UK Shale Gas Summit 11 Oct 2016 John Baldwin CNG Services Ltd

UK Shale Gas Summit

How the UK Biomethane Market has facilitated the injection of Shale Gas into the GB gas grid 11th – 12th October 2016 John Baldwin Managing Director CNG Services Ltd john.baldwin@cngservices.co.uk www.cngservices.co.uk 07831 241217

How the UK Biomethane Market has facilitated the injection of Shale Gas into the GB gas grid • • • • • • •

CNG Services Ltd UK Gas Grids NTS connections LTS connections Gas quality Timetable Conclusions

CNG Services Ltd • Supports projects to inject biomethane into the gas grid – 77 projects by Sept 2016, we have worked on 65 – 28 staff, turnover £24 million in 2015-16 – 3 graduates hired summer 2016

• Owns 30% of CNG Fuels Ltd, company set up to build national network of CNG stations on high pressure grid – Leyland CNG Station – 17% saving in GHG compared to diesel

• Developer of the Islay Biomethane Project – 100% replacement of oil for making whisky with biomethane and natural gas

Our strategy is to win our 2nd Queen’s Award for Enterprise by 2020 – the next one for “Services to the Shale Gas Industry”

UK Gas Grids • National Transmission System – for large volumes of LNG displacement gas – Started being built in 1967 – UKCS decline has provided spare capacity – Fantastic asset for UK onshore shale gas

• Gas Distribution Network – for Extended Flow Tests – Started being built in 1850 ish – Used for biomethane injection • 77 projects • Flows of 500 m3/hr typical (1.2 mmscfd = 1.3 million th/annum)

– Ideal asset for Extended Flow Tests

The Jewels in the Crown of the UK Energy Industry

The National Transmission System • Owned by National Grid • Started being built in 1967 •

West Sole/Easington

• At least £20 billion to build it now and around 200 years for planning • Last major investment in 200508 related to • •

Langeled at Easington LNG at Milford Haven and Isle of Grain

• All onshore peak shaving LNG plants closed

Gas Distribution Networks

• Started in 1850 ish • £900 million a year mains replacement programme • Over 80% of domestic customers connected • Heat demand is 4 x power demand

Injecting gas from onshore production into the gas grid?

• Only once done to NTS – Onshore gas field near Pickering in 1971 – Saltfleetby goes into Theddlethorpe but upstream of NTS entry

• There are examples of gas going into the Distribution Networks: – Caythorpe – Wytch Farm – Biomethane (77 projects since 2012)

Connections to the NTS • For large volumes, commercial production (LNG displacement flows) • Big advantage of capacity availability and no CV target • May be used for Extended Flow Tests as NGT are reforming their processes to reduce cost and time

NTS Connection – Physical Connection • Physical connection build and commissioned and measurement equipment validated – Straightforward, £1.5 Million, no major issues – Allow 3 years for this – NGT working to reduce cost and time http://projectclocc.com/

NTS Connection – Flowing Gas • To flow gas, shippers must have obtained sufficient NTS Entry Capacity via the relevant entry capacity mechanisms – This is location dependent, capacity may be available or a long term capacity bid may be required – In the case of connection in an area with no capacity, NG funds the capex to make capacity available but the gas producer underwrites the costs through use – Shale gas likely to be produced in areas with capacity – huge advantage for UK shale gas industry

For most shale gas areas NTS Capacity exists due to declining UKCS flows – see next slide

Capacity in the NTS The NG 2015 Ten Year Statement shows the decline in flows from St Fergus, Teesside, Barrow: http://www2.nationalgrid.com/UK/Industryinformation/Future-of-Energy/Gas-Ten-Year-Statement/

The best place in UK to find shale gas is under Lancashire

NG Minimum Connection and Producer Facilities National Grid AGI

20D Min

Sample Point

NGG

V

Construction Valve V

20D Min

Bypass Producer

8”

V

ESD

Hot Tap Connection

IJ

ROV & Telemetry Kiosk

Sample Point

T

Producer Facilities 8”

NTS

Metering and Gas Quality Signals

42”

Separation R

V

Dew Point Control

Compression

Bypass

F

M

R

F

V

Meter

Regulator

Filter

ESD

Producer Compound

CV & Gas Quality Measurement

Wellhead

Existing pipeline excavated

Below ground fabrication of the connection and bypass

Grouted/welded tee being fitted

NG AGI Works for Supply to CCGT

NTS example - Islay Biomethane Project CNG Mother Station • Take gas out of high pressure pipeline at Fordoun – CV measured to NGT Standards – NTS has minimum 50 bar pressure

• • • •

Odorant will be added to the gas at 50 bar to provide characteristic gas smell Compress gas to 250 bar and fill Type 4 CNG trailers NGT have completed CDS Plan to build pipeline network and biomethane plants on Islay to replace 10,000 tonnes of oil with gas

Connections to the Gas Distribution Networks •

Biomethane goes mostly into 2 – 7 bar pipelines •

•

In 2012 Ofgem led Energy Market Issues for Biomethane (www.gasgovernance.co.uk/emib) reviewed the connection process for biomethane flows • • •

•

77 projects have injected gas

Competitive ownership model Led to lower overall costs and risks and shorter timeframe <12 months from start to injection

Issues for shale gas producers: •

Addition of propane may be needed to meet Flow Weighted Average Calorific Value (ethane issue)

Local Transmission System Our Completed Projects Nov 2014 – Sept 2016

•

An LTS Project used to take 2 – 3 years and cost £1 million, we can now build in <12months and cost significantly reduced

•

We have done 9 LTS Connection Projects in NGD area in period Nov 2014 – Sept 2016

•

See next slides

1.

• • • •

Holkham Biomethane

19 bar Biomethane Injection to National Grid LTS network First ‘self-lay’ >7 bar pipeline carried out by CSL Compressor and LTS connection arranged and delivered by CSL Compression plant owned and operated by AD developer Future Biogas

7 – 19 bar Compressor

2.

• • • • •

Euston Estates Biomethane

AD Plant at Euston Estates, 6 km from 42 bar LTS Biogas pipeline to Euston Hall Remote compression plant close to LTS PRS at Lankets Grove No need for hot tap or new Telemetry Unit Significant capex and time savings and access to LTS gives high capacity and potential for blending (reduced propane) Intermediate Pressure (IP) pipeline High Pressure (LTS) pipeline Proposed Pipeline Route Electric Route

Biogas pipeline AD Plant

Not drawn to scale – Use for indicative purposes only

Gas Connection

Electricity Connection

LTS Connection

Compressor Compound

3.

• • • • •

Raynham Estates Biomethane

1.4 km HexelOne PE Pipeline to 19 bar LTS First use of single kiosk GEU with compression No NGD compound at all at the AD Plant HSE considering wider application following successful NGD trial See video: https://www.youtube.com/watch?v=AjhErFPGBUE

1.5 km from AD plant to LTS

4.

Methwold Estates Biomethane

• 3.5 km PE Pipeline to compressor station for injection into 42 bar LTS • First example of new NGD compound at LTS • No NGD compound at the AD Plant

5.

• • • •

Brinklow Biomethane

AD Plant at Brinklow biogas 400m Steel 19 bar pipeline to LTS adopted by NGD Steel connection pipeline Single kiosk GEU at AD plant

6.

Fairfields Biomethane

• 900m Steel 19 bar pipeline to LTS adopted by NGD • Steel connection pipeline • Single kiosk GEU at AD plant

7.

• •

• •

Hampton Bishop Biomethane

Main Grid Entry Unit at the AD plant 500m Steel 70 bar private pipeline to LTS Connection at existing Pressure Reduction Station New ROV installed in existing AGI Existing telemetry upgraded

Existing Pressure Reduction Station

50NB pipeline owned by customer

8.

• • • •

Bay Farm Biomethane

850m from AD to LTS 7 bar PE pipeline Compression and RTU/ROV at the LTS <20m LTS connection pipeline

9.

Leyland CNG Station

• Connection to 38 bar LTS for CNG station • LTS CNG gives 17 - 25% saving on GHG (“Well to Motion”) • CNG loading bays allow the station to act as Mother Station – e.g. to supply CNG fuel for generators on drilling/fracking sites

The CNG Trucks

Gas Quality Requirements • Gas Safety (Management) Regulations set out gas quality, basic parameters for shale gas producers are: • • • •

No H2S Dry gas Wobbe within a range Total inerts (CO2/N2) limit (7%)

• North Morecambe, for example, has high N2 and has to liquefy methane to reduce the N2 • Shale gas may be like Southern North Sea gas?

• NTS Network Entry Agreement has no restriction on Calorific value • GDN entry may need enrichment with propane or blending (level of ethane and inerts is key) caused by increase in grid average CV in last 30 years due to decline in Southern North Sea gas and replacement with high CV Norwegian gas and LNG

The key cost issues are high levels of H2S, CO2 and N2

Timetable for Grid Injection • Critical path is planning consent (apologies for stating the obvious) for shale gas production facilities – – – –

Well pads and sub surface Gas gathering system Gas processing plant (dehydration) Export connection to NTS

• NTS connection – there may be upstream reinforcement – If you are unlucky (and you can always have on the day or interruptible capacity)

• GDN connection – depends on level of flow – We have worked with National Grid to bring down costs and time for LTS Connections to support biomethane and shale gas injection projects – Now less than 12 months from start to finish

• For well testing flows (up to around 1,000 m3/hr) it may also be possible to flow directly into MP/IP grid – 70 biomethane projects into MP/IP in 4 years

It’s a lot easier than it would have been pre biomethane!

Conclusions • Gas Composition: – 4% ethane would be perfect – Condensates in the gas always a good idea – Avoid CO2, N2 and H2S if possible

• Location: – NW in particular is very attractive for gas due to existing gas grid, capacity available

• UK regime for gas injection is good, LTS ideal option to start testing • Biomethane market is perfect model for Extended Flow Tests, start to finish the gas export plant and connection in less than a year • NTS a great asset for UK plc for commercial flows • No CV target!

We have waited 350 million years, we are ready!