Energy Security and Defence

LNG-carrier.Galea.wmt

One of the many arguments for maintaining a strong maritime presence is energy security, particularly fossil fuels, oil and gas.

But is this valid?

The Conservative party, to their credit, have highlighted the issue a number of times, even though they indulged in a spot of scaremongering. In October 2009 the Shadow Energy Minister, Greg Clark MP, delivered a speech on the issue titled Keeping Britain’s Lights on. For maximum showbiz effect, it started with the lights off and raised the spectre of rolling blackouts. There was also a strong inference that we were at the mercy of the Kremlin, all they had to do was turn off the taps and old ladies in bobble hats would be dropping like flies.

Earlier this year, in the grip of an extremely cold winter, several large industrial users faced restrictions in supply as domestic users were prioritised. These large users had signed up for interruptible tariffs in return for discount pricing so could not really complain, you pays your money and you take your chances. This, however, did not stop the bandwagon jumpers (i.e. press and opposition politicians) seizing upon the issue, evoking the famous phrase ‘keeping the lights on  yet again.

The Conservative Party’s pre-election strategy paper, A Resilient Nation, devoted a paragraph to the issue of energy security, stating;

The danger that the country now faces of a real risk of the lights going out – inadequate power to keep the economy going – was entirely predictable even before Tony Blair spoke and yet his government did virtually nothing.  Taken together, the lack of resilience in the UK’s stretched power generation, strained energy transmission, insecurity of energy supply and lack of emergency storage is nothing short of alarming. Forming a coherent energy policy, joining domestic with overseas factors, security with long term climate change goals and private sector investment with government policies on resilience of systems will be an urgent Conservative priority on entering office and is an example of an approach that can be applied to other essential sectors

In a supporting Annexe, the paper makes it clear that the armed forces will play a part in addressing the issue of energy security

Reflect energy security concerns in the tasking of the Armed Forces. The MoD should have regard to energy security in the tasking of our Armed Forces, for example, the Royal Navy in the security of the sea lanes and the safety of maritime traffic

Research carried out has shown that the true issue with gas security and resilience is a lack of storage capacity and poor delivery infrastructure. The Greenpeace funded research concluded that threats to UK energy security come from 4 areas;

  • Fossil fuel depletion and external disruptions
  • Underinvestment in infrastructure
  • Technology and infrastructure failure
  • Deliberate disruption

Gas, particularly shale gas, is being extracted in increasing quantities as new reserves are located and exploited but it is an unfortunate geopolitical fact that the majority of oil and gas is found in areas of questionable stability

To mitigate the debilitating effect of wide-area disruptions due to adverse weather, for example, greater diversity in supply, storage and transmission is an obvious means of providing greater resilience.

Deliberate disruption may be inflicted from local, national or international sources.

The majority of gas imports come from Norway via fixed pipelines but this may well change in the next decade or so as LNG and Russian gas increase its share of UK supply. LNG import facilities are distributed around the country but the majority of capacity is concentrated around Milford Haven in Wales, the Dragon and South Hook regasification terminals

As our reliance on imports accelerates, particularly for gas, it is an obvious national priority but the investment split between storage capacity, supply diversity, demand reduction and even military capability is open to debate.

Unless new and extractable reserves are found it is likely that by 2030 the UK will be a total gas importer and although significant volumes will be from European sources via pipelines a significant amount will be via imported LNG. A few days ago South Hook Gas announced the 100th LNG cargo supply to the UK via the South Hook Terminal. The gas flowing into South Hook comes from Qatar’s North Field gas reserves in the Arabian Gulf.

LNG requires timely distribution because of evaporation, the natural gas is compressed to form a liquid and although modern LNG carriers have onboard boil off regasification plants, a significant volume is still lost (although some of this is used to power the ship)

Delays, therefore, are far from welcome and re-routing LNG carriers around the Cape instead of the Suez would push loss and therefore prices, up considerably.

Transmission, generation and storage capabilities have seen a variance in investment but many projects are in the pipeline so to speak and the realisation that renewables are going to have to take a back seat to gas and nuclear generation means that even a government in denial must at some point snap out of their ‘green’ trance and start generating more than hot air and wishful thinking.

The recent outspoken criticism of the Renewable Obligation Certificate and carbon reduction targets from the chairman of Aggreko, the temporary power group, must serve as yet another wakeup call to this delinquent government. Robert Soames went on to say;

“The idea that CCS [carbon capture and storage] is going to be able to contribute significantly to power generation inside of 15 or 20 years is bonkers. People who are not engineers seem to have an unrealistic view of what’s going to be possible”

He also accused politicians of “holding hands and singing Kumbaya to the great green God” but warned the reality is it will be many decades before renewable energy can plug the gap left by traditional sources of power.

So it should be clear that the UK faces an uncertain energy future, if current government policies do not address the wishful thinking on renewable energy and start acting in the interests of this country there exists, despite the scaremongering, a real threat to the continuity of supply. The government is set to publish a paper on electricity market reform that is reportedly likely to ‘go nuclear’ and this is an obvious step in the right direction but the UK will still need a range of generation types in the short and medium-term, i.e. significant imports of gas. Low gas prices also threaten the financial position of power generation companies, especially those looking to invest in nuclear. Even lower wholesale gas prices do not automatically reduce consumer prices, I have to admit; it’s all very confusing!

Whatever happens with the domestic market it is likely that we will increasingly rely on gas imports, delivered to the UK in LNG tankers or via pipelines from Europe, the security of those supplies must be a high priority for the whole of government.

As we approach winter, gas prices rise and the spectre of widespread fuel poverty makes a serious appearance there simply has to be acceleration in generation, storage and distribution projects.

The enormity of the situation puts discussions on the role of the military in securing energy supplies almost into 75th place in terms of things to do; investment in generation, gas storage, inter-country trading agreements and transmission systems are self evidently of a higher priority but security threats do exist and need to be addressed.

At home, there are a finite number of locations where gas is landed using pipelines or LNG tankers. These locations are well known and obvious targets for a terrorist attack. Whether an LNG terminal would actually represent an attractive target for terrorists is questionable, the potential for mass casualties very low, but a scenario that involves proxies is not wholly inconceivable and an attack would be newsworthy. With a small storage capacity and a small number of relatively isolated locations, the UK is quite vulnerable to significant disruption from a targeted attack although the sheer scale of the infrastructure would need a suitably large attack; a rucksack full of homemade explosives is unlikely to have much effect.

We must also assume that there already exists a range of security and contingency measures in place.

Given the Qatari North Field represents approximately 19% of world gas reserves it clearly is an important location and not just for the UK.

A more likely threat of disruption comes from attack or denial of the production, loading and transport facilities in the Persian Gulf, especially in this case, the Qatari gas field. The Q Max tankers now used carry approximately 260,000 cubic metres of LNG and as economies of scale push size up and numbers down, vulnerability increases. Production platforms, gas to liquid plants and other infrastructure is vulnerable to direct conventional attack. With between 3 and 5 tankers per week leaving the area bound for the UK, coupled with low storage capacity and increasing reliance on this source of gas, attacks against the area would have a significant effect on the UK, even more so until nuclear can be expanded.

Conventional attacks might manifest themselves in a wider regional conflict or more likely, the use of proxies and easily deniable means such as mines. Iran also has extensive oil and gas facilities in the area as well, many funded and operated in conjunction with western organisations, therefore any conflict would be many-dimensional.

Attacks by pirates may be no more than a nuisance but may also cause disruption and price fluctuations.

Currently, we have the forward basing of a number of Royal Navy mines countermeasures vessels, as I have mentioned before, this is a capability area in which the UK excels. Beyond that, we might look at a range of political, commercial and military measures to improve resilience and increase security.

Those favouring a stronger Royal Navy point to energy security as one of the main justifications (usually about CVF) but what capabilities deliver the greatest effect in the most cost-effective manner, should we be investing in developing local capacity or providing direct defence for example?

Personally, I think our greatest contribution to the collective security in the area and thus by definition, a significant contribution to energy security at home, should be in developing local capacity and capabilities, training and working in local security partnerships for example. This goes against the ‘strong navy’ mindset, based around CVF and high technology surface combatants, but our limited budget could be better employed.

So, my brief defence and security suggestions are;

  • Investigate a bilateral security agreement with Qatar that might create a framework for greater security cooperation
  • Expand the mine countermeasures capability in the area
  • Increase training and capacity building in conjunction with Qatar

In addition to the sensible suggestions, how about asking Qatar if they want to timeshare MRA4?

3 or 4 MRA4 would provide a massive boost to the protection of the offshore gas production facilities and transit routes for shipping.

Increasing security in the area is not the sole responsibility of the UK but we should play a part.

What our contribution might look like is worthy of debate.

What do you think; home, away, heavy metal or softly?

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