Energy issues have always been important in international relations, but in recent years may have become even more important than in the past due to the widespread awareness of existing limits to energy sources and negative climate impacts. The course discusses global trends in energy consumption and production, various available scenarios for potential developments in the coming decades, the availability of oil reserves and the evolution of the oil industry. It then discusses natural gas and highlights the differences between oil and gas. It will also discuss renewable energy sources, nuclear energy and EU energy policy. The course aims at providing students whose main interest is in international relations a background on energy resources, technology and economic realities to allow them to correctly interpret the political impact of current developments. It also aims at providing students, who already have a technical background in energy science or engineering, with the broad global view of energy issues that will allow them to better understand the social, economic and political impact of their technical knowledge. ABOUT THE INSTRUCTOR : Giacomo Luciani Scientific Advisor for the Master in International Energy at the Paris School of International Affairs (PSIA) Sciences Po, Giacomo Luciani is also Adjunct Professor at the Graduate Institute of International and Development Studies, Geneva and Director of the Executive Master in International Oil and Gas Leadership. For the period 2010-13 he was appointed Princeton University Global Scholar, attached to the Woodrow Wilson School and the Department of Near Eastern Studies. His research focuses on the political economy of the Middle East and North Africa and on global energy issues. RECOMMENDED BACKGROUND : The course requires no special scientific, mathematical or economic background; all key concepts are clearly and elementarily explained. It is expected that it will be of interest to undergraduate and graduate students in schools where an equivalent course is not offered (this being the case for the vast majority of schools). USPC Sorbonne Paris Cité Supported by Université Sorbonne Paris Cité IDEX Investissements d'Avenir Funded by Investissements d'Avenir - 'ANR. Info : Course content : Licence Creative Commons BY NC SA
Gas uses and gas networks
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Del curso dictado por Sciences Po
Politics and Economics of International Energy
729 calificaciones
De la lección
Week #4 : The economics of natural gas
This module presents the Introduction to natural gas, The international gas market, New gas developments
Conoce a los instructores
Giacomo LucianiProfessor and Scientific Advisor for the Master in International Energy
Paris School of International Affairs
-Natural gas has certain advantages
that support its penetration in the energy market.
So more and more people are attracted to using natural gas
rather than other sources of energy.
The main advantages are related to the fact
that burning natural gas generates much lower emissions
than burning other fossil fuels, and especially than burning coal.
So gas and coal frequently compete with each other,
especially in power generation.
When you burn coal,
you generate twice as many CO2 emissions into the atmosphere
as when you burn gas.
Given the energy content that you need,
if you obtain this energy content out of gas,
this is much more benign for the environment.
Shifting from coal to gas is one simple way
to quickly reduce greenhouse gas emissions.
Another obvious advantage of gas is that it has a clean flame.
This is very important in certain industrial processes
where you need to avoid any impurity
and other sources of heat may instead generate such impurities.
When we are talking, for example, of the production of glass,
the production of silicone,
or the molding of some plastics, you want to have a very clean flame.
In some cases, there are directional flames
and you can direct gas to a specific point of the product.
This is important in industrial processes.
Another point is that gas is available from the network.
This is very convenient, especially for small and medium companies
because they do not need to maintain a reservoir for crude oil
or storage for coal.
They can simply turn the tap
and they will get gas from the network, from the pipeline.
Another extremely important point that I need to mention
is that gas allows for power generation
much more efficiently than other sources.
In a thermal power plant which burns oil, coal or even nuclear,
the efficiency of the transformation is low.
You have at most a 40, 45% efficiency in the transformation,
which means that only 40, 45% of the energy
originally contained in the fossil fuel that you are burning
is transformed into electricity.
The rest is lost in the transformation.
For gas, the efficiency can be much higher, up to 60, 65% efficiency.
Which means that you very much reduce the amount of waste of energy
and you get more electricity
out of the same energy that you have used at the beginning.
The drawback of gas is that it has a low energy density.
It is not a good store of energy.
Per unit of volume, it contains little energy
and it cannot be easily transported.
The difficulty in transporting gas is the most important consideration
when it comes to the economics of gas.
Because gas is difficult to transport, in order to be able to use it,
you need a network.
It is basically impossible to serve a customer
and take gas to a market unless there is a network.
You need a network of pipelines that run across the streets
in an urban center, even in rich individual homes,
and even pass through the walls of the home
to reach the kitchen, the boiler and the water heater.
You need to have this network and this facility
in order to have a market for gas.
In some major cities,
such networks were already established at the end of the 19th century
and/or at the beginning of the 20th century
and have been progressively enlarged.
In cities where networks were established a long time ago,
it is easy to enlarge the networks and a market for gas will exist.
But in some cities, such networks have never been established.
To establish them from scratch is a very challenging proposition.
It almost never happens.
That is because you would literally need to carve up old streets
to lay pipes in the streets.
You would need to convince homeowners
to have pipes running through their walls and so on.
This is not a practical proposition.
In fact, where networks are not available,
gas does not have an easy market.
The original networks in the 19th and the first part of the 20th century
were fed with gas that was manufactured, produced out of coal.
You would have a gas factory in each major urban center.
This gas factory would produce the gas
that was injected into the urban network.
With the advent of methane,
when we discovered significant sources of natural gas,
then natural gas was taken to the existing network
and it substituted for manufactured gas.
Today manufactured gas is basically used nowhere.
But it is important that we call it natural gas.
Why do we call it that?
Because it is in contraposition
with what we had in the past, manufactured gas.
In countries where urban networks have existed,
there is a market for gas and it is possible therefore to sell gas
and import gas because you have an established market.
Residential demand is important
so it is important to reach each individual household.
It is also the premium market for gas,
the market that will pay the higher price
because it is very convenient to have gas in the homes.
It is the backbone of the gas industry
in all countries where gas is utilized.
In contrast, in countries where residential demand
did not develop historically, gas penetration has remained low.
It is essentially tied to power generation
because power plants are large potential consumers
so it may be acceptable, economically convenient
to take gas to a large power plant and then distribute the electricity.
Because of the high cost of transportation,
gas is preferably consumed locally.
There is less use flexibility and higher transportation costs for gas.
Therefore, the value of gas at the wellhead is much lower
than the value of oil.
Whenever you can, you prefer to export oil
and keep gas for domestic uses.
So oil and gas producing countries will generally target
domestic consumption for gas and maximize the exports of oil.
The countries that have the highest gas penetration
are those which either still have significant domestic production of gas
or at least in the past enjoyed significant domestic production of gas
and on the basis of that, have been able to develop local networks.
Now those networks exist and when domestic production decline,
then you start importing from the rest of the world.
But the market is established.
If the market is not established, it is very difficult
to start importing from the rest of the world.
When we look at the level of consumption
and dependency on natural gas at the European level,
we can see on this slide
that there is a lot of difference between individual European countries.
We have some countries that are still today or have been in the past
large gas producers.
There, gas accounts for a very significant share
of the total energy consumption.
When we speak of the Netherlands,
Hungary, Italy, Romania or the United Kingdom,
we are talking about countries, especially the first three,
that have a level of gas penetration
which is close to 40% of the total energy consumption.
These are countries that substantially rely on gas as a source of energy.
In contrast, when you move toward the right end of the chart,
you find countries where gas plays a much smaller role
or even an almost non-existent role, such as the case of Sweden.
But there are more, even important countries
like Poland, who is only 15% dependent on gas.
The same is true for Bulgaria, Greece or Finland.
These are all countries where gas plays a very limited role
and has never succeeded in penetrating the market in any significant way.
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