Evolution of the Gas Industry

In most industrialised countries low calorific value gas manufactured principally from coal feedstocks, and distributed generally at low pressures for public consumption and to small industrial consumers for fuel purposes through localised pipeline grids, is either being or has already been displaced by high calorific value, high-pressure natural gas. Undoubtedly the availability of natural gas, with its inherent economic, qualitative, technical and other advantages over manufactured gas, has been the saviour of the gas industry in recent years. It is doubtful whether the traditional manufactured gas industry could have survived, in the face of increasingly severe competition from liquid petroleum fuels and electricity, if it had had to rely upon manufactured gas indefinitely.

No history of the evolution of the gas industry would be complete without at least passing mention of some of the references in folklore, mythology, religion and literature to the existence of such things as will-o’-the-wisp, burning bushes, perpetual lights, and burning springs in ancient times. While the nature and composition of the gases that gave cause to these phenomena were not known in those days, there can be little dispute that the gases in question occurred naturally and were predominantly methane—in most instances they were probably seepages of natural gas accidentally ignited by lightning or by man.

The United Kingdom merits a chapter to itself for several reasons. First, as already described, it is generally recognised that the first commercial use of gas was in the UK in the early part of the nineteenth century and that an Englishman, among others, can claim having discovered a process to produce a combustible gas from coal over a hundred years earlier. Second, in the late 1950s the UK led the world, together with the Japanese, in pioneering the development of processes to make gas from oil feedstocks. Third, at about this time the UK also pioneered, in conjunction with American interests, the transportation of natural gas in liquefied form by ocean tanker and in October 1964 became the first country in the world to import liquefied natural gas on a long-term, commercial basis. Fourth, the British Gas Corporation is now the largest gas entity in the western world when measured in terms of the number of customers (i.e. 14.5 million) it services and supplies with gas for its own account.

While the first recorded commercial use of manufactured gas was in the United Kingdom, the United States can fairly lay claim to being the birthplace of the natural gas industry as we know it today. There are, of course, many interesting references in literature to the burning of natural gas from underground seepages in China and elsewhere many centuries ago, but these were very small, localised events. As mentioned in Chapter 1, only the Chinese got as far as collecting such gas and piping it over very short distances in hollowed-out bamboo canes. All these early events petered out in time and it was the Americans who made the first serious attempts to utilise natural gas in a practical way.Story of Gas American Gas Association, 1964.

The gas industry of Japan is now just over one hundred years of age and is at that interesting stage of evolving from a traditional, fragmented, manufactured gas-based industry to a rather more sophisticated business, albeit still fragmented, relying to an increasing extent on imported natural gas in liquefied form. In terms of gas connections, Japan is today one of the world’s largest gas markets with nearly 15 million consumers: the market is characterised by a number of unique features as will become evident later in this chapter.

The history of the gas industry in Europe is long and distinguished. The story of gas in the United Kingdom has already been described, and while space precludes similar accounts of how the business evolved in Austria, Belgium, France, Germany, Italy, Spain and elsewhere in Europe, one country that cannot be glossed over is the Netherlands. Although the Netherlands is a fairly small country in terms of its geographic size and population, the contribution that Dutch gas has made to the development of the gas industry in north-west Europe over the last 10 to 15 years has been significant enough to merit selection of the Netherlands for individual treatment in this book.

Generally speaking, information on the Soviet gas industry is not as extensive or consistent as is the case for most Western countries. Such data that are available originate principally from governmental and other official sources. There is little scope for verifying and adding to such data from independent sources, which in the main tend to recycle or interpolate official data and published reports with varying degrees of accuracy.

Many references have been made in previous chapters to liquefied natural gas, or LNG as it is usually abbreviated. LNG is a relatively new development for the natural gas industry and has a high potential for substantial growth over the next two to three decades at least. The LNG business can be divided into two main categories.