Wales is similar to South Africa in that we have always had valuable mineral resources under our feet but most of our population has not benefitted from these underground riches
Wales has already given up much of its mineral wealth – including gold, copper, lead and iron – and most notably coal. There are very few viable deposits left and our only oil and gas reserves off the Flintshire coast are disguised as English and not credited to Wales.
Despite the ending of deep coal mining, we still have considerable coal reserves left. Coal deposits have always been associated with methane gas – and uncontrolled releases of gas have previously caused terrible disasters including Senghenydd in 1913 (440 killed) and Gresford in 1934 (266 killed). But Methane – or Natural Gas – is a valuable resource in its own right and is widely used for power generation as well as domestic consumption.
Natural Gas is extracted from huge underground reservoirs in places such as Qatar, Russia and Australia and shipped half way round the world to Europe, where it is imported into gas receiving terminals including Milford Haven. But we are sitting on our own gas reserves associated with our coalfields and we should be trying to develop these as an alternative energy source in place of these imports.
It is estimated that there is 2,900 billion cubic metres of coalbed methane gas in UK, with around 300 billion m3 of this in Wales, and this presents a significant development opportunity for exploitation of this ‘unconventional gas’.
But first a word about Fracking:
Fracking is a process where water is injected at high pressure into shale deposits to fracture the rock and release trapped gas which can then be exploited. It has developed a very bad reputation in USA where poorly regulated operators have caused gas to be released into groundwater, poisoning livestock and polluting drinking water. There have been only limited fracking operations in the UK, and these have been associated with earth tremors, and have been strongly opposed by environmental protestors. There is only limited opportunities for fracking in Wales and these are likely to be strongly opposed. However, to be clear – fracking is nothing to do with Coal Bed Methane.
Coal Bed Methane (CBM)
Extraction of Coal Bed Methane relies on drilling wells into the coal bed and then pumping water out which reduces the pressure underground – which then releases the trapped gas. The water and gas are separated at the surface, and the water can either be treated and discharged into local streams and rivers, or returned underground. The CBM gas is relatively clean and would need only minimal treatment to turn it into sales-quality gas.
Underground Coal Gasification (UCG)
The volume of CBM released by simple drilling may be limited and so rather than relying on extracting the naturally occurring gas, the technique of Underground Coal Gasification relies on injecting steam into coal seams to release more gas. This is a more intensive and expensive process, but releases larger quantities of gas than conventional CBM. However, this technology is not well established and needs further development to make it viable.
Processing and Transport
CBM & UCG would need a certain amount of processing to turn it into a saleable product which would then need a pipeline distribution system to connect into the nearest trunk gas network. It may be more efficient to use the gas to supply small power generation plants near to the extraction point which can then supply electricity to the local grid. This has the advantage of being able to use a lower specification gas than if trying to produce ‘sales gas’ reducing initial gas treatment costs. These small power stations would have the advantage of being situated in the coalfield itself providing much needed local employment.
Alternatively, gas produced in West Glamorgan could be supplied directly to the UK grid via the existing gas trunk line compressor station at Felindre near Swansea.
The Economic Case
By now you should be asking the question – why are we not all driving around in Land Cruisers and Mercedes if we are sitting on such huge gas deposits?? Firstly, not all of the 300 billion cubic metres of gas will be recoverable, and it is estimated that the recoverable gas will be around 10% of this figure or 30 billion cubic meters. To put this in perspective this is equivalent to around 65 cargoes of LNG as delivered to Milford Haven. In total – not annually.
30 billion m3 of gas has an energy value of around 1,000 trillion BTUs which is worth around £10 billion based on the current international market for LNG. Spread over say 10 years working life, this is worth around £1 billion a year to the Welsh economy. But after development costs, production costs, transportation costs etc, the value to the Welsh Treasury in the form of extraction fees (royalties) and taxes would be of the order of £100 million/year.
So it is a valuable resource but it is not a game changer.