Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
GSE Investment Workshop “ Role of gas storage in the market place” Brussels, 24 May 2007 GSE - Gas Storage Europe 1 Agenda • Introduction – The traditional roles of gas storage • Commercial storage • Strategic storage ? GSE - Gas Storage Europe 2 The traditional roles of gas storage Balancing Seasonal variations in consumption Securing gas supply in case of interferences in production, transport or supply Security Of Supply Enhancing Cost effectiveness of gas transport Covering demand peaks GSE - Gas Storage Europe 3 Agenda • Introduction – The traditional roles of gas storage • Commercial storage • Strategic Storage ? GSE - Gas Storage Europe 4 Commercial storage Matching Supply & Demand Supply Daily demand • Indigenous • Long distance pipeline import • LNG J Demand • Fluctuations on various time scales (hourly up to annually) F M A M Inject excess gas J J A S O N D High demand ‘Constant’ supply Produce gas Low demand GSE - Gas Storage Europe 5 Commercial storage Flexibility patterns Flexibility Instrument Annually Seasonal Weekly Daily Hourly Long distance production flexibility Yes Yes Yes No No Short distance production flexibility Yes Yes Yes Yes No Underground storage (fields & aquifers) No Yes Yes Yes Yes Underground storage (caverns) No No Yes Yes Yes Interruptible contracts No No Yes Yes Yes LNG storage (peak shaving) No No No Yes Yes Small scale local compressed gas No No No Yes Yes Line pack No No No No Yes GSE - Gas Storage Europe 6 Commercial storage Value and flexibility needs Commercial gas storage value can be distinguished in: Intrinsic value: price spreads in the forward market – Long duration (seasonal) • Increase capital efficiency of long distance import systems • Contribute to security of supply Extrinsic value: volatility in spot and forward markets – Short duration (hours/days / weeks) • Trading activities and portfolio optimization • Balancing the transmission systems GSE - Gas Storage Europe 7 Commercial storage Extrinsic value Increased trading activity, increased value potential, increased complexity and risk value extrinsic intrinsic Intrinsic Rolling intrinsic Optimal, no hedging Optimal, dynamically hedged GSE - Gas Storage Europe 8 Commercial storage Significance of forward price curves? 2012 2013 Permits, Design & Construction Lead time: 5 – 8 years 2014 2015 2016 2017 2018 ….. Commercial operations Generating income GSE - Gas Storage Europe 9 Agenda • Introduction – The traditional roles of gas storage • Commercial storage • Strategic Storage ? GSE - Gas Storage Europe 10 Strategic Storage ? Who will bear the costs? What does strategic storage cost? How will commercial storage be influenced? Do alternatives exist to ensure supply security? When will strategic capacity be released? GSE - Gas Storage Europe Will the investment climate be affected? 11 Strategic Storage ? • The European Parliament “agrees with the Commission's assessment that, in relation to gas, considering the present technology, it is better to diversify supply routes and technologies, such as degasification plants and LNG terminals, than to create massive gas stocks as this option is too expensive, could be used to influence market prices and its use is less flexible than oil stocks”. European Parliament Working Document, 16 April 2007 GSE - Gas Storage Europe 12 Strategic Storage ? GSE - Gas Storage Europe 13 Thank you for your attention! GSE - Gas Storage Europe 14