pipeline technology conference 2011 · import dependency of europe remains; tendency: increasing...

Pipeline Technology Conference 2011

Perspective on the Development of European Gas Infrastructure

Hannover 4th April 2011; Oliver Giese

2

Contents

1. Activities of E.ON

2. Gas Reserves and Gas Demand

3. European Natural Gas Transmission System

4. Nord Stream as an example of a successful Pipeline Project

5. Perspective on the Development of European Gas Infrastructure -

Conclusion

3

1. Our Group Units accompany our activities along

the whole value chain

Distribution Trading Retail/Sales

Long term contracts

Exploration &

Production

LNG

Storage

Transmission

4

1. Corporate structure of E.ON Ruhrgas

E.ON AG

Global Gas

E.ON Ruhrgas AG

Portfoliomanagement

E & P Exploration &

Production

ISB Infrastructure

Shareholdings

E.ON Gas Storage

Open Grid Europe

LTC Long Term Contracts

Central Functions

LNG Liquefied

Natural Gas

Sales

Ga

s T

echn

olo

gy &

En

erg

y S

yste

ms

Co

mp

ete

nce

Ce

ntr

e

5

Gas Mobility

MV/LV-Grid

MP/LP-Grid

Generation / Supply Transport Storage Distribution End-use

UGS

LNG

Pipeline

RES power

conv. power

HV-Grid

E&P

LTC

Carbon Sourcing & Technical Cooperation

H2 & CO2 Transport

Power Storage

Smart Gas Grid / Smart Meter

Distributed Generation

Gas Metering and Quality Control

Gas S

yste

m

Po

we

r S

ys

tem

Carbon Sourcing

Smart Meter

Efficiency & Buildings

Gas & Renewables

1. Topics of Competence Centre are settled along the whole Value Chain

Gas Technology & Energy Systems

Competence Centre

6

Contents

1. Activities of E.ON

2. Gas Reserves and Gas Demand

3. European Natural Gas Transmission System

4. Nord Stream as an example of a successful Pipeline Project

5. Perspective on the Development of European Gas Infrastructure -

Conclusion

7

2. Perspectives of Gas Supply for Europe (EU-27)

*) i.e., Egypt, Qatar, Nigeria

Basis for EU imports: Contracted quantities of gas, expected extensions of contracts and additional quantities for EU-market

Import dependency of Europe remains;

tendency: increasing

Interdependencies between previous

regional submarkets all over the world

will further increase

Competition regarding resources on the

international markets will grow

Number of important producers outside

EU will remain limited and their position

will stay strong

500

250

Projects in the future (dependent on trend of demand)

EU-imports

EU own production

bcm

2009 2015 2020 2030

ALG

NOR

RUS

other*

North America

Europe

South America

Africa

Middle

East

C.I.S./

Central

Europe

Far

East

proved recoverable natural gas reserves: 177.0 trillion m³

1 m³ = 11.5 kWh

1 January 2009

Source: Oil & Gas Journal

2. World Gas Reserves

8.7

7.6

4.8

14.0 12.2

73.3

56.4

8

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Contents

1. Activities of E.ON

2. Gas Reserves and Gas Demand

3. European Natural Gas Transmission System

4. Nord Stream as an example of a successful Pipeline Project

5. Perspective on the Development of European Gas Infrastructure -

Conclusion

3. Pipeline Gas imports are actually transited via 3 Main Corridors to the European Market; 4th Corridor is needed

from Russia

from the North Sea (Norway, UK)

from North Africa (Algeria / Libya)

from Central Asia / Middle East

20%

21%

23%

36%

10

11

TAP is a commercially & technically viable gas pipeline project linking Europe to new gas sources

TAP contributes to increased security of energy supply in Europe

TAP meets the needs of producers, shippers and buyers

3. Connecting Europe with new gas reserves via TAP

Gas reserves in trillion

m3

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3. TAP - the shortest and most cost effective way to Europe

TAP is a cost effective option (both CAPEX and OPEX)

Uses existing infrastructure and therefore can flexibly developed in a step by step approval

SD II gas to fill TAP’s initial capacity of 10 bcm per year

No other volumes required for the pipeline at this stage

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Contents

1. Activities of E.ON

2. Gas Reserves and Gas Demand

3. European Natural Gas Transmission System

4. Nord Stream as an example of a successful Pipeline Project

5. Perspective on the Development of European Gas Infrastructure -

Conclusion

14

4. The Nord Stream Project

Nord Stream

Two parallel offshore pipelines of 1,224 km (transport capacity 55 bcm per year)

A direct and fixed link between Russia’s vast proven gas reserves and the European Union

An additional route complementing Existing network and other planned pipelines

Infrastructure project ‘of European interest’ within the framework of the EU’s TEN-E guidelines

51% 15.5% 9% 15.5% 9%

since 10 June 2008 since 1 July 2010

2011-2012 2011 2012 2010-2011 1997-1999 2009 2006-2008 2005 - 2009

Feasibility

Study

Pipeline

design

Laying

Line 1

Commissioning

Line 1

Laying

Line 2 Applications &

Permitting EIA

Commissioning

Line 2

2010

Financing

Phase I & II

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4. Over 1,100 km of the first pipeline laid until date

KP1195

KP675

KP297

KP7.5

KP350

2010 April

May

June

July

Aug.

Sep.

Oct.

Nov.

Dec.

2011 Jan.

Feb.

March

April

Casto

ro S

ei (C

6)

So

litaire

Casto

ro D

ieci (C

10)

* KP = Kilometre Point

KP451

Location Castoro 6: ~KP 800 (125 km open)

As of 29. March 2011

16

4. Allseas' Pipelay Capabilities under Arctic Conditions

17

OPAL (Greifswald – Olbernhau)

478 km / DN 1400 / PN 100

Compressor Station Radeland 2 x 33,4 MW 1 x 32,0 MW

Construction Progress: 99%

Planned Completion: October 2011

NEL (Greifswald – Rehden)

440 km / DN 1400 / PN 100

Construction Start: March 2011

Planned Completion: November 2012

Olbernha

u

4. Nord Stream’s onshore connections to the European network – OPAL & NEL

enable to distribute new Volumes into the European Gas Market

Greifswal

d

OPA

L

Radelan

d

Rehde

n

NEL

17

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Contents

1. Activities of E.ON

2. Gas Reserves and Gas Demand

3. European Natural Gas Transmission System

4. Nord Stream as an example of a successful Pipeline Project

5. Perspective on the Development of European Gas Infrastructure -

Conclusion

19

5. E.ON welcomes and endorses the approaches expressed by the

EU COM on Energy Infrastructure Priorities for 2020

Improving internal market in Europe

regarding cross-border interconnec-

tions, integration of isolated regions

and competitiveness

2020 goals and reduction of

greenhouse gas emissions until 2050

can only be achieved with sufficient

and adequate grid infrastructure

Security of energy supply is a key

element of European Energy policy

leading to investment obligations in

infrastructure

Completely new infrastructure

policy needed

Energy Infrastructure Priorities for 2020 +

Southern Gas

Corridor

North-South Gas

Corridor in Western

Europe

BEMIP Gas

North-South Gas

Interconnections

19

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5. EU COM should support important infrastructure projects

primarily by providing an appropriate regulatory framework E.ON’s Position on Energy Infrastructure Priorities for 2020 +

Priority

corridors

Selection of

important

projects

Authorization

procedures

Financing

The identification and development of important infrastructure

priority areas, especially concerning new import routes for gas should

be a joint project of energy companies, Member States and the EU COM.

The selection of projects that are to receive preferential treatment

regarding facilitated processes should involve a dynamic selection

procedure based on transparent criteria and markets’ requirements.

EU COM could potentially facilitate the sharing of best practice

between Member States at national and local level and help to ensure a

framework for co-operation between the relevant authorities.

Current capital market-based system for financing grid investments

should be kept. Existing national regulatory frameworks have to be

adapted to allow an appropriate return on investment.

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5. Transportation tariffs have to provide security for investors

taking over risks for major infrastructure investments

Project joint ventures of non-TSO project sponsors are

an efficient concept for the realization of multinational

import projects parallel to TSO-driven projects

High investment-costs are necessary for the

implementation of major transmission systems

Return on capital employed need to correspond with

investor objectives

Project risks need to be considered adequately

Long-term transportation contracts are backbone for

investments

For transmission systems with strong transit character an

exemption from regulation is important, i.e. tarification

will be defined by investors

E.ON’ s requirements for infrastructure projects

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Thank you for your attention !

Oliver Giese

Senior Vice President Infrastructure Interests, E.ON

Ruhrgas AG

oliver.giese@eon-ruhrgas.com