British Gas Research Articles

Liberalisation and Competition in UK Energy Markets: the Spur to Innovate

This article assesses the main issues for the energy industry over the next decade, and particularly for the British gas industry. Supporting a carbon tax as a way of counteracting market trends towards lower energy prices, the author argues that the agreements at the Kyoto summit will lead, within a decade, to "an effective framework for restricting greenhouse gases". He welcomes the British Government’s recent consultative document on utility regulation and calls for the gas industry to provide serious analysis to allay concerns about diversity of supply in Britain. He foresees accelerating liberalisation in the EU, based not on central agreement but on a Jeffersonian process whereby regulatory changes in one EU state lead to pressure for similar changes in neighbouring states. He concludes by speculating about the energy industry’s equivalent of the PC or mobile phone.

The British Gas demerger — the internal communications story

The demerger of British Gas in 1996 was one of the largest restructurings in UK corporate history. This paper focuses on the internal communications challenges of the demerger, including the objectives, strategies and results. It is written from the perspective of an ‘insider’ because the author was a member of the executive team of British Gas, responsible for the external and internal communication in the run‐up to the demerger.

Is the gas supply market a natural monopoly? Econometric evidence from the British Gas regions

We have estimated a multi-output model of marketing and customer accounting costs in the BG regions. The cost function is well-behaved, separable, exhibits unitary elasticities of substitution between factor inputs and there are constant returns to scale when both outputs rise by the same proportion. When one output is held fixed, economies of scale can be exploited by expanding the other output. If our model is representative of the global cost function, this suggests that suppliers who already have a large market share in the non-domestic market will have a competitive advantage when the domestic market is liberalised in 1998.

Gas and Water Feminism: Maud Adeline Brereton and Edwardian Domestic Technology

In 1911, a group of British gas managers made advertising history by establishing a collective organization dedicated to the promotion of a single industry. The British Commercial Gas Association directed its campaigns at various consumer groups, including builders, architects, and tenants. To present the "woman’s point of view" to their female customers, the B.C.G.A. executive hired Mrs. Maud Adeline Cloudesley Brereton as editor-in-chief of its monthly publicity magazines. A former teacher turned domestic science specialist, Brereton decided to work for the private sector, the gas industry, because it offered a practical solution to housing problems. In this respect, Brereton combined business with social reform. Maud Adeline Brereton anticipated that gas technology, in the form of cookers, water boilers, and gas fires, had the potential to raise housing and nutrition standards for all classes. Within the context of public debates over racial deterioration and eugenics, Brereton promoted ameliorative technology to improve the health of the population. Moreover, she maintained that technology made possible a "domestic revolution," by significantly reducing the time and effort that women, as both servants and housewives, expended on housework. Time saved on housekeeping might be directed to more profitable and gratifying pursuits, including paid employment or voluntary service, extending women’s influence beyond the private sphere. Given her preoccupation with public health and domestic architecture, Brereton continued the work of an earlier generation of Victorian feminist designers. As an Edwardian, she was not alone in this crusade, and interwar women’s groups renewed calls for affordable labour-saving domestic technology. However, Brereton stands out among her contemporaries because she chose to work, not through political organizations, but in the corporate sector in an age when few women held positions of influence in the predominantly male business world.

The exploration history and controls on hydrocarbon prospectivity in the Wessex basins, southern England, UK

Abstract The Wessex basins were formed during Mesozoic extension and were subsequently modified by Cretaceous uplift and Alpine inversion events. The basin geometry and evolution of the area is strongly controlled by the long-lived fault systems which cross the area. Two primary plays are recognized within the Wessex basins; the Triassic Sherwood Sandstone and the Jurassic Bridport Sandstone. These plays contribute the vast majority of the recoverable reserves in the area. The Triassic play consists of a Sherwood Sandstone Group reservoir, a Liassic mudstone source rock and a Mercia Mudstone Group regional seal. Hydrocarbons were generated from the Late Jurassic to Tertiary in the main kitchen area and migrated into a range of fault-related traps. The main risks on the play are reservoir quality together with the timing and the route of hydrocarbon migration into valid traps. The Jurassic play consists of the Bridport Sandstone Formation which is also sourced from the Liassic mudstones and the top seal is provided by the Fuller’s Earth Formation. The dominant risk on this play is the extent and quality of reservoir facies. In the onshore domain trap definition, using two-dimensional seismic data, is an additional risk on both plays. The basins of southern England have been explored for hydrocarbons for over 50 years. The initial phase of exploration focused on the onshore and tested anticlinal structures which had been mapped at surface. Onshore activity reached a peak in the successful drilling by British Gas of the Jurassic and Triassic reservoirs in the Wytch Farm Field in 1973 and 1977, respectively. The first offshore well in the United Kingdom Continental Shelf (UKCS) was drilled off Lulworth Cove by BP in 1963. More recently, offshore exploration concentrated on fault-related traps within or on the edges of the Portland-Wight Basin. Although offshore activity has been reduced in the last 5 years, the 14th UKCS Licensing Round rekindled interest in the area as companies were awarded previously unlicensed acreage for exploration. Successful future exploration in the Wessex basins will require a more complete understanding of reservoir development and three-dimensional basin evolution. Future drilling will focus on untested fault bounded prospects and stratigraphic traps with suitable reservoir quality.

Price cap regulation, profitability and returns to investors in the UK regulated industries

The privatisation of the public utilities in the UK led to the creation of a regulatory structure based on dedicated regulatory offices operating price cap controls. Ideally, the price cap operates so as to share efficiency gains equitably between share-holders, in terms of higher profits, and consumers, in terms of lower prices. The question is, have gains been shared equitably so far? This paper attempts to shed light on this issue by reviewing the profits of BT, British Gas, the water and sewerage companies of England and Wales and the regional electricity companies (RECs). The paper also discusses returns to shareholders in terms of an internal rate of return on investment.

Exploration in the Gulf of Thailand in deltaic reservoirs, related to the Bongkot Field

Abstract Statoil has been involved in exploration in the Gulf of Thailand since 1985, following an invitation by PTTEP (National Exploration and Production Oil Company of Thailand) to assist in the evaluation and possible development of the Bongkot gas and condensate Field. Statoil and PTTEP jointly studied the field in 1985 and 1986. In 1990 PTTEP farmed 60% out to a group consisting of Total, British Gas and Statoil. Development work on the field started in 1990 with the acquisition of 3D seismic data. The field came on stream in June 1993, and production increased from the original planned 150 10 6 ft 2 /day to 350 10 6 ft 2 /day at present. In the joint PTTEP/Statoil study the Oligocene to Middle Miocene reservoirs were described as fluvial point bar sandstones, deposited in a meandering river system located on a delta top or coastal plain. Based on available data it was not possible to map the individual reservoirs. 22 wells found intermingled gas- and water-bearing sandstones without obvious relation to structure. No field fluid contacts were found, and the pressure regime was thought to be hydrostatic. Statoil simulated a reservoir model consisting of numerous pointbar deposits on a muddy delta plain. The pointbars were assumed to be isolated sandbodies which favoured stratigraphic trapping. Structural mapping of existing 2D and old 3D data sets was thought to give reliable structural maps, although it was difficult to correlate single events. Stratigraphic traps were interpreted as the main traps in the field because no relationship was found between structural closure and gas pools. Since 1990 when field development started with Total as operator around 2500 km 2 of 3D data has been acquired, and approximately 20 exploration wells and 45 development wells have been drilled. These data resulted in a much more accurate description of the field, especially through the use of high-resolution 3D seismic data. The well information allowed the identification of high GR intervals with a continuous seismic expression. Also individual sand reservoirs could be correlated. It became evident from the detailed 3D seismic interpretation that structural traps form the main trapping mechanism, although a minor part of the reserves are found in isolated channel sands, which could be detected from amplitude maps. It has been difficult to identify stratigraphic traps but it is hoped that ongoing seismic attribute analyses will help. In 1993 Statoil farmed in to licence B10/32, operated by Ampolex. The Bongkot model of isolated fluvial channels, with traps formed by several faults with or without structural closure was accepted as an attractive play type. Not withstanding this, the first wildcat well, Karawake-1 was a structural test. The well failed to find hydrocarbons because it intersected a series of overlapping alluvial fans; these lack internal seal and would have precluded hydrocarbon migration and entrapment. Ampolex made a reinterpretation of the block based on the existing 2D seismic, and concentrated on seismic facies mapping. The mapping resulted in two prospect areas where fluvial facies could be recognized above a lacustrine source rock; and also the results of the Karawake-1 well could be better explained. A second well should prove the model.

Catalytic aspects of the steam reforming of hydrocarbons in internal reforming fuel cells

Steam reforming of hydrocarbons such as natural gas is an attractive method of producing the hydrogen fuel gas required by fuel cells. It may be carried out external to the fuel cell or internally. The two types of fuel cell in which internal reforming is most appropriate are the molten carbonate (MCFC), operating at ca. 650°C and the solid oxide (SOFC) which currently operates above 800°C. At such temperatures, the heat liberated by the electrochemical reactions within the cell can be utilised by the endothermic steam reforming reaction. This paper reviews some of the catalytic aspects of internal reforming in these two types of cell. In the MCFC the major catalyst issue is that of long term activity in the presence of a corrosive alkaline environment produced by the cell's electrolyte. In Europe, this is being addressed by British Gas and others, in a programme part-funded by the European Commission. In this programme, potential catalysts for the direct internal reforming MCFC were evaluated in ‘out-of-cell’ tests. This has led to the demonstration of a 1 kW proof-of-concept DIR-MCFC stack and the start of a European ‘Advanced DIR-MCFC’ project. For the SOFC, it has been shown that state-of-the-art nickel cermet anodes can provide sufficient activity for steam reforming without the need for additional catalyst. However, anode degradation may occur when steam reforming is carried out for long periods. New anode materials could therefore offer significant benefits.

NEW CONTROL BUILDING ENVELOPE FOR BRITISH GAS.

In April 1994, Babtie Group was commissioned by British Gas Exploration and Production to project manage and design an enclosure to provide blast protection to an existing control building at the North Morecambe On-Shore Gas Terminal at Rampside, near Barrow-in-Furness. The construction of the terminal was virtually complete and the control building, located at the southern end of the facility, was the operational centre for the on-going system commissioning activities. It was an essential project requirement that the enclosure was designed and constructued without causing disruption to the commissioning effort and constructed without compromising the integrity of the existing structure. In order to satisfy health and safety considerations associated with importing full gas inventory for final plant commissioning, the protective envelope was to be structurally intact by 14 August 1994 and fully fitted out, available for opreation's staff occupation by 30 September 1994.

Myson pumps secures major contracts with British Gas services

Myson pumps secures major contracts with British Gas services

ACCOUNTING CHOICE AND A THEORY OF CRISIS: THE CASES OF POST-PRIVATIZATION BRITISH TELECOM AND BRITISH GAS

In examining the accounting choices of two UK utilities, it is argued that positive accounting theory is devoid of explanatory power. In its place the paper proposes a neo-Marxist theory of crisis management, largely based on the work of Habermas. It analyses the financial statements of British Telecom and British Gas, and shows how their accounting choices may be more satisfactorily explained as responses to avoid crises that otherwise might be faced by these two entities in the general context of crisis tendencies in the UK socio-economic system. © 1997 Published by Elsevier Science Ltd Editorial Note. Since preparing this version of the paper, Tony Puxty has died. Prior to his death, the paper had been sent back for relatively minor revisions. Although these were not undertaken, the reviewers and myself think that the paper should be published. We do this hoping that it will serve to remind us of a serious and thoughtful scholar of accounting whose wisdom and contributions are very much missed.

97/03743 The British Gas market 10 years after privatization: a model or a warning for the rest of Europe?

97/03743 The British Gas market 10 years after privatization: a model or a warning for the rest of Europe?

The cost effectiveness of contaminated land remediation stategies

British Gas has a major programme of contaminated land remediation, reclaiming the sites of many former gasworks for other beneficial uses. On behalf of its customers and shareholders, the company must ensure that its approach to remediation is as cost-effective as possible, while meeting all environmental obligations. The development of two disured sites presented the opportunity to examine the cost benefit of remediation, both in terms of the level of site investigation needed to minimise unforeseen costs in the subsequent remediation phase, and to compare the relative costs of alternative remediation techniques. The case studies demonstrated a substantial cost benefit of an extensive site investigation prior to remediation works, while a comparative analysis of remediation techniques concluded that landfill was the least expensive, compared with bioremediation and soils washing. However, with the addition of the landfill tax, the costs of alternatives to landfill disposal become more comparable. As more experience is gained of the new techniques, costs should fall, helping to encourage a wider choice of cost-effective remediation approaches in the UK.

In this issue…

WE LEAD THIS ISSUE with an interesting assessment (by J. K. Seedhouse and A. Racey of British Gas) of the sealing quality of the Triassic Mercia Mudstone Group in the East Irish Sea Basin. Hydrocarbons here are reservoired in the fluvial and aeolian sandstones of the Lower Triassic Sherwood Sandstone Group, a syn‐rift succession up to about one km thick. Both natural gas and crude oil are sourced from underlying Namurian shales, and are produced commercially at a number of relatively small fields located offshore NW England. A regional top‐seal is provided by the post‐rift Mercia Mudstones; however, the quality of this seal is very variable across the basin. In terms of general stratigraphy, the Mercia Mudstone Group is composed of alternating halite‐and mudstone‐rich units, which together reach a maximum thickness of over 3,000 m. Where a halite‐dominated unit directly overlies the reservoir sandstones, a very efficient seal is formed. However, halite‐rich units are limited in their areal distribution; where they are absent, mudstone‐dominated intervals may overlie the reservoir section, providing a seal of very variable quality. This paper reports on the factors which control the variation in seal integrity of the mudstone‐dominated units.The authors make use of downhole pressure data from a number of wells to give a first indication of Mercia Mudstone Group seal integrity. Pore pressures at the top of the oil column are seen to increase markedly, as would be expected, if the overlying sealing unit is halite‐dominated. The pressure build‐up is more variable where mudstones overlie the reservoir interval. In a second stage of the investigation, cores of the sealing interval from two wells and two onshore boreholes were logged in detail. Mercury‐injection porosimetry was used to assess the pore framework of selected core‐plug samples. The results indicate that variations in capillary entry pressures are the most important control on seal integrity in the mudstone‐dominated units. The authors also briefly assess other controls, including the presence of fractures in the seal unit, variable hydrocarbon saturation in the mudstones' pores, and variations in seal thickness across the basin.

Transforming British Gas

The need to change the way any business operates quickly is essential for remaining competitive, understanding what you key competencies and capabilities are is a key prerequisite before initiating a change programme. The restructuring of the UK gas industry presents an additional complication to transforming the business, the market changes, regulatory pressures and an inherited culture all serve to make the journey move complicated. Ensuring the destination is reached requires a full understanding of the environment, a radical change planning process which highlights key competencies and an implementation plan capable of measuring achievements in all aspects of the change. The business competency developed during the change process will ensure the company will remain the leading player in the emerging energy business. © 1997 John Wiley & Sons Ltd and Cornwallis Emmanuel Ltd.

THE UK - CONTINENT GAS INERCONNECTOR.

Keywords INTERCONNECTOR UK, TRANSCO, DISTRIGAZ GAS, INTERCONNECTORS, TRANSMISSION, SYSTEMS, NATURAL, COMPRESSED, SUBSEA, PIPELINES, PIPES, UNDERWATER, SUBMARINE, GRIDS, POWER, ENERGY, EXPORTS, PRODUCTION, PLANNING, DESIGN, CONSTRUCTION, METHODS, PROJECTS, COMPRESSION, TERMINALS, FACILITIES, SUPPLY, PIPELAYING, BARGES, LAYBARGES, ENVIRONMENT, OFFSHORE, SEA BACTON, ZEEBRUGGE UK, BELGIUM, EUROPE... Show All

Liberalized Utilities, New Technologies and Urban Social Polarization

This article explores the urban social impacts of the radical liberalization and privatization of British utilities since the early 1 980s, and relates these impacts to broader shifts towards more socially fragmented cities. The article has three parts. The first part introduces the experimental political project through which British telecommunications, gas, water and electricity networks were privatized and liberalized during the 1980s. In the second part, the changing relationships between these key network utilities and the users of utility services are analysed and the broad logic of 'splintering networks' is identified. Three elements of this restructuring are explored: the 'rebalancing' of tariffs and cost-reflective pricing; the use of new metering technologies for 'cherry picking' affluent consumers while 'socially dumping' more marginal ones; and the development of new IT strategies for supporting the social construction of segmented markets. The concluding part of the article identifies the implications of the reorientation of utilities for social and spatial polarization within cities, and draws out implications for urban policy and research.

The British Gas market 10 years after privatisation: a model or a warning for the rest of Europe?

The tenth anniversary of the privatisation of British Gas (BG) and the demerger of the company make this an appropriate time to review the development of the British gas market. A casual observer would hail the first decade of the privatised British gas industry as a tremendous success: fierce competition in the industrial and commercial gas market will be extended to the entire residential sector in a bold and unique experiment due to be concluded by Spring 1998. Prices have fallen sharply to all classes of customer over the past decade. On the face of it, the gas industry appears to be a triumphant example of the liberalisation and competition experiments which followed the privatisation of utility industries in Britain. The reality is somewhat more complex. The principal problems concern the progressive difficulties with all aspects of the regulatory framework. In addition, a large number of uncertainties remain as to how liberalisation and competition in the residential sector will operate in practice, particularly in terms of public service obligations and security of supply. Concentration on short-term issues has overwhelmed any long-term strategic perspective. For these reasons, it is uncertain whether Continental European governments will show great enthusiasm for following ‘the British experiment’.

Competition and regulation in the UK gas industry

The decade since privatization has seen gas change from an integrated monopoly with no competition and without the structure necessary to encourage it, to an industry moving rapidly towards full competition. British Gas was privatized as an integrated monopoly; it had no regulation in the bulk market, and light regulation in the tariff market. Within 10 years it has lost more than half its bulk market, has voluntarily 'demerged' into a transportation and supply arm, and is leading the way in liberalization of the residential market. Some of these changes have been assisted by the particular circumstances of the gas market, especially the contracts which the incumbent has inherited. The Regulator is relying increasingly on prevention of undue discrimination for control of the dominant supplier, and this principle has been discussed and applied in a number of cases within the industry. Liberalization also raises important distributional issues, especially in the residential market.

Pipeline integrity maintenance using a tethered inspection vehicle (TIV): Lowe, R.; Robson, P. Insight, Vol. 37, No. 6, pp. 413–416 (Jun. 1995)

In recent years there has been a growing awareness of the benefits of using intelligent pigs as a means of maintaining the integrity of pipelines. These pigs are autonomous devices which are transported internally through a pipeline and conduct inspections on-line without the need for taking the pipeline out of operation. This awareness has resulted in the worldwide acceptance of the use of high-resolution on-line inspection equipment for the inspection of high-pressure transmission pipelines. This inspection technology has now been further developed by British Gas for low-pressure pipelines, such as gas and water distribution pipelines, refinery pipelines and even pipelines from the jetty loading point to the terminal. Indeed, discrete sections of decommissioned high-pressure transmission pipelines can also be inspected by this method. This paper describes the tethered inspection vehicle (TIV) as a method of ensuring pipeline integrity, while eliminating unnecessary hydrostatic testing, thereby avoiding the environmental consequences of pipeline failure.