Gas Supplies
|
|
 |
Source: Eurogas Annual Report 2008/09
Gas was first produced in Ireland in 1978 from the indigenous Kinsale gas field off the south coast of Ireland. Kinsale and its satellite fields are still producing gas but output from these fields is declining. New indigenous production from the Seven Heads gas field came ashore in 2003 through the nearby Kinsale Head facility; however, deliveries to date have been lower than originally projected. Further indigenous gas supplies were discovered in the Corrib field, located off the west coast of Ireland. The Corrib field will be operated by Shell and is owned by a consortium including Shell, Statoil and Vermilion Energy. Reserves are believed to be of the order of 20-30bcm. The development of the field was substantially delayed by planning permission difficulties and the start date for deliveries is now expected to be in 2011-2012. The proposed new LNG terminal on the Shannon estuary in Co. Kerry would add to diversity and security of supplies. Bord Gáis has no interests in production activities.
SOURCES OF GAS SUPPLIES
Security of Supply remained a key focus for Bord Gáis in 2009. Security of Supply relates to import dependency, fuel diversity and the capacity and integrity of the supply and distribution infrastructure. Ireland’s security of supply is closely linked to the EU’s security of supply. Ireland’s transmission network infrastructure has the capacity to transport the anticipated gas demand to all end consumers in 2010 and beyond. The White Paper expressed the Government’s intent to set a Security of Supply Standard for Ireland, a key recommendation of Bord Gáis.
In 2009, 93% of Ireland’s gas demand was sourced from Great Britain (GB). Indigenous supplies of gas, including Corrib, will significantly improve Ireland’s Security of Supply position in that it will provide geographic and source diversity. Corrib gas will initially be capable of meeting up to 60% of annual Irish demand and up to 40% of peak-day requirements. The proposed LNG terminal at Shannon is also seen as a positive step in securing diversified gas supplies for Ireland, particularly if supported by guaranteed long-term contracts.
The majority of Irish natural gas requirements will continue to be sourced from GB in the short-term. However, from 2011/12 it is anticipated that this situation will change with a number of new gas supply projects at various stages of development in both Ireland and Northern Ireland. These projects range from new indigenous production projects to LNG re-gasification and gas storage projects. The projects include the Corrib gas field, development of an LNG terminal on the Shannon estuary, near Tarbert, Co. Kerry, proven gas reserves by Island Oil & Gas in the Celtic Sea and the evaluation of the feasibility of a salt cavity gas storage project.
GB Gas Supplies
Using c. 95 bcm of gas per annum, the UK is the largest gas market in the EU. Recent years have seen the remaining reserves on the UK Continental Shelf (UKCS) continue to decline in terms of proven, probable and possible reserves. This has meant that the UK has now shifted to become a net importer of gas at all times throughout the year. By 2017, imports are expected to account for 72% of UK Demand. This projected demand for imports has led to numerous new import infrastructure projects being planned and developed, currently totalling peak deliverability of c.100 bcm per annum of capacity (though in practice, capacity utilisation is lower).
LNG has become an increasingly important method of supply. The regasification terminals include Dragon and South Hook at Milford Haven in South Wales, which were commissioned in 2009, and Phase 2 expansions should be completed by the end of 2010. When all these projects are completed, the UK will have an LNG import capacity of 30 bcm per year. Pipeline infrastructure is also being improved with increased reliance in the UK on imports through Norway (Langeled, Tampen Link and Vesterled) and Netherlands (the BBL line). The current export capacity from Norway (including Tampen) is approximately 368 mcm/day or about 134 bcm/year; the UK accounts for about 45 bcm/year of this.
The new potential supply sources are very diverse – the continued development of the Ormen Lange field is expected to increase the utilisation of the Langeled pipeline throughout the period; LNG imports from Algeria, Qatar, Egypt and Nigeria should begin to increase in the near to medium term; and Russian gas through the planned North-West European pipeline in the longer term. All these give diversity of supply sources as well as security of volume, but with increased interconnection comes the need for the UK prices to compete against alternative markets such as the Continental and the Asian markets to ensure supplies.
OVERVIEW OF EUROPEAN GAS MARKET
The 27-member European Union represents over 16% of the world energy market. In terms of final energy demand, Ireland’s use of natural gas at 12% is considerably lower than the EU average of 22%. In Ireland, oil dominates final energy demand with a 64% share compared to 45% on average in the EU.
EU Gas Supplies
In the latest statistics published in 2008, about 37% of the gas used in the EU came from its own indigenous supplies. The main sources of EU imports were Russia, Norway and Algeria. LNG accounted for 13% of these imports, with Algeria and Nigeria supplying over half these deliveries. The EU is already heavily interconnected, with supply routes developed over past decades with Russia, Algeria and Libya. Further pipeline interconnection is planned to meet growing demand and many new LNG installations are proposed to access new and diverse sources of supply.
OVERVIEW OF WORLD GAS MARKET
Unconventional Gas Reserves
2009 marked a year when the future projections for worldwide gas supplies changed dramatically. The US has abundant reserves of unconventional gas resources – known as Shale Gas – which were previously seen as inaccessible. However, in what is being described as a ’game changer’ for the world energy markets, Shale Gas production has become an economic reality due to new seismic technology and efficient directional drilling techniques. As a result, the US is looking at self-sufficiency in gas supplies for possibly the remainder of this century at least.
This worldwide relative surplus of gas supplies greatly increases supply availability to Europe and Asia as it frees LNG cargoes for these markets. It should also keep downward pressure on wholesale gas prices, continuing the de-linkage from oil prices.
The implications for energy policy are profound if Shale Gas reserves are recoverable. Policy makers are seeking to make energy supplies secure, affordable and clean. A new abundance of gas would provide the answer to all three problems at once.
2008 World Gas Statistics
The world’s Primary Energy Consumption by fuel in 2008 was Oil 35%, Coal 29%, Natural Gas 24%, Nuclear Energy 6% and Hydro Energy 6%. The share of natural gas in world primary energy consumption has increased steadily from 16% in the early 1970s to 24% at the end of 2008. This growth is expected to continue as a result of the increased use of natural gas in electricity generation and as increased emphasis on cleaner fuels results in a move away from oil and coal.
Total world gas consumption in 2008 was 3,019 bcm. The US was the largest consumer of gas in the world, consuming 657 bcm. The Russian Federation is the next largest consumer and used 450 bcm in 2008, followed by Iran (117 bcm), Canada (100 bcm), the UK (95 bcm), Japan (94 bcm) and Germany (82 bcm). The total North American market is c. 824 bcm in size compared to c. 490 bcm for the EU. Ireland used about 5 bcm of gas in 2008.
The Russian Federation produced the most gas in the world in 2008 with output of 602 bcm. The USA is the second-largest producer of gas in the world with output of 582 bcm in 2008. The other large producers of gas include Canada with an output of 175 bcm, Iran with 116 bcm, Norway with 99 bcm, Algeria with 86 bcm, Saudi Arabia with 75 bcm and the UK with 70bcm. Ireland produced less than 1 bcm in 2008.
Proven world gas reserves in place at the end of 2008 were 185,020 bcm, a 4% increase of the 2007 levels and enough to last for 60 years at current levels of production. Proven gas reserves in Ireland are of the order of c. 30bcm. Proven reserves are generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reserves under existing economic and operating conditions. This ratio has actually increased over time, from 52 years in 1975 to 60 years in 2008. This is despite the fact that the consumption of natural gas has more than doubled over the same period.