5. Consumption and supply in future
5.1 Challenges in the coming years
Energinet.dk’s task is to ensure that the gas transmission system is available to the commercial players and that there is sufficient capacity to meet the demand of Danish gas consumers. In addition, the required capacity must be made available for transit on non-discriminatory terms and conditions.
As a result of the large North Sea gas produc- tion, Denmark has been self-sufficient in gas since 1983, and the transmission system has been expanded on the basis of supplies exclusively from the North Sea. North Sea production peaked in 2005-2006. In 2010, supplies were commenced from the Norwegian Trym gas field through the Danish offshore system (Harald-Tyra- Nybro), which contributes to ensuring the supply of gas to the Danish, Swedish and Dutch markets. Supplies from the Danish part of the North Sea in the period 2011-2013 are assessed to be as shown in Figure 5-1. The expected Danish and Swedish markets in proportion to the expected North Sea pro- duction are shown in Figure 5-2.
It is expected that the physical supplies of interruptible capacity from Germany, which became possible in October 2010, will help to alleviate the capacity shortage that may occur in the short term in the Danish and Swedish gas supply in 2012-2014.
In the summer, when large volumes of gas are injected into the storage facilities, it may to a certain extent be necessary to interrupt or reduce the injection and/or interruptible capacity at Dragør exit or Ellund entry to maintain the necessary pressure in the trans- mission system. Therefore an agreement has been made with the storage companies on the practical handling of the interruption of storage injection. As a result of this agree- ment, firm and interruptible capacity has been defined at the storage facilities, and in- terruptions will be effected at all the points in accordance with Rules for Gas Transport. According to the Danish Energy Agency’s projection, which is very uncertain, however, production will decrease markedly in the coming years and may possibly be virtually phased out by 2040.
Due to the high uncertainty surrounding the gas volumes from technological and
exploration contributions, Energinet.dk has decided to only use the reserve contri- bution together with an estimate of the supplies from the Norwegian Trym field in the following calculations. As the reserve contribution may also be associated with a degree of uncertainty, and as Energinet.dk is obliged to ensure the availability of the necessary supply capacity, a conservative assessment of the supply options has been chosen.
As the North Sea has so far been the only physical possibility of supplying gas to Denmark and Sweden, supply problems may arise within a relatively few years. Energinet.dk has therefore decided to invest in new infrastructure facilitating supplies to Denmark and Sweden from Germany from October 2013. At the same time, initia- tives have been implemented which, by means of temporary technical solutions in the North German system, have facilitated supplies from Germany from October 2010. Furthermore, an agreement has been made with the storage companies stipulating that the interruption of storage injection must be handled in accordance with Rules for Gas Transport.
Billion Nm3 Billion Nm3 Exploration contributions Sweden Technology contributions Denmark Trym (estimate, Energinet.dk) North Sea
North Sea production
Figure 5‑1 Expected North Sea gas supplies. The Danish Energy Agency and Energinet.dk, 2011.
Figure 5‑2 Danish and Swedish consumption in proportion to expected North Sea gas supplies.
The Danish Energy Agency and Energinet.dk, 2011. 0 0 1 2 3 4 5 6 7 8 1 2 3 4 5 6 7 2011 2012 2021 2020 2031 2030 2042
Gas in Denmark - Energinet.dk
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In 2011, the Danish Energy Agency made a projection of Danish gas consumption until 2030. Energinet.dk has also made a projec- tion of Danish and Swedish gas consumption until 2020. Energinet.dk’s projection can be seen in Figure 5-3 and is described in more detail in section 5.2.
In the supply scenario outlined in Figure 5-3, it is presumed that in 2014 the gas network towards Germany has been expanded and that the Danish Hejre field has been commis- sioned. In 2015, a further expansion of the North German system is assumed so that the Danish and Swedish markets can be sup- plied from the North Sea and Germany until around 2030.
Energinet.dk’s projection of Danish gas con- sumption extends to 2020. Energinet.dk’s projection of the gas consumption in the exit zone is approximately 0.3 billion Nm3/
year higher than the Danish Energy Agency’s latest projection. In Energinet.dk’s projection, the same difference has been added to the Danish Energy Agency’s projection for 2030 as is displayed in the 2020 projections, ie 0.3 billion Nm3/year. After 2030, consumption is
assumed to drop by around 0.6% a year, just as it is expected to do from 2029-2030. Billion Nm3 Exports, Netherlands Exports, Germany Sweden Denmark
Figure 5‑3 Expected gas production, supplies and consumption 2011-2030, the Danish Energy Agency
and Energinet.dk, 2011. Trym has been included in the North Sea gas supplies as the gas is supplied via Danish platforms. 0 2 4 6 8 10 2012 2022 2032 2042 Imports Germany + North Sea Imports, Germany
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Gas in Denmark - Energinet.dk
Investing in the expansion towards Germany will ensure gas supplies to the Danish and Swedish markets and create flexibility and market opportunities for the players. The investment will also help to counteract the uncertainties in the future investment sce- nario described above. The opportunities in the 2015-2020 period will to a large extent depend on when and on what scale the North German system is further expanded. If the assumed expansion does not take place by 2015, fewer opportunities will be avail- able, depending greatly on the production in the Danish part of the North Sea and/or on whether the Danish offshore system is con- nected to the Norwegian offshore system, for example.
5.1.1 Supply situation
in 2011-2015
As supplies from the Danish part of the North Sea are declining, a tight supply situa- tion is expected in the years 2012-2015. In early 2011, Energinet.dk attempted to give the market players an account of the expected development from 2012 to 2013 until the expansion of the transmission sys- tem to Germany has been completed so as
to provide market players with a common basis for making their own assessments and decisions. This would allow them to take the necessary precautions to avoid critical sup- ply situations on a daily, monthly and annual basis.
Energinet.dk will on an ongoing basis ac- count for the expected development when the supply scenario changes substantially. In the spring of 2011, the Danish Energy Agency prepared a new projection of the expected gas production in the Danish part of the North Sea and a projection of gas consump- tion until 2030. Similarly, Energinet.dk has prepared a new projection of gas consump- tion in Denmark and Sweden. These analyses form the basis of the most recent assess- ment of the supply situation in 2012-2015. The establishment of the physical supplies of interruptible capacity from Germany of 200,000 Nm3/h, which became possible in
October 2010, will help to alleviate the short- age which may occur in the short term in the supply of gas to Denmark and Sweden until the permanent capacity expansion between Denmark and Germany is commis- sioned at the end of 2013. The expansion on the German side is expected to be carried
out during 2014, presumably not later than in October 2014. The supply situation in 2012, 2013 and possibly also for part of 2014 is expected to remain very strained, and consumers, suppliers, shippers and storage customers should therefore carefully con- sider how to ensure sufficient flexibility and supply options in these years.
Figure 5-4 shows the expected development in consumption and supplies in the period 2011-2015.
Figure 5-5 shows the expected annual vol- umes at Ellund in the period 2011-2015. If all gas consumed in the Danish and Swedish markets were still supplied from the Danish part of the North Sea, no physi- cal congestion would occur in the Danish transmission system. The Danish Energy Agency’s projection of the gas production in the Danish part of the North Sea does show, however, that it will probably be necessary to import gas from Germany in 2012-2014 to meet the demand of the Danish and Swedish markets. The Danish Hejre gas field is expected to be commissioned in 2015, and this in combination with the expansion of the gas network to Germany will provide the
Figure 5‑4 Supply scenario 2011-2015. Billion Nm3 Exports, Netherlands Exports, Germany Sweden Denmark 0 2 4 6 8 2012 2013 2014 2015 North Sea
+ imports from Germany North Sea
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Gas in Denmark - Energinet.dknecessary gas supplies. If the Hejre field is commissioned as scheduled, and the German gas network is expanded even further in 2015, Denmark and Sweden will have access to ample gas supplies.
The daily supply situation will in the years to come depend greatly on whether gas is injected into or withdrawn from the gas stor- age facilities. On cold winter days, gas is typi- cally withdrawn from both storage facilities. The storage facilities thus help to increase the pressure at the extreme ends of the gas system (Aalborg, Lynge and Dragør). In the event of considerable physical imports from Germany (100,000-200,000 Nm3/h), the
pressure will generally be low. If, at the same time, only small volumes are withdrawn from Stenlille storage facility, the pressure in Dragør will be low. In such situations, it may be impossible to supply large volumes of gas (more than the firm capacity of 250,000 Nm3/h) to Sweden as the Swedish system is
unable to receive large volumes at low pres- sure. Interruption of interruptible capacity at Dragør exit and/or Ellund entry may thus be required.
In summer, when large gas volumes are injected into the gas storage facilities,
normal consumption (households, industry and power stations) is generally low, but in spring and autumn, when gas is also injected into the storage facilities, consumption in Denmark and Sweden can be relatively high. If, in these situations, large volumes (100,000-200,000 Nm3/h) are imported
from Germany at the same time, the pres- sure in the storage facilities will thus be relatively low. This will impact the injection capacity. It may, to a certain extent, become necessary to interrupt or reduce injection and/or the interruptible capacity at Dragør exit or Ellund entry to maintain the re- quired pressure in the transmission system. Therefore an agreement has been made with the storage companies on the practical han- dling of the interruption of storage injection. As a result of the agreement, firm and inter- ruptible capacity has been defined at the storage facilities, and interruptions will be effected at all the points in accordance with Rules for Gas Transport.
In the 2012-2014 period, the expectation is that it will be necessary to import large vol- umes of gas from Germany, on an annual as well as on a daily basis. Storage customers should therefore focus on ensuring stable injection throughout the injection season.
It may perhaps only be possible to inject at maximum injection rates in June, July and August, and the injection rates should pref- erably be kept at a moderate level in spring and autumn.
Energinet.dk can use tools which mitigate the consequences of occasional instances of ‘random, unexpected and unusual behaviour’ on the part of gas customers, shippers and storage customers. Energinet.dk may, for example, choose to exercise the operation agreement concluded with the storage com- panies and swap gas between the two gas storage facilities. There is, however, no guar- antee that these tools will be sufficient to prevent interruptions in all supply situations. The following aspects are important to consider:
·
Already in 2011, DONG Energy made an agreement with Gazprom on the supply of gas. In the gas year 2011, the agreement will cover approximately 1 billion Nm3,increasing to 2 billion Nm3 in the gas year
2012. Energinet.dk therefore expects a high demand for gas imports via Germany to Denmark and reduced exports to Germany. Smaller gas volumes in Ellund exit will re- duce the possibility of commercial volumes
Figure 5‑5 Supplies at Ellund 2011-2015. Billion Nm3 Imports, Germany Exports, Germany Net, Germany (– for imports) -3 -2 -1 0 1 2 3 4 2012 2013 2014 2015
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Gas in Denmark - Energinet.dk
in Ellund entry as the physical northbound capacity is limited
·
Already in 2012, it is expected that the production from the Danish part of the North Sea in combination with supplies from the Norwegian Trym field, which sup- plies gas to the Harald field, will be insuf- ficient to meet Denmark’s and Sweden’s gas needs even if gas is not supplied to the Netherlands. The missing approximately 0.5 billion Nm3 must be provided fromGermany. Depending on the existing con- tracts and the current market price, the gas from the Danish part of the North Sea will be supplied to the Netherlands or to Denmark (Danish, Swedish and German consumers). It is expected that physical supplies from Germany will not exceed 200,000 Nm3/h, and the supplies will take
place on an interruptible basis. A pressure of 68 barg is guaranteed in Ellund, but often German gas can be supplied at a higher pressure, which substantially im- proves the supply options
·
In 2013, production from the Danish part of the North Sea is expected to be insuffi- cient to meet Danish and Swedish demand. Physical net imports from Germany in the range of 0.8 billion Nm3 will be required.As was the case for 2012, physical supplies
from Germany are expected not to exceed 200,000 Nm3/h, and the supplies will take
place on an interruptible basis
·
The compressor station in Egtved was originally planned for commissioning in October 2013, but one of the four compres- sor units will presumably be commissioned earlier than 1 April 2013, ie before the ex- pected normal storage injection period·
In 2014, the expansions in Germany and Denmark are expected to be commis- sioned with a firm capacity of 310,000 Nm3/h, and the gas volumes will be suf-ficient to supply the Danish and Swedish markets
·
The Hejre field is planned for commission- ing in 2015, which facilitates the supply of larger volumes of gas from the North Sea to the Danish, Swedish and Dutch markets·
It is assumed that the North German gas system will have been further expanded to a capacity of at least 500,000 Nm3/h by2015 and that the Danish gas system will be able to receive at least 700,000 Nm3/h.