German gas providers coped remarkebly well with the supply disruption in January. They even managed to supply extra gas to hard-hit customers in Eastern Europe. Even so the companies are expanding their storage capabilities and looking for alternative supply routes. 02/2009

 

Control room big

 

 

Without his chip card Reinhard Bőhm cannot get into the control room of the Leipzig based gas provider Verbundnetz Gas (VNG). The chip card gives the “gas flow manager” access to an air lock where he puts his hand in a reading device and places himself on a contact mat. At the same time he is filmed by a video camera before the door to the control room finally opens. Here are the two control stations operated by VNG and its gas transmission subsidiary, Ontras. ‘VNG is responsible for physically dispatching gas volumes,’ explains Bőhm. ‘Ontras is in charge of processing the transport contracts.’

 

A large map shows VNG’s 7,000 km gas supply network which, to comply with German unbundling regulations, is operated and marketed by Ontras. Bőhm explains how natural gas from Russian, German and Norwegian sources is fed into the Ontras grid at four transfer stations in the East, South and West. Russian natural gas, which supplies half of VNG’s natural gas demand, flows through the station in Mallnow on the German-Polish border and through the station in Sayda on the German-Czech border.

 

For 35 years Russian natural gas supplies to VNG have been reliable. Short-term interruptions in supply from the Russian group Gazprom on the transport route through Belarus in the beginning of 2004, and on the second transport route through Ukraine in the beginning of 2006, could be compensated for by increasing supplies on the route not affected. Both supply interruptions were a result of Gazprom not being able to agree on increased prices with Belarus and Ukraine. The effect of the Russian natural gas delivery stop to Ukraine on the first of January 2009 was significantly greater. It led in the following days to a complete halt of Russian natural gas transmission through Ukraine to Central and Western Europe. As a consequence there were severe shortages in supply to Bulgaria, Slovakia, Poland, Hungary, Serbia, Bosnia and Herzegovina, as well as Macedonia.

 

There was also a break in the Russian supply of natural gas to VNG on the 7th of January at the Czech-German border station in Sayda in the Erzgebirge on the southern transport route. ‘This means that we have a daily shortfall of approximately eight million cubic meters of natural gas,’ explained CEO Klaus-Ewald Holst at the time. ‘We can make up for half of this through additional supplies from the Jamal pipeline.’ The Jamal pipeline transports Russian natural gas through Belarus and Poland to the German station in Mallnow. According to Holst, VNG sourced twenty percent of the shortfall from other suppliers in Norway and Germany. ‘We are able to cover the rest from our own storage supplies.’ They were well stocked, even at the low temperatures at the time only half of their capacity was required, and were able to provide a secure supply to VNG customers for at least twelve weeks.

 

The company has a total five underground gas reservoirs. 2.5 billion m3 of natural gas can be stored here in summer and fed back into the grid in winter. One of these reservoirs is located in Bad Lauchstädt near Halle/Saale. Only the facilities above ground are visible. They compress, cool and dry the stored natural gas. The storage systems themselves are 750 m below the surface in a former natural gas cavern and in a salt layer. During the gas dispute the capacity of this storage system in Bad Lauchstädt was fully drawn upon. ‘We had an output of up to one million cubic metres per hour,’ reported Winfried Becker, head of VNG’s storage service. ‘With this we came to the upper limit of the facilities’ technical capabilities.’

 

Thanks to its storage facilities and alternative supply options VNG was able to ensure smooth gas supply to its own customers during the Russian-Ukrainian transport crisis. Furthermore, through the Ontras network, it was able to transport even larger amounts of Russian natural gas from Mallnow in the East to Sayda in the South. Here the natural gas was received from the Czech RWE Transgas and pumped to the South-West German transfer station in Waidhaus. During this time VNG and Ontras also delivered Norwegian natural gas for its Czech partner from North-West Germany to Sayda. Under normal conditions VNG can pump up to 13 million m3 of gas through Sayda into the Ontras network daily. During the transport crisis exactly this amount flowed in the reverse direction into the RWE Transgas network.

 

To be able to reverse the direction of the gas flow this way, the normal network operation had to be completely reconfigured. ‘It took us three days to do the system switches,’ said Bőhm. Some of the changes to the valve systems of the compressor stations were able to be implemented from the control room in the VNG headquarters in Leipzig. Network dispatcher Edgar Behrendt showed the pipeline systems of the central compressor station Bobbau on one of his many monitors. Coloured symbols mark the valves used to control the direction of the gas flow. ‘From here, I can change the direction of a whole valve system with a single mouse click,’ explained Behrendt. It only works however if the technology on the ground plays along: At the beginning of January temperatures fell to as low as minus 20° Celsius causing some of the equipment to freeze up. This meant that the crew on stand-by duty had to be called out to manually bring it back into operation.

 

In addition to supplying RWE Transgas, VNG was also able to help the Slovakian gas provider SPP (Slovensky plynarensky priemysel) with natural gas during the critical days. ‘We have rented underground storage capacity in Slovakia,’ reported Bőhm. ‘From here we were able to make 100 million cubic meters available to SPP.’

 

On the 21st of January the emergency situation for VNG was over. After Gazprom had reached agreement with Ukraine for an increase in gas prices the transmission of Russian gas through Ukraine resumed. And VNG received again the full amount of Russian gas via Sayda. At this point in time the VNG natural gas storage facilities were still half full. ‘The situation is the same as it has been in other winters,’ said Bőhm.

 

Gerhard Holtmeier, head of technology, expects that the reserves will not be used up until March. ‘And that’s how they are engineered,’ he said. According to him, four times more gas is used in winter than in summer. In the warm season VNG takes advantage of cheaper prices to buy gas and store it in its storage facilities for the winter. However, it is exceptional for the stores to be completely empty at the end of winter. Becker remembers one such situation at the end of the harsh 2005/2006 winter. However, the stores were only 80% full at the beginning of that winter.

 

VNG’s customers and those of other German gas providers didn’t feel the effects of the Russian-Ukrainian gas supply crisis. ‘There was a constant supply and there are no known problems with the gas supplies,’ said VIK (Association of Industrial Power Plant Operators). At the same time, for example, Eon Ruhrgas, the largest German gas importer had to deal with major breakdowns in the supply of Russian gas. ‘For a period of about two weeks Gazprom’s supply volumes were at a very low level. Gazprom’s supplies to Eon Ruhrgas were reduced by about 60 percent of normal volumes,’ said CEO Bernhard Reutersberg. Ruhrgas sources a quarter of its gas from Russia, which is mainly supplied through the South German border station in Waidhaus. Ruhrgas sourced larger volumes from its suppliers in Norway and the Netherlands to be able to secure supply to its South German customers despite the shortfall in Russian gas volumes. The company also made greater use of its storage reserves and bought additional gas at daily rates on the spot market.

 

This meant that Ruhrgas had to transport unusually high volumes of gas from the North to the South. ‘The technical systems in these two weeks were more challenged than ever before,’ said Reutersberg. ‘At times they were stretched to their maximum capacity. And there were no disruptions worth mentioning.’ To be able to transport the necessary volumes, the gas provider used the capacities of other transport companies in addition to the pipeline network of its own subsidiary Eon Gastransport. Not only was Ruhrgas able to ensure the supply of its German customers during this time, it was even able to supply 13 million m3 of gas daily to Hungary, Slovakia, Serbia, Croatia, Slovenia, as well as Bosnia and Herzegovina.

 

The second largest German gas importer, Wingas, sources around 60% of its natural gas from Russia. Wingas is a joint venture between Wintershall, the oil and gas subsidiary of the German chemical group BASF, and the Russian group Gazprom. The majority of the Russian gas for Wingas is supplied via the northern Jamal-Europa pipeline. It passes from Russia through Belarus and Poland to the German transfer station in Mallnow. Therefore, the effects were limited when Wingas stopped receiving Russian gas on the southern route via Ukraine on the 6th of January. ‘Instead of through Ukraine, Gazprom pumped increased volumes of gas through the alternative northern route via Belarus and Poland to Germany,’ said the company. ‘Wingas got almost all of its contracted volumes from Russia.’ The underground store in Rehden, which holds up to 4.2 billion m3 of natural gas, fed out almost the same volumes as in other winters. Even at the end of January it was still two-thirds full.

 

The German energy group RWE also reported that the crisis management worked perfectly during the gas supply stoppage. The Czech subsidiary of RWE, Transgas, was particularly badly hit by the transmission crisis. The company reported that the shortfalls in volumes were compensated for from storage, supplies of Russian gas via the northern route through Belarus and Poland, and through supplies from Norway. From the Czech Republic, Transgas also supplied additional customers in Slovakia. For this purpose a transmission pipeline was adapted so that for the first time ever, gas from the West could flow to Slovakia. ‘RWE’s crisis management made a crucial contribution to ensure security of supply for our customers in the affected countries at all times,’ said Stefan Judisch who, in his role as CCO Supply of RWE Supply & Trading, is responsible for RWE’s gas procurement portfolio.

 

During the Russian-Ukrainian transmission crisis the strength and reliability of the German gas industry’s infrastructure became apparent. Despite this, the natural gas importers are currently driving a large number of projects to develop further transport routes for the valuable source of energy and to expand storage capacity. For instance, Eon Ruhrgas and Wintershall, the Wingas parent company, are involved jointly with the Dutch Gasunie and the Russian group Gazprom in the Nord Stream pipeline project, which is expected to transport Russian gas along a new transport route from Russia through the Baltic Sea to the German coast from 2011. RWE belongs to the syndicate running the Nabucco pipeline project which aims to deliver gas from Central Asia to Central Europe. In addition, the companies are getting prepared for the introduction of liquified natural gas (LNG). LNG will be delivered by tanker from remote production areas, then converted to pipeline gas in special harbour terminals, and fed into regional networks.

 

Furthermore, German companies are following up on numerous projects for the expansion of already existing, highly efficient underground gas stores. The 46 existing stores are already able to hold 20 billion m3 of gas, which is a quarter of Germany’s annual consumption. Soon two new stores will be added, at Jemgum on the German-Dutch border, which are currently being built by Wingas and EWE. In the future, Wingas will be able to store 1.2 billion m3 of gas here. Eon Ruhrgas is planning to expand the capacity of its storage facilities from the current 5.5 billion m3 to 8 billion m3 by 2012. VNG is also planning to further expand the capacity of its storage facilities. The East German gas provider is also following a joint storage project with its gas supplier, Gazprom, at its existing storage site in Bernburg, between Leipzig and Magdeburg. VNG currently operates a gas store here in an underground salt layer with almost one billion m3 of stored gas. The company is expanding this store at its own expense by 210 million m3 until 2011. The new joint storage project with Gazprom Export will be built in the same salt layer, but it will be operated separately from the current VNG stores.

 

The German subsidiary of the Russian group, Gazprom Germania, already has access to a capacity of 160 million m3 in a storage facility in Etzel on the North Sea coast. Gazprom Germania is pursuing significantly larger storage projects in Schweinrich and Hinrichshagen, both south of the Baltic coast. Here the company is investigating deep geological formations for their suitability as gas storage facilities. According to current forecasts both sites will be able to store up to 15 billion m3 of gas. That would be a strong buffer for the Nord Stream pipeline which will in this region join the Central and Western European gas network.

 

     
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