Driving future Irish gas demand

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1 Driving future Irish gas demand Fergal McGrath, Bord Gáis Networks Presentation to: Oil & Gas - Ireland s Energy Opportunity Date: 17 October 2012

2 Bord Gáis Networks Overview Bord Gáis Networks, on behalf of Gaslink, develops, operates and maintains Ireland s natural gas network and provides transportation services to all gas suppliers and shippers. Connects all new gas customers to the network and is responsible for work on service pipes and meters at customer premises. Manages a full 24-hour emergency response service and attends over 20,000 reported gas escapes annually with an average response time of 25 minutes. Expanding into new gas industry areas including natural gas vehicles, renewable gas and smart metering.

3 Ireland s Gas Network Bord Gáis Networks has developed a world-class gas infrastructure in Ireland comprising: Interconnector System linking Ireland to the UK & Continental gas markets 2,373 km Transmission pipeline network 11,030 km Distribution pipeline network There are more than 647,000 gas users in Ireland in over 157 population centres within 19 counties throughout the country

4 Annual Gas Demand (ktoe) Irish gas demand has grown by an average 5.1% annually. 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Gas Demand

5 Irish energy mix is still dominated by oil Market Share of Oil in Primary Energy [%] 5% % 50% % Market Share of Natural Gas in Primary Energy [%] Oil Natural Gas Solid Fuel Renewables Primary Energy Consumption Source: Eurogas Statistical Report 2011

6 Power Generation is primary driver of Irish gas demand Power Generation Share of Gas Usage [%] Inland Sales of Natural Gas by Sector Source: Eurogas Statistical Report 2011

7 Interconnection is of fundamental importance to Ireland. 1,400 Subsea Interconnector Hourly Flows 2010 & 2011 & IC1 Capacity (Nominal Design) 1,200 1,000 Flow (kscmh) /12/ /11/ /10/ /09/ /08/ /07/ /06/ /05/ /04/ /03/ /02/ /01/ /12/ /11/ /10/ /09/ /08/ /07/ /06/ /05/ /04/ /03/ /02/ /01/2010 Brighouse Bay Flows (Hrly) IC1 Capacity (Nominal Design)

8 Gas in power generation is set to grow facilitating 154% increase in installed wind capacity by Bord Gáis expects annual power sector gas demand to grow by 24% over the next ten years due to: EirGrid forecast electricity demand growth of 13% EirGrid anticipate increase in gas fired generation Increasing carbon and coal prices Commissioning of the East-West electrical interconnector will cause peak day power sector gas demand to fall this year Offset by Moyle partial outage From next year, one in 50 year peak day power sector gas demand is expected to rise by 18% over the period to 2020/21

9 Irish end use of gas is far below EU average Market Share of Oil in Final Consumption [%] 0% % % % 64% Market Share of Gas in Final Consumption [%] Oil Solid Fuel Natural Gas Electricity Final Energy Consumption Source: Eurogas Statistical Report 2011

10 60.00% Thermal energy is process, space & water heating & cooking. Gas still distant second in Residential sector. Thermal Energy Market Share 70.00% Commercial & Public Services 50.00% 60.00% 40.00% 30.00% 20.00% Oil Market Share Gas Market Share 50.00% 40.00% 30.00% 20.00% Oil Market Share Gas Market Share 10.00% 10.00% 0.00% % % Industry 60.00% Residential 50.00% 50.00% 40.00% 40.00% 30.00% 20.00% Oil Market Share Gas Market Share 30.00% 20.00% Oil Market Share Gas Market Share 10.00% 10.00% 0.00% Source: SEAI Energy Balance 0.00%

11 Changing growth drivers Transmission Pipelines New Towns Programme New Home Construction Residential Heating Gas in Transport Biomethane

12 Opportunity for Oil to Gas in Residential Heating Sector 300,000 urban domestic premises with oil fired central heating 100,000 of these lie within 20m of the gas distribution network CER Gas Connections Policy determines network development Existing policy dates from 2006 and has a construction focus Limited growth potential in current format Revision needed on domestic non-gas estates policy treatment

13 Gas is a proven transport alternative Gas is stored in concealed cylinders 14.5m Natural Gas Vehicles (NGVs) worldwide 1.56m NGVs in Europe Proven vehicles and technology Production line models available and affordable No loss in performance Compressed Natural Gas (CNG) vehicles Dedicated, Bi-Fuel, Duel Fuel

14 Benefits of NGVs Typically 30% to 60% cheaper than traditional fuels across Europe. Carbon emissions reductions and significant PM, NOx & SOx savings yielding local air quality benefits Lower noise Introduce diversity in transport fuel mix Biomethane provides a pathway to renewable transport

15 Natural Gas Vehicles are ideally suited to captive fleets Full range of vehicle options available No payload restrictions Vehicles & Refuelling Chicken & Egg EV Strategy for Private Passenger Transport Gas in Captive Fleet Transport

16 CNG is Madrid s municipal fleet fuel Municipality reviewed local services and prioritised severe reductions in exhaust emissions and noise. Now over 660 public buses and 400 waste collection vehicles fuelled by CNG in Madrid Lower emissions & reduced fuel costs Similar approach in Barcelona, Rome, Verona, Paris & The Hague

17 Bord Gáis Activities Creating awareness of gas as a transport fuel Introducing NGVs into fleet Developing a fast fill facility Recently partnered with Bus Eireann for a CNG bus trial.

18 Biomethane Potentially 7.5% of Ireland s gas needs and could drive the next phase of network development

19 Conclusions Bright future for Irish gas demand Gas is Ireland s No 2 fuel, critical to the electricity system and set to remain so Market growth lies in increasing penetration on existing network Gas in transport is growing across Europe and can work for Ireland Biomethane can play a role in Irish renewable heat and transport

20 Thank you