The recent announcement that the Mains Gas is coming to Enniskillen will no doubt be celebrated to great fanfare by Minister Foster. I’ve no doubt she can only see good in the plan. But 200million is a lot of money to be throwing at 30 odd thousand people. You know if there wasn’t a Shale Gas project at the end of the pipeline, it might end up one hell of a white elephant.
The first thing I want to look at is the financials – 32 million of UK taxpayers money, or 1/3 of the transmission line cost. I presume the distribution networks are being funded by private companies as my understanding is they have said they can make a profit on these.
Now I’m not against Gas per-se, and it certainly does have its place in the energy mix, but I can’t help feeling Arlene and her party are missing the plot here. Perhaps she and Sammy Wilson are unaware of this warning of the sub-prime state of carbon fuel assets being traded on the London stock exchange. In fact it also coincides with this piece from Deborah Rogers on her blog – energypolicyforum. Pipelines are big business. Pipelines make money, usually way above their initial cost – except those that go to Fermanagh and those that service fracking it seems.
Pipelines in Northern Ireland are built by the private companies where they foresee a return on their investment in 30 years. The requirement of so much public money to develop this speaks volumes about the profitability – or lack of – this extension to the gas network.
So is the reasoning that Arlene feels confident there’s Shale Gas in Fermanagh ? Well if that is the reason, I’m sorry to say she’s prejudiced the exploration. Has she been advised by her department that there is gas here ? If so, why announce this gas pipeline now, when the sensible thing would be to let Tamboran finance it out of their profits. A win – win situation with Tamboran PR claiming all the indirect jobs.
On the other hand if there is no Shale gas here, then there’s a real white elephant in the making.
Even if there is Shale gas here, what’s evident is there is no 30 year supply of it. Even GSNI agree that the basin will likely contain 0.9-1.8 TCF of gas, as distinct from Tamborans 2.6-5.2 TCF (section 8 here) which while not insignificant is between 3.5 and 7 years of whole island supply at current usage rates (rather than the 12-25 years Tamboran claim). It also doesn’t take into account leakage rates (shale gas from 2-9 percent), transmission usage (1-2 percent) nor calorific value reductions (8% by volume). So one could see a further 11–19 percent reduction in the effective gas totals. Shale gas wells deplete rapidly, and even Tamboran admit with their enhanced model, and drilling over 250 gas wells a year, they could only just meet all Ireland daily demand for a short period.
A last word on costs, to any politicians reading this, I think a recommendation for a levy on pipeline costs to any company extracting gas should be payable to offset the current investment – ie have something on the statute books to allow costs to be re-couped.
Finally one of the arguments raised is that this will get people out of fuel poverty. Hovewer with 44 percent in fuel poverty here, and that 30K customers including businesses, there’s not going to be that much reduction in fuel poverty here. Also there will have to be a boiler conversion programme initiated. If people are in fuel poverty, then its hard to see how they will have spare funds to manage this. Of course the gas supplier could help, but the cost gets added into the price of gas.
It would be interesting to know if a socio-economic study was done on a similar rural area on the mainland. Where gas competes with oil for central heating on the mainland, oil gets pushed to the margins. ie oil will lose the benefit of easy town delivery, increasing the overall cost base. For those without access to gas, then given there is no competition, expect the price of heating oil to rise – not immediately as it will still be in competition with gas in the major towns, but once gas take up pervades, then oil prices will tend to rise. Compare Northern Ireland here, with English prices. and prices in Scotland and Wales and one can see we’re currently trade at approx 2p a litre cheaper than prices on the mainland, and don’t seem to hit peaks in the same way.