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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 Gas
Geneva, January 19, 2011Geneva, January 19, 2011
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 Sustainable Energy
Summary :• Introduction• Structure of the UGS Study• Current status of the UGS Study• Next steps : reasons for going further• Recommendations
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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 Sustainable Energy
Introduction :• As a reminder, this Study should benchmark all aspects of
underground gas storage in Europe and Central Asia• As principles :
• make efficient use of already available data (cooperate with IGU, GSE, ERGEG, IEA?…),
• Use a country by country approach (country representative) for gathering data but also take into account a market area concept
• In the 2010 WPG session, an overview of storage business and of the 90’s UGS Study results were presented
• In this 2011 session, a more detailed description of the current organization of the Study and its potential improvements will be proposed.
4Economic Commission for Europe / Committee on Sustainable 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 place 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)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
5Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (2) :
• Main items in Chapter 1 : • automation of well monitoring, • intelligent UGS (operational / commercial optimization),• increasing of UGS daily peak production• reduced environment impacts, • drilling technologies,• offshore technologies,• capex and opex optimization
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
6Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (3) :
• 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) and Mr B. Ernecic (PSP) with support of Mr J. Wallbrecht (BEB / IGU) and Mr A. Iskhakov ( Gazprom)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
7Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (4) :
• 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,…
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
8Economic Commission for Europe / Committee on Sustainable Energy
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)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
9Economic Commission for Europe / Committee on Sustainable Energy
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 served, market based, pro rata, secondary market, use it or lose it, use it or sell it,…)
• Main outlook for future years
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
10Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (7) :• Main tems in Chapter 3 :
• 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• …
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
11Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (8) :• Main tems in Chapter 3 :
• Part C (to be answered by companies and regulation authorities)
• Access to transmission capacities for • Existing storage sites,• Extension and new storage sites
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
12Economic Commission for Europe / Committee on Sustainable Energy
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) with support of Mr J. Wallbrecht (BEB / IGU), Ms A. Brandenburger (RWE Gasspeicher) and Mr U. Duda (E.On Gas Storage)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
13Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (10) :• Items in Chapter 4 :
• Status (planned, feasibility , design, committed, budget 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,…
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
14Economic Commission for Europe / Committee on Sustainable Energy
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),
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
15Economic Commission for Europe / Committee on Sustainable Energy
Structure of the new study (12) :Items in Chapter 5A. Questionnaire to be sent to national regulatory 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 remaining hydrocarbons• Incentive role of State/local authorities;
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
16Economic Commission for Europe / Committee on Sustainable Energy
Structure of the new study (13) :Items in Chapter 5B. Questionnaire to be sent to storage system operators (satisfaction survey)
• Evaluating the regulation and authorization process related to storage-related activities
• Evaluating the regulation related to landownership issues• Evaluating other provisions related to storage operation
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
17Economic Commission for Europe / Committee on Sustainable Energy
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) with support of Mr Z. Czike (E.On Földgaz Storage) and Mr W. Rokosz (PGNiG)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
18Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (14) :• Main items in Chapter 6 :
• Investment and operating costs in each storage facilities • Average investment and operating cost for each type and
size of storage• Cushion gas (included ?, depreciation ?)• Accuracy of cost estimate
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
19Economic Commission for Europe / Committee on Sustainable Energy
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) with support of Mr J. Wallbrecht (BEB / IGU), Ms A. Brandenburger (RWE Gasspeicher) and Mr U. Duda (E.On Gas Storage)
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
20Economic Commission for Europe / Committee on Sustainable Energy
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
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
21Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (17) :• Conclusion and recommendations : incl.
Comparison with the first study.• Annexes : glossary, contact details, maps, data
base, units, bibliography,…
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
22Economic Commission for Europe / Committee on Sustainable Energy
Structure of the Study (18) : responding parties
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
TSSO CCSO 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
Explanation of termsTSSO Technical Storage System Operator (may be the same as the CSSO)CSSO Commercial Storage System OperatorNRA National Regulatory AgencyMA Mining AuthorityOther Representative Organisations (IGU, GSE, Cedigaz, Eurogas), TSO's,
Consultants (Poÿry, Falke, Storconsult, Deloitte, Teamconsult,…)other?
23Economic Commission for Europe / Committee on Sustainable Energy
Current status of the Study :
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
2008 2009 2010 2011 2012
NUMBER OF MEETINGS
3 5 4
TERMS OF REFERENCE
100%
QUESTIONNAIRE 0% 80% 95%
ON-LINE QUESTIONNAIRE
0% 10% 95%
LETTERS OF INVITATION
0% 95% 95%
IGU CONTRACT 0% 10% 100%
ANSWERS TO QUESTIONNAIRE
0% 0% 0%
ANALYSIS AND WORDING THE REPORT
0% 0% 0%
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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 Sustainable Energy
Current status of the Study :• The Study progress was not significant enough in 2010• Due to competition and workload, Company representatives
are less and less available for co-operations• Company managers do not feel the use of an additional
benchmark Study as there are already many studies made by other gas business bodies (IGU, Cedigaz, …) or from consultants
• The remaining work is huge (collection and analysis of data) and the working group members are too few.
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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 Sustainable Energy
Next steps : Why should we continue ?• A pluralist co-operation : as participants may be companies,
national bodies, consultants,.., the exchange may be more fruitful• A relevant geographic area: Europe and Central Asia makes
sense, marketwise • A multidisciplinary approach : technical, legal, commercial,
economic,..• And initially the needs for updating the Study were defined as
follows: • The market became more complex, particularly because the EU Directives for
liberalization of gas market (TPA concept) : investment decision making then became more difficult,
• Many newcomers entered the market as operators (SSOs) or as customers (TSOs, shippers, DSOs and power producers),
• Due to the further decline of EU gas production, UGS becomes and will become more and more important,
• Investors and developers of Gas Industry need to have benchmark for their investment decisions.
26Economic Commission for Europe / Committee on Sustainable Energy
Recommendations : 1. Secure the current participations (done in December 2010)2. Make lobbying in the gas business community for more
participants (companies, national bodies and consultants)3. Reinforce the management of the Study using a joint
UNECE + Consultancy (benchmark oriented) team : the consultant should deal with lobbying, data collection and analysis (some offers will be proposed)
4. Find a budget for financing the consultancy support, 5. The first results of the study were initially planned at the
end of the year 2010 but they will not be available before mid 2012 even if a relevant organization is put in place.
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
27Economic Commission for Europe / Committee on Sustainable Energy
Thanks for your attention
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
28Economic Commission for Europe / Committee on Sustainable Energy
Back up
Study on Underground Gas Storage Study on Underground Gas Storage in Europe and Central Asiain Europe and Central Asia
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1. The key role of natural gas storage in security of 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
SpainUnited-Kingdom
Danemark
Czech Republic
Estonia, Finland,Lithuania, Lux.
0%
10%
20%
30%
40%
50%
0% 20% 40% 60% 80% 100%
Imports / Demand (%)
Stor
age
/ Dem
and
(%)
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 flexibilityDecline 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 generationestimated additional peak swing demand ≈ 10 Bcm in 2020
=> two major driverstwo major drivers
Sou
rce
: E.O
N E
nerg
y Tr
adin
g
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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
38
19,6
12,3
14
1,6
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
2,3
Storage Storage projectsprojectsin Europein Europe
Hungary
0,6around 70 bcm
0,2
Albania
3,2
0,1
2,40,1
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
Proj
ect i
n bc
m
Cur
rent
in b
cm
38
1,6 1,5
Turkey
39
• 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
39
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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
43
4. Conclusion
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Transparency
Market Orientation
Dialogue
keywords