Exporting Our Water

One of the things in Wales that is better than anywhere else in the world is our water. The English can't get enough of it, but exporting our water to them is not our only option.

I've just read that a memorandum of understanding is to be signed between Fluxys, who operate Belgium's gas network, and the state of Qatar in the Gulf. Flanders imports liquefied natural gas by tanker from Qatar, and up until now the otherwise empty ships have returned to Qatar with sea water ballast, for stability. The plan is to use fresh water instead:

The Gulf emirate of Qatar is planning to import water by ship from Belgium. The water will return in the tankers delivering liquid natural gas (LNG) at the port of Zeebrugge.

When the gas is transported, the ballast tanks are filled with sea water so as to stabilise the ship’s weight. “But why not, instead of sea water, fill the tanks with fresh water as ballast, we thought,” explains Daniël Termont, head of the gas network administrator Fluxys and mayor of Ghent. “Then the ships can return home carrying fresh water that can be used for irrigation in Qatar.” The port of Zeebrugge is consequently set to build a large fresh water reservoir next to the four existing LNG storage tanks. TMVW, the water company serving Zeebrugge, shall be responsible for supplying it. The quality will be comparable to tap water, and a memorandum of understanding is to be signed between Fluxys and Qatar in early February during a trade mission headed by the Flemish minister-president, Kris Peeters (CD&V).

The lack of water is a major source of worry in the Gulf States, which have huge reserves of oil and gas, but remain in desert conditions as far as water is concerned. Qatar, with no rivers, is facing an increasing demand for fresh water as a result of population growth, rapid urbanisation and the changing consumption patterns. Importing fresh water from Belgium is an attractive alternative to desalinising Qatar’s sea water, which is an extremely expensive and environmentally unfriendly process. Meanwhile, for Fluxys the impending deal fits in with the plans for the Belgian gas network administrator to join hands with the major producers in the world. “If we can deliver water to Qatar, we will reinforce our long-term relationship with a very big gas producer,” Termont said.

LNG World News, 18 January 2011

Qatar are fairly desperate for fresh water. I did a bit of searching and found this report from 2009 about them trying to buy water from the American state of Washington, something that didn't happen because their local laws prevented it.

This raises an interesting question, because one of the sections that Peter Hain inserted into the Government of Wales Act 2006 when he was Governor General (I think that's an appropriate term in this particular context) gave him and his successors power to intervene if any proposed legislation by the Assembly:

might have a serious adverse impact on water resources in England, water supply in England or the quality of water in England

GoWA 2006, 101.1.b

But I'm not sure that a commercial agreement to sell water either requires or comes within the scope of legislation. As well as that, we are not talking about drinking water, but fresh water that will be used for irrigation.

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As I'm sure most people are aware, we have recently started importing large quantities of liquefied natural gas from Qatar to South Hook in Milford Haven. In fact the Qatargas 2 terminal there, as we can read on their website, is the largest LNG re-gasification terminal in Europe. If we look at the picture, we can see that these are exactly the same ships. So we need to ask a rather obvious question:

What on earth is stopping Wales from doing the same as Flanders?

Someone from the Welsh Government should be on the phone to them first thing Monday morning.

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19 comments:

Anonymous said...

Yep - food, water and energy - the 3 most basic things needed for human habitation, Wales has a fairly decent amount per head of population of all 3. Worth thinking about.

the outsider.

Anonymous said...

bloody brilliant article!

However as Welsh Water owns all of our reservoirs (apart from 1 or 2). And as WAG can't license more users of water (Schedule 7, Part 1). I find it hard how it would make us money- as any profits Welsh Water makes goes back to the consumer.

If only we had a similar settlement to what Scotland had!

MH said...

Anon, If Welsh Water were to supply the water, they would obviously charge for doing it, and any money they made from it would reduce the bills of other customers in Wales, because of it's unique model. That wouldn't be such a bad thing.

But I doubt that it would be done through Welsh Water, not least because we're not talking about water for human consumption. I think it's more likely that the water would be extracted directly from a watercourse. I guess this would need to be licenced in the same way as it would be if extracted for agricultural or industrial purposes, and I'm not sure who would have the responsibility for that (maybe the Welsh Government, maybe the Environment Agency) but I'm sure there would be a charge for that licence. I'd appreciate it if anybody who knows something about the subject could enlighten me and everyone else reading this.

In general terms, this island has always been rich in water resources, and therefore the law has tended to regard water as a free commodity. What people and businesses pay for is the infrastructure cost of transporting and treating the water, rather than its raw material cost. I doubt that the law has ever envisaged the large scale export of water outside this island, because it has never been economically feasible before now. We got ourselves addicted to North Sea gas in the 70s, and rather than change every single gas boiler in the UK, it's now easier to import the gas by ship. It's only because of the expense of having to do this that we can contemplate filling the same ships with water for the return journey.

If we went ahead (and I think it's a no-brainer that we should) we would for the first time be establishing water as a commodity with a market price of its own, over and above the cost of collecting and transporting it. As it would probably be illegal to charge one customer who wants to export it more than every other customer who uses water within this island, maybe the mechanism for doing it would be by granting an export licence with a fee that in effect becomes the commodity price. I'm not sure we in Wales would be able to do this, but if this were water exported from England we could bet that the UK government would find a way. It would help if we knew how Flanders was doing this because Wales—as a constituent country within a member state of the EU—is in exactly the same legal position as they are. If it works for them, it should work for us.

That brings us to the whole question of who owns natural resources. However I would be relaxed for now about this money going to the Treasury in Whitehall on the basis that nearly all other tax money collected from Wales goes to the Treasury too. But in the longer term, as taxation powers are devolved to Wales, I would expect this fee or tax to be set and to go directly into the Welsh Consolidated Fund, our "current account" at the Treasury.

The value of any commodity is determined by what someone, or some country, is prepared to pay for it. So by exporting water in this way we would be creating a market for our water as a commodity. This would in turn enable us to put a real economic value on the water we export to England. That's not necessarily saying that we should start charging for water exports to England, but being part of a market would help establish the value of something that Wales contributes to the economy of the UK at present, but is not credited as contributing.

Anonymous said...

The water in Wales does not belong to Wales, it belongs to the greedy merchants in London, for years they have stole our rescources, water would only add more wealth to the greedy owners, while we the ignorant and the down troddden would only suffer more. If dwr cymru belonged to cymru then the people of cymru would benefit, but any man will tell you, rscources will be taken from us, just as the oil was taken from Scotland.

Anonymous said...

Your right, Scotland had Oil and England took the lot, if Wales had enough water to export, the mandarins in England would steal the lot, from under our noses.

Draig said...

MH - It's a brilliant idea, ingenious in it's economism and simplicity. As to the mechanics of it, a few points come to mind

(i) Water abstraction is the remit of the Environment Agency, and yes they charge for abstraction. If I recall rightly it's a flat charge and is not related to the volume extracted. It's something in the order of a few grand.

(ii) As to where the water would be abstracted from, this would be outlined in the EA's Catchment Abstraction Management documents. Some areas are defined as "over-abstracted" and others as having extraction potential. Which in turn raises a logistical point.

It may well be that areas defined as having abstraction potential are not in close proximity to Milford Haven. Certainly a reservoir could be constructed at Milford to accomodate water waiting for transportation, but it would still need to be transported to this point, which could either be by road tanker/rail or by pipeline.

If it's by pipeline then the logistics of pipeline construction are brought into play, unless it is possible to gain access to Dwr Cymru's pipeline network and "sub-contract" pipeline capacity in some way.

On the positive side, I can tell you from personal experience that the Assembly have a very good and close working relationship with the Qataris, an idea like this would benefit all parties and would be an absolute coup for the Assembly. Love it.

MH said...

Thanks, Draig. It pays to know the right terms. If I had used the word "abstraction" rather than "extraction" it would all have come up on Google.

This leaflet gives the basics, but it does have a very interesting clause saying that you don't need a licence for:

the filling of vessels (ships or boats) e.g. with drinking or ballast water

Though I think in reality it would only be drinking water for consumption on the ship, not for export. The standard charges are outlined on this page, and in fact a rate for the amount abstracted is a component of the fee. But at £14 per 1000m3 it is very nominal. The latest large tankers hold 266,000 m3, so at that rate you could fill one up for less than £4,000 or $6,000.

However the current cost of desalination in Qatar, according to this article is $1 per m3. This means fresh water is about 50 times more valuable in Qatar than it is in Wales. There is a potential margin of $250,000 on each tanker, though obviously we need to come to an arrangement of mutual benefit to all parties. Therefore we would have to come up with a supplementary charging arrangement over and above the abstraction cost, probably through an export licence.

There would certainly need to be a storage reservoir or two. But a look at the OS Map shows literally dozens of springs, wells and small reservoirs which I would guess are for agricultural purposes within a few miles, so there seems to be plenty of water around. Maybe what's needed is a hybrid arrangement where surplus to agricultural requirement water is abstracted locally when it's wet, but with piped backup from Welsh Water's network when it isn't, at a higher cost. There are also reservoirs on the South Hook and nearby oil refinery sites, but these may well be for settlement, to stop polluted water escaping into the haven.

Penddu said...

MH, The resevoirs at South Hook are either settlement ponds or fire fighting water supply, so please disregard these. However,, there is a large resevoir nearby at Llys-y-fran which was built to service the refineries at Milford Haven so will already be connected to the area on the trunk network and I would be very surprised if it does not have sufficient spare capacity.

This is such a no-brainer - even Peter Hain could work it out...

Penddu

Anonymous said...

MH - The LNG tankers used at South Hook are the Qatar Gas Q-Max ships, which have a massive 266,000m3 capacity. But this does not mean that this is their water carrying capacity, as the ballast tanks are a totally different system. As far as I can find out the ballast tanks have a capacity of only 24,350m3 which even at the equivalent desalination cost of $1/m3 is not going to pay off our debts very quickly.

Anonymous said...

Penddu

Draig said...

MH - Penddu is right about the settlement ponds at Milford, but Llys y Fran on the other hand is a little complicated.

The Environment Agency produced CAMS documents for most areas of Wales, including Pembroke. Within these areas, particular river catchments are broken down into Water Resource Management Units (WRMUs). These units are in turn classifed according to the level of abstraction permissible.

The WRMU that Llys y Fran sits in is classed as "overlicensed", - as opposed to overabstracted. Which means that it may be possible to use Llys y Fran as a water source, but only at particular times of the year, at times of "high flow".

Given that these time periods are likely to be around Winter, however (when LNG tankers into Milford are likely to be more frequent), this may not be a major problem.

Alternately there are other WRMUs much closer to South Hook which are classed as "Water available" and it may be more practicable to look at the logistics of using these instead.

Source: http://publications.environment-agency.gov.uk/pdf/GEWA1206BLKT-E-E.pdf

MH said...

Thanks, Pen. If the deal with Flanders is only going to fill up the separate ballast tanks with fresh rather than sea water, then perhaps the significance of the deal has been over-rated. But 24,350 m3 is still something.

However I envisaged the main tanks being used, and I'm still trying to figure out why they shouldn't be. Methane is liquefied by being cooled down to -163°C, but after being pumped out and the refrigeration switched off for the return journey, any remaining methane would just boil off leaving a clean empty tank. The problem would be pouring water into cold tanks, as it would immediately freeze on contact with the tank walls. But as more water was poured in, the sheer volume would mean that we'd be just be left with a tank of very cold water. There might be stress problems, though. I found a description of the tanks here, the picture is amazing ... especially at full size.

After the water was pumped out and the tank drained at the Qatar end, the tank would have to be brought back down to operating temperature before being filled with LNG. So the question is probably one of time (as it is at the other end, for any stress problems would be reduced if the tank were allowed return to more normal temperatures; but cooling takes longer than warming). Is being in port for an extra six hours (or whatever) worth the value of the water?

It might not be. The price of gas is about $150 per 1000 m3. As liquefication reduces the volume by about 600 times, were talking about LNG being worth around $90 per m3. But the price now is a lot less than it has been over the last ten years, where it has averaged $250 per 1000 m3 and has hit peaks of over $400. With money like that at stake, time will be an important factor. But I think the journey takes about 20 days, so the extra delay might be marginal. No more than missing a tide or rough seas might cause anyway.

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Draig, thanks again. They measure in megalitres/day and a Ml is 1,000 m3. Gann Flats Stream and Westfield Pill are closest, but there are lots of springs, wells and small watercourses even closer that might be suitable.

MH said...

Perhaps I should have said liquefaction; but methinks that word should be kept for more descriptive purposes.

Penddu said...

MH - The standing time on these ships is around $250k per day so no one will contemplate delaying the ships - and while it might be technically possible to fill the gas tanks with water I dont think anyone will take any risks with the tank integrity, so it is ballast tanks or nothing.

Unfortunately it is the modern design of the Q-Max tankers that is a show-stopper. The older LNG tanker designs with a much smaller capacity of around 140,000m3 have much larger ballast tanks, in the order of 50,000m3, but modern designs are more stable, and there is even a ballast-free design available.

siorsyn said...

An excellent proposal. The main problem I see with is is that is implementation requires vision, little of which is to be found in the Senedd.

Loathe though I am to go on and on about this, but natural resources, under the classical economists' definition, is land. A proper land value tax, as opposed to a cumbersome CGT for example, would therefore capture the public value for the Welsh exchequer, whoever extracts it. Job done.

Anonymous said...

Funnily enough, in 2005 I worte a wrote a novel in Welsh based losely on Wythnos yng Nghymru Fydd and located in Wales in the year 2056. In it I advocated this idea.

I also wrote that there would be 'ffermydd dwr' (water farms) where farmers, especially those in less favourable areas would create their own little reservoirs which would link into a grid and then on to Milford Haven.

The novel was turned down by two publishers (it needed a lot of work and time - which I didn't have at the time). But, maybe I wasn't so off the mark after all!

Sion J.

MH said...

Very prescient, Sion. Now if you were to tell me that these small reservoirs all produced hydro electricity too, I'd be even more impressed ;-)

Anonymous said...

MH ... I had every business and house creating their own energy through wind harvesting, solar energy and geothermal warming. didn't think of hydro electricity except in the lakeland area - Powys which was the Wales energy (and beaver!) hub.

Sion

Anonymous said...

I am looking for a welsh speaker to discuss water in Wales could you contact me please
catrin.sion@bbc.co.uk

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