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Interna t i o n a l G a s I n t e r n a t i o n a l

April G a s

S E R A C S A G L A R D U L T NA THE WOR FOR rg o . u .ig w w w

2 0 11

U n i o n


Kuala Lumpur, Malaysia.


25th WORLD GAS CONFERENCE M A L A Y S I A

KUALA LUMPUR

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International Gas april

2011

The IGU Magazine Published by International Systems and Communications Limited (ISC) in conjunction with the International Gas Union (IGU). Copyright © 2011. The entire content of this publication is protected by copyright, full details of which are available from the publisher. All rights reserved. No part of this publication may be reproduced, stored in retrieval systems or transmitted in any form or by any means – electronic, mechanical, photocopying, recording or otherwise – without the prior permission of the copyright owner.

International Systems and Communications Limited Park Place 12 Lawn Lane London SW8 1UD England Telephone: + 44 20 7091 1188 Facsimile: + 44 20 7091 1198 E-mail: general@isyscom.com Website: www.isyscom.com

International Gas Union c/o Statoil ASA 0246 Oslo Norway Telephone: + 47 51 99 00 00 Facsimile: + 47 22 53 43 40 E-mail: secrigu@statoil.com Website: www.igu.org


Vision, Mission and Objectives The International Gas Union (IGU) is a

E C O N O M Y: Promote all activities within the

worldwide, non-profit organisation promoting

entire gas chain, which can add to the technical

the progress of the gas industry. Through its

and economic progress of gas;

many member countries representing

C U S TO M E R S : Encourage development of good

approximately 95% of global gas sales, IGU

customer services and customer relations;

covers all aspects of the natural gas industry.

T E C H N O LO GY: Encourage research and dev­

elopment towards new and better technologies ● The Vision

for the gas community;

Recognising that natural gas has an important

S A F E T Y: Promote the safe production,

part to play in satisfying the global need for an

transmission, distribution and utilisation

environment-friendly energy source, IGU will be

of gas;

the most influential, effective and independent

E N V I R O N M E N T: Encourage and promote

non-profit organisation, while serving as the

development of clean technology, renewable

spokesman for the gas industry worldwide.

energy applications and other activities, which will add to the environmental benefits of gas;

● The Mission

I N T E R N AT I O N A L G A S T R A D E : Encourage

IGU will actively, directly and through its

international trade in gas by supporting non-

members, promote the technical and economic

discriminatory policies and sound contracting

progress of the global gas industry.

principles and practices;

IGU will work towards improving the

L E G A L : Promote and contribute to the

competitiveness of gas in the world energy

development of legislation concerning:

markets. By promoting the development and

● the establishment of equitable, non-

application of new technologies and best

discriminatory and reasonable environmental

practices, IGU will help optimise the economics

and energy efficiency regulations, and

of the entire gas chain, while emphasising

● efforts to establish appropriate and relevant

sound environmental performance, safety

international standards,

and reliability.

as well as

IGU – serving as a global information

● the promotion of and participation in the

clearing house – will promote transfer of

exchange of information relating to

technology and know-how.

regulatory processes;

In carrying out this mission, IGU will

C O O P E R AT I O N: Enhance partnership with

maximise value to its members and gas

industry and manufacturers, and cooperation

customers.

with governments, policy makers and inter­ national energy related organisations, and

4

● Objectives

promote the exchange of information among

In striving towards the vision and fulfilling the

members in order to help them in improving

mission, IGU will regarding:

the efficiency and safety of gas operations.

V is i o n,

Mis s io n

a n d

O b j e c t iv e s


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Contents Introduction Vision, Mission and Objectives

4

Message from the President

10

Message from the Secretary General

14

Countries Represented in IGU

18

IGU Organisation

26

News from the Secretariat

30

Bigger Role for Gas Discussed at 2nd IEF-IGU Ministerial By Erik Gonder

44

A Busy Council Meeting in Qatar By Mark Blacklock

50

Deadlines Approaching for IGU Awards By Jeanet van Dellen

60

News from Organisations Affiliated to IGU 64 Counting Down to IGRC2011 By Robert Badoux and Marie-José Fourniguet

82

25th World Gas Conference is on Track By Zahariah Abdul Rahman

86

Coordination Committee Progress Report 91 Introduction and Key Developments

92

Progress Reports from the Committees

98

Progress Reports from the Task Forces

130

Features

143

The Brazilian Gas Industry By Marcos de Freitas Sugaya, Jorge Paulo Delmonte and Marcos Moreira de Xerez Sobral

146

Cancún Agreement Hailed as a Lifeline By David Adam

154

IGU Joins Forces with Worldwatch for COP16 Gas Symposium By Mark Blacklock

162

The Gas Industry in Mexico, IGU’s Latest Charter Member By Germain Manchon

168

The New Potential of Gas By Walter Thielen and Marc Hall

172

Renewable Gas: Clean Fuels By Elbert Huijzer

176

Trends in Wholesale Gas Price Formation Mechanisms: Results of the 2009 IGU Survey By Mike Fulwood

180

EFET: Promoting Wholesale Gas Markets 188 By Maria Popova The Breakthrough Decade for NGVs By Eugene Pronin, Davor Matic and Manuel Lage Russia’s Initiative in UGS Education and Training By A.E. Arutiunov, S.A. Khan and M.P. Khaydina

194

200

A Fresh Look at the Old World: A Comprehensive Set of Methods to Study European and Russian Gas Markets to 2030 204 By Eric Vambert and Marcos de Freitas Sugaya The Ems Gas Pipeline Tunnel – On Time and Budget By Enno Freese

210

Expanding Northern Europe’s LNG Import Capacity By Sander Lemmers and Peter Boreham

216

GIIGNL’s Information Papers on the Safety and Security of LNG By Tony Acton

222

Publications and Documents Available from IGU

230

Obituaries

232

Events and Acknowledgements

233

The opinions and views expressed by the authors in this magazine are not necessarily those of IGU, its members or the publisher. While every care has been taken in the preparation of this magazine, they are not responsible for the authors’ opinions or for any inaccuracies in the articles. Unless otherwise stated, the dollar ($) values given in this magazine refer to the US dollar.

7


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Message from the President Dear Colleagues Warm greetings and best wishes for a great year ahead. I am delighted to share with you the latest happen­ ings in IGU since the last issue of International Gas in October 2010. The past six months have ushered in a host of proactive activities and exciting initiatives. Building on the theme “Gas: Sustaining Future Global Growth” for the upcoming 25th World Gas Conference (WGC2012), we have developed the statement “Natural Gas CARES for the World” as part of our gas advocacy programme. This will be rolled out in the course of the year and is an important step forward in implanting a

Datuk (Dr) Abdul Rahim Hashim, President.

more effective and consistent voice for the global gas industry. Key advocacy messages have been

what is expected of the industry. This calls for

developed to spread the word that natural gas is a

concerted teamwork from IGU members to

clean, affordable, reliable, efficient and secure

develop the gas advocacy message and reinforce

energy source (hence the acronym CARES). IGU

it across the globe. The target audience will not

Council members dedicated a half day during the

only be policymakers, governmental bodies,

2010 Council meeting in Doha to a special

relevant ministries and energy lobbyists but also

workshop to provide their views on and support

the general public, the end consumers of energy.

for the gas advocacy toolkit. At the 2nd IEF-IGU Ministerial Gas Forum, also

10

l  Communication at all levels

held in Doha, government and industry leaders

With the growing focus on environmental issues

discussed the key challenges facing the natural

and increasingly vocal calls for the creation of a

gas industry. Important proposals were made on

low-carbon economy, it is opportune for the gas

measures to promote natural gas in an innovative,

industry to take appropriate and quick measures

imaginative and effective way as an essential part

to answer the call for “green energy”. IGU

of the current and future global energy mix. It was

continues to participate actively in international

unanimously acknowledged that there is an urgent

conferences, seminars and work groups, and

need for IGU to lead in delivering a forceful

strives to secure alliances and win-win collabor­

message that will reach out to all stakeholders and

ations with relevant world bodies as a means to

encourage them to take positive actions. The gas

promote gas as a sustaining fuel of choice in the

industry has to promote a sound vision of the

coming decades. Communication at all levels is

sustainability of gas now and in the future,

paramount if we are to ensure that gas has its

supported by actions that are geared to deliver

rightful place in the energy mix. IGU’s visible and

M e s s ag e

f r om

t h e

Pr e s i d ent


effective presence at various leading international

interested parties to take the opportunity to join in

events spearheads our vision to be the most

this global event by proposing papers for presen­

influential, effective and independent non-profit

tation and/or posters. The National Organising

organisation while serving as the spokesman for

Committee is working hard to make WGC2012 a

the gas industry worldwide.

memorable event and keynote speakers from

To strengthen IGU’s position regionally we have

important oil and gas companies and associations

appointed four distinguished and influential

have already confirmed their participation.

industry leaders as Regional Coordinators for Asia

Response from exhibitors has also been very

& Asia-Pacific, Europe & the Commonwealth of

encouraging with 70% of the exhibition space

Independent States (CIS), Middle East & Africa and

already committed. Moreover, a Youth Programme

North & South America. We wish to place on

is being introduced for the first time at a World

record our appreciation and thanks to the Regional

Gas Conference. This will include a youth carnival,

Coordinators for accepting their appoint­ments.

roundtable forum, digital marketing website,

These new positions will provide vital connections

science centre activities and also a publication on

and access to the major regional gas projects and

“Understanding the Natural Gas Industry”.

gas market developments, and to relevant poli­

The year ahead will see IGU’s involvement in

tical, policy and regulatory developments as well

more events and initiatives covering the entire gas

as increased membership opportunities.

value chain around the world. We look forward to your continuing support.

l  On schedule

The Triennial Work Programme is on schedule with the Technical Committees and Task Forces fully committed to working on their deliverables for WGC2012. The call for papers for WGC2012 was launched in February and I would like to invite

Datuk (Dr) Abdul Rahim Hashim

Kuala Lumpur will be the venue for the 25th World Gas Conference in June 2012.

Messag e

fro m

the

Pres i dent

11


Message from the Secretary General Dear Reader l  Gas advocacy

In the spring of 2010 IGU launched its gas advocacy initiative to address issues relating to the role of gas in a future low-carbon society. The first phase of the gas advocacy work is now complete. The final reports are published on IGU’s website in the Gas Advocacy folder as downloadable PowerPoint presentations. This format makes it easy to copy pictures and adapt

Torstein Indrebø, Secretary General.

them for use in individual presentations. The reports contain facts and pictures which

consequences and the competition between the

illustrate the environmental advantages of gas,

various energy carriers. IGU has a crucial role in

and give good arguments why gas should be

placing gas in the right context to meet these

looked upon as important to the world’s long-term

challenges.

energy supply and not just as a transition fuel. The

The role of gas in a sustainable energy future

aim is to update and complete the presentations in

was also the theme for our 2nd Ministerial Gas

the time leading up to the 25th World Gas

Forum which was arranged together with

Conference in 2012.

International Energy Forum in Qatar in November

I hope that many IGU members and partners

2010, and our joint event with the Worldwatch

will find the presentations useful as a source of

Institute at the UN Climate Change Conference in

information about the advantages of gas when it

Mexico in December 2010. Presentations from

comes to security of supply, cleanliness and

both events can also be downloaded from IGU’s

affordability, and use them as flexible tools in

website.

communicating with the world at large. Along with the need to cut greenhouse gas emissions, the world needs more energy for a

On June 2, 2011 it will be 80 years since IGU was

population which is expected to increase from

established in London by its seven initiators:

6.7 billion at present to about nine billion in

Belgium, France, Germany, Great Britain, the

2050. This will require huge investments. The gas

Netherlands, Sweden and Switzerland. Norway

industry is very capital-intensive with a lifetime of

and the USA were observers. Manufactured gas

several decades for the installations. This type of

was the basis of the industry at that time. Natural

long-term investment calls for stable political and

gas arrived in greater volumes in the 1960s when

fiscal conditions. Energy policies worldwide in

many large gas fields were discovered.

recent decades have become increasingly impor­

14

l  IGU’s 80th anniversary

Today IGU and the gas industry have become

tant to the markets in that they have had a

truly global with increasing trading operations,

growing influence on risk profiles, environmental

and gas transport by pipelines and LNG carriers

M e s s ag e

f r om

t h e

Se c r e tary

General


all over the world. The industry has gone through

gas and to fulfil IGU’s vision of becoming the

major changes since IGU was established and gas

industry’s most influential non-profit organisation

has strengthened its position as an important

while serving as the spokesman for the gas

energy source worldwide.

industry worldwide.

The membership of IGU has risen significantly

I wish IGU a happy 80th anniversary!

and now comprises 109 members from 73 countries, representing about 95% of the world’s gas market. Efforts to promote the gas industry’s interests are continuing on a broad front by IGU’s members and its leading bodies. This is necessary to realise the full potential of natural

Torstein Indrebø IGU and the gas industry have seen major changes. (left ) Manufacturing gas in London in the early 20th century. (below left ) Laying Russia’s first gas pipeline in 1945. (below ) Exporting LNG from Bintulu in Malaysia.

Messag e

fro m

the

S ecretary

General

15


Š iceberg: Getty Images / D. Allan

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Countries Represented in IGU Algeria

Equatorial Guinea

Macedonia

Slovenia

Angola

Estonia

Malaysia

South Africa

Argentina

Finland

Mexico

Spain

Australia

France

Monaco

Sweden

Austria

Germany

Netherlands, The

Switzerland

Belarus, Republic of

Greece

Nigeria

Taiwan, China

Belgium

Hong Kong, China

Norway

Thailand

Bosnia and Herzegovina

India

Oman, Sultanate of

Timor-Leste

Brazil

Indonesia

Pakistan

Trinidad and Tobago

Brunei

Iran

Peru

Tunisia

Bulgaria

Ireland

Poland

Turkey

Cameroon

Israel

Portugal

Ukraine

Canada

Italy

Qatar

United Arab Emirates

China,

Japan

Romania

United Kingdom

Kazakhstan

Russia, Federation of

United States of America

Croatia

Korea, Republic of

Saudi Arabia

Venezuela

Czech Republic

Latvia

Serbia

Vietnam

Denmark

Libya

Singapore

Egypt

Lithuania

Slovak Republic

People’s Republic of

Countries represented in IGU 74 Charter Members and 35 Associate Members

18

Cou n t r i e s

R e p r e s e n t e d

i n

IG U


charter members Algeria Association Algérienne de l’Industrie du Gaz – AIG Angola Sonangol Gás Natural Argentina Instituto Argentino del Petróleo y del Gas Australia Australian Gas Industry Trust

Belarus, Republic of Beltransgas Belgium Association Royale des Gaziers Belges

Brazil Associação Brasileira das Empresas Distribuidoras de Gás Canalizado (ABEGAS) Brunei Brunei Energy Association c/o Brunei LNG Sdn Bhd

Japan The Japan Gas Association

Egypt Egyptian Gas Association Equatorial Guinea Sociedad Nacional de Gas G.E.

Lithuania Lithuanian Gas Association

France Association Française du Gaz (AFG)

Macedonia Macedonian Gas Association

Greece Public Gas Corporation of Greece (DEPA) S.A. Hong Kong, China The Hong Kong & China Gas Co. Ltd

Ireland Irish Gas Association – Bord Gais Eireann

China, People’s Republic of China Gas Society

Israel The Israel Institute of Petroleum & Energy

Croatia Croatian Gas Association

i n

Latvia JSC Latvijas Ga¯ze

Finland Finnish Gas Association

Iran National Iranian Gas Company (NIGC)

Canada Canadian Gas Association

Korea, Republic of Korea Gas Union

Libya National Oil Corporation

Indonesia Indonesian Gas Association (IGA)

Cameroon Société Nationale des Hydrocarbures

Kazakhstan KazTransGas JSC

Eurogas

India Gas Authority of India Ltd (GAIL)

Bulgaria Overgas Inc.

R e p r e s e n t e d

Denmark Dansk Gas Forening – Danish Gas Association

Germany Deutsche Vereinigung des Gasund Wasserfaches e.V. (DVGW)

Bosnia and Herzegovina Gas Association of Bosnia and Herzegovina

Cou n t r i e s

Italy Comitato Italiano Gas (CIG)

Estonia Estonian Gas Association

Austria Österreichische Vereinigung für das Gas- und Wasserfach (ÖVGW)

20

Czech Republic Czech Gas Association

IG U

Malaysia Malaysian Gas Association (MGA) Mexico Asociación Mexicana de Gas Natural, A.C. Monaco Société Monégasque de l’Électricité et du Gaz (SMEG) Netherlands, The Royal Dutch Gas Association – Koninklijke Vereniging van Gasfabrikanten in Nederland (KVGN) Nigeria Nigerian Gas Association c/o Nigeria LNG Ltd Norway Norwegian Petroleum Society (NPF) – Norwegian Gas Association Oman, Sultanate of Oman LNG L.L.C. Pakistan Petroleum Institute of Pakistan


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charter members (continued) Peru Perúpetro S.A.

Slovenia Geoplin d.o.o. Ljubljana

Poland . Polskie Zrzeszenie Inzynierów i Techników Sanitarnych (PZITS) – Polish Gas Association

South Africa CEF (Pty) Ltd Spain Spanish Gas Association – Asociación Española del Gas (SEDIGAS)

Portugal GDP – Gás de Portugal, SGPS, S.A.

Sweden Swedish Gas Association – Energigas Sverige

Qatar Qatar Liquefied Gas Company Ltd (Qatargas)

Switzerland Schweizerische Aktiengesellschaft für Erdgas (SWISSGAS)

Romania S.N.G.N. Romgaz S.A. Russia, Federation of OAO Gazprom

Taiwan, China The Gas Association of the Republic of China, Taipei

Saudi Arabia Saudi Aramco

Thailand PTT Public Company Ltd

Serbia Gas Association of Serbia

Timor-Leste Secretariat of State for Natural Resources (Government of the Democratic Republic of Timor-Leste)

Singapore Power Gas Ltd Slovak Republic Slovak Gas & Oil Association

The IGU Secretariat is hosted by Statoil at these offices in Sandvika, Oslo.

22

Cou n t r i e s

R e p r e s e n t e d

i n

IG U

Trinidad and Tobago The National Gas Company of Trinidad and Tobago Ltd Tunisia Association Tunisienne du Pétrole et du Gaz (ATPG) c/o ETAP Turkey BOTAS¸ Ukraine Naftogaz of Ukraine United Arab Emirates Abu Dhabi Liquefaction Company Ltd (ADGAS) United Kingdom The Institution of Gas Engineers and Managers United States of America American Gas Association Venezuela Petróleos de Venezuela S.A. (PDVSA) Vietnam Vietnam Oil and Gas Group (PetroVietnam)


2010

2011

2012

Solar power

and, for when the sun isn’t out...

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Natural gas Sunflowers have the right idea. To derive the maximum benefit from sunlight, they turn their faces to follow

the sun! Although the photovoltaic cells in solar panels aren’t yet quite that clever, they’re delivering progressively higher energy yields. They can now even generate power when the sun goes in. But what happens at night, when the earth is facing away from the sun? Will we all be shivering? No! Not with a stable energy partner in natural gas. Solar power and natural gas can thus work in tandem for decades to come. The result of our readily available natural gas:

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2025

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2027 . . .

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a s s o c i at e m e m b e r s Bayerngas (Germany)

Instituto Brasileiro de Petróleo, Gás e Biocombustíveis – IBP (Brazil)

BG Group plc (United Kingdom) BP Gas, Power & Renewables (United Kingdom)

Izgaz – Izmit Gaz Dagitim San. Ve Tic A.S¸. (Turkey) Liander (The Netherlands)

Bursagaz (Turkey)

N.V. Nederlandse Gasunie (The Netherlands)

Cheniere Energy Inc. (USA)

Origin Energy Limited (Australia)

Chevron Corp. (USA) China National Petroleum Corporation (China)

Petróleo Brasileiro S.A. – Petrobras (Brazil) Russian Gas Society (Russia)

ConocoPhillips Company (USA)

RWE Deutschland AG (Germany)

DanaGas (UAE)

Shell Gas & Power International B.V. (The Netherlands)

Det Norske Veritas (Norway)

Société Suisse de l’Industrie du Gaz et des Eaux – SSIGE/SVGW (Switzerland)

E.ON Ruhrgas AG (Germany) ExxonMobil Gas & Power Marketing (USA) Gaslink – Gas System Operator Ltd (Ireland) GasTerra (The Netherlands) . GAZBIR – Association of Natural Gas Distributors of Turkey GDF SUEZ (France)

Sonorgás (Portugal) Spetsneftegaz NPO JSC (Russia) Taqa Arab Company for Energy (Egypt) TBG – Transportadora Brasileira Gasoduto BolíviaBrasil S/A (Brazil) Thyssengas GmbH (Germany)

IGDAS¸ – Istanbul Gas Distribution Co. (Turkey) Indian Oil Corporation Ltd (India)

TOTAL S.A. (France) Vopak LNG Holding B.V. (The Netherlands)

OR G AN I SAT I ONS AFF I L I ATED TO I G U Energy Delta Institute (EDI) Foundation IGU Research Conferences (Foundation IGRC) Gas Infrastructure Europe (GIE)

GERG – Groupe Européen de Recherches Gazières/European Gas Research Group GIIGNL – Groupe International des Importateurs de Gaz Naturel Liquéfié/International Group of LNG Importers

Cou n t r i e s

R e p r e s e n t e d

International Pipeline & Offshore Contractors Association (IPLOCA) Marcogaz

Gas Technology Institute (GTI)

24

International Association for Natural Gas Vehicles (IANGV) including its regional affiliates

i n

IG U

Pipeline Research Council International, Inc. (PRCI) Russian National Gas Vehicle Association (NGVRUS)


IGU Organisation 2009–2012 IGU Council IGU Management Team

President

Vice President

Executive Committee

IGU Secretariat

Coordination Committee

Secretary General

IGU Research Conference (IGRC) Task Force 1 Building Strategic Human Capital Task Force 2 Nurturing the Future Generations Task Force 3 Geopolitics and Natural Gas

P GC A

PG C B

WOC 1

W OC 2

Strategy

Sustainability

Storage

Exploration and Production

PG C C

Gas Markets

W OC 3

Transmission

This photograph was taken at the Executive Committee (EXC) meeting which was held in Doha, Qatar, in October 2010. From left to right in the first row are: Carlos Eduardo de Freitas Brescia, Colin Lyle (who was substituting for Andrew Wagg), Gro Mjellem (who was substituting for Jan Rune Schøpp), Yves Tournié, Ieda Gomes, Jérôme Ferrier, Datuk Abdul Rahim Hj Hashim, Ernesto López Anadón, Evgueni Riazantsev, Khaled AbuBakr and Jorge Delmonte (who was substituting for João Carlos de Luca).

PGC D LNG

WOC 4

Distribution

PGC E

Marketing

Programme Committees (PGCs)

WOC 5

Gas Chain

Utilisation

ig u

o rg a n i s ati o n

Working Commitees (WOCs)

From left to right in the second row are: Ho Sook Wah, Walter Thielen, Daniel Paccoud, Georges Liens, Antoni Peris Mingot, Kapyoung Ryu, Marcel Kramer, Milos Kebrdle and Torstein Indrebø (IGU Secretary General, not a member of the EXC). From left to right in the back row are: Domenico Dispenza, Kenji Ikejima, Mel Ydreos (who was substituting for Shahrzad Rahbar), Yongjang Xia (who was substituting for Wang Guangjun), Man Fai Sham (who was substituting for James Kwan), David N. Parker and Omar Maaliou (who was substituting for Yamina Hamdi). Alaa Abu Jbara sent his apologies.

26

Outgoing


IGU Management Team

Datuk (Dr) Abdul Rahim Hj Hashim, President (Chairman) (Malaysia)

Mr Jérôme Ferrier, Vice President (France)

Mr Ernesto López Anadón, Immediate Past President (Argentina)

Mr Ho Sook Wah, Chairman of the Coordination Committee (Malaysia)

Mr Georges Liens, Vice Chairman of the Coordination Commitee (France)

Mr Torstein Indrebø, Secretary General

I G U E X ECUT I V E CO M M I TTEE Mr Nordine Cherouati, Algeria

Mr Walter Thielen Germany

Mr Alaa Abu Jbara Qatar

Mr Ernesto López Anadón Argentina

Mr Domenico Dispenza Italy

Mr Evgueni Riazantsev Russia

Mr Carlos Eduardo de Freitas Brescia, Brazil

Mr Kenji Ikejima Japan

Mr Antoni Peris Mingot Spain

Ms Shahrzad Rahbar Canada

Mr Kap-young Ryu Republic of Korea

Mr Colin Lyle United Kingdom

Mr Miloš Kebrdle Czech Republic

Datuk (Dr) Abdul Rahim Hj Hashim, Malaysia

Mr João Carlos de Luca Instituto Brasileiro de Petróleo, Gás e Biocombustíveis, Associate Member

Mr David N. Parker United States of America

Mr Jérôme Ferrier France

Mr Ho Sook Wah Malaysia

Mr Khaled Abubakr, Taqa, Associate Member

Mr Georges Liens France

Mr Marcel Kramer The Netherlands

James Kwan IGU Regional Coordinator for Asia-Pacific

Mr Yves Tournié Total, Associate Member

Mr Daniel Paccoud France

Mr Runar Tjersland Norway

Mr Wang Guangjun, China National Petroleum Corporation, Associate Member

Ms Ieda Gomes BP Gas, Power & Renew­ ables, Associate Member

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News from the Secretariat

The new Associate Members are ExxonMobil Gas & Power Marketing from the USA, Origin Energy Limited from Australia and RWE Deutschland AG from Germany.

The IGU Secretariat’s main activities since the last

Our new members are encouraged to sup-

edition of the IGU Magazine (October 2010) are

port and take part in IGU’s activities, and to

detailed below in news items and information

benefit from the wide network and the valuable

from the Secretary General (TI), Director (HR),

discussions during events. TI/CO

Senior Advisor & Press Contact (EG), Advisor to the Secretary General (JvD) and Advisor to the Secretary General (CO).

l  Vacancy for Secretariat secondee

The term of Jeanet van Dellen, seconded to IGU l  Four new IGU members

by N.V. Nederlandse Gasunie, will end in

During the 2010 Council meeting, IGU was

November 2011. We invite members to consider

pleased to welcome one new Charter Member

seconding a person with a few years’ experience

and three new Associate Members.

in the field of energy to the IGU Secretariat in

The new Charter Member is Mexico repre­

Oslo. The position will expose the candidate to a

sented by the Asociación Mexicana de Gas

wide area of responsibilities and give them experi­

Natural, A.C. (Mexican Natural Gas

ence of a unique international environment. IGU

Association).

will cover the candidate’s job-related expenses,

The staff of the IGU Secretariat are, from left to right, Erik Gonder (Senior Advisor & Press Contact), Jeanet van Dellen (Advisor to the Secretary General), Torstein Indrebø (Secretary General), Hans Riddervold (Director) and Carolin Oebel (Advisor to the Secretary General). Åse Nicolaysen (Administration Assistant) is seated.

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including travel costs, while the employer of the secondee must cover salary and other costs related to the assignment. The secondment period will normally be for two years. TI l  LNG17 launches,

LNG18 host elected The triennial LNG conferences are organised jointly by IGU, the Gas Technology Institute (GTI) and the International Institute of Refrigeration (IIR).

Preparations for LNG17 are well underway.

The American Gas Association is the host of the 17th International Conference & Exhibition on Liquefied Natural Gas (LNG17),

Ian Little, Chairman of the Australian Gas Industry Trust (right ) and Ernesto López Anadón, Chairman of the LNG16 Steering Committee (left ) at the LNG18 contract signing.

which will be organised in Houston, April 16-19,

organisations around the world. In this context,

2013. For more information visit: www.lng17.org.

efforts have been made by IGU to establish a

The LNG17 Steering Committee, chaired by

clear and coherent message on the role natural

Jack Lewnard of GTI, and Programme Committee,

gas can and should play. A workshop facilitated

chaired by Dr Nirmal Chatterjee of Air Products &

by Michael Stoppard from IHS CERA was org­

Chemicals, held their first meetings in Houston in

anised at the April 2010 Executive Committee

November 2010. At the same time Australia was

meeting in Jimbaran and some of the issues and comments raised were:

elected to host LNG18 in Perth in 2016. TI

l There are differences in the perception of gas

between different regions and economies – l  IGRC – 2011 in Seoul, 2014 in

particularly when looking at developed versus

Copenhagen

emerging economies; l The industry in general is seen more as a

The next IGU Research Conference (IGRC) will take place in Seoul, Korea, October 19-21. Please

policy-taker rather than a policy-shaper; l The message of the industry regarding natural

see pages 82-84 for more information. At the IGU meetings in Doha last October, the Danish Gas Technology Centre on behalf of the Danish Gas Association was elected to host the IGRC in 2014. It will take place in Copenhagen,

gas has changed over the years – from bridg­ ing fuel to complementary fuel, pointing to a diminished role for natural gas; l Shale gas could be a “game changer” and this

unconventional gas source needs to be fully

September 17-19, 2014. JvD

exploited from a security of supply as well as price stability standpoint;

l  Gas advocacy

l There is a need to communicate better and

Since the last World Gas Conference in Buenos

establish the vision for natural gas in a

Aires, an increased recognition of the role of

decarbonised world.

natural gas has been noted, not only within the natural gas industry itself, but also amongst other

In June 2010, PFC Energy, Washington DC, USA, was appointed to undertake a study on gas

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I G U ’ s g a s a d v o c a c y i n i t i at iv e

Natural Gas is clean. Natural gas produces less nitrogen oxide than coal, and more than 50% less CO2. Gas produces no sulphur and no solid waste Natural gas promotes sustainable transport. Natural gas vehicles can improve air quality and energy efficiency in large cities.

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Natural gas is the affordable choice. Modern gas-fired plants have a capital cost that is half that of coal, one-third the cost of nuclear and one-fifth the cost of onshore wind.

Natural gas is available now. Gas is readily available from a variety of sources, both pipeline and LNG. The environmental benefits of gas can be realised immediately.

Natural gas does not require subsidies. Unlike heavily subsidized renewable technologies, natural gas use allows countries to affordably reduce their emissions.

Natural gas is versatile. Gas can serve as a flexible partner in power generation for intermittent energy sources like wind and solar, facilitating the phase-in of renewables.

International Gas Union

Se c r e ta r i at

The Voice for the Gas Industry Worldwide www.igu.org


Natural gas is efficient. Modern gas-fired power plants are 40% more efficient than coal plants. Natural gas saves time. Gas-fired plants require less construction time than nuclear or coal plants.

Natural gas is abundant. Global production will increase over the next 20 years, with growing supplies from both conventional and unconventional resources. Natural gas is safe. The natural gas sector has the best safety record in the industry.

It is time to act. It is time to choose Natural Gas.

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25th World Gas Conference “Gas - Sustaining Future Global Growth” Kuala Lumpur, Malaysia 4-8 June 2012

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advocacy to help IGU to ensure a proper under­ standing and perception of natural gas amongst the various stakeholders. The Gas Advocacy Report contains the key messages and identifies the main stakeholders. The five main message categories underline that natural gas CARES for the world, as it is Clean, Affordable, Reliable, Efficient and Secure.

& Figures”. Its main purpose is to provide input to efforts promoting natural gas more actively towards external stakeholders. It is structured as a tool kit for IGU members, offering factual infor­mation as an excellent basis for presentations made by members in different countries around the world. For individual presentations the relevant slides can be integrated in line with the most appropriate

Sustainable Development Work Group (SDWG) In the context of advocating the sustainable pro­ per­ties of natural gas, the Sustainable Development Work Group (SDWG), which was established at the 2009 Council meeting in Buenos Aires, has

communication strategy for the respective region and considering the specific stakeholders to be addressed. In certain regions reference to the “Triple A” slogan – Abundant, Affordable, Acceptable – might be a powerful message. HR/CO

also prepared a report on climate and gas. Com­ piled by Bert Panman, Dick de Jong and Terence Thorn, the title of this report is “Natural Gas, Facts

l  2nd IEF-IGU Ministerial Gas Forum

The 2nd IEF-IGU Ministerial Gas Forum was held in Doha, Qatar, November 30, 2010, under the theme “The Role of Natural Gas in a Sustainable Energy Future”. The Forum was a further important step in strengthening the global dialogue between natural gas producing and consuming countries, and delegates welcomed the offer by France to host the 3rd IEF-IGU Ministerial Gas Forum in 2012. In Doha, government and industry leaders discussed the changing dynamics of the gas markets and the key challenges facing the natural gas industry from a low-carbon perspective. For a detailed report, please see pages 44-47. EG/JvD l  COP16 gas symposium

IGU sees the UN climate change conferences as important arenas for informing public servants and other delegates about the contributions of the gas industry to a low-carbon economy, and for addressing gas issues from a climate perspective. Following the successful gas event during COP15 in 2009, IGU decided to organise a similar event at COP16 in Cancún, Mexico. This time IGU colla­ borated with the Worldwatch Institute, which is an Qatar’s Deputy Prime Minister, HE Abdulla Bin Hamad Al-Attiyah (l e f t ) greets Datuk Rahim Hashim (c e n t r e ) and Torstein Indrebø (r i g h t ) at the 2nd IEF-IGU Ministerial Forum.

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independent US-based international research organisation focused on energy, resource and


environmental issues. The IGU-Worldwatch gas symposium was held on December 5, 2010, and is covered in more detail on pages 162-166. EG/CO l  IGU Gas Awards

IGU is inviting submissions for this Triennium’s Gas Awards and encourages you to send in pro­ posals. The deadlines for submission are July 1 for the IGU Gas Efficiency Award and September 1 for the IGU Social Gas Award. You can find out more on pages 60-61 or by visiting the IGU website (www.igu.org/knowledge/ gas). If you have further questions please contact Jeanet van Dellen in the IGU Secretariat at jvde@ statoil.com. JvD l  IGU visits AGA

Statoil’s Senior Vice President for Climate, Hege Marie Norheim, was one of the speakers at the IGU-Worldwatch gas symposium during COP16.

IGU visited US Charter Member the American Gas Association (AGA) in Washington DC in

market developments that included both political and

November 2010. The IGU delegation consisted

business related issues. In particular, they pointed

of the President, Coordination Committee (CC)

out that shale gas developments had drama­tically

Chairman and Secretary General.

impacted the supply side of the American gas

AGA had prepared a wide-ranging programme

market and brought down gas prices. This

which included meetings with many key organi­sa­

development had in turn led to rerouting of LNG

tions and institutions influencing the US energy mar­

that was originally destined for the US market,

kets. Experts in AGA gave an overview of US gas

thus impacting the global gas supply picture.

IGU is inviting submissions for this Triennium’s Gas Awards.

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l  New interactive map online

IGU has worked with the Energy Delta Institute (EDI) to develop a new version of the Interactive World Gas Map which provides statistics and qualitative information about the gas market worldwide. Clicking a link on the home page of www.igu.org takes you to the map and you simply scroll over it to home in on the region and country you want. EG l  World Shale Gas Conference An IGU delegation visited AGA’s headquarters in Washington DC last November. From left to right are: Jay Copan (Executive Director of LNG17), Ho Sook Wah, Datuk Rahim, David N. Parker (AGA President & CEO) and Torstein Indrebø.

IGU was the co-organiser with AGA and the CWC Group of the inaugural World Shale Gas Conference & Exhibition which took place in Dallas-Ft Worth, USA, November 2-5, 2010. There were over 450

The programme included a meeting with

participants from 35 countries. IGU was represented

the American Natural Gas Alliance, the Interstate

by the President and Secretary General whose

Natural Gas Association, the World Bank and

presentations are available on the IGU website.

the Worldwatch Institute. The topics covered a

Key themes that arose from the conference

wide range of areas including cooperation

agenda included:

about improving the image and knowledge of

l Gas is good but gaining and maintaining

the natural gas industry in both developed and

public image is critical.

developing nations.

l Natural gas is set to play a bigger and more

TI

central role in the world energy mix; shale gas will have a crucial role to play in this picture. l Shale gas is truly a revolution, unlocked by

technology with further room for advances; the story is by no means over. l Global development will be uneven depending

on geology, vigour of the exploration effort, infrastructure, fiscal terms, regulatory maturity, commercial strategies and societal attitudes. l The question still remains, however, as to how

long will it take and at what cost can shale gas be produced outside North America. l Most importantly to fully and efficiently exploit

shale gas, the long term mid-cycle price needs to be higher; a figure of $5-$6 per MMBtu was mentioned. l Realising the full potential requires community Torstein Indrebø for IGU and Robert Badoux for EDI shake hands on the Interactive World Gas Map agreement.

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and government support while full disclosure must be addressed at all stages.


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Datuk Rahim addresses the World Shale Gas Conference.

l Shale gas players should be responsive to

stakeholder concerns and collaborative in developing sound regulatory frameworks. l For smooth development, the shale gas industry

needs coordinated industry communications

and education aimed at understanding the full implications of this new resource base. l The development of shale gas on a global scale

will open up fresh opportunities for collabor­ ation, cooperation and new types of partnership rarely witnessed on the scale envisaged. The 2011 World Shale Gas Conference & Exhibition will take place in Houston, USA, November 7-10. For more information please contact Sally Shaw, sshaw@thecwcgroup.com. EG l  IGU at international events

World Energy Congress The 21st World Energy Congress was held in Montreal, Canada, September 12-16, 2010. IGU had a stand that promoted WGC2012 and the Union in general, while the Secretary General chaired a session on energy supply bottlenecks. Together with Shahrzad Rahbar, Chair of the Canadian Gas Association, and Mel Ydreos, Chair of IGU’s Task Force 3, he also participated in a Torstein Indrebø, Mel Ydreos and Jeanet van Dellen at the 21st World Energy Congress.

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CNBC international broadcast session on energy opportunities and gave interviews to TV stations.


Rosa Elvira Herrera (Huancano, Pisco)

Camisea have been working five years for a clean, economical and environmental friendly energy source. As the main natural gas pipeline carrier, TgP is proud to be part of the most important energy project in PerĂş.

www.toronja.com.pe

SHE IS FIVE YEARS OLD, AND HAS BREATHED CLEAN AIR HER WHOLE LIFE.


Central European Gas Congress The Polish Chamber of the Natural Gas Industry organised the Central European Gas Congress 2010 in Wisla, Poland, October 26-28. Hans Riddervold, Director of the IGU Secretariat, addressed delegates on the topic of “Natural Gas in the Energy Policy of the EU and V4 Countries”. The “V4” or Visegrad Group is a regional grouping of the Czech Republic, Hungary, Poland and Slovakia. International Oil & Gas Forum Naftogaz, the Ukrainian Charter Member of IGU, Erik Gonder addresses the 14th International Oil & Gas Forum in Kiev.

organised the 14th International Oil & Gas Forum in Kiev, November 2-4, 2010. IGU Senior Advisor, Erik Gonder, addressed delegates with a speech

INGAS

on “The Role of Natural Gas in the Sustainable

INGAS took place in Skopje, Macedonia, October

Future” and also gave an overview of the various

8-9, 2010. High-level representatives discussed

initiatives launched by IGU on this issue.

the energy politics of the Balkans focusing on the role of natural gas and on investment and oper­

Qatar celebrates 77 mtpa LNG capacity

ating strategies. The Secretary General contributed

The Secretary General took part in the celebration

with a presentation underlining the abundance,

to mark Qatar’s LNG capacity reaching 77 mtpa,

affordability and acceptability of natural gas.

reconfirming the country’s position as the world’s leading producer of LNG. The event was held on December 13, 2010, at Ras Laffan Industrial City, under the patronage and presence of HH the Emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani, and was hosted by HE Abdulla Bin Hamad Al-Attiyah, the Deputy Prime Minister and at the time also Minister of Energy & Industry. Some 1,200 VIP guests from around the world attended, including the 23 countries to which Qatar currently exports LNG. China City Gas Forum The CC Secretary, Ungku Ainon Ungku Tahir, gave a presentation at the 3rd China City Gas Forum, which was held in Shenzhen, China, December 9-11, 2010. Themed “Green Energy, Green City and Green Future”, the forum was organised by

Torstein Indrebø and Alaa Abujbara, Chairman of IGU’s Programme Committee D, at Qatar’s LNG celebration.

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China Gas Association and China Gas Society and hosted by Shenzhen Gas Corporation Ltd.


UNECE Working Party on Gas The Working Party on Gas of the UN Economic Commission for Europe (UNECE) held its 21st annual session in Geneva, Switzerland, January 18-19. On the agenda were five key studies which are being undertaken by the UNECE Member States. They deal with gas market liberalisation, regulation of the gas industry, the use of gas in transport, underground gas storage and LNG. Jeanet van Dellen, Advisor to the Secretary General, presented IGU’s activities in the field of gas advocacy and contributed to the roundtable on the use of gas in transport.

Ungku Ainon addresses the 3rd China City Gas Forum in Shenzhen.

Handelsblatt 2011 conference From January 18 to 20 in Berlin, Germany, the German newspaper Handelsblatt held its 18th

Held annually, the forum is aimed at promoting

Annual Conference focusing on energy topics. A

dialogue and information exchange between city

high-level selection of speakers from politics, non-

gas companies and government as well as

governmental organisations and the industry

addressing the development of the city gas

discussed the latest developments in the energy

industry in China.

market in Germany. A focus was on the

During the Handelsblatt conference, Torstein Indrebø participated in a panel discussion (above ) and met delegates including Klaus Schäfer (o p p o s i t e ), Chairman of the Board of Management of E.ON Ruhrgas.

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b e lo w

Torstein Indrebø and Klaus Schäfer at the Handelsblatt conference.

market – the implications for Europe’s gas industry”. Other panellists were Dr Agnus Cassens (Shell Upstream International), Stefan Judisch (RWE Supply & Trading GmbH), Klaus Schäfer (E.ON Ruhrgas AG) and Jens Schumann (Gasunie Deutschland). IndoGas 2011 The President, CC Chairman and Secretary General were present at the 5th IndoGas Conference & Exhibition with the theme “Clean Energy for Sustainable Development”. The event was endorsed by IGU and took place in Jakarta, Indonesia, January 24-27. implications of the “Energy Concept” presented by the German government in September 2010. The Secretary General participated in a panel discussion on “Revolution in the world energy

Topics discussed included the question of how Indonesia’s natural gas industry could be expanded. CO


response to new opportunities for natural gas.

Bigger Role for Gas Discussed at 2nd IEF-IGU Ministerial

Both sessions were moderated by the Right Honourable Tim Eggar, Chairman of Nital Solar and a member of IGU’s Wise Persons Group.

By Erik Gonder

IGU President, Datuk Rahim Hashim, under­ lined the necessity of enhanced dialogue among

The 2nd IEF-IGU Ministerial Gas Forum was held

all gas stakeholders. He pointed to the importance

in Doha, Qatar, on November 30, 2010, under

of “improved alignment of business strategies and

the theme “The Role of Natural Gas in a

energy policies to meet the global energy chal­

Sustainable Energy Future”.

lenge of bringing clean and reliable supplies to a

HE Abdulla Bin Hamad Al-Attiyah, Qatar’s

growing population, and at the same time ensure

Deputy Prime Minister and at the time also

sustainable economic growth”.

Minister of Energy & Industry, hosted the Forum,

Torstein Indrebø, IGU Secretary General, said

which was attended by representatives of govern­

that “given its availability, environmental qualities

ments from gas producing and consuming

and advances in technology, natural gas is an

countries, the gas industry and international

essential part of the global solution to climate

organisations.

change, in particular as a substitute fuel in the

The Forum was organised under the Chatham

power sector”. He highlighted the role of natural

House Rule as a pair of panel sessions, each

gas in a sustainable energy future as an

followed by roundtable discussions involving all

“enabling” or “dual” fuel to back up intermittent

participants. The morning session discussed dev­

renewable energy sources. “Natural gas is more

elopments in global gas markets and the role of

than a bridge, it’s a destination fuel,” he declared.

natural gas in a sustainable energy future, while

IEF Secretary General, Noé van Hulst, called on

the afternoon session looked at the industry’s

the industry to take the long-term view and con­

The Forum was attended by representatives of governments, the gas industry and international organisations.

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tinue to invest in the gas value chain despite uncertainties surrounding the global economic downturn and current market conditions character­ ised by a gas glut and relatively low prices. Reflecting on recommendations from the 1st IEF-IGU Ministerial Gas Forum, calls from IEF Ministers, the G8 and G20, van Hulst noted that IEF, in cooperation with its JODI (Joint Oil Data Initiative) partner organisations is working on the extension of JODI to cover natural gas. The intention is to launch a Gas-JODI Database in 2011 with the aim of helping to improve gas market data transparency to the mutual benefit of producers and consumers. IEF and IGU noted that projected expansion

From left to right on the podium are: HE Abdulla Bin Hamad Al-Attiyah, Qatar’s Deputy Prime Minister; Datuk Rahim Hashim, IGU President; and Torstein Indrebø, IGU Secretary General.

and lengthening of gas supply chains gives impetus to a growing need for focus on global energy dialogue and that “multilateral agreements

years; a surge in supply volumes coupled with

and intergovernmental solutions will be

weak demand resulted in a global gas over-

increasingly needed to support or bring forward

supply. However, gas demand is expected to

new infrastructure, to jointly explore and exploit

resume growth in both emerging and traditional

new gas reserves, and to help establish robust and

markets in the coming years and decades. The structure of global gas demand has

secure markets to the benefit of all parties”. The important role to be played by the evolving

changed as developing countries have begun to

cooperative relationship between NOCs and IOCs

use more natural gas and the traditional markets

was also emphasised.

have seen their demand level off or decline. The projected increase in gas demand in the next

Government representatives and industry leaders discussed key challenges facing the

decades is expected to come primarily from non-

natural gas industry and how it can help develop

OECD countries, with Asia and the Middle East

a sustainable response to climate change. They

playing a leading role. The surprising development of unconventional

emphasised the need to create predictable rules and regulations in order for the industry to act

gas resources in the US has dramatically altered

efficiently in their operations and investments, for

the global market and is expected to have a

a sustainable use of resources and a sound use of

significant impact on the gas outlook not only in

available human capital. The discussion focused

North America but in other parts of the world as

on the following major areas.

well. However, outside the US, it is still very uncertain how much shale gas can be developed.

l  Gas markets

Gas demand in many producing countries has

Natural gas consumption and trade have been

been growing sharply over the past two decades

growing steadily over the past two decades and

and will continue to grow. This trend has impli­

gas has strengthened its position in the world

cations for producing countries as well as energy

energy mix. Natural gas markets were affected by

markets globally, as increasing domestic demand

a confluence of major forces during the past two

impacts exports and reduces export revenues.

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l  Natural gas – a responsible choice for a

sustainable future For many decades to come future fossil fuels will continue to account for a substantial share of the global future energy composition and natural gas will continue to play a significant role in global energy demand; its share will increase substantially, as demand will continue to increase especially for power generation sector, in parti­ cular in emerging and developing countries. Given its availability, environmental qualities and advances in technology, natural gas is an essential part of the global solution to climate change. The natural gas industry has the scale, technology, and HE Abdulla Bin Hamad Al-Attiyah with Jean-François Cirelli, Vice Chairman & President of GDF SUEZ (l e f t ), and Datuk Rahim Hashim (r i g h t ).

resources to reduce CO2 emissions. This positive

Beside its importance as a supplier to the world

energy future should be highlighted much more

market, the Middle East is emerging as an

strongly in international fora and debates.

important centre of demand growth.

contribution that natural gas is making in climate change mitigation and delivering a sustainable

Due to a number of political, technical, eco­nomic

There is an urgent need to ramp up energy

and market-related factors, the expected period

efficiency and energy saving, in particular in

leading to a substantial renewable energy base will

developing countries, to curb demand growth and

be lengthy and will require significant subsidies.

also tackle the issue of phasing out, over the

Natural gas can be an “enabling fuel”. It can play

medium term and in a socially acceptable way,

a role of a “dual” fuel to renewables by enabling

unsustainable fossil fuel subsidies.

increased deployment of energy supply from inter­

The global spot market is gaining maturity

mittent renewable technologies. Natural gas is abun­

leading to a more liquid market with greater

dant, affordable and environmentally accept­able.

potential for narrowing regional price differences.

Hence, towards a sustainable energy future, natural

However, the increase in shale gas production has

gas is more than a bridge, it’s a destination fuel.

reduced US imports of LNG, with adverse impacts

The importance of communication and cooper­

on the globalising trends of the gas markets. Is

ation between policymakers and the gas industry

this temporary or permanent?

to reach common goals of a sustainable energy

Spot gas prices have fallen in the world’s two

future was acknowledged.

major spot markets, widening the gap between

The need to reduce gas flaring was underlined

gas prices in long-term oil-indexed contracts and

as an issue for the industry to address so as to

spot gas prices. Adjustments are being introduced

better communicate the strong potential of the role

in long-term contracts to reflect spot market

of gas in a sustainable energy future.

conditions and hybrid spot/oil indexed formulas

46

are included in long-term contracts. However,

l  Investment

long-term oil-indexed contracts are likely to

Worldwide, gas resources are more than sufficient

remain predominant as they underpin huge

to meet projected demand for the coming decades,

upstream and infrastructure investments.

subject to adequate investments. The gas industry is

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capital-intensive and huge investments through the

bring forward new infrastructure, to jointly explore

entire value chain are needed to compensate for

and exploit new gas reserves, and to help esta­

the natural decline of existing gas fields. Accord­ing

blish robust and secure markets to the benefit of

to IEA forecasts, the cumulative invest­ment required

all parties. This will require long-term cooperation

over the period 2010-2035 amounts to $7.1 trillion

between gas producers and consumers, and

or around $270 billion per year.

transit countries.

The challenge facing the industry is to take the

Driven by long-term economic considerations,

long-term view and continue to invest in the gas

the interests of national (NOC) and international

value chain despite uncertainties surrounding the

(IOC) oil companies are more likely to converge in

economic downturn and current market conditions

the natural gas business. Stronger partnerships,

characterised by a gas glut and relatively low prices.

multifaceted cooperation and innovative arrange­ ments between NOCs, IOCs, and services

l  Gas market transparency

companies will be needed, particularly for the

The 1st IEF-IGU Ministerial Gas Forum held in

challenges of developing remote and difficult gas

Vienna in 2008 echoed and welcomed the call of

resources. In this regard, the 2nd IEF NOC-IOC

IEF Ministers to extend JODI to natural gas. IEF, in

Forum (to be held in Paris, April 7-8, 2011) was

cooperation with its JODI partner organisations

recognised as an important platform to facilitate

and GECF, initiated the extension work in 2009.

this cooperation.

The Gas-JODI Database is expected to be launched in 2011. It will provide a more accurate

l  3rd Forum in 2012

picture of market conditions and hence will benefit

Continuation of the IEF-IGU Ministerial Gas Forum

gas market players.

is a very useful tool for discussion among all stake­ holders and the offer by France to host the 3rd IEF-

l  Natural gas – a vector for cooperation

IGU Ministerial Gas Forum in 2012 was welcomed.

and dialogue Multilateral agreements and intergovernmental

Erik Gonder is Senior Advisor & Press Contact in

solutions will be increasingly needed to support or

the IGU Secretariat.

In the afternoon panel session from left to right are: Philippe Boisseau, President Gas and Power, Total; Thomas R. Walters, President, ExxonMobil Gas & Power Marketing; HE Abdulla Bin Hamad Al-Attiyah; Tim Eggar, Moderator; Hans-Peter Floren, Member of the Board of Management, E.ON Ruhrgas; Rune Bjørnson, Executive Vice President, Natural Gas, Statoil; and Gertjan Lankhorst, CEO, GasTerra.

Bigg e r

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at

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A Busy Council Meeting in Qatar

IGU and natural gas more actively by organising

By Mark Blacklock

Sook Wah explained that since then seven

events, participating in conferences and cooperat­ ing with international bodies. The 2009 Council meeting had approved its establishment, and Ho members had been recruited (see box) with the

The 2010 Council meeting covered important

Secretary General, Torstein Indrebø, in the chair.

ground including the accession of four new

“We would like to thank them for their support,”

members. It was held at the Four Seasons Hotel in

he said.

Doha on October 21, following sessions of the

The UN Climate Change conferences are

Coordination Committee and the Executive

clearly a priority for the work group and Torstein

Committee. The whole event was hosted by

Indrebø briefed delegates on preparations for the

Charter Member Qatargas, and was attended by

gas symposium during COP16 being organised by

140 delegates and 24 accompanying persons.

IGU in conjunction with the Worldwatch Institute.

The day’s business was opened by IGU’s

(This was held six weeks after the Council meeting

President, Datuk (Dr) Abdul Rahim Hashim, who

and is covered on pages 162-166.) He also

asked delegates to approve the minutes of the

reported that a joint publication with Charter

previous Council meeting, which had been held

Member Eurogas was being prepared entitled

immediately prior to the 24th World Gas

“The Role of Gas in a Sustainable Energy Future”.

Conference in Buenos Aires in October 2009.

Ho Sook Wah took the floor again to introduce

Delegates were then briefed on a series of

the four new Regional Coordinators. Two of these

developments including the second IEF-IGU

were present – Marcel Kramer (Europe & CIS) and

Ministerial Gas Forum, which was held a month

Khaled Abubakr (Middle East & Africa) – while

after the Council meeting (see the report on

João Carlos de Luca (North & South America) was

pages 44-47).

represented by Jorge Paulo Delmonte and James Kwan (Asia & Asia-Pacific) by Man Fai Sham.

l  Sustainable development

Datuk Rahim thanked the Regional Coordinators

Ho Sook Wah, Chairman of the Coordination

for taking on their new responsibilities and then

Committee, introduced the new Sustainable

asked Ernesto López Anadón, IGU’s Immediate

Development Work Group, which aims to promote

Past President, to give a report on LNG16 in his

M E M BERS OF THE SUSTA I NABLE DE V ELOP M ENT W OR K G ROUP

50

A

Secretary General (Chair)

Mr Torstein Indrebø, Norway

Chairman of the Coordination Committee

Mr Ho Sook Wah, Malaysia

Chairman of PGC A – Sustainability

Mr Juan Puertas, Spain

Member nominated by the US Charter Member (AGA)

Mr Steven Kline, USA

Member of the Executive Committee

Mr Wang Guangjun, P.R. China

Member of the Executive Committee

Mr Carlos Eduardo de Freitas Brescia, Brazil

Member of the Executive Committee

Mr Evgueni Riazantsev, Russia

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capacity as Chairman of the Steering Committee.

for event organisers,” he said, “and we are also

As reported in the last issue of the IGU Magazine,

looking for new arenas such as the CNBC TV

the travel plans of many LNG16 delegates and

debates on energy opportunities.”

speakers were hit by the volcanic ash cloud which

Ernesto López Anadón then took the floor again,

paralysed air traffic in northern Europe from April

this time in his capacity as Chairman of the IGU

15 to 20, 2010, and the event had to be reorg­

Research Conference (IGRC) Policy Committee, to

anised at the last minute. In the end, some 60% of

update delegates on preparations for IGRC2011

the people registered managed to attend. “All-in-

in Seoul (see pages 82-84). He also announced

all we had a successful conference in spite of the

that Denmark’s offer to host IGRC2014 in

difficulties,” said Ernesto López Anadón.

Copenhagen had been accepted. The hosts will

The President went on to announce that IGU’s Wise Persons Group would be expanded to

above and b e lo w

The 2010 Council meeting was held in Doha, Qatar.

be the Danish Gas Association and the Danish Gas Technology Centre.

include Dr Kandeh K. Yumkella, who is DirectorGeneral of the UN Industrial Development Organisation (UNIDO). He also chairs UN Energy and the UN Secretary-General’s Advisory Group on Energy and Climate Change (AGECC). The only representative of the gas industry in AGECC is Statoil’s CEO Helge Lund, who was instrumental in bringing Dr Yumkella on board the IGU body. “We are very pleased that Dr Yumkella has agreed to join the Wise Persons Group,” declared Datuk Rahim, “and we are proud to have the support of all these highly respected individuals”. Next up was the Secretary General, who detailed the conferences and events representa­ tives of IGU had participated in since the previous Council meeting. “IGU is a very attractive partner

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Looking further ahead, Datuk Rahim reminded delegates that the deadline for applications to take on the IGU Presidency for the 2015-2018 Triennium

Datuk Rahim then asked the CC Chairman to talk about IGU’s advocacy programme. “Gas appears to be losing ground against

would be January 15, 2011, while Torstein Indrebø

other fuels for the lack of a consistent and effective

explained that the application procedure had been

voice,” declared Ho Sook Wah, who explained

simplified and that instead of asking for letters of

that a number of issues had been identified, most

support the Secretariat would visit each applicant

particularly regional differences in the perception

and carry out a quality check.

of gas, the fact that the industry was more a policy taker than a policy maker, and that the old

l  Communications and advocacy

description of gas as a bridging fuel suggested a

Opening the presentation on the development of

diminishing future role. “We have decided to ask

IGU’s communications strategy, Datuk Rahim said

PFC Energy to assist in developing a message,” he

that one of the messages of WGC2009 was the

said “and this advocacy programme will involve

need for the gas industry to raise its lobbying

every member of IGU. We will ensure that gas has

game. “The fuel without a voice will now get one,”

a voice.” He handed over to Terence Thorn to give

he declared.

delegates a detailed briefing on what will become

“IGU needs to adapt its communications strat­ egy to the challenges of the time,” said Torstein

a comprehensive final report. Terence Thorn is the President of JKM Consult­

Indrebø before giving the floor to Erik Gonder who

ing and a gas industry veteran who amongst other

is in charge of communications in the Secretariat.

roles chaired the then Working Committee 9 dur­

“We need to be more visible and we need to

ing IGU’s 2000-2003 Triennium. His key point was

talk not just to our own people but to the general

that far from being a mere transition fuel, gas has a

public as well,” declared Erik Gonder. “It’s also

permanent role in a sustainable energy economy.

clear we need more contact with the policymakers

”Natural gas does not support renewables; they

and regulators, while we try to work actively with

do not happen without natural gas,” he declared.

the press and to comment on gas events around

Other issues he highlighted included the need to

the world.” He said that as well as IGU represen­

tackle those who claim gas is too expensive, the

tatives getting out and meeting people, it was

fact that when reaching out to people it is impor­

important to develop the Union’s website and

tant to develop stories and images rather than just

publications strategy, and that to this end a survey

recite facts and figures, and the desirability of

had been sent out to IGU’s contact persons.

showcasing the industry’s technical achievements.

He outlined recent initiatives including the

He also suggested that carbon capture and

relaunch of the online interactive map with the

storage (CCS) should be considered for gas-fired

support of the Energy Delta Institute, which is one of

power stations not just coal-fired ones. He ended

IGU’s affiliated organisations, and the joint pub­

with an appeal to delegates: “I need your

lication with Associate Member BP of the “Guide­

feedback about what works in your area.”

book to Gas Interchangeability and Gas Quality”. At this point, Ieda Gomes who is the Head of New Ventures at BP Gas Marketing and chairs

The last item of business in the first session was a report on WGC2009 and a review of the 20062009 Triennium by Ernesto López Anadón.

Task Force 1, was invited to talk briefly about the

52

joint publication which she lauded as, “An oppor­

l  WGC2012

tunity to develop something where the result is

After the coffee break, Ho Sook Wah updated

more than the sum of the parts”.

delegates on the progress of the Technical

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Committees and announced that the call for papers for WGC2012 would be launched on February 1, 2011. There was a video address from the new Chair­man of the NOC for WGC2012, Datuk Anuar Ahmad, who could not attend the meeting in person, and then Zahariah Abdul Rahman, CEO of WGC2012, took the floor to update dele­ gates. She said that some 5,000 participants were expected and that 10,300 m2 of exhibition IGU President Datuk Rahim addresses Council delegates. He is flanked by the Secretary General, Torstein Indrebø (l e f t ), and Vice President Jérôme Ferrier (right ).

space was available. The inter­ national delegate fee has been set at $3,200 with an earlybird discount of $500 for those booking by the end of 2011, while members of the Malaysian Gas Association will be eligible for a special rate of 3,000 ring­ git. She explained that the con­ ference and exhibition venues and the main hotels are all within walking distance of each other as part of the WGC2012 Concept Village which also

The Chairman, Ho Sook Wah (r i g h t ), and Vice Chairman, Georges Liens, of the Coordination Committee

includes a shopping centre. Following Zahariah Abdul Rahman’s presen­tation, the Council formally approved the concept for WGC2012. l  Strategic Statement and

new members IGU’s 2010 Strategic Statement “Natural Gas for a Sustainable Energy Future” was presented to the Council, after which the Immediate Past President, Ernesto López Anadón (left ) and Honorary President, Hans Jørgen Rasmusen.

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President invited three of the four applicants for membership


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to make short presentations (RWE having sent its apologies for not being able to send a represen­ tative). Delegates then approved the application of the Asociación Mexicana de Gas Natural to become a Charter Member, and of ExxonMobil Gas & Power Market­ing (USA), Origin Energy (Australia) and RWE Deutschland (Germany) to become Associate Members. As Bangladesh left the Union at the end of 2010, IGU now has a total of 109 members (74 Charter and 35 Associate) from 73 countries. The Secretariat continues its efforts to increase membership under IGU’s marketing plan, which has identified a number of countries and companies of particular interest. l  Other business

As the most senior honorary official present,

Delegates approved IGU’s accounts for 2009 and

Hans Jørgen Rasmusen closed the main proceed­

the budget for 2011, which includes an increase

ings and asked for a vote of thanks for the host.

in the annual membership fee. After having been frozen for several years at €4,500 it will now

l  Afternoon session

increase to €5,000. Delegates also approved four

Following lunch the Council reconvened for the

new members of the Executive Committee: Yamina

third session, which followed the regular format

Hamdi (Algeria), Kenji Ikejima (Japan), Kap-young

of having a presentation from the host country

Ryu (Korea) and Andrew Wagg (UK). (After the

followed by a roundtable and general discussion.

meeting Algeria proposed that Nordine Cherouati

The theme for the roundtable was “Improving

would succeed Yamina Hamdi in 2011 and the UK

IGU’s Advocacy of Natural Gas”.

proposed Colin Lyle to succeed Andrew Wagg.) Jeanet van Dellen, Advisor to the Secretary General, updated delegates on IGU’s Gas

elopment of Qatar’s LNG business. He said that

Efficiency and Social Gas Awards, while Jay

a ceremony was planned for the end of the year

Copan talked about the preparations for LNG17,

to mark the achievement of an annual capacity

of which he is Executive Director. LNG17 will be

of 77 million tonnes (it was held on Qatar’s

held in Houston, April 16-19, 2013. There were

National Day, December 18), and that the market

also briefings by Jean Vermeire, President of the

split for 2011 would be 40% to Asia, 35% to

International Group of LNG Importers (GIIGNL),

Europe and 35% to North America. He rounded

Jack Lewnard, Vice President and Chief

off by declaring, “This is not the end; we will

Technology Officer of the Gas Technology Institute

continue to expand”.

(GTI), the writer as editor of the IGU Magazine,

56

Alaa Abujbara, Marketing Director of Qatargas, started the proceedings with a review of the dev­

Next up was the IEA’s Senior Gas Expert, Anne-

and Dagmar Tomljenovic´. She was representing

Sophie Corbeau, who discussed the short-term

Charter Member the Croatian Gas Association,

impact of the economic downturn on gas demand

host of the 2011 Council meeting which will be

and examined the longer-term role of gas in the

held on October 6 in Dubrovnik.

future energy mix. “Gas will increasingly be used

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b e lo w

Datuk Rahim introduces the panel for the afternoon session.

to back up wind implying a need for flexibility in

enough to promote the benefits of what he called

transmission and storage,” she said. On the

“the blue fuel”.

supply side she highlighted the growth of LNG

Finally, Ben Cahill, Manager, Markets &

capacity, “Australia seems to be the new Qatar”,

Country Strategies Group at PFC Energy, looked

and the exploitation of unconventional gas, “UCG

at building an effective communications strategy

is definitely a global game changer”.

for the gas business. He stressed that a strategy

David Rimmer, Shell’s General Manager LNG

needs to be tailored to each region, it is important

CIS & Europe, talked about the need to promote

to ensure consistency of messages, partnerships

gas, highlighting that it is “abundant, affordable

should be used effectively and both the public

and acceptable”, what he called the three ”A’s”.

as well as policymakers should be targeted.

He said that the power generation sector has the

He talked about the need to evaluate the cost-

key role in terms of future gas demand, and

effectiveness of advertising campaigns, how

echoed Terence Thorn’s point from the morning

best to make use of IGU resources and how

session that CCS should be demonstrated in gas-

aggressively to target other fuel sources, and

fired power stations. “Replacing old coal-fired

introduced the acronym “CARES”, standing for

power stations with gas is the cheapest and

Clean, Affordable, Reliable, Efficient and Secure.

quickest way of meeting emissions targets,”

“Feedback from IGU members can shape this

he declared, and urged greater engagement

approach,” he said, “it’s important to understand

with stakeholders as part of a comprehensive

which messages will resonate”.

advocacy programme. Sergey Balashov, Deputy Head of Gazprom’s

Datuk Rahim closed the session by thanking the speakers and reiterated the call for feedback from

International Business Department, reinforced

members to help finalise IGU’s advocacy programme.

David Rimmer’s message, saying that the gas

The day was rounded off with a farewell dinner

industry was losing out to the coal and oil lobbies.

in Doha’s Museum of Islamic Art.

He said that gas is plentiful and offers the best combination is terms of cost and environmental

Mark Blacklock is the Editor-in-Chief of

friendliness but that the industry is not doing

International Systems and Communications.

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DR K ANDEH K . YU M K ELLA JO I NS I G U ’ S W I SE PERSONS G ROUP One of the important announcements during IGU’s 2010 Council meeting was the news that Dr Kandeh K. Yumkella had agreed to join the Wise Persons Group. Biography

Dr Yumkella is the Director-General of UNIDO, a specialised agency of the United Nations mandated to foster sustainable industrial development in developing countries and economies in transition. At the same time, UNIDO helps to protect the environment by supporting clean and sustainable technology. Dr Yumkella was elected to the post of DirectorGeneral in December 2005, and re-elected for a second four-year term in December 2009. Before assuming his current position, Dr Yumkella had worked in various high-level policy positions in UNIDO, and was Special Adviser to two previous Directors-General. He also served as Director of the Africa and LDCs Regional Bureau and as Representative and Director of the first UNIDO Regional Office in Nigeria. Prior to joining UNIDO, Dr Yumkella had served as Minister of Trade, Industry and State Enterprises of the Republic of Sierra Leone; as an Assistant Professor and Lecturer at the Michigan State University and Assistant to the Dean in the College of Agriculture at the University of Illinois. He has a Bachelors degree in Agriculture, a Masters in Agricultural Economics and a Doctorate in Agricultural Economics. Dr Yumkella is an active member of the UN system Chief Executives Board and is the current

Chair of both the UN Secretary-General’s Advisory Group on Energy and Climate Change (AGECC) and the UN-Energy Coordination Group. He is a strong believer that the most effective way to fight poverty is to strengthen the pro­ ductive capacities of countries and people, enhance their adaptive capabilities to use modern technology and devices, and to com­ mer­cialise new knowledge. He has advocated pro-poor industrial and agribusiness develop­ ment as sustainable means of wealth and job creation, and the economic empower­ment of the poor. Working with IGU

After joining IGU’s Wise Persons Group, Dr Yumkella declared: “In order to achieve a goal of universal access to energy by 2030 we will need a change of pace and scale of actions on the ground and political commitment. A massive undertaking in infrastructure develop­ ment is required and this will need to include all forms of modern and clean energy techno­ logies. IGU and its members are well placed to help in the necessary technology expertise, know­ ledge sharing and private sector engagement.” His first public appearance on an IGU plat­ form was as a speaker at the Gas Event during COP16, which is reported on pages 162-166. Dr Yumkella’s colleagues in the Wise Persons Group are Professor Dr Coby van der Linde, Director of the Clingendael International Energy Programme, the Right Honourable Tim Eggar, Chairman of Nital Solar, and Dr Daniel Yergin, Chairman of IHS CERA. Kandeh K. Yumkella (far left ) is the new member of IGU’s Wise Persons Group joining Coby van der Linde (third left ), Tim Eggar (second left ) and Daniel Yergin (left ).

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l The idea – what is the “new“ element;

Deadlines Approaching for IGU Awards

l Costs of project implementation; l Benefits/savings of gas which have been/will be

realised by the project;

By Jeanet van Dellen

l Current project phase; and l Project implementation.

If you have not already done so, now is your

In addition a CV of the project author covering

chance to submit nominations for IGU’s Gas

no more than one A4 page should be included.

Efficiency and Social Gas Awards for the 20092012 Triennium.

The deadline for submissions for the IGU Gas Efficiency Award is July 1, 2011. They should be

IGU sponsors these Awards because energy

sent to: igugasefficiencyaward@igrc2011.com, for

efficiency and increasing the awareness of gas

the attention of Robert Badoux, Secretariat of the

efficient behaviour play a key role in achieving

IGRC2011 Technical Programme Committee (TPC).

a more sustainable energy future. The Awards

The first selection of the award submissions will

will be presented at the opening ceremony of

be made by a committee with experts from the

the 25th WGC in Kuala Lumpur, Malaysia on

TPC at IGRC2011 in Seoul, Korea in October

June 4, 2012.

2011. This expert committee is chaired by Marc Florette, Senior Vice President Research and

l  IGU Gas Efficiency Award –

Innovation of GDF SUEZ. The three best proposals

submissions deadline July 1

will be forwarded for final evaluation and selection

Under the motto “Gas Efficiency – Leading into

of the winning proposal to the Evaluation

a Sustainable Energy Future” IGU is calling for

Committee consisting of:

new ideas and projects aimed at obtaining

l Datuk Rahim Hashim, President of IGU;

greater efficiency in the use of natural gas. IGU

l Nobuo Tanaka, Executive Director of IEA;

considers energy efficiency to be one of the

l Prof. Dr-Ing. Rainer Reimert, Engler-Bunte-

Institut, Karlsruhe University, Germany;

most important ways in achieving a more sustainable energy future, reducing greenhouse

l Ho Sook Wah, Chairman of the IGU

Coordination Committee; and

gas emissions, enhancing security of supply and

l Torstein Indrebø, Secretary General of IGU.

reducing energy-related costs.

The submissions will be evaluated according to

IGU members can propose projects related to gas efficiency that come from the gas

the following criteria:

industry, the academic sector or public or private

l Innovation: what is new about the proposal

(technology, process, methodology);

institutions. Submissions can have all kinds of backgrounds (technical, economic, etc.)

l Improved efficiency;

provided that they are new. They may already

l Energy savings;

have been published or implemented but not

l Cost feasibility (realised benefits/savings of

project vs. project costs/investments);

earlier than two years prior to the date of submission to IGU. For projects not yet

l Practical applicability; and

operating the submission has to detail how and

l Contribution to the image of the gas industry.

The decision by simple majority of the

when a project will be implemented.

60

Submissions should be no more than five A4

Evaluation Committee is final and will be made in

pages in length including a half page non-

February 2012. The Secretariat will inform the

technical abstract and elaborate on:

winner of the result in March 2012.

D e a d li n e s

A p p r oac hi n g

f or

IGU

Aw a r d s


l  IGU Social Gas Award – submissions

The submissions will be evaluated according to

deadline September 1

the following criteria:

Under the motto “Encouraging Gas Efficient

l Innovation: what is “new” about the proposal;

Behaviour” IGU is calling for new ideas and

l Educational and behavioural aspects;

projects aimed at stimulating people to use gas

l Energy savings;

more efficiently. The proposed projects must have

l Cost feasibility (realised benefits/savings of

been implemented but not earlier than two years before the date of submission to IGU. IGU members can propose projects from both the public and private sectors including those

project vs. project costs/investments); l Practical applicability; and l Contribution to the image of the gas industry.

The decision by simple majority of the

developed by public authorities, schools, univer­

Evaluation Committee is final and will be made in

sities, social institutions, professional associations

February 2012. The Secretariat will inform the

and companies. Submissions should be no more

winner of the result in March 2012.

than five A4 pages in length including a half page non-technical abstract and elaborate on:

l  Prizes

l The idea – what is the new element;

For each Award there will be a cash prize of

l Educational method and behavioural results;

$5,000. In addition, the authors will be invited

l Costs of project implementation;

to WGC2012 with free registration for the con­

l Benefits/savings of gas which have been

ference and travel (economy class) including

realised by the project;

accommodation expenses. Both winning projects

l Current project phase; and

and their authors will be featured in the autumn

l Project implementation.

2012 edition of the IGU Magazine and on the

In addition a CV of the project author covering

IGU website.

no more than one A4 page should be included. The deadline for submissions for the IGU Social

l  Wider aims

Gas Award is September 1, 2011. Anyone who is

Apart from the direct benefit of fostering energy

also submitting material for WGC2012 can use

efficiency, organising these Awards helps to raise

the conference website (www.wgc2012.com).

IGU’s profile as a socially responsible organi­

Those people who are only submitting proposals

sation, strengthen ties with academia, public sector

for the IGU Social Gas Award should send them

bodies and industry, and promote gas as part of

to: igusocialgasaward@wgc2012.com, for the

the solution to a sustainable energy future.

attention of Mrs Naiara Ortiz de Mendíbil Romo,

All IGU members are encouraged to nominate

Secretariat of IGU Programme Committee (PGC)

entries for this Triennium’s Awards and should you

A – Sustainability.

require any further information please do not

The first selection of the award submissions

hesitate to contact the Secretariat or visit:

will be made by a sub-committee of experts from

l www.igu.org/knowledge/gas (both awards);

PGC A – Sustainability in January 2012. This

l www.igrc2011.com/igu-gas-efficiency-award

expert committee is chaired by Juan Puertas, Director of Engineering and Technology of Gas Natural Fenosa. The three best proposals will be

(IGRC2011 and IGU Gas Efficiency Award); l www.wgc2012.com (25th World Gas

Conference and IGU Social Gas Award).

forwarded for final evaluation and selection of the winning proposal to the same Evaluation

Jeanet van Dellen is the Advisor to the Secretary

Committee as for the Gas Efficiency Award.

General and can be contacted at jvde@statoil.com.

D eadl i nes

Approach i ng

for

IGU

Aw a r d s

61


News from Organisations Affiliated to IGU

European gas industry. Marcogaz and GERG are both affiliated to IGU and participate actively in the Union’s work. EGATEC2011 is hosted by the Danish Gas Technology Centre (DGC), which is also very active in IGU committees and conferences.

In this issue we have reports on EGATEC2011,

The organisers are grateful to IGU for sponsor­

which is organised under the joint auspices of the

ing the event and especially to IGU President

European Gas Research Group (GERG) and

Datuk (Dr) Abdul Rahim Hashim for giving the

Marcogaz, from Gas Infrastructure Europe (GIE),

opening keynote speech. The conference is the

NGV Global (International Association for Natural

successor to the European Forum Gas.

Gas Vehicles) and the Pipeline Research Council

The conference programme is built on the

International (PRCI), while the International Group

theme “Gas Innovation for a Greener Europe”.

of LNG Importers (GIIGNL) has contributed an

Natural gas will increase its importance in

article to the features section.

Europe’s energy mix in the foreseeable future and will play an important long-term role in a less

l  European Gas Technology Conference –

carbon-intensive energy system. The conference

EGATEC2011

examines how natural gas and other energy gases

By Peter I. Hinstrup

(e.g. biomethane) combine to create a greener

The European Gas Technology Conference –

gas system without relaxing strict requirements in

EGATEC2011 – will take place in Copenhagen,

terms of security of supply, efficiency and safety.

Denmark, May 12-13.

EGATEC2011 is very much in line with IGU’s

EGATEC2011 is organised under the joint aus­

natural gas advocacy programme.

pices of Marcogaz and GERG, together represent­ ing the complete technological branch of the

In addition to Datuk Rahim, Anders Eldrup, CEO of DONG Energy, Denmark, Simon Blakey, Special Envoy of Eurogas, and David Caroll, CEO of the Gas Technology Institute, are giving keynote speeches. The technical sessions look at the latest technology and discuss the strategy of the natural gas industry. Key issues include: l Smart gas: a reality for the gas industry? Gas &

electricity, smart metering, smart gas grid, auto­ matic meter reading. l Biomethane technology for a greener Europe.

Biogas upgrading, injection, synergies with natural gas, GoBiGas-project, contaminants in biogas. l Opportunities for the gas industry in carbon

capture and storage (CCS). Gas-fired power plants with CCS, transport and storage of CO2. l Asset management, a new approach. Asset

management, pipeline inspection, automatic aerial surveillance of pipelines.

Copenhagen is the venue for EGATEC2011.

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l New green gas technologies for domestic and

l  GIE and the Changing Gas World

commercial use. Gas heat pumps, renewable,

By Abel Enríquez and Astrid Dolak

micro-CHP.

Gas Infrastructure Europe (GIE) represents the

A special roundtable on “Natural gas in the

interests of the infrastructure sector of the natural

renewable energy world” will be chaired by Marc

gas business covering operators of transmission

Florette, Senior Vice President of Research &

systems, storage systems and LNG terminals. GIE

Innovation at GDF SUEZ. Other panellists will be

currently has 66 members in 26 European coun­

the President of GERG, Enrique Palomino Bilbao,

tries and one of its objectives is to voice the views

Hisao Watanabe (Senior Executive Officer, R&D

of members vis-à-vis the European institutions, the

and IT, Tokyo Gas), Bjarke Pålsson (CEO,

regulators and other stakeholders. Its mission is to

Naturgas Fyn, Denmark) and Jeremy Bending

actively contribute to the construction of a single,

(Director of Distribution Network Strategy,

sustainable and competitive gas market in Europe

National Grid, UK).

underpinned by a stable and predictable regu­

GERG will hold its 3rd Academic Network Event in connection with EGATEC2011 and this means that 20 posters on the latest gas R&D work will be

latory framework as well as by a sound investment climate. After the Third European Energy Market

presented by their authors during the conference.

Package came into force, new developments and

Special prizes will be awarded to outstanding

challenges in the energy world led to changes

papers. In addition there will be a small exhibition

in the structures of companies and consequently

of gas-related services and equipment.

also to the bodies representing the interests of those companies. As a Third Package require-

GERG and Marcogaz events

ment the European Network of Transmission

GERG will celebrate its 50th anniversary in con­

System Operators for Gas (ENTSOG) was founded

nec­tion with EGATEC2011. A special presentation

out of GTE in December 2009 and now works as

will be given on “How R&D and GERG have been

a standalone organisation. Its aim is to deliver the

helping the introduction of new gas technologies

obligations of the Third Package as defined in the

during the last 50 years”.

Gas Regulation and therefore to further the

Marcogaz will also hold its annual general assembly in Copenhagen the day before

completion of the internal gas market. GIE continues to focus on policy developments

the conference.

in the energy sector and works towards securing a level playing field for the best development of

See you in wonderful springtime Copenhagen

gas infrastructure in the European market, while

The conference organisers cordially invite you to

bringing together the broader view of all infra­

join them in Copenhagen for a landmark confer­

structure operators.

ence that will clearly demonstrate the commitment

Energy will stay at the top of the European

of the European gas industry in creating a greener

agenda in 2011. The President of the European

Europe through gas innovation. And while the

Commission (EC) recently called energy policy the

focus is on Europe, delegates from the rest of the

next “great European integration process” whilst

world are of course warmly welcome.

energy was one of the two main themes of the first European Council this year. The Energy 2020

Peter I. Hinstrup is the President of the Danish Gas

Strategy is being discussed as well as the Energy

Technology Centre (www.dgc.dk). For information

Roadmap 2050 and new Energy Infrastructure

and registration visit: www.egatec2011.dk.

Instruments. The EC is indeed right in its

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Technip: LNG from design to delivery Technip, in JV, has completed construction of the world's six largest LNG trains (7.8 Mtpa each) through EPC contracts with Qatargas 2 (Trains 4 and 5), RasGas 3 (Trains 6 and 7) and Qatargas 3 and 4 (Trains 6 and 7). With these projects, Qatar will become the world’s largest LNG producer with some 77 Mtpa. Through its Yemgas JV, Technip has also completed a major lump sum turnkey contract with Yemen LNG Company Ltd (YLNG) for the country's first LNG plant. YLNG Train 1 started-up in October 2009, Train 2 in April 2010. Both have been producing steadily ever since. At the other end of the scale, Technip is building a 2-train mid-scale liquefaction plant in China. In the floating LNG (FLNG) market, Technip in consortium, signed in July 2009 a frame agreement for 15 years with Shell for the development of FLNG solutions and projects. Shell awarded Technip another 2 contracts for the Prelude project FEED, and the unit construction terms, if the Prelude project receives FID. In December 2009, Petrobras awarded Technip a FEED contract for a proposed FLNG (design competition). Preparing the next generation of onshore LNG plants, Technip is performing engineering studies, pre-FEED's and FEED's, for several projects in Australia, Russia, and elsewhere. Continuous R&D activities allow Technip to offer innovative solutions for the benefit of investors in LNG production plants: Efficient Nitrogen Removal process applied in several Middle East projects CryomaxŽ. Deep NGL extraction integrated into the liquefaction scheme Highly efficient refrigerant evaporators and condensers in association with tube manufacturer Wieland Increased LNG production with the MLP gas phase sub-cooling cycle Cryogenic pipe-in-pipe, flexible pipe and offshore transfer systems that can greatly simplify marine infrastructure.

Technip is a world leader in the fields of project management, engineering and construction for the oil & gas industry, offering a comprehensive portfolio of innovative solutions and technologies. With 23,000 employees around the world, integrated capabilities and proven expertise in underwater infrastructures (Subsea), offshore facilities (Offshore) and large processing units and plants on land (Onshore), Technip is a key contributor to the development of sustainable solutions for the energy challenges of the 21st century. Present in 48 countries, Technip has operating centres and industrial assets (manufacturing plants, spoolbases, construction yard) on five continents, and operates its own fleet of specialised vessels for pipeline installation and subsea construction. The Technip share is listed on Euronext Paris exchange and over the counter (OTC) in the USA.


54 Mtpa of new LNG capacity

Thanks to our engineering, procurement and construction management teams, our Clients, our suppliers and our partners, Technip has completed multiple parallel LNG projects in the period 2008 - 2010: the world’s six largest LNG trains in Qatar the two-train Yemen LNG export terminal

www.technip.com


commu­nications to call energy “the life blood of

gas demand will increase significantly. Additional

our society” and the energy infrastructure “the

natural gas infrastructure provides the flexibility

central nervous system”.

which is required.

Gas infrastructure: highway to a low-carbon

their “central nervous system” even better and to

economy

contribute to the functioning of a sustainable,

Europe’s gas infrastructure links sources and

competitive and secure EU gas market. This will

markets allowing diversification and competition in

undoubtedly mean reducing CO2 emissions in an

gas supply. This infrastructure based on market

equitable way across the EU. But a low-carbon

demand is the foundation of the current inter­

economy does not have to mean an economy with

connected European gas system and the basis of

less gas. Decarbonisation is a requirement of the

an efficiently functioning and integrated energy

energy produced and does not contradict a con­

market. It accommodates increased competition

tinued use of natural gas.

GIE and its members are committed to make

Natural gas is the cleanest, most efficient and

between sources and suppliers of gas. This com­ petition in the wholesale market ensures more

versatile of the fossil fuels, making it a unique

choice and more efficient price setting for

choice in the path towards a lower carbon energy

end customers.

mix and sustainable future. More importantly, the

To ensure the functioning of the European gas

abundance of natural gas, its competitive cost of

market over the next decades, new infrastructure

supply, its immediate availability and the flexibility

and interconnection capacities will need to be dev­

to enable renewable energy clearly favour it as the

eloped to enhance market integration, accommo­

best source to address emission reductions at the

date declining domestic production and provide

lowest cost.

the necessary back-up for renewable energy pro­ duction. Even if gas demand in the EU does not

Activities of GIE

reach the same growth rates as in previous

In addition to its various activities on policy dev­

decades, significant gas infrastructure develop­

elopments and the goal to promote natural gas

ment will still be needed for flexibility and security

and gas infrastructure, GIE is a key stakeholder in

of supply purposes.

the European Gas Regulatory Forum. This

Against this backdrop, it is important to high­

so-called “Madrid Forum” addresses the key issues

light that gas infrastructure development is not

relating to the creation of an internal market for

driven by the level of overall gas consumption,

energy in the European Union. GIE is a permanent

but by the capacity needed to meet peak demand,

member of the Gas Coordination Group, the

and the latter is expected to increase significantly

European platform with the goal to facilitate the

as a result of the rise in installed gas-fired

coordination of security of supply measures at

power generation.

Community level. GIE is represented in the

We are moving towards an EU market where

Thematic Network on Critical Energy Infrastructure

renewable energy is subsidised and promoted.

Protection and gives its members a platform to

Due to their operational features, gas-fired power

exchange information on security issues relating to

plants have proven to be an affordable back-up

gas transport throughout Europe. Every year GIE organises a conference

for renewables. However, as long as new combined-

68

cycle gas turbines (CCGTs) are necessary to com­

focusing on important energy and gas

plement the power intermittency of renewables,

infrastructure topics, which always attracts

both the need for flexibility and the expected peak

many market players. More than 300 delegates

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attended last year’s confer­ence in Vienna, which focused on security of supply and related issues. The 2011 Annual Conference will be hosted by National Grid and South Hook LNG in Edinburgh on June 23 and 24. Speakers from across Europe will discuss how to facilitate the building of necessary gas infra­structure as a highway to a low-carbon economy. GIE is in constant liaison with other associations including ENTSOG, Eurogas, the European Federation of Energy Traders (EFET) and Marcogaz. With IGU, GIE signed a cooperation agreement to become an affiliated organisation in June 2006 on the occasion of the 23rd World Gas Confer­ence. GIE and its members participate in most IGU events to ensure that the important role of the natural

GIE’s 2010 conference was held in Vienna, June 24-25.

gas infrastructure is recognised in IGU’s work The Aggregated Storage Inventory Levels (AGSI)

and its related activities. Representing the interests of the infrastructure

data platform is a voluntary initiative of GSE

industry in the natural gas business, GIE is also the

members to publish the storage working gas

umbrella organisation for its three subdivisions:

levels, as well as injection and withdrawal rates, in

Gas Transmission Europe (GTE), Gas Storage

an aggregated format per hub area. This initiative

Europe (GSE) and Gas LNG Europe (GLE). Within

provides the market with the information it needs

GIE, these subdivisions also carry out their own initiatives and activities. Aggregated Gas Storage Inventory Publication of Daily Gas Storage data grouped by Hub Area

Gas Transmission Europe The GTE activities have been transferred to

GIE MEMBER

ENTSOG. GIE will continue to develop lobbying

NBP

activities for all the infrastructure operators

TTF (EUROHUB)

in Europe, including transmission system

PEG

operators (TSOs).

PSV GERMANY

Gas Storage Europe

BAUMGARTEN

GSE focuses on the promotion of the gas storage

IBERIAN

business as a main contributor to security of

ZEE

supply and flexibility, especially in a low-carbon economy with intermittent electricity production. In recent years, GSE has also been contributing to both the transparency and security of gas supply to Europe whilst ensuring a proper investment framework in the EU.

GSE publishes a daily gas storage inventory by hub area.

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on a daily basis whilst protecting commercially

GSE also interacts strongly with the EU institu­

sensitive information. GSE recently presented the

tions and EU regulators. For example,when the

latest AGSI developments to the Gas Coordination

European Regulators’ Group for Electricity and

Group and for more information, please visit

Gas (ERGEG) carried out a public consultation

http://transparency.gie.eu.com.

related to its proposal to amend the Capacity

The information provided by GSE on its

Allocation Mechanism & Congestion Management

transparency platform is complemented by the

Procedures (CAM & CMP) provisions from the

GSE map and GSE investment database.

Guidelines for Good Practices for Storage System Operators, GSE published a position paper outlining the main findings and conclusions of the GSE questionnaire on CAM & CMP practices. The conclusions of this study were presented at the Madrid Forum last year. Gas LNG Europe The importance of LNG as a significant contributor to security and diversification of supply in the European gas market is increasing. GLE is con­ tinu­ing efforts to promote recognition for LNG infrastructure activities at European level as well as the proper legislative and regulatory framework for the LNG industry in Europe. While doing so, GLE seeks to ensure that LNG business specificities are taken into account in any future EU regulatory developments. In November 2008, as part of its regular cooperation with other stakeholders, GLE became a co-signatory of the “Protocol for the coordination of activities and the exchange of information among LNG organisations”. Signatories (including IGU) seek to share useful information and coordi­ nate their activities so as to create synergies and avoid overlaps. Apart from periodical interactions with EU institutions and national regulators, and apart from the active contribution to several regulatory developments and fora in the EU (e.g. the ERGEG study on CAM & CMP for EU LNG Terminals and presentation to the Madrid Forum), GLE has recently published a well-received study on LNG supply disruption scenarios. This study was

GLE focuses on Europe’s LNG infrastructure – the Enagás receiving terminal in Cartagena.

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developed following an invitation from the Gas Coordination Group to carry out LNG disruption

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SNC-LAVALIN CONSTRUCTION DESIGNING AND BUILDING FOR SAFETY, QUALITY AND SUSTAINABILITY

SNC-Lavalin’s oil & gas activities cover the full spectrum relating to the production, transportation, processing, upgrading and delivery of conventional energy resources, chemicals, petrochemicals and synthetic fuels.

www.snclavalin.com


scenarios simulations. The GLE LNG Disruption

Despite outstanding improvements in vehicle

Task Force finished the risk analysis of the whole

efficiency and massive growth in the use of

LNG gas chain considering three different

alternative fuels and powertrains, hybrids in

scenarios (no LNG from Algeria, no LNG from

particular, emissions con­tinue to rise. This is simply

Nigeria and no LNG from Qatar) and assessing

a result of the increas­ing vehicle population

the final impact of those interruptions on the EU

around the world.

gas market. The final results for the supply disrup­

At the NGV India conference held in Mumbai

tion analysis (including the network simulation),

in November 2010, delegates heard projections

together with the main conclusions, were jointly

from vehicle manufacturers that annual vehicle

presented by GLE and ENTSOG during the Gas

sales will double by 2015 to more than 4 million

Coordination Group Task Force meeting held on

units per year. Some estimates suggest that by

November 9, 2010. This study, together with the

2030, the total vehicle population in India will

GLE map and the GLE investment database are

exceed 300 million vehicles. That is at the extreme

available at the GIE website.

end of the growth spectrum but growth continues everywhere, making some of the efficiency gains a

Future cooperation

hapless struggle.

GIE represents the vast majority of gas infra­struc­

Meanwhile, governments around the world

ture operators in Europe and is a well established

continue to come to grips with the challenges of

promoter of natural gas in the energy world of

reducing greenhouse gases. The focus seems to

the future.

be on cost and, to a large degree, avoidance.

In this context GIE is keen to cooperate with

The perception appears to be that greenhouse

other energy associations, institutions and bodies

gas reductions create economic disadvantage.

to contribute to achieving energy sustainability in

As a result, climate change strategy seems to

the future.

be a battle to see who can be disadvantaged the least.

Abel Enríquez is Executive Secretary and Astrid

This has created unprecedented changes to

Dolak is Vice Executive Secretary of GIE

energy industries worldwide. For the natural gas

(www.gie.eu).

industry the major opportunity has clearly been in electricity generation. This sector requires large

l  NGV Global Pushes the NGV

investments but in general these are proving to be

Greenhouse Advantage

well justified.

By Brett Jarman

There is one major opportunity however, which

While the greenhouse advantages of natural gas

to date has been flying under the radar of govern­

vehicles are generally well known, what isn’t really

ment decision-makers and the majority of the gas

appreciated, even by the natural gas industry, is

industry worldwide, particularly in developed and

the scope of benefits that NGVs have to offer.

OECD nations.

Following is a summary of the message we have been driving recently, including at the IGU-

realised, is that NGVs have the capacity to reduce

Worldwatch Symposium in conjunction with

greenhouse gas emissions on a scale that no other

COP16 and at the UN Working Party on Gas in

transport fuel or technology can even come close

Geneva, Switzerland.

to. They can do so with a net economic benefit to

It’s no secret that transport related greenhouse gas emissions are rising dramatically.

72

What both groups of stakeholders have not yet

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all involved, including the owners and fleet oper­ ators who use the vehicles.

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NGV benefits One of the advantages that natural gas has over other fuels and technologies is the range of appli­ cations in which it can be used as pretty much anything that operates on an internal combustion engine can either be built or converted to run on natural gas. Per vehicle emissions reductions will vary according to the source of the vehicle but typically range from 10% to 30%. And if we factor biomethane into the equation, the benefits are increased dramatically. One way of realising the benefits of natural gas is by converting existing vehicles so that the current vehicle fleet can be used to reduce its own emis­ sions. This is a benefit that tends to be understated but is in fact quite significant. In order to realise the benefits of an electric or hybrid vehicle, for example, either an existing vehicle has to be replaced or a new vehicle added

The role of gas as a marine transport fuel is set to increase. The Bit Viking operates for Statoil and is one example of a ship being converted to run on LNG.

to the overall fleet. Further, this means that the

these options are a long way off from being truly

technology can only be phased in over the normal

“zero emissions” on a life-cycle basis, and even

life cycle period of a vehicle, otherwise it creates

from being technically or economically viable or

an additional environmental burden. In most

functional on a large scale.

cases, that would mean a phase in period of

The temptation to wait for utopia remains

10-20 years (depending on where you are in the

though and many, particularly in political circles,

world) to reach a particular market penetration or

wait for tomorrow rather than taking action with

fuel replacement target.

what works, and what is already proven, today.

With NGVs though, you can set a target and

Our message is simple – we don’t have the luxury

tackle it at both ends of the spectrum – through

of time to wait for a utopia that might or might not

natural attrition as new vehicles come on the road,

come so let’s work with what we’ve got – now.

and through the conversion of existing vehicles already on the road. This has been the funda­

Marine applications

mental reason why countries such as Pakistan and

I have already mentioned the variety of appli­

Iran have been able to get more than 2 million

cations of natural gas as a transport fuel but the

NGVs on the road in such a short space of time,

marine sector is worth highlighting, a) because its

only eight or nine years. There is no reason why

contribution to environmental degradation is vast

those successes can’t be duplicated in almost any

and b) because it’s matched in equal measure by

market in the world.

opportunity, both for greenhouse gas reductions

There are plenty of alternative fuels and tech­ nology options out there that are proving to be

and for business for the natural gas industry. For decades the marine sector has been using

quite seductive with their promise of “zero

cheap but heavily polluting bunker fuel. This fuel

emissions” – hydrogen fuel cell and electric

often has a sulphur content of 40,000 parts per

vehicles in particular. The reality of course is that

million or more. On land meanwhile, most truck­

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CRUDE O I L D I SPLACE M ENT BY ALTERNAT I V E FUEL V EH I CLE ( AF V ) TYPE

Regardless of the benefits you are after, be they greenhouse reductions, energy security, air quality improvements etc., the aim of the game in trans­ port is oil displacement. Though the relative bene­ fits on a percentage per vehicle basis may be marginal between some of the options, the overall accumulated result from natural gas outstrips all other options by a vast order of magnitude. The term that’s often used in these discussions is that ”there is no silver bullet”, meaning there’s no single solution that will resolve all of our trans­ port energy related issues. We of course agree with this point but can honestly say the NGV bullet is at least 80% silver.

Notes: E85 = ethanol, B100 = biodiesel, NEV = neighbourhood electric vehicle

Our argument therefore is, let’s put the bulk of resources to where the bulk of results occur. When setting policy or investment priorities, let’s dedicate

above

Figure 1.

ing sectors have moved to or are on their way to

them to the solution that is proven to have not just

only 50 parts per million. Much of this pollution

the capability, but also the capacity to address the

makes its way to land or to the upper reaches of

problem on a scale that no other can match.

the atmosphere.

When we look at a table of established NGV

The tide is changing though and LNG is proving to be an enticing option for maritime use.

users, what’s striking is the absence of OECD nations, with the one notable exception being Italy.

Some experts are predicting that by 2020 more

While OECD governments, and others, con­

than 50% of new shipping orders will be LNG

tinue to argue about who should be disadvant­

fuelled and that by 2030, the majority of fuel used

aged least in terms of climate change strategy,

in the sector will be LNG.

those which are by far the most responsible for transport related emissions continue to ignore the

Gas outstrips other options

one solution that can deliver results on a massive

Natural gas is abundant, available and offers

scale and without economic disadvantage.

maximum crude oil displacement. This final point

Natural gas vehicles are the low hanging fruit

in some ways is the most important and shows the

of greenhouse reduction strategies. They are ripe

strength of adopting fuels and technologies for the

and they are ready for plucking. Not only do

heavy-duty sector and the magnitude of benefits

governments need to wake up to this but also the

arising as a result.

gas industry needs to step up to the plate and start

The data in Figure 1 is sourced from the US Department of Energy, Clean Cities Coalition. The

investing resources so they, and the community they serve, can reap the benefits.

yellow bars represent numbers of vehicles using a

74

particular fuel and the blue lines the amount of

Brett Jarman is Executive Director of NGV Global,

crude oil displaced. We have added hybrids at the

the international umbrella organisation repre­

end using data from elsewhere in their study.

senting the natural gas vehicle industry

Though it is a powertrain rather than a fuel, the

(www.ngvglobal.org, www.iangv.org,

relativity of oil displacement is also relevant.

www.ngvglobal.com).

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JUNE 6. - 7. OSLO - NORWAY

WWW.EGC2011.COM

Come to the 16th European Gas Conference in Oslo and be enlightened by stimulating debates and round table discussions with energy industry experts, politicians and environmentalists – all trying to tackle the issues below. Session 1 : Bringing Norwegian gas to Europe Will Norway be a key supplier in the future gas supply mix in Europe? 2011 marks the 10th anniversary of Gassco. Session 2 : Natural Gas in a low carbon Europe Some say it is part of the solution, some say it is part of the problem - can it be both at the same time? Session 3 : Gas sources – origin and use Can new sources of gas be unlocked? What is the potential in the European transportation sector?

Confirmed speakers

Terje Riis-Johansen

Gerhard Schröder

Charles Hendry

Patrice de Viviès

Minister of State, UK

Former German Chancellor

HELLI - Visuell kommunikasjon www.helli.no

Minister of Petroleum and Energy

Senior Vice President, Northern Europe, Total Exploration & Production

Organizer

The Norwegian Gas Association

Sponsored by


l  Pipeline Safety and Pipeline R&D

By Cliff Johnson Recent pipeline failures in the US have highlighted the need to develop a strong collaborative research programme. The members of the Pipeline Research Council International (PRCI) have a long history of participating in a collaborative research programme that strives to ensure environmental safety and pipeline integrity. The goal of oil and natural gas pipeline operators is zero leaks or failures and through the research programmes at PRCI, companies are addressing of some the most pressing challenges facing the pipeline industry. PRCI is a non-profit research organisation that is comprised of 33 energy pipeline operating companies located in the United States, Europe, Canada, South America and the Middle East.

Cliff Johnson, PRCI President.

Augmenting the pipeline membership are 24 The real value of collaborative research is the

Associate Members drawn from companies in the US, Europe, Canada, China, Mexico, Japan and

contribution it makes to assuring that the pipeline

Australia that serve the industry as pipe and

industry’s multi-billion dollar investment in prac­

equipment manufacturers, service providers

tices, tools and equipment to assure safety, reli­

and vendors.

ability and productivity is based on sound science

Pipelines remain the safest mode of trans­

and technology. Over the years, PRCI has

portation; however, any failure is unacceptable. In

researched many of the challenges that have

light of recent high-impact pipeline failures, it is

faced the industry and we look forward to con­

important that the industry work collaboratively to

tinuing to find the solutions that will increase the

find solutions to issues facing these critical assets.

safety of these vital assets. Our 2011 research

With the ongoing increase in the demand for

programme of over $8 million directly funded by

energy, we will continue to expect more from the

members (see Figure 2) adds to a solid basis on

pipeline infrastructure, but in meeting that demand

which to develop the solutions that the industry will

we must assure that pipelines operate in a safe,

need to continually improve performance. The

reliable and environmentally benign manner. PRCI

following section highlights a number of specific

members have noted how critical and timely a

initiatives in 2011 that will advance the energy

collaborative approach is.

pipeline industry:

The San Bruno failure in California has demon­

l Corrosion – review the performance of fusion

strated that there is a greater need to be more

bonded epoxy (FBE) coating; improving the

involved in collaborative research and the mem­

internal corrosion threat guidelines;

bers of PRCI continue to work to leverage their

development of grinding limits guidelines for

dollars and personnel to provide the R&D

repair of stress corrosion cracking (SCC) on

programmes that industry needs to ensure the

operating pipelines.

integrity of our global pipeline system and to

l Design, materials and construction – expanding

PRCI’s On-bottom Pipeline Stability Analysis

protect public safety.

76

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tools; relationship between welding procedure/

PRC I 2 0 1 1 RESEARCH PRO G RA M M E

parameters and the mechanical properties of the girth welds; subsea applications of weld overlay pipe. l Operations and integrity – continued focus on

nondestructive inspection technologies; field tests to evaluate and quantify the performance of leak detection technologies; multiple programmes addressing pipeline damage prevention. l Compressor and pump station – liquid pumps

mechanical seals; catalyst-based after-treatment technologies; minimising gas compressor cylinder lubricating oil consumption; complete

possible mechanical integrity test based on gas

an evaluation of a gas turbine field main­

expansion cooling.

above

Figure 2.

These projects are just a small part of the over­

tenance package. l Measurement – assessment of the auto-adjust

all PRCI R&D programme that is aimed at address­

and self-checking capabilities of dual rotor

ing the needs of the industry. It is important that

turbine meters; cost-effective orifice meter

we continue to work to address the challenges

performance diagnostic tools; extend the Meter

facing the industry and to reassure the public of

Station Design Tool capability; develop low

the safety of this vital infrastructure.

cost, distributed gas quality sensors using crossover technologies.

Cliff Johnson is the President of the Pipeline

l Underground storage – field test of an improved

Research Council International (www.prci.org).

brine string stiffener in a salt cavern; cement

If you are interested in joining PRCI please email

bond log inspection tools; development of a

info@prci.org.

Pipeline workers are working to ensure the integrity of the pipeline system.

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contributing to operational excellence. We work to enable efficient and safe utilization of natural and green gases, and the integration of gas and electricity within smart grids. > Gas Infrastructure & Transport – We provide knowledge and experience in the form of research projects, consulting solutions and technical services throughout the infrastructure life cycle. We create shareholder value through a comprehensive package of integrity, safety and performance services for pipelines and installations. > Gas Quality & Flow – We have extensive experience with the response of end use equipment to changes in gas quality, separation methods, gas odorization, gas metering equipment testing and calibration, the dynamic behavior of gas in high-pressure transmission grids, and the performance of gas engines and turbines for both transport and combined heat and power.

www.kema.com


Gas in a changing world of energy With climate change high on the political agenda, the gas world faces the challenge of redefining its role. Through innovation, gas can play – and needs to play – a pioneering role as a transitional and sustainable fuel. Operating under the motto, “cleaner, smarter and more efficient,” energy knowledge company KEMA is contri­ buting to the realisation of these necessary changes. “The gas industry is going to be a key player in the transition to a more sustainable energy economy, provided that it adopts a smart, innovative approach,” asserts Pierre Bartholomeus, Global Director of Gas Consulting Services at KEMA. “In a world where electricity and gas are growing ever closer, gas is both a transitional fuel and a destination fuel.” Natural gas can also become more sustainable through the addition of, for example, biogas or hydrogen. v  Carbon footprint reduction The gas industry’s contribution to securing climate objectives begins with the reduction of its own opera­ tional carbon footprint. That means cutting not only the carbon emissions associated with production and end use, but also those associated with gas transport. Carbon footprint reduction is about finding win-win oppor­ tunities: reducing emissions and improving energy efficiency while also cutting operating costs. Efforts to reduce corporate carbon footprints focus on CO2 equi­ valent emissions. “Our services in this field range from developing company policies and strategies to imple­ menting relevant measures,” stresses Bartholomeus. “In our policy development work, we always seek to align footprint control with government policies, overall company strategy and business economics. We advise on how to formulate a corporate ambition that is not only measurable, but also consistent with technical possi­ bilities, economic constraints and environmental objectives.” Furthermore, technical innovation in operations, as can be gained through re-examination and re-optimisation of the performance of installations and equipment, such as gas compression and gas heating installations, can be important for achieving significant footprint reductions. “Through innovative technologies, such as new simulation tools, it is possible to assess efficiency measures and other operational changes real­

In a world where electricity and gas are growing ever closer, gas is both a transitional fuel and a destination fuel.

istically,” Bartholomeus says. “Reduction options can be directly linked to daily operations and their potential explored in a meaningful way. Implementation support is crucial to help companies realise their carbon foot­ print reduction ambitions and support their communi­ cation strategies, where claim-and-proof is important.” v  Injection of green gas The next step is to make gas more sustainable. Energy doesn’t have to come from wind, water or the sun to be sustainable. “People often overlook the fact that gas can be a sustainable fuel,” observes Bartholomeus. “Nevertheless, green gas projects are popping up like mushrooms all over the world. A number of important conditions need to be met, however, for biogas to be transported and used in the natural gas grid.” Green gases from biomass digestion consist mainly of CH4 and CO2, but also contain a wide variety of other chemical and biological components. Some of these components can be corrosive or toxic, or can affect the quality of products made from (natural) gas. Furthermore, the flame properties of green gases can be very different from those of natural gas. “Several studies have been carried out with the aim of facilitating the injection of green gases into the natural gas infrastructure,” Bartholomeus states. “The general conclusion is that injecting purified biogas from digestion processes into the natural gas grid has no adverse implications either for the integrity of the natural gas grid or for the safety and health of end users,


as long as the composition of the green gases meets the relevant specifications.” Under some circumstances, the treatment processes required to bring raw gas into line with grid quality requirements (e.g. calorific value, Wobbe Index) may be sufficient to reduce the hazards to acceptable levels. Under other circumstances, special treatment processes may be required to satisfy additional specifications. Nevertheless, the effectiveness of the treatment needs to be verified by checking and by operating a Quality Assurance system. v  Safe CO2 transport In the transition to a sustainable energy economy, coal and natural gas will remain important electricity generation fuels for some time to come. Although natural gas is a relatively clean fuel, its combustion does result in the release of CO2. So the development of innovative techniques for extracting CO2 from flue gases is very important. KEMA is active in this field, working on concepts such as the use of nano-membranes. “There are several technical and economic challenges that must be overcome to ensure the safe and reliable transport of captured CO2,” Bartholomeus comments. “We are investigating these challenges, and are developing a system that utilises the experience already acquired from (natural) gas transportation and experiences in other countries, but fine-tuned to West European requirements and safety standards.” Determining optimum transport pressure, pipeline diameter and compression requirements is a significant challenge, as is tackling CO2 quality issues. To make the necessary technical and economic analyses, we have developed an optimisation tool. The thermodynamic properties of CO2 are being calculated and used to investigate the energy consumption and operating cost of a CO2 pipeline system. The next steps will be to carefully determine the thermodynamic properties of CO2 under transport conditions and to perform experiments on large-diameter pipelines. v  Smart grids “In the energy landscape of the future, electricity is going to occupy a more prominent position, as

sustainable sources come into more widespread use. However, that doesn’t imply that gas no longer has a role to play,” argues Bartholomeus. “On the contrary. Energy transition is an excellent opportunity for the integration of electricity and gas, right up to the point of consumption.” That was illustrated recently by the smart energy grid trials carried out in the north of the Netherlands. In PowerMatching City, a living lab Smart Grid demonstration project in Hoogkerk near the city of Groningen, 25 homes have been equipped with a mix of decentralised energy resources (e.g. PV-solar, microCHP and hybrid heat pumps), smart appliances, smart meters, electric vehicles and wind energy. Stabilisation and optimisation of the network are realised by trading energy on a local market on the basis of a real-time price signal. The project also involved researching the smart use of gas and the efficient deployment of equipment. In a smart set-up, natural gas can be used for power consumption peak shaving and potentially to achieve substantial energy cost savings. In order to make good its responsibility for a sustainable future, the gas industry needs to overcome a wide variety of challenges. That in turn implies a degree of out-of-the-box thinking. KEMA, with its long history of involvement in the energy value chain, is ready with advice and practical support to help the industry on the road ahead.

KEMA’s Gas Services Our gas expertise originates from N.V. Nederlandse Gasunie. As one of Europe’s largest gas infrastructure companies, Gasunie operates a gas transmission network with an overall length of more than 15,000 km in the Netherlands and Germany. The throughput totals approximately 125 billion cubic meters. This network meets the highest requirements for safety, reliability and performance. Continuity, safety, sustainability and process optimisation are the key values of KEMA’s gas expertise which spans more than 40 years. This is combined with KEMA’s electricity experience of over 80 years worldwide.


We are sure that you agree that in essence the

Counting Down to IGRC2011

picture has not yet changed. Natural gas is the

By Robert Badoux and Marie-José Fourniguet

fuels, making it a unique choice in the path

cleanest, most efficient and versatile of the fossil towards a lower carbon energy mix and sustain­

IGU will hold the 2011 edition of its renowned

able future. More importantly, the abundance of

triennial gas research conference, IGRC2011, at

natural gas, its competitive cost of supply, its

the COEX Convention and Exhibition Centre in

immediate availability and the flexibility to back up

Seoul, Korea, October 19-21. The theme is

intermittent renewable energy supplies clearly

“Innovation is the Key to a Sustainable Future”.

favour it as the best source to address emission

Since IGRC2008 was held in Paris, the global gas industry has experienced remarkable changes.

reductions at the lowest cost. Accordingly, the need for enhanced R&D,

Although energy markets are still affected by a

successful innovation and technical progress

global financial and economic crisis of historic

remains unchanged. The International Gas

dimensions, the rise of unconventional gas pro­

Union Research Conference brings together

duction promises substantial new supply options.

gas researchers and innovation managers from

Meanwhile, the reluctance to implement concrete

around the world, presenting forward-looking,

measures adds further uncertainty to the future

new added-value technical solutions and alter­

climate policy framework. At this time you may ask

natives for operational excellence. It provides

yourself where does the global gas industry stand?

a forum to exchange inno­vative ideas that may

And what will be the future prospects for the

change the normal practices of doing business,

sector? Is it time to re-shape the long-term vision

and in which business man­agers from the

of a climate-friendly energy future?

industry can seek solutions to overcome the challenges that lie ahead. IGRC2011 is paving the way towards a sustainable future. Here are five key reasons to attend IGRC2011 in Seoul: l Listen to what experts say about new supply

sources and their logistics such as unconventional gas, LNG and the increasing role of biogas; l Learn about new technologies and discover

opportunities to operate your infrastructure more efficiently in the face of potential challenges such as ageing assets, integrity management, or third party interference; l Discuss the potential market contribution of

new appliances such as hybrid systems combining natural gas with renewables, decentralised power generation and micro-CHP as well as smart grid solutions; l Make up your mind in the growing debate COEX in Seoul will be the venue for IGRC2011.

82

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I G RC 2 0 1 1

about a carbon-free energy world, hydrogen


options and the long-term vision for natural

approach, policy, technology or tool that has been

gas; and

developed and implemented by an organisation

l Supplement knowledge of process safety and

and has yielded significant results. Proposals can

environmental management for sustainable

be in areas such as safety, reliability, cost effici­

development.

ency, revenue generation, regulatory issues and organisational efficiency.

l  Anchoring IGRC in IGU

Proposals should be submitted through the

Since 2006, IGRC has been a regular confer-

website for submitting abstracts for WGC2012. The

ence under the umbrella of IGU. The Technical

deadline for submissions is September 1, 2011.

Programme Committee (TPC) has established links with the Working Committees (WOC), Programme

Strategic Panel on R&D

Committees and Task Forces of the current

During WGC2009 the Strategic Panel: “Innovation

Triennium. These links have resulted in the

and New Technologies for Increasing Gas

chairing of oral sessions at IGRC2011 by amongst

Competitiveness” was organised by the R&D Task

others Hélène Giouse, Chair of WOC 2, and

Force headed by Marc Florette, the current

Alessandro Soresina, Chair of WOC 4. Further­

Chairman of the TPC of IGRC2011.

more, the TPC is working closely with Task Forces

The Task Force’s 2006-2009 work programme

1 and 2 to prepare the workshop on human

focused on how R&D will shape gas companies in

resources during IGRC2011.

the 21st century, as well as on the preparation of

The TPC is also involved in several activities

IGRC2008. The scope of the Strategic Panel at

connected with WGC2012:

WGC2009 was to pick up from the main con­

l Pre-selection of the winner of the IGU Gas

clusions and to discuss further how innovation and

Efficiency Award; l Pre-selection of the winner of the Best Practices

Project; and l Organisation of a Strategic Panel on R&D at

WGC2012.

new technologies can contribute to developing the gas business and competitiveness, particularly in terms of safety and security of supply, environ­ mental issues, and gas efficiency and utilisation. At WGC2012 there will also be a Strategic Panel on R&D, which the Chairman of the IGU

IGU Gas Efficiency Award

Coordination Committee, Ho Sook Wah, has

Full details about IGU’s Awards are given on

asked the TPC to organise. During this panel the

pages 60-61. Proposals for the Gas Efficiency

major findings of IGRC2011 will be presented.

Award should be submitted through the IGRC2011

The TPC has to investigate if it is desirable and,

website (www.igrc2011.com). The deadline for

if so, possible to provide an update on the

submissions is July 1, 2011. The TPC will select

findings of the R&D Task Force of the 2006-

the three best projects and send these together

2009 Triennium. Furthermore, the TPC has to

with the reasons for their choice to the members of

find a theme and panellists for a discussion.

the Evaluation Committee.

The panel will be organised in close liaison with Ho Sook Wah.

Best Practices Project This project was initiated during the Argentine

Robert Badoux of Gasunie and Marie-José

Triennium and is being continued in the Malaysian

Fourniguet of GDF SUEZ are members of the

Triennium with the TPC as the coordinator. A Best

IGRC2011 Technical Programme Committee. For

Practice idea or proposal is an innovative

more information visit www.igrc2011.com.

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I G RC 2 0 1 1 T e n tat iv e P r o g r a mm e Wednesday October 19, 2011

16:30 – 18:30– Oral Presentations (parallel sessions)

09:00 – 10:30 Opening Plenary Session

D How can E&P keep pace with market and environmental demands?

Chairman: Ernesto López Anadón, Chairman IGRC Policy Committee

Session chairman: Sergey Rassokhin, VNIIGAZ – Advanced technologies to produce shale gas (incl. state of reserves and resources) – Advanced technologies to produce from tight sands (incl. state of reserves and resources) – Advanced technologies to produce coal-bed methane (incl. state of reserves and resources)

Welcome address by President of Korea Gas Union

Opening of the conference by Ernesto López Anadón, Chairman IGRC Policy Committee

CEO roundtable

E Which innovations will improve transmission system operation?

Participants: – Dato’ Shamsul Azhar Abbas, President and CEO of Petronas – Matthias Bichsel, Projects & Technology Director, Member of the Executive Committee of Shell – Paul van Gelder, CEO NV Nederlandse Gasunie – Shri B. C Triphati, CEO Gail Moderator: – Robert Catell, Chairman Advanced Energy

Session chairman: Hector Fajardo, Chevron Pipeline Company – Reliability and integrity – Advanced inspection technologies – Simulation for pipeline networks

F What are the opportunities for natural gas in homes and businesses of the future? Session chairman: To be confirmed – Natural gas and renewables – Micro-CHP, fuel cells – Gas heat pumps and cooling

10:30 – 11:00 Coffee-break Sponsored by Daelim Industrial

11:00 – 13:00 Oral Presentations (parallel sessions)

18:30 – 19:00 Break

A How can advanced geo-engineering impact bottom line performance?

19:00 – 22:30  Welcome reception Sponsored by KOGAS

Session chair: Ms Hélène Giouse, Storengy – Exploration and production of deep deposits – Geo-engineering for frequent cycling UGS – Re-use of depleted gas and oil fields for UGS

Thursday October 20, 2011 9:00 – 12:30 Poster Sessions 2 & 3 Innovations Exhibition

B Do innovations drive asset management in transmission & distribution system?

9:00 – 11:00  Workshop W2 Is there a role for natural gas in smart energy grids?

Session chairman: Pierre Bartholomeus, Kema GCS – Upgrading of systems (pressure increase, life time extension) – Innovative approach for asset management – Risk analysis

Organised by KEMA – Will anybody care about natural gas in smart energy grids? – Smart grids: only an electrical concept?

11:00 – 13:00  Workshops

C Does electricity power the gas industry?

W3 What will the new LNG market look like? Organised by Petronas – Techno-political-economic issues – Technology demand for LNG of the future – LNG versus GTL – Management of ageing LNG systems

Session chairman: To be confirmed – Improving gas turbines – Gas technologies and electrical storage (hydrogen, compressed air storage) – Large CHP – Natural gas in the next generation fuel mix

W6 Can R&D be a magnet for new talent in the gas industry?

I What are the future gas properties? Session chairman: Howard Levinsky, KEMA – Varying gas quality / composition – CFD – Fuel switching in industrial processes – Innovative and efficient technologies for industry

16:30 – 18:30 Poster Session 4 Innovations Exhibition 16:30 – 18:30  Workshop W4 What will be the picture in 2050: zero gas or zero carbon gas? Organised by E.ON Ruhrgas – Will natural gas be part of the long-term solution? – What technologies and solutions keep gas utilities in the game?

18:30 – 19:00 Break 19:00 – 22:30  Gala dinner Sponsored by GDF SUEZ

Friday October 21, 2011 9:00 – 11:00– Oral Presentations (parallel sessions) J LNG – Where are the next technology breakthroughs? Session chairman: Colin Wong, Petronas – Latest tank design – Off-shore LNG / micro LNG – Safety issues – New LNG carriers

K Which innovations will improve distribution system operation? Session chairman: Alessandro Soresina, A2A – Third party interference – Materials and ageing – Odorisation – Advanced metering

L Will gas prevail over electric mobility in the transport sector? Session chairman: Brett Jarman, NGV Global – How do NGVs compete with hybrid and electrical cars (CO2 / efficiency)? – Heavy duty – New storage concepts – Charging electrical vehicles by gas

11:00 – 11:30 Coffee-break 11:30 – 12:45 Closing Plenary Session

13:00 – 14:30 Luncheon

Organised by the TPC, IGU TF1 & TF2

14:30 – 16:30 Poster Session 1 Innovations Exhibition

13:00 – 14:30 Luncheon

Chairman: Ernesto López Anadón, Chairman IGRC Policy Committee Sponsored by E.ON Ruhrgas

14:30 – 16:30 Workshops

14:30 – 16:30 Oral Presentations (parallel sessions)

11:30 – 12:00 Closing Keynote Speech by CEO KOGAS

W1 What roles should the gas industry play in CCS?

G Is bio-energy an option for greening the gas market?

12:00 – 12:30– Wrap up, Dan Dolenc & Young Researcher’s Prize

Session chairman: Friedrich Wolf, E.ON Ruhrgas – Biomethane in the natural gas grid – Advanced technology for biomethane processing – End use of biomethane

Organised by GDF SUEZ

W5 Keeping gas in the buildings of tomorrow: will codes and standards kill gas?

H How to assess the environmental footprint of the gas chain?

Organised by GTI – Are building rules & regulation excluding natural gas as a solution?

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Session chairman: Marc Florette, GDF SUEZ, – Analysis of the whole chain: what is missing? – Methods and data?

to

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by Ernesto López Anadón, Chairman IGRC Policy Committee

12:30 – 12:45  IGRC2014 by Peter Hinstrup, DGC


Top expertise in gas research Sustainable energy supply is the key for the future. Together with industry, TNO develops and implements innovative gas technologies to enable a smooth transition to a sustainable energy supply.

TNO | Innovation for Life TNO is actively involved in innovative processes to increase energy efficiency, to produce renewable energy, to reduce CO2 emissions and to optimize oil and gas exploration and production.

Gas related research

• Exploration & Production • European Gas Hub • LNG Test & Technology Centre • CCS & Sour Gas Treatment • Gas Transport & Storage

WWW.TNO.NL/OIL&GAS


25th World Gas Conference is On Track By Zahariah Abdul Rahman With the theme “Gas: Sustaining Future Global Growth”, the 25th World Gas Conference (WGC2012) to be held in Kuala Lumpur, Malaysia, from June 4-8, 2012, is on track to become IGU’s most memorable gas event. The National Organising Committee of the 25th World Gas Conference (WGC 2012) picks up pace this year to continue efforts to fulfil the high expect­ ations of the 3,500 delegates expected to make their way to this global gas event. So far, 11 keynote speakers and one luncheon

Zahariah (Liza) Abdul Rahman, CEO of WGC 2012.

speaker have confirmed participation. With the

b e lo w

Table 1.

preliminary programme now finalised (see Table

has been planned to provide a seamless flow

1), the opening ceremony will be scheduled on

from one event to another, giving exhibitors ample

the afternoon of June 4, 2012, followed by the

oppor­tunity to showcase their booths and network

open­ing of the exhibition halls and ending with

with high profile industry players after the

the gala dinner in the evening. This arrangement

opening ceremony.

W G C 2 0 1 2 PREL I M I NARY PRO G RA M M E

echnical gramme

at a Glance

Monday 4 June

Tuesday 5 June

Wednesday 6 June

Thursday 7 June

Friday 8 June

THEME OF THE DAY

FOUNDATION FOR GROWTH

ENSURING SUPPLY SECURITY

ENHANCING GAS DEMAND

A SUSTAINABLE FUTURE

08.30 – 09.15

Keynote Addresses

Keynote Addresses

Keynote Addresses

Keynote Addresses

09.45 – 11.45

Committee Sessions/ Expert Fora

Committee Sessions/ Expert Fora

Committee Sessions/ Expert Fora

Strategic Panel Sessions 1. Gas and renewables 2. World Petroleum Congress

12.00 – 13.30

Luncheon Address

Luncheon Address

Luncheon Address

Luncheon Address

13.45 – 14.30

Keynote Addresses

Keynote Addresses

Keynote Addresses

14.30 – 16.00

Opening Ceremony

Strategic Panel Sessions 1. Building strategic human capital 2. Nurturing the future generations

Strategic Panel Sessions 1. Geopolitics and natural gas 2. Non-conventional gas 3. LNG and the future

Strategic Panel Sessions 1. Advocacy for natural gas 2. Innovation and research 3. NGV for transport

Special Session TWP 2012-2015

16.30 – 18.30

Exhibition Opening & Networking

Committee Sessions/ Expert Fora

Committee Sessions/ Expert Fora

Committee Sessions/ Expert Fora

Closing Ceremony

20.00 – 22.30

Gala Dinner

Plenary Sessions

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Breakout Sessions

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Farewell Party

Official Ceremonies

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Social Events

C o n f e r e nce

Note: For updated information on the Technical Programme and to register for Technical Programme updates via the WGC2012 electronic newsletter, please visit the WGC2012 website (www.wgc2012.com)

i s

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Participants in the first meeting of exhibitors were welcomed with warm Malaysian hospitality (above ). They also had the opportunity to meet service providers and were taken for tours of the WGC2012 Concept Village (below ).

l Abstract submission deadline September 1,

Registration for delegates is now open. Early

2011;

birds registering before December 31, 2011 will enjoy a special rate of $2,700. The full conference

l Author notification November 15, 2011;

fee after that is $3,200. All authors of papers at

l Full paper submission deadline February 1,

WGC2012 are required to register for the confer­

2012.

ence and pay the fee. For registration enquiries, e-mail registration@wgc2012.com. l  New Chairman of WGC 2012

Datuk Anuar Ahmad has now taken over as the Chairman of WGC 2012 from Datuk Wan Zulkiflee. Datuk Anuar is the Executive Vice President of PETRONAS Gas and Power Business and has been with PETRONAS since 1977. l  Call for papers

The call for papers for the 25th World Gas Confer­ence was published and launched on February 1. Abstracts are welcomed via online submission at www.wgc2012.com. Detailed infor­ mation and instructions can be found on the web­ site or contact: cfp@wgc2012.com. Key mile­stones for the technical paper selection are as follows:

25th

World

Gas

Conference

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event and more visitors to Kuala Lumpur

L I ST OF CONTRACTED E X H I B I TORS AS AT FEBRUARY 1

in 2012. Arrangements have been made to increase

Geofields

BP Gas Marketing

Heath Consultants

Brunei LNG

Radius Systems

CNPC

Hermann Sewerin GmbH

Delcom

Japan Gas Association

RWE

movement at the exhibition venue a dynamic

Dialog

Lima Bintang

Sapura Crest

one (see the exhibition floor plan). For priority

Elster-Instromet

Mesura

SBM Offshore

assistance, please e-mail exhibition@

Emerson Process Management

MISC

Schutz GmbH

NIGC

Solar Turbines

wgc2012.com.

E.ON Ruhrgas AG

NMI

Statoil

Exxon Mobil Corp

OMV Gas & Power

Talisman Malaysia

Fluxys Corp

Pergam-Suisse

Technip

oppor­tunity to explore the conference and

Gas Natural

Petronas

Total

exhibition venue and experience Malaysian

Gascat

Polish Oil & Gas Company

Wood Mackenzie

hospitality. Exhibitors were updated on the

Yemen LNG

progress of the event organisation, toured the

Gasunie

PTT Public Company Limited

traffic flow between the expert conference

BG Group

sessions, coffee breaks, luncheons and technical sessions thus making people

Romgaz

The first meeting for exhibitors was held on November 12, 2010, and was an excellent

sites / facilities and met major service providers and suppliers who will help them above

Table 2.

b e lo w

Table 3.

with their exhibition.

l  Exhibition

To allow companies the opportunity to have

A remarkable 70% of the total exhibition space has been committed and contracted (see Table

a final site visit before the event, a second

2 for a list of contracted exhibitors). Extensive

meeting will be organised later this year.

marketing efforts by the team continue to

Participants who joined us for the first visit are

attract more companies to join this prestigious

more than welcome to attend again. If you would like to receive the invitation to attend the second meeting, please e-mail your request to

CONTACT DETA I LS

exhibition@wgc2012.com. Taking place at the Kuala Lumpur

WGC 2012 (Organiser of the 25th World Gas Conference) Etiqa Twins, Level 20, Tower 1 11, Jalan Pinang 50450 Kuala Lumpur Malaysia Tel: +60 3 2171 3500 Fax: +60 3 2171 3535 Website: www.wgc2012.com General information: Conference (general): Conference (registration): Conference (call for papers): Exhibition: Sponsorship: Media: Accommodation, transportation and social events:

Convention Centre, the main hub of the 25th World Gas Conference Concept Village, the exhibitors’ meeting will brief you on the general event programme, available accommodation near the venue, sponsorship opportunities to maximise your brand and invoicing and payment schedules. A guided

info@wgc2012.com conference@wgc2012.com registration@wgc2012.com cfp@wgc2012.com exhibition@wgc2012.com sponsorship@wgc2012.com media@wgc2012.com

tour will be arranged for the site visit.

destination@wgc2012.com

Zahariah Abdul Rahman is the CEO of

Do not hesitate to contact WGC 2012 with your enquiries. Contact details are provided in Table 3. We look forward to welcoming you to Kuala Lumpur.

WGC 2012.

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WGC2012 exhibition floor plan (for a detailed floor plan, please visit www.wgc2012.com).

MAIN ENTRANCE / DROP OFF / PICK UP POINT

VO

ID VO

ID

VOID

VOID

CONFERENCE SESSION ENTRANCE

VOID

LEVEL 4

EXHIBITION ENTRANCE ELEVATORS CONCOURSE

VOID

ENTRANCE FROM CAR PARK

HAL

L1 0

PETRONAS TWIN TOWERS

TOWER 3

HALL HALL

MANDARIN ORIENTAL HOTEL

LEVEL 3

8

9

EXHIBITION HALLS EXTENDED EXHIBITON HALLS

VO

ID VOID

VO

ID

COURTYARD

LEVEL 1 (MEZZANINE)

VOID HA

HALL 7

GROUND FLOOR

LL

CATERING OUTLET LINKWAYS 1st FLOOR

5

HALL 6

HA

LL

CA

R

HALL

4 HALL

PA R

K

1

GROUND LEVEL

2

HOSPITALITY LOUNGE ORGANISER’S OFFICE

HALL 3 CAR

CONCOURSE LEVEL

PARK

PLENARY HALL (AUDITORIUM) VOID 3rd FLOOR EXHIBITION HALLS MEETING ROOMS

LEVEL 4

PLENARY HALL (AUDITORIUM) PLENARY THEATER

LEVEL 3

4th FLOOR MEETING ROOMS

LEVEL 1 (MEZZANINE)

VOID VOID GROUND LEVEL

VOID

CONCOURSE LEVEL

Solutions Geared Towards Success through Total Integrated Specialist Services Technology Partners

Shell MDS

Listed on Bursa Malaysia (KLSE), DIALOG GROUP BERHAD is the leading integrated service provider with more than 20 years of experience in servicing the oil, gas & petrochemical industry covering the needs of both the upstream and downstream activities. In its pursuit to be a Trusted Global Business Partner, DIALOG aims to forge strategic alliances with experienced technology partners to broaden the range of services provided to its customers. The services provided range from upstream to downstream activities encompassing: • Centralised Tankage Facility Services • Specialist Products and Services • Catalyst Handling Services

DIALOG GROUP BERHAD (Company No. 178694-V) 109 Block G, Phileo Damansara 1, No. 9 Jalan 16/11, 46350 Petaling Jaya, Selangor Darul Ehsan, Malaysia

• Plant Maintenance • Engineering & Construction

Tel : 603-7955 1199 Fax : 603-7955 8989

• Fabrication

www.dialogasia.com

Integrated World Class Solutions via World Class Partnerships and Technology


The French Gas Association The professional gas union in France

www.afgaz.fr

Bringing our energy together • Promotion and development of the gas industry in France • Supplyer of services in the fields of standardization, certification and training • Exchange of information and expertise between gas players

Save the date of the next Gas Conference Paris: 14th & 15th September 2011 www.congresdugaz.fr / www.expogaz-expo.com

© Visuel : cornelius - fotolia.com / Conception graphique : www.pension-complete.com - 2010

• Representation of French gas interests at national, european and international levels


COORDINAT I ON COMMI TTEE PROG RESS REPORT Introduction and Key Developments

92

CC meeting

92

Programme Committee A – Sustainability

114

Programme Committee B – Strategy

116

Programme Committee C – Gas Markets

120

Technical Committees and Task Forces: Membership, meeting highlights and external cooperation

93

Programme Committee D – LNG 122

WGC2012 in Kuala Lumpur

95

Programme Committee E – Marketing

126

Progress Reports from the Task Forces

130

Working Committee 2 – Storage 100

Task Force Building Strategic Human Capital

130

Working Committee 3 – Transmission

104

Task Force Nurturing the Future Generations

134

Working Committee 4 – Distribution

107

Task Force Geopolitics and Natural Gas

137

Working Committee 5 – Utilisation

110

Progress Reports from the Committees

98

Working Committee 1 – Exploration and Production

98

91


representatives of the various Committees and

Introduction and Key Developments

Task Forces shared the progress of their work activities in the presence of IGU Executive Committee members and guests.

By Ho Sook Wah and Ungku Ainon Ungku Tahir

IGU under the Malaysian Presidency has initiated a global advocacy programme for natural

This is the second progress report of the 2009-

gas, building on its key attributes and developing

2012 Triennium under the Malaysian Presidency.

a communications strategy that will resonate with

The report aims to provide the reader with infor­

each stakeholder group. As a follow-up from the

mation about the status of the work as described

workshop held in Jimbaran, Bali in April 2010,

in the Triennial Work Programme (TWP). It consists

IGU has appointed PFC Energy, a US consultant

of contributions and updates by IGU’s Working

based in Washington DC to assist in developing

Committees (WOC), Programme Committees

this message for gas advocacy and crafting an

(PGC) and Task Forces (TF) since June 2010.

effective communication strategy. At the 2010 Council meeting in Doha, a half day was dedi­

l  CC meeting

cated to holding a special workshop to solicit the

The Coordination Committee (CC) held its fifth

views and support of delegates for the gas advo­

meeting in Doha, Qatar on October 18, 2010.

cacy toolkit that has been developed.

It started with a closed session to discuss internal

As mentioned in the last progress report, a joint

matters centred mostly on the programme content

committee meeting was held on May 4, 2010 in

and activities planned for WGC2012. During the

Opatija, Croatia to discuss gas and renewables,

second part of the meeting, the Chairs and

a subject which is being addressed by PGC A,

Ho Sook Wah, CC Chairman (l e f t ) and Ungku Ainon Ungku Tahir, CC Secretary (right ).

92

I n t r o d u c ti o n

a n d

K e y

D e velop m ents


Doha was the venue for the October 2010 meetings of the CC, Council and Executive Committee.

PGC E and WOC 5. The three Committees agreed

The CC Chairman, Secretary and represen­tatives

their respective areas of focus and responsibility

from IGU Management continued to attend and

and also committed to preparing a joint publi­

participate in the scheduled meetings of the Technical

cation called “Renewable Gas – the Sustainable

Committees whenever possible, or through

Energy Solution” for 2012.

conference calls with the Committee leaderships to

The preliminary conference programme for the 25th World Gas Conference has been developed.

discuss the work progress and related matters. The minutes of the meeting in Doha and the

A total of 10 Strategic Panels have been planned

respective presentations are published in the

in line with the theme for each day of the con­

CC section of the IGU website, which is accessible

ference. The call for papers was launched on

to members.

February 1 and provides opportunities for external authors to participate either with oral papers or

l  Technical Committees and Task Forces:

posters. It also calls for submissions for the project

Membership, meeting highlights and

“Best Practices in the Natural Gas Industry” and

external cooperation

the IGU Social Gas Award. The review and selec­

Membership of the Technical Committees con­

tion of the papers in these latter two categories will

tinues to grow with 840 professionals from more

be assisted by the IGRC Technical Planning Com­

than 50 countries registered. Figure 1(over) shows

mittee and PGC A respectively. All submissions of

the evolution of membership from the start of the

abstracts will be managed by the e-Abstract Man­

Triennium to the end of 2010, while the resulting

agement System.

global coverage is depicted in Figure 2 (over). The

Introduct ion

and

Key

D e velop m ents

93


A workshop and a round­

E V OLUT I ON OF CO M M I TTEE M E M BERSH I P ( AS OF END 2 0 1 0 )

table were held in the second half of 2010 and a workshop

1000

was scheduled for this March.

900 800

862

840

808

796

TF 1’s workshop “Recruiting and Retaining Talent in the Gas

700 600

Industry: Challenges and

562

500

Opportunities in the Middle

467

East” was held on October 19

400 308 300

in Doha, after the CC meeting.

200

TF 3’s Asia-Pacific Roundtable

100

on Geopolitics and Natural Gas

0 Jul

right

Aug Sept

Oct

Nov Dec

Jan

Feb

Mar

Apr

2009

Figure 1.

May

Jun

Jul

Aug

Sept

Oct

Nov

was held in Taipei on November

Dec

2010

23. Highlights of these two events are included in each Task

breakdown of members by Committee and Task Force is shown in Table 1.

At presstime, IGU and the International

All the Committees and Task Forces have held

right

Figure 2.

Confederation of Energy Regulators (ICER) were

their 2010 autumn meetings as scheduled. A

set to hold a joint workshop in Washington DC on

summary of their progress reports is presented in

March 8 looking at regulatory issues of global

the following chapters.

significance for the gas industry. The objective is to TECHN I CAL CO M M I TTEE M E M BERS ( AS OF END 2 0 1 0 )

g lo b a l c ov e r ag e

far right

Table 1.

9%

12%

19%

94

Force’s progress report.

I n t r o d u c ti o n

60%

WOC 1 Exploration and Production

45

WOC 2 Storage

73

WOC 3 Transmission

92

WOC 4 Distribution

79

WOC 5 Utilisation

86

PGC A Sustainability

59

PGC B

Strategy

126

PGC C Gas Markets

64

PGC D LNG

89

PGC E

Marketing

59

Europe & Russia

TF 1

Building Strategic Human Capital 47

Asia-Pacific

TF 2

Nurturing the Future Generations 27

North & South America

TF 3

Geopolitics and Natural Gas

Middle East & Africa

Total

a n d

K e y

D e velop m ents

16 862


left

The fifth CC meeting in progress.

promote interaction between regulators and operators. Key topics include: regulation and gas price formation, regulatory influences on inter­ national investments and environmental aspects of natural gas. PGC B worked on this event which received a very encouraging response, partici­ pation being by invitation and limited to 100 participants. A similar workshop may be held at a later date in Europe. l  WGC2012 in Kuala Lumpur

IGU’s 2009-2012 Triennium will culminate at the 25th World Gas Conference in Kuala Lumpur, 4-8 June, 2012. The deadline for the submission of abstracts, which will only be accepted through the online e-Abstract Management System, is September 1, 2011. Further details can be found in this edition of International Gas on pages 86-89 and also from the website www.wgc2012.com. We look forward to receiving the abstracts and to the fruitful exchange they will generate at WGC2012. Ho Sook Wah is Chairman of the Coordination Committee and Ungku Ainon Ungku Tahir is the Committee’s Secretary. Readers requiring further information are invited to contact Ungku Ainon at ungkuainon@malaysiangas.com or to visit IGU’s website at www.igu.org.

WGC2012 will be held in Kuala Lumpur.

Introduct ion

and

Key

D e velop m ents

95


Total and LNG An interview with Laurent Maurel, Vice President, Liquefied Natural Gas and Management Committee member, Total Gas & Power. v  LNG is pivotal to our future LNG, three letters that pack a punch for the nat­ ural gas industry in general and Total in particular. Over the last 20 years, liquefied natural gas has become a key gas market driver. With almost 40 years of experience, our LNG expertise spans the entire value chain. We have laid the foundations for various building block projects that will drive us forward over the coming years – Angola LNG, Ichthys and Gladstone LNG in Australia, Shtokman in Russia, Nigeria LNG and Brass LNG in Nigeria. v  Why is LNG strategically important for Total? Demand for LNG is growing at a remarkable rate, despite the recent global economic downturn. With a current market share of just over 25% and annual growth of 7% over the last decade, LNG looks set to meet 40% of international gas trade in 2020. Its success can be attributed to the fact that when liquefied at -160°C, it occupies 600 times less space than gas. It can then be shipped by LNG carrier to consumer markets far away from the production site. Furthermore, carriers can change destination, whereas gas pipelines are fixed. And then there are its environmental advantages. When burned, LNG generates 50% less carbon than coal, making it a suitable fuel for power plants until alternative energies are mature enough to take their place alongside fossil fuels. All good reasons for our active presence in this segment. In addition, the cutting-edge LNG expertise of our engineers, technicians and marketing staff has been honed over several generations, since we started producing

LNG in Algeria in the 1960s. Our unique skills enable us to provide an end-to-end LNG offer that extends from production to marketing. v  The flexibility of LNG has redefined gas markets. Where are the main markets for LNG and the near-term outlook? Because transportation is flexible, LNG is very popular with countries that are not supplied by gas pipeline, for geographic or political reasons, as well as those simply seeking to diversify their energy sources. This gave birth to an LNG market that enables buyers and sellers to leverage price differences between regions. The long-established LNG markets of North-East Asia (Japan, South Korea, Taiwan) and Europe still constitute the main demand hubs. At the same time, new markets are developing quickly, chiefly China and India. An increasing number of countries are looking to LNG, either to enhance their security of energy


supply or to supplement their domestic pro­ duction. New nations across the globe, for instance in South-East Asia, South America or the Middle East have recently com­pleted or are about to commission the regasifi­cation terminals they need to become LNG importers. What’s even more remarkable is that many of these countries were or still are large pipe gas or LNG exporters. v  LNG requires considerable infrastructure, including liquefaction plants, LNG carriers, regasification terminals, and enduser distribution networks.   How can you secure suffi­cient outlets for your production? Although important, technical resources alone are not sufficient for establishing a leading presence in the LNG market: people with specialised knowledge of the LNG chain are the key factor. As I said earlier, we have grown our expertise with the market. Our teams have worked with LNG from the outset, and have transferred their skills at each step. This expertise is invaluable, enabling us to ensure sufficient outlets for our production. We know how to produce, liquefy and ship natural gas, we have interests in a large number of regasification terminals, and we have world-class marketing expertise. We have the necessary skills and tech­nology every step of the way. Let me emphasise our marketing expertise, as LNG has been a key driver of gas market globalisation. Our London-based trading team oversees many large-scale trans­actions, including LNG cargo trading, arbitraging with regard to regional competition and spot and futures contracts, managing shipping, and reserving regasification capacity. They ensure that our LNG

portfolio is leveraged to its full potential. Our expertise across the entire value chain, from production to market, guarantees us a key role in many major international projects. v  Total has launched a new round of projects for the next decade. Could you tell us about them? Yemen LNG and Qatargas 2 started up in 2009, and have increased our production by 50% in the recent past. They are indicative of a change in scale that is set to continue in the coming years as we design and build various large-scale projects. Currently under construction, Angola LNG will process associated gas from offshore oil licenses as of 2012. In Nigeria, we have a 17% interest in the Brass LNG project, which will produce 10 mtpa of LNG. We also have a 15% interest in the 22 mtpa Nigeria LNG liquefaction plant, for which front-end engineering and design (FEED) is being conducted for a planned new 8.5 million metric ton train. In Russia, we are addressing, in par­tner­ship with Gazprom, the technological challenges involved in developing the giant Shtokman natural gas and condensate field in the Arctic Ocean. And lastly, in Australia, we have two projects. First the Darwin liquefaction plant which will process 8.4 million metric tons of dedicated natural gas fed from the Ichthys field each year. I shall finish this long list with our most recent investment: at the end of 2010 we acquired a 27.5 % interest in Gladstone LNG that is due to start production in 2015 after the final investment decision was taken in January 2011. All these large, high-tech projects will contribute significantly to our growth and allow us to maintain our position as a top-tier LNG operator over the next decade.


Progress Reports from the Committees

of WOC 1’s work, and the expected contributions of the two Study Groups were also clarified. SG 1.1 Recent Advances in exploration and production of natural gas

This chapter contains news and information from

Leader: Armando Hashimoto (Brazil). For the

IGU’s five Working Committees and five

meeting in Oran, Kamel Eddine Chikhi (Algeria)

Programme Committees.

acted on his behalf. SG 1.1 will update estimates of resources and

l  Working Committee 1 – Exploration and

reserves of both conventional and unconventional

Production

natural gas according to IGU’s regions. This

By the end of the Malaysian Triennium, WOC 1

update must be supported by an analysis of

aims to provide a comprehensive study on

statistical indicators for gas exploration efforts. The

significant technological advances related to

results will be represented by the “creaming

the up­­stream segment of the global gas industry

curves”1 for the main gas provinces. The

with case studies on typical gas projects being

technology component will also be developed,

dev­eloped or put into production during this

especially if the resources are related to difficult

decade.

reservoirs or unconventional accumulations.

As reported in the last issue of the IGU Magazine, WOC 1’s first meeting of the Triennium

SG 1.2 Most significant new E&P gas projects

had to be postponed when the Icelandic ash-cloud

Leader: Flavia Di Cino (Argentina). For the

closed airspace in Europe. It eventually took place

meeting in Oran, Mazouzi Amine (Algeria) acted

in Oran, Algeria, September 14-16, 2010.

on her behalf.

The meeting in Oran was attended by 17 delegates from 12 companies and 11 countries,

The objectives of SG 1.2 are to: l Identify existing gas projects and agree on

and the work session was split into two days.

selection criteria based on the level of reserves,

Presentations were provided on the various themes

complexity and type of technology used; l Analyse their impact at regional and global

levels, particularly those located near areas of regional consumption and in remote/frontier areas; and l Provide an update on the most important gas

projects over the last decade, namely those related to unconventional resources such as CBM, shale gas and tight gas. Attention will also be given to the development of sour gas projects in south-east Asia and pilot projects associated with gas hydrates. WOC 1’s second meeting was held in Buenos Aires, Argentina, from November 30 to December 2, 2010. It was attended by 11 delegates from seven Delegates to WOC 1’s first meeting pose for a group picture at the headquarters of Sonatrach Downstream in Oran, Algeria.

98

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1  The creaming curve displays the cumulative discovery versus the cumulative exploration activity.


companies and six countries. During the meeting a

addressed. The concepts of “de-risking” plays

presentation was made by CC Secretary, Ungku

through explorations and “de-stranding” gas for

Ainon. She provided members with updated infor­

global markets were also addressed. During the

mation on CC activities and a reminder of the dead­

discussions, the following ideas / keywords

lines for expected contributions from WOC 1. The

emerged to prepare the call for papers:

immediate task was preparing for the call for papers.

l Best practices;

It was also agreed that WOC 1 will help pro­

l Horizontal drilling;

mote the message that IGU is conveying to the

l Fracking;

energy community under the advocacy programme

l Reservoir conditions;

with its slogan / acronym “Natural gas CARES for

l Sweet spots and how to identify them;

the world” (Clean, Affordable, Reliable, Efficient

l Drilling patterns, well designs, acreage; and

and Secure).

l Practical cases / lessons learned.

Then Flavia Di Cino, Leader of SG 1.2,

On the topic of CCS, WOC1 will collaborate

presented the scope and purpose of the study on

with WOC 2 and develop an approach from an

E&P gas developments and the reasoning behind

E&P perspective. The main subjects should include

the proposed chapters:

reinjection, production economics, best practices

l Worldwide natural gas endowment (in

and regulatory frameworks.

coordination with SG 1.1);

The topics proposed for the call for papers for

l Conventional and complex projects;

WGC2012 were also debated. (After the meeting

l Unconventional developments; and

in Buenos Aires they were finalised and are

l Carbon capture and storage (CCS) initiatives

reflected in the call for papers issued in February).

(in coordination with WOC 2, from an E&P

WOC 1 is preparing two Committee Sessions and

perspective) and methane hydrates.

two Export Fora for WGC2012.

In the ensuing discussions delegates agreed that, for natural gas endowment, conditions for

Future meetings

commerciality will be the key criterion instead of

At presstime WOC 1’s third meeting was due to

quantity for the purpose of SG 1.2 deliverables.

take place in Beijing, China, March 14. The fourth

Particular attention was dedicated to define conventional and complex projects which: involve geologically conventional targets in harsh environ­ ments or remote areas; face new technical chal­ lenges; or are on a scale requiring ad-hoc solu­ tions. The criteria for project characterisation and methodology for data gathering were addressed. Public sources were considered to be the best approach for data gathering. With regards to the collection of case studies, it was agreed that in order to identify the current main trends, a history of complex projects would be included as a way to show how difficulties were overcome in the past and what today’s challenges are. Case studies will be presented to describe today’s challenges and how they are being

The SG 1.2 team led by Flavia Di Cino (second right ) seen in Buenos Aires with CC Secretary Ungku Ainon (fourth left )

Pro gress

Reports

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C o mmi t t e e s

99


WOC 2 Chair, Hélène Giouse, welcomed participants and thanked Gazprom for hosting the meeting. CC Chairman, Ho Sook Wah, shared the latest developments and updates on IGU and CC activities. The three Study Group Leaders presented their work progress to date and then met separately with their teams. At the end of the meeting the Leaders gave a brief update on what had been agreed in their separate sessions. SG 2.1 Updating and improving the UGS database and promoting it as a reference Leader: Ladislav Goryl (Slovakia) The questionnaire and contact list were finalised at the meeting in St Petersburg, although some countries have no contacts identified. A special arrangement has been made for Fred Metzger, WOC 2 members pose for a group picture during their second meeting of the Triennium in St Petersburg.

WOC 2 corresponding member from the USA to collect the questionnaire for North America and to update it with the American Gas Association.

meeting will be held in Rio de Janeiro, Brazil,

Contacts too have been established with Australia

October 3.

with the help of Barbara Jenkins, who is the Leader of WOC 3’s Study Group 3.3.

l  Working Committee 2 – Storage

The questionnaire was sent out in August with a

During 2010, two WOC 2 meetings were org­

deadline of October 31, 2010. It was pre-filled

anised. The first was held in Paris in January and

with the data of the previous questionnaire (2006-

was covered in the last progress report. The

2009). A meeting of SG 2.1 was then organised

second was held in St Petersburg, Russia from

on November 24 in Pieve di Soligo, Italy, to analyse

June 29 to July 1. Both meetings were followed by

the first results of the questionnaires and to prepare

technical site visits to a storage site – Gournay,

another consultation on some of the missing

operated by Storengy in France and Gatchinskoe

answers. After this meeting, SG 2.1 members

UGS, operated by Gazprom in Russia.

visited the Collalto UGS facility operated by Edison.

An additional conference call involving the

An agreement was signed by UNECE and

Committee’s leadership took place on October 12

WOC 2 on November 17, 2010, to share data

to discuss preparations for the next meeting and to

about operational and planned UGS facilities in

exchange views on WOC 2’s proposals for the call

Europe and the CIS region.

for papers. The meeting in St Petersburg was attended

100

SG 2.2 Definition of some best practices in UGS

by 47 members from 15 countries. Mr Aksytin,

operations and design

a member of Gazprom JSC’s Board of Directors

Leader: Eddy Kuperus (The Netherlands)

and the Head of Gas Transportation,

Best practices will cover three topics: methane

Underground Storage and Utilisation

emissions, CO2 sequestration and well

Directorate, officiated.

integrity assessment.

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Respect. For Europe’s energy needs.

Europe needs new sources of natural gas to maintain economic growth while meeting climate protection targets. The Nord Stream Pipeline is a timely and environmentally sound means of bringing large volumes of natural gas to Europe. Nord Stream will provide enough energy to satisfy the energy demand of more than 26 million households. www.nord-stream.com


l “Theoretical and practical aspects to prove the

technical well integrity for gas storage purposes” by Abdel Haq Amer (UGS); l “Technical diagnostics of well casing for inte­

grity management at UGS facilities in Russia” by Nikita E. Barsuk (Gazprom UGS LLC); l “Well integrity management methodology at

E.ON Gas Storage” by Herman Spreckels (E.ON); l “Some aspects of the well’s integrity assessment

of Chiren UGS” by Dimitar Shterev (Bulgartransgaz); l “Well integrity management in Storengy :

Overview and focus on a case study” by Hélène Giouse and Jean-Marc Patroni (Storengy). These presentations provided some in-depth elements for the Study Group’s final report.

During the meeting a technical visit was made to Gatchinskoe UGS.

Members also discussed the methodology of their report. Two possibilities have been identified:

Methane emissions – the report should be issued by the end of 2011 and an article will be published in the next issue of the IGU Magazine. After the St Petersburg meeting an email was sent

l Proposal of a methodology to rank integrity of

wells based on the presentations; l Research of existing data, visual inspection, well

measurements and intervention.

out requesting all members of the Study Group to provide answers to three specific questions on

SG 2.3 Skills and competencies for UGS activities

methane emissions. The answers are being anal­

Leader: Vladimir Onderka (Czech Republic)

ysed and VNIIGAZ, which has major experience in

In order to ensure a reliable and flexible supply of

this field, has agreed to assist. The following approach

skilled resources to the UGS sector, it is important

has been agreed for the structure of the report:

to support training for specialists working in the

l Categorisation of main UGS components and

field. Hence SG 2.3 has designed a “Young

activities that impact methane emissions; l Definition of best practices to reduce emissions

based on this categorisation; and

professionals under 30 and recent graduates working in the UGS sector. Five fields of interest

l Identification of regulations (European, local).

CO2 sequestration – at the meeting in St Petersburg, VNIIGAZ presented some infor­ mation on CCS projects around the world. The

have been listed: Geosciences; Reservoir Engineering; Production Engineering; Drilling & Completion; and, Treatment of Natural Gas. Each course runs for approximately two weeks

Study Group has decided to develop a database

and has places for 15 students; each company in

of CCS projects. In addition, WOC 1, WOC 2 and

WOC 2 can nominate a maximum of three

PGC A have agreed to work together to organise

candidates. The programme will end in the second

a common session on the topic of CO2 seques­

half of 2011. Courses are taught in English and

tration during WGC2012.

the selection of successful candidates is made via

Well integrity assessment – a workshop on this

102

Employees Exchange Programme” dedicated to

an entrance test. The best trainee will have the

topic was organised during the meeting in St

opportunity to participate in WGC2012 (with the

Petersburg with five presentations:

support of his or her company).

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In parallel, a questionnaire has been sent to

ing was held in Houston, USA, with temperatures

WOC 2 members to analyse and describe the

of 35°C and almost 100% humidity. It was hosted

current shortage of skilled professionals in the

by Chevron and took place from September 8 to

storage business.

10, 2010. Delegates entered the meeting room to the

Next meetings

strains of WOC 3’s signature tune “I can’t give you

At presstime the next WOC 2 meeting was due to

anything but…” and the text was displayed on the

be hosted by NAFTA in Bratislava, Slovakia, March

projection screens. After everyone had arrived

15-17. The fourth meeting is planned for the

WOC 3’s Chairman, Eric Dam, handed over the

second half of 2011 and will be hosted by E.ON

first CD of our song to CC Chairman Ho Sook Wah.

in Essen, Germany. Enagás has agreed to host

Eric Dam welcomed the 44 participants from

the final meeting in Spain in February or March

22 countries and gave a special word of welcome

2012. Technical visits will be organised during

to the 15 new members present. He thanked

each meeting.

Chevron for hosting the meeting and gave the floor to Becky Roberts, President of Chevron Pipe

Miscellaneous

Line Company. Declaring that Houston is the

Hélène Giouse will chair a storage and

energy capital of the world, she explained that

geosciences session during IGRC2011 in Seoul

more than 3,000 energy-related companies are

(see page 84 for the IGRC2011 programme).

active in the city and they account for over 40% of

WOC 2 has also contributed an article to this

the local economy. Just as gas is an important part

issue of the IGU Magazine (see pages 200-202).

of the world energy portfolio, she said, it is a signi­ficant part of Chevron’s future. However, the

l  Working Committee 3 – Transmission

BP incident will have a significant impact on the

As mentioned in the last progress report, WOC 3’s

gas industry. The challenges, particularly for trans­

first meeting of the Triennium was held in a chilly

mission are significant and therefore it is of vital

Amsterdam. In complete contrast the second meet­

importance to work together. She congratu­lated

With a big turnout for WOC 3’s second meeting, arranging people for the group photo took 15 minutes.

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The Study Groups had met separately the day before and then presented their progress reports during the WOC 3 plenary meeting. SG 3.1 Strategic gas transmission infrastructure projects Leader: Enno Freese (The Netherlands) Enno Freese gave his progress report and men­ tioned that 13 members were present. One of the Study Group’s activities is to make an inventory of strategic pipeline projects, to analyse the differ­ ences and similarities of the selected projects and After the business sessions there was time for socialising (above ) and a technical visit to the Sabine Pass LNG terminal (below ).

finally to describe the typical problems, challenges and conditions and chosen solutions. Ten strategic pipeline projects have been chosen and now all

IGU on the important role WOC 3 is playing in

the information will be collected to enable SG 3.1

gas transmission.

to carry out the analysis.

Next up was Mark Rand, the Chevron Pipe Line

Enno presented a detailed draft table of con­

representative in London, who gave a very inter­

tents for SG 3.1’s final report for WGC2012. He

esting presentation on the US gas industry. He was

also mentioned that two new topics will be studied:

followed by Jeanet van Dellen from the IGU

a comparison of new tariffs and regulation; and

Secretariat, who gave a short introduction to the

the global impact of major incidents on strategic

IGU structure and practices for the benefit of the 15

pipeline projects. As an area of concern he said

new members present. Then Ho Sook Wah gave a

that the time schedule was very tight and asked

presentation on the current IGU and CC activities.

whether everyone could deliver input as promised. SG 3.2 Integrity of gas transmission systems and footprint reduction Leader: Mohd Nazmi-bin-Mohd-Ali-Napiah (Malaysia) Nazmi gave his progress report and mentioned that 19 members were present. He said that the response to the questionnaire sent out to WOC 3 members had been disappointing (SG 3.2 received replies from 25 companies / organisations in 23 countries), and urged all those who had not replied to do so to get a good picture of all regions of the world. He also presented a detailed draft table of contents for SG 3.2’s final report for WGC2012. SG 3.3 Securing sufficient expertise to operate gas transmission systems safely and adequately Leader: Barbara Jinks (Asutralia) Barbara Jinks gave her progress report and men­

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l Vladimir Bychkov (Russia – Gazprom Expo LLC)

tioned that nine members were present. She said

on inspection patrols by unmanned aircraft;

that SG 3.3 had sent out a questionnaire on

l Daniel Falabella (Argentina – TGS) on the

August 6, 2010 with 36 questions. Up to the time

Tierra del Fuego project; and

of the Houston meeting there had been 22 replies,

l Yuri Dergausov and Sergey Popov (Russia –

and she urged missing countries/companies to reply. SG 3.3 needs more input from Africa,

Spetsneftegaz) on Spetsneftegaz and the

China, the Middle East, South America and the

company’s in-line inspection (ILI) tools. Once business had been concluded, Chevron’s

USA. Barbara also concluded that it would be good to have the views/input of gas associations

Hector Fajardo provided information about the

in addition to individual companies, and that there

social event (baseball – Houston Astros vs. Los

is a need to conduct key interviews. Finally, she

Angeles Dodgers – in the Minute Maid Park) and

presented a detailed draft table of contents for SG

the technical visit to the Sabine Pass LNG Terminal.

3.2’s final report for WGC2012.

Finally, the Chairman thanked Hector Fajardo for Chevron’s kind hospitality.

Eric Dam thanked the Study Group Leaders and their members for the detailed progress reports and he called on to all WOC 3 members

l  Working Committee 4 – Distribution

to help by informing the Study Groups about best

The third meeting of WOC 4 was kindly hosted by

practices in their companies.

Tokyo Gas in Tokyo, Japan, September 28-October 1, 2010. It was a real success in terms of activities,

After the SG progress reports the following interesting presentations were given:

targets reached and attendance. In fact 45 dele­

l Dong Jiu Zhang (China – Beijing Tianhuan Gas

gates took part in the meeting, and among them

Company) on the China Gas Association and

we welcomed new members coming from India,

the status of gas development in Beijing;

Thailand and Russia. This means that participation

The fantastic view from the venue for WOC 4’s third meeting in Tokyo.

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WOC 4 members pose for a group photo as they start the social tour at the end of the meeting.

in WOC 4 is more diverse, and it contributes to

focusing on the planning and submission

widening the experiences that can be shared

deadlines for the call for papers.

among the members.

To close the morning we had a very interesting

The meeting started as usual with an introduction

small exhibition on smart gas metering in Japan,

by the host on the gas industry in their country.

kindly arranged by the colleagues from Osaka

Kenji Ikejima, Managing Director of The Japan

Gas Co. This gave delegates “hands-on”

Gas Association, explained in detail the current

experience of the technologies adopted on real

status of the city gas industry of Japan and its

meters and communication systems, and allowed

safety-related activities. His presentation was

them to exchange information through an open

followed by two very interesting ones on the topics

discussion with Osaka Gas Co. engineers.

under study in WOC 4. Eiji Yasuki, Manager of the General Safety & Distribution Control Department,

During the afternoon the work went on as usual via separate meetings of the three Study Groups:

Pipeline Business Unit at Osaka Gas Co., gave an in-depth analysis of the events that occurred

SG 4.1 Gas distribution safety management systems

during and after the Hanshin earthquake, and the

Leader: Ben Lambregts, Liander (The Netherlands)

anti-earthquake measures adopted after this experience. Then Takashi Tanaka, General

SG 4.2 Smart metering systems: characteristics,

Manager of the Technology Development &

technologies and costs

Solutions Department at Tokyo Gas Co., talked

Leader: Kim Vrancken, Eandis (Belgium)

about his company’s approach to smart metering, from the first projects in the early 1980s to the

SG 4.3 Unaccounted-for gas: identification,

current automatic meter reading (AMR) systems.

measurement, calculation and management

Finally, CC Chairman Ho Sook Wah updated

Leader: Barbara Jinks, GHD (Australia)

delegates on the Coordination Committee’s

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activities and the planning for WGC2012. He

The Study Groups started analysis of the answers

discussed the milestones that must be reached,

received to the questionnaire that had been

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Eustream – the Gas Highway for Europe Eustream operates a large-scale high-pressure gas transmission system in the territory of the Slovak Republic. Our basic mission is to transport natural gas in Slovakia and through Slovakia to the European markets. Eustream allows access to the gas transmission network and offers its customers a wide range of transmission services on a trans­parent and non-discriminatory basis. The access regime is in full compliance with existing legislation and gas industry standards. The business partners of Eustream include major energy companies from EU and non-EU member states. Our key priorities are safety and reliability of operations. The transmission system operated by Eustream represents an important energy link between the Commonwealth of Independent States (CIS) and Eustream_image AD.ai 1 6. 12. 2010 23:08:52 the European Union. It is interconnected with

major European trunk lines in Ukraine, the Czech Republic and Austria. The annual capacity of the transmission system is more than 90 billion cubic metres, which equals roughly 15 times the overall domestic gas con­ sumption of the Slovak Republic. This demon­ strates how a large part of our work concerns inter­ national gas transit. In 2010 Eustream transported some 68 billion cubic metres of gas. Thanks to the continual modernisation and upgrade of infrastructure, Eustream contributes to ensuring safe and reliable gas supplies to Central and Western Europe whilst doing its utmost to reduce the environmental impact of its activities. Eustream, in close co-operation with adjacent net­work operators, is currently reviewing gas flow dir­ections and cross-border capacities in order to enhance further the security of gas supplies to Europe.


circulated after the second meeting as a single

The Committee currently has 79 members

web-based questionnaire. There were more than

(some of them corresponding members) and of

50 replies and the data collected are thus a sound

course new members are still more than welcome

basis to work on. The questionnaire addressed

to join. For more information contact the Chairman,

specific areas of interest covering the three study

Alessandro Soresina, at alessandro.soresina@a2a.

areas, in particular:

eu, or the Secretary, Mario Pelizzoli, at mario.

l For safety management systems it addressed

pelizzoli@a2a.eu.

process safety leadership, human factors and competence, inspection and maintenance,

l  Working Committee 5 – Utilisation

emer­gency arrangements, audit and review;

WOC 5 focuses on the downstream part of the

l For smart metering systems it addressed the

gas value chain, which plays a significant role in

meter reading process, functions and services

the sustainable development of the gas market.

of smart meters, regulation and smart meter­

The Committee aims to be a platform for infor­

ing, costs and benefits in smart metering,

mation exchange, to demonstrate the positive

techno­logies used / considered; and

impact of new gas technologies, to create and

l For unaccounted-for gas it addressed its

update databases of technical information and

definition, components and measurement, and

market data, as well as providing recommen­

issues related to network operations such as

dations to the gas industry.

unbilled gas, metering and custody transfer. As the questionnaire started with a general

The Committee’s activities are divided into three Study Groups (detailed below); and two

section, with data not specifically related to a

Expert Fora (EF) have been set up in order to

single study item, a task force composed of one

integrate topics common to the three Study

member from each Study Group was set up to

Groups: EF 1 for renewables and EF 2 for

provide inputs related to the different study topics.

efficiency and gas quality.

During the morning of the second day, SG 4.2

There has been some change in the member­

ran a workshop with Panasonic, one of the largest

ship of WOC 5, which currently has a total of 86

electronic product manufacturers in the world and

members from 29 countries. One of the key

with a specific knowledge of smart metering, to

changes has been in SG 5.2 where Deputy Leader,

discuss its functions, technologies for metering and

Eric van Engelen, has had to withdraw from WOC

AMR. The workshop was open to any WOC 4

5 activities due to a change of his responsibility in

member with an interest in smart metering not just

the company. WOC 5 members wish to convey

those directly involved in the study topic.

their sincere appreciation and thanks to Eric for

Traditionally WOC 4 meetings are rounded off

his contributions and dedication to the Committee.

with a “social-technical” tour. This time we visited

His responsibilities have been taken over by

the Edo-Tokyo Museum, which displays models

Frédéric Pastier of GDF SUEZ.

and life-sized recreations of structures and events to show the daily life of Tokyo during the Edo,

Third meeting

Meiji and early Showa period, and the Tokyo

WOC 5’s third meeting was hosted by Gazprom

Tower, the world’s tallest self-supporting steel

promgaz in Moscow, Russia, September 14-16.

tower, to enjoy wonderful views of the city.

Despite administrative problems with visa

At presstime WOC 4’s next meeting was due to be hosted in Dublin, Ireland, by the kind invitation of Bord Gáis Éireann, March 22-25.

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procedures, 33 members attended. The three-day programme began with WOC 5 members attending the opening ceremony of

C o mmi t t e e s


The main objective pursued by the Czech Gas Association is to provide high-quality technical and managerial support for the reliable and effective development of the gas industry in the Czech Republic

To achieve this objective, 1. CGA supports activities enhancing the image of natural gas as an energy-efficient and environmentally-friendly fuel; 2. CGA supports the transfer of latest information from all over the world to the Czech Republic; 3. CGA has represented the Czech Republic in the IGU since 1932, and takes an active part in its activities; it also co-operates with other European and global non-governmental organisations; 4. CGA represents the Czech gas industry in respect of the development of legal and technical regulations, particularly their alignment with the relevant EU legislation; 5. CGA is a publisher of the „PLYN“ (Gas) journal, the only gas industry periodical in the Czech Republic (published since 1921, circulation 3,000) monitored by worldwide Chemical Abstracts.

Czech Gas Association

Novodvorská 803/82, 14200 Praha 4, Czech Republic, Telephone/Fax +420 222 518 811 e-mail: cpsvaz@cgoa.cz, www.cgoa.cz


GasSuf-2010, an exhibition on NGVs and related

The structure of SG 5.1’s report for the 2009-

technologies and products. WOC 5 Vice Chairman,

2012 Triennium was confirmed and the tasks,

Eugene Pronin, gave an opening speech. On the

roles and responsibilities were assigned to the

second day, the three Study Groups held separate

members. Also, analysis of the questionnaires for

meetings at the Gazprom promgaz offices. On the

the report was made and the general time

third day, members were divided into two groups.

schedule going forward was agreed. At the

The first group went on a technical tour to the

plenary session on the third day, Toshikuni Ohashi

Kuryanovo sewage plant, which has biogas power

presented a case study on energy conservation in

generation facilities, and the Sminovich gas-fired

air conditioning systems in Japan.

power plant, which is the oldest power plant in Moscow having started operations in 1896. The

SG 5.2 Domestic and commercial utilisation

second group, consisting mainly of members of

Leader: Martin Seifert (Switzerland)

SG 5.3, attended the “Gas into Engines” 3rd

Deputy Leader: Eric van Engelen (The Netherlands)

Moscow International NGV Conference, which was

– succeeded by Frédéric Pastier (France) Both the Leader and Deputy Leader of SG 5.2

held at Gazprom VNIIGAZ.

were unable to attend the meeting in Moscow. In SG 5.1 Industrial utilisation

fact, only two members were present but this did

Leader: Nuno Afonso Moreira (Portugal)

not dampen their spirits. They discussed the

Deputy Leader: Egidio Adamo (Italy)

questionnaires planned for SG 5.2’s report, and

WOC 5 members at GasSuf-2010.

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made a proposal to SG 5.1 to send out the

Next meeting

questions concerning energy services jointly since

At presstime WOC 5’s fourth meeting was due to

this topic, with reference to technical overviews

take place in Livorno, Italy, March 2-4.

and market situations, is common to both Study Groups. The proposal will be passed to SG 5.2’s

l  Programme Committee A – Sustainability

Leader for his concurrence.

PGC A has 59 nominated members from around the world and held its second meeting of the

SG 5.3 Natural gas vehicles

Triennium in Tokyo, Japan, September 15-17,

Leader: Eugene Pronin (Russia)

2010. The meeting was hosted by Tokyo Gas and

Deputy Leader: Davor Matic (Croatia)

attended by 26 delegates.

In Moscow, SG 5.3 members concentrated on the

On the first day, SG A.2 visited the Tokyo Gas

structure and content of chapters and subchapters

laboratory in Yokohama where biogas is produced

of the final report. The concept, vision and ideas

in a pilot plant. On the last day, a Japanese IGRC

on the structure and content were presented by

representative presented the IGRC2011 call for

those who have already confirmed their

papers, the possible links between the Technical

commitment to prepare the final report.

Programme Committee and other IGU committees

The progress of the UNECE/IGU joint study was presented to members. This is a study on the “Use

and the call for nomination of invited speakers and session chairs for IGRC2011.

of Gas in Transport in the UNECE Region”. Work and the efforts of all NGV experts will be compiled

Scope and objectives of the Study Groups

in parallel with WOC 5’s final NGV report.

SG A.1 Sustainability and investment

Updates on related external meetings, exhibitions,

Leader: Vladimir Bashkin, Gazprom (Russia)

strategic activities and technologies were also

SG A.1’s objectives are to:

presented by members during the meeting.

l Design a hydricity (i.e. the complementary use

SG 5.3 has contributed an article on NGV development to this edition of the IGU Magazine

the role of natural gas as a transition fuel will

(see pages 194-197) summar­ising what was

be analysed;

achieved and what targets were missed during the

b e lo w

first decade of the new century.

Figure 1.

of hydrogen and electricity) model in which

l Present the best hybrid solutions between renew­

able energies and natural gas in a video; and l Study the state of development of CCS tech­

nology and analyse the implications for the

P G C A LEADERSH I P

gas industry. The sub-group working on the hydricity model

Chairman Juan Puertas Spain Secretary Naiara Ortiz de Mendíbil Spain

reconsidered the purpose of this report in Tokyo, and it was decided to present the topic in a Vice Chairman Satoshi Yoshida Japan

roundtable during WGC2012 with the presence of some experts. The same approach was adopted by the sub-group responsible for the CCS study. Both sub-groups also worked on the call for papers concerning hydrogen and CCS. As regards

SG A.1 Leader Vladimir Bashkin Russia

SG A.3 Leader Satoshi Yoshida Japan

SG A.2 Leader Elbert Huijzer The Netherlands

the gas and renewables video, a questionnaire and a letter for sponsors was prepared and it was decided to contract an external company to record

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Delegates to PGC A’s second meeting pose for their group photograph (above ) and enjoy Japanese cuisine (below ).

the installations and then edit the video. Some of

tion in emissions in each process and a reduction

the best practices have already been chosen.

in the environmental impact of each activity.

SG A.2 Integrating other gases into the natural

agreed the structure of the report and final deliver­

gas industry

ables in terms of chapters and pages. The authors

Leader: Elbert Huijzer, Liandon (The Netherlands)

of each chapter were appointed and they agreed

SG A.2 aims to set the basis for the natural gas

to integrate the work of the Methane to Market

industry to take advantage of these gases,

(M2M) Programme”, which is coordinated by the

eliminating any possibility of impact on people’s

US Environmental Protection Agency. Furthermore,

health and the useful life of installations.

delegates agreed SG A.3’s work schedule up to

During the meeting in Tokyo, the Study Group

Definitions for renewable gases were discussed

the third meeting in Serbia and worked on the call

and agreed in Tokyo. These definitions have been

for papers regarding the reduction of gas emissions.

shared with PGC E and WOC 5, which are also working on renewable gases. Furthermore, a structure was defined for a combined report with these two Committees. In addition to the meeting itself, a workshop was organised with represen­ tatives of the Institute of Energy Economics and the Japan Organic Recycling Organisation. SG A.2 also worked on the call for papers regarding biogas. SG A.3 Reduction of gas emissions Leader: Satoshi Yoshida, Tokyo Gas (Japan) SG A.3 aims to record best practices in the gas chain and develop a comprehensive industry guide to reduce gas emissions, which provides for a reduc­

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Plans for WGC2012

welcomed 50 new members since the successful

PGC A’s three Committee Sessions will: give a

first meeting in London (February 2010). The

résumé of the work done by the three sub-groups

Committee now has 126 registered members.

(SG A.1); present the renewable gas report (SG

The second meeting was held in Oran, Algeria,

A.2); and present the comprehensive industry

September 14-16, 2010. Forty senior gas repre­

guide on the reduction of gas emissions SG A.3.

sen­tatives from 27 different organisations in 19

PGC A is also organising Expert Fora on

countries joined in the PGC B working sessions in

“The future of hydrogen” (SG A.1.1) and “CO2

Oran. The meeting was generously hosted by

sequestration” (SG A.1.3) and a Strategic Panel

Sonatrach, which was a fantastic opportunity to

in collaboration with PGC E during which

also learn more about Africa’s largest gas pro­

the video “Natural gas and renewables” will

ducer and a major LNG exporter. For those who arrived early, there was a cult­

be presented.

ural tour of historic Oran before the welcoming Future meetings

dinner hosted by Sonatrach. The next morning the

At presstime PGC A’s third meeting was due to be

delegates were welcomed by Mr Benmoulay,

held in Belgrade, Serbia, March 2-4. The fourth

Division Director of Sonatrach Downstream, on

meeting will be held in Moscow, September 7-9,

behalf of Mr Benchouia, VP Sonatrach Downstream,

and the fifth in Milan, February 1-3, 2012.

followed by Fethi Arabi of Sonatrach who is the Vice Chairman of PGC B. Then Ungku Ainon, CC

l  Programme Committee B – Strategy

PGC B is responsible for a wide range of issues

Secretary, gave an update on IGU’s activities. The core objective of this meeting was for the

that are fundamental to our future business

Committee to share the outputs from the last six

prospects, including regional and global gas

months and continue the progress from the last

demand, gas supply, international pipeline gas

meet­ing. Each Study Group held individual sessions.

and LNG trade, gas price formation trends and the interaction of regulation with corporate

SG B.1 World gas supply, demand and trade

strategy. It is not surprising that, with this interest­

Leader: Jaap Hoogakker (The Netherlands)

ing and important range of subjects, PGC B has

SG B.1 reviewed the work underway to update gas

Delegates to PGC B’s second meeting made a technical visit to the Arzew LNG and LPG facilities.

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Provide energy. Protect the environment. A dual challenge for all of us. It lights our homes. Fuels our transportation. Powers our industries. Energy plays a crucial role in driving our economy and raising living standards around the world. But as populations and economies have grown, energy use has increased, and so have greenhouse gas emissions. So there’s a dual challenge: provide the energy the world needs to prosper and reduce poverty, but do it in ways that lessen our environmental impact. To supply more energy, we’ll need increased investments, new technologies and access to energy resources. To reduce emissions, we’ll need to develop innovative ways to use energy more efficiently and take a global approach to managing the risks of climate change. Everyone has a role to play – industry, governments, individuals. Every practical option must be explored, and thoughtful solutions and technologies have to be found. ExxonMobil is confident we can address this challenge so that the world can achieve both energy and environmental security. exxonmobil.com


supply and demand for each of the eight IGU

LPG facilities at Arzew. Algeria was the first country

regions, along with an update on global trade.

to export LNG commercially and today supplies a

The representatives from the National Iranian Gas

significant proportion of European LNG, as well as

Company also gave a special presentation on

delivering gas to Asia and North America. The visit

Iran’s supply and demand, giving a detailed view

was a great opportunity to visit one of the key gas

on future developments and the strategy for

plants in the world, particularly given that the

exploit­ation of the world’s second largest gas

previous technical visit was to Isle of Grain LNG –

reserves. The first full draft of the updated regional

one of the many regasification terminals that are

supply/demand imbalances and the corresponding

supplied by the facility.

global trade is on target to be reviewed internally by the Study Group in 2011.

PGC B Chairman Colin Lyle and the Study Group Leaders would like to thank Sonatrach for their generosity and in particular Vice Chairman

SG B.2 Wholesale gas price formation

Fethi Arabi for making the meeting such a success.

Leader: Mike Fulwood (UK) SG B.2 had presentations on four core areas of

Future plans

investigation:

SG B.1’s regional supply and demand data-set is

l The impact of globalisation on price convergence;

on target, with the first draft of a new IGU base

l Price drivers;

case for all regions ready for internal review by

l The impact of carbon taxes/cap and trade; and

the Study Group in 2011. Confirming the base

l Regional pricing models.

data, debating the resulting regional imbal­ances

In-depth studies on the Spanish, Russian and

and the international trade scenarios will be

Australian domestic gas markets, along with com­

among the topics of discussion at the next PGC B

peting fuels and substitution in Central Europe

meeting which at presstime was scheduled to be

were presented by the authors. Gazprom gave a

held in Washington DC, March 9-10. Further work

presen­tation on price convergence and divergence

in 2011 will focus on updating the IGU green

of Euro­pean gas prices, looking at demand

scen­ario and taking forward issues from the

recovery scenar­ios and future prices. The Study

IGU 2030 gas industry study presented in Buenos

Group also continued with its first major update of

Aires in 2009.

the IGU survey of national gas prices and price formation mechanisms.

SG B.2 has been updating the wholesale price formation database, examining both national and regional price formation methods and the actual

SG B.3 Corporate strategy and regulation

prices ranges that have occurred. An article on the

Leader: Francisco de la Flor (Spain)

results can be found in this issue of the IGU

During SG B.3’s session there were presentations

Magazine (pages 180-186).

of corporate strategies and a technical paper comparing the US Federal Energy Regulatory

team, has been working with the International

Commission (FERC) and Europe’s Agency for the

Confederation of Energy Regulators (ICER) to pro­

Cooperation of Energy Regulators (ACER). The

mote cooperation and understanding between the

meeting was also an opportunity to share and

two organisations. At presstime IGU and ICER

discuss the recently completed gas value chain

were set to hold a joint workshop in Washington DC

model that the Study Group has been working on.

on March 8 to share views and discuss concerns

PGC B’s successful meeting culminated in a

about regulatory issues of global significance for

unique opportunity to visit Sonatrach’s LNG and

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PGC B, with the support of the IGU leadership

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the gas industry. PGC B Chairman Colin Lyle


would like to express his particular appreciation to

Study Groups

David Halldearn and Natalie McCoy of ICER, as

SG C.1 ASEAN+4

well as to Susan Court and Francisco de la Flor, of

Shigeki Sakamoto (JOGMEC, Japan) reorganised

SG B.3, for their outstanding efforts in organising

his team, forming new focus groups for (i) ASEAN

the workshop.

led by Lee Ching of Petronas and (ii) North-east

All the presentations from the Oran meeting

Asia (China, Japan, Korea and Taiwan) led by

can be found on the IGU website, along with

John C. Harris of IHS CERA. Figure 2 shows the

updates and details of future meetings. Please

resulting organisation of PGC C for the current

contact Harry Whitaker (harry.whitaker@bg-group.

Triennium.

com) if you require any further information.

SG C.1 concluded a number of individual coun­ try profiles describing infrastructure, regulations,

l  Programme Committee C – Gas Markets

gas production, trade and market conditions, and

PGC C held its second meeting in Seoul, South

is now moving to the integrative analysis proposed

Korea, from September 28 to October 1, 2010. It

in the TWP, focusing on security of supply, market

was hosted by the Korea Gas Union (KGU) and

drivers and unconventional gas sources. One

Korea Gas Corporation (KOGAS).

member suggested that the Study Group should

The local organisation was impeccable, thanks

analyse regional subsidies, following the last IEA

to the diligent work of Changsoon Park of KGU,

World Energy Outlook in which a strong case is

and there was a record attendance of 30 dele­

made against subsidies for fossil fuels.

gates from 15 countries. After two days of intense work, delegates visited

b e lo w

Figure 2.

SG C.2 North America

the Incheon LNG terminal, one of the largest

Following receipt of answers to a questionnaire

regasification facilities in the world. It supplies 40%

focused on its proposed work programme, SG C.2

of Korea’s gas demand and is strategically located

agreed the structure of its report, which will include

close to the Seoul metropolitan area. Delegates

themes such as the demystification of unconven­

also toured the Gas Science Museum in Incheon

tional gas, environmental policies, regulatory

and Gyeongbokgung Castle in Seoul.

tendencies and new production technologies. Hydraulic fracturing has transformed the pan­ orama for the gas industry, especially in the USA,

P G C C OR G AN I SAT I ON CHART

where large amounts of additional gas have been made available to consumers in a relatively short

Chairman João de Toledo (Petrobras, Brazil)

period of time, a phenomenon that is often referred to as a silent revolution. As the use of this

Vice-chairman Gi-Chul Jung (Kogas, Korea)

Secretary Marcos Sugaya (Petrobras, Brazil)

technique intensifies and spreads to other parts of

External advisors

North America Rodrigo Vilanova (Petrobras America, USA)

ASEAN+4 Shigeki Sakamoto (JOGMEC, Japan)

Asean Lee Ching (Petronas, Malaysia)

NE Asia John Harris (IHS CERA, China)

Delegates

Delegates

the globe, however, environmentalists raise their

John Harris (IHS CERA) Karen Sund (Sund Energy) Katinka Barysch (CER) Michael Stoppard (IHS CERA)

voices, increasing the possibility of a new turn of events that could again change the path followed

Europe and Russia Eric Vambert (GDF SUEZ, France)

by the industry. SG C.2 will examine these con­

Security of supply Martin Schwarzbichler (OMV, Austria)

Growth potential Nuno Moreira da Cruz (Galp Energy, Portugal)

Legal framework and prices Bertine Markvoort (GTS, Netherlands)

Delegates

Delegates

Delegates

cerns, setting the scenario for a debate on the future of unconventional gas. In order to prevent capacity holders from

Delegates

circumventing capacity release to the secondary market, FERC extended the prohibition that bars

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12/8/2010

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SG C.3 Europe and Russia Since the roundtable in Paris in May 2010 (cov­ered in the last progress report), SG C.3 has started to produce its first analyses of gas competi­tiveness, security of supply costs and regulatory poli­cies, using the approach described in the article on pages 204-209 of this issue of the IGU Magazine. The work emphasises the fact that security is something that everyone wants, but is not always ready to pay for. As a consequence, it is important to establish the cost and value of security for all parts of the gas chain. And security of supply must Delegates to PGC C’s second meeting pose for a group picture.

see security of demand in the mirror.

capacity holders from reselling equivalent

expected to come from B2B demands in power

amounts of gas shipped through interstate pipe­

and industry, where competitiveness is the key

lines. SG C.2 will analyse the relevance of the

driver. Only a relatively small fraction of the

theme considering the criticism that was recently

consumption growth is likely to arise from B2C

raised against this prohibition.

demands, where regulation, image and investment

Most of the consumption and growth can be

Current low gas prices could encourage

in infrastructure would be the main drivers.

new investments in gas processing, but plant

Prices in Europe present large variations in

construction costs continue to rise, following a

composition. Energy taxes can be high in some

curious corr­el­ation with petroleum prices.

countries, while in other countries it is the distri­

Meanwhile, power applications continue to

bution cost that is relatively expensive. Focus group

drive demand growth.

C.3.3 will analyse the gas value chain to shed

These themes will be further developed during

light on the reasoning behind these variations.

the next PGC C meeting, which will be hosted by SG C.2 in Houston.

WGC2012 PGC C has developed six themes for WGC2012, which have been submitted to the Coordination Committee for evaluation and final selection. It is a good moment to develop gas markets, as prices are and will continue to be very attractive. Future meetings At presstime PGC C’s third meeting was due to take place in Houston, USA, March 1-4. The fourth meeting will be organised jointly with PGC A in Moscow, September 6-9. l  Programme Committee D – LNG

PGC D has 89 members from 29 countries. The PGC C delegates at the Gas Science Museum in Incheon.

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Committee’s second meeting was held in Rotterdam,


the Netherlands, from August 31 to September 1,

SG D.2 Penetrate new markets for LNG

2010. It was attended by 48 people and the work,

Leader: Ted Williams, AGA (USA)

by Study Group, is detailed below.

SG D.2 has three sub-groups tasked with: l Identifying key market drivers for the

SG D.1 Enhance terminal compatibility

implementation of LNG projects to meet and

Leader: Jean-Yves Capella, Total (France)

sustain current and future overall natural gas

Global LNG trade increased more than 30%

demand and new end-use needs;

between 2004 and 2008, and the spot market’s share jumped from 5% to 20%. However, there are still significant obstacles to its further development. Furthermore, the issue of LNG quality and inter­

l Identifying barriers to entry overcome or

minimised in the course of introducing LNG supply; and l Formalising analysis of new market entrants

changeability remains a barrier to LNG being

based on this experience and using previously

fungible in all markets.

applied methods or develop new analytic

The scope of this Study Group is to gather receiving terminal data as regards ship compati­

approaches. The Study Group has set up regional working

bility with the objective of providing recommen­

groups (Americas, Asia, Europe and the Middle

dations for further enhancing compatibility. There

East) to carry out market analysis for its case

are four sub-groups:

studies. Work has started based on a matrix of

l Operational safety – LNG facilities and

market drivers and barriers which was refined

carriers, Eric Gerard and Sander Lemmers

thanks to the contributions of newly attending

gave a presentation;

Study Group members. They added forward-

l Characteristics of LNG carriers, Carlos de la

Vega will give a presentation at the next meeting; l Characteristics of LNG facilities, Richard

Lammons gave a presentation; l New creative LNG facilities, Jeroen de Groot

looking analytical considerations of new environ­ mental / sustainability policies (as drivers and barriers) and further development of regional, transnational gas markets (driver). The working groups’ progress will be tracked through monthly

gave a presentation.

communications between their coordinators and

There were additional presentations by Luis

the Leader and Deputy Leader of the Study Group.

Gorospe (compatibility of the Enagás terminal in Barcelona) and Yoichi Mori (operator training

SG D.3 Enhance efficiency in the LNG value chain

simulator).

Leader: Rob Klein Nagelvoort, Shell (The

Going forward, SG D.1 will seek to avoid dupli­

Netherlands)

cation of efforts in database creation by requesting

SG D.3 has sub-groups reviewing:

access to the GIIGNL and SIGTTO databases.

l The status of operating / new / future projects;

SIGTTO will be invited to participate in meetings,

l New on- and offshore technologies;

and Qatargas will be asked to involve a captain in

l New LNG operations;

the Study Group. The aim is to produce a report

l Different construction approaches;

which helps newcomers to the gas industry build

l The enhancement of efficiencies in existing

compatible LNG facilities, and to develop

facilities;

recommendations to “bridge” or “link” SIGTTO,

l The efficiency of “wells to electrons”;

GIIGNL and ISO standards.

l New uses of LNG;

SG D.1 has also contributed an article to this issue of the IGU Magazine (pages 216-220).

l Gas price vs. efficiency; l Utilisation vs. efficiency.

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Global LNG trade has surged but still faces challenges – (above ) HH the Emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani, at the ceremony marking Qatar’s achievement of an LNG capacity of 77 mtpa in December 2010 and (b e lo w ) the offshore production platform for Australia’s Pluto LNG which will ship its first cargo later this year.

The Study Group is preparing a number of case studies: l Gas production – unmanned platforms / wet

trunk line, by Wouter Pastoor; l LNG production – highly-efficient LNG designs,

by Rob Klein Nagelvoort, and highly-efficient LNG operations, by Jeroen van Hooijdonk; l LNG transport – pressurised LNG, propulsion

developments, size of ships and hull shape, speed optimisation, management of boil-off gas (BOG), author to be advised; l LNG regas – air vaporisers, cold utilisation,

floating terminals, integration with power plant, by Phil Redding; l Gas transmission – pipeline leakage

elimination / reduction, by Dimitri Udalov; and l Gas utilisation – small-scale LNG, electricity, by

Vaclav Chrz. Future meetings PGC D’s third meeting will be held in Warsaw, Poland, May 16-18. The fourth meeting is scheduled to be held in Beijing in September and the fifth in Madrid in February 2012.

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FPSO

• • • •

Snøhvit

FSRU

A highly skilled organization with a wide range of competence gained through LNG operation since 1973 Merging competence, innovation and technology development The company operates a fleet of seven LNG carriers, including two Shuttle and Regasification Vessels (SRV) A fully integrated company with in-house fleet management www.hoeGhLNG.coM


l  Programme Committee E – Marketing

to understand better the consequences of political

PGC E held its third meeting in Barcelona, Spain,

decisions relating to energy. One other brilliant

November 17-19, 2010. The meeting was hosted

presentation was given by Roland Mett, Director of

by Gas Natural Fenosa and Sedigas, and brought

Marketing at Gas Natural Fenosa and Vice Chair­

together 28 members from 17 countries.

man of PGC E. He presented the merger of Gas

During their stay in Barcelona, delegates were

Natural and Unión Fenosa from a branding per­

invited for a breakfast session at the new premises of

spective, taking delegates through the complex

Sedigas, the Spanish Gas Association. The President

process of creating a new brand and a corporate

of Sedigas welcomed the group and gave an

brand strategy.

interesting presentation on the Spanish gas industry. The further sessions took place at the premises of

Due to the extensive plenary programme, there was less time than usual for the Study Group

Gas Natural Fenosa. The programme for this PGC E

sessions. Nevertheless the meetings were effective

meeting was quite tight with many interest­ing

and members progressed in their work.

presentations and discussions during the plenary sessions. They included a case study of a rapid

SG E.1 Natural gas and renewables

pilot project to establish what the media is saying

Leader: Uwe Klaas, DVGW (Germany)

about gas, which was given by Nik Vitkovitch and

SG E.1 will identify the position of natural gas in

Jonathan Coham from CARMA International

combination with renewables in the future energy

(Global Media Analysts). There was also a work­

market. During the meeting, the Study Group

shop run by Anton Bujis, the Chief Communication

concentrated on the key words necessary for the

Officer from GasTerra and member of PGC E,

call for paper process. Several case studies have

who presented the energy transition model. This is

been selected which will be followed up by mem­

a transparent, comprehensive, fact-based and

bers. These cover large-scale projects (e.g. in

independent model about energy-related matters,

Egypt and Finland) and combined uses at the level

ranging from CO2 emission levels to sustainability

of private consumers (e.g. in Germany, Iran and

targets. It is an online tool designed to help users

Japan). The aim is to have the first draft of the case studies ready for the next session in May. SG E.1’s main problem so far has been that while many combinations of natural gas and renewables could be identified, marketing of the issue has been minimal. However, this seems to be chang­ing now as examples from Egypt and Germany show. Work is progressing on a film project showing successful combinations of gas and renewables. This project is under the leadership of PGC A and the final film will be shown at WGC2012. SG E.2 Marketing campaigns Leader: Urs Zeller, Swiss Gas Industry Association (Switzerland) SG E.2 focuses its work on analysing the business

PGC E delegates pose for a group picture at Gas Natural Fenosa’s headquarters in Barcelona.

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behaviour in marketing across different sectors. A questionnaire has been developed to collect the


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Answers for energy.


l A reputation model to allow IGU to highlight key

issues, key voices and media trends over time. SG E.3 will continue the work with CARMA anal­ ysts on this subject and present a study in 2012. l Online gas advocacy platform (IGU). SG E.3

wants to give a precise recommendation to IGU on how to further strengthen its online presence. This project is in progress. l SG E.3 at WGC2012. SG E.3 has submitted a

call for papers on the image of natural gas and it is planned to outline the Committee Session on this topic during the next meeting in May. A detailed table of contents for the SG E.3 report

Members of SG E.2 enjoying their work.

will be prepared by then. necessary information and a test version was pre­

l IGU communications advice. SG E.3 has

sented during the meeting. Subsequently, the link to

proposed offering advice to IGU on the work

the survey was sent to all contact persons of IGU

being carried out by PFC Energy on the next

(Charter and Associate Members). The first results

steps in the Union’s communications work.

will be discussed during the next meeting in May. The Study Group also discussed how to present

WGC2012

the results at WGC2012. The idea is to give a

PGC E is planning two Committee Sessions, one

view of the key factors of success as well as pitfalls

looking at the image of natural gas (a presen­

and possible failures in marketing behaviour, and

tation of SG E.3’s work), and the other being a

show the major marketing mixes and instruments

“green forum” with representatives from NGOs

for the different sectors.

such as the Bellona Foundation, Greenpeace, Worldwatch Institute and WWF.

SG E.3 Image of natural gas

It is currently envisaged that the report presen­

Leader: Hansch van der Velden, Nederlandse

tation of SGs E.1 and E.2 will not take place in the

Gasunie (The Netherlands)

sessions mentioned above, but will be part of an

SG E.3 will investigate the image of natural gas

Expert Forum. Experts from the call for paper

and the drivers of successful communication and

process will be chosen for this session.

advocacy activity in this area. Its main deliverable is the development of IGU guidelines on commu­

Miscellaneous

ni­cation strategies to support the gas industry in

PGC E currently has 60 members and two

improving the image of gas.

corresponding members from 22 countries, and

The work of the Study Group is split into the l Country case studies to investigate the role and

image of gas in 10+ countries around the world by using a questionnaire and carrying

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new members are still welcome. The next meeting will take place in Prague, May

following project work streams:

25-27, by the invitation of RWE Transgas and the Czech Gas Association. Marc Hall is the Chairman of PGC E. For more

out expert interviews. The studies will also

information, please contact him at Marc.Hall@

identify advocacy campaigns and their impact.

bayerngas.de or the Secretary of PGC E, Barbara

Work is in progress.

Schmid at Barbara.schmid@bayerngas.de.

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A COMPANY WITH ENERGY THAT PRODUCES ENERGY

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best practices. Finally, a series of about 20-30

Progress Reports from the Task Forces

interviews will be conducted by TF 1 members with experts from the energy industry, academics, futurists and politicians. The participants will be asked to express their opinions on topics such as

This chapter contains news and information from

the role of gas in the future energy mix, the

IGU’s three Task Forces.

opportunities and challenges the gas industry is facing and, of course, the attractiveness of the

l  Task Force 1 – Building Strategic Human

industry to human talent.

Capital

TF 1’s Vice Secretary, Marius Popescu, pre­sen­

The third meeting and first workshop of TF 1 were

ted some preliminary results of the demographic

hosted by Qatargas in Doha on October 19,

survey and explained that the survey had so far

2010, coinciding with the IGU Executive

been distributed via email, post and telephone to

Committee and Council meetings.

more than 600 companies. At the time of the Doha meeting, more than 70 companies had

b e lo w

Table 1.

Third meeting

replied. About 48% of all replies came from

TF 1’s third meeting was attended by 22 members

Europe, 20% from Asia and 14% from South

representing 16 companies. Vice Chairman, Rod

America. More replies are expected to come in,

Kenyon, kicked off proceedings with a full recap of

especially from North America and the Middle

ongoing projects. TF 1 has developed an online

East. Early results show, among other things, that

survey to collect statistics on human resources (HR)

with regard to recruiting talent, most gas com­

and map out the demographics of the gas indus­

panies feel that there is a shortage in technical

try. In order to complement the static picture pro­

and projects skills and find it particularly difficult to

vided by the demographic survey, the Task Force is

fill their positions in the operations/production and

collaborating with Schlumberger to develop a

engineering/construction sectors. With regard to

qualitative survey that focuses on the dynamics of

talent retention, the survey found that gas employ­

human capital in the gas industry, HR policies and

ees rarely leave a company for compensation reasons and that they prefer to take up a similar position with a different energy company over a

TF 1 W OR K SHOP SPEA K ERS

different position within the same energy company. The results vary with location and company

Mr Essa Rashed Al Kaabi, Chairman, Qatarisation Committee

profiles; a comprehensive interpretation of the

Mr Deya A. Elyas, Director Staffing Services, Saudi Aramco

results will be released in the near future.

Mr Shukri Al Mandhari, HR Director, Oman LNG

Olivier Soupa (Schlumberger Business Consul­

Mr Hossein Taghi Nejad, NIGC, Iran

tancy) introduced the HR survey that Schlumberger

Mr Steve Surrall, Asset Manager, BG

conducts every year for the upstream oil and gas industry. Drawing on this experience and on

Ms Martha Desmond, HR Director, BG

Schlumberger’s resources, Olivier has developed a

Mr Dave Pinchbeck, Director, European Gas Research Group, GERG

first draft for TF 1’s qualitative survey. This second

Ms Liu Zhao Yan, Shenzen Gas Corporation

survey, as the name suggests, seeks more quali­

Mr Jorge Paulo Delmonte, Gas Manager, Brazilian Institute of Petroleum & Gas, IBP

tative information with regard to HR policy and best practices. This survey will take into account the particularities of the gas industry such as the

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integrated value chain (in contrast to the oil industry, key resources are not restricted to the geosciences and petroleum engineering sectors), volatile environment (severe price variations), gasto-gas competition and gas in a low-carbon future energy mix. The qualitative survey is aimed at understanding the dynamics of talent in the gas industry and is meant to complement the quanti­ tative information of the demographic survey and a third, detailed survey. Jon Butterworth from National Grid provided an update on the interviews with experts. So far 10 have been carried out. Some of the experts

A business session during TF 1’s third meeting in Doha.

expressed their concerns that the gas industry risks becoming a sunset industry if it does not speak out

IGU President, who talked about the chal­lenges

with a clear voice. Others expressed optimism and

faced by the gas industry globally and the work

hopes for the potential of natural gas to comple­

IGU is doing to promote the industry’s image. The first speaker, Essa Rashed Al Kaabi, spoke

ment renewable energies in a low-carbon future. As more interviews follow, we look forward to

about Qatarisation in the energy sector. He shared

learning the opinions of some of the most influ­

his insights on the concept and the achievements

ential persons linked to the energy industry.

of the programme to date. The main highlights of his presentation were: l Companies were involved from the beginning

First TF 1 workshop

and there is strong linkage with universities;

The workshop focused on “Recruiting and

l Although the current target is to have 50% of

Retaining Talent in the Gas Industry: Challenges and Opportunities in the Middle East”, and was

the workforce as Qatari nationals, the

very well attended with over 80 people from

programme is a continuous and rolling one; l There is structured governance at all three

across the world.

levels i.e. corporate (strategic), departmental

There were two panel sessions and nine speak­

(operational) and individual (developmental);

ers (see Table 1). In the first session speakers from

l There are three main processes – recruitment,

Saudi Arabia, Iran, Oman and Qatar debated

training & development and career progression;

specific regional issues including the policies of

l The main challenge is to attract and retain

countries and companies for the development of local talent, the growing participation of women in

quality Qatari resources in view of competition

technical roles, and how companies work together

from newer and more exciting career choices. Deya A Elyas (Saudi Aramco) also highlighted

with academic institutions to motivate young

the theme of nationalisation of the workforce. The

people. In the second session representatives from Europe, China and Brazil shared their views on the

key points of his presentation were:

HR issues in their relevant countries/regions.

l Due to the cyclical nature of the petroleum

The workshop started with introductory remarks by Ieda Gomes, Chair of TF 1. She welcomed all the speakers and participants and presented a brief context. She was followed by Datuk Abdul Rahim,

industry it is challenging to attract talent, especially engineers; l The industry is not a preferred choice for young

talent, although the recent financial crisis did

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l Appropriate actions that Oman LNG has taken

include a focus and commitment from top man­ agement, a differential developmental pro­ gramme based on competence and the provision of opportunities within the limited scope. Hossein Taghi Nejad (NIGC) spoke about the chal­ lenges and opportunities in attracting and retaining talent. Some of the key points of his talk were: l There are challenges due to the industry’s poor

image, the regional security crisis, competition from other countries, a limited pool of skilled people, tough job conditions and salary limitations due to legal restraints; l To compete in the global arena NIGC has recog­

nised the importance of people and given strate­ gic importance to attracting and retaining talent; l It provides its employees with development

opportunities by job rotation, the identification and development of fast trackers and man­ aging the work environment. The second session of the workshop provided views from outside the Middle East region with representatives from Europe, Brazil and China. Chair Ieda Gomes addresses TF 1’s first workshop (top ) which was very well attended (a b ov e ).

Steve Surrall and Martha Desmond (BG) pre­ sented a view of the challenges facing global gas companies, such as BG, and what policies are being

provide an opportunity to highlight the job

developed by their company both on a global scale

opportunities available;

and at the regional level. Steve’s talk was focused on

l Talent attraction and retention is a strategic

European gas market fundamentals, development of

priority in Saudi Aramco which offers its

the market and structural changes, the changing

employees a “value proposition” that goes

supply profile and the role being played by gas in

beyond monetary benefits and looks at overall

de-carbonisation. Martha’s talk highlighted the

development and building careers;

opportunities and challenges such changes will

l Saudi Aramco adopts models of excellence and

132

present from the human capital per­spective. She

follows best practices from around the world.

talked about the social and econo­mic factors

Shukri Al Mandhari (Oman LNG) shared

influencing the strategies of companies to attract and

insights on the retention of talent. His views could

retain talent, and about challenges in finding people

be summarised as follows:

to work in newer areas like uncon­ventional gas, in

l Oman LNG faces challenges to attract and

the LNG sector and in less attrac­tive mature markets.

retain talent due to the nature of the business,

Martha also mentioned some measures to mitigate

remoteness of location, small pool of talent

the challenges such as fast track development, the

and limited opportunities it can offer as a small

sharing of knowledge, strategic partnerships and

and flat organisation;

recruiting in skill-rich markets.

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l Establish a career path and create a position

Dave Pinchbeck (GERG) talked about his

matrix;

organisation’s contribution in promoting the gas

l Regulate guidance and corporate culture.

industry amongst educational and research institutes. One of the main objectives of GERG

Jorge Delmonte (IBP) started off his presen­ta­tion

is to facilitate and enhance interaction between

by looking at the development of the gas sector in

academia and industry. In its communications

Brazil and its future potential with regards to the

to students and young engineers GERG high-

resources available. He then talked about the HR

lights the fact that the gas industry promotes

programme created in 1999 by the National

sustainable energy solutions and invests in

Petroleum Agency (ANP). The programme, which

R&D whilst offering challenging and rewarding

provides scholarships and grants to univer­sities, is

career opportunities.

funded through an industry royalty based on the

Liu Zhao Yan from Shenzen Gas Corporation

oil and gas that is being produced. The Federal

focused her presentation on the growth of the

government has also developed a pro­gramme

Chinese gas market and the huge potential it

called PROMINP which encourages the develop­

offers in the future. The Chinese gas market is

ment of a local support and service industry on a

expected to treble in size in the next decade with

competitive and sustainable basis. PROMINP has

the dependence on imported gas increasing to

developed a national plan to identify skill short­ages

around 50% from the current 13%. She talked

in critical areas related to the oil and gas sector

about the growth in infrastructure, both in

and formulate a plan to meet these shortages. The workshop was hosted by Qatargas and

transmission and distribution, and stated that HR policy in China is underpinned by three pillars:

supported by TF 1 sponsors Oman LNG and Total.

l Make the best possible use of each employee; l  Task Force 2 – Nurturing the Future

Generations TF 2’s second meeting was hosted by The Hong Kong China Gas Company Limited (Towngas), August 19-21, 2010. Delegates were treated to a welcome dinner at the Flame restaurant, which is owned and operated by Towngas and where the chefs use cooking appliances developed by Town­ gas engineers. Hosted by General Manager – Customer Service, Peter L.S. Wong and General Manager of Production, Shan Man-Fai, the dinner was an opportunity for newcomers to get to know each other. Delegates were also briefed on Hong Kong’s town gas distribution system and manage­ ment, and were impressed by Towngas’s emphasis on customer service and safety. The meeting kicked off the next morning at the headquarters of Towngas. It was attended by 10 people including three new members – Heike Boss TF 2 members pose for a group photo during their second meeting of the Triennium.

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of Shell (Singapore), Antony Seigel of BG Group (UK) and Melody Yeung of Towngas. In her wel­come

F orces


together the best practices that can be adopted or emulated by the global gas industry. Then Vice Chair, Agnès Grimont, gave an update on IGRC2011. The Chair welcomed any future collaboration between TF 2 and IGRC, and she proposed that the partnership be determined after receiving the outcome of the strategy study. Day two was dedicated to discussing the Youth Team initiatives. The Digital Marketing Team Leader, Dr Amir Adam Hon, presented the pro­ gress of work on TF 2’s website and social media channels. Updates and fun information on gas will be distributed via Facebook and Twitter, and the team plans to link the channels to www.igu.org for better access by members. The website was due to go live by March and will be kept online up to two months after WGC2012. The Youth Team Leader, Suhana Sidik, gave an

TF 2 also made a technical visit to the Towngas Technical Training Centre.

update on events being planned to attract the younger generations. There will be pre-WGC2012

address the Chair, Soh Mey Lee, said that TF 2’s

events to promote STEM among youngsters and

work is making good progress despite initial

these will be organised via selected science centres.

teething problems and is now better resourced.

On-site activities during WGC2012 will be organ­

There are 14 team members at Tier 1 level. TF 2’s

ised as part of a science and technology carnival,

Secretary, Jasmin Ramli, gave a brief update on

and we hope selected youths from every country

the membership and invited members to encour­

represented in IGU will participate. Currently, the

age more people to join the Youth Team. “The

team is also identifying role models/young engin­

workforce is needed at on-site events during

eers to be used as our “ambassadors”. They will

WGC2012 itself,” added TF 2’s Chair.

be nominated for onstage panel discussions with

Soh Mey Lee continued by giving an update on the framework and status of TF 2’s project “Nurtur­

industry leaders on selected themed topics through our Youth Ambassadorship programme.

ing the Future Generations”. Consultants for the

the Towngas facilities. The Technical Training

appointed and work is currently underway. The

Centre provides comprehensive gas engineering

strategy study will assess the efforts of governments,

training for the company’s technical staff and con­

corporations, academia and industry associations

tractors, and we were impressed by the all-inclu­

to raise the interest of young people in science

sive training facilities that include workshops, class­

and mathematics.

rooms and a laboratory. The visit continued to the

For the next session, team members gave pre­

136

TF 2 ended the meeting with a visit to some of

project’s strategy study and website have been

Towngas Grid Control Centre and Customer

sentations on efforts to promote science, techno­

Service Hotline Centre. We were surprised to note

logy, engineering and mathematics (STEM) educa­

that there were Bahasa Indonesia and Tagalog

tion in their respective countries. The challenge for

speaking staff to cater to the many domestic help­

TF 2 now is to collate the information and put

ers in Hong Kong in case of any gas-related chal­

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lenges in their respective residences – come to

l Eni S.p.A., general sponsor;

think of it, that was customer service par excellence!

l CPC Corporation, Taiwan, partial regional

roundtable sponsor; and

The team also had the opportunity to visit the

l Taqa Arabia, regional roundtable sponsor.

Hong Kong Science Museum in Kowloon. It was

Since our last update, the work of the Task

an eye-opener as the team learned the art of designing science presentations and exhibitions to

Force has been largely focused on organising a

attract the younger generations. The farewell

series of regional roundtable events to build

dinner was again hosted by Towngas, when team

understanding of regional geopolitics and how

members enjoyed Hong Kong’s freshest seafood.

they impact gas market development. The first of these roundtable events, focused on

At presstime the third meeting and a round­ table session were due to be hosted by GDF SUEZ

the Asia-Pacific region, was held on November 23,

in Paris, March 16-18. Representatives of TF 1 and

2010 in Taipei, Taiwan. Attended by a wide cross

WOC 2 were expected to join the roundtable session.

section of 18 senior individuals from the gas indus­try and academia, the workshop was focused

l  Task Force 3 – Geopolitics and Natural Gas

on developing a deeper understanding of regional

The members of TF 3 are very pleased to report

geopolitical issues.

that we have secured a number of important

Our generous hosts, CPC Corporation, began

sponsorships which will allow for the undertaking

the event with an informal dinner on November 22.

of the necessary work to produce the Task Force

The workshop was then convened on November 23,

deliverables. We would like to thank the following

at the CPC Corporation office in Taipei.

organisations that have committed to provide

The discussion began with observations and

financial support for the work of the Task Force:

dialogue related to a discussion paper developed

l Royal Dutch Gas Association (KVGN), premium

for the workshop by Edward Chow from the

sponsor;

Center for Strategic and International Studies,

l Chevron, WGC2012 strategic panel sponsor;

who served as a subject matter expert for this

l Gazprom Export, general sponsor;

event. Participants offered regional perspectives

Taipei was the venue for TF 3’s first roundtable.

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137


TF 3 members and roundtable delegates pose for a group picture at the CPC Corporation office in Taipei.

on Mr Chow’s themes as well as key themes in the

TF 3 has been split into sub-groups that will

draft report on Geopolitics and Natural Gas from

each provide required support for a regional

the Clingendael International Energy Programme.

roundtable session. Members have agreed that

Please see Mr Chow’s article below for a summary

roundtable planning can be best accomplished via

of the discussion.

email exchanges and telephone conferences. With

Following the meeting, the GASEX Steering

this in mind a formal meeting of the full Task

Committee hosted a formal dinner for all dele­

Force was not scheduled for the last half of 2010

gates, and many also took advantage of the

(the first meeting having been held in May 2010).

opportunity to attend the GASEX 2010 Conference l  Asia-Pacific Roundtable on Geopolitics

and Exhibition that began the following day. At presstime, the second workshop looking at

and Natural Gas

the Middle East was due to be held on March 1 in

By Edward C. Chow

Cairo, Egypt, and will be covered in the next issue

On November 23, 2010, around 20 participants

of the IGU Magazine. Future roundtable sessions,

gathered at the headquarters of Chinese Petroleum

at which attendance will be by invitation only, are

Corporation (CPC) in Taipei, Taiwan, for the first of

being planned to cover Europe/Russia (in

a number of regional roundtable discussions that

Amsterdam, September 30) and South America

IGU’s TF 3 is convening around the world. The

(tentatively scheduled for late 2011).

purpose of these roundtable discussions is to gain

In addition to planning for the regional round­

138

regional geopolitical insights that may influence

table sessions, input on the draft report on geo­

the development of natural gas markets. The

politics and natural gas has been received from

collective results of these discussions will be

both Task Force participants and the Advisory

presented at WGC2012. The event was chaired by

Committee and will be incorporated as the report

Datuk (Dr) Abdul Rahim Hashim, President of IGU,

is finalised.

and enjoyed generous support from the project

P r o gr e s s

R e p o r t s

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sponsors KVGN, Chevron, ENI and Gazprom as

with sellers and buyers favouring traditional long-

well as the regional host CPC.

term contracts indexed to oil prices on a ship-or-

A quick review of a previously distributed

pay / take-or-pay basis. There was much discussion

discussion paper was first presented by a subject

over whether this might change over time with

expert. This paper emphasised the tremendous

infrastructure growth and with second- or third-

demand growth for natural gas in Asia Pacific

generation LNG contracts. Participants foresaw a

as highlighted by the IEA’s 2010 World Energy

shift to shorter and medium term contracts with

Outlook, released the same month, which

greater pricing flexibility, but not necessarily to the

projects gas demand in the region more than

same extent as the robust spot market in the US or

doubling by 2035. Higher demand in the region

the increasingly important spot market in Western

implies that imports will increasingly come from

Europe, as long as security of supply is at a

greater dist­ances, from outside the region by

premium. Diversity of gas supply sources is also

long-haul pipelines and LNG cargoes, with

viewed as important by each importing country.

attendant vast upstream investments and infrastructure expansions. At the same time, there are regional border

A point was made that liberalisation works better in mature markets than for rapidly growing markets that require major investment in new

dis­putes, including key maritime areas and

infrastructure. The gas business in the region

potentially vulnerable choke points, such as the

values long-term and personal relationships. As

Straits of Malacca. This was highlighted for the

trust in market mechanisms builds, there may be

participants in the Taipei roundtable by a military

more scope for sub-regional market development,

skirmish on the Korean Peninsula on the day of

such as in north-east, south-east or southern Asia.

the meeting. Numerous subjects for discussion

However, participants did not see this immediately

touching upon geopolitical tensions in the region, the search for security of supply by major con­sum­ ing countries, and whether market development would lessen or exacerbate these tensions were suggested to the participants by the subject expert. A lively discussion ensued. The economic rise of China and India was seen in favourable terms and their growing geopolitical influence was acknowledged as a natural develop­ ment that needs to be accommodated by tradi­ tional powers, including the USA, over time. The world is shifting to a more multi-polar mode with the end of Cold War bilateralism and a shorter period of unilateral­ism. The rebalancing of geo­ political influence should not be feared with selffulfilling negative consequences. Natural gas demand in the region will be driven by income growth, econo­mic efficiency and traditional environmental – not climate change – concerns. Security of supply and demand remain impor­ tant factors for the region’s major gas players,

Datuk Rahim thanks CPC Corporation’s Shein-Wei Lai (standing left ) for hosting the roundtable.

Pro gress

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139


over the horizon. Market integration was seen as

will be developed in the future was seen as a

better accomplished on a business-to-business

crucial question.

basis, which de-emphasises geopolitics, rather

There was some discussion on the impact of

than on a government-to-government basis,

unconventional gas, but most of the discussion

which highlights geopolitics. The growing

was on numerous conventional gas opportunities

cooperation between international oil companies

in Asia-Pacific. However, forays by Chinese and

(IOCs) and national oil companies (NOCs) in

Indian companies into shale gas plays in the US

equity invest­ments in natural gas was also

were seen as interesting signals that may portend

discussed. It was noted that best practices can

greater potential for the region. The role of reg­

be shared across the region even without

ional and international organisations in pro­

market integration.

moting natural gas development in Asia-Pacific

Some concerns were expressed over barriers

was dis­cussed and dismissed as their impact is

to market growth, such as price subsidies and

likely not significant. These organisations

bureau­cratic hindrances. In spite of promises

included ASEAN, Asia-Pacific Economic

made by countries in the region at G20 meetings

Cooperation (APEC), Shanghai Cooperation

that energy subsidies will be removed by 2020, a

Council (SCO), GECF and IEF.

high degree of scepticism was expressed that this

The discussion benefited greatly from the

would actually be implemented in national

active participation from representatives from

policies. Instead, price volatility is seen as a more

diverse countries in the region, including

practical concern for investing in new infra­

Australia, India, Japan, Malaysia, Singapore

structure that allows markets to absorb more gas.

and Taiwan.

Territorial disputes were discussed with a gen­

Asia-Pacific was perceived by all the parti­

eral belief that it may be possible to jointly

cipants as a region of vast opportunity for the

develop resources in disputed areas before

growth of natural gas. They tended to emphasise

thornier issues over political sovereignty can be

issues directly impacting demand and project

resolved. The probability of military conflict over

economics and less on geopolitical risks asso­

territorial dis­putes was considered low given how

ciated with the future development of the gas

closely linked countries in the region are

market and how it will be supplied. This can be

economically. Questions came up on better

seen as a sign of optimism. On the other hand,

coordination of maritime pro­tection in the Indian

it is the responsi­bility of TF 3 to bring to light

Ocean, South China and East China Seas as the

geopolitical concerns so that they can be

naval capabilities of India and China improve.

addressed during the Triennium and, if properly

LNG was seen as predominating over long-

managed, not hinder further growth of the

haul pipelines as a means of avoiding geo­

industry. This roundtable for Asia-Pacific was a

political obstacles and increasing supply flexi­

good first step in integrating regional issues into

bility. The one exception might be China which

the global picture.

may be willing to pay a premium for pipeline

140

gas from Central Asia, Myanmar and Russia

Edward C. Chow is a Senior Fellow, specialising

given its geographic location and concerns over

in energy and national security, at the Center for

security of maritime supply routes. By contrast,

Strategic and International Studies in Washington,

importing pipeline gas from the Gulf or Central

D.C, who was engaged as a subject matter

Asian countries for India was viewed as more

expert for the Asia-Pacific Roundtable Forum on

speculative. How Iran’s vast nat­ural gas potential

Geopolitics and Natural Gas.

P r o gr e s s

R e p o r t s

f r om

t he

Task

F orces


FEATURES This issue’s features section starts with a profile of the gas industry in Brazil which is hosting the April 2011 Executive Committee meeting. Then we have coverage of the UN climate change conference in Cancún, where IGU organised a symposium with the Worldwatch Institute, followed by a profile of the gas industry in Mexico, IGU’s latest Charter Member. Eight Technical Committees have contributed to this issue and there are articles from PGC A – Sustainability, PGC B – Strategy, PGC C – Gas Markets, PGC D – LNG, PGC E – Marketing, WOC 2 – Storage, WOC 3 – Transmission and WOC 5 – Utilisation. There are also articles from the European Federation of Energy Traders (EFET) and the International Group of LNG Importers (GIIGNL). We round up with obituaries of two leading figures in the gas industry, a description of the publications and documents available from IGU and the events calendar.

143


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How about having them all?

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detailed information about Petrobras and the offering.


Manufactured gas networks were subsequently

The Brazilian Gas Industry

developed in other Brazilian cities, but it was not

By Marcos de Freitas Sugaya, Jorge Paulo Delmonte and Marcos Moreira de Xerez Sobral

used on a sizeable scale in the country. That took

until the 1950s that natural gas started to be place in the State of Bahia, where associated gas was used to serve local industry. By 1969, over

To mark Brazil’s hosting of the April 2011 Executive

3 mcm/d of gas from the States of Bahia, Sergipe

Committee meeting, the Brazilian Petroleum, Gas

and Alagoas supplied Petrobras’s RLAM refinery

and Biofuels Institute (IBP) and Petrobras have

and its neighbouring petrochemical complex.

contributed this article giving an overview of the development of the country’s gas industry from its

l  The Campos Basin

early days to the pre-salt discoveries.

When global oil prices surged in the early 1970s, Brazil started a major exploratory programme in

l  Early days

offshore and other prospective areas. At the time,

The gas industry in Brazil can trace its origins

oil accounted for nearly half of the country’s

back to 1849, when the country was still an

imports and severe economic crises resulted

empire ruled by the Braganças. At that time,

whenever petroleum prices increased significantly.

Irineu Evangelista de Sousa, the Viscount of

The discovery of reserves in the Campos Basin

Mauá, a visionary entrepreneur of great success

in the State of Rio de Janeiro in 1974 was a key

in sectors such as banking, steel and railways,

event, with commercial production starting in

formed a joint venture with partners in Brazil and

1977 from the Enchova field. Three decades later,

England to develop a gas lighting system for the

production reached 1.5 million b/d of crude and

streets of Rio de Janeiro. A plant to manufacture

22 million mcm/d of gas.

gas from coal was built and operations started in 1854.

In spite of the dramatic increase in production and demand experienced by Brazil, proved reserves

Brazil’s first gas plant of 1854 has been preserved in Rio de Janeiro (above left ) while the latest developments include this LNG terminal based on a floating storage and regasification unit (FSRU) in Pecém (above right ) and another one in Rio de Janeiro..

146

T h e

B r a z i l i a n

G a s

I n d u s t ry


have also increased dramatically, reaching 12.9 billion barrels of oil and 360 bcm (12.7 tcf) of gas in 2009. l  Bolivia-Brazil pipeline

A most important development in Brazilian gas history was the construction of a pipeline to import gas from Bolivia, which opened in 1999 with a capacity of 30 mcm/d. Taking advantage of the new supplies, the govern­ ment encouraged the construction of gas-fired power plants to boost Brazil’s electricity generation capacity and back up the hydroelectric sector. The importance of back-up was under­lined by a series of black­outs in 2001 and 2002, due in part to water shortages

The development of the Campos Basin in the 1970s was a key event in the history of Brazil’s petroleum industry; now the Santos Basin is yielding promising pre-salt reserves.

reducing hydro-electric output. Gas demand grew strongly throughout the last decade and today gas

to contract private companies to carry out explor­

accounts for approximately 9% of the Brazilian

ation and production of oil and gas. They became

energy mix (the share of oil is 38%, renewables

effective in 1997, when the main rules were set by

32%, hydro 15%, coal 5% and nuclear 1%).

Law No. 9.478, and the National Petroleum Agency (ANP) organised 10 bidding rounds for the

l  Changes in the regulatory framework

exploration of oil and gas under a concession

In 1953, with the promulgation of Law No 2.004,

regime.

the exploration and production of oil and gas

In November 2010, Brazil’s production of oil

became a monopoly of the Brazilian Union. The

and gas reached 2.1 million b/d and 66 mcm/d,

same law created Petrobras as the Brazilian

respectively, thanks to the deep water endeavours

national oil company.

of Petrobras (see Figure 1 over). Brazil has been a

In 1988, a new Brazilian Constitution was promulgated. This retained the Union’s monopoly of exploration and production activities and

net oil exporter since 2006, but still imports around half of its gas. In 2009, a law for gas was published, covering

defined natural gas distribution as a public service,

not only transmission but also storage, LNG and

a responsibility of local state governments which

other relevant matters. A complementary regula­

should be provided by a state-owned company.

tion was published in December 2010, but con­

Two amendments to the Constitution were made in 1995. Amendment 5 allowed local state governments to contract private companies as

tingency issues remain to be regulated by the Ministry of Mines and Energy. On the production side, three new laws

concessionaires of the public gas distribution

changed the panorama in 2010, establishing a

service. Likewise, Amendment 9 allowed the Union

production sharing regime for the exploration and

The

Braz i lian

Gas

Industry

147


G RO W TH OF O I L PRODUCT I ON

Pecém, in Ceará State (7 million mcm/d), and in Rio de Janeiro (14 million mcm/d), using an innovative design that was recognised by KPMG and Infrastructure Journal as one of the 100 most interesting infrastructure projects in the world, mainly because of its potential for replication elsewhere. Studies to develop new regasification terminals and liquefaction facilities are now under way to cope with demand. The use of floating liquefaction facilities is a possibility,

above

Figure 1.

production of oil and gas in large discoveries of

depending on the results of FEED studies that are

the pre-salt play.

still pending. This would allow LNG to be delivered to a number of regasi­fication facilities

l  LNG

scattered along the Brazilian coast.

LNG operations in Brazil started in 2006, when the Petrobras subsidiary Gaspetro and White

l  Gas transmission

Martins formed a partnership called GASLOCAL to

The first 2,000 kilometres of the gas transmission

supply industrial customers and distribution

pipeline network were built between 1973 and

companies with cargoes transported by trucks

1997. Then there was a big jump in total length

from a liquefaction plant in Paulínia in São Paulo

when the Bolivia-Brazil pipeline added 2,600

State (380,000 m /d capacity).

kilometres in 1999. Subsequently, the Projeto

3

b e lo w

Figure 2.

Three years later two floating storage and

Malhas and Plangás developments expanded the

regasification units (FSRU) started operations in

network (see Figure 2). Projeto Malhas focused on transmission lines in the

G RO W TH OF G AS TRANS M I SS I ON CAPAC I TY

southern, north-eastern and south-eastern regions of the country, while Plangás was an ambitious plan to increase gas production quickly to cope with the growth in demand by the industrial and power sectors. One of the most important recent achievements of the Brazilian gas industry was the completion of GASENE in 2010,

Source: ANP.

148

a pipeline system that inte­grated

T h e

B r a z i l i a n

G a s

I n d u s t ry


by almost 50% over the last six years to reach

NATURAL G AS DE M AND ( M C M / DAY )

360 bcm in 2009, a third of which consists of non-associated gas.

130*

The production of gas in the pre-salt areas has already started on a pilot basis, and is

32 4

expected to reach 3 mcm/d by the end of 2011.

41

Almost 2 million b/d of crude are also expected to be produced there by 2020.

46 14.4 2.0

53

l  Stakeholders

24.3

Gas producers

5.3

2009 Electrical Generation

Most of the gas production is still owned by

2014 Industrial

Fertilisers

Other Uses

* The 2014 electricity generation forecast assumes full and simultaneous operation of plants. Source: Petrobras.

Petrobras, but the participation of private and international companies is increasing (see Table 1). left

Transportation companies

Figure 3.

Law 9.478/97 implemented an unbundling policy the north-eastern transmission system with the

for transportation services, which required the

national grid. Approximately 1,400 kilometres

creation of new companies to develop, operate and

were added to bring the network to almost 10,000

maintain transmission pipelines (see Table 2 over).

kilometres today. In 2010, new volumes of gas were made

Distribution companies

available by Petrobras at Mexilhão and Uruguá-

The concession for gas distribution services is

Tambaú (Santos Basin) and in Canapu (Espírito

granted by the state governments. At the moment

Santos Basin). And in September 2010 a new

there are 27 distribution companies, selling an

b e lo w

Table 1.

record was set with the production of 5,800 MW from 30 million mcm/d of natural gas, when the total volume transported throughout the network reached 81 mcm/d. Altogether, nearly $13 billion has been invested in gas transmission during the last four years. l  Reserves, production and demand

The Petrobras business plan for 2010-2014 includes a projection for 2014 that suggests a significant increase in the consumption of natural gas, led by the power and industrial segments, but large uncertainties surround the level of gas-fired electricity generation, mostly related to the role of hydropower in the Brazilian grid (see Figure 3). A significant increase in reserves is expected, mainly in the pre-salt play, sustaining the future of the

G AS PRODUCERS Field Basin Shareholders Various

Volume (mcm/d)

Campos, Santos Petrobras and others

55.3

Manati Camamu

Queiroz Galvão 45% Petrobras 35% Rio das Contas 10% Brasoil 10%

3.6

Bijupirá Salema, Campos, Pescada Arabaiana, Potiguar, Albacora Leste, Espírito Santo Camarupim Norte, Frade

Petrobras, Shell, UnoPaso, Repsol, El Paso, Chevron, FJPL

1.1

Source: Adapted from Cima F.M. et al., Atlas da Integração do Setor de Gás Natural ao Sistema Elétrico Brasileiro, Petrobras, 2010.

industry. Indeed, Brazil’s proved reserves increased

The

Braz i lian

Gas

Industry

149


average of 40 million mcm/d, mostly in São Paulo, Rio de Janeiro, Bahia, Espírito Santo and Minas Gerais. The majority of them remain under state control, but the most important ones have already been privatised (see Table 3). l  The future

The discoveries in the pre-salt play, which is estimated to have potential resources of nearly 40 billion barrels, is reshaping the Brazilian oil and gas industry, bringing new challenges to its stakeholders. The availability of capital to develop new infrastructure and production facilities, such as Operations at Rio’s Guanabara Bay LNG regasification terminal started in March 2009.

Pipelines

TBG

Bolivia – Brazil

TSB

Paso de los Libres – Canoas

The technologies involved in the deepwater, Length (km)

TAG

Various

TUM

Urucu – Manaus

an important issue. Major investments in the downstream sector are also important.

TRANSPORTAT I ON CO M PAN I ES Company

new platforms, pipelines and general equipment is

2,600

pre-salt production of oil and gas are highly complex, as are the logistics of serving production facilities 300 kilometres offshore.

600 3,600 500

Source: Adapted from Cima F. M. et al., Atlas da Integração do Setor de Gás Natural ao Sistema Elétrico Brasileiro, Petrobras, 2010.

Likewise, the demand for goods, services and human resources at all levels is another matter of utmost importance to the country. In order to better understand all of these challenges, the Brazilian government created a Mobilisation Programme for the Petroleum and

above

Table 2.

PR I V AT I SED G AS D I STR I BUT I ON CO M PAN I ES

right

Table 3.

Company Location Shareholders

Operation size (mcm/d)

Comgás

São Paulo City, Campinas, Santos and Vale do Paraíba

BG, Shell

CEG

Rio de Janeiro City

Gas Natural, BNDESPAR and others

6.2

CEG-RIO

Rio de Janeiro State

Gas Natural, Gaspetro and others

4.7

BR

Espírito Santo

BR

1.8

São Paulo Sul

South of São Paulo State

Gas Natural

1.4

Gás Brasiliano

North-west of São Paulo State

ENI*

0.5

Note: *A stock purchase agreement was recently signed with Gaspetro. Source: Adapted from Cima F. M. et al., Atlas da Integração do Setor de Gás Natural ao Sistema Elétrico Brasileiro, Petrobras, 2010.

150

T h e

B r a z i l i a n

G a s

I n d u s t ry

12.5


After evaluating Brazil’s existing capacity to supply goods, equipment and services to the oil and gas industry, one of the first questions studied by PROMINP was how to foster an orderly expansion of this capacity to satisfy the country’s future needs. More than 200,000 jobs could be created by 2016. On the demand side, a promising future can also be expected for the industry. Gas is already extremely important to the security of power supply in the country, representing the main complementary energy source to hydro during dry seasons. This fundamental role will continue to be played by natural gas, as new hydro power plants are scheduled to add significant generation capacity in the near future (see Table 4). In summary, in spite of the huge challenges presented here, the future seems to be bright for Brazil’s oil and gas industry. The country is experiencing record levels of exchange reserves, Pre-salt production will help meet Brazil’s burgeoning demand for oil and gas.

steady growth and stable inflation rates, and may soon become one of the five largest producers of oil and gas in the world.

Gas Industry (PROMINP). It is led by the Minister

right

Table 4.

of Mines and Energy, with the full support of

Jorge Paulo Delmonte is the Natural Gas Manager

Petrobras, IBP and several other organisations,

of the Brazilian Petroleum, Gas and Biofuels

including service suppliers, equipment manufac­

Institute (IBP), Marcos de Freitas Sugaya and

turers, unions and general associations connected

Marcos Moreira de Xerez Sobral are Senior

with the oil and gas industry.

Engineers at Petrobras S.A.

NE W HYDROELECTR I C FAC I L I T I ES I N THE M ADE I RA AND X I N G U R I V ERS Plant River Jirau

Capacity Start-up (MW)

Madeira 3,400

Santo Antônio Madeira 3,100

2012

GDF SUEZ Energy, Eletrosul, Chesf, Camargo Correa

2012 and 2015

Odebrecht, Andrade Gutierrez, Eletrobras, Furnas, Cemig, FIP

Belo Monte Xingu 11,200 2016

152

T h e

B r a z i l i a n

G a s

I n d u s t ry

Shareholders

Chesf, Queiroz Galvão, Galvão Engenharia, Mendes Júnior, Serveng Civilsan, J Malucelli, Contern, Cetenco e Gaia


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Cancún Agreement Hailed as a Lifeline

national agreement on emission cuts, is due to

By David Adam

officially, was high. After all, hadn’t the countries

expire next year. COP15, the thinking went, would need to sort a successor for there to be time to get it up and running by 2012. Expectation, at least of the world already agreed to sign a new deal in

The UN climate change meeting (COP15) in

Copenhagen fully two years previously, at highly

Copenhagen in December 2009 was widely

charged meeting in Bali in 2007?

derided as a failure. COP16 at the end of last year in Cancún has been hailed as a success. Yet,

became clear that few countries could even agree

as far as action on climate change is concerned,

on what should be agreed, never mind come close

both meetings had broadly similar outcomes:

to actually agreeing it. The resulting diplomatic

vague pledges on international action, weak

chaos saw each party push hard for its version of

targets to cut greenhouse gas emissions suggested

success to be realised: developing nations held

by countries in line with their existing domestic

fast to the principle that Kyoto should continue,

policies, little movement towards a new legally-

while the US made it clear that was not an option.

binding international deal and a reluctance to take

Europe dreamed of a new deal that would bring

difficult decisions. What explains the contrasting

in China and the US, which would not be called

reactions? Expectation.

Kyoto but would work along similar lines. China

COP15 was the meeting which the UN climate

154

Yet, as December 2009 rolled around, it

and India, meanwhile, knew that their cooperation

process had named as the nominal deadline for a

was a trump card, and used it to demolish each

new global deal to be sealed. The first phase of

such attempt. Throw in a Danish government that

the Kyoto Protocol, the world’s existing inter­

appeared out of its depth as organisers and

Ca n c ú n

Ag r e e m e n t

H a i l e d

as

a

Li f e l i n e


media coverage hyped before the summit and

negotiations, but to bury them. Using a footballing

heavily spun during it, and COP15 was only

analogy, Yvo de Boer, who stood down as Executive

going to be allowed to end in one way. Compared

Secretary of the UN Framework Convention on

to the heavily trailed new global deal to save the

Climate Change (UNFCCC) after COP15, warned

planet, the meagre output of COP15 simply did

on the brink of the Cancún meeting that many

not stack up.

people had given the UN process a yellow card.

Fast forward 12 months and expectations were so low that even some meagre output from COP16 was seen as unlikely. Continued economic

It could not, he said, afford the unfortunate consequences of a second. All of this helps to explain that, when the

woes and renewed media attention to climate

COP16 talks staggered towards the traditional

scepticism had brought a harsher lens to the way

small hours finish, relief and then optimism

the global warming problem was viewed in many

greeted the result, rather than the recriminations

countries. President Obama’s attempts to deliver a

and bitterness seen in the Danish capital. The

US cap and trade scheme to regulate fossil fuel

modest progress made in Cancún was hailed as

use looked dead in the water. The UN climate

“a breakthrough agreement reached amid scenes

process itself was facing calls to be radically

of tearful jubilation” by one veteran environmental

altered. When a sharply reduced number of

journalist. Another said: “If Copenhagen was the

journalists, green campaigners, delegates and

Great Dane that whimpered, Cancún has been

critics travelled to Cancún, it was not to praise the

the Chihuahua that roared.” On the tightrope that

b e lo w

The 16th Conference of the Parties to the UN Framework Convention on Climate Change took place in Cancún from November 29 to December 10, 2010. In the picture Mexican President Felipe Calderón is at centre.

is the world’s fragile journey towards the goal of effective action against global warming, COP16 saw it take another step forwards. After an unpleasant wobble, and compared to a plummet into oblivion, such an advance is always welcome – however distant the destination remains. Writing in the UK newspaper, The Guardian, Michael Jacobs, climate change adviser to former UK Prime Ministers Tony Blair and Gordon Brown, said COP16 was both a remarkable achievement and badly inadequate. He wrote: “The Cancún agreements perform the remarkable feat of simul­ taneously changing nothing and changing a great deal. Yet, they should be seen as restoring a climate of hope in difficult times.” Cancún, he said, was significant because it would restore confidence among both governments and busi­ nesses that action on climate change is going to occur. “And in turn that makes it more likely that such action will occur.” Christiana Figueres, who succeeded de Boer as Executive Secretary of the UNFCCC, struck a similar tone. “Cancún has done its job. The beacon of hope has been reignited and faith in

C ancún

Ag r e e m e n t

H ailed

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obstruction from a string of countries in Copenhagen meant the UN was unable to adopt them officially, so they were sidelined into an agreement called the Copenhagen Accord. In Cancún, this accord was essentially given a new front cover, stamped with the superficially impor­ tant badge of the UN process. Bolivia objected to this conversion, but was shouted down. As a result, emission cutting targets that countries proposed for themselves last year can now be formally recognised within the UN process. So too can the language of the accord that spoke of the need for deep cuts in emissions by both developed and developing nations. This is the basis for much of the optimistic coverage of Cancún: one reading of the agreement there is that the countries of the world have signed up to the fact that “climate change is one of the greatest challenges of our time” and they recognise that “deep cuts in global greenhouse Christiana Figueres, who succeeded Yvo de Boer as UNFCCC Executive Secretary, addresses the conference.

gas emissions are required according to science”. Most funda­mentally, the Cancún agreement formalises their shared responsibility

the multilateral climate change process to deliver

to take “urgent action” to meet the long-standing

results has been restored,” she said. “Nations

goal of Europe to limit global warming to 2ºC

have shown they can work together under a

above pre-industrial levels.

common roof, to reach consensus on a common

COP16 also saw mechanisms established to

cause. They have shown that consensus in a

drive funding from rich countries to poor, and to

transparent and inclusive process can create

build capacity in the developing world for them

opportunity for all.”

to spend this money on protecting themselves

Even strident green campaigners Friends of the

from the changes in weather that global

Earth saw some light from Cancún at the end of

warming is expected to bring. And it fleshes out

the tunnel. Andy Atkins, Executive Director, said:

the details of a framework that could reward

“The world needed strong and determined action

tropical nations who act to reduce emissions

to tackle climate change in Cancún. The outcome

from deforestation, as well making clean

is a weak and ineffective agreement, but at least it

technology common in the developed world

gives us a small and fragile lifeline.”

more widely available.

l  The detail of Cancún

of arguments, conspiracies, obstruction, threats,

So what was agreed at COP16? How strong is

broken promises, hype and fear that have

the lifeline it provides? At its heart, the Cancún

characterised the global negotiations on global

agreement formalises a series of pledges that were

warming, to get difficult global consensus

originally drafted in Copenhagen. Late night

(Bolivia aside) on such statements is indeed an

Against a backdrop of more than a decade

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So why not review them now? The answer is that in the name of consensus, nations have settled for what they can get, not what they know they need. This is standard in politics of course, and many seasoned observers of the UN process expected that this would be the likely outcome. But there is more than an emissions gap drawn in the Cancún sand, there is a reality gap too. Take the promised reductions in emissions. That they do not add up to the amount dictated by the 2ºC target marks a sharp diversion from the claim that global action on global warming is geared up according to science. That would demand a topdown allocation of targets driven by a central, and commonly agreed, goal. That was the mechanism Bolivian President Evo Morales; Bolivia strongly objected to the re-badging of the Copenhagen Accord at Cancún.

that the Kyoto agreement tried to introduce. Critics of Kyoto are correct that the agreement was an expensive way to make barely a dent in global

impressive achievement. The world has finally

emissions, but then it was never really expected to.

agreed that it wants to take collective action to

It was supposed to show how it could be done and

reduce emissions. But will it? And if it does, will it

set up a suitable architecture. Subsequent phases

be enough?

were supposed to increase the shared load, and

The mixed pledges to reduce emissions made

so pass on harsher cuts to nations.

by nations in Copenhagen were declared by scientists as insufficient to meet the 2ºC target then, and they remain insufficient now. Few people dispute this. According to widely quoted figures calculated by the UN Environment Programme, to reach the 2ºC target, global greenhouse gas emissions in 2020 would need to be no more than around 44 gigatonnes each year. Even if all coun­ tries manage to cut pollution by as much as they promise, annual greenhouse gas emissions by 2020 will be closer to 49 gigatonnes. Hence, scientists and campaigners talk of an “emissions gap” of at least five gigatonnes. The Cancún agreement acknowledges this apparent inconsist­ ency, and includes scope for its targets to be assessed again in 2013, based on the latest scientific evidence. This is where the mask of optimism starts to slip to reveal the political reality of what COP16 truly achieved. The targets are known to be inadequate.

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Jens Stoltenberg, Prime Minister of Norway (left ), meets UN Secretary General Ban Ki-moon during COP16.


Such a top-down system (unlike the bottom-up

Take the future of the Kyoto Protocol for

series of self-reported targets now in place) has

instance. Talk of a second commitment period

been a central demand of many involved in the

nearly sunk the Cancún talks, with Russia and

UN process, especially within Europe. So too, was

Japan particularly vocal in opposition. Kyoto

the principle that the targets would be legally

remains the darling of the developing nations, who

binding, with penalties imposed for failing to meet

see it as their only route to compel rich countries

them. In the mid-part of the last decade, when

to take on challenging targets (while largely

President George W. Bush indicated that voluntary

excusing themselves). That particular disagreement

and non-binding goals were the limit of his

has been rolled over to be resolved at COP17 in

ambition for the US, he was widely scorned by

December this year in Durban, when it will be truly

green campaigners, scientists and rival politicians.

do or die for something new to be in place by next

Now the Obama administration, among others,

year, and the new-found inter­national consensus

seems to have succeeded in presenting such a

could find itself torn apart again.

relatively toothless approach as a best-case

As Jacobs put it: “The Copenhagen-Cancún

compromise.

climate regime does not look like the model

Countries including the UK will still push for the

architecture to which environmentalists have for so

targets to be made legally binding, but it is difficult

long adhered. In place of a legally binding treaty,

to see why those who object to such an arrange­

there will merely be the soft law of UN decisions.

ment now will change their minds. Recent history

Instead of a top-down global target set by

of the UN climate talks shows that potential points

scientific analysis, distributed between countries

of disagreement that could derail the process have

according to some formula of equity, countries will

a habit of being kicked into the long grass of

make their own bottom-up commitments.”

future meetings.

All is not lost, Jacobs insists, as the renewed confidence offered by the Cancún consensus should boost investment into low-carbon techno­ logy and other measures. That still seems a big ask: for years, the political mantra of the govern­ ment that Jacobs advised was that a top-down approach and binding targets were needed to put a price on carbon, without which the money would not flow. Confidence alone, as we have seen with the world economy, is a transient and flimsy base on which to make predictions. The steady creep of global warming seems irresistible. Political difficulties to serious global action seem immovable. The acclaimed break­ through in Cancún postponed the collision bet­ ween the two, but for how long? David Adam is an editor with the international

Side events at COP16 included the “Stop talking, start planting” initiative (schoolchild Felix Finkbeiner is pictured with Ecuador’s President Correa) and the IGU-Worldwatch Gas Event (see next article).

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weekly journal Nature (www.nature.com). From 2005 to 2009 he was environment correspondent for The Guardian.


generation had contributed to a reduction in US

IGU Joins Forces with Worldwatch for COP16 Gas Symposium

CO2 emissions and asked, “What is the potential for gas to contribute to decarbonisation in areas such as China and India?” The presentations were divided into sessions looking respectively at global and industry

By Mark Blacklock

perspectives, with the first moderated by Christopher Flavin and the second by IGU’s

Following the success of IGU’s gas event during

President, Datuk Abdul Rahim Hashim.

COP15 in 2009, the Union joined forces with the Worldwatch Institute to organise a gas symposium

l  Global perspectives

during COP16, and “The Role of Natural Gas in a

The first speaker was Dr Kandeh Yumkella,

Low-Carbon Economy” was held on December 5,

Director General of UNIDO and a new member

2010. It was attended by around 75 people

of IGU’s Wise Persons Group. His theme was

including members of COP16 delegations, NGOs

widening access to electricity in a clean way. He

and other invited guests, and was sponsored by

pointed out that 1.5 billion people in the world

E.ON Ruhrgas and Statoil.

lack electricity and that exposure to smoke as a consequence of using fuelwood for cooking and

Welcoming participants IGU Secretary General Torstein Indrebø said, “The purpose of this event is

heating kills between 1.5 and 2 million people

to outline in more detail how the gas industry can

each year. “Natural gas is one of the possibilities

contribute to meeting emissions targets”, while

and it’s abundant,” he said. Picking up on Dr Yumkella’s theme, Nobuo

Worldwatch’s President Christopher Flavin pointed

Tanaka, Executive Director of the International

out that a shift from coal- to gas-fired power

IGU joined forces with Worldwatch for the gas symposium during COP16.

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Energy Agency (IEA), declared, “$36 billion a year is enough to alleviate energy poverty by 2030”. He contrasted this amount with large government subsidies for fossil fuels – some $312 billion in 2010 he estimated – and said that prices reflecting market principles are essential. Drawing on IEA’s latest World Energy Outlook, he pointed out that China is now the world’s largest energy consumer so its actions on the emissions front are crucial, and warned that the cost of delay in the invest­ments needed to stabilise greenhouse gas emissions at 450 parts per million of CO2-equivalent (in line with an increase in global temperature of around 2°C) is rising. Noting developments on the unconven­ tional gas (UCG) front, he forecast that UCG would account for 35% of global gas supply by 2035 and that carbon capture and storage

IGU President Datuk Rahim talks to Nobuo Tanaka, IEA’s Executive Director (centre ), and UNIDO’s Director General Dr Kandeh Yumkella (right ) during a break in proceedings.

(CCS) with gas would play an important role in the future energy mix. “We may have a golden

David Goldwyn, Special Envoy and Coordinator for International Energy Affairs in the US Depart­

age for gas,” he ended. Timothy Wirth, President of the UN Foundation,

ment of State, focused on UCG and the benefits of

described the advances in UCG technology as a

exporting the US experience to the rest of the

“gift” and asked, “Why aren’t we doing a better

world. He pointed out that in the US shale gas

job to take advantage of this gift?” He outlined the opportunities for gas in terms of improving energy access, in power generation and as a transpor­ tation fuel, and lamented the fact that, “much of the policy dialogue has put gas into a confron­ tational role with renewable energies”. Jos Delbeke, Director General for Climate Action in the European Commission (EC), stressed that putting a price on carbon – as the European Union has done for large-scale emitters – is essential in the battle against climate change. “By 2050 the carbon emissions of the power and manufacturing sectors will be 70% less than in 1990,” he said, adding that “a raft of measures” was being put in place to tackle small-scale emitters. He also said that the EC was “determined to get cracking on CCS” with a new legal frame­ work and €4-5 billion of funding for demon­

Jos Delbeke of the EC: putting a price on carbon is essential in the battle against climate change.

stration plants.

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production has increased 14-fold in 10 years

lumped together with other fossil fuels, he said;

and that gas reserves increased 11% in 2009

rather it is part of a long-term solution to com­

alone, despite lower gas prices. “UCG can be an

bating climate change and one which can bring

energy and climate change game changer as it

rapid improvements on the emissions front without

has been in the US,” he said, “and can give

the need for subsidies.

greater energy security.”

Statoil’s Senior Vice President for Climate, Hege

Professor Jiang Kejun, Director of the Energy

Marie Norheim, agreed. “We in Statoil believe gas

Research Institute of China’s National Reform and

will play an increasingly important role in the

Development Commission, explained that a key

energy mix,” she said. “Nuclear is often touted as

Chinese priority is to reduce the pollution caused

a back-up to renewable energy but a reality check

by reliance on coal through a combination of CCS

is needed. Nuclear plants take twice as long to

and greater use of gas. “Natural gas is crucial for

build as gas plants … gas is the optimal fuel to

China,” he declared, forecasting a minimum

partner renewables.” However, she stressed that

demand of 200 bcm by 2020 compared to con­

for gas to fulfil its role in the energy mix, “political

sumption of 89 bcm in 2009. Imports are set to

will is needed [and] it is up to us, industry leaders,

increase with 10 new LNG receiving terminals in

to promote gas”.

the pipeline and the domestic industry will be

Total’s Gérard Moutet, Vice President Climate –

developed. “We hope gas can do a good job for

Energy in the Sustainable Development &

the rural energy supply,” he said.

Environment Division, focused on CCS, declaring,

David Sandalow, Assistant Secretary for Policy

“CCS can be efficiently applied to gas-fired power

and International Affairs in the US Department of

generation”. He explained that while the cost per

Energy (DOE), agreed with the EU’s Jos Delbeke

tonne of CO2 captured is higher for gas, the cost

about the importance of carbon pricing saying,

of avoided CO2 per megawatt hour is lower.

“the [Obama] administration is fighting for a

Moreover, there is less CO2 to be transported

carbon price”, and stressed the importance of

and stored. Shell UK’s Tanya Morrison, International

government support for UCG research. He pointed out that DOE funding had helped kick-

Government Relations Manager for Climate

start the UCG revolution in the US and that the

Change, reinforced the message. “Gas plus CCS

latest grants are targeted at methane hydrates.

is lower cost and delivers better CO2 savings than

“We are committed to the safe and responsible

any other competing energy source,” she asserted.

development of natural gas resources,” he said.

“We need to focus on doing the doable today.” Dr Gerald Linke, Head of the Gas Technology

A discussion of the topics addressed rounded off the first session. Among contributions from

Centre at E.ON Ruhrgas, looked at the increasing

the floor, Lisa Beal of the Interstate Natural Gas

potential for biomethane, end-use appliances and

Association of America called for more invest-

energy storage. In the residential end-use sector

ment in gas compared to the big investments in

he reviewed the latest developments in gas-fired

clean coal.

heat pumps, the scope to combine condensing boilers with solar panels and micro-CHP. ”The

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l  Industry perspectives

goal [in micro-CHP] is to keep the overall effici­

IGU’s CC Chairman, Ho Sook Wah, started the

ency at 90% but to increase electricity efficiency

presentations in the second session with a call to

from 20% towards 50%,” he said. As regards

policymakers “to give natural gas the role it

storage he outlined how the gas infrastructure

deserves in the energy future”. Gas should not be

could be used to store energy from volatile

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Director of NGV Global, outlined the benefits of natural gas vehicles (NGVs), saying that he current road transport fleet was 11.2 million (mostly running on CNG) and that marine applications (in the form of LNG) were developing. “Bunker fuel is history,” he declared. Kenneth Vareide, US Regional Manager for Det Norske Veritas, focused on the use of LNG as a maritime fuel, which he explained was being driven by new regulations on shipping emissions and a drive for greater effici­ency. Ship owners can install scrubbers, use low sulphur fuel or switch to LNG to meet the new regulations. “LNG is the cheaper option over 20 years but there are higher upfront investment costs,” he said. In the ensuing discussion differing regional issues were highlighted. Michael Eckhart said that price volatility in the US is a problem which the industry is not addressing, while Hege Marie Norheim pointed out that in Europe long-term supply contracts made this less of an issue.

Gerald Linke of E.ON Ruhrgas: gas infrastructure could be used to store energy from volatile renewable sources.

l  Conclusions

renewable sources. At times of high wind, for

Gas can provide clean base load support for

example, excess electricity could be used to

intermittent renewables and is part of the long-

produce hydrogen through electrolysis, with the

term energy solution to mitigating climate

hydrogen then being injected into the gas grid

change, but this message needs to be reinforced

subject to local standards.

to policymakers and the general public, and IGU

Michael Eckhart, President of the American

is working on this with its advocacy programme.

Council on Renewable Energy (ACORE), also

In their joint statement the presidents of IGU and

addressed the complementarity of gas and

Worldwatch said that, “both organisations intend

renewables. “ACORE and the Natural Gas Supply

to continue to address the climate challenges

Association have announced a joint initiative to

facing the world, and at the same time also to

bid gas and renewable energy projects as an

present the essential facts about natural gas to

entity,” he said, stressing that future solutions must

the public”.

be clean, economic and tailored to regional

Datuk Rahim and Torstein Indrebø rounded

circumstances. He also stressed that policy and

up the symposium by thanking the speakers.

financial initiatives have to be backed up by

The Secretariat is planning a similar gas sym­

advocacy and education. “We have to persuade

posium during COP17 in Durban later this year.

one more person every day,” he said. Mark Blacklock is the Editor-in-Chief of

The last two speakers looked at gas as a

International Systems & Communications Ltd.

transportation fuel. Brett Jarman, Executive

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Kevin Yule Manager, Developing Assets E.ON Ruhrgas

 We are active along the entire gas value chain  E.ON Ruhrgas is a leading European gas company and responsible for the pan-European gas business in the E.ON Group operating worldwide. We have a growing E&P and LNG business. We operate Europe’s largest gas supply business, supplying gas to resellers, large industrial customers, and gas-fired power stations in and outside Germany. Our geographically diverse portfolio of long-term supply contracts with key producing countries makes us a pillar of gas supply security in Europe. We are also engaged in gas storage in Germany, Austria, Hungary, the U.K. and in gas transmission in Germany. Read more at: www.eon-ruhrgas.com


The Gas Industry in Mexico, IGU’s Latest Charter Member

sector participation and investment in both the operation and ownership of gas pipelines, distribution and transportation systems – all of which would create competition.

By Germain Manchon

In essence the reform divided natural gas activities in two:

In 1995, the Mexican federal government b e lo w

Table 1. bottom

Table 2.

l Strategic activities, reserved to the State

enacted a series of legal and institutional

through the national oil company Petróleos

reforms to create a new organisational structure

Mexicanos (PEMEX), which include natural

in the natural gas industry. The goal behind the

gas exploration, processing and first hand

amendments was to create and stimulate private

sales; and l Non-strategic activities open to private

participation, which include storage, pipeline

O b j e c t iv e s o f t h e 1 9 9 5 N at u r a l G a s Structural Reform

transportation, distribution and marketing. The reform also created the CRE, Mexico’s Energy Regulatory Commission, empowering it

l Ensure a sufficient, reliable, timely and competitive supply

of natural gas to satisfy the needs of the productive sector, stimulate economic growth and competitiveness.

to guide and design the regulatory framework for the industry and setting specific

l Promote the use of clean fuels and the enactment of

methodologies for natural gas pricing (first hand

environmental regulations.

sales) to replicate the conditions of competitive

l Open new spaces for productive investments and generate

new sources of permanent employment. l Promote healthy competition in the industry in favour of

markets. l  Results

final users.

The natural gas reforms have triggered invest­

l Promote an adequate supply and availability of gas

ments in the sector. Since 1995 the private

throughout the country.

sector has invested approximately $5 billion in

l Help promote new power generation projects.

the con­struction of natural gas infrastructure in

Source: CRE, Informe quinquenal 1995-2000, p16.

Mexico. According to the CRE (see Table 2), since 1995 it has awarded 213 permits representing investment commitments of

N at u r a l G a s P e r mi t s Aw a r d e d b y t h e E n e r g y R e g u l at o r y C o mmi s s i o n Modality Number of Permits Natural Gas Transportation

$8.3 billion. The Asociación Mexicana de Gas Natural

Committed Investments (US$ million)

(Mexican Natural Gas Association – AMGN) was founded in 1988 and represents the interests of the main natural gas players in Mexico, including private companies in charge of

186

$3,281

23

$1,873

LNG

3

$3,037

Underground Storage

1

$200

clients in Mexico and control most of the private

213

$8,391

gas infrastructure in the country, including open

Natural Gas Distribution

Total (as of November 2010)

distribution, trans­portation and storage activities. The Association groups the companies that provide natural gas to over 2 million residential

access private transport­ation pipelines. It

Source: AMGN based on information from the CRE.

became a Charter Member of IGU in 2010.

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l  Future of natural gas

capacity required by the CFE by 2024 will be gas-

Mexico’s natural gas production averaged

fired projects. As can be concluded, the Mexican natural

197 mcm (7.03 bcf) per day in 2010. Based on official estimates, natural gas demand will

gas market faces real challenges in the future

show an annual 2.4% growth rate over the next

decade, including guaranteeing the supply

15 years.

and production for a growing demand that is mostly driven by state-owned energy utilities,

In order to supply the domestic natural gas demand of the country, natural gas imports have

PEMEX and CFE. Additional transportation

grown and will continue growing. In 2010, over

infrastructure and redundancy in the system

17% of national demand was covered through

is urgently needed. Considering the investment requirements of the

natural gas imports, both from pipelines and from LNG. A new LNG facility in Manzanillo on the

energy sector as a whole, private participation will

Pacific Coast is being constructed to ensure future

be an important component to meet these needs,

availability of gas for Mexico’s Federal Electricity

and the Mexican Natural Gas Association will be

Commission (CFE).

present and supporting the future changes that the industry demands.

Currently, natural gas represents over 45% of CFE’s installed capacity. Over 55% of total power generation in Mexico comes from gas-fired

Germain Manchon is Head of GDF SUEZ’s

plants, and this trend is not expected to change

operations in Mexico and Honorary President of

going forward. Approximately 40% of the new

the Asociación Mexicana de Gas Natural.

Over 55% of Mexico’s electricity is generated by gas-fired plants such as this one in Valladolid.

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The New Potential of Gas By Walter Thielen and Marc Hall

elements in these efforts are the cost-intensive expansion of network infrastructure (the German Energy Agency estimates that some 3,600 kilo­ metres of additional power lines will be needed) and research and development in the area of

The major challenges we face in the 21st century

innovative power storage technologies. Systems

are to ensure reliable, economic and environ­

that have been tested to date, including pumped-

mentally compatible energy supplies and to meet

storage power stations, underground compressed

ambitious climate protection targets. At COP16 in

air storage, the use of electric vehicles as mobile

Cancún at the end of 2010, some small steps

storage devices and the development of huge

were taken in this direction.

lithium ceramic batteries, will only be sufficient to

Renewable energy sources will play an increas­

provide part of the storage capacity that will be

ingly important role in the energy mix of the

necessary. None of these technologies is suitable

future. However, the energy sources with the high­est

for bridging regional electricity shortfalls over a

potential, wind and solar, cannot be stored, are

period of days or even weeks.

subject to severe fluctuation and cannot be

A striking feature of the current debate on

exploited in line with demand. The amount of

energy supply systems of the future is that sol­

power fed into the grid depends on weather con­

utions are being discussed mainly in the electricity

ditions and the time of the day. While wind farms

industry, while the potential for solutions on the

generate abundant power in high wind conditions,

gas side is ignored.

customers need electricity from other sources

As a result of its outstanding properties and the

during calm periods. Increasingly, wind and solar

highly developed pipeline systems in place in

power are assigned negative prices, which must

many countries, gas could play a key role in a

be avoided from the economic point of view.

holistic energy system of the future. IGU Charter

The highly volatile and unpredictable nature of

Member DVGW – the German Technical and

renewable power generation means that power

Scientific Association for Gas and Water – is

generation is increasingly becoming uncoupled

currently investigating the potential future contri­

from consumption. Energy supplies are changing

bution of gas as part of its innovation offensive.

rapidly from a consumption-driven to a gener­ ation-driven structure, resulting in a transformation

l  DVGW innovation offensive

of power supply systems.

The objective of the DVGW innovation offensive is

If power generation from renewable sources is

as a fuel with respect to climate protection, energy

storage technologies and capacities will be cru­

efficiency and innovation. The potential of natural

cially important. Cost-effective processes with

gas in future energy systems and for heat supply is

minimal energy losses are needed to store surplus

to be highlighted. The key elements are:

electricity from renewable sources as it is gener­

l Support for the introduction of innovative gas

ated and to release it again as and when it is needed. Large hourly, daily and to some extent

applications (“gas-plus” technologies); l Reinforcing the role of renewable gaseous

even seasonal storage capacities will be required,

energy sources in existing gas infrastructure (the

as well as efficient conversion technologies.

greening of gas); and

In the electricity industry, a number of different approaches are currently being pursued. Key

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to develop the technological basis for natural gas

to be expanded as planned, the development of

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l Developing optimisation technologies and pro­

cedures for distribution networks (smart grids).


One of the main focuses of the work is on the

industrial scale. Under the DVGW codes of

assessment of gas infrastructure and utilisation

practice, it is already admissible to add up to 5%

technology in connection with the integration of

hydrogen to natural gas. With reference to the

renewable energy sources into energy systems.

German gas system, this would mean that up to

The energy system of the future will feature two

5 bcm of hydrogen from renewable sources could

key aspects – an increasingly volatile power net­

be injected into the system each year. Current

work and a gas network that is flexible thanks to

estimates indicate that the German gas system has

its storage capacity. One of the challenges faced

the potential for absorbing excess energy from

by the gas industry is to combine these two sys­

renewable power generation up to 2050. As

tems in an intelligent way.

manufactured gases, which are already used

This approach is based on two main ideas.

successfully in many parts of the world, contain up

While the figures stated apply to Germany, the

to 50% hydrogen, the injection of hydrogen would

principle is also transferable to other countries.

not take the gas industry into uncharted waters.

l  Power-to-gas

that low-efficiency part-load operation of condens­

A highly promising possibility of storing power from

ing power stations could be reduced. With the supply

renewable sources more effectively at competitive

of power from renewable sources, these power

cost is the conversion of wind or solar power into

stations could continue to operate at opti­mum effi­

hydrogen. The process has an efficiency of about

ciency, generating the electricity needed for electro­

80% and the only by-product is harmless oxygen.

lysis and hydrogen production. However, calcu­lations

The hydrogen produced can be fed into gas

for this application have not yet been finalised.

An additional benefit of this approach would be

systems and used for all the applications where

In the second step, synthetic natural gas could

natural gas is used today, e.g. for heating homes or

be produced from the hydrogen. This option has

power generation. Electric power can be converted

the advantage of allowing mixture with natural gas

into hydrogen by electrolysis, a technology which

in practically any proportion but would have

is well-established and has been tested on an

additional drawbacks in terms of efficiency losses.

OUTLOO K – ENER G Y STORA G E US I N G HYDRO G EN The renewable energy sources with the highest potential, wind and solar, cannot be stored. Power-togas offers a solution. Government action required: l Technology, economics and sizing of electrolysis plants and injection systems; l Identification and description of solutions on the basis of pilot regions and application models with specific load curves (generation and demand); and l Creation of legal framework.

Additional action required from DVGW: l Identification of specific hydrogen potential or quantities of power to be converted from renewable sources; l Confirmation of limits for the addition of hydrogen to natural gas; l Network injection technologies; l Ensuring customer invoicing in accordance with regulations (to G 685) and, if applicable, development of compatible calorific value tracing systems; and l Comparison of efficiency (energy and CO2) of this energy chain with other systems and infrastructure work on the power side.

The

Ne w

Potent i al

of

Gas

173


The attraction of power-to-gas technology is that

offers even greater potential. The concept of

it allows the use of the existing gas network infra­

“power-to-gas” may be new but the technology

structure, making gas infrastructure into the enabler

required and a highly developed, high-

of renewable energy sources or transforming the

performance natural gas network have already

gas network into an electricity storage facility.

been available for a considerable time. The concept outlined could also make a highly cost-

l  Gas-to-power

effective contribution to the integration of renew­

Power could then be generated from gas using high-

able energies as the use of existing gas infra­

efficiency energy conversion technology, ideally in

structure would reduce and postpone the need for

cogeneration plants or highly efficient gas-fired

expansions to electric power systems and also

power stations. These technologies also offer the

considerably reduce energy storage problems.

benefit of rapid adaptation to demand changes.

Methane and natural gas may come from

Compact cogeneration plants in the megawatt

fossil or non-fossil sources, already help protect

range, equipped with gas turbines, already reach

the environment and can be used in future with

electrical efficiencies in excess of 45%. In combi­

no impact on the climate, becoming the energy

nation with well-thought-out waste heat utilisation

partner of renewables and part of the solution

systems, overall efficiencies of the order of 90%

for the environmental transformation of our

can be reached. Fuel cells can also achieve very

energy supplies.

high electrical efficiencies; promising systems with

In our opinion, it is now important for the gas

efficiency levels of the order of 60% are already

industry to recognise the opportunity offered by

being tested, even for low-output plants. The

gas / power convergence and to make a strong

holistic consideration of the combined generation

contribution to the research work required (e.g.

of heat and power and an open-minded assess­

more detailed investigation of the specific potential

ment of the technologies available will ensure that

of hydrogen, limits of hydrogen addition to natural

the highest possible energy efficiency is combined

gas, the development of optimised injection

with the lowest possible specific CO2 emissions.

systems, ensuring invoicing in accordance with the

For efficiency reasons, intelligent waste heat

regulations, efficiency comparisons with other sys­

utilisation also plays a key role. The possibilities considered must not only include heat generation

tems and power infrastructure measures required). Apart from promoting gas-plus technologies on

for space heating, but the optimisation of all

the utilisation side, the gas industry must under­

thermal potentials, even for air conditioning.

stand the value of its own assets in the current energy and climate policy environment. Once

l  Conclusion

industry has recognised this, gas/power conver­

With natural gas, biomethane and the existing gas

gence offers further potential for natural gas to

infrastructure, realistic, affordable approaches are

make a contribution to reliable, efficient, environ­

already available for mastering many of the

mentally compatible energy supplies, making the

challenges arising in connection with the environ­

gas industry, as energy system service provider, an

mental transformation of energy supplies.

“asset winner”.

Renewable energy sources are already

174

integrated into existing systems by injecting bio­

Dr Walter Thielen is the Managing Director of

methane into the natural gas system. The produc­

DVGW and a member of IGU’s Executive

tion of hydrogen using excess wind or solar power,

Committee. Marc Hall is the Managing Director of

followed by injection into the natural gas system,

Bayerngas and Chairman of PGC E – Marketing.

T h e

N e w

Pot e n ti a l

o f

G a s


The independent global LNG terminal operator

Vopak

– – – – – –

Vopak has terminals in the world’s most strategic ports. The terminals are strategically located for users and the major shipping routes.

the independent global LNG terminal operator offers non-discriminatory terminal access to all interested gas suppliers and off-takers is open for strong partnerships displays long-term commitment develops terminals based on a repeatable formula is committed to sustainability

www.VopakLNG.com


Renewable Gas: Clean Fuels By Elbert Huijzer

language to technicians; some definitions are general, others are detailed. The question that PGC A asked itself was how to speak a common language in IGU, without getting into detailed definition debates. We have come up with the

Although natural gas is the cleanest of the fossil

scheme shown in Figure 1.

fuels, increasing use of renewable gas is necessary to reduce the industry’s overall emissions.

l  Processing

Introducing renewable gas into the supply stream

When processing biomass, there are two main

represents the biggest change for the industry

routes to follow. One is anaerobic digestion,

since the switch from manufactured to natural gas;

normally used for wet biomass, and one is

and three of IGU’s Technical Committees are

gasification, normally used for dry biomass. The

working on this important issue.

result of digestion is called biogas; the result of gasification is called bio synthetic gas. Once it is

In May 2010, WOC 5 and PGCs A and E decided to work together on a shared approach to

processed to a composition that is comparable to

renewable gas. A joint report is being prepared

natural gas, it is called biomethane. The overall

for WGC2012 and coordination in the content of

name for all these gases from biomass of

sessions and panels is being discussed.

renewable origin is renewable gas. In order to transport the product of digestion

The first job is to explain what we mean by

b e lo w

renewable gas – often termed biogas or

(or gasification) some basic processing steps need

biomethane – when many definitions are used

to be carried out, like dehydration and desulphuri­

around the world for gases that originate from

sation. To distinguish between the gases before

renewable sources. In some cases these definitions

and after these steps, it might be useful to describe

are not even consistent within countries. Producers,

the non-processed gas as “raw”. In the scheme shown in Figure 1, biomethane

consumers and politicians may speak a different

Figure 1.

is a definition which is used for gas from both

RENE W ABLE G ASES

the digestion and the gasification route. The

Renewable Biomass

logic is that it does not

Bio Synthetic Gas

Gasification

Cleaning

differ in its composition, since by definition it

Upgrading

should be comparable to the natural gas

Direct use

Dedicated grid

Biomethane

composition of the grid to which it is connected.

Anaerobic digestion

One could also use the

Upgrading

Cleaning

terms bio natural gas

Biogas

or bio synthetic natural

Natural gas grid

gas. However, the use of these different wordings is not to be promoted.

176

R e n e wa b l e

G a s :

C l e a n

F u els


As natural gas is distributed in a variety of qualities, biomethane can also be produced in a variety of qualities. For instance, in Europe one

making them partly self-sufficient, thereby keeping money in the region. Local conditions for growing biomass differ.

can imagine a difference between low- and high-

Therefore, the production techniques for renew­

calorific biomethane.

able gas, its distribution and its use may differ.

Hydrogen, which can be produced from various

The necessary food-feed-fuel discussion may lead

sources using various techniques, can be a

to different conclusions because of local con­

renewable gas as well. When it is derived from a

ditions. However, in all these situations, there will

renewable source, such as using excess wind or

be a need for energy connections to the rest of the

hydro power for electrolysis or from renewable

world, whether it is for balancing, for selling a

biomass, it can be called wind, water or bio

surplus of energy or for back-up on a cold day.

hydrogen to stress the renewable origin. Hydrogen

This is where the gas industry is the natural

made by natural gas reforming, however, is not a

partner to these communities.

renewable gas, no matter how useful this might be in reducing CO2 emissions.

The gas industry is in a unique position to connect local initiatives to the global natural gas grids formed by pipelines and LNG carriers. We

l  Strengthening communities

can help the world become more sustainable while

By introducing renewable gas, the gas industry will

providing the energy needed for develop­ment. Let

be able to help local communities. Producing and

us use this opportunity. In the near future, this will

processing biomass is typically a local or regional

be our licence to operate.

activity because transporting vast quantities of biomass is not the smartest way of transporting

Elbert Huijzer of Alliander division Liandon is the

energy. It strengthens local communities by

Leader of Study Group 2, Programme Committee A

creating jobs, increasing technical knowledge and

– Sustainability.

Increasing use of renewable gas will reduce the industry’s overall emissions.

Rene wable

Gas :

Clean

F uels

177


European Security of Gas Supply and the Role of the Trans Adriatic Pipeline in the Southern Gas Corridor About the Trans Adriatic Pipeline (TAP)

The Trans Adriatic Pipeline (TAP) AG is aimed at enhancing security of supply as well as diversification of gas supplies for the European markets. TAP will open a new so-called Southern Gas Corridor to Europe and market outlet for natural gas from the Caspian Sea. TAP’s shareholders are Swiss EGL (42.5%), Norwegian Statoil (42.5%) and German E.ON Ruhrgas (15%). The project is designed to expand transportation capacity from 10 to 20 bcm per year depending on throughput. The TAP project also envisages physical reverse flow of up to 8 bcm and the development of natural gas storage facilities in Albania to further ensure security of supply during operational interruptions of gas deliveries.

An important year ahead

Last year saw encouraging progress for TAP as we reached several significant milestones, from several agreements on key stages of our pipeline route to welcoming a new shareholder – E.ON Ruhrgas.

nically viable, safe and offering the most commercially attractive transportation route for shippers, TAP has the enormous advantage of being the shortest new-build pipeline and the most cost-effective route for delivering Shah Deniz II gas into Europe. Our project enjoys the support of the European Union and is regarded as integral to the EU’s energy policy. TAP has several features that enhance Europe’s energy security. These include the possibility to physically reverse gas flow in the event of an emergency, develop storage opportunities in Albania, and a commitment to include several tie-in points along the pipeline for other spur lines into South Eastern Europe. Furthermore, TAP is a large pipeline with a capacity of 20 bcm. It is designed to effectively transport the 10 bcm of Shah Deniz II gas from Azerbaijan during the first phase, whilst accommodating additional supplies as they come on stream. However, Europe’s energy security does not simply require political will and consensus. In these challenging economic times, when decisions are subject to unprecedented public scrutiny, it is even more essential to chose the most efficient and

Kjetil Tungland, TAP Managing Director:

2011 will be the decisive year for the Southern Gas Corridor 2011 looks like being an even more momentous year, with critically important decisions due to be made that will not only determine the future of TAP and other pipeline projects in the Southern Gas Corridor, but will also have a profound and lasting impact on Europe’s energy security. This year we expect to hear which companies have been successful in procuring gas from the Shah Deniz II consortium. This will then directly lead to a decision on which transportation solution becomes the cornerstone in the Southern Gas Corridor for bringing Caspian gas to European markets.

Well placed for success

TAP is in a strong position at this critically important stage and we remain optimistic of the outcome. In addition to being tech-

cost-effective solutions that do not require massive subsidies from the public sector in order to be physically realised or made commercially viable. To do otherwise risks failure and renewed uncertainty over Europe’s energy future. TAP brings confidence as it is supported by financially robust and technically strong shareholders without any need for public funds. It is absolutely essential that the official support and decisionmaking process is transparent and takes place on a level playing field, without fear or favour, based on clear criteria understood by everyone. For there is so much more at stake than just the fate of any one particular pipeline. Political decisions regarding the Southern Gas Corridor, and indeed all similar projects and initiatives, must be based on sound commercial and technical principles.


Opening the Southern Gas Corridor

Enhancing Europe’s Energy Supply The Trans Adriatic Pipeline (TAP) supports the European Union’s strategic goal of securing future gas supply. TAP offers a practical and realistic solution to the transportation of gas to Southern and Central Europe by opening up the Southern Gas Corridor. The 520 km long pipeline will start in Greece near Thessaloniki, cross Albania and the Adriatic Sea and come ashore in Italy near Brindisi, allowing gas to flow directly from the Caspian region to European markets. TAP connects to existing gas networks and is as a result, the shortest route in the Southern Gas Corridor.

The advantages of TAP for Europe include: • • • •

Realistic and commercially viable Expandable gas transportation capacity (from 10 to 20 bcm per annum) Physical reverse flow of up to 8 bcm Underground gas storage facility in Albania

For more information, please visit our website:

www.trans-adriatic-pipeline.com Trans Adriatic Pipeline (TAP) AG Lindenstrasse 2, 6340 Baar, Switzerland, tel.+41 41 747 3400, fax: +41 41 747 3401 Enquiries@tap-ag.com


Trends in Wholesale Gas Price Formation Mechanisms: Results of the 2009 IGU Survey By Mike Fulwood

sub-group to consider gas pricing, with a key remit to carry out a comprehensive analysis of gas price formation models. The sub-group decided to carry out a survey of current pricing mechanisms around the world, not only for gas traded inter­ nationally, but also for gas produced and con­ sumed within countries. IGU members were sur­ veyed and provided data for almost 100 countries, and the survey responses were collated and

The third IGU survey of wholesale gas price formation mechanisms for the year 2009 was

b e lo w

Table 1.

analysed by Nexant. The focus of the gas pricing sub-group, and the

completed in late 2010, following on from similar

surveys, was very much on wholesale prices, which

surveys for 2005 and 2007. The idea for the

can cover a wide range. In fully liberalised traded

survey arose at the beginning of the 2006-9

markets, such as the USA and the UK, the

Triennium. The Strategy, Economics and Regulation

wholesale price would typically be a hub price

Programme Committee (PGC B) had set up a new

(e.g. Henry Hub or the NBP). In many other

TYPES OF PR I CE FOR M AT I ON M ECHAN I S M S Oil price escalation (OPE)

The price is linked, usually through a base price and an escalation clause, to competing fuels, typically crude oil, gas oil and / or fuel oil. In some cases coal prices can be used.

Gas-on-gas competition (GOG)

The price is determined by the interplay of supply and demand – gas-on-gas competition – and is traded over a variety of different periods (daily, monthly, annually or longer). Trading takes place at physical hubs (e.g. Henry Hub) or notional hubs (e.g. NBP in the UK). If there are longer-term con-­ tracts these will use gas price indices to determine the price. Spot LNG is also included in this category.

Bilateral monopoly (BIM)

The price is determined by bilateral discussions and agreements between a large seller and a large buyer, with the price being fixed for a period of time – typically this would be one year. There may be a written contract in place but often the arrangement is at the government or state-owned company level.

Netback from final product (NET)

The price received by the gas supplier is a function of the price received by the buyer for the final product the buyer produces. This may occur where the gas is used as a feedstock in chemical plants, such as ammonia or methanol, and is the major variable cost in producing the product.

Regulation: The price is determined, or approved, by a regulatory authority, or possibly a Ministry, but the level cost of service (RCS) is set to cover the “cost of service”, including the recovery of investment and a reasonable rate of return. Regulation: social and political (RSP)

The price is set, on an irregular basis, probably by a Ministry, on a political / social basis, in response to the need to cover increasing costs, or possibly as a revenue raising exercise.

Regulation: below cost (RBC)

The price is knowingly set below the average cost of producing and transporting the gas often as a form of state subsidy to its population.

No Price (NP)

The gas produced is either flared, or provided free to the population and industry, possibly as a feedstock for chemical and fertiliser plants. The gas produced may be associated with oil and / or liquids and treated as a by-product.

Not known (NK)

No data or evidence.

180

Trends in Wholesale Gas Price Formation Mechanisms : Results of the 2009 IGU Survey


countries, where gas is imported, it could typically be a border price. The more difficult cases are countries where all gas consumed is

W ORLD PR I CE FOR M AT I ON M ECHAN I S M S 2 0 0 9 NP 1%

supplied from indigenous production, with no

RBC 11%

international trade (either imports or exports)

OPE 21%

and the concept of a wholesale price is not recognised. In such cases the wholesale price could be approximated by wellhead prices or

RSP 11%

city-gate prices. Generally the wholesale price is likely to be determined somewhere between the entry to the main high pressure transmission system and the exit points to local distribution companies or very large end-users.

RCS 13%

The initial data collection was done on a country basis. The data were then collated to a regional level using the standard IGU

NET 1%

regions. In preparation for the initial survey, a

BIM 6%

GOG 36%

series of discussions were held at the PGC B.2 sub-group meetings on the definition of

Note: Percentages rounded, NK was less than 1%.

different types of price formation. It was decided to use for categorisation purposes the wholesale pricing mechanisms described in Table 1.

The results presented here focus on the world picture with some regional breakdown,

above

Figure 1.

and not particularly on the breakdown of the l  Results of 2009 survey

different categories of indigenous production

In looking at price formation mechanisms, the

and imports, although such detailed information

results have generally been analysed from the

is available.

perspective of the consuming country. Within each country gas consumption, ignoring storage, can come from any combination of

Figure 1 summarises the 2009 survey results at the world level. The largest single price formation category in

three sources, indigenous production, pipeline

2009 was gas-on-gas competition at 36%. This

imports and LNG imports. Data was collected

was across all categories – indigenous production

separately for each of these three gas supply

(especially in North America), pipeline imports and

sources showing the per­centage of the

LNG imports. Oil price escalation accounted for

wholesale price which is deter­mined by each of

some 21%, but was largely in pipeline imports and

the nine pricing mechanisms.

LNG imports. The three regulated categories

Each country was then aggregated in one of

accounted in total for some 35%, split broadly

the IGU regions and finally the IGU regions

equally between the three – cost of service, social

were aggregated to give the results for the world

and political and below cost. The regulated

as a whole. As well as collecting information on

categories were almost exclusively from indigenous

price formation mechanisms by country,

production.

information was also collected on wholesale price levels in each country.

In Table 2 (over) the regional breakdown by price formation category is highlighted.

Trends in Wholesale Gas Price Formation Mechanisms : Results of the 2009 IGU Survey

181


W ORLD PR I CE FOR M AT I ON 2 0 0 9 : RE G I ONAL BREA K DO W N 2009 North America Latin America Europe CIS Middle East Africa Asia Asia-Pacific Total World

above

Table 2.

Total Consumption (BCM) OPE

GOG

BIM

NET

RCS

RSP

RBC

NP

NK

TOT

0.0 19.7 371.7 0.0 19.7 6.2 68.7 175.4 661.4

789.4 18.0 155.7 130.3 1.0 0.0 6.7 18.7 1,119.8

0.0 5.2 2.3 88.4 30.4 3.3 3.1 45.8 178.5

0.0 14.0 1.0 0.0 0.4 0.8 0.0 0.0 16.2

0.0 13.1 0.0 284.5 0.0 0.6 106.0 7.9 412.1

0.0 59.0 19.1 21.0 121.6 8.8 30.0 79.6 339.1

0.0 0.0 0.4 96.5 162.6 77.2 3.3 0.0 340.0

9.8 0.0 4.6 3.8 3.2 0.7 0.0 0.0 22.0

0.0 0.0 0.0 0.0 2.0 0.0 0.0 2.4 4.4

799.2 129.0 554.7 624.5 340.9 97.6 217.8 329.9 3,093.6

The gas-on-gas competition category is obvi­ ously dominated by North America, but in Europe with the UK market and the continental trading

time of negotiation. The three regulated categories – cost of service,

hubs it is also important. The contributions from

social and political and below cost – are found

Asia and Asia-Pacific largely reflect spot LNG

predominantly in indigenous production in the CIS

sales. It may also seem surprising there is

and Middle East, plus China, Malaysia and

deemed to be significant gas-on-gas competition

Indonesia.

in the CIS region, specifically Russia. This reflects

It should be emphasised that choosing the

the signifi­cant changes in the domestic Russian

categorisation of price formation mechanisms in

market which has seen the larger consumers

individual countries is not an exact science. In

being allowed to trade directly with independent

particular, the distinction between the gas-on-gas

producers at negotiated prices. Previously much

competition and bilateral monopoly categories in,

of this sector was price regulated, as the rest of

for example, Russia and Australia may be

Russian domestic consumption is, largely supplied

becoming increasingly blurred. Since the first IGU

by Gazprom.

survey for 2005, wholesale prices under the BIM

The oil price escalation category is dominated by imported gas under long-term contracts, linked to oil product prices, into Europe, as well as the

category have risen to be much closer to, what might be called, “market” levels. As well as collecting data on price formation

LNG contracts into Asia-Pacific, linked to crude oil

mechanisms the IGU study also collected infor­

prices. The level in Asia is a combination of LNG

mation on wholesale price levels in 2009. The

imports and indigenous production in Pakistan

results here should be treated as broad orders of

and India.

magnitude, since the definition of wholesale prices

The bilateral monopoly category is important

is quite wide. It is typically a hub price or a border

in intra-CIS trade and indigenous production in

price in the case of internationally traded gas, but

Qatar, Australia and New Zealand. In Australia,

could also easily be a wellhead or city-gate price.

outside the spot market in Victoria, the majority

182

price reflects the market fundamentals at the

Figure 2 (over) shows a snapshot of price levels

of gas is sold under 10-to-15-year contracts

for 2009. From year to year, wholesale prices can

where the price of gas is fixed initially and then

obviously change significantly. Generally the

changes in line with inflation. The initial base

highest wholesale prices are in regions where, it

Trends in Wholesale Gas Price Formation Mechanisms : Results of the 2009 IGU Survey


l  Changes in price formation mechanisms

A V ERA G E W HOLESALE PR I CES BY RE G I ON

As the 2009 survey followed the 2005 and 2007 surveys, it enables an analysis of changes

Europe

in the relative importance of price formation

Asia-Pacific

mechanisms to be undertaken. Changes in the

Total World

relative impor­tance of the different price formation mechanisms can occur either because of

North America

differential growth in consumption between

Asia

countries or because price formation mechanisms

CIS

themselves change.

Africa

While world consumption grew by just over

Latin America

8% between 2005 and 2009, this masked very

Middle East $0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$/MMBTU

different changes between regions. Consumption in Europe and the CIS declined, in contrast to a more than 50% increase in Asia – India and China – and a 30% plus increase in the Middle

above

Figure 2.

could be said that, there is more “economic”

East. The decline in Europe would imply that the

pricing – i.e. gas-on-gas competition and oil

oil price escalation category would decline in

price escalation – in Europe, Asia-Pacific and

importance while the rise in Asia and the Middle

North America – although the decline in spot

East would suggest the regulated categories

prices in the latter has brought prices down

increasing, although this would be partly offset

compared to previous surveys. With both China

by the decline in CIS consumption.

and India increasing wholesale prices recently,

b e lo w

Figure 3.

Figure 3 shows the respective percentage

the average is now very close to North American

shares in the different price formation mechanisms

spot prices. The lowest wholesale prices are

for 2005, 2007 and 2009.

generally where regulation (or state decrees)

The main increase has been in the gas-on-

dominates in the Middle East, Latin America,

gas competition category rising from 30% in 2005

Africa and the CIS.

to 32% in 2007 and to 36% in 2009. If consumption patterns had not changed between regions from 2005 to 2009 the GOG category

PR I CE FOR M AT I ON M ECHAN I S M S SHARES ( % ) : 2 0 0 5 TO 2 0 0 9

share would have been some 2% higher in 2009 at 38%. The key change from 2007 to 2009 was

40%

in the CIS following the changes in the domestic

35%

Russian market, which added some 4% share. The

30%

share in Europe has been increasing steadily from

25%

2005 through 2007 and 2009 as the importance

20%

of continental trading hubs increases, at the

15%

expense of oil price escalation. The gas-on-gas

10%

competition share in Asia-Pacific increased

5%

between 2005 and 2007 but declined from 2007

0% OPE

GOG

BIM 2005

NET

RCS 2007

RSP 2009

RBC

NP

NK

to 2009 as the impact of the recession resulted in declines in spot imports into Japan, South Korea and Taiwan, although the 2009 share was still

184

Trends in Wholesale Gas Price Formation Mechanisms : Results of the 2009 IGU Survey


Sonangol, Creating the environment to establish a natural gas-based industry in Angola Av. Lenine nยบ 58 5ยบ/6ยบ andar C.P. 2055-Luanda Angola Fax: +244 222 336 751 Website: www.sonangol.co.ao


little from 2005 through 2007 to 2009. How­

CHAN G ES I N W HOLESALE PR I CE LE V ELS ( S / M M BTU ) : 2 0 0 5 TO 2 0 0 9

ever, there have been significant changes to price levels in the different price formation

$9.00

categories (see Figure 4).

$8.00

Average wholesale prices were just over

$7.00

$4.00 per MMBtu in 2009, slightly down from

$6.00

$4.50 in both 2007 and 2005. Over the period

$5.00

gas-on-gas competition prices have been on a

$4.00

declining trend from being the highest prices in

$3.00 $2.00

2005 at over $8.50 to just over $4.00 in 2009

$1.00

– around the world average. In contrast oil price escalation prices have risen consistently

$0.00 OPE

GOG

BIM 2005

NET

RCS

2007

RSP

RBC

TOT

2009

reflecting increasing oil prices over the period. Bilateral monopoly prices have also been consistently rising but this reflects the transition, especially in intra-CIS trade, towards more

above

Figure 4.

higher than in 2005. The decline in the oil price

market related pricing.

escalation share from 2005 to 2009 has been wholly down to the changes in Europe, partly

l  Conclusions

offset by a slight increase in share in Asia

The trend towards more gas-on-gas competition

between 2007 and 2009, as the new East Coast

continued in 2009, rising to 36% of world gas

Indian production came onstream.

consumption, from 32% in 2007 and 30% in

The bilateral monopoly share has been in

2005. The increase between 2007 and 2009

steady decline from over 9% in 2005 to just

was largely due to changes in the domestic gas

under 6% in 2009. This reflects wholly the

market in Russia together with the continuing

changes in Russia’s price formation

growth of trading hubs in Europe. The growth

mechanisms. The overall share of the three

in Europe was at the expense of the oil price

regulated categories has changed little from

escalation category which continued to decline

2005 through 2007 to 2009, staying at around

from the 24% level in 2005 to 22% in 2007

35%, although based on the more rapid growth

and 21% in 2009. This was partly offset by a

in consumption in some of the areas where

rise in Asia as a result of new production in

regulated pricing predominates, the share

India. The three categories of regu­lated prices

should have risen slightly if price formation

amounted to some 35% of world gas

mechanisms had not changed. The key change

consumption in 2009, broadly the same level

has been within the regulated categories with a

as in 2007 and 2005. However, there was a

switch in Russia from below cost to cost of

significant shift in 2009 in the regulation

service of a share of 9% of total world con­

categories away from below cost towards cost

sumption. This change in categorisation reflects

of service as regu­lated prices in Russia rose to

the fact that Gazprom no longer makes losses,

more economic levels.

on an average cost basis, on regulated sales into the domestic market.

186

Mike Fulwood is a Principal in the Global Gas

In respect of the levels of wholesale prices,

division of Nexant and is also Leader of Study

average prices around the world have changed

Group 2, Programme Committee B – Strategy.

Trends in Wholesale Gas Price Formation Mechanisms : Results of the 2009 IGU Survey


Galp Energia Galp Energia is an integrated operator present through­ out the whole oil and natural gas value chain. Its activi­ ties are expanding strongly worldwide and are located in Portugal, Spain, Brazil, Angola, Venezuela, Mozambique, Cape Verde, Guinea-Bissau, Swaziland, Gambia, East Timor, Uruguay and Equatorial Guinea. The ongoing Exploration & Production projects support the strategy that will enable production goals to be achieved. Brazil and Angola are core countries for the execution of this strategy. The current base of hydrocarbon resources, which exceeds three billion barrels as identified by intensive exploratory work, is a solid foundation on which Galp Energia’s strategy for its production business rests. In Gas & Power Galp Energia is the leading company in Portugal for natural gas supply, distribution and sales with more than 900,000 clients and more than 4 billion cubic metres (bcm) of annual sales. In Spain its AFj_Press_148x210_ing.ai 1 2008 1/25/11 3:47 PM gas supplier for presence started in as a natural

the industrial market and increased significantly in 2010 with the purchase by Gas Natural of over 400,000 customers in the Greater Madrid region, adding about 0.4 bcm of annual consumption. With this acquisition Galp Energia became the second player in terms of customers served in the Iberian Peninsula. In the power sector, Galp Energia aims to become an important player in Portugal, both in terms of production and supply to the final market. Galp Energia’s priority is to diversify its sources of nat­ural gas by developing its ongoing projects in the Explor­ation & Production business segment, having various LNG upstream and midstream opportunities under review. In Refining & Marketing, Galp Energia is focused on extracting additional value from its assets, namely from its refineries and Iberian network for marketing oil products, which expanded significantly in 2008 following the acquisition of Agip and ExxonMobil’s marketing platforms in the Iberian Peninsula.


EFET is an organisation designed to promote

EFET: Promoting Wholesale Gas Markets

and facilitate European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles.

By Maria Popova

EFET improves the conditions for energy trading by: l Finding solutions for market design and advo­

Over the last few years, the European wholesale gas markets have undergone considerable improve­

cating suitable policies and regulatory measures; l Providing standard solutions to the repetitive

aspects of wholesale energy transactions; and

ments. New trading locations have emerged, energy exchanges have taken a growing interest in

l Encouraging probity, good risk management

gas trading and the established hubs have bene­

practices, responsible corporate governance

fited from greater liquidity. Unbundled trans­

and proper accounting among energy traders.

mission system operators (TSOs) have started

b e lo w

Figure 1.

offering better services and the range of traded

l  Membership and organisation

products has widened. As a result of these improved

There has been tremendous success during the

conditions, an increasing number of companies

last few years, with the conditions for gas trading

have engaged in gas trading. The mounting

improving throughout Europe and with gas trading

interest in wholesale gas trading across the

now widely recognised as the best way forward.

Continent is also evident in the rising member­ship of

Thus, during 2010 more than 20 new EFET mem­

the European Federation of Energy Traders (EFET).

bership applications were approved, including companies with major gas portfolios. EFET currently has more than 100 member companies,

EFET OR G AN I SAT I ON CHART

active in over 27 European countries. EFET aspires to the adoption within its member companies of core values, such as:

EFET Members

l Integrity of action, for example in dealing with

counter-parties and business stakeholders; Secretariat/ General Support

PR/Communication/ Education

Board

l Respect for others, such as fellow employees,

competitors and professional advisors; l Open communication, subject to observing

legitimate business confidentiality; Market Design, Policy and Regulation

National and Regional Implementation

Contractual and Transactional Standardisation

l Professionalism, ensuring that only qualified

parties and staff are involved in trading activities; l Observing the spirit of a truly open and sus­

tainable wholesale marketplace. The strategic direction of EFET is defined by the Board, which meets several times a year. The Secretariat, on the other hand, is responsible for the operational level. It coordinates and facilitates Paul van Son, Chairman of the EFET Board.

188

Jan van Aken, EFET Secretary General.

EFET :

Colin Lyle, Chairman of the EFET Gas Committee.

Pr o m ot i n g

Maria Popova, Secretary of the EFET Gas Committee.

W h o l e s a le

Gas

the work of the various EFET committees, task forces and working groups. As presented in the organisational chart (see Figure 1), the work of EFET is organised in three

Mark ets


workstreams: market design, policy and regu­

locations. Primary capacity allocation and con­

lation; national and regional implementation; and

gestion management are matters of concern for

contractual and transactional standardisation.

the Capacity Group. The goal of EU-wide cashed-

Within these broad areas, the EFET Gas, Electricity,

out local and regional balancing markets is

Legal and Business Process Optimisation

advocated by the Market-based Balancing Group,

Committees supervise the activities of a number of

while the LNG Group focuses on the harmoni­

issue- or region-specific working groups.

sation of services that make LNG more fungible

The main role of the Electricity Committee is to

with pipeline gas. Lastly, working in close

advocate policy changes and modes of regulation

cooperation with the EFET Market Supervision

likely to stimulate the efficient and harmonised

Task Force, the Information Group encourages

functioning of the European wholesale electricity

transparency along the whole gas chain, in

markets. The Legal Committee has developed and

particular striving for real-time information

released a number of standardised documents

provision by TSOs on the use and availability of

intended to facilitate the trading of energy and

transmission infrastructure.

energy-related commodities. The EFET Gas Master

In addition to the subgroups dealing with key

Agreement, a number of annexes to facilitate gas

issues at the European level, EFET helps the

trading at the more liquid hubs in Continental

development of national and regional gas markets

Europe, as well as an ex-ship LNG trading

through a growing number of local task forces.

agreement can be downloaded free of charge

These include Belgium, France, Germany, Italy, the

from the EFET website (www.efet.org). The Business

Netherlands, Central and Eastern Europe and the

Process Optimisation Committee guides the work

Iberian Peninsula.

of the Back Office Group, which focuses on the standardisation of data exchange and industry

l  Challenges facing European energy

processes as exemplified by EFETnet (see www.

markets

efetnet.org).

Well-functioning wholesale markets in electricity and gas are essential, not only because they

l  Who deals with gas issues within EFET?

enhance competition and expand the spectrum of

The Gas Committee focuses on improving the

consumer choices, but also because they help to

interconnections and liquidity across Europe’s

maintain supply security, achieve environmental

widely varying national gas markets. To this end,

objectives and sustain EU competitiveness in a

in the context of the Madrid Gas Forum1 and other

global context. In the past 10 years, the European

communication and cooperation frameworks, the

energy sector has undergone fundamental trans­

members of the EFET Gas Committee engage in a

formations. Market participants and regulatory

continuous dialogue with regulators, TSOs and

authorities have made important commitments to

other relevant actors.

improve market transparency and liquidity, with

The work of the Gas Committee is supported

the ultimate goal of creating a single European

by several subgroups dealing with the main

market in electricity and gas. As a result of these

obstacles to trading liquidity. The Gas Hub

efforts, wholesale trading, particularly in electricity,

Development Group promotes improvement in

has been successfully established in a number of

the services provided at existing and new trading

European regions. However, the development of efficient and

1  The Madrid Gas Forum (http://ec.europa.eu/energy/gas_ electricity/forum_gas_madrid_en.htm) is chaired and organised by the Energy Directorate of the European Commission.

competitive markets in electricity and gas is a complex task, as these are network-bound energy

EFET :

Pro m oti ng

Wholesale

Gas

Mark ets

189


sider­ably to market liquidity. Despite the technical difficulties of accepting different gas qualities, the number of market areas in Germany is expected to consolidate to just two within the next few years. The UK, Belgium and the Netherlands already have volumes of gas traded in the high-pressure pipeline systems that match or exceed national gas consumption. Further progress has been made in the Netherlands with the launch of a traded gas futures contract. In Central and Eastern Europe, the Czech Republic created a virtual trading point (VTP) during 2010 and Hungary is on the same track. In Denmark, Italy and Austria energy Important gas trading developments are underway in places such as Baumgarten in Austria.

exchanges are now enabling gas trading to take place through screen-based services in addition to the more traditional over-the-counter (OTC)

commodities (with the exception of LNG). They

bilateral deals and trading via brokers.

cannot be freely traded unless there is equitable

underway in other countries, notably at the Italian

pipelines throughout Europe. Despite considerable

VTP and in Austria at Baumgarten near the border

progress, a number of important structural and

with the Slovak Republic, but access to capacity in

policy challenges still remain.

the international pipeline routes remains a con­

The third EU Gas Directive and the new EU

straint. In Spain, where almost 70% of the supply

Gas Regulation that took effect on March 3, 2011

is LNG, traded volumes are significant, and the

include an assumption that there will be a market-

development of a transparent and liquid market

based approach to natural gas. There is a grow­

downstream may well now be on the cards, with

ing recognition that the successful liberalisation of

improvements in hand for enhanced inter­connec­

the whole EU gas market will require improve­

tion capacity with the rest of the EU and increased

ments in the conditions for gas trading, which

flexibility from gas storage.

recognise the legitimate positions of existing

Tremendous progress has been achieved, but

players, whilst encouraging new entrants. As

lack of liquidity still prevails in most markets. The

trading develops, then the exchanges will start to

absence of a reliable, transparent gas spot price,

offer standard products with different maturities of

particularly in eastern and southern countries,

contracts for buying and selling wholesale gas on

creates difficulties in hedging and in devising

the forward, day-ahead, and intra-day and

reliable financial instruments to manage risk. Even

balancing markets.

within north-west Europe, incompatible pipeline

Over the past few years, countries like

190

Important gas trading developments are also

third party access to the power grids and gas

access causes geographical fragmentation within

Germany and France have significantly improved

the region. Helped by the global supply-demand

their internal network access arrangements. In

balance, traded gas volumes have been increasing

2009, the five French market areas were merged

and the outlook should be for further growth. The

into three: PEG-North, PEG-South and TIGF. The

new EU legislation should help, but this still needs

number of market areas in Germany halved from

to be implemented properly to ensure that robust

12 to six in the same period, contributing con­

wholesale markets are established to support con­

EFET :

Pr o m ot i n g

W h o l e s a le

Gas

Mark ets


sumers’ needs throughout Europe. In particular,

consti­tutes insider information and what may

the following issues need to be addressed:

amount to market manipulation, in a manner

l Guaranteeing fair access to gas infrastructure.

suitable for the physical and commercial realities

Priority access is still a problem at some high-

of the power and gas sectors throughout Europe.

pressure pipeline interfaces in Europe. There is

It is crucial that market integrity rules recognise the

a continuing failure to ensure that capacity

market structures and underlying physical

needed by the market is built and that all

characteristics of the commodities concerned.

existing unused capacity is offered to market

Moreover, with regard to the consultation on

participants. Coherent mechanisms for capacity

proposals to reform the application of the Markets

trading are still missing.

in Financial Instruments Directive (MiFID) to

l Reducing the number of market areas. In order to

commodity derivative transactions launched in

create supra-national gas grids and trading zones

parallel by DG Internal Market of the European

that transcend national borders, market rules

Commission, EFET believes many of the ideas put

need to be simplified and harmonised. Indepen­

forward will impose a disproportionate burden on

dent operators, responsible for several combined

corporate Europe and could seriously undermine

pipeline networks, need to be established.

the achievement to date of a competitive single

l Improving information provision. Information on

European energy market. They would hugely

the physical use and availability of gas infra­

increase business costs, in particular for smaller

structure is often not available or not provided

wholesale market participants, thereby erecting

in a consistent or coherent form. To build

considerable new barriers to entry, and in turn

confidence and encourage trading, trans­

jeopardising the liquidity and depth of wholesale

parency needs to be enhanced. TSOs should

power and gas markets across Europe.

provide all market parti­cipants and regulators with near real-time infor­mation on the avail­

l  EFET’s role and vision

able capacity and the actual gas flows.

Advocating appropriate energy policy and regu­

Energy market transparency and integrity are

lation has been recognised from the outset as a

b e lo w

core activity for an association representing the

also issues of particular relevance for the proper

Figure 2.

functioning of European gas markets. Pro­moting transparency and integrity, while preserving the

EUROPE ’ S G AS HUBS

liquidity and depth of the markets is a priority for EFET. Therefore, the Federation has supported the

Virtual hub in entry-exit system

European Commission as it has developed its

Physical hub Physical hub with virtual trading point

proposals for a Regulation on Energy Market Integrity and Transparency (REMIT) and welcomes

Mature, liquid hub with price transparency

the move to put in place a harmonised European regime, whereby regulators may receive necessary information about transactions. Their access to

NordpoolGas

Less mature or less liquid hub, with growing price transparency

TTF

NBP

Gaspool

Future hub ZEE

such information should ensure that they can

Active exchange trading

effectively monitor markets.

Strong price link

The future regime must, however, be carefully

Weaker or expected future price link

designed, so as not to harm the market, nor

PEG-N

TIGF

PEG-S

CEGH

NCG

PSV

AOT

hinder its development. It will be important to tightly define (in implementing measures) what

EFET :

Pro m oti ng

Wholesale

Gas

Mark ets

191


interests of European power and gas traders.

l Each ISO’s system has one balancing zone;

EFET is known for working quickly and profes­

l Bid and offer prices are used for cashing out

daily imbalances;

sionally to analyse issues that affect the operation of Europe’s wholesale energy markets. The

l Robust and liquid gas futures markets exist; and

relevance of the Federation’s analyses of these

l Capacity rights for any individual transfer route

issues is made possible by the experience of our

are in the hands of many companies.

geographically diverse membership and by our

Now, in 2011, entry-exit systems are indeed

emphasis on maintaining a flexible organisation,

the norm and TSOs are increasingly independent.

in which whenever possible, decisions are reached

Competition authorities have addressed several

by consensus. Conflicting national or sector

market foreclosure issues and pipeline, storage

positions are discussed internally, with the end

and LNG capacity is increasingly in the hands of

result being the publication of EFET position

many companies. New EU Network Codes are

papers that have been objectively and carefully

being written for pipeline capacity allocation and

argued. Table 1 lists examples of some position

for market-based balancing. There is no doubt

papers published by the EFET Gas Committee

that the conditions are improving for gas trading,

over the past few years.

and with the continuing influence of the European

Five years ago, the EFET Gas Committee set out

Federation of Energy Traders the vision of robust

a vision for the European gas market, in which:

and liquid gas futures markets throughout Europe

l Entry-exit systems are the norm;

will be a reality.

l Independent system operators (ISOs) are

established;

Maria Popova (M.Popova@efet.org) is EFET’s

l Long-term contracts that foreclosed the market

have been changed; right

Table 1.

Policy and Communication Officer and Secretary of the EFET Gas Committee.

SO M E E X A M PLES OF EFET G AS POS I T I ON PAPERS EFET Response to ERGEG Consultation on a Conceptual Model for the European Gas Market, January 2011 EFET Response to the ERGEG Consultation on Transparency Requirements for Natural Gas, November 2010 Framework Guidelines on Gas Balancing, June 2010 Essential Elements of a Guideline for Congestion Management, March 2010 Essential Elements of a European Framework Guideline for Capacity Allocation, February 2010 EFET-Eurogas Joint Note on LNG Harmonisation, December 2009 EFET Interim Paper on Interruptible Capacity, November 2009 Gas Storage in Europe – Adding Security through Flexibility, July 2009 Common Position of EU Gas Industry Associations on Regional Cooperation, June 2009 The Allocation of Primary Gas Capacity, September 2008 Market-based Balancing, May 2008 Regional Gas Grids – towards the Single European Market, October 2007 Enabling Secondary Market Gas Capacity Trading, March 2007 Note: All EFET gas position papers are available for download from the EFET website (www.efet.org).

192

EFET :

Pr o m ot i n g

W h o l e s a le

Gas

Mark ets


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Ten years ago natural gas was used for vehicle

The Breakthrough Decade for NGVs

fuel in about 40 countries around the world; today this “NGV Club” has over 80 dedicated members. It is also interesting to note that during this decade

By Eugene Pronin, Davor Matic and Manuel Lage

the “centre of NGV gravity” shifted away from Latin America. Pakistan (2.5 million NGVs), Iran

The first decade of the new century and the new

(2 million) and India (0.9 million) are among the

millennium is over so now is a good time to take

world’s top NGV nations. Adding China (0.5

stock. For the NGV industry the beginning of the

million), these four countries account for almost

21st century was extremely successful. During the

50% of the world NGV fleet.

last 10 years isolated national markets have

Another noteworthy fact is the change in the

matured into a global business community that

top 10 list between 2000 and 2010 (see Figure 1).

brings together politicians, the gas industry, vehicle

Argentina, Brazil, India, Italy and Pakistan are still

manufacturers, passenger and goods transpor­

there on the list, while Canada, Egypt, Russia, the

tation companies, producers of cylinders and other

USA and Venezuela have left and let Bangladesh,

on-board equipment, the cryogenics business and

China, Colombia, Iran and Ukraine into the

many other stakeholders.

champion’s club. These 10 leading nations have

Statistics from different sources may vary but the general trend is clear: the market is growing.

10.8 million NGVs between them amounting to 91% of the world NGV fleet.

In 2000, there were 3,500 CNG filling stations

market as a whole (see Figure 2), it is particularly

locations where gas vehicles can be filled with

interesting to see the 26% annual growth from

CNG, LNG or biomethane. The world population

2001 to 2008, when this forecast was made.

of NGVs has grown from 1 million vehicles in

The expected volume in 2010 was achieved,

2000 to 12 million in 2010 and gas consumption

giving more credibility to the annual growth

from 2.4 bcm to approximately 30 bcm.

forecast of 18% for the years to come, which

N G V FLEETS 2 0 0 0 AND 2 0 1 0 I N TOP 1 0 COUNTR I ES ( M I LL I ONS )

2000

2010 3000

500 450 400 350 300 250 200 150 100 50 0

2500 2000 1500 1000 500

NGVs (thousands of vehicles)

T h e

B r e a kt h r o ug h

De c a d e

for

NGVs

na ol um bi a U kr ai Ba ng ne la de sh

ly

hi

C

Ita

n nt in a Br az il In di a ge

an

Ira

ki st Pa

NGVs (thousands of vehicles)

Source: GVR and IANGV

194

Ar

A

rg en tin a Ita Pa ly ki st an U Ve ne SA zu el a Br az i Ru l ss ia Eg C ypt an ad a In di a

0

C

right

Figure 1.

Looking at the development of the world

around the world; and now we have 18,300


N G V W ORLD M AR K ET FORECAST

What other major changes did we see on the

single filling station increased from 287 in 2000

40

2007 7 million NGVs

30 2001 1.7 million NGVs

20 10

to 656 in 2010. It has been noted on several

0

91

occasions that the best economic return from a

19

CNG filling station will come when it serves 1,000 NGVs.

50

97 19 99 20 01 20 03 20 05 20 07 20 09 20 11 20 13 20 15 20 17 20 19 20 21 20 23 20 25

The average number of NGVs served by a

2020 65 million NGVs (9% market share)

60

95

decision-making processes.

70

93

they mirror general trends and could be used in

13 years, assuming 18% annual growth

80

19

necessarily reflect the true situation of the market,

Worldwide NGVs (million)

global NGV market during the past decade? Although average numbers do not always

6 years 26% annual growth

10 years 15% annual growth

19

by 2020.

19

would mean some 65 million NGVs in the world

Source: NGVA Europe, NGV Global

So far the world annual average consumption of natural gas per NGV has not changed dramatically. It remains at the same level as 10

invest, promote and support the use of natural gas

years ago: about 2,300 m per vehicle. Light duty

as a motor fuel.

3

automobiles prevail, whereas medium and heavy

have realised the unique and integral combination

NGV fleet. In China, France, South Korea, Spain

of environmental, economic and social advan­

and some other countries where relatively large

tages of natural gas which, taken together, make

numbers of medium and heavy duty vehicles are

CNG and LNG the most eco-efficient transportation

used, average yearly consumption can reach

fuel. It is for that reason federal and municipal

11,000, 20,000 or even 30,000 m3 per vehicle.

authorities in many countries extend financial and

Another numerical indicator of NGV success annual gas sales per filling station. In 2000, it was

Figure 2.

Politicians and governments in many countries

duty vehicles make up only 5.8% of the world

during the past decade is the growth of world

above

administrative incentives to all participants in the NGV market. Retrofitting is still the major source of NGVs

just under 700,000 m3, and in 2010 it reached

around the world. However, more and more

900,000 m3.

original equipment manufacturer (OEM) gas vehicles are being marketed. There are now over

l  Key progress points

80 NGV models manufactured by almost all

Quantitative indicators alone cannot give a

major automotive companies.

complete picture. Important ideological, political

Natural gas technologies have been

and technological progress has been made in the

successfully tested and approved for nearly all

global NGV market.

transport applications. Apart from the increas-

A key achievement is that in a number of

ingly commonplace gas-powered cars, buses or

positive cases, there is no longer a chicken-or-egg

trucks, there are sea ferries and aircraft, railway

dilemma regarding the provision of refuelling

loco­motives and tuk-tuks, airport handling equip­

stations and the take up of NGV vehicles. Gas

ment and fishing boats, forklifts at storage

companies all over the world – big or small,

facilities and snow groomers in ski resorts –

government owned or private – have said a

natural gas is safe, clean and offers price

definite “Yes” to the NGV market. They lobby,

advantages everywhere.

The

Brea kthrou gh

Decade

for

NGVs

195


Recent studies which also involved interviews1

Natural gas/hydrogen blends demonstrate high

with OEMs show the positive attitude of (European)

environmental benefits and economic efficiency.

OEMs towards CNG as a cost-effective way to

These blends could be produced at the CNG

meet EU criteria (regarding NOX and CO2

filling stations or onboard the vehicle.

emissions) with downsized petrol engines.

No real commercial success has been achieved

But NGV markets need optimised engines.

in adsorbed natural gas (ANG) technologies,

New generations of CNG vehicles are likely to

although R&D projects have been carried out

move into other regions in parallel with the

in a number of countries. It is realistic to expect

development of more stringent national and

tangible progress in the ANG area in the

local standards.

next decade.

Unfairly forgotten for a time, dual fuel (diesel/

Gas-to-liquid technologies (GTL) remain

natural gas) heavy duty vehicles have returned to

promising although so far the actual intro­duction

the market.

of GTL falls far behind original expectations.

Radio frequency identification (RFID) tech­

Not only NGV technologies are maturing.

nologies have been introduced into the NGV

There is a lot of international activity going on

market to help improve the safety of high-pressure

around the world and relations between IGU and

cylinders.

the UN Economic Commission for Europe

A new generation of ionic compressors has

(UNECE), the European Business Congress (EBC)

recently been introduced. This promising

and major NGV associations are developing. The

technology will exclude the contamination of

“Blue Corridor”, a joint UNECE/IGU NGV study,

natural gas with lubricating oil that circulates

NGV rallies, major international conferences and

inside conventional compressors.

events all over the world – these are just a few

The biofuel community has finally found a way to avoid sacrificing land or other resources in order to make fuel for vehicles. Second gener­ation

examples of true cooperation. Summarising NGV technology developments in the medium-term, we will see more and more

biomethane collected during organic waste

products along five main lines:

processing is probably the best transpor­tation fuel

l CNG hybrid vehicles, for urban bus

from a “green” point of view. Moreover, pipeline-

applications;

quality methane injected into the distri­bution grid

l Dual fuel technology for heavy duty trucks;

requires no new midstream or down­stream

l Biomethane used directly or mixed in different

technologies. The infrastructure is already in place for all categories of end customers including vehicle owners and operators. How­ever, it must also be stressed that biomethane will always be

proportions with natural gas, reducing notably the well-to-wheel CO2 balance; l LNG in trucks and buses for medium- and

long-distance road transport; and l Methane/hydrogen blends, as a bridge to

more expensive than natural gas. Different kinds of LNG and liquefied-to-CNG

eventual hydrogen-based mobility.

equipment are flourishing in many countries. The time of liquefied NGVs is still to come but this will

l  Towards 2020

happen soon.

The results of the past decade leave no space for doubt: very solid foundations for the global NGV

1  CNG as an automotive fuel for Europe/CEE: Is it possible to achieve 5%+ market share for CNG? Necessary steps and actions to achieve, Duisburg-Essen University, Centre for Automotive Research, March 2010.

196

T h e

B r e a kt h r o ug h

De c a d e

for

NGVs

business have been laid down. The second decade of the 21st century is the time for really big projects all over the world to make at least 50


million NGVs a reality. To achieve this goal it appears reasonable to: l Develop, modernise and harmonise missing

and/or conflicting national and regional NGV legislative and regulatory regimes for filling station infrastructure and NGV construction and operation;

trate on railway locomotives, air- and watercraft with significant fuel consumption; l Increase the use of LNG/LBM where logistically

and economically viable; l Obtain pan-European permissions and

approvals for onboard LNG tanks for NGVs; l Continue R&D on hydrogen, GTL and hybrid

l Eliminate the remaining barriers that hinder the

technologies for the transportation sector;

transit of methane-powered vehicles between

l Continue the introduction of advanced tech­

countries and continents; l Strengthen cooperation between the gas

industry, NGV manufacturers, qualified vehicle modifiers (QVM) and national and local governments; l Build up networking between international

nologies to increase the safety of NGVs systems (like RFID); l Spread knowledge about the benefits of NGVs

among politicians, managers and the general public; l Organise promotional events (such as NGV

organisations such as UNECE, IGU, ISO and

rallies and caravans, trade shows and

EBC and the major NGV associations;

conferences).

l Invite governments and private businesses

to launch large-scale international

And the world gas industry must preserve its leading role in this process.

NGV projects; l Create a comfortable environment for investors

and other stakeholders; l Broaden NGV diversity by introducing new

Eugene Pronin of Gazprom is the President of NGVRUS, Vice Chairman of WOC 5 and the Leader of SG 5.3; Davor Matic of OMV Gas Adria

types and makes of vehicle, particularly heavy

d.o.o. is Deputy Leader of SG 5.3; Manuel Lage is

duty ones with 420+ horsepower engines;

the General Manager of NGVA Europe and a

l Reach beyond on-road vehicles and concen­

member of SG 5.3.

The range of vehicles which took part in the NGV rally “Blue Corridor 2010” highlights the breadth of possibilities for NGV development.

The

Brea kthrou gh

Decade

for

NGVs

197


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elopment of a specialised premium-class segment,

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deep, high pressure, horizontal/directional, and

products capable of with­

other challenging environments, including shale

standing today’s challenging drilling environments.

X  OCTG pipes at TMK’s Blytheville facility.

deposits. Given their success, demand for ULTRA

In particular, pipes threaded with gas-tight

products has been rapidly increasing with eight of

connections provide additional durability and

the top twelve operators working in such US shale

improved well integrity while

plays as Barnett, Haynesville and Marcellus now

making it possible to operate

using the ULTRA line of connections.

in the most severe and high-

Z  Pipes undergoing heat treat­ ment at TMK’s Baytown facility.

market, the world’s largest pipe market, and

Although the industry has known about shale

pressure conditions. Mirror­

gas for decades, developing the technology to

ing this trend, the world’s

extract it safely and economically has posed a

lead­ing pipe producers, inc­lu­

major challenge. The extreme depth, pressure and

ding TMK, one of the three

narrow pay zones of these shale plays are signifi­

global market leaders, are

cant barriers that vertical drilling simply cannot

actively developing premium-

overcome. However, advances in horizontal drilling,

class products, which has led

hydraulic fracturing and rising natural gas prices

to the creation of a truly

during the past several years have finally made

unique business segment.

recovery of unconventional shale gas resources

TMK has spent the last several years developing

financially viable. There are sufficient quantities of

its premium segment and now offers a range of

recoverable shale gas in North America – up to

proprietary premium threaded connections. Prior

3,842 tcf – to supply US natural gas needs for 45

to the development of TMK’s

years. Shale gas also may account for more than

premium portfolio, connec­

30% of the technically recoverable gas reserves in

tions had to be imported on

the US. Finally, even with the recent decline in

the Russian market. TMK’s

natural gas prices, advances in technology have

first breakthrough came with

allowed drilling in unconventional environments to

the TMK GF premium

remain economical.

connec­tion which was

Even with the advances in drilling technology

specifi­cally designed for

and hydraulic fracturing, it has become apparent

directional and horizontal

that there was tremendous need for a new breed

wells. Nowadays, this

of premium connections designed specifically to

connection is popular not

master the shale plays. The demand for equal


strength in both tension and compression, high torsion strength for rotation and superior sealing

premium connection developed by TMK IPSCO. Challenging drilling and operating environments

through metal-to-metal seals separated TMK

call for specialised main­tenance and repair services.

IPSCO’s ULTRA product line from every other type

Oil and gas operators need

of premium connection on the market. The

more than just pipe; they

superior strength, performance and value of these

require the supply of the

products make them the leading premium

entire pipe column to the well

connection choice of major and independent

site accompanied by related

operators alike.

field services. To provide its

ULTRA Premium Connections have been

customers with added value

produced in Odessa, Texas since 2004. They are

beyond premium connections,

also being produced currently at several other TMK

TMK has also positioned itself

IPSCO facilities – in Houston, Texas; Catoosa,

as an oilfield services

Oklahoma and Brookfield, Ohio.

company that supplies high-

North American drilling activity and resulting

performance premium

pipe consumption continued its post-crisis recovery

connections and the full range of support services

in 2010, buoyed by increased activity at onshore

including heat treatment, coating, threading, and

oil fields, a shift to wet natural gas drilling and the

technical support during running operations.

increasing complexity of unconventional drilling. In

Today, TMK premium

2010, more than 295,000 joints containing ULTRA

products benefit from the

Premium Connections were produced at TMK

Company’s extensive market­

IPSCO facilities in North America, which was a

ing network and enjoy a

36.5% increase over 2009.

strong foothold in the North

As in the United States, shale drilling will likely

Z  The OCTG pipe storage area at TMK’s Brookfield Ultra facility.

American, European, CIS,

be applied in Europe, which holds its own wealth

South-East Asian and Middle

of shale gas in regions such as Poland, northern

Eastern markets.

Germany and the southern North Sea. Innovations such as ULTRA Premium Connections will be

TMK (www.tmk-group.com)

needed to access those resources.

TMK is one of the world’s

In Russia, the potential use of premium

leading manufacturers and

connections in challenging environments remains

suppliers of steel pipes for the oil and gas industry.

strong with the implementation of offshore

Founded in 2001 TMK operates 23 pro­duction sites

projects in the Caspian Sea, the continental shelf

in the United States, Russia, Romania and

of Kamchatka and the Sea of Okhotsk, and the

Kazakhstan. TMK has the world’s largest steel pipe

development of the Arctic.

production capacity, of which about half is

Given these market prospects, TMK has been

dedicated to the production of high margin oil

actively expanding its product range. In particular,

country tubular goods (OCTG). In 2010, total pipe

TMK specialists have been developing the TMK PF,

sales amounted to approximately 4 million tonnes.

a new premium threaded connection comparable

TMK supplied customers in more than 65 countries.

to other global market-leading premium

TMK’s ordinary shares are listed on the RTS and

connections. The Company will soon offer

MICEX stock exchanges in Russia. Its GDRs are

customers a double-flash welded drill pipe joint

traded on the London Stock Exchange and ADRs

known as the TMK TDS, the gas-tight TMK CWB

on the OTCQX International Premier trading

connection and the much anticipated DQX

platform in the US.

Z  OCTG pipes with Ultra Premium Connections ready for transportation from TMK’s Odessa Ultra facility.


Russia’s Initiative in UGS Education and Training

analysis and improved performance prognosis.

By A.E. Arutiunov, S.A. Khan and M.P. Khaydina

might satisfy the broad professional, technical and

High levels of UGS automation also imply the need for minimal staffing. No high school trains licensed specialists who managerial requirements of a UGS staff member.

In common with other branches of the gas

As a rule UGS companies have to employ speci­

industry, the storage sector is beginning to see a

alists with a standard industry educational back­

short­age in technical skills. This is a critical issue

ground: geological, geophysical, drilling, develop­

for companies engaged in the operation or

ment of oil and gas fields, engineering and

maintenance of existing facilities, or who are

process systems, etc. The know­ledge of any of

developing new projects. In Russia the issue has

these specialists is very specific. At best, they have

been addressed with an initiative to build specific

experience in gas field development and

curricula dedi­cated to underground gas storage

operation.

(UGS) competencies.

JSC Gazprom has considerable experience in

The UGS sector has been a part of the gas

UGS construction and operation and, since 2006,

industry for approximately 100 years and its

has used this experience to offer programmes

operations are characterised by some specific

designed to provide all-round training and

peculiarities. For example, gas field exploitation

retraining as well as to raise the skill level of UGS

causes a constant and gradual decrease in

staff. Curricula have been developed by JSC

working pressure and a relatively constant

Gazprom’s Transportation, Underground Storage

withdrawal rate, which is not the case in UGS

and Gas Utilisation Department under the control

surface facilities or in their reservoirs. This requires

of Professor, Doctor of Sciences O.E. Aksiutin and

additional expense for the overhaul and ongoing

Candidate of Sciences S.A. Khan. A.E. Arutiunov is

repair of UGS assets, for diagnostics and for geo-

also taking an active role. The coordinator of the

technological inspection. Besides the alternation of

project is the Head of JSC Gazprom’s Department

maximum and minimum allowable reservoir

of Staff Management, E.B. Kasian.

pressures throughout the year, the mobility and the

Gazprom and organisations which have scientific,

the coordination of well construction and overhaul

intellectual and teaching potential, and which also

activities with UGS exploitation regimes, explor­

have appropriate experience and staff to take on

ation and fields. This means that UGS staff need

the work. Leading educational and scientific

specialised knowledge and skills in addition to

centres are involved such as Gubkin Russian State

having standard geological and engineering

University of Oil and Gas, Gazprom VNIIGAZ Ltd

capabilities.

and the Institute of Fuel-Energy Complex Staff

Underground storage installations are mostly

200

The curricula are jointly designed by JSC

direction of gas-water contact movement requires

Development Issues (ISD FEC). The following

situated close to gas consumers and inhabited

curricula are currently offered:

districts, generating specific demands for industrial

l A Master’s programme in UGS from Gubkin

and environmental safety. Modern UGS

University’s Gas Technology and UGS

installations are expensive and complicated

Department (with certain studies at Gazprom

industrial facilities. They are equipped with

VNIIGAZ Ltd);

integrated systems, incorporating subsurface and

l A programme of complementary professional

surface modelling in order to allow for fast system

education (about 1,200 hours) leading to a

R us si a’ s

I n i t i a t iv e

i n

U GS

Educat i on

and

T rai nin g


qualification as a specialist in the field of UGS, (ISD FEC); and l Two independent programmes for raising the

level of skills (each comprising 72 hours of tuition) which are taught separately at Gubkin University and Gazprom VNIIGAZ Ltd. All these programmes are included in JSC Gazprom’s continuing professional education system for staff. Another new educational skill conversion programme was prepared in 2009 entitled “Creation and Operation of UGS”. The course of 592 hours will be run by ISD FEC and

Surface installation at the Karashurskoe UGS facility in Russia.

launches this year. All the programmes satisfy the requirements of the State educational system of

After successful graduation and the presen­ tation of the degree thesis, graduates receive the

the Russian Federation.

State standard diploma. It is a certificate of addi­

There are now 11 Masters who are official speci­alists in UGS and this year six students are set

tional education with a complementary qualifi­

to graduate and become Masters. The initial 10

cation given.

students who followed the programme of comple­

Under the two-year programme, studies are

mentary professional education successfully presented

mainly carried out on a correspondence basis with

their qualification papers in December 2009, and 12

students also studying eight on-site modules

more students are following this programme. They

during the course. Each module lasts two weeks.

will finish their education in December 2011. Each

The eighth and final module is dedicated to the

year more than 20 people increase their skill

thesis, the State examination and the presentation.

levels after the 72-hour programme in Moscow.

Students also have personal study work and essays to complete between modules.

l  Study requirements

Students wishing to study on the new Master’s courses must already have a Bachelor’s degree or be experts with qualifications including oil and gas specialisations, from Russia or elsewhere. Studies are divided between the premises of Gubkin University and Gazprom VNIIGAZ Ltd, and take two years to complete. Master’s thesis super­ visors are high-level specialists from JSC Gazprom, Gazprom VNIIGAZ Ltd, Podzemgazprom Ltd, or Gubkin University. Students who enrol in the complementary pro­ fessional education courses must already have higher education qualifications (possibly but not necessarily in fields such as geology, geophysics, drilling, development, oil and gas recovery) as well as UGS experience.

R u s si a’ s

Russia has an extensive network of UGS facilities to balance its gas requirements throughout the year.

I n i t i a t iv e

in

U GS

Educat i on

and

T rai nin g

201


education. Most of the students are employed by Gazprom subsidiary companies with more than 80% employed by Gazprom UGS and its branches. Further development of the UGS professional education system is coordinated by JSC Gazprom’s Department of Transportation, Underground Storage and Gas Utilisation. For the 2011-2013 period, study materials including lectures and manuals will be prepared on the basis of the existing experience in the main Gubkin Russian State University of Oil and Gas teaches the core disciplines for the UGS curricula.

courses: The role of UGS in the gas supply grid; Search for and exploration of geological structures for UGS creation; The peculiarities of drilling and

Students on the skill conversion course

well design at UGS facilities; Computer simulation

“Creation and Operation of UGS” must have

of UGS operation; Control over UGS operation;

either secondary or special technical education or

Theory and practice of UGS design; Economic

work experience in the field of UGS. This is a

indices of UGS operation; Surface complex of

shorter course and in addition to the corres­

UGS equipment; Ecological monitoring of oil

pondence work there are five on-site modules.

and gas fields and UGS; and, Usage of horizontal

The fifth module is dedicated to the progress of

and multilateral wells while creating underground

the thesis and the State examination.

gas storage.

Having successfully graduated and after their

The curricula are dedicated to specialists from

thesis has been represented at a State examination,

the CIS and neighbouring countries which cooper­

the graduates receive the State standard diploma.

ate with JSC Gazprom. Courses have been dev­

This certificate opens opportunities to start a

eloped with a pragmatic approach and students

professional career in a new sphere of activities.

have to know Russian or be ready to study it.

The Gas Technology and UGS Department of

Russian may be taught at the Russian language

Gubkin University is in charge of the professional

department of Gubkin University. Furthermore, an

education in collaboration with the University’s

International Master’s programme has been

Gas Department. The Gas Technology and UGS

proposed in cooperation with a European

Department was organised in 2001 with the

university. All lectures will be in English.

support of Gazprom VNIIGAZ Ltd.

Thus the curricula for preparing specialised

The internationally renowned specialist, Doctor

staff for UGS design, construction and operation

of Sciences, Professor S.N. Buzinov is the scientific

are a key component for the manpower develop­

head of the Gas Technology and UGS Department,

ment needed to serve the united Eurasian gas

with leading specialists from Gazprom VNIIGAZ

supply system.

Ltd delivering lectures. The core disciplines as well as some specific

202

Sergei A. Khan of JSC Gazprom served as

ones are studied at Gubkin University and the

Chairman of Working Committee 2 (2003-6) and is

professors, drawn from different faculties have

currently a member; A.E. Arutiunov of Gazprom

experience in manpower development for the oil

PHG Ltd and M.P. Khaydina of Gubkin Russian

and gas industry. The Gas Department coordinates

State University of Oil and Gas participated in the

the academic contributions to this new branch of

second WOC 2 meeting of 2010.

R us si a’ s

I n i t i a t iv e

i n

U GS

Educat i on

and

T rai nin g


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A Fresh Look at the Old World: Methods to Study European and Russian Gas Markets to 2030 By Eric Vambert and Marcos de Freitas Sugaya

P is the price or the cost per volume or energy contents, assumed constant over the lifetime of the asset (€ MWh, $/MMBtu, Nok/m3, etc). N is the life­ time of the asset, k is a given year from the start of the project (0) to its decommissioning (N), Vk is the corresponding volume of natural gas produced or used, “r” is the discount rate, Capexk is the capital expenditure in the year “k”, and Opexk is the operational expenditure, including taxes.

This article describes and analyses a number of

Given the fact that the discount factor “r” is

methods that can be used to study gas markets in

included in the equation, the price of equilibrium

Europe and Russia, highlighting the most suitable

“P” gives a return that pays for the cost of capital.

for each step of the gas value chain.

Over the life of the asset, the revenue will fluctuate

To study costs along the value chain, we can use

around an equilibrium point, depending on price

a method based on the levelised cost of energy

and volume, and the cost of capital and expendi­

(LCOE). The wholesale market organisation is

tures may vary as well.

assessed along with the metrics of efficiency to

Refinements to this equation can be numerous; for

trigger investments, and security of supply is

instance, tax rates are high in the upstream segment

studied as a competition between several options.

and they should be taken into account either

End-user markets are debated in terms of key

independently or in the Opex. However, the simplicity

aspects such as price level, volatility, transparency,

and the fact that one can compare assets that are

taxation and stability of demand. But above all, it

very different in nature, with significant variations in

is important to assess the effectiveness of the legal

lifetime, make Equation 1 very useful and convenient.

and regulatory framework, as it may have a severe

In the end, the build-up of cost along different routes

impact on a number of steps of the gas value chain.

from production site to final user gives a good picture

This set of methods should allow us to make

of the cost for gas in the long term.

recommendations to strengthen the position of

Margin repartition fluctuates along the value

the gas industry on the Eurasian continent. One

chain, but what matters in the end is that the value

interesting outcome of the study will be the

creation from wellhead to burner tip is the highest

indicative conclusion that natural gas should be

possible. The study will therefore focus on a global

one of the preferred energies of the future in

industry approach and not margin repartition (see

Europe and Russia.

Figure 1). Nonetheless, additional factors affecting margins can be important such as:

l  Cost along the value chain

l Rent for the producer;

The LCOE method, summarised in Equation 1,

l Margins in wholesale and retail markets;

yields a most reasonable evaluation of the contri­

l Margins due to favourable conditions or

bution of an investment in the gas value chain.

scarcity of resources; and l Potential of loss due to reduced volumes or prices.

Equation 1.

Σ N

k=0

204

Σ

l  Wholesale markets and price formation

N

P*

Vk ( 1 + r)

k

=

k=0

Capexk + Opexk ( 1 + r) k

There is no such thing as a single market in Europe. Not only are there different locations but also the organisations, the price settlement and

A F r e s h Lo o k at t h e O l d W o r l d : M e t h o d s to S t u dy E u r o p e a n a n d R u s s i a n G a s M a r k e t s to 2 0 3 0


positioning along the value chain differ greatly from place to place (see Figure 2). The long debate over which system is the best has not

BU I LD - UP OF COSTS ALON G THE G AS V ALUE CHA I N

reached and probably never will reach a conclusion.

Enduser

Costs along the value chain include Taxes Margins Cost of Sales

Long-term gas contracts have a good track record in developing the gas industry in Europe,

Costs h €/MW

whereas organised market places (namely Henry Hub) have been successful in making North America one of the biggest gas markets in the world. There is no “one size fits all” in market organisation. Often, the metrics derived from the financial

Exploration & Production

International pipeline or LNG

National Transport

Storage

Distribution

world such as transparency and liquidity do not apply well in the energy industry. Crude oil markets are a success regarding financial metrics, yet they do not always succeed in reaching low and stable prices for the end user. That is why we have to look

Figure 1.

SU I TABLE LOCAT I ON FOR M AR K ETPLACES OR LON G -TER M CONTRACT PO I NT OF DEL I V ERY

beyond the framework of wholesale market organisation and develop a pragmatic approach. What matters in the end is to find the best market organisation that benefits the whole gas

Exploration & Production

International pipeline or LNG

Storage

National Transport

Distribution

industry. A practical example for price formation on the wholesale market is given in Figure 3.

Potential location for wholesale market Over the counter (OTC) or organised

The price level does not depend entirely on the market organisation; price fluctuates between the netback value at the wholesale market point (upper value) and the incremental cost of production. Nonetheless, from time to time price can be out of this theoretical range. In the pragmatic approach developed, the cost of market organisation is analysed and its effects

Figure 2.

PR I CE FOR M AT I ON I N W HOLESALE M AR K ETS

Price

on key aspects of the gas industry com­puted,

el ion Futitut s b su

including security of supply, end-user price level and stability, and even the indication of triggers for appropriate and timely investments. The best wholesale market organisations are

Replacement value oriented price

Technology

in today’s environment, but will also adapt easily to changes that may happen in the future.

The first aspect of security of supply (SoS) is to provide gas, on a business as usual basis. Invest­ ments needed to produce and transport this gas to

Production cost oriented price

Scarcity

Oversupply

on

uti

stit

ub

ls Fue

Resource Rent

those that are not only flexible enough to per­form

l  Security of supply

Supply curve

Ge dis olog tan y/ ce

Economic Growth

Demand curve

Volume

Production Capacity Limit (depends on policy and resources) Note: Figure inspired by: Evolution of Gas Pricing in Continental Europe: Modernisation of Indexation Formulas versus Gas to Gas Competition, Dr Andrey A. Konoplyanik, University of Dundee, Centre for Energy, Petroleum, Mineral, Law & Policy, 2010.

Figure 3.

A F r e s h Lo o k at t h e O l d W o r l d : M e t h o d s to S t u dy E u r o p e a n a n d R u s s i a n G a s M a r k e t s to 2 0 3 0

205


customers are significant, and they should be

point of view as an additional service to provide

developed in a timely manner. Such invest­ments

to customers.

are decided according to reasonable expectations

Therefore, one can chose a rather different

of developments in gas markets. They mirror the

methodology that relies on more stable and

security of demand in the long term. Therefore,

predictable assumptions. In Western Europe the

we think that the first aspect of SoS is to be

actual level of safety for the system is usually

addressed in the topic of end-user market

imposed by law or regulation, this is a good

analysis. A second SoS aspect concerns accidents

starting point to find the best way to provide SoS

along the gas chain (e.g. a supply disruption

on a reasonable basis.

during abnormal weather conditions).

Once the security target is settled, one can

A method to evaluate the value of SoS can be

work on the best means to ensure it. A good path

derived from electricity markets where the metrics

is to arbitrate between different sources of supply,

of lost load values are used. A value of lost load

such as additional storage, additional international

represents the cost entailed to end-users in case

pipelines, reverse flow investments, or additional

of a supply disruption. The values involved are

LNG regasification capacity1. Figure 4 presents

very high, because electricity is essential to

typical breakeven points between major alternative

many businesses and domestic consumers.

supply sources2. Gas sources will be increasingly

Applying this method to gas is not straightforward

distant because of decline of domestic production

because, in addition to the heating applications,

and neigh­bouring mature fields. The method

gas contributes to the SoS of electricity through

we propose takes that into account and relates

power generation. In addition, customers are

distance to economics. In addition, it takes into

not always willing to pay the real cost of what

account different types of storage. Should flexi-

they want.

bility needs change in Europe following the

It is also possible to consider demand-side management to delay or decrease the gas

evolution of customer portfolios, this could be taken into account.

consumption in the end-user market, thereby b e lo w

Figure 4.

avoiding additional investments. However,

l  End-user market and security of

we would rather look at it from a marketing

demand The European gas markets have been the object

COST OF ADD I T I ONAL G AS AS A FUNCT I ON OF THE D I STANCE I N V OLV ED

of many high-level studies but forecasting gas consumption in 2030 is not an easy task. However, it is a necessary one because this is the time horizon for investments in gas

Cost for additional capacity dedicated to security of supply €/MWh or €/m3/day

infrastructure. G

ge

ran

N rL

fo

st e Co for pip ange Cost r Cost range for storage

Distance of supply (km)

A common method relies on linear optimi­sation to balance supply and demand relying on longterm trends. However, this type of reasoning often leads to volatile results and to huge upward 1  Cost Curves for Gas Supply Security: The Case of Bulgaria, EPRG Working Paper 1031, Cambridge Working Paper in Economics 1056, Florent Silve and Pierre Noël. 2  Methodology currently developed under the supervision of Martin Schwarzbichler, OMV.

206

A F r e s h Lo o k at t h e O l d W o r l d : M e t h o d s to S t u dy E u r o p e a n a n d R u s s i a n G a s M a r k e t s to 2 0 3 0


ALL THE DATA YOU NEED.

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www.PlattsHasTheData.com OIL S H I P PING

PETROCHEMICA L S RENEWABLE S

N AT U R A L E L E C T R I C

G AS

COA L

P OW E R

M E TA L S


or downward revision3. Another pitfall to avoid

role of Trojan Horse to promote more value-

is to put too much importance on the actual

added services.

mood of the gas industry. Everyone remembers

A first step is to assess the maturity of the gas

the optimistic growth scenarios elaborated in

market in a given area, considering each

2007-2008, followed by a downward revision

of the market segments to find where value

of forecasts in 2008-2009. Forecasts are

can be extracted. Customer segments can be

frequently unstable, but key factors that allow

power generation, domestic, industry, natural gas

or prevent growth in gas markets are often

vehicles, natural gas as feedstock and

the same.

side products.

Therefore, another way to proceed is to

A second step, for each segment, is to identify

use or develop toolboxes to predict where

the levers. The first lever to be addressed is

the market is heading. Ideally, the method

competitiveness, followed by the legal and

proposed should work as a compass and

regulatory framework (including CO2 emissions),

map to allow the user to find the best path

societal factors and the image of natural gas,

to value in a changing environment (economic

marketing and innovation (technology, effici­ency)

and legislative). It should allow break-

and additional value creation (comple­ment­arity

through thinking and not only trends

with renewables, services, etc). Competitiveness is assessed against other

reasoning. The methodology should be value oriented

energies (commodity prices) but also against

because in mature markets, where the volume

the cost of investments, which can be related to

growth can be low in some segments, one can

raw materials, mining, inflation, etc4. At the same

find new growth in value instead. Reasoning

time, for each lever and segment, the assess­ment

based on value broadens the scope of

of the leverage effect on value creation (related

products and services that can be proposed

to gas sales) is measured and forecasts can

to the customer. Natural gas can play the

be produced on the expectation of growth in each segment.

b e lo w

Figure 5.

3  GEM, published by Observatoire Méditerrranée de l’Energie (OME), October 2009, article “The Role of Supply-Demand Forecast in Long-term EU Natural Gas Security”.

The pursuit of new developments takes place in a changing framework of competing energies, taxes, environmental and security

G AS W I LL BE ONE o f THE FUTURE PREFERRED FOR M S OF ENER G Y I N EUROPE AND RUSS I A Security of demand New needs New value

Growth Exploration & Production

International pipeline or LNG

Storage

National Transport

Distribution

Electricity Coal Oil & Derivatives

Security of supply Industry efficiency

Regulatory and legal framework

208

factors. l  Legal and regulatory framework

Customers satisfaction

Natural gas

of supply regulation, among other relevant

A need for heating, electricity, energy or feedstock in Europe and Russia

Government bodies are often concerned with the energy sector, and will not let it set its own rules. In Europe, regulation has left few steps untouched along the gas chain: most of the infrastructure is regulated, except for some international transpor­tation or storage. At the upper end of the gas chain, gas production is 4  From analysis of the relative competitiveness of natural gas for power by Dr Marcos de Freitas Sugaya, Petrobras S.A.; study to be completed under the current PGC C work programme.

A F r e s h Lo o k at t h e O l d W o r l d : M e t h o d s to S t u dy E u r o p e a n a n d R u s s i a n G a s M a r k e t s to 2 0 3 0


less regulated but it is strongly influenced by govern­ment policies; at the lower end, regulated tariffs for final users are still widespread in Europe and the CIS. In addition to rules that directly apply to the gas industry, general environmental or energy laws have a significant influence on the industry’s development. Once again, a pragmatic approach is necessary: what are the costs and benefits of a new set of rules for the gas industry, what are the opportunities created? In a short-term perspective, it is possible to evaluate the effects of a given legal and regulatory framework on the gas industry to verify where it is heading. But a richer approach is to determine what the framework should be to ensure a smooth development of the gas industry. Putting it in the perspective of the long-term investments that the industry needs, one should propose a stable and convenient framework that would give enough room for companies to innovate and grow. l  Conclusion

Gas is affordable, abundant, reliable and clean. But the industry must work hard in all steps of the gas value chain to main­tain its competitiveness and equilibrium and to convince decision makers of the value of natural gas assets. The set of methods we propose have their limi­tations. However, they should allow us to draw a global picture of opportunities for nat­ ural gas in Europe and Russia, by providing reliable analysis useful to stakeholders of the gas industry. Finally, this could help to grow the positive reinforcement loop that is drawn in Figure 5. Eric Vambert of GDF SUEZ is the Leader of Study Group 3, Programme Committee C – Gas

Let us refresh your image of Germany. The German gas market is worth 960 billion kilowatt-hours and is extremely dynamic. An active participant in this market, Bayerngas has developed a strong position in the last 40 years. As an integrated company providing gas trading, storage, exploration & production, pipeline operation and technical services, we procure natural gas on the European market for our customers. This makes us the right partner for importing gas to Germany. Why not contact us?

Markets; Dr Marcos de Freitas Sugaya of Petrobras is the Secretary of PGC C.

www.bayerngas.de


The Ems Gas Pipeline Tunnel – On Time and Budget

River Ems, a major shipping lane and also an

By Enno Freese

The fifth crossed the port of Emden, while the sixth

important nature reserve. Six different ways of crossing the Ems were studied. Four routes were based on a pipeline that went through the estuary. was based on a ring around the city.

On October 1, 2010, the first gas flowed through

The decision was eventually taken to cross the

a new pipeline under the River Ems in northern

Ems itself. Two of the three alternatives were

Germany, marking the completion of phase one of

quickly rejected since they involved a combination

N.V. Nederlandse Gasunie’s North-South

of open excavations and direct drillings, and the

expansion project to expand import capacity.

construction work would have had too great an

Gasunie is responsible for the transport of gas

impact on shipping, and on the ecosystem in

in the Netherlands and northern Germany, and

particular. Gasunie therefore decided to build a

operates a high-pressure pipeline network of

tunnel for the gas pipeline under the Ems, running

15,000 kilometres. Under the North-South

between the north German town of Rysum and the

expansion project, 500 kilometres of new pipeline

Dutch village of Borgsweer. At this point the Ems is

are being built to connect the landfall site for

almost four kilometres wide.

pipelines bringing gas from Norway, which is near the north German town of Emden, with the

l  International group of contractors

Netherlands. In phase one a difficult obstacle had

Gasunie awarded this complex construction project

to be hurdled: Emden lies at the mouth of the

to BAM Combinatie Eemstunnel, a team consisting of the Dutch BAM Civiel and the German Wayss & Freytag Ingenieurbau. These companies contracted Smet Tunnelling from Belgium to build the boring machine. The different types of soil in the ground under the Ems were first mapped. This determined the choice of drill head and cutting wheel. It was expected that there would be mainly sand and clay under the Ems, but the possibility of encountering erratic boulders and peat could not be ruled out. It was reckoned that a tunnel with a cross-section of 2.5 metres would be sufficient to accommodate a gas pipeline with a diameter of 1.22 metres, but this was thought likely to create logistical problems. The difficulty of transporting tunnel elements to the front and the problems involved with utilities and the disposal of bored slurry could, it was felt, pose too great a logistical challenge in this rather narrow space. A tunnel diameter of 3 metres was therefore eventually chosen. The boring machine arrived in sections at the construction site in Rysum at the end of December 2008. In January 2009 it was assembled, named

The cutting head of the tunnel borer.

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and blessed according to tradition. No tunnel-

rim ensures a watertight seal between the elements.

builder will start work until the borer has been

In total, about 20,000 concrete segments were

blessed and a statue of St Barbara, the patron

needed for the construction of the tunnel.

saint of building, has been placed at the entrance of the tunnel mouth. In spring 2009, the borer set

l  Safety

out on its four-kilometre journey.

Working in a long, narrow tunnel meant working

The whole machine was more than 80 metres

with risks. Fire and smoke constituted a particular

long and was made up of the tunnel borer itself

threat to workers. That is why the safety require­

and seven trailers. Behind the cutting head lay the

ments were extremely high. Gasunie abides by

motor and an airtight, sealable chamber where

existing regulations, anticipates new ones, and

the excavation team could shelter in the event of

even goes beyond them. The entire tunnel borer

an emergency. There were also compartments for

was therefore fitted with a sprinkler system. At the

pumps and installations for electricity and air

front end of the borer was an airlock compartment

facilities. Concrete segments with which the tunnel

which was designed as a rescue chamber so that

was lined were delivered at the rear. These

in the event of fire, workers could take shelter

segments were custom-made.

there for up to 12 hours while they waited for

The concrete tunnel segments are reinforced with

help. A special fire fighting engine that could go

steel fibres which prevent splintering of the concrete;

into the tunnel and extinguish any fire was also

this is particularly important at the edges. Six seg­

designed for this construction project. The fire

ments form a tunnel ring with an internal diameter of

service at Emden was trained to operate this

3 metres. A tunnel ring is 1.2 metres long. A rubber

equipment. A personnel gate registered who

During construction small trains were used to transport employees and materials.

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Sections of pipeline await assembly in a string yard near Rysum.

entered and left the tunnel. Each employee had

l  Laying the pipeline

his own emergency breathing equipment with 30

Drilling a tunnel is one thing: the next challenge

minutes of fresh oxygen. In the tunnel, extra

was to lay a pipeline in it. The decision was taken

breathing equipment was located every 800

to lay the pipeline in a way that had never been

metres to enable employees to walk to the tunnel

done before on this scale. For this method to

exit in the event of smoke formation.

work, the tunnel first had to be filled with water so

The tunnel borer covered a distance of about

that the gas transport pipeline could be driven in.

17 metres a day with work going on around the

Before that, the tunnel was cleared of all the

clock in shifts. Small trains travelled back and

equipment relating to the tunnel borer and the

forth transporting employees and construction

final elements to be removed were the rails for the

materials to the tunnel borer. Initially, one train

trains. While this was being done, a layer of

was laid on to provide the excavation team with

gravel was deposited on the tunnel floor. Wooden

the necessary equipment in good time, but after

portals were also installed every 100 metres to

four months of continuous drilling, by which time

prevent the pipeline from being torn by the

the tunnel borer had reached exactly halfway, a

concrete walls of the tunnel during insertion; this

section of passing track was laid and a second

would have damaged the coating. Tests showed

train was brought in. Sixteen metres below the bed

that the gravel bed did not harm the coating of

of the Ems, the two trains passed each other with

the pipeline. The laying of gravel and the insertion

only 5 centimetres to spare. The tunnel is so deep

of the wooden portals took nearly four weeks.

that the navigation channel can still be dredged

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Four pipe strings of gas pipeline with a total

deeper in the future. In November 2009, after

length of one kilometre lay waiting at a string yard

nine months of continuous drilling, the tunnel

near Rysum. Although it had a combined weight

borer had reached exactly the right place at the

of 2,850 tonnes, the pipeline floated on water

construction site in Borgsweer on the Dutch side.

when sealed at both ends. One possible danger,

After that it was dismantled and removed in sections.

however, was that it could have risen too high and

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pushed away the wooden portals. It could then

to expand and contract in response to changes in

have grated along the concrete tunnel wall. It was

pressure and temperature.

therefore decided to completely flood the tunnel

Once this operation had been completed and the

and to insert a ballast pipeline in the gas pipeline

pipeline was successfully anchored, the construction

which would move sufficiently to push the gas

sites on both sides of the Ems were dismantled

pipeline gently down on the gravel bed. Due to

and the land was restored to its original state.

the length of the pipeline, it was flexible enough to

Valve installations at Rysum and Borgsweer are

easily follow the contour of the tunnel. The tunnel

now the only remaining clue testifying to the fact

subsequently took 10 days to fill with water. The

that Gasunie has laid a natural gas pipeline under

question now was whether the theory would work

the Ems. After two years of preparation and a

in practice.

further two years of construction, the gas pipeline

A 750-tonne pipe-thruster was now brought in to push the pipeline down the tunnel. On March

was inaugurated on October 1, 2010. This unique construction was successfully

15, 2010, the first kilometre of gas pipeline slid

completed without disrupting or disturbing nature

slowly into the tunnel at a rate of about 20 metres

or shipping, and on time and budget. Phase two

per hour. The operation was tense, but at the end

of the North-South expansion project is due for

of the day the team gradually sensed that their

completion later this year.

carefully calculated theory was working in practice. The pipe-thruster only needed to exert a force of

Enno Freese is Director of the North-South Expansion

60 tonnes to push the pipeline into the tunnel.

Project, N.V. Nederlandse Gasunie, and the Leader

After a few hundred metres, there was an over­

of Study Group 1, Working Committee 3.

whelming feeling of relief that the selected working method appeared to be a success. After nearly a kilometre of pipeline had been pushed into the tunnel, the next kilometre was welded to the first string of gas pipeline and the process was repeated. After two weeks, the gas pipeline reached the receiving trench in Borgsweer on the Dutch side. The ballast pipeline was removed and the pipeline coating was tested. The tests showed that the pipeline had reached the Dutch side completely intact. The pipeline was duly connected to the land-based pipeline and pressurised with water. One more challenging task remained. The pipeline had to be firmly anchored on the gravel bed in the tunnel. A cement-bentonite installation was therefore built at both Rysum and Borgsweer. With the help of pipelines attached to the ceiling of the tunnel, the tunnel was filled from the centre outwards with a mixture of cement and bentonite. The liquid mixture ensured that no air pockets developed in the filler. At the same time, once hardened, this elastic clay allows the steel pipeline

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v  A selection of our various projects Integrated services framework contract with NAM NAM is the largest producer of natural gas in the Netherlands. Its onshore projects have been covered in a contract between NAM and LOP (Land Onshore Projects) since 2002. LOP is a joint venture between Tebodin, A. Hak and Cofely. The contract comprises the services for engineering, procurement, commissioning and project management. In 2010, the contract was renewed for another 2.5 years. Assess study Abu Dhabi As Abu Dhabi is preparing for the future, a master plan is being developed for the country’s overall offshore power infrastructure, including ZADCO and ADGAS operational areas. ADMA-OPCO (Abu Dhabi Marine Operating Company) awarded the assess study for this master plan to Tebodin Middle East. The project is the first of its kind ever awarded in the region and will be conducted in a strategic alliance with ABB Norway. EMC for Oman North Territory PDO awarded the large Engineering and Maintenance Contract (EMC) for Oman North Territory to the STSTebodin joint venture. The seven-year contract encom­ passes various small to medium size oil and gas projects in the North PDO concession area of Oman. The work includes all on-plot engineering, procurement services, construction and commissioning besides management services and maintenance support of all new projects and all upgrades or changes to existing projects. Nitrogen storage Gasunie, the Dutch-based gas infrastructure company, has started producing and storing gaseous nitrogen in an existing salt cavern. When extracted from the cavern, the nitrogen is mixed with high calorific gas to form ‘Groningen’-quality gas for Gasunie’s clients in the Netherlands. A joint venture of Tebodin and Fabricom is responsible for the engineering, procurement and execution of a significant portion of the project.

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Gate Terminal BV, and will play a key role in the

Expanding Northern Europe’s LNG Import Capacity

development of the Port of Rotterdam as an LNG hub for Europe. The waterfront facilities can handle LNG carriers ranging from the larger end of the current

For this issue PGC D has contributed an article

Mediterranean fleet to the Q-max class. There are

on the new LNG import terminal in Rotterdam

two jetties, each equipped with four 20” unloading

and an update on expansion at the UK’s largest

arms, and the unloading capacity ranges from

import terminal.

12,500 m3/hour for a single carrier to a maximum of 15,000 m3/hour for simultaneous unloading of

l  The Gate Terminal

two carriers.

By Sander Lemmers

The marine facilities are supplied with stand­

Gate (Gas Access to Europe) on the Maasvlakte of

alone PLC-based unloading arm process control

the Port of Rotterdam will be the Netherlands’ first

systems, which have been fully integrated into the

large-scale LNG receiving and regasification

overall process automation system. Additional

terminal. It is expected to be operational by the

systems are provided for all ship mooring, berth­

third quarter of 2011 on time and budget.

ing and jetty operations. All these operations can

The initial capacity is 12 bcm/year (8.9 mtpa)

be monitored from the central con­trol room or

+ 20% swing with three 180,000 m3 full contain­

from the jetty monitoring buildings.

ment storage tanks, but is likely to be increased to

A dedicated channel for LNG carriers will

16 bcm/year (11.8 mpta) + 20% swing, including

ensure a rapid turnaround time and minimise

a fourth storage tank. Gate has been developed

demurrage, port costs and safety risks. The depth

by NV Nederlandse Gasunie and Koninklijke

of the channel has been dredged to only 15

Vopak NV through their joint venture company

metres to deny access to very large crude oil carriers and thus safeguard against collisions. Extensive marine studies have been performed to optimise the approach, turning and mooring of LNG carriers. Gate has made the most of what is a tradi­ tional Dutch activity: land reclamation. A swap of land and water has taken place in that the LNG storage tanks are built where there was once water and the jetties are now where there was once land. This land reclamation programme has been performed by and in cooperation with the Port of Rotterdam Authority, and fits in the overall masterplan for the Maasvlakte II port extension, currently under construction. The LNG storage tanks are constructed with a shallow ringbeam type of foundation on top of compacted soil. The soil compaction was per­ formed in several stages. First a 15-metre high preload was put in place for six months to com­

An aerial view of the Gate site.

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pact the underlying clay layers. Secondly the loose soil was further compacted using a technique called vibrocompaction down to a depth of 40 metres as well as pneumatic hammering (dynamic compaction) for the top few metres. As the LNG storage tanks have been constructed only 25 metres away from the water’s edge, an extensive design programme was instigated to allow construction of a heavily reinforced waterfront protection. The initial three LNG tanks are above-ground, full containment 9% Ni storage tanks with concrete outer shells. Each tank will have a net working capacity of 180,000 m3 and three fully equipped low-pressure pump wells. Building a fourth storage tank would bring the total storage volume to

Gate’s waterfront and LNG unloading arms.

720,000 m3. The design guarantees that the normal process design boil-off gas (BOG) from

Any combination of LP and HP pump can be

the storage tank is less than 0.065 volume per

used during Gate terminal operations. The HP

cent per day based on pure methane. Internal

LNG system feeds a series of open rack vaporisers

tank piping enables bottom or top filling to

(ORVs) which will be floating on the natural gas

minimise the risk of stratification and potential

pipeline pressure. The natural gas is delivered to the Dutch

subsequent rollover.

natural gas grid operated by Gas Transport

The tanks are equipped with instrumentation providing real-time process parameters monitoring

Services (GTS), according to contractual

and input to tank safety systems. Besides managing the inventory of the stored LNG, there is extensive instrumentation for the monitoring of potential LNG product stratification, cold spots on the LNG storage tank walls and other tank safety integrity parameters. During the holding and unloading modes of operation, BOG from the LNG storage tanks is compressed into the BOG re-condenser for re-condensation and re-introduction into the LNG send-out stream. The LNG is pumped from the storage tanks by the low-pressure (LP) pumps into a LP LNG distribution system which will maintain process lines in a permanent cryogenic condition, whilst also feeding the BOG re-condenser and high-pressure (HP) pumps. A series of canned pumps increases the LNG pressure to the natural gas grid pipeline pressure.

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Land reclamation in the Port of Rotterdam.

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North Sea temperatures are around 3ºC and with the addition of the power plant heat, the lower end of acceptable ORV design temperatures is achieved. Using the waste heat from the power plant reduces the thermal impact of these facilities to the surface water temperature. Thereby the Gate terminal contributes significantly to a thermally balanced harbour. Indeed, it is the terminal at the highest latitude on the planet to use this LNG vaporisation technology which is normally used exclusively in warm water regions. The conventional LNG receiving and Construction of the seawater intake and pumps at the power plant cooling water outfall.

re-gasification terminal operates in two main

specifications and battery limit conditions. The

operation and the holding mode of operation.

send-out pressure is between 65 barg and 79.9

Send-out takes place in both operational modes

barg and the natural gas temperature needs to

at varying rates.

oper­ational modes, the unloading mode of

be between 0°C and 40°C. Gate can process

In addition to these operational modes the

the most common LNG qualities produced since

Gate LNG terminal can unload two LNG carriers

agreements for nitrogen blending are in place

at the same time in the so-called simultaneous

with GTS.

unloading mode, and can reduce its send-out

The terminal has been designed to deliver a

under conventional minimum send-out rates

minimum send-out temperature of 2°C for a

via the minimum send-out (MSO) mode

10°C seawater inlet temperature to the ORVs.

of operation.

The master metering and custody transfer

For the latter operational mode a high-

system is based on an ultrasonic flow metering

pressure BOG compressor will be installed.

system, using flow computers, a data acquisition

Minimum send-out solutions using HP BOG

system and data processing and storing facilities

compressions systems are generally more cost

with a fully redundant high-data integrity,

effective from a capital and operational

security and safety system.

expenditure point of view than BOG

Gate terminal uses the waste heat of nearby

re-liquefaction based solutions. To spike the BOG,

power plants for its LNG vaporisation process.

when the heating values fall below the minimum

Glass reinforced polyester (GRP) warm water

natural gas specification, in the MSO mode of

lines with an internal diameter of 1.8 metres

operation a small HP blending pump will be

and a concrete sub-harbour tunnel with internal

installed as well.

diameter of 2.2 metres will supply as much as

from one operational mode to the other is based

year + 20% swing.

on fully automated sequences. In addition

The power plants heat up North Sea water

218

Any routine operation as well as changing

60,000 m3/hour for the vaporisation of 16 bcm/

automated sequences are used for start and stops

by approximately 7ºC and the Gate terminal

of rotating equipment, proposed LNG terminal

will take out the equivalent in heat. Minimum

equipment line-up and draining operations.

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Future developments

l  Grain LNG

There are plans to break bulk LNG in the Port

By Peter Boreham

of Rotterdam and back-load into smaller LNG

National Grid Grain LNG has transformed a

carriers (7,500 m to 25,000 m ) to supply

brownfield site on the Isle of Grain peninsular in

remote areas where pipeline gas has no access.

north Kent into a $1.58 billion LNG installation.

It is also intended to introduce LNG as fuel for

With the capacity to supply 20% of the UK’s gas,

shipping in Rotterdam harbour and its

it helps meet the country’s strategic need for a

hinterland. LNG bunkering facilities from shore

more diverse energy mix.

3

3

to bunker barges and subsequent side-by-side

The first LNG shipments to the UK began in

transfer of LNG to the end-user will need to

1959 with trial importation from Louisiana in the

be developed.

USA on the Methane Pioneer to Canvey Island, the

To use additional storage capacity at the

first LNG import terminal in the world. The success

nearby Gasunie peak shaver facility feasibility

of this venture led to large-scale trade from

studies are being done to connect the Gate

Algeria to Canvey Island in the 1960s and con­

terminal with this facility via a sub-harbour

tinued to the 1990s, when increased production

cryogenic pipeline using Pipe in Pipe in Pipe

of North Sea Gas reduced the UK’s need for

(PiPiP) technology and 36% Ni Invar material.

LNG imports.

LNG can be used as an automotive fuel as

The subsequent decline of North Sea

well and LNG truck-loading and trucking is

production led to the redevelopment of a site on

another form of LNG distribution that will be

the Isle of Grain, where a peak shave plant had

developed in the Port of Rotterdam.

been built in the early 1980s, for LNG impor­

The projected start-up date of the Gate

tation. The site benefits from deep-water access

terminal is the third quarter of this year. By the

on the River Medway, connections to the UK’s

end of 2010 all engineering activities had been

high-pressure gas network and is located near

finished and as-built documentation is now being

to the centre of demand. Grain LNG was

prepared. Procurement activities are nearly

commissioned in 2005, and was expanded in

complete and construction activities are focusing

2008 and 2010.

on energising systems, hydro testing the tanks,

Following inauguration of the latest expansion

completing jetty construction works, pressure

project on December 1, 2010, Grain LNG’s

testing, development of the turnover packages,

capacity is now 20 bcm/year (14.8 mtpa). The

and insulation works for both piping and tanks.

project added a second jetty and a further

The total project construc­tion remains firmly on

200,000 m3 storage tank, and was completed on

schedule and within budget.

time and budget.

The operational team has been formed and

In an innovative approach, the majority of the

the operators are involved in the pre-

processing plant was assembled offsite, at the

commissioning and commissioning activities and

Fabricom facilities in Immingham in the north-east

the development of operation manuals. The

of the UK, in a secure non-weather dependent

project team is making the shift from construction

environment. This allowed preparatory work to

to pre-commissioning, commissioning, testing,

progress at Grain in the meantime and secured

start-up and operations.

sufficient resources at a time of increased compe­ tition for skilled labour due to major construction

Sander Lemmers of Vopak LNG is the Secretary of

activity, such as the 2012 Olympic Games, in the

Study Group 1, Programme Committee D – LNG.

south-east of England.

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The Fabricom site had direct dock access and

surplus heat from E.ON’s neighbouring gas-

the modules were transported to London Thames­

fired power station. Excess hot water from power

port, located just over a kilometre from Grain

generation is piped from the power station at

LNG, for installation. The units arrived at site

approximately 42.5ºC and returned after use by

painted, insulated and pre-tested so the defect

the vaporisers at 15º C. Using the surplus heat

rate on full testing was lower. As the pumps and

in this way will reduce Grain LNG’s fuel gas

pipework columns were built as preassembled

usage and carbon emissions by up to 169 mcm

units and lifted into place, there were safety gains

and 300,000 tonnes a year.

by reducing working at heights and manual lifting. The plant now includes eight LNG storage

The success of Grain LNG is underpinned by long-term contracts. Original customers

tanks (four of 50,000 m3 and four of 200,000 m3),

BP and Sonatrach were joined at the first

14 submerged combustion vaporisers, 12

expansion by Centrica and GDF SUEZ,

compressors and three recondensers. As well as

together with additional capacity for Sonatrach.

two high-pressure connections, the process plant

The second expansion has provided capacity

utilises the original gas connection provided to the

for new customers E.ON Ruhrgas and

peak shave plant with the ability to economically

Iberdrola, together with additional capacity

export BOG directly to the distribution network at

for Centrica.

2 and 38 bar. This ability allows Grain’s customers

The terminal continues with its appetite for

to fully benefit from the dynamic nature of the

growth and additional capacity could be

UK’s commercial gas environment with rapid

available from as early as winter 2015/16.

renomination capacity. Moreover, Grain LNG has demonstrated its commitment to climate change with a deal to use

Peter Boreham, National Grid UK LNG Director, is a member of PGC D’s Study Group 1.

Arctic Princess delivered the commissioning cargo for Grain LNG’s second jetty on October 29, 2010. Commercial operations started on December 1.

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GIIGNL’s Information Papers on the Safety and Security of LNG

and manage safety risks. Misunderstanding is not un­common and is often caused by confusion or incom­plete or inaccurate information about LNG pro­ perties. One also must clearly distinguish its proper­ ties as a liquid from its properties as a gas or vapour. LNG takes up about 1/600th the volume of

By Tony Acton

natural gas and its boiling point is -162°C, which is considered a cryogenic temperature. At this

The International Group of Liquefied Natural Gas

temperature (somewhat depending upon its actual

Importers (GIIGNL) has prepared a comprehensive

composition), LNG evaporates to convert from a

set of information papers on LNG properties, its

liquid to a vapour. Conversely, natural gas

transportation, storage and re-liquefaction and the

becomes a liquid at these cryogenic temperatures

safety and security of operations.

at atmospheric pressure.

The information papers were developed during

While natural gas is flammable, LNG is not.

2009 by the independent company SEA Consult­

The flammability limits of methane are such that

ing of the US, guided by the GIIGNL Technical

any small leak of LNG vapour from a tank in a

Study Group and with technical information and

well-ventilated area is likely to rapidly mix with air

support from the safety experts and classification

and quickly dissipate. Leaks and spills are largely

society, Bureau Veritas of France. The papers are

precluded by a plethora of leak-detection systems

intended to increase understanding of the tech­

and similar safeguards.

nical and safety aspects of LNG production, l  The LNG process chain

transport and re-gasification. As a service to the LNG industry, GIIGNL has

The LNG process chain includes the extraction of

decided to make the information papers available

natural gas, its processing, liquefaction, transport,

generally. They can be found on the GIIGNL

storage, re-gasification and distribution to

website (www.giignl.org) from which they may be

consumers (see Figure 1).

downloaded and printed without restriction. There

Extraction of natural gas from commercially-

are seven papers in all, selected extracts from

viable, drilled wells produces feed gas which

which follow.

needs to be processed to commercial quality. This involves cleaning it by separating and removing

l  Basic properties of LNG

various extraneous compounds, including CO2 and

First, and most importantly, one must understand

water. Liquefaction of the natural gas is achieved

that the very properties which make LNG a good

by refrigeration down to approximately -162°C.

source of energy can also make it hazardous if not

in specially-designed, double-hulled ships, or over

nately methane (about 80%-99%), its composition

shorter distances by specialised, double-skinned

also includes small amounts of other hydrocarbons.

tank trucks. LNG is loaded into and unloaded

The specific chemical composition of natural gas is

from LNG ships and transferred via cryogenic

a function of the gas source and type of process­

articulated arms (“hard-arms”).

ing. The chemical composition of the natural gas

222

Transport of LNG over long distances is by sea

adequately contained. While LNG is predomi­

Safety systems are designed into every single step

and the properties of its hydrocarbon components

of the chain. Examples include, during the unload­ing

determine how LNG behaves, affect our predic­tions

process, the powered emergency release coupler

about its behaviours, and influence how we assess

(PERC), which safely disconnects the ship’s manifold

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THE LN G PROCESS CHA I N

left

Figure 1.

connection and the terminal’s hard-arms in

tanks (membrane design). A typical modern LNG

emergency situations, and an emer­gency shutdown

carrier is approximately 300 metres long, 43

device (ESD), which immediately terminates the

metres wide and has a draft of 12 metres. Cargo

loading process with no leakage. These activate

capacities can be up to some 270,000 m3

either automatically when vessel movement occurs

although most are in the range from 125,000 to

outside the normal operating range, or manually.

170,000 m3. Sailing speeds approach 21 knots.

Re-gasification of the LNG is accomplished by

Smaller LNG ships (1,100-7,500 m3 capacity) also operate in some coastal areas.

using one of a number of kinds of vaporisers. After re-gasification, the natural gas is metered

All LNG carriers have double hulls. The cargo

and sent out for delivery to the end-consumers by

is carried near atmospheric pressure in specially

pipeline. Odours are added in the pipeline system.

insulated tanks, referred to as the cargo contain­ ment system, inside the inner hull. International

l  LNG ships

codes govern the design and construction of

The majority of LNG ships sailing today have been

gas carriers.

designed to carry LNG either in spherical tanks (Moss sphere design) or in geometric membrane

The technology may also be utilised to function as floating storage and re-gasification units (FSRU)

The majority of LNG ships have been designed to carry LNG either in Moss (above

G I I G NL ’ s

I n f o rmat i o n

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left )

the

or membrane (above

Safety

and

right )

tanks.

Secur i ty

of

LN G

223


in offshore receiving terminals. Floating facilities

the IGC committees and USCG. Each country with

allow LNG terminals to be sited offshore.

an LNG presence tends to have one or more

The LNG shipping industry has an excellent safety record. Since the first cargoes of LNG were shipped on a regular commercial basis in 1964,

governmental agencies monitoring, in varying fashion, their own LNG sector. An extensive network of international work

over 56,000 shipments have been made without a

groups and associations includes, among other

single incident of LNG being lost through a breach

entities, TC67 Work Group 10 (which addresses

or failure of the ship’s tanks.

LNG equipment and installation standards); the

Classification societies maintain standards for

European Committee for Standardisation (CEN),

design and construction and conduct surveys while

which has addressed or is addressing, among

under construction and throughout a ship’s service

other things, the control of major accident hazards,

life. Insurance underwriters require that ships are

equipment / installation design for onshore instal­

“in class”; without insurance the ships cannot trade.

lations, and tank design and manufacture; and

LNG ships must comply with all relevant local and

the American Petroleum Institute (API), which

international regulatory requirements, including but

maintains some 500 standards covering LNG and

not limited to those of the Inter­national Maritime

all other segments of the oil and gas industry.

Organisation (IMO), International Gas Carrier Code (IGC) committees and US Coast Guard (USCG). Marine quality assurance for LNG carriers is

International gas industry associations codify and disseminate LNG infor­mation and safeguards, including best prac­tices. GIIGNL has 66 member

provided through the process of vetting, which

companies in 20 different countries and focuses

assesses ship quality against a known standard to

on import terminal operations. The Society of

determine its acceptance for use. Vetting is con­

International Gas Tanker and Terminal Operators

ducted by shipping companies using employees or

(SIGTTO) has over 100 members and represents

independent contractors on their own ships as well

the operators of LNG and LPG tankers and lique­

as chartered ships.

fied gas marine loading or receiving terminals. SIGTTO’s focus is on shipping and its interface

l  Managing LNG risks – operational

with marine terminal operations. IGU has 109

integrity, regulations, codes and industry

members and spans the entire spectrum of the gas

organisations

industry around the world. The Center for

The safe processing, storage and transportation of

Liquefied Natural Gas (CLNG) is a broad asso­

LNG is an essential condition for the continued

ciation of LNG producers, shippers, terminal

existence, growth and sustenance of the entire

operators and developers in the US, as well as

industry. Companies within the industry, govern­

energy trade associations and natural gas con­

mental bodies and professional trade associations

sumers. Its purpose is to advance the exchange of

are all committed to the continued issuance of

educational and technical LNG information.

codes, guidance, regulations and standards

Ship classification societies review various

intended to assure the safe operation of onshore

aspects of ship quality, including mechanical fit­

and offshore LNG facilities, personnel and ships.

ness, security and safety of cargo capacity and

There are a number of international authorities

224

structural integrity, as well as the professional

which are instrumental to the creation, main­

competence and training of the crew. The ship

tenance and dissemination of the diverse data­

classification process has long influenced the

base, broadly defined, of LNG knowledge.

design, construction and maintenance of ship

Included most prominently among them are IMO,

structures and related engineering systems.

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By the end of 2010 Qatar will have the world’s largest Liquefied Natural Gas combined production capacity of 77 million tonnes per annum. This is enough energy produced to meet the world’s entire natural gas needs for 13 days. Qatar supplies all four corners of the world and has a significant and positive impact on world energy use.


technologies, including alarms, emergency plans

A primary safety requirement for the industry is to

and shutdown valves, fireproofing / fire-resistant

contain LNG. Modern LNG storage tanks at

barriers and coatings, flame detectors, gauging

liquefaction facilities and import terminals typically

devices, pressure controllers, relief valves, smoke

have a capacity of 100,000-200,000 m3. A typical

detectors and temperature sensors. Most safety

LNG terminal has two to four such tanks, although

devices are remotely monitored, e.g., in a control

a small number of facilities have 10 or more.

room, to provide a safe and secure way to manage the facility.

LNG tanks have more than one means of containment. The first layer of containment is provided by the tank which holds the LNG (see

l  Managing LNG risks – industry

Figure 2). All LNG storage tanks are constructed

safeguard systems

with thermal insulation to limit heat transfer,

Industry safeguard systems are designed to imme­

reduce evaporation, and protect the structure from

diately detect, control and mitigate the consequences

cryogenic temperatures which could damage the

of any LNG release at an LNG facility.

structural integrity of the tank. Secondary contain­

There are two types of safety features in an

ment is provided either by the use of dikes, berms

LNG facility: equipment / technology systems and

and impoundment dams around storage tanks, or

management systems. The former include multiple

by building a second tank around the primary

levels of hazard detection, mitigation and inter­

storage tank to contain the LNG in the unlikely

vention systems. The intervention systems may be

event of a failure in the primary tank.

active, requiring an operator to act, or passive, requiring no operator inter­action. The latter type,

Various kinds of tanks are used around the world, including single containment tanks, double

management systems, include, among other

containment tanks, full containment tanks, mem­

things, studies during the design process which

brane tanks and in-ground tanks.

first identify the hazards and then review the design to incorporate steps which eliminate or

Liquid and gas/vapour leak detection and b e lo w

Figure 2.

I

l  Managing LNG risks – containment

response systems associated with LNG storage

control / mitigate the hazards. They also include,

incorporate a wide array of relevant devices and

for example, the drafting, refinement and

implementation / dissemi­nation of sound operating procedures

A M ODERN LN G STORA G E TAN K DES I G N

and safe working practices. Typical layers of protection implemented in modern LNG terminals are illustrated in Figure 3 (over). These layers begin, in a sense, with the siting and design of the terminal. The next layer reflects the control and monitoring features (includ­ ing, for example, detectors and trained operators). Prevention components include alarms, shut-down valves, etc. Protection is provided by elements such as

226

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While the LNG industry has been in worldwide

LAYERS OF PROTECT I ON

existence for well over 60 years, there have been relatively few accidents, incidents, injuries or

Community Emergency Response

deaths in any facet of the entire industry, despite

(emergency broadcasting)

the presence of ships and trucks travelling the

Plant Emergency Response

oceans, seas and roadways of the planet. No

(emergency response procedures)

injuries to the public have occurred since LNG trading first became commercially viable some

Protection

(impounding areas, fire extinction system...)

60 years ago. Like other members of this energy family, the

Prevention

safety hazards and risks of LNG can be effectively

(alarms and shut down valves…)

and efficiently managed through the multiple lay­ers of codes, standards, best practices, measures and con­

Control and Monitoring

tingency planning applied throughout the industry.

(detectors, trained operators...)

l  GIIGNL

Siting and Design

GIIGNL is a non-profit organisation founded in 1971 that studies and promotes the development of activities related to LNG, in particular pur­ chasing, processing, importing, transporting, handling, re-gasification and various uses of LNG.

right

To this purpose, the Group aims to provide its

Figure 3.

members with an overview of the state-of-the-art impounding areas and fire extinction systems.

technology in the LNG industry and of its general

Company management of the incident is provided

economic state. GIIGNL promotes the exchange of

by implementing the plant emergency response

information and experience among its members to

procedures. In addition, community emergency

enhance the safety, reliability and efficiency of

response begins with notifi­cation about an inci­

LNG import activities and of the operation of LNG

dent, which activates govern­mental oversight,

import terminals in particular. The Group has a

mobilises additional response resources to

worldwide focus and its membership is composed

reinforce the facility’s response, and thereby

of nearly all companies in the world active in the

protects the public and adjacent properties.

import, terminalling and re-gasification of LNG. In order to improve its service to the LNG

l  Questions and answers

industry, GIIGNL would greatly appreciate feed­

Some 50 commonly-asked questions and answers

back from users of its website in general and the

are provided in this final information paper org­

LNG information papers in particular. Please

anised around general topics related to LNG

provide any comments to the Central Office (see

import terminals and the transportation modes

www.giignl.org for the contact details).

which interface with them. These include LNG

228

production, shipping and re-gasification, LNG

Dr Tony Acton was, for many years until 2010, the

properties, safety features and procedures, stan­

Chairman of GIIGNL’s Technical Study Group and

dards and regulations, hazards, incidents and the

is now Principal of ActOn LNG Consulting

benefits of LNG trade.

(drtonyacton@btinternet.com).

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GTI Progresses on Technology, Education and Conference Programs Gas Technology Institute (GTI) of the USA is an Organisation Affiliated with IGU and is furthering gas research, technology development, training and deployment across an array of gas-focused topics. The company is based in Des Plaines, Illinois (near Chicago), on a campus which includes the head­ quarters building, modern laboratory and research facilities, offices, training facilities, and an extensive library. Specialised laboratory facilities are used for the development and testing of advanced energy technologies from gas supply to utilisation. GTI seeks to solve important energy challenges and create value by turning raw technology into practical solutions related to the overall industry value chain. Key objectives are: v Expanding the supply of affordable energy; v Ensuring a safe and reliable energy delivery IGU ad 148x210mm 2-11_IGU ad 148x210mm infrastructure; and 2-11 2/7/11 3:49 PM Page 1 v Promoting the efficient use of energy resources.

Selected initiatives currently include: v Biogas technology development and the use of renewable resources with natural gas; v Pipeline integrity and risk management; v Expansion of natural gas and alternative fuels for transportation; and v Training the next generation workforce. IGU and GTI have a history of cooperation in organising the IGRC and LNG conferences. Following a successful 2010 event in Amsterdam, IGU will also co-sponsor the conference, Global Unconventional Gas 2011: Unlocking your Potential (GUG2011). This international confer­ ence will share the North American experience and help enable and accelerate the global potential of unconventional gas in Asia and beyond. GUG2011 will be held September 12-14, 2011 in Beijing, China. For more information on GTI, visit www.gastechnology.org.

Gas Technology Institute Research and technology development for natural

Training in exploration &

production, LNG, distribution/ transmission, and utilization

gas customers and the energy industry

Conferences > GUG 2011, Global Unconventional Gas September 12-14— Beijing, China > tcbiomass2011, the International Conference on Thermochemical Conversion Science September 28-30— Chicago, USA

www.gastechnology.org


Publications and Documents Available from IGU

IGU Secretariat c/o Statoil ASA 0246 Oslo Norway Tel: +47 51 99 00 00

As a non-commercial organisation promoting

Fax: +47 22 53 43 40

technical and economic progress in the gas

Email: secrigu@statoil.com

industry worldwide, IGU offers its publications

230

free of charge. You are invited to download the

IGU publications

publications currently available from the IGU

l IGU Articles of Association

website www.igu.org or order hard copies from

l IGU Annual Report

the Secretariat.

l Triennial Work Programme 2009-2012

P u b li c at i o n s

a n d

Do c u m ents

Av a i l a b l e

fro m

IG U


l IGU Organisation Chart 2009-2012 l IGU General Brochure l IGU Guiding Principles for Sustainable

Development

Int ernational Gas I n T E R n a T I O n a l

l Natural Gas – Part of the Solution to Global

l IGU Gas Efficiency Award 2008/2009 & IGU

Social Gas Award l Current IGU Strategic Statement

Publications from WGC 2009

OCTOBER 2010

l Natural Gas Unlocking the Low-Carbon Future

I n ter n a ti on a l G a s

Climate Changes l Natural Gas as a Transportation Fuel

l Natural Gas Industry Study to 2030

OCTOBER 2010 G a s

U n I O n

E IN L O R S GAS’ STAINABLEE A SU GY FUTUR ENER .igu. www

org

l IGU Energy Efficiency Indicators l IGU proposed Guidelines for Gas Market

Integration l Best Practices Initiative l Proceedings of the 24th World Gas

Conference, Buenos Aires 2009 Joint publications with other organisations l The Role of Natural Gas in a Sustainable Energy

Market (with Eurogas) l Guidebook to Gas Interchangeability and Gas

Quality 2010 (with BP) Scientific and technical papers and documentation l Proceedings of the 23rd World Gas Conference,

Amsterdam 2006, (CD-ROM) l Sustainable Development and the Role of Gas (2006) l Gas to Power Global Outlook, (2006) l The Art of Regulation, (2006) l Proceedings of the 22nd World Gas Conference,

Tokyo 2003 l Proceedings of the 17th, 18th 19th, 20th and

21st World Gas Conferences, (CD-ROM) l International Gas, ISC, all issues of the

bi-annual IGU Magazine from 2004-2010 Please check the IGU website for other (older) publi­ca­ tions which are still available from the IGU Secretariat.

Pu b l i c at i ons

and

Docu m ents

Av a i l a b l e

fro m

IG U

231


OB I TUAR I ES GTI Mourns the Passing of Bernie Lee It is with deep sadness that IGU affiliated organisation the Gas Technology Institute (GTI) notes the loss of Dr Bernard S. “Bernie” Lee, who died on November 7, 2010 aged 75. Dr Lee, former President and CEO of the Institute of Gas Technology (IGT), was well-known and highly respected within the natural gas community. He joined IGT in 1965 and was responsible for the develop­ment of various synthetic fuels pro­grammes involving coal, oil shale and liquid hydrocarbons, becoming President in 1978. Dr Lee was a strong leader in the international LNG community and played an active role in organising the International Conference & Exhibition on LNG series. He was a member of the Steering Committees from LNG6 through LNG13, and chaired the Steering Committees of LNG7, 9, 11 and 13. He retired in 1999 but con­ tinued to be involved profes­ sionally, serving as an energy advisor in Malaysia and China. During the past four years, he had been actively promot­ing the development of massive electricity storage (MES) to the renew­able energy industries and the scientific research community. Dr Lee served on IGT’s Board of Trustees and Executive

232

OB I TUAR I ES

Committee and on several other US industry boards, including the National Fuel Gas Company, NUI Corporation and Peerless Manufacturing Com­pany. He received his bachelor’s degree and doc­ torate in chemical engineering from the Polytechnic Institute of Brooklyn in 1956 and 1960, respectively. In Memory of Katarzyna Steczko The Oil and Gas Institute of Krakow, Poland, pays homage to Dr Katarzyna “Kasia” Steczko, who died on March 27, 2010 aged 67. A woman of great heart and int­ellect, Dr Steczko was a

demand­ing leader but at the same time she asked much of herself, which allowed her to be an excellent research worker. A graduate of Jagiellonian University in Krakow, Dr Steczko started her profes­ sional career in the University before moving in 1980 to the Oil and Gas Institute. For many years she was the head of the Institute’s Environment Protection Department and developed a range of research projects, notably on the management of wastes and waste waters and on methane emissions from the natural gas system. She was also active in the fields of nat­ural gas quality and the manage­ment of chemicals used in the petro­leum industry. Internationally, Dr Steczko partici­pated in several Euro­ pean projects, represented Poland in ISO technical committees dealing with gas, contri­buted to the IPCC’s work and was valued member of the IGU team. In the 1997-2000 Triennium, she was an active member of the then WOC 8 – Environment, Health and Safety and organised the Committee’s meeting in Krakow in May 1998. She continued as a WOC 8 member for the 2000-2003 Triennium and presented a report at WGC2003 in Tokyo. Most recently she was a mem­ ber of PGC A – Sustainability


2011 April 5-7 IGU Executive Committee Rio de Janeiro, Brazil May 12-13 European Gas Technology Conference EGATEC2011 Copenhagen, Denmark June 6-7 16th European Gas Conference Oslo, Norway June 10 Eurogas General Assembly Milan, Italy June 14-16 Shale Gas Series: Europe Summit Warsaw, Poland September 12-14 Global Unconventional Gas 2011: Unlocking Your Potential Beijing, China September 12-16 45th Annual IPLOCA Convention Beijing, China October 3-7 IGU Council Meeting Dubrovnik, Croatia

For the IGU Secretariat Secretary General: Torstein Indrebø Director: Hans Riddervold Senior Advisor & Press Contact: Erik Gonder Advisor to the Secretary General: Jeanet van Dellen Advisor to the Secretary General: Carolin Oebel Administration Assistant: Åse Nicolaysen For ISC Editor-in-Chief: Mark Blacklock Copy & Picture Editor: Adrian Giddings Publisher: Nigel Ruddin Publications Director: Robert Miskin Special Projects Director for IGU: Karin Hawksley Finance Director: Yvonne O’Donnell Finance Assistants: Maria Picardo, Anita d’Souza Senior Consultants: Jeffrey Fearnside, Michael Gaskell, William Innes, Jonathan Unsworth Art and Design Director: Michael Morey Printed by: Buxton Press Ltd IGU and ISC would like to express their thanks to all those who helped in the preparation of this publication. Thanks are also due to the following companies, people and organisations for providing pictures. The credits are listed by article. Where the pictures for an article came from a variety of sources, the appropriate page numbers are given in brackets after each source. Cover: flame – David Parker/Science Photo Library; Inside the drilling platform of Sakhalin II – Gazprom; Rio skyline – Flickr User: Rodrigo Soldon; IEF-IGU 2nd Ministerial Gas Forum in Doha & IGU-Worldwatch Gas Symposium in Cancún – IGU, CNG-fuelled taxi in Detroit – Ford Motor Company.

October 18-20 4th Biennial Conference & Exhibition of the Asia-Pacific NGV Association (ANGVA2011) Beijing, China

IGU Events and IGU-related Events 2011-2012

October 19-21 IGU Research Conference (IGRC2011) Seoul, Korea

2012

October 31-November 1 Australia Gas Sydney, Australia

March 13-15 IGU Executive Committee Houston, USA

November 7-10 World Shale Gas Conference & Exhibition Houston, USA

June 4 IGU Council Meeting Kuala Lumpur, Malaysia

November 28-December 9 17th Session of the Conference of the Parties to the UNFCCC (COP17) Durban, South Africa December 4 IGU-Worldwatch Natural Gas Symposium Durban, South Africa

June 4-8 25th World Gas Conference Kuala Lumpur, Malaysia You can find links to many of the above events by visiting www.igu.org.

December 4-8 20th World Petroleum Congress Doha, Qatar

Messages: Malaysian Gas Association – MGA (10 & 15 right), Kuala Lumpur City Hall (11), IGU (14), Mary Evans Picture Library (15 upper left), Gazprom (15 lower left). IGU Members and Organisation: Statoil (22), IGU (26), MGA (Datuk Abdul Rahim Hj Hashim and Ho Sook Wah, 27), AFG (Jérôme Ferrier and Georges Liens), IAPG (Ernesto López Anadón, 27), IGU (Torstein Indrebø, 27). News from the Secretariat: IGU (30, 31, 34, 35, 36, 38, 40 & 42 upper), Dietmar Gust/Handelsblatt (42 lower & 43). Bigger Role for Gas Discussed at 2nd IEF-IGU Ministerial: IGU. A Busy Council Meeting in Qatar: IGU (51, 54, 56, 57 & 58 Eggar), UNIDO (58 Yumkella), Clingendael International Energy Programme (58 van der Linde), Jon Chomitz/IHS CERA (58 Yergin). News from Organisations Affiliated to IGU: Danish Gas Technology Centre (64), GIE (69), Enagás S.A. (70), Wärtsilä Corporation (73), PRCI (76), Spectra Energy (77). IGRC2011 Launches Call for Papers: COEX Convention and Exhibition Centre. 25th World Gas Conference is On Track: MGA. Progress Report: All IGU except Flickr User: Hulivili (93), MGA (95 lower), Sonatrach (116), Qatargas (124 upper), Woodside Energy Ltd (124 lower). The Brazilian Gas Industry: Paulo Maurício (146 left), Geraldo Falcão/Petrobras Image Database (146 right), Petrobras (147), Marcos Morteira/ Petrobras Image Database (150), Paulo Cabral/ Petrobras Image Database (152).

Ev e n t s

Acknowledgements Cancún Agreement Hailed as a Lifeline: International Institute for Sustainable Development. IGU Joins Forces with Worldwatch for COP16 Gas Symposium: IGU. The Gas Industry in Mexico: GDF SUEZ. The New Potential of Gas: Abengoa Solar (173 left), Iberdrola, S.A. (173 right). Renewable Gas: East Midlands International Airport Limited. Promoting Wholesale Gas Markets: EFET (188), OMV AG (190). The Breakthrough Decade for NGVs: Eugene Pronin. Russia’s Initiative in UGS Education and Training: Gazprom UGS Ltd (201), Gubkin Russian State University of Oil and Gas (202). The Ems Gas Pipeline Tunnel – On Time and Budget: N.V. Nederlandse Gasunie. Expanding Northern Europe’s LNG Import Capacity: Gate Terminal/Aeroview B.V. Rotterdam (216 & 217 lower), Gate Terminal (217 lower & 218), Grain LNG (220). GIIGNL’s Information Papers on the Safety and Security of LNG: Roar Lindefjeld/Statoil (223 left), Samsung Heavy Industries (223 right). Obituaries: GTI (232 upper), IGU (232 lower).

and

Ac k nowled g em ents

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International Gas 2011 - Spring Edition  

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