Gaz de France plans major expansions to meet demand growth

With the full opening of the European Union's gas and electricity markets July 1, Gaz de France is increasing investments by as much as €5.7 billion to expand its natural gas transmission network and gas storage capacity in France to accommodate growing gas demand and the requirements of new suppliers.

Jun 29th, 2007

Doris Leblond
OGJ Correspondent

PARIS, June 29 -- With the full opening of the European Union's gas and electricity markets July 1, Gaz de France is increasing investments by as much as €5.7 billion to expand its natural gas transmission network and gas storage capacity in France to accommodate growing gas demand and the requirements of new suppliers.

The group's wholly owned gas transmission subsidiary Gestionnaire du Réseau de Transport (GRTgaz), which operates its 31,600 km gas pipeline system in France, has outlined a 10-year expansion forecast. It plans to build about 1,000 miles of large-diameter pipeline, construct four compression stations, expand nine existing compressor stations, and increase underground storage by more than 10% by 2010.

While 2007-08 investments amount to €903 million, investment prospects represent €3.7-5.7 billion, incorporating several scenarios, depending on the major infrastructure projects currently available, GRTgaz spokeswoman Nadine Salaris told OGJ.

Most of the pipeline plans depend on construction of LNG regasification terminals. Five projects have been announced, three of which are more advanced:

-- Electricité de France's 9 billion cu m/year terminal at Dunkirk (OGJ, Oct. 16, 2006, Newsletter).

-- Germany's E.ON and Paris-based Poweo SA's 9 billion cu m /year terminal at Antifer near the oil port of Le Havre (OGJ Online, June 7, 2007).

-- Gaz de France's capacity expansion at its existing Montoir-de-Bretagne LNG terminal—by 2.5 billion cu m/year in 2011and an additional 4 billion cu m by 2014 (OGJ Online, Feb. 27, 2007).

Studies have been requested for the first two terminals, but no binding agreement has yet been received for the Montoir extension. If all three projects go through, GRTgaz foresees a maximum expenditure of €5.7 billion, but it has earmarked €5 billion as a more probable figure.

Salaris said a proposed LNG terminal in southwestern France at Le Verdon (capacity unknown) is a Total project that will link to its Total Infrastructure Gaz France transmission network. And Shell is considering the Fos-sur-Mer Shell LNG terminal with a 9 billion cu m/year capacity. If it is built, it would come on stream after 2015 (OGJ, May 7, 2007, Newsletter).

Pipeline additions
To accommodate the first three LNG projects, three pipelines are proposed: the Hauts-de-France pipeline from the Dunkirk LNG terminal to the Paris area, the Normandy pipeline linking Le Havre terminal to the Paris area, and the Artère du Maine pipeline that would link the Montoir extension to underground storage facilities in central France, near Tours.

GRTgaz also plans to double its pipeline looping capacity. The North-East pipeline, which is under construction, is intended to increase the entry capacity of Russian gas supplies via the French town of Obergailbach on the German border by 570 MMcfd beginning in 2009. Combined with the existing gas line's capacity, the Obergailbach import loop will supply a total of 1.95 bcfd of gas to France from 2010.

One pipeline certain to be built, indicated Salaris, is the Rhône pipeline along the Rhône River from north of Lyon to Marseille.

Salaris told OGJ that over half of the 1,600 km of pipelines planned will be 48 in. (1,200 mm) in diameter. More than 66% of the new pipelines will have a diameter of 42-48 in., and 20% will have 36-in. (900 mm) diameter.

The largest existing pipeline in France—between Dunkirk and Cuvilly, north of the Greater Paris area—has a 36-in. diameter, she said.

Compression additions
To debottleneck core transmission systems, four new compressor stations will be built: a 22-Mw station at Nozay, west of Montoir; 24 Mw at Cuvilly north of the Greater Paris area; 20 Mw at Champey in northeastern France; and 40 Mw at Etrez near Lyon in southeastern France.

The capacity of nine existing compressor stations also will be increased. Six are in northern France, where 18 Mw of compression will be added at Auvers, 30 Mw at Cherré, 63 Mw at Dierrey, 20 Mw at Voisines, and 24 Mw at Laneuvelotte. In southern France, 38 Mw of compression will be added at Chazelles, 20 Mw at Palleau, and 10 Mw at Saint-Martin.

A number of old compressor stations totaling some 27 Mw will be dismantled, bringing total extra compressor capacity to about 302 Mw.

GRTgaz said the overall transmission development plan was based on growth assumptions involving 1.8%/year average volumes for the 2007-16 period, including 1%/year for traditional gas use in residential, commercial, and industrial sectors, and a threefold growth of natural gas consumption for use in electricity, hydrogen, and biofuels production over the same period.

Gas storage projects
Acting on the assumption that natural gas consumption is growing by some 2%/year in France—a trend expected to continue over the coming years—Gaz de France is undertaking an ambitious program to expand its underground storage capacity, targeting an increase exceeding 10% over the 2005-10 period.

This should be achieved with the building of a new salt cavity storage facility at Hauterives in southeastern France, a salt cavern project between Colmar and Mulhouse in the Alsace region, and the conversion of the Gaz de France-operated, depleted Trois-Fontaines gas field northeast of the Paris basin. The caverns could add 1 billion cu m working volume at a cost estimated at €150-200 million/year.

Currently the Gaz de France group has in France the second largest technical storage capacity in the EU after Italy. It has nine aquifer sites totaling 8.6 billion cu m, which currently account for over 90% of total working capacity, and three salt cavity facilities totaling 900 million cu m.

These two storage types are complementary and provide for all contingencies. In addition to gas import fluctuations, the aquifer sites are sufficient to cover basic needs for a whole winter due to their larger capacities, from 216 million cu m for the smallest to 3.5 billion cu m for the largest.

The salt cavity facilities, offering very high peak flows, are primarily used to meet demand in very cold weather. Together both aquifer and salt cavity storage can meet over 50% of France's gas supply needs at high peak demand periods.

Since 2006, when the EU's gas directive was transposed into French law, companies with a license to supply gas in France have had third party access to Gaz de France's storage facilities on a transparent and nondiscriminatory basis in order to meet clients' flexibility needs. This access offers capacities for gas injection, storage, and drawdown under storage access contracts with conditions that reflect the characteristics of the facilities.

For greater simplicity, the facilities have been assembled into "storage groups" on the basis of their characteristics: the nature of the gas stored, geographical location, and drawdown speed.

A storage access contract runs for a 12-month period from April 1 of each year. Clients can reserve, in each group, storage capacity that entitles them to a daily withdrawal capacity and a daily injection capacity.

The offer is regularly improved to further increase access flexibility to stored gas and reactivity. In 2007, to promote development of a secondary market, Gaz de France established a new transnational platform via the internet, which it operates on a fee based on a percentage of the transaction. The platform is intended to facilitate dealings among market players.

Gaz de France has a 50-year successful track record in underground gas storage, with expertise in aquifer and depleted fields that offer porous storage for seasonal needs and in salt caverns for short-duration storage.

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