PGCL’s new gas pipeline proposal: A luxury we cannot afford

According to recent media report, the government-owned Pashchimanchal Gas Company Limited (PGCL) has proposed to install gas pipelines which will run from Rajshahi to Rangpur and Saidpur. These pipelines will cost around Tk268 crore and in theory will supply 165 mmcfd (million cubic feet per day) of gas to industries and power plants in the northern region.

However, PGCL and other gas companies are already running low on their gas supply in other areas of the country. The gas pipeline system that runs through Bogura, Pabna, Sirajganj and Rajshahi gets an average of 176 mmcfd of gas, against a demand of 272.5 mmcfd. 

Another 165km pipeline system in Khulna-Barishal region had to be abandoned in 2016 for the lack of gas supply, which cost the government Tk1,200 crores of taxpayers' money!

The tremendous amount of money that is being invested in these projects, which in many cases gets abandoned or cancelled because of low gas supply, should constitute a major reason for worry. 

A developing nation like Bangladesh cannot sustain these financially disastrous endeavours indefinitely. 

The country should not invest in ambitious projects without extensive planning. Without uninterrupted gas supplies, these massive and expensive projects will prove to be catastrophic for us. 

The 100km proposed Rajshahi-Rangpur pipeline system will create an additional demand for 165 mmcfd of gas, putting more strain on an already stretched system.

The country at present consumes close to 3,200 mmcfd of gas against a demand of about 4000 mmcfd. A significant portion of the consumed gas is being supplied through imported LNG (liquified natural gas) and the figure is likely to grow as we move forward. 

At current trend, our domestic gas production is likely to fall below 1,500 mmcfd as early as 2030, but by that time the demand is expected to rise to about 5000 to 5500 mmcfd, according to the government appointed consultant's projection. 

This will leave a significant demand-supply gap, supposed to be closed by importing more and more imported gas i.e. LNG. But can Bangladesh buy too high a volume of LNG without hurting its economy? 

Although the present pandemic situation has temporarily lowered the LNG price in response to low worldwide demand, its price is bound to sharply rise as the petroleum market returns to its original form. 

Import of large volume of costly LNG to meet the future demands will mean increased pressure on the national economy. Therefore, whether Bangladesh can reasonably manage the required volume of gas supply to meet the high demand, by relying on the costly LNG, is doubtful, because of the economic fallout. 

It is likely that the demand-supply gap will remain open, meaning the gas supply curve will never meet the demand curve unless an alternative cheaper source of gas is made available. 

Building an extensive pipeline infrastructure without being sure that gas demand and supply curves meets, will be a wasteful venture.   

This bleak future can be avoided through vigorous and extensive explorations. Bangladesh can and should explore more gas fields, which might help us avoid a future energy crisis. Discovery of major gas reserves in Bhola recently has brought forth the prospect of more discoveries in the future. 

The government-owned Bangladesh Petroleum Exploration and Production Company Limited (Bapex) and other institutions can play decisive roles in this respect should the government take necessary measures. Also, the possibility of offshore hydrocarbon exploration should lead the policymakers to conclude that they should cooperate with certain international bodies as well.

The government should engage in vigorous moves, which will include international biddings for gas exploration, among others. Places such as the Cox's Bazar-Teknaf offshore basin are among extremely promising areas being adjacent to Arakan basin, the latter being regarded as one of the most prolofic gas rich provinces in southeast Asia.

It is ironic though that despite being in a region which has huge gas reserves, Bangladesh has not really been successful in locating her natural resources. In the last 20 years, Bangladesh has discovered a mere two trillion cubic feet (Tcf) of new gas reserves. 

The figure seems even smaller when compared with the amount of gas Bangladeshis have consumed in the same period, a whopping 13 Tcf! 

Unlike our neighbouring countries, we are not efficiently searching and extracting our natural resources. 

Both our neighbours are extensively pursuing the policy of exploration and extraction of their natural resource s. Myanmar has succeeded in locating multiple gas fields, and so has India. 

Experts have long held the belief that Bangladesh may have major reserves of gas in the Bay of Bengal. Therefore, like her neighbours, Bangladesh must strive to find her natural resources before running into serious energy shortages.

Another major danger that a low gas supply may bring about is the prospect of more coal in our energy sector. The current government target seeks to raise the usage of coal in our power plants to 35 percent, as projected in the Power Sector Master

Plan (PSMP) 2016, down from 50 percent projected in PSMP 2010, which would have been catastrophic for our already-dilapidated environment. 

Excessive use of "dirty" energy sources such as coal and oil will endanger lives and invite scathing international criticism.

Therefore, the government cannot afford to be indifferent to this. In addition to the "land-based terminals" for LNG, we have to work energetically to extract natural resources all around the nation, which should increase our domestic gas production significantly.

These steps will also enable the gas supplying companies to meet the demands of their clients. And with the looming energy crisis averted, the government can plan for more infrastructural projects like gas pipeline systems to supply gas to industries, powerplants and private homes.

Until that happens and a vigorous "exploration and production" policy is introduced, large-scale infrastructure projects such as the abandoned Tk1,200crore south-western gas pipeline system are luxuries we cannot afford. These projects must go through conservative estimations and careful considerations before they are implemented.

The author is a professor of Geology at the University of Dhaka and an energy expert