Upon entering what the IEA has termed the Golden Age of Gas, Energy Security has been both a leading theme and a topic overshadowed by the rapid developments taking place with Shale Gas and LNG . Has storage really taken a permanent backseat to LNG?
Time will tell, but what has emerged is a ‘chicken and egg’ debate in the industry. Gas storage, and the products that developed in its portfolio catered to transmission, and large annual blocks of gas bought and sold. With the rise of LNG, a great deal of lateral movement with pricing has been achieved. However, what is not addressed by the flexibility and price ‘relief’ tied to LNG, is grid capacity.
The central role gas storage plays in providing capacity will be re-examined at the European Gas Storage and Infrastructure Forum, Berlin, this September 26th -27th. Speaker and former Head of Gas Storage at Wingas, Dr. Stephan Dewald commented in a pre-conference interview that “the problem is the gas grid, which does not have any spare capacity for long distances in case of a shortfall (e.g.: less gas from the east cannot be compensated with LNG from the west because the western pipeline is already full).”
“In this case LNG in the vessel’s tanks is (stranded)…therefore, decentralized gas storage close to the main consumers/customers are of value in any scenario to have a physical buffer.” So, it appears that the rapid rise of LNG is once again limited to system capacity. Does this mean we will see the rise of smaller – urban/suburban or municipal storage sites and smaller scale transmission routes?
Recent market developments in which traders are increasingly able to to assert their needs on players in transport and storage may hint at this. What we find are flexible products and services, that Gas Storage providers deliver to provide back up for gas and energy trades. Nafta, a company of E.ON Ruhrgas and GDF Suez, and others have played major stakes on this strategy, seeking to increase revenue. This is further proof that market competition and complexity is growing.
At the conference in Berlin, storage will be joined by Pipelines, Biogas, CO2 & Hydrogen Storage, Integrated Gas & Renewable Networks, and LNG. Considering what history has shown us it will require a cooperative approach to maintain European energy security. Technology & Gas volumes aside, communication and cooperation are the fundamental elements of energy security.
Thus, in the short term, while LNG enjoys its moment in the sum, Storage and other integral elements of the gas grid are applying themselves to the further development of the gas market’s business and physical infrastructure.
For further information on: European Gas Storage & Infrastructure Forum, Berlin, Sept. 26 -27
Event Homepage: http://oilgas.flemingeurope.com/european-gas-storage-forum/
Ada Tobias | Fleming Europe
Phone: 00 421 257 272 137