In Pakistan the electricity is now turned off for 18-20 hours some days in many cities and 20 hours in rural villages. The onset of summer temperatures, shortages of fuel oil for thermal generation and falling water levels have increased the power shortfall to record levels. Without electricity to run the pumps urban water supplies quickly shut down. Without power to run the mills, exports are falling, leaving the country without money to import oil. In short we are seeing a classical downward spiral.At the same time, in India, the domestic natural gas supply is falling, requiring increased, and more expensive imports that can only be achieved using LNG resources.
There have been discussions for years over the possibility of running gas pipelines from Turkmenistan and Iran down through Pakistan and into India to provide the natural gas needed to help. The TAPI pipeline from Turkmenistan is currently at a stage where it may be moving forward. Pakistan is ready to commit to purchasing gas by this July, but . . .
In the four nations’ ministerial meeting last week, both India and Pakistan had agreed to the broader aspects of the gas sales and purchase agreement (GSPA), but crucial things like the price of gas and transit fee are yet to be decided.At present the Turkmen are expected to demand at least $7 to $7.50 per kcf, which is the price that they are getting from China. And transit fees to get the gas through Afghanistan and Pakistan to India will be added to that. (In context that is about the same price as LNG when it is currently delivered in India, and above the $4.94 to $6.42 price of domestically produced gas).
The current hope is that the pipeline will be started in 2013, with full flow to all three countries by 2016. The pipeline will have to run a thousand miles before it reaches India. And this highlights one of the problems with natural gas. It is harder to deliver than other fuels.
Oil can be put on rail cars, or tankers, as well as being piped, as can coal (though there are very few places that use pipelines to move coal). But natural gas either requires a direct pipeline, or it has to be condensed to liquid form for shipment. When large volumes are involved turning the NG into LNG requires construction of both a condensing plant at the supply end and a re-gasification unit at the customer end. Both require time to build. And one the gas is regenerated, the customer has only a limited capacity for storage, and depends on the flow coming through the delivery pipe to keep power being generated.
Coal at the other extreme used (in my youth) to be delivered to our house from the back of a horse-drawn cart. It was dumped in the street, and we shoveled it into the “coal bin” out of which we then hauled it, a bucket load at a time, into the house, and dumped it on the fire. Logistics were a lot simpler, and we kept at least a couple of weeks supply in reserve in the bin.
Times have changed somewhat, for although shovels may still dig out the coal, they now can load a hundred tons, rather than a few pounds. Rail cars can haul 120 tons apiece in unit trains of 100 cars, and power stations may use 10,000 tons of coal a day to generate 850 MW of baseload power. But the coal is often still dumped in heaps at the power station, to be used when needed. Stations will usually keep 60 to 90 days of supply on hand.
India is aware of these advantages, but has internal problems with developing enough domestic coal supplies for the power that it needs. Coal India has said that it can only deliver 100 million tons against the 330 million ton increase in demand that, over the next five years, that power stations now being built will need.
With domestic coal production floundering amid a sharp upsurge in power capacity addition, over 40,000 MW of new generation capacity could get stranded over years for want of fuel. This is close to 70 per cent of the power capacity slated to come up during the period, most of which is being set up by private developers.With a current generation capacity of 173,626 MW, this threatens the generation of some 42,000 MW.
There is a catch with using imported coal to meet all the shortfall, because of the construction of the Indian boilers. They blend about 10% of the higher thermal content imported coal with domestic coal but there are technical problems with a higher concentration that limit how high it can be raised, as well as the additional cost factor. However new construction can be built to handle higher concentrations of imported coal, it just costs more – which is expected to be a problem in relatively poor parts of the country.
Seeing this as an opportunity, however, Adani Enterprises, an Indian coal company, has just bought the Abbot Point coal terminal in Australia, after buying coal properties in Queensland last year. Over the next five years they will bring the mines on line and be able to feed up to 50 million tons into the Indian subcontinent. It is not enough, in itself, to meet the shortfall, but it is evidence that firms in India are aware of the problem and are moving to find answers. They will do so, however, in the face of stiff competition from China. And this competition underlines the conclusions that I drew in an earlier post about the unrealistic projections of future coal use by folk such as Tad Patzek and Dave Rutledge.
Unfortunately also this does not solve the immediate problem that India faces with a current shortage of available fuel. Nor does it get Pakistan any closer to finding a short-term solution to power shortages in that country. There comes a certain point where, when warnings go unheeded, the consequences must be suffered, though sadly often not by those who weren’t paying enough attention.