Six things you didn’t want to know about gas

Posted on July 8, 2010

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I’ve learnt an awful lot of things about the natural gas market in the short time that I’ve been working for a gas trading consultancy, which I personally find interesting and strange. You probably won’t, which is why this blogpost is called exactly what it is. Without further ado, then, here are six things you didn’t want to know about gas:

1. The French love the Spanish but not the other way around

Personally I really like this notion because it perpetuated the myth that everyone thinks the French are a bit aloof and therefore no-one likes them all that much. The world is connected through pipelines, many of which have (especially in Europe thanks to a recent EU Directive) become interconnected; that is, they pump gas in both directions, from one country to the other. This happened recently in France and Spain: the pipeline connecting the two became an interconnector, and capacity on the pipeline was opened up to bidders. If you imagine that the gas moving along the pipeline is a train, then it might help you understand. The train going from France to Spain managed to sell 59% of its seats (so Spain only want a little more than half of France’s possible gas exports to them). The train from Spain to France? Well that was 200%. The French love that Spanish gas.

2. We’re all going to have to love Iran eventually

Bad news, I know. At some point we’re going to have to grit our teeth and sidle up to Mahmoud Ahmadinejad, famous Holocaust denier and wearer of natty suits and even nattier facial hair. The problem is that he’s currently sitting on a huge empire of gas which we’re going to need as the areas we’re currently using become tapped out. Already Iran is the fourth largest gas producer in the world – and they’re only really bothering to produce enough for their domestic usage at the minute. In 2008 alone they harnessed 116 billion cubic metres of gas. That’s the same volume as 116,000,000,000,000 1-litre cartons of milk.

3. Britain only supplies 50% of its own gas…

Which is why we need to be nice to Mahmoud. The most recent figures say that we only produce about half of the gas we use domestically. 30% comes from Norway, 12% from Liquid Natural Gas reserves (where gas is tapped and then supercooled so it condenses into a liquid, making it easier to transport), 7% comes from the Dutch and 0.1% comes from the numerous storage sites we have off-shore of the island.

4. …but Ireland is worse.

They rely pretty much totally on us. 95% of Irish gas comes through the three interconnector pipes that connect Britain to Ireland and Northern Ireland. The other 5% they take their own depleting gas fields.

5. Sometimes interconnectors don’t actually pump gas in both directions

This one is confusing. You have to imagine hypothetical gas. Many ‘interconnectors’ (including one of the largest ones that connects Britain to mainland Europe, the BBL interconnector to Holland; and the Moffat interconnector linking us to Ireland) only actually flow in one direction (into Britain in the case of the former, away from it in the latter). But the EU have demanded that they flow in both directions! “Well okay,” say the gas companies, “but that’s going to cost us lots. So how about we pretend that we’re flowing gas in the opposite direction?” The EU say that’s fine. I don’t understand.

6. Denmark bring home the bacon for themselves

Oh Denmark, you provide the world with pork products and the ability to make poor puns based on that fact. Denmark is one of the very few EU countries that actually domestically produces 100% of the gas it uses. It’s got a vast number of gas reserves. Bringing home the bacon indeed.

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