Vast regional reserves fuel gas option

Peter Haylett in the Cape Times Insight column 6 March 2012.

(Editorial comment: An excellent article which avoids the fracking issues and instead concentrates on the use of imported natural gas versus coal and nuclear for power generation and points out the synergies between gas-powered electricity generation and renewable energy intermittency.)

SINCE South Africa’s Integrated Resources Plan (IRP) to map out future energy policy was approved in the first half of last year, two game-changing events have taken place to make a revision of the plan both essential and urgent.
The first is the nuclear disaster in Japan. While this is by no means the end of the road for nuclear power, it has made people more cautious and they will naturally demand additional safety measures. That will add to costs, giving rise to new questions about the viability of the industry. It will also stimulate the considerable opposition to nuclear power.
The second game-changing event was the discovery of vast reserves of natural gas off the coast of Mozambique. Present estimates indicate confirmed reserves of between 85 and 100 trillion cubic feet, and new discoveries seem to be announced every week.
In addition, discoveries off the coast of Tanzania add another 15 trillion cubic feet, while similar reserves lie off the Namibian coast. And we have our own gas field off the West Coast. To put all this into perspective, we are looking at enough gas to run a dozen gas-to-liquid fuel projects like the one in Mossel Bay for nearly 200 years.
We should also remember that the vast reserves of shale gas in the US and other countries have brought natural gas prices tumbling down and broken the link between gas and oil prices. This provides an escape from the artificially high oil prices of the Opec countries.
Cheaper gas means that the economics of gas power stations have changed and new combined cycle gas turbine (CCGT) power stations in the US and the UK will soon be producing electricity at costs significantly lower than either new nuclear or coal-fired power stations.
Just how do gas power stations work?
The combined cycle plants use a gas turbine (in effect a jet engine) in the first stage to drive a generator, and then they use the waste heat from the turbine exhaust to produce steam and drive a steam turbine and a second generator.
The process is extremely efficient and about 60 percent of the energy in the gas fuel is converted into mechanical energy and electricity. This thermal efficiency of 60 percent and more compares with about 35 percent for existing coal-fired power stations.
Both coal and nuclear plants produce a lot more waste heat than power, hence the enormous cooling towers and the use of sea water to cool nuclear plants.
The CCGT power stations have a number of practical advantages.
First, they are clean and produce less than half the pollutants that coal power stations pour into the air.
Second, they are compact. No railway lines to deliver endless trucks of coal, no conveyer belts to feed the furnaces and no mountain of ash at the other end of the process. Just a pipeline with valves to adjust the flow of gas.
They are versatile and can be throttled back at night when the demand for electrify is low. This versatility means they are ideal for use in conjunction with variable sources of renewable energy from wind and solar radiation.
In a water-scarce country like South Africa, gas power has the added appeal of using very little water, especially when built at the coast.
CCGT power stations can be built in just two to three years, a huge advantage over coal or nuclear power stations, which take between 10 and 15 years from first approval to first power.
Capital costs are also lower, largely because they are put together from off-the-shelf modules. The gas turbines come from aircraft engine factories, so the economies of scale are excellent, and so is the back-up for spares and servicing.
How do they compare with nuclear power stations?
The main disadvantages of nuclear power stations are the high initial costs, the long lead times and the fact that most of the capital outlay is also money leaving the country. The advantages are that they are clean and running costs are lower. They also use sea water for cooling.
What of the danger of a nuclear accident?
The industry has an excellent safety record, but the continuing challenge for us will be to provide a consistently high standard of management for the 40 years of the power station’s life. In fact, the standard required to ensure safety is probably higher than can be |found in any of our state-owned enterprises.
So CCGT power stations are cheaper, more efficient, can be built in a fraction of the time it takes to construct a coal or nuclear plant, and they use very little water. The disadvantage is the enduring cost of fuel.
Well, that used to be the problem. What has changed is that costs have come down. Natural gas is available for import on long-term contracts, so future costs become predictable. And this situation can only improve as the gas fields on our doorstep are exploited.
We should also bear in mind that when vast sums of money are spent on nuclear reactors it is money leaving this country for distant shores.
On the other hand, when we buy gas from Mozambique, Tanzania or Namibia the money will find its way into the regional economy and much of it will come back to us when these countries buy our goods and services.
Gas would lead to improved trade and regional co-operation, and that means economic growth.
The National Planning Commission saw the case for gas clearly and recommended its use to generate electrify. And that was before the immense Mozambique discoveries were announced in November last year.
The final point is this: Sasol, a company built on coal, has decided to generate most of its own electricity to reduce its dependence on Eskom, and it is using gas to do so.
If it works for Sasol, it should work for Eskom and the municipalities around the coast, which could very well generate some of their own power and reduce dependence on the long and vulnerable transmission lines from the north.
This would allow Eskom to make more electricity available for the mines, encourage new mining projects and bring an end to the rationing of power to major industries. It is all so obvious that one must question why so little attention was given to gas in the IRP.
One oil industry analyst says his reading of the IRP convinced him that gas for power generation was an afterthought and that it was never properly considered.
Gas power stations will also provide us with a bonus, for they will create a market for imported gas, and once the gas is available it can be used a primary source of process heat for a range of industries, from brick and glass making to food |processing.
Gas is a more cost effective heating fuel and it reduces the demand for electricity.
It will also reduce the demand for liquid fuels from our old and failing oil refineries as it can be used as a transport fuel.
It will also end the shocking wastage of thousands of tons of imported diesel which we are pouring into the open-cycle gas turbines that produce peaking power at something like seven times the cost of the electrify from our base-load power stations.

  • Haylett is chairman of the Industrial Focus Committee of the Cape Chamber of Commerce and Industry.
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