Spglobal Platts The Future Of European Gas After .
www.spglobal.com/plattsThe future of European gasafter GroningenNatural gas special reportFebruary 2020Lead Authors:Kira Savcenko, Gary HornbyContributors:Adrian Dorsch, Stuart Elliott, Gilles Heyberger,Neil Hunter, Antoine Simon, Desmond Wong
Special report: Natural gasThe future of European gas after GroningenForewordGas production at Europe’s largest gas field – the giantGroningen field onshore the Netherlands – will end in 2022,eight years earlier than planned, due the risk of earthquakesin the region triggered by production drilling. The movewill leave the European gas market 54 Bcm/year shortcompared with 2013. In our Special Report, “The Future ofEuropean Gas After Groningen”, we focus on five themesexamining how the European gas market will change andwhat consequences the shutdown is likely to have.Why Groningen mattersProduction at Groningen began in 1963, hitting a recordhigh of 87.7 Bcm 13 years later in 1976. Infrastructurearound the field was developed to supply consumers inthe Netherlands, Germany, Belgium and northern France,supported by a combination of large production volumesand low costs. The Dutch field’s gas has less energy thangas from alternative sources, such as Russia, but Europeanreliance on it has been significant. Groningen’s gas containsa high concentration of nitrogen and is classed as lowcalorific gas (L-gas), unlike alternatives from other sourceswith lower nitrogen content – high-calorific gas (H-gas).Impact on European pricingGroningen’s phase-out is likely to have a moderately bullishimpact on gas prices in Europe, as the market will be lessflexible and more dependent on pipeline imports and LNG.This trend can already be seen in the 2022-21 contango onthe pivotal Dutch TTF trading hub with 2022 prices almostEur2/MWh above the 2021 price during 2019. At the sametime, liquidity on the TTF is expected to continue rising withthe upcoming single trading hub in Germany unlikely tobecome a serious rival.Pipeline flows shiftThe closure of Groningen, alongside declining gasproduction elsewhere in northwest Europe, means thatby 2025 the region will need to replace about 45 Bcm ofgas supply, according to S&P Global Platts Analytics. Thisshortage is likely to be partially covered by an increasein Russian gas, while Norwegian imports are set for slowdecline. Russian gas can reach Europe via the first NordStream pipeline system, the Yamal-Europe corridor viaPoland and via Ukraine, following a newly agreed fiveyear Ukrainian transit deal. In addition, Nord Stream 2is expected to start flowing gas in late 2020. Gazpromaims to invest in around 250 Bcm/year of new productioncapacity to come online by 2025. Russian pipeline flows arealso seeing a boost from spot sales on Gazprom Export’selectronic sales platform (ESP).How LNG supply will changeThe loss of the Groningen volumes comes as the globalLNG market looks to remain oversupplied after a surge ofnew production coming online in the US Gulf Coast andAustralia, leaving plenty of supply to fill the upcoming 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.shortage in Europe. During 2019, the LNG glut became akey bearish price driver on the European gas hubs; however,looking ahead, market participants think further pressuremay be limited.Switching from L-gas infrastructure to H-gasThe Groningen phase-out will create a deficit of L-gas inthe Dutch domestic market, as well as in certain parts ofBelgium, France and Germany, sooner than expected. Workhas long been underway to prepare Europe for the transition,including projects to convert more H-gas into L-gas, sinceL-gas networks are unable to accommodate H-gas.— Kira SavcenkoThe Groningen gas field: a brief historyand why it mattersThe Groningen natural gas field, located near Slochteren inthe northeastern part of the Netherlands, is the largest gasfield in Europe and the 10th largest in the world.Gas was first discovered in July 1959 with the Slochteren 1well – which followed two previously unsuccessful wells.Slochteren 1 came across 2.8 Tcm (98.9 Tcf) of gas resourcein the porous Rotliegend sandstone formation, which is130-140 m (430-460 ft) thick and 45 km (28 miles) longfrom north to south and 25 km wide from east to west.Production from Groningen began in 1963, and rose rapidlyover the first decade of production, hitting what wouldend up being the record high of 87.74 Bcm in 1976 due toDutch government expectations that nuclear energy wouldovertake other sources.With large production quantities from a cheap cost source,infrastructure around the field was geared towards thisresource in the Netherlands, Germany, Belgium and northernFrance. This reliance on Groningen came despite the factthat, pound for pound, Groningen gas has less energy thangas sources from the likes of Norway and Russia.Gas within the Groningen field contains a high proportion ofnitrogen — about 15% — and has been classed as L-gas,with gas from other sources considered H-gas, which holds4%-6% nitrogen.Despite the strong demand for Groningen gas fromclose-by markets, production from the field began toslide as more gas began to be extracted from smaller gasfields, while nuclear energy did not develop as quickly aspreviously expected.Due to this, Groningen began to act as a swing field, withproduction volumes having been easy to manage on a dailybasis, with output falling back to as little as 21.17 Bcm in2
Special report: Natural gasThe future of European gas after Groningen2000, before picking back up in pace as reserves at thesmaller fields began to dwindle.DUTCH GAS PIPELINE NETWORKUndergroundnitrogen storageIndeed, extraction recovered to 53.87 Bcm in 2013, beforeproduction caps were put in place due to environmentalconcerns with the increase in frequency and size ofearthquakes, which caused damage to local property.GroningenResearch into the field in terms of an environmentalimpact began in 2012 following a 3.6-magnitudeearthquake in Huizinge, which also massively swungpublic opinion, prompting the creation of the StateSupervision of Mines (SodM).BBLAfter the 32-year production high in 2013 and furtherseismic activity in the Loppsersum area in particular,the decision was made to cap output from Groningen,effectively limiting the amount of gas that would be able tobe extracted on an annual basis.Gate LNGNETHERL ANDSGERMANYFeeder station(entry point)Export stationUnderground gasstorageCompressor stationBlending stationCompressor andblending stationNitrogen injectionGroningen pipelineHigh calorific pipelineDesulfurized pipelineNitrogen pipelineIn 2014, the cap was set at 42.5 Bcm, with the field comingclose to breaking this limit with 42.41 Bcm produced.This reduction was achieved by a steep drop in extractionfrom the Loppersum area, which saw production of 17.13Bcm in 2013 fall to just 2.59 Bcm in 2014 in order to reducethe number of seismic events from the Groningen field.However, extraction from the other three areas (Oost,Zuidwest and Eemskanaal) combined actually rose duringthe first year of the production caps, climbing to 39.8 Bcmin 2014 from 36.7 Bcm the year before.BELGIUMSource: Oxford Institute for Energy Studies, Dutch governmentNUMBER OF EARTHQUAKES RISES DESPITE LOWER PRODUCTIONIndeed, the number of seismic events at the field didinitially decline as a result of the production cap in place,with 80 registered in 2014 from the 119 the previous year.125Nonetheless, further production cuts were introduced aspublic opinion continued to turn against gas.But earthquake numbers subsequently failed to fall in linewith weaker output — extraction fell back to 28.1 Bcm in2015, 27.59 Bcm in 2016, 23.58 Bcm in 2017, and to itslowest in 50 years in 2018 at a mere 18.83 Bcm.But the 3.4-magnitude earthquake that hit Zeerijpin January 2018 saw opposition to gas production atGroningen take an irreversible turn for the worse, withSodM advising the Dutch government to reduce productionfrom the field to a maximum of 12 Bcm/year as soon aspossible shortly afterwards, something they took to heartwith the current cap for Gas Year 2019-20 (October 1, 2019,to September 30, 2020) at 11.8 Bcm. 2020 S&P Global Platts, a division of S&P Global Inc. All rights 19881998200802018Source: NAMPRODUCTION FROM LOPPERSUM, EEMSKANAAL ALREADY ost20The Groningen field is currently slated to end gas extractionin 2022, a decision announced in September 2019.— Gary Hornby(Bcm) Production100GY 2010-11GY 2012-13GY 2014-15Source: S&P Global Platts Analytics3GY 2016-17GY 2018-19
Special report: Natural gasThe future of European gas after GroningenImpact on European pricing and TTF liquidityCAL 22 CAL 21 CONTANGO ON THE TTFThe accelerated phase-out of Groningen productionhas fuelled price support and volatility as a result of theexpected greater dependency of the country on alternativesources of supply.21The soft European gas pricing outlook is expected toprevail in the short term to 2021 amid robust storagelevels and unprecedented levels of LNG supply flows tothe UK and continental Northwest Europe, according toPlatts Analytics.18Such flows have kept a lid on European natural gas spotprices. The TTF day-ahead contract is expected to weakenfurther to average Eur10.40/MWh in unJulAugSepOctGRONINGEN NOVEMBER PRODUCTION OUTPUT25(Bcm)ProductionGY 2019-20GY 2018-19GY 2017-182015Output quotaGY 2019-20GY 2018-19GY 2017-1810The tide of US LNG currently flowing into Europe is alsoexpected to recede from 2021, supporting a recovery ingas prices.The TTF Cal 21 contract opened almost Eur1/MWh abovethe Cal 22 in January 2019, but the premium disappearedover the course of 2019; the spread flipped at the endof November and Cal 22 had jumped to a 77.5 euro centpremium at the end of the year, Platts pricing data showed.Production at the two remaining active Groningen gas fieldsin the Netherlands totalled only 650 million cu m in October,down more than 46% year on year because of the sharpreduction in the output quota for GY-19. This very rapidacceleration in Groningen production stems from the newlyimposed GY-19 quota of 11.8 Bcm, which started October 1.The new permit is below the one recommended by the StateSupervision of Mines of 12 Bcm, already thought to bedifficult to achieve while meeting the required gas demand.This quick ramp down in domestic production will trigger amarket tightness, leading to a recovery in Dutch TTF naturalgas spot from 2021 to reach an average of Eur19.5/MWh in2023, according to Platts Analytics.Moderate boostAll else being equal, shutting down production at Groningenat an accelerated pace should provide a moderate boostto gas prices in Europe, according to Akos Losz, SeniorResearch Associate at the Center on Global Energy Policy,Columbia University, who has since left the position. 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.DecSource: S&P Global PlattsHowever, the rapid production decline and completephase-out of the Groningen gas field by mid-2022 willmark a structural change in European gas and tightenthe market.“The market noticed that [the Groningen shutdown] iscreating a contango between 2021 and 2022 Cal TTF,” anItalian gas trader said.Nov50Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug SepSource: GasunieHowever, there is a real possibility that 2020 will see aneven bigger glut hitting Northwest Europe during the lowseason, given the market’s oversupply, with any bullish priceimpact being washed away by a flood of LNG.“However, the market is expected to tighten – at leasttemporarily – in the 2022-23 timeframe, just around thetime when the shutdown of Groningen is scheduled to becompleted,” Losz said.“Once a tighter market takes hold, the loss of Groningencould have a more pronounced impact on prices andvolatility, especially in times of seasonal peak demand.The loss of this supply flexibility can further exacerbatevolatility and lead to sharper price spikes when the marketis tight.” While the field is a key source of gas supply to theDutch market, Groningen is also an important supplier ofL-gas to customers in Germany, Belgium and France.With Groningen ceasing production, despite recent fieldstartups, North Sea production will also decline in 2022-23which will further support prices.Greater seasonal fluctuations and supply squeezes duringthe winter months are likely under the current strategy tooptimize the use of the lower domestic production.The wild demand swings in Europe in March 2018 triggeredby the Beast from the East weather system are still fresh intraders’ minds. Greater Dutch dependency on its neighbors4
Special report: Natural gasThe future of European gas after Groningenwill result in further tightness on the spot market and couldmake price spikes more frequent.creating a single traded hub, stands little chance ofrivalling TTF.Gas demand in northwest Europe has witnessed 16 Bcmswings over the past five winters, according to PlattsAnalytics, so the prevailing weather conditions will playa key role in how the system balances. This is a risk thecountry is willing to take to significantly reduce andeventually neutralize the earthquake risks.German hubs, historically, have been used more as marketbalancing tools rather than for curve trading. TTF, however,has become the main tool for traders to risk manage theirgas portfolios given the hub’s liquidity all the way down thecurve. To grab that business from TTF is a big ask, accordingto market sources.Looking ahead and past the Groningen phase-out, theprice spike should eventually soften. A new wave ofLNG plant startups over 2024-26 will see a period ofoversupply despite coal closures and declining domesticgas production.“There is no way a single German hub will outpace TTF,” aDutch gas trader said.Platts Analytics sees prices softening again below the EUcoal switching point at Eur18/MWh but above Eur5/MWh.The TTF day-ahead contract for instance is forecast to easeto Eur17.20/MWh in 2024, falling to an average of Eur16.30/MWh in 2025.Groningen shutdown to create enormousL-gas deficitLiquidity to stayLiquidity on the pivotal TTF trading hub has been growingsteadily over recent years, reaching 2,779 TWh in October2019 – according to the latest data available from Gasunie– up from just 430 TWh in January 2011.The number of active parties increased to 162 in November2019 from 83 in 2011.The TTF hub in terms of traded volumes leaves itsEuropean counterparts far behind: for comparison,liquidity at MIBGAS, the Iberian gas exchange, was just4.38 TWh in November.The shutdown of Groningen seems unlikely to harm thestatus of the TTF as Europe’s premium gab hub or itstrading volumes. Gas production in the Netherlands alreadydropped by more than half between 2013 and 2018, whileTTF liquidity boomed.Similarly, the merger of Germany’s two gas trading marketareas – NetConnect and GASPOOL – by October 2021,DUTCH TTF LIQUIDITY4000(TWh) Traded volumeActive 15201620172018201950Source: Gasunie 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.— Antoine Simon, Kira SavcenkoThe accelerated phasing out of production from theGroningen fields will create a huge L-gas deficit acrossNorthern Europe, and far sooner than expected.Geographically distinct L-gas market areas in the Dutchdomestic market, and in certain transmission anddistribution zones of Belgium, France and Germany, makeup the demand centers for this variant of natural gas, andwere first developed and constructed as exclusive regionsin line with the development of onshore production fromfields such as those at Groningen in the 1960s.With the closure of Groningen now hastened, aconsiderable portion of the L-gas supply required to meetthat demand will be missing both in the short term andfar out on the horizon, meaning efforts to wean NorthernEurope off L-gas will too have to be intensified in orderto then fill the vacuum created by Groningen’s absence,with current plans to do this jeopardized by the latestproduction quota cut.Work has long been underway to prepare Europe for thetransition from L-gas dependency to H-gas exclusivity,with expected shortfalls to be ultimately neutralizedwith existing initiatives already in place, namely theconversion of more conventional H-gas supplies intoL-gas by process of diluting it with inert nitrogen, or morestrategically adapting domestic L-gas infrastructure,large-scale users and household appliances to functionwith higher energy content.These are necessary developments, since L-gas networksin Europe are unable to accommodate H-gas supply, andthe two varieties of gas are not commonly interchangeable,meaning conversion is often a one-way process.Moreover, the conversion of grid interconnection pointsto facilitate the transport of H-gas into exclusively L-gasregions is an added dimension of complexity that needs to5
Special report: Natural gasThe future of European gas after Groningenbe factored into what is already a monumental challenge.Transmission and distribution networks would also haveto discourage any additional connections to L-gas supply,although this is easier said than done.At present, operator NAM – a joint venture between Shelland ExxonMobil – produces and sells Groningen gas toa single market maker, Gasterra, an unbundled supplyand trading arm of former Dutch incumbent and currenttransmission system operator (TSO) Gasunie. The Dutchgovernment owns 50% of Gasterra, with NAM’s parentcompanies making up an equal share of the remainingholding. Consequently, Gasunie, Gasterra and NAM allhave to operate within the regulatory and legislativeframework set out by the Dutch government with regard toGroningen production.Gasterra, as well as meeting domestic requirements forL-gas, is the Netherlands’ prime exporter of the commodityto trading partners in neighboring Belgium, France andGermany, with many of these sales made under long-termsales agreements until 2029, the previous projected datefor the closure of Groningen. These agreements wouldbecome increasingly compromised and difficult to honorwithout production volumes.The extent of the overall undertaking required isformidable. According to TSO operators’ body Entsog,annual L-gas demand across these countries equatesto 594 TWh/year. The Netherlands consumes the most,with 6.8 million domestic customers using 270 TWh/year,while Germany comes a close second with 4.9 millionusers consuming 230 TWh/year. Belgium and France havedecidedly lower requirements of 50 TWh/year and 44 TWh/year respectively, requiring another 2.9 million domesticconversions between them.While each country has its own arrangements for L-gasdistribution, all will need to upgrade their existinginfrastructure in order to make the transition.The NetherlandsThe Dutch government has pledged to increase capacity atexisting H-gas conversion facilities, while fast-tracking newinfrastructure for industrial users to reduce demand.The Netherlands currently has 20 Bcm/year (or 18 Bcm/year in H-gas) of conversion capacity, which has beenoperating at almost full utilization after steep cutsin production, with operator Gasunie now frequentlypublishing warnings when capacity limits are about tobe reached. Such capability used to be in response toweather conditions, but are now fulfilling a baseloadsupply role, now there is little seasonal flexibility fromproduction or conversion.Gasunie recently said it was confident of building enoughH-L gas conversion capacity ahead of the 2022 shutdown. 2020 S&P Global Platts, a division of S&P Global Inc. All rights reserved.“The Dutch gas network, including additional qualityconversion, is capable of accommodating the rapidreduction and closure of the Groningen field,” Bart JanHoevers of Gasunie said at the S&P Global Platts EuropeanGas and LNG summit in September.This i
The future of European gas after Groningen. ForEword Gas production at Europe’s largest gas field – the giant Groningen field onshore the Netherlands – will end in 2022, eight years earlier than planned, due the risk of earthquakes in the region triggered by production drilling. The move
May 02, 2018 · D. Program Evaluation ͟The organization has provided a description of the framework for how each program will be evaluated. The framework should include all the elements below: ͟The evaluation methods are cost-effective for the organization ͟Quantitative and qualitative data is being collected (at Basics tier, data collection must have begun)
Silat is a combative art of self-defense and survival rooted from Matay archipelago. It was traced at thé early of Langkasuka Kingdom (2nd century CE) till thé reign of Melaka (Malaysia) Sultanate era (13th century). Silat has now evolved to become part of social culture and tradition with thé appearance of a fine physical and spiritual .
If a previous version of the Excel Add-In has already been installed, you can uninstall the previous version of the Platts Excel Add-In by following these simple steps: 1. Open the 'Windows Control Panel' and select 'Programs and Features' 2. Select 'Platts Market Data Direct' or Platts Excel Add-In and click 'Uninstall.' 3.
(Monday – Friday, including holidays). Symbol files are updated each weekend. Most ‘market data cuts’ are timed to coincide with the end of the Platts Editorial day in each of the major trading regions, as follows: All times in the table above are US Eastern local
On an exceptional basis, Member States may request UNESCO to provide thé candidates with access to thé platform so they can complète thé form by themselves. Thèse requests must be addressed to esd rize unesco. or by 15 A ril 2021 UNESCO will provide thé nomineewith accessto thé platform via their émail address.
̶The leading indicator of employee engagement is based on the quality of the relationship between employee and supervisor Empower your managers! ̶Help them understand the impact on the organization ̶Share important changes, plan options, tasks, and deadlines ̶Provide key messages and talking points ̶Prepare them to answer employee questions
Dr. Sunita Bharatwal** Dr. Pawan Garga*** Abstract Customer satisfaction is derived from thè functionalities and values, a product or Service can provide. The current study aims to segregate thè dimensions of ordine Service quality and gather insights on its impact on web shopping. The trends of purchases have
Chính Văn.- Còn đức Thế tôn thì tuệ giác cực kỳ trong sạch 8: hiện hành bất nhị 9, đạt đến vô tướng 10, đứng vào chỗ đứng của các đức Thế tôn 11, thể hiện tính bình đẳng của các Ngài, đến chỗ không còn chướng ngại 12, giáo pháp không thể khuynh đảo, tâm thức không bị cản trở, cái được
