An alternative to nuclear power
Natural gas, the lesser evil among fossil fuels, is an attractive choice.
The Fukushima crisis could not have come at a worse time for the global energy industry. With China looking to add several atomic reactors to augment its generation capacity and India planning to switch to light water reactors after the agreement with the United States, nuclear power was poised to make a big comeback.
That possibility may have melted along with the fuel rods at Fukushima. Globally, there is bound to be a slow-down in the nuclear power industry, at least for a couple of decades, if we go by the earlier experience of two accidents. No doubt, the situation today is a bit different — Asia is poised on an energy-intensive growth trajectory and is competing with the developed economies for access to adequate fuel. Conventional fuels are scarce, are depleting or are controversial. It is indeed tempting to believe that we no longer have the luxury of rejecting nuclear power.
But, even if we discount the ethical, safety aspects and other arguments against nuclear power, unlike any other source of energy, the nuclear option is also about public perception. There is the fear of the unknown which is difficult to dispel with assurances, explanations and ostensibly rational arguments. Post-Fukushima, the chorus against nuclear power has risen to a crescendo. In India, safety concerns have been compounded and exacerbated by fears of disenfranchisement and dislocation of the local population in the siting of new reactors. Self-seeking political parties have jumped into the fray to fan such fears. It would be difficult for any government to push through its nuclear power programme, undeterred by the groundswell of domestic public opinion.
What then are the alternatives to nuclear power? How do we ramp up our power generation capacity? Natural gas, the lesser evil among fossil fuels, offers itself readily. With less than half the carbon content of coal and very little of the other greenhouse gases that bedevil other fossil fuels, natural gas is a viable option for a carbon-constrained world. Abundant and less whimsically distributed than crude oil or coal, its fungibility improved by liquefaction technology, and less demanding of water than coal or nuclear power, natural gas could be a viable alternative.
The technology to explore, produce, liquefy and transport natural gas is well established. A versatile fuel that finds use in a wide range of applications such as fuel for power generation, industrial processes and in automobiles and as feedstock in fertilizers and petrochemicals, natural gas is also an ideal cooking fuel whether piped to houses or bottled as LPG in cylinders. In power generation, the efficiency factor (the ratio of electricity generated to the heat content of the fuel) could be as high as 60 per cent in a combined cycle as opposed to around 30 per cent in the most efficient coal-based power plant. This alone should make natural gas the fuel of choice for electricity generation. Its efficiency could be even higher in combined heat and power applications when waste heat from the turbines is utilised in other industrial processes. Indeed, the advantages of natural gas make it the ideal bridge fuel for the next 50 years until solar photovoltaic and nuclear fusion become affordable.
Natural gas already accounts for almost a quarter of the energy basket of developed countries. Yet, in India, the share of natural gas in its commercial energy basket has stagnated at less than 10 per cent despite major new domestic discoveries in recent years. First discovered in Assam in the late 19th century, natural gas became the mainstream fuel in India in the 1960s after major reserves were discovered in the Cambay Basin on the west coast. Acknowledging its value, as a national resource, the government prioritised its application in power and fertilizer plants along the western and northern belts and built an arterial pipeline network to service them. Today, the pipeline network of 10,000 km, and with more to be added, includes a limited national grid and regional grids in Gujarat, Andhra Pradesh and in the North-East.
More gas came on stream in the early 1990s, when some of the “discovered fields” of the Oil and Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL) were developed in joint ventures with the private sector. From 1997, India opened its acreages to international investors in exploration and production through a structured licensing process termed NELP (New Exploration Licensing Policy) of which nine rounds have been completed. Of the 239 blocks awarded to investors so far, 68 fields, of both oil and gas, are claimed to have been discovered. In fact, the discovery of the Krishna-Godavari (KG) Basin gas fields by Reliance Industries Limited (RIL), ONGC and the Gujarat State Petroleum Corporation came from the acreages awarded in the first NELP round. Yet, only one of these fields — KG D6 — has commenced commercial production. India also has two operating LNG (Liquefied Natural Gas) terminals which regassify LNG and supply it to consumers. Two more terminals are likely to be commissioned shortly.
Gas floating above coal seams, called coal bed methane (CBM), is another rich source of high calorific value fuel. India may have about one trillion cubic metres of this gas mostly in the Gondwana basin. CBM projects qualify for carbon credits under the Clean Development Mechanism (CDM). Recent years have witnessed four licensing rounds of CBM as well. There are 30 CBM blocks awarded for exploration. Production, which is modest, has also commenced and is expected to be ramped up significantly in the next few years. India is also examining the prospects of domestic shale gas.
The table ( above) gives the average daily production from all sources.
Domestic gas demand is estimated to be at least double that of daily availability, although demand is price-elastic and linked to the price of alternative fuels. Gas markets, unlike liquid fuel markets, are still segmented, regional and continental, rather than global. Natural gas prices can vary from one-tenth of crude oil price to one-fifth, depending on the source, the type and crucially, on consumers' ability to absorb the price. Gas piped through transnational pipelines tends to be cheaper than LNG; domestically produced gas is cheaper than gas imported through transnational pipelines as well as LNG. Long-term contracts are cheaper than spot cargoes which are usually top-up options.
With global crude prices spiralling and coal becoming increasingly unacceptable, gas may suddenly find itself attractive, viable and competitive. It could greatly contribute to enhancing India's quest for energy security provided we get our act together in time and play our cards right to drive hard bargains. On the domestic front, it is essential to accelerate the pace of drilling for gas, CBM and shale and monitor effective compliance with drilling and production schedules specified in the licence and production sharing contracts. Multiple sources of supply will ensure a competitive price outcome. As for gas imports, since pipelines make much better economic sense, transnational pipeline projects should be pursued vigorously and built expeditiously. It is essential to clinch competitively-priced long-term contracts for both pipeline imports as well as LNG supplies.
Even if one or two transnational pipelines with a total capacity of 60 MMSCMD materialise, and assuming the entire supply is used for electricity generation, India can add 15 gigawatts of generation capacity in just three years, pari passu with the construction of the pipeline. Similar results can be reached with two LNG terminals with a total capacity of 15 million tonnes per annum. Not only will it take nuclear energy several decades to reach this target, but even at currently prevailing long-term LNG prices, gas-based power will be cheaper than nuclear power.
( The writer is Member, Petroleum and Natural Gas Regulatory Board. The views expressed are personal.)