Fluxys Indicative Investment Programme for the Development of Natural Gas Infrastructure in Belgium

Transcription

1 Fluxys Indicative Investment Programme for the Development of Natural Gas Infrastructure in Belgium

2 Table of contents 1 2 foreword... 4 fluxys in a nutshell...6 TRENDS AND DEVELOPMENTS IN THE EUROPEAN NATURAL GAS MARKET Mission Vision Infrastructure Activities Demand: natural gas will continue to feature prominently in the energy mix Supply: European production declining Natural gas transmission infrastructure: huge investment needed Initiatives of European institutions FLUXYS new infrastructure FLUXYS 2OO9

3 3 4 INDICATIVE investment programme General approach underpinning the investment programme Key elements of the indicative investment programme Estimation of future capacity demand 26 Capacity to supply points Capacity at the entry zones Less balancing zones for domestic transmission Partial conversion of the low-calorific natural gas network into a high-calorific natural gas network 3.4 Key investment projects on the main axes 31 Enhancing the east/west transmission axis Enhancing the north/south transmission axis Additional compression capacity and second pressurereducing facility in Berneau Opwijk - Desteldonk pipeline Alveringem - Maldegem pipeline Enhancing capacity on the transmission axis to Luxembourg Natural gas specifications 3.5 Major investment projects for local and regional axes 36 Pipelines New connections for industrial end users and combined heat and power facilities Connections for new power stations 3.6 Storage projects 40 Capacity enhancement at the underground storage facility in Loenhout Research into possible underground storage in the Campine region of the Province of Limburg 3.7 LNG terminalling projects 42 Construction of an Open Rack Vaporizer Project for a second capacity enhancement at the Zeebrugge LNG terminal 3.8 Safety Environment 45 Systematic reduction of environmental impact Commitment to joining the global energy efficiency elite From preliminary study to commissioning: what are the stages involved in laying a pipeline? Preparatory tasks 47 In-depth study to determine the optimal route Different permits Fluxys appoints a specific contact person for the owners and users of affected lands 4.2 Laying a pipeline 49 Pipeline laying step by step Consultation with land operators during the works Compensation for damage 4.3 After construction of the pipeline 54 No change to how the plot of land is used Legal notification requirement for works in the vicinity of natural gas transmission pipelines Administrative simplification: quick and simple notification via the CICC/KLIM website Unless indicated otherwise, the figures and numbers in this publication reflect the situation as at 30 June When referring to capacities or volumes in cubic metres, it is understood that these are normal cubic metres (a cubic metre of natural gas at 0 C and a pressure of 101,325 Pa) > e exercice 3

4 foreword Fluxys pursues an active investment policy to anticipate changes in natural gas demand in Belgium, attract new border-to-border gas flows and continue to open its grid to as many sources of natural gas as possible. By developing its network as a crossroads, Fluxys enhances security of supply, diversification of sources and the well-functioning of the natural gas market in Belgium and North-Western Europe. To take account of market signals, Fluxys updates annually its ten-year indicative investment programme for its three core activities: transmission and storage of natural gas and terminalling of liquefied natural gas (LNG) in Belgium. The company has gradually increased its budget earmarked for investments in Belgium from 2700 million in 2002 to some 22.8 billion in This budget was revised downward in 2010 to reach a little more than 22 billion. Fluxys Executive Board (from left to right) Pascal De Buck Commercial Director Gérard de Hemptinne Director Asset Management Walter Peeraer Chairman of the Executive Board and CEO Peter Verhaeghe Director Infrastructure Projects & Engineering Paul Tummers Director Strategy and Regulatory Affairs Michel Vermout Chief Financial Officer 4 FLUXYS new infrastructure

5 The reason for this drop has partly to do with bringing project budgets in line with market price trends. In addition, grid users in Belgium as well as elsewhere in Europe have been adopting a more cautious approach as to booking additional capacity and prolonging their existing contracts. Against this background, Fluxys has essentially reviewed the scope of its north/south project (see page 33) to avoid over-investment and associated stranded costs. Current demand for additional flows can actually be met by using capacity available in the existing infrastructure, laying a shorter pipeline than initially planned, and building additional compression capacity. This publication outlines how Fluxys has drawn up its indicative investment programme in Belgium for the period The bulk of this programme is earmarked for laying around 700 km of new pipelines and investments in ancillary stations for natural gas transmission. Investments are also planned and under way in natural gas storage and liquefied natural gas (LNG) terminalling. Also provided for are the funds required to keep the natural gas transmission infrastructure in good condition. Projects have already been approved for nearly 25% of the indicative budget, the remaining projects still being in a preparatory phase and liable to evolve in line with market demand, on the basis of which Fluxys annually adapts its rolling ten-year programme. The aim of Fluxys in publishing this indicative ten-year programme is to give grid users a comprehensive and anticipatory overview of the investments the company deems necessary based on the information currently available. However, this plan is also aimed at municipalities, permitting authorities and people living in the vicinity of the Fluxys infrastructure. For each new project of any scale, Fluxys makes every effort to ensure that all interested parties are kept clearly informed right from the preparatory phase, in a spirit of good neighbourliness. This publication takes that policy a step further, informing you about the entire range of projects included on an indicative basis in Fluxys investment planning process >

6 FLUXYS EN BREF 1. Fluxys IN A NUTSHELL 1.1 Mission Fluxys builds and operates the infrastructure for transmission and storage of natural gas and terminalling of liquefied natural gas in Belgium. The company has been designated as the independent system operator in Belgium and in this activity of general economic interest we aim on behalf of natural gas consumers at competitive tariffs for our services, contributing to a well-functioning market and security of supply, and we spare no effort to consolidate our role as a crossroads for international natural gas flows in North-Western Europe. Safety, efficiency, sustainability and profitability are at the centre of our approach. 1.2 VISION The natural gas transmission market in North-Western Europe is evolving into a virtual cross-border unity. Fluxys plays a key role in developing this integrated market into an efficient system for suppliers to move natural gas flexibly from any border point in the region to their customers.

7 NORWEGIAN GAS FIELDS UNITED KINGDOM NETHERLANDS ZEEBRUGGE GERMANY LNG SOURCES FRANCE LUXEMBOURG FLUXYS NETWORK: NATURAL GAS CROSSROADS FOR THE NORTH-WESTERN EUROPEAN MARKET plan indicatif 2009 >

8 FLUXYS in a nutshell 1.3 Infrastructure Belgium has no natural gas of its own and so is entirely reliant on imports. The interconnection points on the Fluxys grid connect Belgium to natural gas supplies piped from the United Kingdom, Norway, the Netherlands, Germany and Russia, while the Zeebrugge LNG terminal enables LNG to be supplied by seaborne transport from producing countries worldwide. LNG for Belgium is currently sourced mainly from Qatar. In 2008 and 2009, the Zeebrugge LNG terminal was also used to unload LNG ships from Egypt, Norway and Trinidad & Tobago. LNG SOURCES united kingdom norwegian gas fields BELGIum FRANCE spain ITALy the netherlands RUSSIa germany LUXEMBOURG Fluxys has developed the Zeebrugge area into a central crossroads of international natural gas flows in North- Western Europe. The Zeebrugge area has an annual landing capacity of 48 billion cubic metres, which represents 10% of the border capacity needed to supply Europe. It is a reception point for LNG imported by ship as well as the place where two key gas pipelines meet: the east/west route between Russia and the UK and the north/south route between Norway and the Netherlands, the UK and Southern Europe. Zeebrugge is also a key trading centre for the natural gas industry: the Zeebrugge Hub is one of mainland Europe s most important spot markets for natural gas. 8 FLUXYS new infrastructure

9 norway united kingdom HUB LNG Zelzate the netherlands Zandvliet Loenhout the netherlands Poppel / hilvarenbeek Zeebrugge Bruges Antwerp Sint-Niklaas Mechelen Dilsen norway / germany Gent Genk Kortrijk Aalst Brussels Berneau s-gravenvoeren norway / germany russia / germany Tournai Liège Verviers Eynatten Namur Mons Charleroi Sinsin Blaregnies bras High calorific gas Low calorific gas france spain italy Libramont Bastogne Arlon Pétange Interconnection points LUXEMBOURG LNG terminal Compressor station Blending station Storage Hub FLUXYS NETWORK FOR NATURAL GAS TRANSMISSION 2010 >

10 FLUXYS in a nutshell 1.4 Activities Transmission Fluxys is responsible for the transmission of natural gas in Belgium to industrial consumers and power stations directly connected to its grid. Fluxys also ensures the transmission of natural gas to distribution system operators, who in turn supply the gas to the SMEs and private households connected to their distribution systems. The Fluxys grid has connections with 17 distribution system operators. In addition, there are about 250 industrial customers, combined heat and power facilities and power stations connected directly to the Fluxys grid. On 30 June 2010, 13 grid users were active in the business of domestic transmission. Consumption in Belgium represents some 17 billion cubic metres of natural gas per year, or 3% of the overall European consumption. Fluxys also accommodates border-to-border natural gas flows for other markets in Europe: France, the Netherlands, Germany, Spain, Italy, the UK and Luxembourg. Some 40 grid users are active in the business of border-to-border transmission. Long-term booked capacity for borderto-border flows amounts to approximately 95 billion cubic metres per year, corresponding to the capacity needed for supplying nearly 20% of the European Union. 10 FLUXYS new infrastructure

11 210 Large industrial end-users 3,900 km Fluxys grid High pressure 18 Combined heat & power units 18 interconnection points 17 bcm/year Transmission for supply in Belgium Households 17 Grids of distribution system operators 60,000 km Low pressure 24 Power stations 95 bcm/year Long-term booked capacity in the Fluxys network for border-to-border transmission SMEs 2010 FLUXYS > 2019 ROLE ON THE NATURAL GAS TRANSMISSION MARKET 11

12 FLUXYS in a nutshell LNG Terminalling Fluxys LNG provides LNG terminalling services at the Zeebrugge LNG terminal, where LNG ships can be loaded or unloaded. The LNG is kept in cycling storage at the facility and can be regasified and injected into the grid for transmission or be reloaded onto LNG ships. In April 2008, Fluxys finalised the investments to increase the terminal s annual capacity from 4.5 to 9 billion cubic metres of natural gas by commissioning a fourth storage tank and additional regasification facilities. The overall capacity of 9 billion cubic metres of natural gas per year (i.e. a little more than 7 million tonnes of LNG) has been booked through long-term agreements with 3 terminal users. Commissioning of the fourth storage tank has increased the terminal s cycling storage capacity from 240,000 to 380,000 cubic metres of LNG, which corresponds to two or three times the cargo of a standard LNG ship. As for the additional regasification facilities, they increased send-out capacity from 950,000 to 1.7 million cubic metres of natural gas per hour: the entire cargo of a standard LNG ship can be regasified and injected into the grid in about two days. Q-Flex-type ships with a capacity of 217,000 cubic metres of LNG have been able to use the Zeebrugge terminal since the summer of In 2010, Fluxys LNG loaded LNG for the first time on a small capacity LNG ship (with a volume 20 times smaller than a standard LNG ship) in a trial operation. Fluxys LNG considers to develop this activity according to market demand so as to expand the services offered at the LNG terminal and offer customers greater utilisation flexibility. The LNG terminal in Zeebrugge also expanded its services in 2010 with LNG truck loading, a particularly useful alternative for supplying natural gas to industrial sites in Europe where no pipeline supplies are available. The LNG terminal can load 3,300 LNG tanker trucks per year. The new service offers terminal users the opportunity to further broaden their options in the destination flexibility for the LNG they have shipped into the facility. Liquefied natural gas Liquefying natural gas enables it to be transported over huge distances by LNG ship from producer countries to end-user markets. Natural gas is liquefied by cooling it down to -160 C. This reduces its volume by a factor of 600 and allows large amounts of energy to be shipped in relatively small volumes in an economical and ecological manner. 12 FLUXYS new infrastructure

13 Storage Fluxys offers natural gas storage capacity to suppliers to the Belgian market so that they can ensure continuity of supply to their heating customers in periods of colder weather. The service is offered from its facility in Loenhout where natural gas is kept in storage in an aquifer more than 1,000 m below sea level. The workable storage volume in Loenhout amounts to 675 million cubic metres of natural gas >

14 Trends and developments in the European natural gas market 2. trends and developments in the European natural gas market Natural gas transmission system operators must plan the investments needed to make the required capacity available to the market in good time. However, market liberalisation and the impact of the economic crisis bring along that TSOs no longer have a clear view on how the flurry of grid users will use their networks in the long run. The challenge for TSOs in this climate of uncertainty is to continue to develop their infrastructure while avoiding both over- and underinvestment. 14 FLUXYS new infrastructure

15 2.1 demand: natural gas will continue to feature prominently in the energy mix Long-term forecasts of natural gas demand uncertain. Forecasts of demand for natural gas consumption in the long-term tend to diverge far more than in the past. The economic crisis has of course left its mark, and still does, but consumption is nevertheless expected to return to pre-crisis level as of 2015 and even exceed that level slightly around After 2020, natural gas demand will be influenced primarily by developments in electricity generation and renewable sources of energy. Natural gas will continue to feature prominently in tomorrow s energy mix. The purpose of energy policies is not only to enhance security of supply, but also to reduce greenhouse gas emissions at an acceptable cost. But what policies will actually be implemented to take up the environmental challenge? And how much time will such policies take to produce results? Several scenarios have been put forward, but whatever the scenario, natural gas will continue to feature prominently in tomorrow s energy mix. From an environmental point of view, natural gas is the best option among fossil fuels (lower CO 2 emissions), and natural gas technology is more energy efficient than rival technology. In addition, transmission by pipeline and by ship has a minimal environmental impact compared to other modes of transport. What s more, all the signs are that the share of natural gas in Europe s power generation mix (currently close to 25%) will remain stable, or even increase, in future. Coal already plays a much less important role in Europe s electricity production than natural gas. And when the last of Europe s coal-fired plants reach the end of their life cycle, they will need to be replaced. Only natural gas technology can be deployed quickly enough to meet the needs of power production: alternative solutions such as carbon capture and storage will doubtlessly need more time to reach maturity. Furthermore, some renewable energy sources such as wind and photovoltaic generate electricity only intermittently and must therefore be supplemented with back-up production capacity. And that capacity will very probably rely on natural gas technology because it offers the necessary flexibility. Finally, natural gas also has major advantages for residential heating and as fuel for vehicles >

16 Trends and developments in the European natural gas market 2.2 Supply: European production declining On the supply side in Western Europe, only Norwegian natural gas production has scope for further expansion. According to Cedigaz, additional production of natural gas in Norway could cover one-third of the growth in demand for gas imports in Europe up to the year This increase in Norwegian production would be used mainly to supply the United Kingdom, which has been a net importer of natural gas since , as the reserves of the British Continental Shelf are in decline. In the Netherlands, production from small fields is also waning while production from the Groningen field has been capped. To meet the growth in European demand, larger volumes of natural gas will have to be imported from sources further afield. European Union: evolution of natural gas production Bcm/y Source : Cedigaz, July FLUXYS new infrastructure

17 NORWAY 2,985 CIS 59,631 6,000km 4,000km UNITED KINGDOM 625 2,000km NETHERLANDS 1,222 ALGERIA 4,504 IRAN 29,050 QATAR 25,580 TRINIDAD & TOBAGO 500 NIGERIA 5,292 SAUDI ARABIA + UNITED ARAB EMIRATES 14,002 Source : Cedigaz, July 2009 NATURAL GAS SOURCES FOR THE EUROPEAN MARKET (in billion m 3 ) 2010 >

18 Trends and developments in the European natural gas market Unconventional natural gas production could prove an opportunity as well. Some countries such as the United States have in recent years registered high growth in the production of what is known as unconventional gas. This is natural gas found particularly in shale or coal layers. Thanks to technological advances, this type of natural gas can now be extracted at competitive costs. Unconventional gas production in the United States amounted to 44% of natural gas demand in In Europe, the oil and gas industry is beginning to explore the possibilities of producing unconventional gas as well. The sites currently being explored are located essentially in the east: Hungary, Poland, Austria and Germany. 2.3 natural gas transmission infrastructure: huge investment needed More pipeline gas from remoter sources. As regards gas piped from sources further afield, all the signs indicate that Russia will continue to develop as a major producer for Europe. Against this backdrop, work got under way in 2010 on the undersea Nord Stream pipeline, which will supply more Russian gas to Europe via north-east Germany. Another remote-source project on the longer term is the Nabucco pipeline, planned to run through Turkey and Austria and connect the Caspian region, the Middle East and Egypt with the markets of Central and Western Europe. There is also the South Stream pipeline project, which would transport natural gas from Russia via southern continental Europe. As it goes, the new supply routes do not extend to all consumer markets: downstream of these major arteries, substantial investment in infrastructure is required to transport the new flows to their final destinations. 18 FLUXYS new infrastructure

19 Nord Stream NEL Opal Yamal II? ZEEBRuGGE RTR 2 BauMGaRTEN North/South MET White Stream TaP? South Stream Medgaz Galsi ITGI Nabucco Pipelines Commissioning date Under construction Planned or announced Possible route MAJOR PIPELINES PROJECTS IN EUROPE 2010 >

20 Trends and developments in the European natural gas market More liquefied natural gas. Europe will also have to further diversify its import portfolio with liquefied natural gas from the Middle East, Africa and most likely also, albeit to a smaller degree, from Latin America. LNG actually has the flexibility needed to cover demand peaks, particularly through the price arbitrage mechanism. According to Cedigaz estimates, LNG imports in Europe are set to rise from 55 billion cubic metres in 2008 to 115 billion cubic metres in 2015 and may hit 135 billion cubic metres by A raft of LNG projects are in the pipeline to build new LNG terminals or expand existing facilities. In 2009, Europe s total regasification capacity reached 137 billion cubic metres of natural gas, and additional regasification capacity totalling 54 billion cubic metres was under construction. More capacity for cross-border and bidirectional flows. On a European gas market being unified, major investments are also indispensable to facilitate cross-border flows and to promote competition between suppliers so that they can provide natural gas to end users at the best price. A larger number of interconnections between the different Member States must be created, making sure that they can be operated in both directions so as to enhance security of supply in the European Union. 20 FLUXYS new infrastructure

21 Nynäshamn Shannon LNG Wilhelmshaven (2) (1 on hold) Klaipéda Rotterdam Swinoujscie MildfordHaven(2) Isle of Grain Le Havre Dunkirk Zeebrugge Montoir Reganosa El Musel Bilbao Rovigo La Spezia Fos (2) Livorno Rosignano Barcelona Trieste Krk Falconara Brindisi (on hold) Ereglisi Sines (2) Huelva Sagunto Cartagena Porto Empedocle Taranto Gioia Tauro Priolo-Augusta- Melilli Revithoussa Izmir Vasiliko Existing LNG terminals Terminals under construction Planned or announced terminals Enhancement under construction Planned or announced enhancement LNG TERMINALS AND LNG PROJECTS IN EUROPE 2010 >

22 Trends and developments in the European natural gas market 2.4 Initiatives of European institutions The European Commission s Third Gas Directive. The European Commission s Third Gas Directive imposes tougher requirements in terms of unbundling i.e. the separation between trading activities and infrastructure management and also requires greater cooperation between national transmission system operators in order to gain a better picture of the capacity needs through the different grids and to develop synergies between infrastructure investment projects. To this end, the European Network of Transmission System Operators for Gas (ENTSOG) has been created, and is responsible for publishing a coordinated ten-year investment plan and for drawing up a set of network codes in order to harmonise the rules governing system access and facilitate gas transmission between networks and markets. Security of supply. Following the dispute between Russia and Ukraine in January 2009, the European Commission published a proposed Regulation aimed at strengthening security of gas supply to the internal market. The proposal is currently under discussion between Member States and gas industry players. It provides for solidarity mechanisms enabling Member States to provide mutual assistance in the event of a supply interruption. In this connection, the Commission has highlighted the importance of investments in border-to-border infrastructure and the possibility to moving gas in both directions at interconnection points between networks. Support for trans-european infrastructure projects. As part of its economic recovery plan, the European Commission intends to increase investments and to modernise infrastructure in Europe. The Commission has thus earmarked 21.4 billion to financially support trans-european projects such as LNG projects and reinforcements of interconnections between transmission systems (see pages 32 and 33: Enhancing the east/west transmission axis and Enhancing the north/south transmission axis). 22 FLUXYS new infrastructure

23 3. Indicative investment programme >

24 Indicative investment programme General approach underpinning the investment programme The Fluxys indicative investment programme currently amounts to a little over 22 billion. Fluxys has planned expenditures of 21.7 billion for the period alone, i.e. the equivalent of 80% of its investment programme. Fluxys updates its indicative ten-year investment programme each year. For these updates, due account is taken of the changing needs for natural gas supply, requests for additional connections and new needs of grid users as identified through market consultations among other things. When updating its investment programme, Fluxys carries out simulations on the grid as it currently stands. These simulations use data covering expected development of demand for transmission capacity and expected use of entry zones. Several scenarios are considered to take account of different flow configurations, peak consumption conditions in Belgium, and the maximum tolerance for imbalance on the Fluxys system. For each scenario, Fluxys examines what investment is needed to ensure continuity of service at economically justified conditions. Fluxys also attaches great importance to working closely with adjacent grid operators as the success of certain projects on Fluxys own grid requires consultation and agreement on the nature and timing of investment in neighbouring grids. This approach allows Fluxys to anticipate market needs as effectively as possible while taking into account the time required to complete a project. In Belgium, infrastructure projects on any significant scale take a good five to six years to complete. 24 FLUXYS NEW infrastructure

25 3.2 Key elements of the indicative investment programme Transmission 88% Opening up the grid to as many sources as possible to ensure maximum diversification of sources, thus contributing to security of supply. Making new capacity available to cover the expected demand growth in transmission capacity in Belgium (capacity increase of around 20 to 30% by 2019). Strengthening the role of the Fluxys network as a crossroads for international natural gas flows in North-Western Europe by making additional border-to-border capacity available as agreed with grid users through long-term contracts. Moving towards a virtual marketplace for the Belgian market. increasing capacity and availability at the Loenhout underground natural gas storage facility. Systematically reducing the environmental impact of the company s activities. Maintaining the security, integrity and reliability of the infrastructure. Breakdown by type of activity Storage Terminalling MORE THAN w 2 BILLION Services / ICT 6% 4% 6% Breakdown by type of investment Keeping the network in good condition 20% 2% Other (buildings, purchase of land, small equipment,...) Network extension / enhancement 74% INDICATIVE INVESTMENT PROGRAMME OF FLUXYS: % DECIDED, PLANNED, NOT ASSIGNED Planned 60% Not assigned 17% Decided Decided 23% Projects approved for realisation. Planned Projects still waiting for approval before realisation, but for which expenditures can already be made. Not assigned Budgets in the investment programme for projects not identified for the time being, such as the construction of pressure-reducing stations. Today, real projects are only known for part of the period of the investment programme. For the other years, Fluxys takes into account historical data to determine the indicative budget in the investment programme >

26 Indicative investment programme Estimation of future capacity demand Capacity to supply points Two consumption profiles. In estimating future demand for transmission capacity in Belgium, Fluxys draws a distinction between the consumption profiles of different categories of end users: Residential consumers connected to local distribution grids have a consumption profile that is sensitive to temperature variations. Industrial consumers and power stations have a consumption profile that is less dependent on temperature variations. Local distribution: sufficient capacity for peak day consumption. As for local distribution, Fluxys calculates the capacity that has to be available in its grid to be able to transport the quantities of natural gas consumed in a day at an equivalent temperature of -11 C in Uccle (calculated daily average). The corresponding consumption is known as peak day consumption. In its indicative investment programme , Fluxys uses the following variables to estimate the growth in local distribution demand: The annual growth percentage used by CREG (i.e. 1.4%) in its study (F) CREG-874 on natural gas supply needs, security of supply and development of the infrastructure ; The forecasts of distribution system operators: under their cooperation agreements with Fluxys, they provide the company with their growth forecasts for the next five years; A winter consumption analysis: each year, Fluxys carries out an analysis of consumption through local distribution during the previous winter. 26 FLUXYS NEW infrastructure

27 Industrial consumers and power stations: capacity according to market demand. In estimating the evolution of the capacity required for industrial consumers and power stations, Fluxys takes as its basis the requests for new connections, capacity increases and disconnections from its grid. To determine the time at which new capacity must be available, Fluxys looks at the commissioning date requested by end users. Obviously, the requested commissioning date must be compatible with the time needed to build the connection and perform any necessary grid upgrades. Most new capacity requests currently registered by Fluxys pertain to the period Estimation of growth in capacity demand Local distribution Industry, power stations, combined heat and power units Total Capacity (in thousand m 3 /h) The graph shows the rise in average hourly capacity that has to be available during a day of peak consumption: the capacity demand of local distribution, industry and power stations grows by approximately 30% over ten years according to the Fluxys reference scenario. This scenario takes into account all the capacity enhancement or new connection projects that have reached a sufficient degree of maturity. If only projects in progress are taken into account, capacity demand over ten years increases by about 20% >

28 Indicative investment programme Capacity at the entry zones In estimating the capacity increases that will be needed at the entry zones, Fluxys takes as much account as possible of the available information on upstream capacity, planned investments in neighbouring countries and the development of booked capacity in Belgium. In 2008 and 2009, Fluxys has assessed market interest in domestic transmission capacity for the short and medium term. For border-to-border transmission capacity, Fluxys organises market consultations, wherever possible in conjunction with the relevant neighbouring grid operators. These consultations enable the company to assess the interest in booking new long-term borderto-border capacity in a given direction. If a consultation results in the signing of new contracts for a sufficient volume of additional capacity, a new project is launched. 28 FLUXYS NEW infrastructure

29 +90 Zeebrugge Zelzate Zandvliet Loenhout Poppel s-gravenvoeren Eynatten 2010 High calorific gas 2010 Low calorific gas 2016 The chart shows the overall weight of the various entry zones for all current contracts. Zeebrugge s share in the expected growth of capacity at the entry zones to the high-calorific grid remains sizeable, while that of Eynatten and Zandvliet increases substantially. Zelzate recently has become a new interconnection point for firm entry from the Netherlands. Capacity evolution at the entry zones (in thousand m 3 /h) 2010 >

30 Indicative investment programme Less balancing zones for domestic transmission The planned investments by Fluxys will make it possible to veer towards a virtual market place for the Belgian market. Currently, the Fluxys high-calorific gas transmission system is subdivided into three balancing zones with specifically defined transfer capacity levels between them. These three zones will be merged into one single balancing zone to the benefit of the market. Partial conversion of the low-calorific natural gas network into a high-calorific natural gas network The Fluxys grid consists of two separate grids: one for the transmission of low-calorific natural gas from the Netherlands, and the other for the transmission of high-calorific natural gas from the North Sea, Russia and LNG sources. Future supply of low-calorific natural gas in Belgium is dependent, among other things, on changes in suppliers purchase contracts and the remaining life cycle of the Groningen gas field in the Netherlands. Against this backdrop, the Federal Public Service Economy has set up a Task Force comprising Fluxys, distribution system operators, natural gas suppliers and the authorities. The Task Force s role is to establish the medium term security of supply outlook with regard to low-calorific natural gas in Belgium. Various lines of approach will be considered on the outcome of the task force s work. 30 FLUXYS NEW infrastructure

31 3.4 Key investment projects on the main axes Maldegem Alveringem Desteldonk Opwijk Winksele s-gravenvoeren Berneau Eynatten Saint-Amand Ben-Ahin Bras 2010 >

32 Indicative investment programme Enhancing the east/west transmission axis Opwijk EYNATTEN In February 2009, Fluxys decided to build new capacity on the east/west Zeebrugge-Zelzate/Eynatten transmission axis (RTR). This new capacity will enable Fluxys to meet demand evolution on the Belgian market, open up the transmission system to as many natural gas sources as possible and continue to enhance the role of the Fluxys network as a natural gas crossroads. As for border-to-border transmission, long-term agreements have been concluded for an additional capacity of around 10 billion cubic metres a year on the east/west axis following a market consultation launched in June The project involves the construction of a 170-km bidirectional pipeline on the route from Eynatten to Opwijk (RTR2 project) parallel to the existing Zeebrugge-Zelzate/Eynatten pipeline. Work on the RTR2 pipeline began in early 2010; the larger part should be completed by the end of 2010, with te remaining section to be finalised in As the east/west transmission axis upgrade is an important step in strengthening security of supply in Europe, RTR2 is listed among the European Commission s priority projects for the development of trans-european energy networks. The east/west project is also earmarked for co-funding through the European Energy Programme for Recovery. The new transmission capacity also fosters continued liquidity growth at the Zeebrugge Hub and therefore greater market fluidity, benefiting both international players and suppliers to the Belgian market. In addition, the new infrastructure will offer Belgian market suppliers greater flexibility in importing natural gas at the entry point of their choice. Co-financed by the European Union European Energy Programme for Recovery The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein. 32 FLUXYS NEW infrastructure

33 Enhancing the north/south transmission axis Saint-Amand Winksele Berneau The market consultation on new east/west transmission capacity conducted in 2005 also pointed to interest in new capacity between Belgium and France. In order to specifically assess the need for additional north/south capacity, Fluxys launched another market consultation in April 2007 in coordination with adjacent grid operators. This market consultation was brought to a successful conclusion in December Several grid users then booked new capacity from Zeebrugge, s-gravenvoeren (Belgian-Dutch border) or Eynatten (Belgian-German border) to Blaregnies (Belgian-French border). In the meantime, some grid users have revised their demand downward, both in Belgium and downstream in the GRTgaz network, leading Fluxys to downsize the initial north/south project in order to avoid overinvestments. In this new configuration, the Fluxys indicative investment programme provides for laying a new pipeline between the Winksele compressor station and Saint-Amand. The programme also includes capacity enhancements in the compressor stations at Winksele and Berneau. As the Winksele Saint-Amand pipeline will be connected to the RTR pipelines, the north/south project will trigger improved diversification of natural gas sources and security of supply. It will also support the development of the natural gas market in the Walloon Region, thanks to the potential along the route for creating new injection points to local distribution networks. The project for enhancing capacity on the north/south transmission axis has been included in the European Commission s list of priority projects for the development of the trans-european energy networks. The north/south project is also earmarked for co-funding through the European Energy Programme for Recovery. Co-financed by the European Union European Energy Programme for Recovery The sole responsibility of this publication lies with the author. The European Union is not responsible for any use that may be made of the information contained therein >

34 Indicative investment programme Additional compression capacity and second pressure-reducing facility in Berneau Berneau The enhancement works at Berneau will make it possible to combine gas flows on the east/west and north/south routes more flexibly. Additional compressor facilities are being built with a view to complete the works in The new facilities will make it possible to increase the pressure of natural gas from the s-gravenvoeren - Blaregnies pipeline (SEGEO pipeline at 66 bars) for onward transmission in the RTR (Zeebrugge/Zelzate-Eynatten) and RTR2 (Opwijk-Eynatten) pipelines at 84 bars. To enhance existing pressure-reducing capacity for transfers from the RTR pipeline (Zeebrugge - Zelzate/Eynatten) to the SEGEO pipeline ( s-gravenvoeren - Blaregnies), a second pressure-reducing facility was completed in The investments at the Berneau compressor station also fit in with the future evolution towards a virtual market for domestic transmission of high-calorific natural gas. In the longer run, additional firm capacity could be offered from the entry point in s-gravenvoeren. Desteldonk Opwijk Opwijk - Desteldonk pipeline To meet demand for additional capacity, Fluxys has also plans to lay a second pipeline along the RTR route between Opwijk and Desteldonk. The Ghent-Zeehaven section of this pipeline will be laid in and the other sections are scheduled for 2012 and Depending on the evolution of market demand, Fluxys also plans to extend this pipeline from Desteldonk to Zomergem. 34 FLUXYS NEW infrastructure

35 Alveringem westhoek Maldegem Alveringem - Maldegem pipeline At the end of May 2010, Fluxys and French system operator GRTgaz launched a joint market consultation to assess the interest in long-term agreements for firm natural gas transmission capacity from France to Belgium. Firm transmission capacity is now available only in the direction from Belgium to France, at the interconnection between the Fluxys and GRTgaz grids in Blaregnies/Taisnières. The project depends partly on the project to build an LNG terminal in Dunkerque. In a first phase, grid users have expressed sufficient interest to launch the binding phase of the market consultation. Depending on the level of long-term capacity that grid users will book, a new interconnection point between France and Belgium can be built at Alveringem (West Flanders), with a pipeline to be laid between Alveringem and Maldegem (East Flanders) to connect this new interconnection point to the Zeebrugge area. The aim of Fluxys and GRTgaz is to make new capacities available to the market by 2015, but the actual commissioning date will depend not only on the scale and nature of the investments required but also on lead times for obtaining permits and licences both in France and Belgium. Ben-Ahin Bras Enhancing capacity on the transmission axis to Luxembourg In June 2009, Fluxys launched a market consultation to assess the interest for future transmission capacity to the Grand Duchy of Luxembourg. Upon closure of this market consultation in February 2010, Fluxys had received capacity bookings for the period that justify the construction (in 2012) of a pipeline between Ben-Ahin and Bras on the transmission axis to Luxembourg. This investment is to ensure security of supply for the Grand Duchy of Luxembourg in the long term and at the same time creates potential for new connections with local distribution networks in the Walloon Region. Natural gas specifications The composition of natural gas supplied and the standards applicable at interconnection points vary from one European country to another. In many cases, these variations hinder the free movement of cross-border flows. Against this background of divergent standards, Fluxys has plans for a facility to optimise the use of its grid. However, network interoperability will in the long run have to be secured through the harmonisation of natural gas specifications at interconnection points. Fluxys continues to be one of the pioneers in the process of developing harmonised specifications within the European gas industry >

36 Indicative investment programme major investment projects for local and regional axes Pipelines Fluxys indicative investment programme includes plans to lay around 300 km of pipelines to enhance supply capacity in several regions of Belgium. The Dilsen-Boslaan (2010), Olen-Ham (2013) and Tongeren-Genk (2013) pipelines to enhance security of supply in the Campine region of the Province of Limburg and to ensure new connections to the Fluxys grid, e.g. the power station in Dilsen. The Lommel-Ham-Tessenderlo (2010) and Tessenderlo-Diest (2013) pipelines to enhance supply capacity in the Province of Limburg and in particular to connect a new combined cycle gas turbine plant on the Tessenderlo Chemie site. These pipelines will also enable the Province of Limburg to switch partially over to high-calorific natural gas (see page 30). The Warisoulx-Vedrin-Namur pipeline (2010) to increase network capacity in the Meuse valley. The Péronnes-Leernes-Dampremy pipeline ( ) in the La Louvière and Charleroi area, to allow for the connection of a power station in Marcinelle. The Wilsele-Loenhout pipeline (2012/2013) to keep up with standards for security of supply of high-calorific natural gas in the Antwerp region and to develop supply capacity to and from the underground storage facility in Loenhout. The pipeline will also make it possible to supply the Antwerp region and Loenhout from two different pipeline systems. 36 FLUXYS NEW infrastructure

37 Oosterweel Loenhout Brugge Zwijnaarde Kruibeke Denderleeuw Olen Ham Lommel Balen Dilsen Beringen Tessenderlo Boslaan Genk Diest Wilsele Leuven Tongeren Lixhe Quevaucamps Beloeil Warisoulx Angleur-Belle-Ile Manage Obourg Namur Aisemont Péronnes Leernes Dampremy 2010 PIPELINES: > 2019 LOCAL AND REGIONAL ENHANCEMENT 37

38 Commissioning date Capacity in m 3 /h In addition to new connections for industrial end users and combined heat and power facilities, the indicative investment programme also provides for the construction of new pressure-reducing stations to cover demand growth from local distribution systems. 38 New connections for industrial end users and combined heat and power facilities FLUXYS NEW infrastructure

39 Capacity in m 3 /h Fluxys indicative investment programme also includes projects for new power stations, taking into account network balance constraints. A positive investment decision for such projects is only made when a connection agreement with due reservation of firm capacity has been concluded. The connections featured on the map are all connections for which the investment decision has been made. One of the major challenges the company continues to face is that the lead times for obtaining the permits required to lay a pipeline by far exceed the time it takes to build a power station Connections > 2019 for new power stations 39

40 Indicative investment programme Storage projects capacity enhancement at the underground storage facility in Loenhout Fluxys has since 2007 carried out work to progressively increase the workable storage capacity in Loenhout by 15% over a period of four years ( ) from 600 to 700 million cubic metres (total volume of 1.4 billion cubic metres). Workable storage capacity reached the 675 million m 3 mark in Utilisation flexibility of the underground storage facility is also being enhanced: emission capacity will increase from 500,000 to 625,000 cubic metres per hour and injection capacity from 250,000 to 325,000 cubic metres per hour. 40 FLUXYS NEW infrastructure

41 research into possible underground storage in the Campine region of the Province of Limburg In collaboration with the Flemish Institute for Technological Research (VITO) and the Limburg Investment Company (LRM), Fluxys is currently looking into potential underground storage sites for natural gas in the Campine region of the Province of Limburg. Seismic research was carried out in November 2007 in Bree, Maaseik, Kinrooi and Dilsen-Stokkem to chart the deep subsurface. Since then, seismic research by VITO geologists has revealed that possible storage structures may be present. In order to confirm the subsoil characteristics of the area and to analyse the structures which might be used as a reservoir, Fluxys and VITO are considering an exploratory drilling in >

42 Indicative investment programme LNG terminalling projects Construction of an Open Rack Vaporizer In the framework of the environmental licence for the first capacity enhancement of the LNG terminal in Zeebrugge, Fluxys has over the past few years been looking at whether it would be conceivable to complement the new regasification facilities with a second combined heat and power installation or with a series of Open Rack Vaporizers (ORVs). These vaporizers, which regasify LNG using the heat present in seawater, can considerably reduce energy consumption as well as carbon dioxide, nitrogen dioxide and noise emissions. In 2009 Fluxys decided to invest in the construction of an Open Rack Vaporizer at the Zeebrugge LNG terminal and initiated discussions with the relevant federal and regional authorities concerned. The competent authorities issued the environmental permit for the ORV project in July 2010 and works got under way in autumn. The facility could be commissioned by the end of 2011 at the earliest. Project for a second capacity enhancement at the Zeebrugge LNG terminal Fluxys LNG launched a market consultation in late 2007 to assess interest in a second capacity enhancement at the LNG terminal in Zeebrugge. Several players in the LNG sector have shown non-binding interest. In 2010, Fluxys LNG, in close cooperation with the Bruges port authority and the competent administrative authorities, has thoroughly studied the technical and economic feasibility of the project as well as the nautical and security aspects. Depending on the long-term capacity contracts that may be concluded, Fluxys LNG envisages to take a two-step approach as to the capacity enhancements that might be triggered by the market consultation. As the project to enhance capacity at the LNG terminal in Zeebrugge depends on decisions that will be taken in neighbouring countries to develop new regasification capacity, Fluxys deems it important to invest in phases so as to avoid stranded costs. 42 FLUXYS NEW infrastructure

43 phase 2 phase 1 Phase 1: construction of a second jetty. In a first phase, Fluxys LNG considers to build a second jetty for accommodating both standard LNG ships and LNG vessels of very small capacity. The earliest commissioning date for the second jetty would be Phase 2: Fluxys LNG could build a fifth storage tank and additional regasification capacity on the existing site of the LNG terminal in a second phase. The new storage and regasification facilities could be available in The cost of this second enhancement phase is not included in Fluxys indicative investment programme >

44 Indicative investment programme Safety Every investment project includes a section for safety provisions. Nevertheless, there are some projects whose main or even sole purpose is to make infrastructure safer. Such safety projects include for example works to safeguard the integrity and accessibility of pipelines, works to modify and replace infrastructure and works to improve and expand fire-fighting resources. 44 FLUXYS NEW infrastructure