Experts deride cheap gas claims

THE PRICE of natural gas in Britain is likely to double in the next 10 years as North Sea reserves become rapidly depleted, according to Professor Ian Fells, an energy expert at Newcastle University. Professor Fells said that Michael Heseltine, President of the Board of Trade, does not know what he is talking about in saying gas-fired electricity will undercut power from coal.

He said: 'Most of what Mr Heseltine says is, quite frankly, untrue.'

His concerns were echoed by Dr Jonathan Winterton of Bradford University, who said the dash for gas would add pounds 1bn to Britain's energy bill and force the closure of 17 coal-fired power stations.

At the same time experts at Sheffield University said that the UK has only 22 years of proven and probable gas reserves, in spite of government assertions that the gas will last 50 years.

Dr Philip Wright, a senior economist at Sheffield, accused Mr Heseltine of using possible reserves and undiscovered reserves to reach his figure of 50 years.

Dr Wright also said government reckoning assumes 1990 production levels, but the dash for gas will clearly accelerate production. He added that as North Sea fields become more marginal, they will be more difficult and expensive to develop: 'People investing in these fields will require a good price for their efforts.'

The Government is already privately worried that North Sea operators will flock to other oil and gas areas as the cost of developing and producing on the UK continental shelf rises. Whitehall estimates that marginal fields could be 70 per cent more expensive to work than fields in regions such as the Gulf of Mexico.

Professor Fells said that hopes that the gap left by lower UK reserves would be filled by Russian gas were futile. He said the Russian pipeline system was crumbling and required investment of billions of pounds. He added: 'The Norwegians will sell, but where there is shortage, they will be able to hike up the price.'

Professor Fells urged the Government to use its 40 per cent holding in the generators, National Power and PowerGen, to force them into a better deal for British Coal. The Government has said it would not use its position as shareholder to pressure the generators. But Professor Fells said: 'It is not too late for a U-turn. The country needs an energy policy that is more than just market forces.'

A government adviser said that to use pressure of that nature was 'unthinkable'.