WXTXNATIONAL NATURAL GAS MARKET
Working Consulting G r o u p
O c t o b e r 1907 WP-87-102
R e p o r t by t h e Working Consulting G r o u p of t h e President. of t h e Soviet Academy of S c i e n c e s o n Long-Term E n e r g y F o r e c a s t i n g , Acad. M. S t y r i - kovich , R e s e a r c h L e a d e r .
Working h p r s are interim r e p o r t s on work of t h e International I n s t i t u t e f o r Applied Systems Analysis a n d h a v e r e c e i v e d only limited review. Views or opinions e x p r e s s e d h e r e i n d o not n e c e s s a r i l y r e p r e s e n t t h o s e of t h e I n s t i t u t e or of its National Member Organizations.
INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS A-2361 L a x e n b u r g , Austria
About the Authors
The following individuals h a v e c o n t r i b u t e d to t h i s Working P a p e r . S e c t i o n s 1, 2.1, 2.2, 2.5, 2.6, 3.9, 10, a n d 11 w e r e w r i t t e n by Yu. V . Sinyak, D o c t o r of S c i e n c e (Economics); S e c t i o n 2.4 by M r s . O.A. N e k r a s o v a , Candidate of S c i e n c e (Econom- ics); S e c t i o n s 2.3 a n d 9 by E.B. S h l i k h t e r , Candidate of S c i e n c e (Chemistry); S e c - t i o n s 4 a n d 5 by M r s . T.Ya. B u k h t o y a r o v a , J u n i o r R e s e a r c h e r ; S e c t i o n 7 by Mrs.
Z.N. T s v e t a y e v a , Candidate of S c i e n c e (Geography); S e c t i o n s 4 a n d 6 by A.K. A r - s k y , Candidate of S c i e n c e (Economics); S e c t i o n 8 by N
.N.
Chizhov, Candidate of S c i - e n c e (Geography); S e c t i o n 3, s o f t w a r e by Yu. S . L e z n e r , S e n i o r R e s e a r c h e r ; a n d S e c t i o n 3 by A.D. V i r t s e r , Candidate of S c i e n c e ( P h y s i c s , Mathematics).With c o n t r i b u t i o n s f r o m S.Ya. C h e r n a v s k y , Candidate of S c i e n c e (Technology), Working Consulting G r o u p of t h e P r e s i d e n t of t h e S o v i e t Academy of S c i e n c e s ; A.S.
Astakhov, D o c t o r of S c i e n c e (Economics), Academy of t h e National Economy of t h e Council of Ministers of t h e USSR; M.S. Modelevsky, D o c t o r of S c i e n c e (Geology), In- stituLe of Geology of F o r e i g n C o u n t r i e s ; a n d Yu. A . Vislol~qov, SoyuzgasexporL.
Foreword
The I n t e r n a t i o n a l Gas Study was organized in form of a c o l l a b o r a t i v e r e s e a r c h e f f o r t a n d focused o n t h e f u t u r e p r o s p e c t s f o r n a t u r a l g a s in E u r o p e a n e n e r g y m a r k e t s . One of t h e most a c t i v e p a r t i c i p a n t s o u t s i d e IIASA w a u t h e Working Con- sulting G r o u p of t h e P r e s i d e n t of t h e S o v i e t Academy of S c i e n c e s . Unlike IIASA, where t h e g e o g r a p h i c a l s c o p e of t h e s t u d y was limited to t h e E u r o p e a n e n e r g y m a r k e t s with s p e c i a l emphasis p r i m a r y o n g a s r e l a t e d t e c h n i c a l e v o l u t i o n a r y c h a n g e , t h e Working Consulting G r o u p a d o p t e d a comprehensive global s c o p e a n d a p r i m a r y f o c u s on i n t e r n a t i o n a l g a s t r a d e . During a series of working meetings a t IIASA a n d in t h e S o v i e t Union t h e two r e s e a r c h teams developed an e f f e c t i v e and mutually beneficial r e l a t i o n s h i p a t both t h e working and social level.
This r e p o r t summarizes t h e r e s e a r c h a c t i v i t i e s of t h e Working Consulting G r o u p u n d e r t h e l e a d e r s h i p of Academician
M.
Styrikovich d u r i n g 1984-1986.Hans-Holger R o g n e r L e a d e r
I n t e r n a t i o n a l Gas Study
Preface
F o r t h e l a s t two y e a r s t h e I n t e r n a t i o n a l I n s t i t u t e f o r Applied S p t e m s Analysis OIASA). t o g e t h e r with some o t h e r national organizations, h a s conducted r e s e a r c h o n t h e f u t u r e p r o s p e c t s of t h e i n t e r n a t i o n a l n a t u r a l g a s t r a d e . S o v i e t r e s e a r c h in- s t i t u t e s h a v e a l s o t a k e n a n a c t i v e p a r t in t h i s p r o g r a m . M o r e o v e r , t h e Working Consulting G r o u p of t h e P r e s i d e n t of t h e S o v i e t Academy of S c i e n c e s on Long-Term E n e r g y F o r e c a s t i n g ( t h e leading Soviet organization p a r t i c i p a t i n g in t h e r e s e a r c h ) h a s p r e p a r e d a "shadow p r o j e c t " t h a t a d d r e s s e s t h e problem on t h e i n t e r n a t i o n a l n a t u r a l g a s m a r k e t o v e r t h e n e x t 30-40 y e a r s .
N a t u r a l g a s h a s long b e e n viewed as a s o u r c e of e n e r g y c a p a b l e of reducing t h e d e p e n d e n c e of industrialized nations o n oil imports. In t h e e a r l y 1980s, global e n e r g y s t u d i e s confirmed t h e v e r s a t i l i t y a n d economic viability of t h i s r e s o u r c e , and economic a s s e s s m e n t s showed t h a t only n a t u r a l g a s c a n compete with oil, when long-distance i n t e r r e g i o n a l g a s t r a n s p o r t a t i o n as LNG o r by pipeline becomes p r a c t i c a b l e .
The worsening ecological situation called i n t o question t h e p r o s p e c t s f o r wide-scale c o a l a p p l i c a t i o n s , and t h e continuing opposition toward n u c l e a r e n e r g y e n h a n c e d i n t e r e s t in n a t u r a l gas as a n ecologically c l e a n fuel.
A t t h e same time, i t became c l e a r t h a t t h e high c o s t of n a t u r a l g a s t r a n s p o r t a - tion and d i s t r i b u t i o n substantially weakens i t s competitiveness, e v e n a t a high p r i c e . U n d e r t h e s e conditions only a limited number of s u p p l i e r s possessing l a r g e gas r e s o u r c e s at low production c o s t s c a n e n t e r t h e world n a t u r a l g a s m a r k e t . These s u p p l i e r s include c o u n t r i e s in t h e Middle E a s t ( I r a n , Q a t a r , e t c . ) ; some coun- t r i e s in N o r t h Africa (Algeria, Nigeria); S o u t h e a s t Asia (Indonesia, Brunei, Thai- land, e t c . ) ; t h e US n e i g h b o r s
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Mexico and Canada; a n d two E u r o p e a n c o u n t r i e s - Norway and t h e USSR.The i n t e r n a t i o n a l n a t u r a l g a s Lrade was originally e x p e c l e d t o e x p a n d on a l a r g e r s c a l e in t h e n e a r f u t u r e . Today, however, t h e prevailing e x p e c t a t i o n i s t h a t of moderate g r o w t h f o r t h e n e x t d e c a d e . This c a n b e a s c r i b e d to virtually s t a b l e e n e r g y demand in industrialized c a p i t a l i s t c o u n t r i e s , which r e d u c e s t h e s c o p e f o r Lhe development of n a t u r a l g a s , n u c l e a r e n e r g y , and t h e c o a l i n d u s t r y . Developing c o u n t r i e s , in which f u r t h e r growth in e n e r g y consumption i s e x p e c t e d , d o n o t h a v e t h e n e c e s s a r y i n f r a s t r u c t u r e f o r n a t u r a l g a s utilization. On t h e o t h e r hand, t h e r e c e n t twofold d r o p in oil p r i c e s will h a v e a s t r o n g influence o n n a t u r a l g a s p r i c e s a n d will impede t h e expansion of g a s utilizatian, d e s p i t e i t s obvious a d v a n t a g e s from a n ecological point of view. H e r e o n e should also mention s e c u r i t y o f s u p p l i e s from individual r e g i o n s , which i s a n issue of p a r t i c u l a r c o n c e r n f o r Western coun- t r i e s . This f a c t o r plays a n increasing role in planning i n t e r r e g i o n a l pipeline g a s t r a n s p o r t a t i o n . T h a t i s why region.. with a n u n s t a b l e political climate may h a v e limited access to t h e m a r k e t s of industrialized c a p i t a l i s t c o u n t r i e s . All t h e s e is- s u e s should b e t a k e n i n t o a c c o u n t in modeling t h e i n t e r n a t i o n a l n a t u r a l g a s m a r k e t . The world g a s m a r k e t in t h i s Working P a p e r is divided i n t o t h r e e l a r g e r e - gions (local m a r k e t s ) a n d s e v e r a l l a r g e g a s s u p p l i e r s , some of which h a v e a possi- bility of e n t e r i n g a l l t h r e e m a r k e t s with l a r g e volumes of g a s s u p p l i e s . Thus, t h e problem a c q u i r e s global significance. W e f o c w o n evaluating t h e d e p e n d e n c e of marginal n a t u r a l g a s p r i c e s o n g a s consumption volumes o n t h e b a s i s of d e t a i l e d
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vii-
e n e r g y f o r e c a s t s f o r t h e r e g i o n s a n d l a r g e e n e r g y consumers. T h r e e s c e n a r i o s of t h e world n a t u r a l g a s m a r k e t with r e s p e c t t o v a r i o u s h y p o t h e s e s of p r i c e growth in competitive e n e r g y s o u r c e s (notably oil) h a v e been c o n s i d e r e d . With t h e h e l p of t h e dynamic model f o r t h e i n t e r n a t i o n a l n a t u r a l g a s m a r k e t , l e v e l s of industrial development within t h e r e g i o n s a n d volumes of g a s imports, as well as e x p e c t e d na- t u r a l gas p r i c e s in t h e case of balance between s u p p l y and demand in l o c a l mark- ets, h a v e been d e t e r m i n e d . An assessment h a s b e e n made of t h e o v e r a l l e f f e c t d e r i v e d from t h e world n a t u r a l gas t r a d e f o r gas consumers a n d s u p p l i e r s .
Throughout t h e r e s e a r c h t h e Working Consulting Group h a s constantly main- t a i n e d c o n t a c t s with IIASA to c o o r d i n a t e a n d verify initial d a t a a n d s c e n a r i o s f o r computing. A s f o r t h e r e s t , both s t u d i e s are q u i t e independent r e s e a r c h e f f o r t s made o n a similar data b a s e . S p e c i f i c f e a t u r e s of e a c h of t h e s t u d i e s allow us to r e g a r d t h e latter as mutually complementary.
M . Styrikovich R e s e a r c h L e a d e r
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viii-
C o n t e n t
C h a p t e r 1
The C u r r e n t World Energy S c e n e and F a c t o r s Conditioning E n e r g y P r o s p e c t s Throughout t h e Remainder of t h e 20th and t h e Beginning of t h e 21st C e n t u r y
1.1. The continuing impact of oil p r i c e s 1.2. The p r o s p e c t s f o r n a t u r a l g a s 1.3. The p r o s p e c t s f o r c o a l
1.4. E n e r g y supply of developed c o u n t r i e s and urbanized a r e a s of developing c o u n t r i e s
1.5. E n e r g y supply of r u r a l areas of developing c o u n t r i e s C h a p t e r 2
Energy Demand S c e n a r i o s f o r Industrialized Market Economies 2.1. Methodology
2.2. I n d u s t r i a l e n e r g y consumption 2.3. T r a n s p o r t a t i o n
2.4. Residential a n d commercial s e c t o r 2.5. E l e c t r i c i t y demand p r o s p e c t s
2.6. E n e r g y demand s c e n a r i o s f o r t h e U S , Western E u r o p e , and J a p a n
2.7. Potential n a t u r a l g a s m a r k e t C h a p t e r 3
Modeling t h e I n t e r n a t i o n a l N a t u r a l Gas Market C h a p t e r 4
Economic Evaluation of World N a t u r a l G a s R e s o u r c e s C h a p t e r 5
E x p o r t P o t e n t i a l of Major Gas-Exporting Countries C h a p t e r 6
Economics of I n t e r r e g i o n a l N a t u r a l G a s T r a n s p o r t a t i o n C h a p t e r 7
Economics of I n t r a r e g i o n a l G a s S t o r a g e a n d Distribution C h a p t e r 8
Ecological Advantages of N a t u r a l G a s Over O t h e r Types of Fossil Fuels
C h a p t e r 8
Evaluation of Marginal N a t u r a l Gas P r i c e s
C h a p t e r 10
Dependence of Willingness to P a y on Potential Incremental Demand f o r N a t u r a l Gas
C h a p t e r 11
F u t u r e P r o s p e c t s f o r t h e I n t e r n a t i o n a l N a t u r a l Gas T r a d e 11.1. The g e n e r a l s i t u a t i o n
11.2. The s i t u a t i o n in individual n a t u r a l g a s m a r k e t s 11.3. Individual g a s e x p o r t e r s
DHERNATIONAL NATURAL
GAS KARKET Working C~nsuLtCng &oupChapter 1
The Current World Ehergy Scene md Factors Conditioning Energy Prospects Thro hout the Remainder of the 20th and the Begin-
?!
ning of the 21st entury
More than a d e c a d e h a s elapsed s i n c e t h e
OPEC
c o u n t r i e s f o r t h e f i r s t time drastically r a i s e d world oil p r i c e s . The worsened e n e r g y situation pushed e n e r g y supply issues to t h e f o r e f r o n t . After numerous and h e a t e d discussions at scientific forums and in t h e p r e s s , where t h e m o s t conflicting views on f u t u r e e n e r g y p r a s - p e c t s were e x p r e s s e d , i t became c l e a r t h a t t h e world e n e r g y demand will follow a n upward t r e n d . Its growth p r o s p e c t s will b e conditioned by t h e world's population growth and by t h e impossibiLity of providing s a t i s f a c t o r y living conditions without a manifold i n c r e a s e in p e r c a p i t a e n e r g y consump!.ion in developing countries. The growth r a t e s will b e d i f f e r e n t f o r developed and developing c o u n t r i e s . A s t a b l e e n e r g y demand s i x t o eight times t h e p r e s e n t level i s likely t o b e achieved by t h e end of t h e next c e n t u r y .W e are now enjoying a period of virtually s t a b l e e n e r g y supply: supply in t h e world m a r k e t i s well in e x c e s s of demand; traditional b u y e r s of e n e r g y r e s o u r c e s have become more self-sufficient; s t r a t e g i c oil s t o c k s a r e available in c a s e of i n t e r r u p t i o n s in e n e r g y supply; new technologies are r e a d y t o come on-stream b u t are impeded by t h e low p r i c e of basic e n e r g y r e s o u r c e s .
Against this background, with r e s p e c t to f u t u r e e n e r g y development, t h e si- tuation in developing c o u n t r i e s h a s become a matter of growing c o n c e r n . The r i s e in e n e r g y p r i c e s r e s u l t e d in a dramatic i n c r e a s e in the d e b t of developing coun- t r i e s , which in t h e mid-1980s collectively owed a t a t a l of nearly 900 billion dollars.
As a r e s u l t , many international p r o j e c t s of the 1970s f o r a c c e l e r a t i n g economic development w e r e not realized. New economic growth was h a r d to a c h i e v e during a financial c r i s i s . A s h i f t in t h e weight of global e n e r g y problems from developed to developing c o u n t r i e s o v e r t h e n e x t 50 y e a r s will r e q u i r e prompt a c t i o n f o r a time- ly r e s t r u c t u r i n g of the world e n e r g y economy with a view to avoiding more s e r i o u s complications i n f u t u r e than e x p e r i e n c e d in t h e past. These problems are likely to r e t a i n t h e i r c r i t i c a l importance f o r t h e n e x t few decades.
Everyone r e a l i z e s now t h a t mankind h a s e n t e r e d t h e so-called p e r i o d of tran- sition from t h e e n e r g y economy based on fossil fuels to a n economy based o n virtu- ally inexhaustible e n e r g y r e s o u r c e s s u c h as n u c l e a r and thermonuclear e n e r g y , s o l a r , etc. Analysis of global fossil f u e l r e s o u r c e s (coal. oil, n a t u r a l gas) with re- g a r d
to
e x t r a c t i o n and utilization costs shows t h a t t h e y will continue to play aleading r o l e in t h e world e n e r g y balance, p e r h a p s into t h e middle of t h e next cen- tury. Pacsil fuel r e s o u r c e s proved substantially l a r g e r than expected e a r l i e r . Even in t h e c a s e of oil, available data point
to
additional r e c o v e r a b l e r e s o u r c e s . H e r e , a f t e r t h e c h e a p e s t r e s o u r c e s a r e e x t r a c t e d , t h e world must mine more ex- pensive fuels, which wiU inevitably result i n h i g h e r e n e r g y p r i c e s .In t h e e a r l y y e a r s of t h e p a s t decade, g r e a t hopes w e r e pinned on renewable s o u r c e s of e n e r g y r e g a r d e d as virtually unlimited and ecologically clean. Subse- quent studies proved t h a t r e n e w a b l e b a s e d energy supply is too costly compared wlth coal, natural gas, and n u c l e a r options. That i s why, though t h e role of renew- a b l e sources of energy in f u t u r e energy supply i s not clear up to now, t h e i r contri- bution in t h e foreseeable f u t u r e wlll obviously be Limited to local applications.
There were a l s o f e a r s of global changes in t h e e a r t h ' s climate resulting from the burning of fossil fuels and from thermal pollution. These problems have not been adequately studied, though calculations show t h a t only more t h a n a tenfold in- c r e a s e in energy consumption from t h e c u r r e n t level may lead
to
t h e overheating of t h e e a r t h ' s s u r f a c e to a threatening degree. As mentioned above, e n e r g y fore- c a s t s suggest not more than a six- to eightfold r i s e in e n e r g y consumption. In t h e Loger run, t h e overheating c a n b e p a r t l y compensated f o r through a n i n c r e a s e in t h e e a r t h ' s albedo, due to deforestation, urbanization, e t c . A l e s s c e r t a i n f a c t o r t h a t may a f f e c t global climate i s t h e growth of C02 atmospheric concentrations and t h e "greenhouse effect1'. The influence of C02, however, i s now s e e n to b e not s o g r e a t as expected. Moreover, due to some p r o c e s s e s (enhancement of C02 solubili- ty in t h e waters of t h e world ocean, intensified growth of vegetation), C02 concen- t r a t i o n growth r a t e s will be lower t h a n predicted e a r l i e r , and t h e volume of C02 - emissions will grow at a slower pace as the s h a r e of nuclear energy i n c r e a s e s and fossil fuel consumption declines. Besides, in middle latitudes, t h e "greenhouse ef- fect" may even have s o m e positive impact on biomass growth.True, though in t h e long r u n ecological problems d o not seem to r e q u i r e c a r e - ful consideration on a global level, environmental protection o a local and regional level i s of g r e a t concern. "Acid rains" resulting from increased SO, and NO, emis- sions pose a s e r i o u s problem f o r some developed c o u n t r i e s in Central Europe, t h e US e a s t e r n s t a t e s , and some p a r t s of Japan.
To sum up, now and in t h e foreseeable f u t u r e , mankind i s not t h r e a t e n e d with
"energy famine" b u t v a r i o u s t r e n d s in energy p r i c e s and ecological considerations influence t h e o r d e r of p r i o r i t i e s of e n e r g y technologies, necessitating radical changes in the p r e s e n t e n e r g y economy.
Liquid and gaseous fuels r e t a i n t h e i r dominant s h a r e in today's world e n e r g y balance: 602 in developed and 40% in developing countries.' The latest s h a r p r i s e in world oil p r i c e s in t h e 1979-1980 period r e s u l t e d in declining e n e r g y consump- tion in some developed market economies (it i s quite possible t h a t some of them have a l r e a d y r e a c h e d a s t a b l e level of consumption, after which one c a n e x p e c t absolute e n e r g y consumption to drop); in a considerable reduction in t h e oil demand of developed market economies a f t e r the y e a r 1980; in a c c e l e r a t e d oil and gas exploration and a rise i n t h e oil and g a s production of t h e non-OPEC countries;
in l a r g e s c a l e oil stockpiling in oil-importing countries, namely, market economies;
a n d i n a glut i n the oil market.
I t is obvious t h a t c u r r e n t t r e n d s in t h e world e n e r g y s c e n e are d i r e c t e d to- ward energy-saving policies (energy conservation as a whole, including capital- intensive measures) and toward substituting o t h e r r e s o u r c e s , notably coal and in some c o u n t r i e s n u c l e a r e n e r g y and n a t u r a l gas, for oil.
The p r i c e elasticity of oil consumption proved much h i g h e r than t h e majority of e x p e r t s p r e d i c t e d e a r l i e r . The substantial d r o p in t h e oil demand of industrial- ly developed c o u n t r i e s t h a t o c c u r r e d a f t e r t h e y e a r 1980 w a s caused not only by t h e g e n e r a l economic r e c e s s i o n
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tdal g r o s s national p r o d u c t in r e c e n t y e a r s would not decline b u t e v e n slightly i n c r e a s e d-
b u t also by fuel, mainly liquid fuel, conservation a n d t h e use of oil substitutes encouraged by t h e situation in t h e marked and, i n s o m e c a s e s , by government policies. In t h e United States t h e above decline w a s accompanied by a significant r i s e in coal production and consumption.Coal production in some coal-exporting c o u n t r i e s (especially in Australia) h a s sub- stantially i n c r e a s e d , and international t r a d e in coal expanded. In the s h o r t r u n , f u r t h e r expansion of t h e world t r a d e i n natural g a s i s expected, and t h e possibility of establishing a world g a s market i s now being discussed.
The following f i g u r e s (in p e r c e n t ) i l l u s t r a t e t h e s e positive shifts in t h e e n e r g y economy of developed nonsocialist c o u n t r i e s between 1973 and 1980. 2
Gross domestic p r o d u c t (GNP) Total e n e r g y consumption
including oil consumption oil import
Electricity/GDP r a t i o
O i l consumption p e r unit of GDP Domestic energy production
oi 1 coal
n u c l e a r e n e r g y
These t r e n d s became m o r e pronounced in t h e f i r s t half of t h e 1980s.
Forecasts of e n e r g y consumption are now being revised, and t h e erroneous- ness of e a r l i e r p r o j e c t i o n s of liquid fuel consumption h a s been unanimously recog- nized. The errors w e r e based on t h e underestimation of t h e response of world oil demand to high liquid fuel p r i c e s and t h e overstating of t h e volumes of global oil consumption in t h e 1990-2000 period and beyond. High world p r i c e s of h y d r o c a r - bon fuel c r e a t e d a n incentive f o r accelernting oil prospecting and roduction in n o n 4 P E C c o u n t r i e s , Mexico. G r e a t Britain, and Norway among t.hern.8According to t h e majority of f o r e c a s t s , o i l production in developed nonsocialist and developing c o u n t r i e s will rise slightly from t h e 1980 level t h r o u g h to 1990 and will total 2300- 2400 million t/yr a n d 2500-2600 million t by 2000.'
h a m , A.B., L Scbrrbtmhohw, A. Svoronw, r l t h tb. a d a n t . at J.L Rowley (alms) Irk- Uond Energy Wo- S u m u y d Poll BUPMSOE. Luenburg, Amdrl.: 1ntor~tloa.l I r t i t r k Cor A p p l l d astam A-s.
1.1.
The continuing impact of oil priceaThe p r i c e of oil i s of c r i t i c a l importance f o r t h e e n e r g y economy of t h e world and i t s regions, s i n c e oil and oil products not only continue to play a leading r o l e in t h e p r e s e n t world e n e r g y s c e n e but, due to t h e availability of considerable idle oil production capacities, oil gradually becomes a marginal r e s o u r c e in t h e world's e n e r g y balance, i.e., it a f f e c t s e n e r g y decisions. That i s why forecasting long-term t r e n d s in oil p r i c e s has now become a key issue in e n e r g y studies. R e c e n t f o r e - c a s t s (between t h e l a t e 1970s and t h e e a r l y 1980s) suggested a v e r y high oil p r i c e (60-80 d o l l a r s / b a r r e l in t h e 1980 p r i c e s ) by the end of t h e century. Today t h i s es- timate h a s dropped to 20 dollars; and t h e majority of e x p e r t s now think t h a t o v e r t h e n e x t o n e or t w o y e a r s oil p r i c e s may decline by s e v e r a l d o l l a r s but t h e n will inevitably rise again, though at f a r m o r e m o d e s t rates than in t h e 1970s. As f a r back as t h e summer of 1985 i t w a s e x p e c t e d t h a t by 2000 p r i c e s will rise 10-152 from t h e 1900 level and 20-252 by 2010, i.e., much lower t h a n p r e d i c t e d e a r l i e r . = Today, however, i t i s m o s t likely t h a t p r i c e s will r e a c h t h e 1980 level only by 2020.
The p r e s e n t world e n e r g y s c e n e o f f e r s limited opportunities f o r a n economi- cally viable growth of e n e r g y p r i c e s . Moreover, because of t h e unforeseen d r o p in oil consumption, oil p r i c e s a r e , quite to t h e c o n t r a r y , declining to p r e v e n t demand from sagging, though in t h e n e a r f u t u r e this decline will change to slow growth again. This c a n b e a t t r i b u t e d to large-volume liquid fuel uses in those energy-consuming s e c t o r s ( e l e c t r i c utilities, boiler plants, and industrial f u r - naces) where the p r i c e elasticity of oil consumption i s high and oil substitutions (less costly and available) are c o s t effective when oil p r i c e s r i s e . Oil p r i c e s o v e r a long time will condition t h e rates of t h e s t r u c t u r a l evolution of t h e world fuel and e n e r g y balance, notably owing to liquid fuels' declining contribution. I t i s c l e a r now t h a t due t o this factor a viable large-scale transition t o a l t e r n a t i v e e n e r g y s o u r c e s and oil substitutes c a n b e e x p e c t e d only beyond t h e y e a r 2000.
1.2. The
prospects for natural gasInternational t r a d e in n a t u r a l g a s will also have a c e r t a i n restraining influ- e n c e on o i l p r i c e s . Natural g a s , t h e clearlest fuel from a n ecological point of view, i s t h e b e s t fuel f o r s t a t i o n a r y consumers. Emissions resulting from its burning c a n b e a l m o s t entirely excluded as t h e r e i s no bound nitrogen i n gas, and s u l f u r avail- a b l e in t h e form of H$3 h a s to b e completely removed t o avoid c o r r o s i o n of pipe- lines. This p r o c e s s i s relatively c h e a p and, in s o m e c a s e s , i s offset by t h e c o s t of r e l e a s e d sulfur. Under t h e s e conditions t h e delivered p r i c e of g a s will b e set equal to middle distillates with l o w sulfur content. The g a s consumer will obtain a price plcm pipellno transgorhtlon ads which a m be rather high, if gas is
trarm-
portsd o v e r m e dtatances, e v e n prcwided high-atpacity p i p s l i m s are d. The . s a s l o n a l m k P e o f m k r r a l g m ~ o n r a k s s i t n e c c g s a r ~ b ~ f a r more fibrage facilities w i t h dl and coal.
Moreover, compressor stations consume a l a r g e f r a c t i o n of g a s delivered;
even in t h e case of the world's l a r g e s t pipelines r e g a r d e d as s t a n d a r d in t h e Soviet Union (d
=
1.42 m, P,,,-
7.5 MPa) with t h e world's highest throughput c a p a c i t y , t h e g a s t u r b i n e d r i v e of compressor stations consumes w 1 0 2 of g a s o v e r a dis- tance of 3000-4000 km (for instance, T p m e n-
Ukraine) and 152 o v e r a d i s t a n c e of 6000 km (Tyumen-
Ukraine-
West Europe).k r r c r . , AS., I.. S e h r a m r , A. ~.orotlos, d t b tlw ...~stacrca ot 3.1.. ~oriy (IOM) w r r a -
U dBmrgy WorLdrop:
S-rn
d Poll -tI Irawbur#, A d r i a I n k r m a U d IrrLltvk lor Applied Sy.tma A n l p t aIn t h e f u t u r e , switching o v e r to e l e c t r i c d r i v e (it a p p e a r s c h e a p e r t o meet baseload demand from nuclear-derived electricity compared with costly gas) and raising p r e s s u r e
to
1 0 MPa will r e s u l t in h i g h e r throughput capacity.G a s cooled to -30°C and especially to -60 and -70°C c a n substantially i n c r e a s e a pipeline's throughput capacity.= Calculations prove this t o be a viable proposi- tion, despite some technical complexities involved. But i t a p p e a r s c o s t effective only f o r large-volume transportation, provided cooling does not r e q u i r e d e c r e a s - ing a pipeline's diameter. P r o j e c t s f o r t r a n s p o r t a t i o n by larger-diameter pipeline or as
LNG
a r e unlikely to b e realized. A s f o r s c a t t e r e d or seasonal g a s consumers, i t i s necessary to t a k e into account c a p i t a l investments r e q u i r e d f o r a distribution network and seasonal underground s t o r a g e . The l a t t e r leads to h i g h e r g a s p r i c e s , since even if exhausted g a s o r oil fields a r e used f o r s t o r a g e , one should t a k e into account t h e cost of buffer g a s s t o r a g e , which i s nearly equal t o t h e a c t i v e volume of t h e gas s t o r e d , and t h e a v e r a g e amount of n a t u r a l gas. With no g a s o r o i l fields available in t h e proximity of t h e consumer, use c a n be made of man-made seasonal g a s s t o r a g e facilities. And this a l s o involves heavy investments even under favor- a b l e geological conditions. 7G a s t r a n s p o r t a t i o n by s e a , including the s t a r t - u p and operating costs of liquefaction and regasification facilities and t a n k e r s , a p p e a r s more costly com- p a r e d with t r a n s p o r t a t i o n by large-diameter pipeline with electrically driven compressor stations. Only in those c a s e s where g a s i s t r a n s p o r t e d o v e r l a r g e dis- tances and liquefaction and regasification costs a r e but a small f r a c t i o n of total transportation costs may transportation as
LNG
b e comparable with pipeline, espe- cially when t h e volume of gas t r a n s p o r t e d o v e r a given r o u t e i s not too l a r g e and, consequently, a smaller-diameter pipeline i s used.Since t h e c o s t of d r y n a t u r a l g a s transportation i s h i g h e r compared with oil, i t may be reasonable to consider regional systems, including prospective import- e r s such as Western Europe, Japan, and the US and t h e i r r e s p e c t i v e e x p o r t e r s . In some c a s e s , the conversion of remotely located gas to more t r a n s p o r t a b l e pro- ducts, such as methanol, ammonia, e t c . , a t o r close t o the point of production may prove a p r a c t i c a b l e proposition.
On the whole, given t h e advantages of g a s as a n ecologically clean fuel, as a feedstock, and i t s availability in some p a r t s of t h e world, g a s may p r o v e to be op- timal in the e n e r g y balance of some regions, especially those with s t r i c t pollution- c o n t r o l laws. In l a r g e c i t i e s and u r b a n a r e a s , with high m o t o r fuel consumption and relatively modest specific c a p i t a l investments in g a s compressor stations, one should consider the use of methane f o r automobile t r a n s p o r t . In t h e n e a r f u t u r e t h e Soviet Union will have hundreds of thousands of methane-fueled t r u c k s ; at f i r s t use will be made of 20 MPa s t e e l cylinders, which w i l l eventually b e r e p l a c e d by light composite cylinders.
The world natural g a s m a r k e t , owing to i t s varying effectiveness f o r different consumers and in d i f f e r e n t regions, p a w s a s e r i o u s problem t h a t calls f o r c a r e f u l consideration. Work in t h i s field i s being done by some international organizations under the auspices of t h e International Institute f o r Applied Systsms Analysis, Lax- enburg, A u s t r i a .
But despite all the advantages of gas, t h e world n a t u r a l g a s m a r k e t will be lim- ited compared with oil because of the high cost of t r a n s p o r t a t i o n by pipeline and especially as
LNG.
The deLivered p r i c e of n a t u r a l g a s will b e s e t r e l a t i v eto
t h e ' ~ a e transportation In peramfrost reglone will lnvolve messures to avoid defroetlng the ground underneath a plpellne. Thle wlll require tbe use of precooled gas.7 ~ n some cases i t may be n e c e a s r y t o regulate dolly consumption from underground gas storage.
p r i c e of liquid fuel, at l e a s t until t h e end of this century. High transportation costs will limit t h e international n a t u r a l gas t r a d e t o a few g a s p r o d u c e r s which have a n abundance of c h e a p g a s r e s e r v e s (Iran and o t h e r P e r s i a n Gulf s t a t e s , In- donesia, Algeria, Nigeria, and the Soviet Union). In gas fields remote from t h e market, i t will be desirable to develop energy-intensive industries, notably t h e petrochemical industry, which uses g a s both as a s o u r c e of e n e r g y and a feedstock.
1.3.
The
prompsct. for coalLess c e r t a i n i s t h e situation in t h e rapidly growing world market f o r high- g r a d e coals, t h e demand f o r which is rising steadily (from 200 million t in 1977, to 250 million
t
in 1980, and t o 306 milliont
in 1985). Accordingto
s o m e f o r e c a s t s , t h e coal market i sto
expandto
450-460 million t by 2000,' although they n o longer pointto
t h e boom (up to 1 billion t in 2000) predicted e a r l i e r . gP r i c e s f o r coals with high calorific value and low sulfur content (less than I % ) , which a r e t r a n s p o r t e d by s e a o v e r Large distances (South African, North American, and even Australian coals at the p o r t s of West Europe), constitute 50-60 dollars/t, in terms of coal equivalent, i.e., twice a s l o w as c u r r e n t p r i c e s f o r a heat-equivalent amount of fuel oil. This c r e a t e s incentives f o r building new elec- t r i c plants and l a r g e coal-fired boiler plants with pulverized coal combustion, even in c o a s t a l regions remote from t h e point of production if t h e l a t t e r i s located close t o a n ocean port.10 Moreover, even a costly switch of fuel oil units o v e r to coal i s paid back relatively rapidly, in some cases. For instance, two 300 MW power- generating units in South Korea, when switched o v e r to Australian coals, were paid back in two y e a r s . This s h i f t p r o v e s f a r more economical at t h e point of produc- tion of internationally t r a d e d coal (Middle East, Central America), because the p r i c e of coal t h e r e is lower as i t does not include f r e i g h t costs.
I t should be noted t h a t a highly probable considerable r i s e in t h e demand f o r power-generating coals i s unlikely t o lead to higher r e a l p r i c e s , since quite a few c o u n t r i e s have l a r g e r e s e r v e s of high-grade coals, c h e a p at t h e point of produc- tion, l w a t e d close t o s e a p o r t s . Besides such countries as the United S t a t e s , Aus- t r a l i a , South Africa, and Poland, which a r e now l a r g e e x p o r t e r s of power- generating coals, large-scale penetration of t h e Soviet Union, Canada, China, and India into t h e world market i s expected in the long r u n , which will make i t possible to k e e p t h e coal/fuel oil p r i c e r a t i o at a constant level.
The main f a c t o r t h a t impedes Large-scale coal consumption i s ecological con- s t r a i n t s . In the c a s e of l a r g e plants equipped with electric p r e c i p i t a t o r s , particu- l a t e emissions do not pose any t h r e a t
to
t h e atmosphere because, with a precipita-tor
whose efficiency r a n g e s from 99to
99.52, these emissions c a n b e comparable with fuel oil ash emissions (fuel oil units a r e not equipped with g a s cleaning sys- tems). But fly a s h electrostatically precipitated consists of sub-microparticles with heavy metals, contained in coal ash, concentrated on t h e i r s u r f a c e . These e m - issions may b e a health hazard.- --
$orecast of Chose Manhotton Bank, 1965.
%lfele, rt aL. (IB01), h e s p y i n o F Y n i t e mid. A Cfo6tzl Z & s t m A n a l y s i s (Ballinger, Cambridge, Mass.).
1°wlth further progress I n coal fluldieed bed comburrtlon medium- and small-capacity plants will be shifted to coal.
A major o b s t a c l e in t h e use of coal in l a r g e industrial plants i s SO2 and NO, emissions in s t a c k g a s e s , which are not only toxic but are also t h e c a u s e of so- called acid r a i n s . The Latter may have a detrimental e f f e c t on vegetation and biohydrosphere (Scandinavia, Canada, etc.). In s p a r s e l y populated areas this c a n b e avoided by dissipating emissions through high stacks. But main prospective coal i m p o r t e r s and consumers a r e , as a r u l e , densely populated regions where spe- cial plants have to b e installed
to
desulfurize s t a c k gases. Such plants involve high o p e r a t i n g costs and, in p a r t i c u l a r , enormous investments. Whereas operating e x p e r i e n c e gained with t h e s e plants e n s u r e s sufficiently d e e p desulfurizatfon of s t a c k g a s e s , nitrogen oxides c a n b e removed only through c a t a l y t i c oxidation of NO to NO2, which makes a plant m o r e costly and p r e v e n t s wide-scale applications of t h i s method. With t h e help of inexpensive methods of reducing t h e t e m p e r a t u r e in t h e flame-kennel, o n e c a n s u p p r e s s t h e formation of nitrogen oxides from t h e a i r , b u t the nitrogen contained in coal itself forms NO, at moderate t e m p e r a t u r e s as well. 11On t h e whole, wide-scale use of coal at l a r g e industrial plants meets, i n some c a s e s , with c e r t a i n objections. Medium- and low-capacity plants, where n e i t h e r s t a c k s n o r g a s cleaning facilities c a n b e installed, pose a f a r more s e r i o u s problem Substantial p r o g r e s s h a s recently been made i n coal utilization with CaO and CaC03 additions in fluidized bed combustion f u r n a c e s . This will probably b e a n a t t r a c t i v e option f o r medium- and low-capacity consumers in regions with s t r i c t pollution con- t r o l . But t h e use of fluidized bed combustion in l a r g e industrial plants e n c o u n t e r s c e r t a i n difficulties.
In any c a s e , because one h a s t o t a k e into a c c o u n t both h i g h e r o p e r a t i n g c o s t s and especially c a p i t a l investments compared with liquid fuel, t h e r e f o r e coal remains unsuitable f o r peak-load plants with a s h o r t operation period. Still, for some economic r e a s o n s one should e x p e c t coal's contribution to grow both in developed and developing countries. Coal's growth p r o s p e c t s in developing coun- t r i e s will b e limited because of t h e lack of developed t r a n s p o r t a t i o n systems and, consequently, high t r a n s p o r t a t i o n c o s t s , especially if one t a k e s into a c c o u n t that even t r a n s p o r t a t i o n by r a i l not adapted
to
e l e c t r i c t r a c t i o n , let alone automobile t r a n s p o r t , involves considerable volumes of oil products. As a r e s u l t , a substan- tial r i s e in coal consumption c a n be e x p e c t e d only in those c o u n t r i e s t h a t have a widely b r a n c h e d network of water- and railways, f o r instance, India and China, as well as in coastal regions a n d areas c l o s e to t h e point of production.Though c u r r e n t coal p r i c e s will tend
to
i n c r e a s e in the long r u n , still t h e y will be more s t a b l e compared with oil a n d n a t u r a l g a s , which will create incentives for a s h i f t to coal in t h e f u t u r e , especially dueto
t h e introduction of new technologies (for instance, fluidized bed combustion) t h a t are ecologically c l e a n e r compared with traditional ones. As international t r a d e in high-grade coals expands, coals with l o w c a l o r i f i c value a n d p a r t l y oil shales, whose t r a n s p o r t a t i o n by land, in par- t f c u l a r , i s costly, will remain c h e a p fuel locally produced. In regions with abun- d a n t coal reserves energy-intensive industries and, i n t h e m o r e d i s t a n t f u t u r e , synfuel production will develop.Analysis of f u t u r e p r o s p e c t s s u g g e s t s t h a t p r i c e s f o r main fossil f u e l s will change
to
varying d e g r e e s . Asto
n a t u r a l g a s a n d l o w c a l o r i f i c fuels, t h e i r p r i c e s in s o m e regions will remain relatively low. This will condition s t r u c t u r a l changes in t h e e n e r g y mix of developed c o u n t r i e s a n d t h e c r a a t i o n of new power-generating c a p a c i t i e s i n developing c o u n t r i e s with r e g a r d f o r c u r r e n t l y established r a t i o s l%uccessful work has recently been done In NO, reduction through 1nJectlon o f N H 3 I n gases.and, to a f a r g r e a t e r d e g r e e , f o r proportions anticipated o v e r t h e next 20-30 y e a r s .
1.4. Energy mpply of developed countries and urbanized areaa of developing countrim
Future e n e r g y supply of developed countries and urbanized areas of develop- ing countries will b e conditioned by t h e replacement of liquid fuel by more avail- a b l e and less costly s o u r c e s of energy; by the introduction of new e n e r g y s a v i n g technologies and reduction of a i r pollution, which poses a p a r t i c u l a r t h r e a t to densely populated areas. On t h e whole, t h e above will b e capital-intensive meas- u r e s . In developed countries they will be aimed mainly at saving l a b o r r e s o u r c e s .
F u r t h e r e n e r g y development, f i r s t and foremost, will b e c h a r a c t e r i z e d by h i g h e r growth rates of t h e e l e c t r i c i t y s h a r e in t h e fuel and e n e r g y balance t h a n o c c u r r e d in t h e past.
Due to t h e g r e a t advantages of e l e c t r i c i t y f o r many consumers, t h e s h a r e of e l e c t r i c i t y in t h e world e n e r g y balance w a s steadily growing even at a time of c h e a p oil availability when t h e c o s t of e l e c t r i c i t y under a base-load p a t t e r n of consumption w a s f o u r times t h e cost of d i r e c t Liquid fuel use (mainly owing t o low conversion efficiency not exceeding, as a r u l e , 4OX, and, t o a l e s s e r d e g r e e , t o capital investments in e l e c t r i c plants). Under t h e s e conditions the use of e l e c t r i - city f o r low-temperature (space heating, ventilation) and even high-temperature h e a t production w a s limited to relatively few c a s e s where technological advantages outweighed t h e high c o s t of e l e c t r i c i t y .
In many countries ( f o r instance, the US) t h e use of e l e c t r i c traction on rail- ways w a s r a t h e r limited. Until r e c e n t l y even in t h e Soviet Union, where f r e i g h t t r a f f i c i s very heavy, a little more than half of f r e i g h t w a s c a r r i e d by diesel locomotives, because c a p i t a l invgstments w e r e paid back r a t h e r slowly as t h e r e was little difference between diesel fuel and fuel oil (used as fuel f o r e l e c t r i c plants) p r i c e s .
Today, f o r almost any l a r g e base-load consumer of high-temperature h e a t , a shift from liquid fuel to e l e c t r i c i t y p r o v e s cost effective.
Direct utilization of high-temperature nuclear-based h e a t a p p e a r s promising only f o r some industrial processes, namely, f o r those requiring medium tempera- t u r e s (lower than 700-800°C). In t h e long run, f o r h i g h e r temperatures, e l e c t r i c heating with a n increasing s h a r e of plasma technology is likely
to
be the dominant method.Taking into account the leading r o l e of t h e power industry in t h e e n e r g y econ- omy of developed countries, one should e x p e c t t h a t t h e g r e a t e s t changes will o c c u r in t h i s field. Nuclear e n e r g y or coal substitution f o r liquid fuel w i l l r e d u c e its s h a r e in newly c o n s t r u c t e d l a r g e e l e c t r i c plants. In t h e majority of developing c o u n t r i e s new l a r g e power-generating units operating on liquid fuel are n o longer laid down, excluding peak-load units in some w e s .
Introduction of n u c l e a r e l e c t r i c power plants with t h e i r s h a r e exceeding cer- tain l i m i t s pares some problems.
As
i s known, nuclear plants are c h a r a c t e r i z e d by v e r y high specific c a p i t a l investments and low c u r r e n t costs; at t h e same time they are t h e c h e a p e s t s o u r c e of e l e c t r i c i t y used to meet t h e base-load demand of t h e majority of industrialized world regions (with t h e exception of a few regions with v e r y low-priced indigenous coals or v e r y efficient hydropower r e s o u r c e s ) . Operating in t h e base-load p a r t of the load c u r v e , nuclear plants oust o t h e r plants of t h e system. If t h e load c u r v e i s r a t h e r dense ( a r e a s where heavy industry i sc o n c e n t r a t e d ) a n d o t h e r e l e c t r i c plants are highly maneuverable, then, technical- ly a n d economically, n u c l e a r p l a n t s c a n g e n e r a t e t h e g r e a t e r p a r t of e l e c t r i c i t y a n d c o v e r t h e e n t i r e load c u r v e (minimum load at n i g h t a n d a sightly h i g h e r load on d a y s off). In t h e latter c a s e , however, a l l o t h e r e l e c t r i c plants would b e s h u t down more t h a n 300 times and s t a n d i d l e during some SOX of t h e y e a r . S i n c e t h i s i s unac- c e p t a b l e f o r many of t h e p l a n t s , hydro-pumped s t o r a g e p l a n t s h a v e t o b e con- s t r u c t e d . These p l a n t s o p e r a t e during t h e night a n d on d a y s off as pumps, i n c r e a s - ing t h e minimum load of t h e system, a n d as s h a r p peak-load t u r b i n e s (750 h / y r ) when t h e load i s at a maximum. The efficiency of t h e s e p l a n t s d o e s n o t usually e x c e e d 70X, i.e., t h e y are n o t p r o d u c e r s b u t n e t consumers of e l e c t r i c i t y . In mountainous r e g i o n s , f o r i n s t a n c e , i n J a p a n , t h e i r c o n s t r u c t i o n d o e s n o t involve h e a v y investments a n d p r o v e s economically viable.
Quite d i f f e r e n t conditions e x i s t i n some o t h e r p a r t s of t h e world, f o r i n s t a n c e , in t h e E u r o p e a n p a r t of t h e USSR, where t h e g r e a t e r p a r t of t h e c o u n t r y ' s popula- tion l i v e s i n t h e v a s t almost f l a t E a s t E u r o p e a n lowland. S i n c e t h e development of mainly highly energy-intensive i n d u s t r i e s i s c o n c e n t r a t e d in C e n t r a l S i b e r i a , which h a s a n a b u n d a n c e of c h e a p c o a l r e s e r v e s a n d highly e f f i c i e n t h y d r o p o w e r r e s o u r c e s , t h e load c u r v e s i n t h e E u r o p e a n p a r t will remain nonuniform a n d with time t h i s n o n u n i f o m i t y will t e n d to i n c r e a s e . Due to a r e l a t i v e l y high p r i c e of c o a l in t h e r e g i o n , newly c o n s t r u c t e d base-load plants a r e n u c l e a r . Existing power p l a n t s are mainly s u p e r c r i t i c a l p r e s s u r e t h e r m a l units, which are unsuitable f o r f r e q u e n t s t a r t u p s a n d shutdowns, e s p e c i a l l y coal-fired units. Besides, a c o n s i d e r - a b l e p a r t (30X) of t h e t o t a l e l e c t r i c c a p a c i t y i s met from c o g e n e r a t i o n p l a n t s , which combine e l e c t r i c i t y g e n e r a t i o n with h e a t p r o d u c t i o n , and t h e l a t t e r , g r e a t l y i n c r e a s i n g in w i n t e r , slightly d e c l i n e s at night h o u r s a n d o n d a y s off. Consequent- ly, e v e n if n u c l e a r p l a n t c a p a c i t y c o n s t i t u t e s b u t a small f r a c t i o n , t o p r o v i d e them with base-load u n d e r t h e s e conditions poses a problem. The u s e of hydro-pumped s t o r a g e p l a n t s t o eliminate t h e nonuniformity of t h e load c u r v e i s n o t economically justified, as t h e i r c o n s t r u c t i o n in flat c o u n t r y p r o v e s more c o s t l y c o m p a r e d with moun!ainous r e g i o n s . The a b o v e c o n s i d e r a t i o n s make o n e think of o t h e r ways t o s t o r e e n e r g y , which r e q u i r e additional investments a n d p r o d u c e only a p a r t i a l ef- f e c t . This r e s u l t s i n g r e a t v a r i a t i o n s in t h e cost of e l e c t r i c i t y , depending on t h e corsumption p a t t e r n , a n d i t becomes d e s i r a b l e to r e g u l a t e t h e p a t t e r n i t s e l f .
Many consumers c a n s u b s t a n t i a l l y c h a n g e t h e i r consumption p a t t e r n . F o r t h i s , r e l a t i v e l y small a d d i t i o n a l c u r r e n t e x p e n d i t u r e s a n d c a p i t a l investments would b e r e q u i r e d . Moreover, at t h e l o w cost of "off-peak" e n e r g y , i t might b e d e s i r a b l e t o o r g a n i z e s p e c i a l consumer-regulators. H e r e belong i n d u s t r i e s with v e r y high en- e r g y intensity p e r unit of c a p i t a l investments a n d employed l a b o r f o r c e , which p e r - mit load r e d u c t i o n s or i n t e r r u p t i o n s i n a p r o c e s s ( f o r i n s t a n c e , aluminum p r o d u c - tion), t h a n k s to t h e accumulation of p r o d u c t s .
The u s e of n u c l e a r p l a n t s f o r e l e c t r i c i t y g e n e r a t i o n a b o v e c e r t a i n limits, which are heavily d e p e n d e n t o n l o c a l conditions, will involve additional expendi- tures r e d u c i n g the coat e f f e c t i v e n e s s of t h e i r application. Similar f a c t o r s (though to a lesser d e g r e e ) condition the c o n s t r u c t i o n
of
coal-fired plants, as investment costs h a v e g r e a t l y i n c r e a s e d (mainly because of ecological c o n s t r a i n t s ) , a n d t h e p l a n t s are f a r less m a n e u v e r a b l e c o m p a r e d with gas-and-oil-fired units.Much m o r e complex is t h e use of the g r e a t number of existing t h e r m a l power p l a n t s with gas-and-oil units. This problem is of p a r t i c u l a r significance
to
coun- tries with a high share of f n e l o i l in e l e c t r i c utilities' f u e l s u p p l y ( f o r i n s t a n c e , t h e USSR).The s i m p l e s t t e c h n i c a l solution h e r e i s t h e ousting
of
liquid f u e l from existing t h e r m a l p l a n t s with g a s a n d - o i l units b y shifting t h e s e p l a n t sto
n a t u r a l gas.12 Dur- l%lth e sfmultancous shin to e shutdown mode of operetlon or deep load reduction e t "OW-peek"ing t h e n e x t 10-15 y e a r s t h i s p r o j e c t will be realized on a wide s c a l e in t h e Soviet Union and some o t h e r gas-exporting countries. In t h o s e c o u n t r i e s where t h e pene- t r a t i o n of n a t u r a l g a s i n t o t h e world market i s hampered, on-site g a s utilization will develop, p a r t i c u l a r l y f o r t h e needs of t h e petrochemical industry. The rapidly growing demand f o r oil as a feedstock h a s a l r e a d y been m e t from d r y n a t u r a l g a s ("chemistry
CIM),
notably heavy f r a c t i o n s e x t r a c t e d from associated g a s a n d g a s condensate fields. In the long run, o n e c a n expect p a r t i a l r e t u r n to coal chemistry (in t h e f i r s t place, on t h e basis of high-speed pyrolysis of coal a n d oil s h a l e s and syngas production from coal). In t h e majority of c o u n t r i e s where a s h i f t from ex- isting g a s a r i d d l units to natural g a s i s not economically viable, switching them o v e r to coal i s t h e g r e a t e s t concern. To overcome ecological c o n s t r a i n t s , t h e s h i f t to coal involves r a t h e r long a n d costly r e c o n s t r u c t i o n of plants; however, t h i s i s a l r e a d y under way in some c o u n t r i e s (the US, Denmark, etc.). A t t h e same time f u e l oil units, even those r e c e n t l y c o n s t r u c t e d , are being shiftedto
a s h a r p peak-load zone or are completely s h u t down (Great Britain, Sweden, etc.).Thus, o n e should e x p e c t a substantial reduction in liquid fuels' contribution to e l e c t r i c i t y generation and industry, two major fuel oil u s e r s . Taking i n t o account t h a t today's fuel oil production throughout t h e world accounts f o r 800 million t / y r , it i s h a r d
to
overestimate t h e e f f e c t t h a t t h e fuel oil replacement may have on fu- t u r e demand p r o s p e c t s f o r oil. Substantial p r o g r e s s i s being made in t h i s field in s o m e developed market economies. F o r instance, in t h e United S t a t e s , fuel oil yield a t oil r e f i n e r i e s dropped to 6% from a l o w level of 11% i n 1979; i n G r e a t Britain this reduction accounted f o r 17% c o m a r e d with 32%; in theFRG
i t d r o p p e d from 21X t o 16%; in R a n c e-
f r o m 29 lo ZOX.' Many c o u n t r i e s s t i l l have g r e a t possibilities f o r f u r t h e r r e d u c t i o n s in the fuel o i l yield.In s o m e developed c o u n t r i e s t h e residential and commercial sectors have high s h a r e s in t h e o v e r a l l consumption of g a s and oil products, namely, f o r s p a c e heat- ing and h o t water supply. The scope f o r h i g h q u a l i t y fuel replacements i s heavily- dependent o n climatic conditions, t h e t y p e of housing, and existing methods of low- t e m p e r a t u r e h e a t supply. Today major low-temperature h e a t consumers are c i t i e s and urbanized areas where t h e g r e a t e r p a r t of t h e population of developed and, in s o m e c a s e s , developing c o u n t r i e s lives. The p a t t e r n of settlement of urbanized areas v a r i e s from country to country. For instance, in t h e Soviet Union c i t i e s a r e planned and developed as a system of residential areas built up with multistory a p a r t m e n t houses. Under t h e s e conditions centralized h e a t supply from l a r g e heat-generating plants, namely cogenerating ones, p r o v e s m o s t cost effective.
Usually g a s or liquid fuel i s used as fuel f o r cogeneration plants a s in t h i s case less e f f o r t i s r e q u i r e d to e n s u r e c l e a r community a i r and t o r e d u c e t h e s i t e occupied by a cogeneration plant. In t h e Soviet Union, owing
to
t h e s h a r p r i s e in liquid f u e l p r i c e s , existing cogeneration plants are being gradually shifted to gas.14 In t h e l o n g e r r a n , e v e n i n t h i s country, which h a s a n abundance of g a s r e s o u r c e s , t h e p r i c e of g a s will continueto
rise, a n d a switch from cogeneration p l a n t s to coal or n u c l e a r fuel will a p p e a r economically justified. In both c a s e s t h i s will involve additional expenditures conditioned, in t h e case of coal-tired plants, by ecological c o n s t r a i n t s a n d t h e needto
d e l i v e r l a r g e amounts of solid fuel andto
remove a s h a n d s l a g . In t h e case of n u c l e a r cogeneration plants with water-cooled hours. For thIe I t will be necessary to construct low-cost g8s storage facilities for daily or woekly regulatlon.
a n d Qus AwmaL 82(32):23 (1984).
l%ut because urban heat supply I s largely of seasonal nature 8nd long-distance gas plpellnes re- quire constant load, the shlft to gas neceaaltatbe developlng a network of underground seasonal gas storage facllltles.
reactors producing low-pressure steam, e l e c t r i c i t y generation p e r 1 Gcal of sup- plied h e a t is substantially lower. Besides, safety considerations r e q u i r e t h a t such plants be located a t s o m e distance from big cities, which necessitates long-distance t r a n s p o r t a t i o n of low-temperature h e a t (in t h e form of hot water). Such transpor- tation p r o v e s f a i r l y cheap, provided large-diameter pipelines with high a v e r a g e annual load a r e used. As a r e s u l t n u c l e a r cogeneration plants a p p e a r cost effec- tive only in the c a s e of year-round h e a t supply, i.e., in meeting p a r t of big cities' annual h e a t demand. To improve a d i s t a n t h e a t supply from n u c l e a r cogeneration plants, i t becomes n e c e s s a r y
to
develop new w a y s of long-distance h e a t t r a n s p o r t a - tion, especially as r e c e n t p r o j e c t s seem n e i t h e r economically viable n o r c h e a p .One of t h e options f o r supplying u r b a n h e a t i s t h e construction of nuclear h e a t supply plants. The l a t t e r , when operating at low p r e s s u r e , c a n b e b r o u g h t to s u c h s a f e t y s t a n d a r d s t h a t i t will become possible to locate them i n densely popu- l a t e d areas. They c a n effectively supply hot w a t e r and p r o c e s s steam not only to a p a r t m e n t houses b u t a l s o to many other municipal low-pressure s t e a m u s e r s . In t h e Soviet Union such p l a n t s are being built in Gorky, Voronezh, and o t h e r towns.
Coal- or nuclear-based c e n t r a l i z e d h e a t supply a p p e a r s highly promising f o r residential a r e a s dominated by multistoreyed houses or f o r l a r g e industrial consu- mers, including agricultural/industrial complexes (for instance, v e r y l a r g e greenhouses).
In residential a r e a s , where c o t t a g e s are dominant, low-temperature h e a t pro- duction through h e a t pumps, especially f o r s p a c e heating and air-conditioning, p r o v e s cost effective. Heat pumps are v e r y economical in supplying h o t water with simultaneous warm water d i s c h a r g e , s i n c e a r i s e in t h e t e m p e r a t u r e of s u c h a good h e a t - t r a n s f e r medium as w a t e r does not r e q u i r e l a r g e heat-exchange s u r f a c e s . Such conditions e x i s t at many industrial a n d agricultural/industrial complexes and biological purification plants. In many c a s e s , natural (particularly ice-free) ponds or man-made r e s e r v o i r s c a n b e used as a s o u r c e of low-temperature heat. Heat pumps are especially a t t r a c t i v e f o r seaside resorts where requirements f o r c l e a r a i r are especially s t r i c t and t h e r e i s a need t o produce low-temperature h e a t f o r swimming pools.
Even a t p r e s e n t with oil p r i c e s in decline, t h e r e a r e g r e a t possibilities f o r vi- a b l e liquid fuel substitution igr almost a l l consumers with t h e exception of cars and t r u c k s , buses, planes, r i v e r b o a t s a n d mediumsized s h i p s , t r a c t o r s , self-propelled combines, e t c . In t h e longer r u n , however, one c a n e x p e c t p a r t i a l Liquid fuel sub- stitution even i n t h e s e fields.
This will involve, in t h e f i r s t place, i n t r a c i t y m a s s t r a n s p o r t a t i o n . Naturally, t h e existing system established during t h e p e r i o d of c h e a p oil availability should b e r e c o n s t r u c t e d with a view t o increasing t h e s h a r e of electric-powered t r a n s - p o r t
to
a maximum. Even in case of a successful solution of t e c h n i c a l problems, r e c o n s t r u c t i n g t h e e n t i r e u r b a n i n f r a s t r u c t u r e will t a k e time. I t i s unlikely t h a t by 2000 t h e g r e a t e r p a r t of i n t r a c i t y t r a n s p o r t w i l l b e r e p l a c e d by e l e c t r i c a l l y d r i v e n vehicles. P a r clearer are t h e p r o s p e c t s f o r developed systems of public t r a n s p o r t , at l a a d i n t h e Soviet Union a n d c o u n t r i e s with a similar settlement pat- t e r n , where o r i e n t a t i o n of public t r a n s p o r t (mostly e l e c t r i c a l l y d r i v e n ) toward e v e r y d a y journey b work a n d back h a s a l r e a d y proved economically justified. I t is especially importantto
take i n t o a c c o u n t the possibilities f o r developing public t r a n s p o r t in l a r g e c i t i e s of developing c o u n t r i e s where population growth rates are extremely high and automobile t r a n s p o r t consumes a n enormous amount of liquid fuel a n d causes heavy a i r pollution. Development of high-speed mass t r a n s i t b e f o r e new r e s i d e n t i a l areas are densely built up i s relatively c h e a p .In many c a s e s , developing c o u n t r i e s are o r i e n t e d toward t h e settlement pat- t e r n t h a t h a s gained wide a c c e p t a n c e , especially in t h e United S t a t e s , where residential areas with cottage-type housing are c l u s t e r e d around t h e c i t y c e n t e r forming a b e l t with a r a d i u s of 50-80 km a n d more. Such a p a t t e r n r e q u i r e s enor- mous c a p i t a l investments in a t r a n s p o r t a t i o n network and makes i t n e c e s s a r y t o use p r i v a t e cars f o r everyday journeys to work. Much c h e a p e r a n d more r e a l i s t i c i s t h e orientation toward constructing multistareyed apartment houses. This p a t t e r n h a s been a c c e p t e d in many c o u n t r i e s , though often with little r e g a r d f o r t h e development of public t r a n s p o r t . I t i s clear t h a t t h e s e options lead to widely vary- ing projections of m o t o r fuel consumption in developing countries.
Of c o u r s e , u n d e r any conditions t h e world's p r i v a t e car f l e e t will continue to groar.l5 But v a r i o u s economic f a c t o r s , notably t h e high cost of m o t o r fuel, will create incentives f o r Limiting t h e use of p r i v a t e t r a n s p o r t (especially in everyday life) and f o r developing public t r a n s p o r t and, what is more, will r e d u c e specific m o t o r fuel consumption p e r 100 km of t r a v e l . G r e a t p r o g r e s s h a s a l r e a d y been made in t h i s field due to both t h e growing s h a r e of diesel-powered vehicles in t h e car f l e e t and a s h i f t to small economical c a r s , in p a r t i c u l a r . Improvement in t h e efficiency of vehicles, especially p a s s e n g e r c a r s , will substantially compensate f o r t h e growth of t h e world's car f l e e t which i s likely t o b e completed during t h e next 20 y e a r s ; t h e r e a f t e r , t h e growth of fuel consumption i n multipurpose (inter- and i n t r a c i t y ) t r a n s p o r t will b e a l m o s t proportional to t h e number of cars.
Those are briefly t h e lines along which work will b e done to solve energy problems of developed and urbanized areas of developing countries.
1.5.
Energy mpply of rural areas of developing countriesThe g r e a t e s t p a r t of t h e population of developing c o u n t r i e s lives in r u r a l a r e a s (more t h a n 752). Providing s a t i s f a c t o r y living conditions f o r t h i s p a r t of t h e world's population will inevitably lead to a rise in e n e r g y consumption, which in i t s t u r n is impeded by lack of c a p i t a l . Energy supply of developed and developing c o u n t r i e s should be considered differently f o r e a c h g r o u p , i.e., f o r developing c o u n t r i e s solutions must b e as c h e a p as possible, provide maximum employment, a g r e e with traditional lifestyle, e t c . Hence i t follows t h a t r u r a l areas should be o r i e n t e d toward building small (local) unsophisticated plants, which c a n b e s e r - viced by indigenous personnel p r o p e r l y instructed. For t h e majority of less developed countries, c a p i t a l investments i n such equipment will be lower compared with developed c o u n t r i e s (primarily due t o t h e availability of a c h e a p l a b o r f o r c e ) . A t t h e s a m e time t h i s d o e s n o t mean t h a t l e s s developed c o u n t r i e s should use ob- solescent technologies. Quite t h e c o n t r a r y , such equipment should be manufac- t u r e d with r e g a r d f o r t h e latest achievements in s c i e n c e and technology. But new tschnologies should be optimized with r e s p e c t to the a b o v e conditions
-
d i f f e r e n t f o r d i f f e r e n t countries.Up to now t h e basic e n e r g y requirements of these areas have been m e t by so- called noncommercial (conventional) e n e r g y resources: wood and c h a r c o a l , a g r i - c u l t u r a l wastes, muscular power. On t h e whole, t h e s h a r e of t h e s e resources in t h e
a number or developed countries, however, .utomobIle transport has almost reached. level of saturation and further growth (two and three c a r s per famlly) wlll not result in a notlccable In- crease In rnlleage.
