This report takes an interdisciplinary perspective, which marries energy security insights from politics and international relations, with detailed empirical understanding from energy studies and perspectives from economic geography that emphasise the spatial distribution of actors, networks and resource flows that comprise the global gas industry.

Natural gas production in the UK peaked in 2000, and in 2004 it became a net importer. A decade later and the UK now imports about half of the natural gas that it consumes. The central thesis of the project on which this report is based is that as the UK’s gas import dependence has grown, it has effectively been ‘globalising’ its gas security; consequently UK consumers are increasingly exposed to events in global gas markets.

UKERC research highlights ‘lack of a clear vision of the future role for gas’ in the UK’s energy system, and cautions that, without CCS, a second ‘dash for gas’ could compromise decarbonisation ambitions. Please download the report using the button above.

This systematic review assesses the insight offered by thesemethodologies and critically evaluates their usefulness in projecting future oil production.It focuses on models that project future rates of oil production, and does not address themodeling or estimation of oil resources (e.g., ultimately recoverable resources, or URR).Models reviewed include the Hubbert methodology, other curve-fitting methods, simulations of resource discovery and extraction, detailed bottom-up models, and theoretical and empirical economic models of oil resource depletion. Important examples of published models are discussed, and the benefits and drawbacks of these models are outlined. I also discuss the physical and economic assumptions that serve as the basis for the studied models.

This report provides a detailed comparison and evaluation of fourteen contemporaryforecasts of global oil supply. The forecasts are based upon mathematical models ofvarious levels of complexity, embodying a wide range of modelling approaches andassumptions. In addition, the views of two oil companies on the likely adequacy of future oil supply are also summarised.

This submission focuses on the potential impact of shale gas production on the global gas industry. Firstly, it suggests that the rapid development of shale gas production in the United States (US) has had a significant impact as it has resulted in the loss of a major market for LNG exporters. Events in Japan post-Fukushima are also an important factor in explaining the current situation. Secondly, the very low price for gas in the US, as a result of shale gas production, is putting pressure on gas price formation, both in Europe in relation to long-term oil-indexed pipeline imports and in the Asia-Pacific region in relation to long-term oil-indexed LNG imports. However, the high-price of oil is also a key factor in the current debate over the future pricing of natural gas. To conclude, the potential for significant shale gas production is an important factor in the current uncertainty over the future of the global gas industry, but it is not the only factor at play and any assessment of shale gas must be made in the wider context of multiple uncertainties.