Natural Gas/Coal Seam Methane

Natural gas is a wonder fuel. Nuclear and coal-fired power plants need to be run constantly to run efficiently. By contrast, natural gas can be switched on and off quickly. It's an attribute that few other energy sources enjoy with the exception of hydro. As a result, it should be used primarily as a load-balancing energy source in a future electricity grid increasingly marked by fluctuating renewables.

To waste natural gas on providing base load power is a bit like squandering the talents of an gifted orchestra conductor by having him play the French horn, and nothing else. Encouraging the use of natural gas (and coal seam methane) as a primarily a load-balancing energy source rather than a base-load energy source is another economic reform that's needed in the Australian energy market.

 
 
 

 

The benefits will be many. First, Australia will gain a more robust energy system during the transition period away from dirty fossil fuels by having abundant natural gas as a backup fuel spread widely across the system and ready to be switched on at short notice. Second, by properly economically valuing this critical load-balancing characteristic of this fuel, it eliminates the current undervaluation of gas, and thus increases economic transparency of prices. Third, natural gas producers and generators stand to make more money from less gas by progressively targeting their energy resource toward peak power markets, which are less frequent but much more lucrative than base load markets. Fourth, by exploiting renewables and concentrating gas on load-balancing, increased supplies of natural gas (and coal seam methane derivatives) can be exported, offering a double benefit in the fight against global warming. That's because Australia itself will use less fossil fuel, while the countries that in turn import the additional internationally-traded gas supplies will similarly lower their greenhouse gas emissions since natural gas can supplant coal in countries without Australia's abundant wind, solar, geothermal and other renewable resources.

Let's take these benefits one by one.

First, natural gas is a crucial load-balancing asset. Using it to provide brute, baseload power is like using a ballet dancer to do manual labor. In a grid characterised by increasing amounts of renewable energy, natural gas and hydro assume an important role in balancing the load. As such, they provide the underlying stability to the system. At present, gas is undervalued and this crucial role is underappreciated.

 

Natural gas has the fastest startup time of any non-hydro energy source
 

Second, Australia will gain more by developing its natural gas resources primarily for export than it will for domestic use. The reason is that exporting more gas creates a double-bang for the buck both in national income, export receipts and global greenhouse gas reductions. The reason is that Australia has natural gas supplies sufficient to last hundreds of years at current rates of extraction. But by 2100, natural gas and all fossil fuels will have been supplanted by renewables, meaning that the value of this resource will be negligible in a hundred years time.Therefore, the best strategy is to develop and export the resource now to countries without Australia's renewable energy generation potential. This will increase Australia's short to medim term export earnings as it develops a renewable energy industry, expertise from which it can later export to those same gas-buying countries as services later.

Australia should find ways to reduce gas use going forward... ..and direct it to exports
Source: ABARE Source: ABARE

What's doubly intriguing here is that increased export receipts from gas could help underwrite domestic investment in renewables. This would create a double-benefit for Australia. First, it would get a discounted renewable energy infrastructure built through the proceeds of foreign trade today. Then, in 30 years time, it would get a second export opportunity through advising other nations how to build out their eventual shift to renewables.

At present, most of Australia's gas from the northwest shelf is already exported. Future exports of gas, assuming the fuel doesn't emerge as the low-cost input to hydrogen creation, could come via the existing eastern gas pipeline infrastructure as renewables satisfy an increasing amount of Australia's energy needs, leaving the gas to be exported through the pipeline terminus ports of Brisbane, Sydney and Melbourne to huge markets like China.

The eastern gas pipeline network is ideally and flexibly configured for
increased East Coast gas exports as renewables increasingly satisfy base load electricity demand.
 

 

 

 

 

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