study on underground gas storage in europe and central asia … · 2012-01-24 · sto sso nra ma...

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Study on Study on Underground Gas Storage Underground Gas Storage in Europe and Central Asiain Europe and Central Asia

Working Party on GasWorking Party on GasGeneva, January 24, 2012Geneva, January 24, 2012

G.G.--H. Joffre (Storengy) et al.H. Joffre (Storengy) et al.

United Nations Economic Commission for Europe Committee on Sustainable Energy

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Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia

Economic Commission for Europe / Committee on Sust ainable Energy

Summary :• Introduction• Structure of the UGS Study• Current status of the UGS Study• Recommendations

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Introduction :• As a reminder, this Study should benchmark all aspe cts of

underground gas storage in Europe and Central Asia• As principles :

• make efficient use of already available data (coope rate with IGU, GSE, ERGEG, IEA?…),

• Use a country by country approach (country representative) for gathering data but also take in to account a market area concept

• In the 2010 WPG session, an overview of storage bus iness and of the 90’s UGS Study results were presented

• In the 2011 WPG session, a more detailed descriptio n of the current organization of the Study were presented an d its potential improvements were proposed.

4Economic Commission for Europe / Committee on Sust ainable Energy

Structure of the Study (1) :

• Chapter 1 : New and emerging technologies : • to identify innovations in UGS business that may

lead to a better cost efficiency, • to list the technologies that have been put in plac e or

that are planned to be put in place to improve efficiency of the facility, in terms of quality of service, responsiveness to Client or cost

• Heads : Mr A. Iskhakov (Gazprom), Mr H. Spreckels (E-On Gas Storage) and Mr C. Gomez-Montalvo (Geostock)




• Main items in Chapter 1 : • automation of well monitoring, • intelligent UGS (operational / commercial optimizat ion),• increasing of UGS daily peak production• reduced environment impacts, • drilling technologies,• offshore technologies,• capex and opex optimization




• Chapter 2 : Current UGS status : set up an updated data base for all existing UGS plants in each country,

• Heads : Mr M. Sandu (Romgaz), Mr J. Mandl (ÖMV) (resigned) and Mr B. Ernecic (PSP) with support of Mr J. Wallbrecht (BEB / IGU) and Mr A. Iskhakov ( Gazprom)




• Main items in Chapter 2 :• Calorific value• working volume,• cushion gas volume,• nominal and peak withdrawal rates,• injection rate,• min and max pressure,• compression power,• number of wells,…



Structure of the Study (5) :• Chapter 3 : Market structure and legal framework :

describe the legislation and guidelines for UGS market organization (incl. TPA rules) and UGS services,

• Heads : G.-H. Joffre (Storengy) with support of Ms A. Brandenburger (RWE Gasspeicher) and Mr U. Duda (E.On Gas Storage)



Structure of the Study (6) :• Main tems in Chapter 3 :

• Part A (to be answered by regulation authorities):

• Currrent regulatory access• Principles of Capacity Allocation Mechanisms (first

come first served, first committed first served, auction, open season, pro rata, …)

• Principles of Congestion Management Procedures (first come first served, first committed first ser ved, market based, pro rata, secondary market, use it or lose it, use it or sell it,…)

• Main outlook for future years




• Part B (to be answered by companies for each storage)

• TPA regime• Storage service (virtual, hub, firm, interruptible,

parking, lease, bundled, unbundled,…)• Characteristics of contracts (duration, volume,

withdrawal and injection capacities, price)• Principles of CAM and CMP• …




• Part C (to be answered by companies and regulation authorities)

• Access to transmission capacities for • Existing storage sites,• Extension and new storage sites



Structure of the Study (9) :• Chapter 4 : UGS projects : set up a data base for

planned projects in each country including criteria for selecting projects,

• Heads : Mrs E. Wicquart (EDF) (resigned) with support of Mr J. Wallbrecht (BEB / IGU), Ms A. Brandenburger (RWE Gasspeicher) and Mr U. Duda (E.On Gas Storage)



Structure of the Study (10) :• Items in Chapter 4 :

• Status (planned, feasibility , design, committed, b udget approval, under construction)

• Calorific value• working volume,• cushion gas volume,• nominal and peak withdrawal rates,• injection rate,• min and max pressure,• compression power,• number of wells,…



Structure of the Study (11) :• Chapter 5 : Legal framework for development and

operation : provide with all useful information (legislation and procedures) necessary for granting consents and authorizations to SSO,

• Heads : Mr T. Korosi (Hungarian Energy Office), Mr W. Rokosz (PGNiG) and Mr G.-H.Joffre (Storengy) with support of Ms A. Brandenburger (RWE Gasspeicher) and Mr M. Laczko (E.On Földgaz Storage),



Structure of the new study (12) :Items in Chapter 5A. Questionnaire to be sent to national mining authoritiesIn the case of new, existing and abandonned sites

• Which authority for supervision and decision ?• Which procedures and which regulating laws ?• Duration, environmental impact studies• Obligation of landowners• Ownership (cushion gas and non recovered

hydrocarbons)• Incentive role of State/local authorities (evolutio n of

regulation framework);



Structure of the new study (13) :Items in Chapter 5B. Questionnaire to be sent to storage system operators (satisfaction survey)

• How works the regulation and authorization process related to storage-related activities ?

• How works the regulation related to landownership issues ?

• How work the other provisions related to storage operation ?



Structure of the Study (13) :• Chapter 6 : Tariffs of UGS : provide with

information (if available and taking into account confidentiality issues) about construction costs and operation costs,

• Heads : Mr G. Martinus (Gas Terra) (resigned) with support of Mr W. Rokosz (PGNiG)



Structure of the Study (14) :• Main items in Chapter 6 :

• Investment and operating costs in each storage faci lities • Average investment and operating cost for each type and

size of storage• Cushion gas (included ?, depreciation ?)• Accuracy of cost estimate



Structure of the Study (15) :• Chapter 7 : Outlook and main expected trends of

UGS markets : describe the gas market (supply and demand) evolution and define the UGS needs subject to this evolution .

• Heads : Mr G. Martinus (Gas Terra) (resigned) with support of Mr J. Wallbrecht (BEB / IGU), Ms A. Brandenburger (RWE Gasspeicher) and Mr U. Duda (E.On Gas Storage)



Structure of the Study (16) :• Main items in Chapter 7

For 2010, 2015, 2020 and 2025 : • National natural gas supply• National maximal peak demand• Storage supply• National storage demand



Structure of the Study (17) :• Conclusion and recommendations : incl.

Comparison with the first study.• Annexes : glossary, contact details, maps, data

base, units, bibliography,…



Structure of the Study (18) : responding parties


STO SSO NRA MA OtherChapter 1 XChapter 2 X XChapter 3.A XChapter 3.B XChapter 3.C X XChapter 4 X XChapter 5 X XChapter 6 X XChapter 7 X X X X

Explanation of termsSTO Storage Technical Operator (may be the same as the SSO)SSO Storage System Operator (incl. commercial) NRA National Regulatory AgencyMA Mining AuthorityOther Representative Organisations (IGU, GSE, Cedigaz, Eu rogas), TSO's,

Consultants


Current status of the Study (quantitative estimate) :


2008 2009 2010 2011 2012

NUMBER OF MEETINGS

3 5 4 4 0

TERMS OF REFERENCE

100%

QUESTIONNAIRE 0% 80% 95% 99% 100%

ON-LINE QUESTIONNAIRE

0% 10% 95% 99% 100%

LETTERS OF INVITATION

0% 95% 95% 100% 100%

IGU CONTRACT 0% 10% 100% 100% 100%

ANSWERS TO QUESTIONNAIRE

0% 0% 0% 0% 25 -30 %

ANALYSIS AND WORDING THE REPORT

0% 0% 0% 0% 0%



Chapter 1 2 3A 3B 3C 4 5A 5B 6 7

Fully & partially completed by SSO

31 28 1 27 24 21 10 7 9 13

35 (=32 %)

not answered 83

% of working gas volume (TSSO)

60 % (representing 112 bcm vs 200 bcm Working Gas Volume )

Fully or partially completed by NRA

12 10 3 1 4

16 (=23%)

NRA not answered

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Available data :



Example Chapter 1 : Innovation in UGS technological developmentTotal Total Total, % of answered Total, % of answered

AppliedToday

Expected/Needed in Future

AppliedToday

Expected/ Neededin Future

1.1.1 UGS created in reservoir without trap

6 3 19.35 9.68

1.1.2 UGS in depleted oil fields 12 7 38.71 22.58

1.1.3 UGS in fractured water bearing reservoirs

6 4 19.35 12.90

1.1.4 UGS for associated gas from oil fields

6 5 19.35 16.13

1.1.5 UGS in porous media projected for non cycling operation

3 4 9.68 12.90

1.1.6 UGS in abandoned mines 5 3 16.13 9.68

1.1.7 UGS for helium concentrate 3 6 9.68 19.35

1.1.8 UGS for СО2 sequestration (CCS)

3 7 9.68 22.58

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Current status of the Study (weaknesses):• The Study progress was not satisfactory in 2012;• Due to competition and workload, Company representa tives

are less and less available for co-operative works : 2 Heads of Chapters (4 , 6 & 7) resigned;

• The relatively low level of interest of a number of gas companies to contribute actively to the completion of the questionnaire (60%) and to participate in the UGS S tudy ;Lack of data for Chapters 5, 6 & 7;

• The support of an external service provider was ser iously considered but not approved due to the lack of fund s and potential conflict of interest;

• Data was collected in the on-line questionnaire but their extraction and processing tools were not available

�� analysis of data was not possible.


Recommendations : 1. To delete Chapter 6 & 7 due to the lack of data a nd Head of

Chapter, 2. To continue for securing the current participatio ns,3. To lobby in the gas business community for more p articipants

(companies, national bodies and consultants),4. To reinforce the management of the Study using a reinforced

UNECE Secretariat and to put in place a relevant or ganization (IT, secretariat),

5. To enhance efforts to foster completion of the St udy by 1 July 2012 and to present a first draft to World Gas Cong ress in June 2012 and a final report for consideration by the 2 3rd session of the Working Party on Gas;

�� For a successful future of the Study, these recommendations should be seriously taken into acco unt and cautiously implemented.



Thanks for your attention



Back up


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Next steps : Why should we continue (strengths and opportunities)? :

• A pluralist co-operation : as participants may be c ompanies, national bodies, consultants,.., the exchange may b e more fruitful

• A relevant geographic area: Europe and Central Asia makes sense, marketwise

• A multidisciplinary approach : technical, legal, co mmercial, economic,..

• And initially the needs for updating the Study were defined as follows:

• The market became more complex, particularly becaus e the EU Directives for liberalization of gas market (TPA concept) : invest ment decision making then became more difficult,

• Many newcomers entered the market as operators (SSO s) or as customers (TSOs, shippers, DSOs and power producers),

• Due to the further decline of EU gas production, UG S becomes and will become more and more important,

• Investors and developers of Gas Industry need to ha ve benchmark for their investment decisions.

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1. The key role of natural gas storage in security o f supply

2. Gas storage development perspectives

3. Risks and incentives

4. Conclusions

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1. The key role of natural gas storage

in security of supply

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Security of supply : Security of supply : a a «« highhigh --visibilityvisibility »» topictopic

January 2009

January 2010

October 2010

Reduction in gas supply in %, January 2009

Regulation onSecurity of Gas

Supply

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Natural gas storage : Natural gas storage : A key role in the A key role in the European policyEuropean policy

sustainability

security of supply

The European energy policy

� Large proven reserves (conventional + unconventional )

� Large panel of routes and suppliers

� A storable energy

� A market-oriented storage industry which proved its efficiency through crisis

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Austria

Belgium, Portugal,Switzerland

Bulgaria

Hungary

Ireland

Italy

Netherlands

Poland

Romania

Slovakia

Spain

United-Kingdom

Danemark

Czech Republic

Estonia, Finland,Lithuania, Lux.

0%

10%

20%

30%

40%

50%

0% 20% 40% 60% 80% 100%

Imports / Demand (%)

Sto

rage

/ D

eman

d (%

)

EU-27Storage/Imports = 25% EU-27 2020e

EU-27 2030eGermany

France

Source: SG Equity Research / Eurogas / GSE 2008

Another way to look at Another way to look at storage in Europestorage in Europe

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2. Gas storage developmentperspectives

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1. Need for security of supply � Decline of local production

� Increase of import contracts & remoteness of sourcing

=> two major driverstwo major drivers

Sou

rce

: Ced

igaz

200

5

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2. Need for flexibility� Decline of local production

� estimated additional seasonal swing demand ≈ 14 Bcm in 2030

� Development of trading

� Exple : traded volumes on NCG

� Increase of CCGT

� Increase of wind power generation

� estimated additional peak swing demand ≈ 10 Bcm in 2020

=> two major driverstwo major drivers

Sou

rce

: E.O

N E

nerg

y T

radi

ng

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19,6

12,3

14

1,6

2,3

2,8

3,7

5,04,3

4,1

1,0

0,7

2,7

0,4

Spain

France

Belgium

UK

Netherlands

Germany

Poland

Latvia

Italy

Denmark

Czech R.

Slovakia

Austria

Croatia

Romania

Bulgaria

0,2

Portugal

Source: GSE 2009, CEDIGAZ 2009, IGU 2009

4,2

3,1

14,3

P

P

P

P

p

Storage volumesStorage volumesin Europein Europe

–– current situation current situation ––Hungary

0,6

Europe storage facilities : working gas volume in bcm

Total around 80 bcm

1,6

Turkey

40

19,6

12,3

14

1,6

2,8

3,7

5,0

4,3

4,1

1,0

0,7

2,7

0,4

Spain

France

Belgium

UK

Netherlands

Germany

Poland

Latvia

Italy

Denmark

Czech R.

Slovakia

Austria

Croatia

Romania

Bulgaria

0,2

Portugal

Source: GSE 2009, CEDIGAZ 2009, IGU 2009

4,2

3,1

14,3

P

P

P

P

p

2,3

Storage Storage projectsprojectsin Europein Europe

Hungary

0,6around 70 bcm

0,2

Albania

3,2

0,1

2,4

0,1

Bosnia-H.

0,5

0,8

1,8

8,7

2,3

11

1

0,5

Lithuania4,5

1,7

2,2

5,8

Serbia

5,9

20

Pro

ject

in b

cm

Cu

rren

t in

bcm

40

1,6 1,5

Turkey

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• A worldwide oversupply situation � Economic crisis => fall of the demand (2009 : -3% / -4%)

� New GNL capacities (+50% from 2009 to 2013)

� Rise of non conventional gas

• Impact on the flexibility market � Spot prices < Long term oil indexed prices

� Squeeze of the seasonal spread

=> ……but short term uncertaintiesbut short term uncertainties

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3. Development :Risks & incentives

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� Stability of the regulation Stability of the regulation : a necessity for attracting funding

Regulatory instabilityRegulatory instability

(three directives in ten years !)

several dozen billion EUR to be invested in the next 20 years

RISK

Incentives

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- strategic storage might be definitely damaging

- choice of access regime should be market-oriented

- negotiated TPA should be the preferred choice wherever market conditions allow : ⇒ best regime to facilitate investments⇒ best regime to foster commercial creativity and provide best response to the demand

Inappropriate regulatory frameworkInappropriate regulatory frameworkRISK

Incentives

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4. Conclusion

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� Transparency

� Market Orientation

� Dialogue

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study on underground gas storage in europe and central asia … · 2012-01-24 · sto sso nra ma...

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