Underground Gas Storage (UGS)Flexibility and Security in Gas Supply
for the Brazilian Market
NBCC - May 23rd, 2017
CONTENTS
Chapter 1 Presentation of ENGIE
Chapter 2Why Brazil needs Flexibility and
Security of Gas Supply?
Chapter 3Underground Gas Storage: a
Solution for Brazil?
ENGIE PROFILE
4
153,090
employees worldwide
Operations in more
than 70 countries
€16 billion growth investments
over 2016-2018 including
€1 billion
in innovation and digital
¨*Figures as of 31 December 2016
€66,6 billion
revenues
€10.7 billion
EBITDA
A priority given to our 3 growth engines:
LOW CO2 POWER GENERATION
5
Installed ENGIE capacity
by energy source*
* Including 100% of capacity of assets held by the Group at December 31, 2016, regardless of the actual holding rate.
GAS VALUE CHAIN
6
• A supply portfolio of 1,082 TWh (100 bcm)
• 3rd seller in Europe
• 1st distribution network in Europe
• 2nd transport network in Europe
• 1st vendor of storage capacity in Europe
• 1st importer of LNG in Europe
• 2nd operator of LNG terminals in Europe
• A LNG supply portfolio of 245 TWh
(16.4 mtpa) from 6 countries
• A fleet of 12 LNG tankers inc. two
regasification vessels
* As of 12/31/2016
Natu
ral gas
LN
G
7
STORENGY: a Leader of UGS
~1,000
employees
21 storage
sites in Europe
12 bcm (330
Mcm/d)
of Working Gas
Volume~ 40 clients
A 60-year
experience in
developing and
operating UGS
Lost Time
Injury
frequency rate
2015 = 0
N°1 storage operator in Europe
Flexibility is the ability of supply to follow continuously the evolution of the demand...
9
Demand-Supply balances: seasonal, monthly, weekly, daily and intra-daily
... Brazil has a very high need of flexibility
during the dry seasons
during the dry years
1
2
3
4 historical generation peak
Thermal dispatch:
Extreme variability of the gas
to power demand:
10
from 8 to 50 MMm3/d
i.e. +70% of the gas demand
The sources of flexibility....
11
Domestic gas
productionSwing to adapt to the demand
Gas imports Contractual dispositions (take-or-pay)
Gas
transmissionLinepack (gas stored in the pipes)
Gas demand Voluntary reduction of consumption
LNG imports LNG imports program
Regas Storage capacity of the terminals
... Low Flexibility of Brazilian Gas System
12
Description Degree of flexibility
Domestic gas
production75% associated gas LOW
Gas imports80% take-or-pay from
BoliviaLOW
LNG imports FSRU LIMITED
Gas transport Long distance network LIMITED
Gas demandThermal dispatch as a
back-up of hydroLOW
Underground Gas Storage: a “must”?
large working gas capacity
deliverability depending on rock
porosity and permeability
13% in the
world
Natural Aquifers
Nature adapted
Depleted Fields
Nature re-used
large working gas
capacity
deliverability depending
on rock porosity and
permeability
80% in the
world
high deliverability
modular development
7% in the
world
Salt Caverns
Nature valorized
13
14
How is Brazil doing and is it sustainable?
Portfolio optimization of the fully integrated national monopoly
Construction of 3 LNG regasification terminals in 5 years to
import LNG when needed
Gas-fired power plants are dispatched with 60 days of
anticipation to organize LNG imports
Future role of PETROBRAS?
Creation of a Gas Market open to third parties?
In average low load factor of the terminals
LNG supply - constraints and risks (sea conditions, geopolitics…)
Mid-terms needs exposed to spot LNG market
Is it responding well to the power sector needs?
Will it support gas to be the preferred fuel for thermal units?
New challenges
15
Furthermore, there is significant uncertainty for the near future:
• Bolivian gas production
• Pre Salt gas production
• Balance of the power intermittent sources (wind, solar...)?
• Opening of the gas market?
• Gas pricing?
The need for gas flexibility is structural in Brazil
The answer should be structural too
volume and flexibility available?
17
Underground Gas Storage offers unique services without equivalent
High volumes of energy stored in the country of delivery (not abroad)
High withdrawal rates: volume rapidly available to the consumers
High reliability: a proven technology; gas immediately available
High operational safety: between 600 and 2,000 meters of depth
18
The understanding of Brazilian Stakeholders is growing
Gas para Crescer reveals a great interest from the participants
CNPE directives: -> review the authorization process
-> stimulate the activity
Initiatives of the ANP: UGS seminary in 2015 and Consultation of
Interest in 2016
The stakeholders needs to better understand the
services of a UGS
ENGIE is willing to accompany the value
discovery process for Brazilian partners
19
To sum up: Underground Gas Storage in Brazil
Creating UGS in Brazil is likely possible
— Onshore depleted field exists
— Positive outlook for gas
Creating UGS in Brazil is relevant:
— to improve the reliability of the gas supply chain
— to optimize the costs and gas competitiveness
UGS and
Brazil
Favorable
preconditions
Creating UGS in Brazil needs to be supported:
— Development is not fast and easy
— Market visibility to be ensured in the long run
— Investments to be secured to allow private investment
Challenges