Post on 30-Jun-2020
transcript
Australia’s Alternative
Energy Options – Gas
Matthew Clemow
28 February 2007
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What we will cover this evening …….
•Australian Energy Supply
•Electricity Market
• Forward Market
•Spot Price and Retail
•Gas Market
•Gas Supply Chain
•Gas Pricing and Contracting
•Gas Generation and Future Supply
•Other uses of Gas
•Environmental Effects
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Australian Energy Market Size� 3% annual growth in gas
consumption
(1PJ=936Mcf)
� 2-3% annual growth in electricity consumption, 3-4% growth rates in summer peak demand periods
NorthernTerritory
Victoria
New South Wales
Tasmania
Queensland
South Australia
Western Australia
AUSTRALIA Total NEMNEM share of
Australia
Population (m) 20 17.1 87%Installed Capacity MW 45,330 36,700 81%GWh consumption 176,100 153,000 87%PJ consumption 1,000 610 61%
QUEENSLANDshare of Australia
share of NEM
Population (m) 3.7 19% 22%Installed Capacity MW 11,300 25% 31%GWh consumption 40,000 23% 26%PJ consumption 80 8% 13%
WESTERN AUSTRALIAshare of Australia
Population (m) 1.9 10%Installed Capacity MW 5,300 12%GWh consumption 12,000 7%PJ consumption 370 37%
NEW SOUTH WALES & ACT
share of Australia
share of NEM
Population (m) 7.0 36% 41%Installed Capacity MW 12,800 28% 35%GWh consumption 63,000 36% 41%PJ consumption 140 14% 23%
VICTORIAshare of Australia
share of NEM
Population (m) 4.9 25% 29%Installed Capacity MW 8,900 20% 24%GWh consumption 39,000 22% 25%PJ consumption 250 25% 41%
SOUTH AUSTRALIAshare of Australia
share of NEM
Population (m) 1.5 8% 9%Installed Capacity MW 3,700 8% 10%GWh consumption 11,000 6% 7%PJ consumption 140 14% 23%
Note: In WA gas is a significant source for electricity generation.
Australia’s Alternative Energy Options - Gas
Note: Gas consumption has been converted from PJ to GWh
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
NSW &
ACT
VIC
QLD
WA SA
TAS NT
Con
sum
ptio
n –
GW
heq
uiva
lent
LPGNatural GasElectricity
(LPG=Bottled Propane Gas)
Australian Energy Market Consumption by State
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NEM generation by energy
Brown Coal29%
Gas6%
Hydro8%
Black Coal56%
Other0%
Wind1%
NEM Fuel type by capacityWind2%
Hydro17%
Gas10%
Brown Coal17%
Black Coal52%
Other2%
Current Usage of Gas in Electricity Generation
Gas, Hydro and Wind typically have a utilisation of 50%, vs. Coal, which usually targets 100% utilisation.
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Competition & Ownership State by State
Closed
Queensland• Gas industry privatised• PNG pipeline expected 2010• Mass market opening 2007• Electricity public• Electricity Retail to privatise
2006
New South Wales & Snowy• Electricity public• Gas private• Gas & electric markets open• Privatisation uncertain
Victoria• Fully privatised• Market fully open
Tasmania• Electricity public• Gas being developed • Basslink completed
2006• No competition
South Australia• Fully privatised• Full retail competition
electricity & gas
Western Australia
• Electricity public
• Gas privatised• Comp starting
Partially Open
Open
Northern Territory• Electricity public• Market fully open • No competition
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History of Australian Electricity
LocalReticulation
State governments
takeover, connect
state grids
Statemonopoly
6-8% Growth
1910-40 1940-60 1960-80
0-2% growthOversupply
Market Reform,Disaggregation
GovernmentsCorporatise
and/orPrivatise
1980-90 1990-2000 1995-2000
MarketConsolidation
2000-Present
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The National Electricity Market
• Physical or Spot Market or “Pool”
• Gross pool model• 5 minute dispatch/pricing – Max $10,000/MWh & Min -$1,000/MWh• half-hourly pricing/settlement period
• Pricing Regions• intra-regional fixed MLFs – set annually• inter-regional dynamic MLFs – calculated every 5 minutes
• Energy market and Ancillary Services (FCAS) market
• Transmission “common carriage” & single market operator (NEMMCO)
• Forward Market or Contract Market• All transactions are financial (cash settled, no delivery)
• largely between “natural” counter-parties, mostly OTC
• Futures Exchanges are becoming more active
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Control of the NEM
• National Electricity Market (NEM) commenced on
13 December 1998
• Australian Energy Market Commission (AEMC)
• Responsible for decisions on National Electricity Rules (the Rules) changes
• Publishes the Rules
• Advises Government on NEM
• Australian Energy Regulator (AER)
• Enforces the Rules and the Electricity Law
• NEMMCO
• NEMMCO is both the System Operator and Market Operator under the
Rules
• Five State Governments are shareholders and appoint one Director each to
the NEMMCO Board
• NEMMCO operates on a self funding break even basis
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Responsibilities of NEMMCO
• Maintain System Security
• Operate NEM
• Set spot prices, dispatch generating
units, etc
• Dispatch Frequency Control
Ancillary Service (FCAS) and set
prices
• Manage Reserves
• Settle Energy Market based on spot
price
• Coordinate network planning
• Develop NEM
• Register all Participants and ensure
conformance with the requirements of
the Rules
• NEMMCO also maintains a database of
all electricity customers in NEM area for
Full Retail Competition
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Electricity Market Regions
Victoria8000 MW
Snowy3000 MW (gen) New South Wales
12500 MW
Queensland8000 MW
S Australia2800 MW
750 MW
-950 MW
QNI
180 MW
-180 MW
Directlink
460 MW
-300 MW
V-SA
220 MW
-220 MW
Murraylink
-1900 MW
1100 MW
V-SN
-1100 MW
3000 MW
Snowy1
Tasmania1700 MW
-420 MW
600 MW
Basslink
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Forward Trading Activity
• Is largely “Over-the-Counter” (OTC) contracting
• through brokers or direct with counterparties
• Some via Futures - Sydney Futures Exchange & ASX Futures Exchange
• Generators, Retailers & Traders (about 30 participants)
• Relatively illiquid 3-4 years
• Credit an issue for non-government participants
• Generator to Retailer
• Back large customers or retail load
• Generator to Generator
• Cover outages
• Generators and retailers often have trading books
• Impacted by regulatory arrangements
• NSW Electricity Tariff Equalisation Fund (ETEF)
• Qld Benchmark Pricing Arrangement (BPA)
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Contracts Traded
• Main forms
• Swaps (also called CfDs, 2-way hedges)
• Futures (standardised product through exchanges)
• Cap or Floor (Half-hourly options)
• Collars (Combination Cap & Floor)
• Swaption (Call or Put Options on Swap)
• Asian Options (average rate Call or Put options)
• Timeframes
• Monthly -> Quarters -> Calendar or Financial Years
• Peak (7am -10pm Business Days), Off-peak, Flat
• Locations
• NSW, Vic, Qld, SA nodes
• Inter-regional combinations
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Ancillary Services
These are services that are essential to the management
of power system security, facilitate orderly trading in
electricity and ensure adequate quality of supply.
These include:
• Frequency Control - regulating capacity and contingency
control
• AGC, Governor, RGUL, RGUU and Load Shedding
• Reactive support - system voltage control.
• System Restart capability (Black Start) - to get the lights
back on.
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Generation
~40%
Transmission132kV - 500kV
~10%
Distribution415V - 66kV
~40%
Retailing240V~10%
•Electricity units
• Power: kiloWatt (kW), MegaWatt (MW)
• Energy: kiloWatt hour (kWh) MegaWatt hour (MWh)
•1000kW =1 MW (e.g. Yallourn 1,450MW power station)
•Typical house load ~1 kiloWatt (kW) and 10MWh/year
Electricity Supply Chain
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Generation Transmission132 - 500kV
Distribution415V - 66kV
Retailing
Electricity Supply Regulation
Regulated Natural Monopoly with
“open access”
Competition where it is possiblePrice regulation and open access where it isn’t
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Generation Dispatch
• Energy is dispatched based on Participant bids, the cheapest generating
unit will be dispatched first, based on offer price and loss factor
• Market Ancillary Services (Frequency control) are also dispatched based on
Participant bids
• There are several timeframes to be considered
• 6 second, covers the trip of a generating unit (contingency) and limits the drop
in frequency
• 60 second, ensures that frequency recovers from its minimum following a
contingency
• 5 minute, ensures that frequency returns to the Normal Operating level following
a contingency
• Regulation, controls frequency within a dispatch interval
• Each of these timeframes needs to be managed for both raise (managing
generator events) and lower (managing load events)
• This gives a total of 1 energy and 8 FCAS markets
• The total cost of all 9 markets is minimised by NEMDE
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Typical Generator Offer
(For every 1/2 hour)
250 350 660160
$/MWh
$50
$20
0
MW-$15
$35
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Price Setting
$0 & 400 MW
$15 & 400 MW
$16 & 40MW
$17 & MW
$18 & 350 MW
$19 & 40 MW
$20 & 450 MW
$22 & 40 MW
$28 & 60 MW
$29 & 20 MW
$30 & 200MW
$400 & 40 MW
$410 & 60 MW
$420 & 40 MW
$0 & 400 MW
$15 & 400 MW
$16 & 40MW
$17 & MW
$18 & 350 MW
$19 & 40 MW
$20 & 450 MW
$22 & 40 MW
$28 & 60 MW
$29 & 20 MW
$30 & 200MW
$400 & 40 MW
$410 & 60 MW
$420 & 40 MW
$0 & 400 MW
$15 & 400 MW
$16 & 40MW
$17 & MW
$18 & 350 MW
$19 & 40 MW
$20 & 450 MW
$22 & 40 MW
$28 & 60 MW
$29 & 20 MW
$30 & 200MW
$400 & 40 MW
$410 & 60 MW
$420 & 40 MW
Pool Price Setat $29.00/MWh
Time
Demand
Offer stacks
$0 & 400 MW
$15 & 400 MW
$16 & 40MW
$17 & 250 MW
$18 & 350 MW
$19 & 40 MW
$20 & 450 MW
$22 & 40 MW
$28 & 60 MW
$29 & 20 MW
$30 & 200MW
$400 & 40 MW
$410 & 60 MW
$420 & 40 MW
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10
90
50
30
15
500
Offer$/MWh
11:00 1:0012:0011:30 2:0012:30 1:30
am pm
100
500
400
300
200
600
0
Generator 1
Generator 4
Generator 5
Generator 3
Generator 6
Generator 2
Load forecast - price taking “bid”MW
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10
90
50
30
15
500
Offer$/MWh
11:00 1:0012:0011:30 2:0012:30 1:30
am pm
100
500
400
300
200
600
0
Generator 1
Generator 4
Generator 5
Generator 3
Generator 6
Generator 2
MW
10
15
15
40
90
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10
500
50
30
15
Offer$/MWh
11:00 1:0012:0011:30 2:0012:30 1:30
am pm
100
500
400
300
200
600
0
Generator 1
Generator 4
Generator 6
Generator 3
Generator 2
MW
VoLL
500
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Retail Pricing
Network & Distribution
Cost
NEM Fees
PassThrough
Energy
Cost
PortfolioManagement
RetailCost to Serve
Retail Margin
Retail
~$40/MWh
$30-$60/MWh
$5-$20/MWh
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Forward Market
Hedge $
Trader
Hedge $
FuturesExchange Pool
Retailer
Pool $
Pool $
Spot Market
Bill $
NetworkCharges
$
ConnectionCharges
$Transmission
Grid
DistributionNetwork
End Use Customer
Grid
Generator
Ret
ail
Who
lesa
leMonopoly
Electricity Market Structure
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Yallourn (TRUenergy), Hazelwood (IP), Loy Yang (par t AGL), Southern Hydro (AGL)
NEMMCO
TRUenergy, Origin, AGL, Red, PowerDirect
VENCorp/SP AusNet
Powercor, MultiNet,CitiPower, SP AusNet
Domestic, Commercial & Industrials e.g. Ford, Shell
Pool $
Pool $
Hedge $
Westpac
GridSpot MarketForward Market
Bill $
NetworkCharges
$
Hedge $
SFE
ConnectionCharges
$
Example: Victoria
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• Gas from coal before electricity (gasometers)
• 1960’s moved to natural gas direct from oil fields
• Vic 60’s, NSW/SA/SE Qld 70’s, WA 80’s, NT 90’s, Tas 2002
• Domestic & Industrial use large in Vic, SA & WA.
• Main Power station fuel in SA, WA & NT
• Minor non-industrial in NSW & Qld
• Whole supply chain by private monopolies (e.g. AGL in NSW)
• Except Vic had government transmission, distribution and retailing
monopoly
• Gas & Fuel. Production was Esso/BHP Gippsland
• In late 90’s Vic created a gas market and privatised the pipes and
retailing
• Encouraged new producers elsewhere, e.g. Otway, Yolla
• 2000-4 Vic, NSW & WA introduced gas markets
• Coal Seam Methane an established alternative
History of Australian Gas Supply
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Gas Market Characteristics
•Domestic – poor load factor <50% in Victoria due to
domestic heating demand in winter
•Other states more steady due to lower domestic usage
• Industrial & Commercial – variable but large loads can have
very favourable load factors >80%
•Electricity Generation – peaky in Victoria but intermediate to
peaky in SA. Demand for peak generation will continue to
grow (summer vs. winter) due to air conditioning use.
•Mandated 13% electricity generation from gas in Queensland
•Construction of gas fired power stations in NSW
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No National Gas Market
• While there is some short-term contractual trading around the
longer-term contracts, there is no transparent national market for
short-term trading in gas
• The Gas Market Leaders Group (GMLG) was established by the
Ministerial Council on Energy (MCE) in December 2005, and have
drafted a “National Gas Market Development Plan”
• The Plan has been developed to: “deliver on the MCE’s objectives
for a competitive, reliable and secure natural gas market
delivering increased transparency, promoting further efficient
investment in gas infrastructure and providing efficient
management of supply and demand interruption”
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Gas Market Reform Plans
• Establishment of a Bulletin Board (BB) covering all major gas
production fields, major demand centres and transmission pipeline
systems
• Implementation of a Short-Term Trading Market (STTM) for all
States (except Victoria, which already has a gas spot market)
• Formation of a national Gas Market Operator to manage both the
wholesale and retail gas markets throughout Australia
• Administer the BB and the STTM
• Produce an annual national gas supply/demand statement
• The Market Operator would assume the gas retail market functions of
GMC and REMCo and the gas functions of VENCorp
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Changing the Victorian Gas Market Rules
Governor in CouncilAEMC Decision
Process Who
Consultation GMCC
Advise VENCorp Board VENCorp
Victorian Government Government
Proposal Anyone
AEMC process AEMC
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Gas - What is it?
•CH4 - methane (a hydrocarbon)
•Raw Gas contains a mixture methane and variable
proportions of LPG, Condensate, water, inert gases (e.g. N2,
CO2) and non-hydrocarbons (eg H2S)
•Sales Gas (depending on specification required) generally
contains >90% CH4, <7% inerts, and minimal water and
condensate
•Hydrocarbons are a product formed by geological processes
and have a predictable occurrence
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Gas - Where is it found?
•Hydrocarbons – predominantly thermogenic
•Sedimentary basins – thick sequence of accumulated
sediments (up to 3km)
•Specific conditions required for hydrocarbons to form and
accumulate
• source rock (organic matter)
• heat of burial
• reservoir (porous & permeable rock)
• seal and trap (impervious barrier that allows
hydrocarbons to accumulate)
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Conventional vs. Coal Seam Methane
Conventional gas is stored
within the centre of pores
and forms the continuous
phase
CSM is adsorbed onto
surfaces of microporosity
within coal. It is not in the
gaseous state until pore
pressure is loweredSource: BHP Billiton
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Well Production Profile Comparison
Source: BHP Billiton
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So what is Coal Seam Methane?
•Methane gas stored in coal
seams
•Methane generated as
coals are buried, heated
and compressed
•Gas bonds to the surface
of coal
•Extracted via wells which
pump water from coal
cleats thereby “liberating”
the gas
Source: BHP Billiton
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Conventional Drilling Rigs
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Coal Seam Methane Drilling Rig
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Production,Processing &
Storage~50%
Transmission(High Pressure)
~5%
Distribution(Low Pressure)
~35%
Retailing~10%
•Gas units
• GigaJoules (GJ), TeraJoules (TJ=1000GJ), PetaJoules (PJ=1000TJ)
•Typical average house consumption ~ 100 GJ/year
•Typical gas supply facility capacity ~100-1000 TJ/day
Gas Supply Chain
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Gas Supply Regulation
Production,Processing &
Storage“Competitive”Unregulated
Transmission(High Pressure)
Partially Regulated
Distribution(Low Pressure)
Regulated Natural Monopoly
RetailingCompetitive
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Retail Pricing
Transmission & Distribution
Cost
VENCorp Fees
PassThrough
Gas Commodity
Cost
PortfolioManagement
RetailCost to Serve
Retail Margin
Retail
~$2/GJ
$3-$6/GJ
$2-$3/GJ
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Victorian Gas Market
• Total Annual Demand – 220,000 TJ
• Winter: peaks above 1000 TJ/day (Record is 1206 TJ) with prices
peaking at over $6.00/GJ
• Summer: lower demand dropping below 300 TJ/day, price dips to
$2.20/GJ during market oversupply
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How the Victorian Gas Market Price is set
Market Price = $2.72/GJ
“Infinite Tank”
Retailer A
Retailer B
Retailer A
Trader X
Retailer C
100
300
0
600200
400500
700
TJs
Forecast Demand = 550TJ
Source: VENCorp
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Gas System Operation
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Ancillary Services
• Similar to in the Electricity Market, these are services that
are essential to the management of gas system security,
and ensure adequate supply during intra-day peaks.
• These include:
• Out of Merit gas injections
• Peak Shaving (LNG)
• Uplift is levied on the Market to recover the monies paid out
to the suppliers of Ancillary Services.
• Uplift is payable by Market Participants that exceed their
AMIQ – their capacity right to use the Transmission System.
• AMIQ can be traded and assigned.
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Capacity and Gas Storage
Vic + SA Demand Profile
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
TJs
Total Demand
AQ
TOP 80%
Use of storage
swing
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Why Gas Storage?
• Similar to the Electricity Market, the Gas Market must have
sufficient injection capacity to meet demand on the coldest days.
• Producers such as EssoBHP Longford and Otway Gas Plant have
limited capacity
• Production facilities are more complex, therefore expensive. A
plant like the Otway gas plant has a capacity of approx. 200
TJ/day but costs $500-700 million
• A Gas Storage facility with a capacity of 300 TJ/day has a cost of
around $200 million, so despite the cost of reinjecting gas into a
reservoir it can provide cheaper capacity ($135-190/GJ/year)
• Interstate Gas Pipelines and the Dandenong LNG facility also
provide but cannot provide sustained injections as they have
limited gas inventory holdings
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Upstream Gas Price
•Crude Oil
- ~US$60/bbl (~A$80/bbl)
- West Texas Intermediate, Brent, Tapis
•Condensate
- Can generally command a premium to crude ~US$1-2/bbl
•Gas
- Henry Hub ~US$6.00/GJ ~A$8.00/GJ (~US$35/boe)
- Victorian Spot Market ~A$3/GJ (~US$13/boe)
• In Australia coal, the abundance of gas as well as limited
market development help suppress the gas price relative to the
US and Europe.
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Matching Supply to Demand
•Supply Contract
• ToP, MDQ (swing), renomination
•Transportation
• MDQ, park and loan/flex/imbalance
•Storage
• Underground Storage, LNG
•Substitution
• Oil (generation)
•Curtailment
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Gas Supply Contracts
Key Terms (1)
- Volume (total contract qty, annual qty)
- Swing = MDQ/ADQ = 1/Load Factor
- Term
- Price (fixed, variable component, CPI, Review)
- Take-or-pay (make-up provisions)
- Interruptions
- Permitted - Force Majeure, maintenance
- Non-permitted – Shortfall (penalties)
- Gas Specification
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Gas Supply Contracts
Key Terms (2)
- Nominations process
- Source of supply (reserves)
- Taxes, billing
- Financial circumstances (change in conditions, parent
company guarantee, pre-payment)
- Default, suspension, termination
- Liabilities
- Dispute resolution (expert, arbitration)
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Gas Transportation Contracts
Key Parameters
- Capacity (MDQ and throughput)
- Operating Pressure (input considerations, delivery)
- Tariff (fixed, variable)
- Scale (extra compression, looping)
Typical Transportation Tariffs
- Victorian Market Carriage $0.16/GJ
- Interstate Pipelines – range $0.50 to 0.80/GJ
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Gas Supply
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Gas Transportation
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Trading Functions vs. Time Horizon
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Key Gas Market Trends
• Increasing Gas fired generation demand
• Increasing peak demand requirement
•Reducing availability of flexible supply contracts (limited swing
and high ToP commitment)
• Interconnected markets – value driven, short term supply
•Multiple gas supply sources
• Increased Wholesale trading as participants try to match their
demand requirements
•Transmission system hitting capacity constraints
•Availability of gas commodity and capacity on interruptible
basis.
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Transport energy as molecules or electrons?
• Technical Comparisons are never easy, but lets give it a go:• SEA Gas was 700km, cost $500m and transfers 320TJ/day
• Equivalent to 1800 Electrical Megawatts when put through a powerstation
• i.e. Cost $400 per MW per km of energy transfer capability.• The SNI (NSW->SA electricity interconnector) project was about the same length, cost $110m for 250MW• i.e. Cost $650 per MW per km• Other interconnectors more expensive, e.g. Basslink ~$3,000 per MW per km!
• That’s why the old central planners put their gas power stations in cities!• But today, power stations pay for pipelines, but not for electricity transmission• Someone else pays for that!
• So, it is more commercial to locate at the fuel source than at the load
OR
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Electricity Generation Comparison
• Brown Coal most capital intensive,
cheapest fuel, therefore plants
run continuously, and receive
premium most times
• Open Cycle GT less capital, but
dearer fuel, so only run a few
hours per year
• Load shedding zero capital, huge
marginal cost, reflected in price
cap $10,000/MWh
Time
Price$/MWh
Price Cap
Load Shed
Open Cycle Gas Turbine (~$50/MWh)
Combined Cycle Gas Turbine (~$40/MWh)
Black Coal ($9-15/MWh) Brown Coal ($3-5/MWh)$30-40
Average Price
$10,000
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Key Gas Supply Trends
• Existing, large flexible contracts will expire over the next
few years
• Replaced by less flexible and higher take contracts
• This increases the demand for flexible services such as Gas
Storage
• New supply sources competing (Otway, CSM)
• Northern (PNG or Timor Sea) or Western (NWS, Browse,
Gorgon) supply unlikely to be needed until mid to late next
decade
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GippslandBasin5 Tcf
OtwayBasin1.5 Tcf
YollaField
TRUenergy Gas StorageVIC
SA
QLD
NT
NSW
WA
Sydney
Canberra
Perth
Brisbane
Adelaide
Darwin
MoombaGas Plant
Ballera
Bayu/Undan
LNG
Wallumbilla
Longford Gas Plant
Thylacine/Geographe Fields
Melbourne
Minerva Field
Casino Field
Kipper Field
CooperBasin1.8 Tcf
Coal Seam Methane Projects
2.6Tcf (potentially 5-10 Tcf)
Basin Discovered Gas Resource
Gas Field - undeveloped or under development
Townsville
Gladstone
Gas Processing Plant
Minerva Gas Plant
Otway Gas Plant*
* Under construction
Bass Gas Plant
Orbost Gas Plant
Proposed PNG Pipeline
Greater NorthWest Shelf
90Tcf
Browse Basin 30Tcf
Timor Sea 25Tcf
Papua New Guinea (PNG) 10Tcf Existing pipeline
Proposed pipeline
1Tcf=1068PJ(Vic uses ~250PJ p.a.)
Australia has Significant Gas Reserves
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Global Gas Resources also Plentiful but…
• Gas Reserves (2004) = 6300TCF (180TCM); “underexplored”
• About 40% of gas (2500TCF) is stranded (Russia, Qatar, Australia, PNG)
• R/P ratio: ~70 years (versus oil at ~35)
• Associated gas is re-injected or flared
Source: bp
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Flaring of Associated Gas (Red ~15 bcf/day?)
Source: bp
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Remote Gas Monetisation Options
PIPELINE PUSHING THE LIMITS ($25B)
LNG TECHNOLOGY OF CHOICE TODAY
GTL (FT, Fischer-Tropsch ) BIRTH OF A NEW INDUSTRY
METHANOL TRANSITION FROM CHE MICAL TO FUEL
DME “SYN-LPG”, RAPID GROWTH IN CHINA
CNG A NICHE FOR SMALL & SHORT (EnerSea)
GAS BY WIRE DC TRANSMISSION COS T DECREASING
HYDRATES MOVING A LOT OF WATER
Source: bp
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Simple Conversion Chemistry
Dimethyl-ether(DME)
Methanol
Hydrogen Carbon Oxygen
“Diesel”
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About DME
• Di-methyl Ether
• Easily made from methanol
• Physical properties: like LPG
• Clean bill of health
• Multi-purpose fuel
• LPG extender (commercial)
• Diesel alternative (fleet demos)
• Power production
• Other: olefins, hydrogen, gasoline
Source: bp
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LNG to GTL Supply Chain Comparison
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GTL – a Large Unconstrained Market
Source: bp
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Economics of GTL vs. LNG
Key Issues :• Oil:gas price relationship;
gas capped by coal
• LNG capex: plant only or value chain capex?
• Strategic value :
• Revenue diversification• Value added in-country • LNG and GTP
LNG EconomicallyAdvantaged
GTL EconomicallyAdvantaged
Oil
Pric
e ($
/bbl
)
20
40
60
80
100
106 8LNG Price ($/mmbtu)
4
Net Present V
alue
Source: bp
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Environmental Impacts
•Open Cycle Gas Turbine generates ~80 MWh/TJ of Gas, a
Steam Generator Unit ~100 MWh/TJ, and a Combined
Cycle Gas Turbine 110-120 MWh/TJ
•This results in up to 50% less CO2 per MW than a brown
coal power station
•However, methane traps 20 times more heat than CO2
(although it only lasts 10 years in the atmosphere), so
venting and fugitive emissions need to be controlled
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Environmental Impacts
Institute for Sustainable Futures, UTS
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Reality Check – Is Gas the Answer?
•Victoria’s four Brown Coal Power Stations generate at least
6000 MW
•To generate this electricity from natural gas would require
approx. 1400 TJ/day (assuming 100MW/TJ)
•Victoria’s Peak Day gas capacity is around 1200 TJ/day,
meaning that existing production and transmission capacity
would need to be doubled
•NSW’s Coal Power Stations generate approx. 10,000 MW,
which would require over 2000 TJ/day of natural gas
•Moomba gas supply is in decline, so this level of supply
would require a major new supply source (e.g. PNG, NWS)
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Torrens Island Power Station(gas, 1280MW)
Yallourn Power Station&Mine(coal, 1480MW)
SEA Gas Pipeline
Ecogen Hedge
(gas, up to 966MW)
Gas Storage Facility
(12 PJ)
Tallawarra Power Station
(greenfield, gas, 400MW)
Otway Basin gas contracts
(long-term)
Gippsland Basin
gas contracts
(long-term)
• 2760MW generation owned, 966MW under contract, 400MW under construction
• Underground gas storage and pipeline owned, large gas supply under contract
• 600,000 electricity retail customers & 500,000 gas retail customers
•Mostly in Vic, but growing organically elsewhere-best in SA
TRU Who?
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