Natural gas pipeline: strategic study.

STATES OF JERSEY

NATURAL GAS PIPELINE: STRATEGIC STUDY

Lodged au Greffe on 29th January 2009 by Deputy P.V.F. Le Claire of St.  Helier

STATES GREFFE

PROPOSITION

THE STATES are asked to decide whether they are of opinion

(a ) to request the Minister for Planning and Environment to –

(i ) c o m mission a strategic study into the full benefits of providing Jersey with a natural gas

pipeline; and

(i i ) c o n s ider and lodge for debate recommendations based on the findings of the study within

12  months of this proposition being adopted;

(b ) to request the Minister for Treasury and Resources to identify funding to carry out this study and,

if this sum cannot be identified through the reprioritisation of existing heads of expenditure or year-end balances, to request the Minister to bring forward a request under Article  11(8) of the Public Finances (Jersey) Law 2005 for the necessary additional funding to meet the cost of these payments.

DEPUTY P.V.F. LE CLAIRE OF ST. HELIER

REPORT

POTENTIAL ADDITIONAL BENEFITS OF PROVIDING JERSEY WITH A NATURAL GAS PIPELINE

Executive Summary

It is proposed to undertake an additional study into providing natural gas for the Island of Jersey in order to identify and quantify additional benefits that were not taken into account in the States of Jersey Pöyry Report drafted in January 2007: additional benefits include:

The opportunity for better use of land in St.  Helier; both at Tunnell Street and La  Collette, St.  Helie and at the Kosangas Jersey LPG Storage and Cylinder Filling Depot, St.  John.

The provision of natural gas to the Island, which would reduce customers' energy bills, improve security of supply and decrease reliance upon imported electricity.

Environment benefits, reducing the Island's carbon emissions.

Note: – Copies of the draft report entitled "Economic Feasibility of Supplying Hydrocarbon Fuels to Jersey by

Pipeline – draft report" dated 10th January 2007 prepared by Pöyry Energy Consulting for the Minister for Planning and Environment are available in the States Assembly Information Centre or are available electronically at www.gov.je/states reports.

Background

It is recognised that the States of Jersey has considered the importation of hydrocarbon fuels to Jersey by pipeline. The  study  was  performed  by  consultants  Pöyry,  a  report  was  drafted  in  January  2007  entitled "Economic feasibility of supplying hydrocarbon fuels to Jersey by pipeline". The report calculated the costs of providing such pipeline facilities and balanced these against some of the more obvious benefits. However, I believe that there are significant advantages and incentives that were not taken into account in the study as they are not directly linked and/or are smeared across a variety of stakeholders; various States of Jersey departments (Planning, Environment, Economic Development, Health and Safety, etc.), Jersey Gas and the Jersey public at large. Also I believe that the cost of the project to the States of Jersey could be reduced if other joint lay and project sharing opportunities were considered.

I therefore call for the States of Jersey to fully investigate all of the advantages and incentives for the importation of hydrocarbon fuels to Jersey by pipeline, and in particular a natural gas pipeline. I also call for the States of Jersey to investigate other potential projects and initiatives that could run concurrently with a pipeline project. I believe some of the following benefits could be realised.

1 L a n d use and planning

Je r s e y Gas and Kosangas Jersey Managing Director, Paul Garlick, has confirmed to me that the provision

of a natural gas pipeline would negate the need for Jersey Gas and Kosangas Jersey to occupy a number of parcels of land in Jersey as detailed.

Je r s e y Gas gas-holder site at Tunnell Street, St.  Helier. Jersey Gas would no longer need the gas-holder or

the land on which it is sited at Tunnell Street, St.  Helier. This land, approximately 1,700  m²., is currently owned by Jersey Gas.

Je r s e y Gas offices, stores, showroom and associated parking facilities at Tunnell Street, St. Helier. Jersey

Gas would no longer need  these facilities at  this location.  Smaller accommodation could  be  found elsewhere on the Island. This land, approximately 5,800  m.², is currently owned by Jersey Gas.

J er s e y Gas LPG storage facility, gas production plant and associated buildings at La  Collette, St.  Helier

Jersey Gas would no longer need any of these facilities. The land, approximately 9,500  m.², on which these facilities are placed, is leased from the States of Jersey under a 99  year lease, signed in 1978.

K o s a ngas Jersey LPG storage and cylinder filling plant at St.  John. Jersey Gas would no longer need this

facility. A small parcel of land anywhere on the Island would be required to store filled LPG cylinders that would be imported direct from Guernsey, France or the UK. Jersey Gas lease this site, approximately 3,900  m.², from a private landlord, lease expires on 2019.

T h u s a natural gas pipeline would present various land use planning opportunities, some are outlined

below.

1. S t .  Helier carparking

T h e n eed to build a car park at Anne Court could be negated by maintaining Minden Place car park and

providing an additional car park facility on the Jersey Gas gas-holder site at Tunnell Street, together with an appraisal of the empty land currently opposite Grand Marché, which could also facilitate a multi-storey car park on the ring-road in short order.

A d v a ntages of this scheme are –

T h e Jersey Gas-holder site at Tunnell Street is better suited to a car park development, being situated

directly on the ring-road. Road access to this site could be enhanced by negotiation with Jersey Gas to acquire the 4  terraced houses located between the gas-holder site and St.  Saviour's Road.

T h e M  inden Place car park is viewed as promoting town centre shopping. In order to maintain a vibrant

town centre it is important to provide such facilities. Town centre retailers face a number of challenges at this moment in time, competition from out of town retailing, the economic downturn and GST. It is felt that the removal of the Minden Place car park would merely add to these problems.

T h e M  inden Place car park facility is still fit for purpose, by keeping it operational the States of Jersey will

avoid the cost and inconvenience of demolition.

2. H  ousing – AnneCourtsite

A s o utlined in 1.1, a solution is provided that would negate the need to provide car parking on the Anne

Court site, thus allowing the site to be developed for much-needed housing as outlined in Deputy Martin's proposal (P.184/2008 – Ann Court Site, St.  Helier: use for sheltered social housing for the over-55s).

T h e re may be other opportunities generated for housing, see items 1.4 and 1.5.

3. S t .  Helier TownPark

T h e p otential release of Jersey Gas land at the Tunnell Street site (gas-holder, offices, stores, showroom and associated parking) would provide a greater scope for the St.  Helier Town Park development.

T h e r e would a potential to use the Jersey Gas offices as a community centre, delivering a wet and dry

facility for the town park.

4. L a Collette Site

R e m  oval of the Jersey Gas facility at La  Collette would release land for alternative use. Possibilities

include –

A new sewerage treatment facility.

Other industrial/commercial activities.

T h e r emoval of the Jersey Gas LPG storage facility would also reduce the land use/planning restrictions

around the whole of La  Collette area. These restrictions apply for a significant distance around the fuel installations. If the potential hazards posed by the LPG facility and the neighbouring liquid fuel farm could be eliminated or reduced, the redevelopment opportunities for the sites and La  Collette as a whole are significant. Possible examples –

New port facilities. Possibly including facilities for the importation of aggregates as outlined in the mineral strategy. Possible facilities to receive cruise liners.

Housing development.

New or extended marina facilities.

T h e p rovision of a natural gas pipeline and subsequent retirement of the Jersey Gas facilities at La  Collette

could negate the potential cost of re-siting Jersey Gas' facilities at some point in the future. The scenario of moving the Jersey Gas' facilities in the future is real, given the development restrictions resulting from the potential hazards presented by the site and the ongoing reclamation. Jersey Gas' rough estimate as to the potential cost of moving their La Collette facilities are +£18 million at present-day costs. Given the length of the Jersey Gas lease for the site it is likely that a significant portion, if not all, of the costs of moving the LPG storage and gas production facilities could fall to the States of Jersey.

5. S t John'sLPGstoragesite

T h is site is again potentially hazardous and as such may not be compatible with future development and/or

potential plans for the site. If Kosangas Jersey vacated this site early, the private landlord and the States of Jersey could develop more useful schemes for the site: for example – alternative industrial, commercial and/or retail use or for Housing.

2 E c o nomic and development

1. N a turalgascosts

N a t u ral gas delivered by pipeline would offer Jersey a lower cost fuel. Natural gas would have a price

advantage over the current gas supply (LPG/Air) and electricity. Natural gas is likely to be a similar price to heating oil. This is demonstrated in the Isle of Man. As a result there would be an economic gain for the Island which could be used in various ways, for example –

The States of Jersey could take some or all of this cost advantage infinitum or for a period of

time in order to ensure the pipeline project became economically viable, and/or to spend on other essential projects/initiatives.

The States of Jersey could ensure that this cost advantage is passed on to, or shared with, the Jersey public and businesses.

2. H  edge againstimported electricity costs

A s in the Isle of Man, natural gas could be used as a feedstock for power generation, or simply used as a hedge. As such, the provision of natural gas would act to protect against imported electricity costs.

3. P r ovision and cost of gasappliances

C u r r ently, customers and businesses in Jersey who wish to use mains gas have limited access to gas

appliances. Manufactures do not make appliances that operate on the current LPG Air mains gas mixture supplied by Jersey Gas. Appliances must be converted to work on the LPG Air mixture, this adds to the cost of the appliances and limits the range of appliances available to customers. If natural gas were provided to the Island, customers and businesses could source standard gas appliances from the UK or Europe directly without the need to convert. Thus customers and businesses in Jersey would have access to a wider range of appliances at a lower cost.

3 E n e rgy Policy issues

1. D i versity ofenergysupply

O b v i ously the introduction of natural gas would add to the diversity of the energy mix on the Island. As

alluded to above in items 2.1, 2.2 and 2.3, natural gas would be a significant advantage to the Island's energy mix.

2. S e curityofsupply

A n a tural gas pipeline provides a higher level of security of supply than the shipment of LPG. A natural

gas pipeline is also a more reliable means of providing a supply of gas than the current Jersey Gas production plant and gas-holder facility. Whilst people will be aware of the current dispute between Russia's Gazprom and the Ukraine, one should not be distracted by this short-term situation. Europe will respond to these problems in the short term and reduce dependence on Russian gas or mitigate against such action. Proven natural gas reserves are sufficient to meet demand for about the next 60  years and there are estimates that further reserves exist that will last for circa 200  years. This is significantly beyond the estimates made for peak oil.

A s s tated in item  2.2, natural gas could be used as a feedstock for power generation, thereby adding to

Jersey's diversity and security of electricity supply.

T h e v ulnerability of importing other liquid fuels to the Channel Islands was highlighted by experiences in

Guernsey in 2008. The Island suffered interruptions in shipping liquid fuels that led to extremely low on Island inventories that forced the oil companies to introduce demand-calming measures. Later in the year, December 2008, the States of Guernsey were forced into a position of purchasing 2  ships to ensure the supply of liquid fuel to Guernsey (cost declared at 17  million Euros).

3. S e curinganaffordableenergysupply/fuelpoverty

A s h i ghlighted in item  2.1, natural gas would have a price advantage over the current LPG Air mains gas,

neat LPG, electricity and in a number of applications, heating oil.

A l s o , as stated in item  2.2, the provision of a natural gas pipeline could be used as a hedge against

imported electricity prices.

4. C a rbon abatement/useoflowcarbon intensity fuels

W  h il st the view expressed by the States of Jersey Energy Policy Consultation Paper issued September

2007 is that imported electricity is of a very low carbon content, circa 0.056  kg. of CO2/kWh., this is being challenged. Jersey Gas, a number of independent consultants and several informed politicians are of

the opinion that nominating a figure of 0.056  kg. of CO2/kWh. or thereabout for imported electricity is

inappropriate for the Energy Policy. Opponents of this carbon intensity figure would argue that it does not reflect

how the European grid will react to a change in demand, with the sentiment of the Jersey Energy policy consultation document, an increase in demand.

It i s n ot robust, consistent, or predictable, i.e. the carbon intensity figure for imported electricity could be

subject to significant changes. For example, if the JEC cannot agree terms with EDF, or EDF merges with another supplier, etc.

N o r d oes it align with the calculation methods and assumptions employed in other jurisdictions. It w  il l not deliver strategies and outcomes that will reduce carbon dioxide emissions.

T h e opponents of this aspect of the Energy Policy suggest that Jersey should assign an EU 25 average

carbon intensity to electricity imports, that would be circa 0.4  kg. of CO2/kWh. The carbon intensity of natural gas is 0.185 kg. of CO2/kWh., this is less than LPG at 0.214  kg. of CO2/kWh. and heating oil at

0.252  kg. of CO2/kWh. (figures taken from UK Carbon Trust Fact Sheet CTL018). Hence, a move to natural gas will reduce the Island's carbon footprint, even if one accepts the Energy Policy view of imported electricity. If one considers that imported electricity should be assigned a carbon intensity of

0.4  kg. of CO2/kWh. then natural gas presents further carbon reduction opportunities for the Island. Also, generation of electricity with a modern natural gas CCGT plant would enable Jersey to generate electricity on-Island at comparable carbon intensity to the EU 25 average generation, i.e. additiona security of supply and imported electricity cost hedging could be attained without an increase in world carbon emissions.

1. Other potential environmental benefits – current technology - Biogas (Bio methane)

T h e i ntroduction of natural gas to Jersey will enable biogas (bio-methane) options to be developed. Bio-

gas, predominantly methane, arising from the anaerobic conversion of organic matter, is currently being promoted in Europe. The most simple and cost-effective model is to inject this gas into natural gas systems (natural gas being predominately methane). Such technology is deemed to be carbon-negative, as unless the methane from the organic matter is collected, it is likely to escape to the atmosphere as the organic matter rots. Methane is 21  times as potent a greenhouse gas as carbon dioxide. Hence, if one can collect the methane and burn it, converting it to CO2 and gaining energy, one can gain a significant

greenhouse gas reduction.

A b ar rier to development of bio-gas (bio-methane) in Jersey is the potential use for the gas. Bio-gas cannot

be used in the current Jersey Gas mains network as it is not compatible with the LPG Air mixture. If Jersey were to convert to natural gas, then bio-gas could be used in the mains gas system.

2. Other potential environmental benefits – potential future technology – Hydrogensupply

I n t h e future the natural gas pipeline could be used as a source of hydrogen for the Island. There are

technologies emerging whereby natural gas is processed to remove the carbon, the carbon is then sequestrated and stored, the remaining hydrogen is then used as a feedstock for power generation. The resulting emissions from hydrogen-fuelled power generation being water vapour (no carbon dioxide). Whilst this technology could be seen as being a number of years away, it could offer a second generation use for a natural gas pipeline.

5. E n ergy Policy promotionof electricity – possible withdrawalof competing fuels

If th e Energy Policy proactively promotes the use of electricity for heating, it could lead to the premature withdrawal of other product(s) from the Jersey Energy Market in the short term. The potential cost of

such action would be significant. There are 2 likely options for the States of Jersey, to support the non- electric failing energy businesses or to fast-track the migration to electricity. There are significant costs with both: with regard to the latter there would be costs arising from the need to significantly improve and

reinforce the electricity supply infrastructure. There would also be significant costs carried by customers and

businesses as a result of increasing heating bills (gas, heating oil and coal all having a price advantage over electricity). Customers and businesses would be forced to change appliances at their cost. There would be significant disruption in terms of road works to facilitate the electricity network improvements. There would also be disruption in people's homes as they were forced to change appliances. In addition to these costs and disruptions the Island would become almost completely reliant upon electricity imports from Europe, reducing diversity, security of supply and exposing the Island to the risk of imported electricity costs.

T h e c ost and effect of the above should be considered in terms of quantity of carbon abated, particularly

given the challenge to the low carbon intensity assigned to imported electricity. A similar cost benefit analysis should be considered for the provision of a natural gas pipeline. Natural gas will yield carbon reductions without risking security of supply and undermining diversity of the Island's energy supply.

4 H a z ard / risk reduction

T h e f ollowing Jersey Gas facilities are hazardous and do present a risk –

The LPG storage and gas production plant at La Collette.

The LPG storage and cylinder-filling facility at St.  John.

The gas-holder at the Tunnell Street site, St.  Helier.

In te r ms of level of hazard, the La  Collette site is the most significant, the site at St.  John is a lower leve

of hazard and the gas-holder at Tunnell Street is lower still.

Je r s e y Gas claim to be a responsible operator who adopt UK/Best Industry practice in order to minimize the level of risk. However, the accepted approach to the management of risk is to, wherever possible – (a)  eliminate, (b) reduce, (c) isolate and (d) control. These objectives should be co-sjutstified. If one does not take into account the wider advantages or incentives accrued by the Island it would not be economically justified for Jersey Gas to eliminate, reduce or isolate these facilities by providing a natural gas pipeline. However, if some of these wider advantages can be realized, one could argue that from a States of Jersey perspective, the elimination of the facilities may become cost-justified. If the sites were eliminated, planning restrictions on the land around them would be removed. The biggest gain here would be for the La Collette site, this impact could be significantly improved if the risk presented by the fuel depot could be reduced or eliminated (see item 1.4).

T h e current Jersey Gas facilities would be replaced by an incoming high pressure natural gas pipeline.

There are risks associated with such a pipeline, however, the risks are significantly less. The risks are reduced further still as, as soon as the pipeline is landed, the operating pressure would be reduced.

5 O t h er potential pipeline projects and initiatives

T h e r e are various other potential projects and initiatives that could run concurrently with the laying of a

natural gas pipeline in order to accrue further benefits or reduce the cost of the project. Some suggestions follow.

1. S h are the naturalgas pipeline facility

A s al luded to earlier, the natural gas pipeline could be used as a source of fuel for JEC on-Island power generation. Also, there may be cost advantages by promoting natural gas connections to other Channel Islands, most likely the only economically viable case being Guernsey. In turn, the project could consider

the provision of natural gas to GEL for on-Island power generation. This would provide GEL with a

potentially cheaper fuel source with a lower carbon intensity (GEL currently use fuel oil).

2. J o int lay with a liquid hydrocarbon pipeline

A s h ighlighted in the Pöyry report, January 2007, there would be significant cost advantages of joint

laying a natural gas pipeline with a liquid hydrocarbon pipeline. A liquid hydrocarbon pipeline could significantly reduce the inventory of liquid fuels on the La  Collette fuel farm and improve security of supply by reducing or eliminating hydrocarbon fuel shipments. As highlighted in item  1.4, such an initiative may be instrumental to allowing radical redevelopment of the La Collette area.

A g a i n, as per 5.1, such a scheme should be attractive to the States of Guernsey. Guernsey have similar

demands made upon their limited land resource, Guernsey adopt similar land use planning restrictions around the fuel farm and LPG storage depot and, as highlighted in item 3.2, have had more acute security of supply issues with regard to the delivery of hydrocarbons to the Island given the significant restrictions of St.  Sampson's Harbour.

3. J o int lay with liquidwaste pipeline

A n o t her potential allied project would be to lay a liquid waste pipeline between Jersey and France in order

to export liquid waste from Jersey. Such a pipeline, if feasible, could mitigate the need for significant capital  expenditure  in  on-Island  liquid  waste  treatment  facilities,  estimated  to  be  in  the  order  of £35  million.

6 J er s ey Gas Comments with regard to this Proposal

I sp o ke with the  Managing  Director of Jersey Gas, Paul Garlick, about  this proposal. I was given

assurances from Mr. Paul Garlick, the MD, that the owners of Jersey Gas would be willing to enter into discussions with regard to a natural gas pipeline option, as laid out in these proposals.

I t i s  unlikely,  given  the  current  economic  climate  and  Jersey  Gas' perception  of  the  political  and

regulatory environment in the Channel Islands, that the parent company would be willing to invest in a natural gas pipeline. Hence Jersey Gas believe that the pipeline should be financed by others, most likely the States of Jersey. However, Jersey Gas do foresee that the States of Jersey would need to ensure that any investment was used for the benefit of the Island and the public. Hence if Jersey Gas were to benefit from a natural gas supply from a States of Jersey funded asset it would, in principle, be prepared to consider full economic regulation of its business.

7 N a t ural gas pipeline – possible business models

T h e S tates of Jersey Pöyry Report costings for a natural gas pipeline to Jersey were included in the Energy

Policy  Consultation  Paper,  table  27  page  224.  Costings  for  the  base  case  scenario  ranged  between £15  million and£29  million, the financial analysis suggested the project was£3  million to£17  million in deficit. However, as I have stated, I believe there were various significant benefits that were not included in the project appraisal. There are also other revenue-earning opportunities that the States of Jersey could adopt to reduce the financial risk of this project. For example, in the Isle of Man natural gas, due to the lower cost, has been retailed on average circa 2p/kWh. less than LPG, Jersey Gas sell approximately 120  million  kWh. of gas per year. If there is a shortfall in incentives for the project, the States of Jersey could take an income, in order to make the project viable, delaying the pass through of natural gas savings to customers. The above calculation indicates that there could be a revenue stream of approximately £2.5  million per year if gas tariffs on Jersey were maintained at their current levels.

B u s in ess Models available in the event that the States of Jersey funded a natural gas pipeline project –

States of Jersey to own and operate the pipeline and sell gas to Jersey Gas. Jersey Gas continue to operate the on-Island network, delivering gas to customers. Jersey Gas network operations

being undertaken under full economic regulation.

States of Jersey to own the pipeline and allow another company (JEC, JG, Gaz de France, for

example) to operate the pipeline and sell gas to Jersey Gas. The pipeline operators would pay the States of Jersey a licence to operate and would be regulated. Jersey Gas continue to operate the on-Island network, delivering gas to customers. Jersey Gas network operations being undertaken under full economic regulation.

The States of Jersey to acquire Jersey Gas and have full ownership of the gas delivery system

from Europe to the Jersey customer. The States of Jersey could then allow another company to operate these assets under a licence and full economic regulation. A variation on this option could be to allow JEC to operate these assets, given the synergy benefits this should produce an efficient business model.

T h e re are various other business models.

IE  G , the parent organisation of Jersey Gas, also own Manx Gas. A natural gas connection to the Isle of

Man was made in 2003, the project was lead by Manx Electricity Authority. They own and operate the natural gas pipeline and sell gas to Manx Gas. Natural gas is used for power generation as well as being supplied as a fuel for heating, cooking, catering, CHP, etc. At the moment natural gas is only available to the town of Douglas; Manx Gas, like Jersey Gas, supply LPG and LPG/Air to other towns on the Isle of Man. Such is the popularity of natural gas, the Manx Government are now considering a project of delivering natural gas to other towns.

M  an x Gas are prepared to arrange a visit for interested parties to visit the Isle of Man to discuss their

experiences with natural gas.

T h e p roject is recommendable in my view because, amongst other benefits –

It provides the opportunity for better use of land in St.  Helier; both at Tunnell Street, Anne Court, St. John and La Collette;

It would bring natural gas to the Island, which would reduce energy costs, improve security of supply, and reduce risk; and it would contribute to improving the environment. Moreover the cost

of the pipeline could be financed mainly from the land released.

8 P o s sible Terms of Reference for the Proposed Investigation

T h e M inister may like to consider proposing terms of reference for the research report. If it is in any way

helpful, these could include the following –

to examine, on an Island-wide basis, the expected costs and benefits of installing a natural gas pipeline from France;

to report on the expected environmental impacts of making natural gas available in Jersey;

to report on the land that would be released from terminating LPG importation, storage and processing in Jersey;

to consider the potential for cost savings from co-coordinating this project with the liquid waste project; and

if the report recommends proceeding with a natural gas pipeline, to recommend a project

structure, to outline the likely timetable, and to set out the next steps with an associated budget.

Discuss with other Channel Islands the potential for a joint project.

I th  in k the Research Report could be completed in about 6 months or less. There may be some benefit in

having Jersey Gas and Jersey Electricity as ex-officio members of the project team. A series of interim reports could be tabled with accompanying propositions.

Placing all of our eggs in one basket

In a letter to the Jersey Evening Post on 9th January 2009, Chris Ambler, the Chief Executive of JEC, spoke of the future cost for investing in electricity over the next 10  years, by this supplier. He clearly spelt out that it was to be in excess of £100  million. This is a company whose ownership is largely held by the public through the States of Jersey. If it is right for the States to forgo the likely dividends it might have received, because of the need to invest for the future in electricity, then why are we not also investing in a natural gas pipeline and oil fuel pipeline? This would deliver a much broader mix of suppliers and help to keep costs down for consumers and the States themselves.

In the same letter, Mr.  Ambler warned that the recent 24% increases could have been as high as 36%. Is this possible scenario acceptable in the future?

Financial and manpower implications

The  report I believe  would  be  relatively  inexpensive.  It  would probably  be achievable  within  a  budget  of £50,000.00 or less. I believe it could be completed within 6  months. Much of the research could be conducted by the States themselves with Jersey Gas and JEC co-opted on, as I have said. I am certain that the savings implied from my initial investigations could run into many millions of pounds. This work could be delivered in parts. Early reports and negotiations could deliver a series of quick wins for all concerned. The MD of Jersey Gas has offered assistance to the States, to facilitate fact-finding trips to Guernsey and the Isle of Man, should this proposition be successful.

Note:  Maps of the key sites referred to in this Report are shown at the attached Appendix.

ANNEX OF PROPOSALS

The Study

A high level strategic study into extending a natural gas pipeline to Jersey would identify whether some, or all, of the following initiatives could be achieved, or would be expected to occur.

1. A reduction in CO2emissions,which would help to mitigate theeffectsof global warming.
2. Improved securityof energy supply (a natural gaspipeline is significantly more reliable than LPG and liquid fuelsshipping. A natural gas pipeline ismorereliable than the gas production plantandgas-holder facilities currently serving Jersey).There are 2 things to consider. The first thing is the risk to the offshore pipeline and whathappensifit is hit. Although pipelines are clearly marked on marine charts they do get hit from time to time.They can be pulled by an anchorordamagedby fishing equipment,etc. If an offshore pipeline is damagedit can be a problem, but it is a very small insurable risk. Everyone will be awareof the disruption togassupplies to Europecausedby the recent dispute betweenGazpromand Ukraine. There is a need to be assured that the natural gas supply would be secure. France has a contingency storage tocoveranyloss,and Britain istomine the sea-bedtostore gas in the future. These measures assureand will assure respectively, continuity ofsupply. If the project proceeds it maybe possible fortheChannel Islands to buy into the reserves in France andelsewheretocover this eventuality. Reserves of gasare greater than thoseof oil. The peak oil' concern that contributed to driving up oil prices doesnot apply to natural gas. Proven natural gas reserves are sufficient to meet demand for about the next 60 years and estimated remainingreserves for about200 years. This compares to oil, wher proven reservesare sufficient for30 years.
3. Allow for supplyof natural gas to beextended from France to Jersey andon to otherChannelIslands.
4. A natural gaspipelinecouldprovide a sourceof hydrocarbon for electricity generation on-Island. This would act as a hedge against imported electricity prices. The current approach from theChannel Islands Governments leaves them vulnerable to imported electricity prices. Notonlymust they import electricity, in ordertoclaim a low carbon footprint (whichinglobalterms is challengeable), but they mustbuy from one electricity supplier, EDF.
5. The added potential to lay a dual or triple pipeline from France, to carry gas and oils into Jersey and onwards to otherChannelIslands.The possibility oflaying several pipes would have to beconsidered carefully; however there wouldbesome savings inco-ordinating the planning and negotiating routes. Thereis also a saving in the mobilisationcostofoffshorecontractors and equipment. I am informed that the gas pipe wouldbe relatively small', e.g.  .200  mm. in diameter. My understanding is that this can b welded and coiled onshore,beforebeingputon the lay-barge. It is then rolled out into the sea in one continuous length. If the liquid waste pipe wasany larger, then it would have tobewelded in straight lengths, which would use different offshoreequipment.Moreover,whenonelooksforlanding points on the Island andinFrance,local existing infrastructure may suggest differentlanding points. Theremaybe benefit inexaminingeach pipe option separately,butto oblige theteamstowork together to see if thereis scopeto minimise costs. Otherwise, there is a potential risk that the scope gets so wide, that it is difficult to getone'sarmsaround'.

5.

6. Increased diversity of energy supplywhichaddsto choice and security of supply.
7. Investigation of the potential to pump liquid waste from Jerseytotreatment facilities in France or elsewhere inEurope. Mitigating the need for capital expenditure in this area, estimated tobearound £35  million+ (see pointsmade at paragraph  5 of Report).
8. The acquisition ofthegas-holder site, car park and main building. Theremovalofthegas-holder would provide a greater sized space for developing a newmulti-storeycarpark.If the States are lookingfor better access to this site, Jersey Gasowns the 4  terracedhousesbetween St.  Saviou'rs Roadand the gas-

holder. I am reliably informed that Jersey Gas would be prepared to look at options for swapping or selling these

properties, which are currently rented to employees of Jersey Gas.

9. The removalof all Jersey Gas facilities at La Colette. This includesLPG tanks, office, buildings andgas production plant. This would free the siteformoresuitabledevelopmentor use.

9.

9.The acquisition of the site would also allow for these additional proposals:

10. Allow for theremovalof the large gas-holder at GasPlace.
11. Allow forthe construction of a large multi-storeycar park onthenorthend of the JerseyGas site. Unlike Anne Court, this would be on thering-road.
12. Build a new multi-story car park on the vacant land opposite GrandMarché and lateranother,on the gas- holder site, if necessary. Housingplanned for this land can bebuiltonAnneCourt,together with any other housing desired, andnegatethe need to build a car park at Anne Court.This will reduce pressure to build in the countryside.
13. Retention ofAnneCourtas a much-neededhousing site fortheIsland's residents, as outlined in Deputy Martin'sproposals.
14. Retain Minden Place car park, helping town centre shopping. Shopping today is an increasingly challenging issue. With the pressureon retailers at anall-timehigh, the last thing businesses need is for the Statestointroduce disincentives toshopping in town andreduce their customerbase.
15. The retention ofMindenPlace car park will alsoreducecosts associated with its demolition andextend the lifeof the La Collette reclamation site.
16. Allow for a much larger areaof land tobe used to achieve the town park.Meeting all expectations of Islanders and visitors alike. With the earlybuildof a new multi-story car park onthe ring-road, there is much greater scope for theTown Park development. The difference with this proposal and the one at Anne Court is that theseparking facilities would beon the ring-road.
17. Create a new communitycentreonthetownpark. Achieved by changing the current use of the Jersey Gas building, whichwouldnolongerberequiredby the company. This would deliver a wet anddry facility for the town park.
18. Removalof any associated risk from Jersey Gas operations at St. John,GasPlace and La Collette.
19. RemovaloftheLPG storage tanks and gas production plant facility [currently rented by Jersey Gas from the Statesof Jersey] atLa Collette.
20. Free up the Jersey GasfootprintatLa Collette to provide for other strategic purposes,suchasnew port facilities, marinaor housing developments.
21. Removalof the LPG storage andgas production plant facility will improvesea access to Jersey. This would allow for the possible importation ofaggregates,asoutlined in the MineralStrategy.
22. ReplacementofLPG storage and gasproductionplant facility, to allow for a new sewerage facility on site.
23. Develop and lay in tandem to thenaturalgas pipeline, a pipelinetopumpseweragefortreatment to mainland Europe, helping to rationalize costsandlong-term capital expenditure forbasic infrastructure. If this couldbeachieved it mayreducethe liquid waste strategy costs.
24. Removal of significant and sizable hazardous sites and facilities for Islanders. The natural gas pipeline

will be at high pressure, hence it will be a hazard itself, but much less than the LPG site; i.e. by UK standards

such pipes can be within 3  m. of properties. Essentially, what would happen is that the pipe would be landed underground, and then as soon as possible a pressure reduction station (above or below ground) would reduce the pressure, reducing the hazard to practically zero. This area of land would be as little as

200  m.2, i.e.  10  m. by 20  m. site, somewhere on the east coast, ideally in a rural location. Such a installation, as said, could be below ground, semi-below ground or above, which could be easily screened.

25. Reducethe cost ofcookingand heating formany Islanders.
26. Increase consumer choice and access to different suppliers of gas appliances, thereby saving them money.Atpresent, all gas appliances have tobeconverted to operate safely on the gas suppliedbyJersey Gas. Not all modern appliances can be converted. Jersey Gas can only offer ones that can beconverted. Consumers will benefit from a widerrangeofappliances, avoiding the costof conversion, and be able to purchase from a widerrangeof suppliers.
27. Guarantee the retention ofmuch-neededjobs and skills in this field, for all communities within the ChannelIslands.
28. A highlevel strategic review could identify any potential issues regarding current fuel deliveries to Jersey. Possibly helping to avoid situations arising where, as inGuernsey, £17 million of shipping hadto be purchased outside ofnormalproceduresof the States, due to crisis this year.
29. The decision to commission a natural gas pipeline would mitigatethecosts associated with moving the Jersey Gas facilities at the La Collette site at some point in the future. (Iassume that the cost would fallto the States in this eventuality, asJerseyGashas a very long leasefor the La Collette site.) I wouldimagin that thesecostsalone would outweigh anyexpense incurred.
30. Better land use in several areas of the Island. A natural gas pipeline will release land in Jersey for development in many areas. It will rationalize States aims and objectives in other areas and save taxpayers money.

T h is would free the sites for more suitable development/use.

I th i n k that this point is valid for all the sites.

31. Reducepressure to build outside the town. This could mean that spacecouldbeleft undeveloped in the countryside; where at present thereis a growing pressure to build as we have seenrecently.
32. Freed spacecouldbe used for much-neededhousing,oritcouldbe used for much-neededindustry. All in all, Jersey Gasoccupy a significant land footprint, itis an essential business;however a natural gas pipeline will deliver a better business,better product, low cost,lower carbon and give Jersey valuable, much-needed land back at the same time (the gas-holdersiteatTunnell Street, potentially the Jersey Gas offices atTunnell Street [bothowned by JerseyGas], the LPG storage site at St. John [currently rented by Jersey Gas from a private landlord] and the Jersey GasLa Collette LPG storage and gas production plant facility [currently rentedby Jersey Gas from the States of Jersey].
33. Investigation of the possible costs of early withdrawalofgas from the Jersey energy markets. If current thinking on energy policy is pursued, JG will getno new connections (due to the proposed building bye laws).
34. The possible adverse consequence of not retaining gas as an energy source may have serious implications in the mediumterm.With a States long-term objective tophaseout gas over 20 years, this may as a consequencemean Jersey Gascouldceaseto be a viable businessinas few as5–7 years.

W i t h over 10,000  customers at present, how would these people be adequately catered for by the States, in

such an eventuality?

35. Extending  the supply of natural  gas  to  Islanders  would  mitigate  the States of Jersey, and indeed

Guernsey, having to purchase a diminishing and depleting operation, to guarantee service to Islanders, at great

cost to taxpayers.

APPENDIX

MAPS OF KEY SITES