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DEVELOPING CAPACITIES: THE NEW CHALLENGES

This article discusses the challenges of handling technical disruptions and developing capacities in the Italian gas storage market. It covers Stogit, the Eni-owned storage company, and its role in managing storage fields and optimizing performance. It also highlights the need for infrastructure development and the environmental challenges of developing new fields. The article concludes with the importance of timely response to market needs and stakeholder involvement.

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DEVELOPING CAPACITIES: THE NEW CHALLENGES

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  1. HANDLING OF TECHNICAL DISRUPTION DEVELOPING CAPACITIES: THE NEW CHALLENGES A. Stegher Head of Planning and Business Development

  2. AGENDA • WHO IS STOGIT: • AT A GLANCE • THE ITALIAN MARKET PERSPECTIVE • THE FRAMEWORK • INFRASTRUCTURES DEVELOPMENT • CAPACITY DEVELOPMENT: • OPTIMISING PERFORMANCES • NEW FIELDS • SOME CONCLUSIONS

  3. WHO IS STOGIT Stogit (STOCCAGGI GAS ITALIA): • is the Eni-owned storage company created in 2001 following the implementation of 98/30/CE Directive (“Letta Decree”) • manages 8 storage depleted gas fields in Italy • more than 8 Bcm working gas for modulation (@2006) • 257 Mcm/d maximum withdrawal peak • 5.1 Bcm working gas for strategic reserve (Stogit gas) • serves more than 35 clients through a single “virtual” point on the transportation network

  4. BORDOLANO CORTEMAGGIORE FIUME TRESTE DEE0 UNDER DEVELOPMENT WHO IS STOGIT SERGNANO BRUGHERIO MINERBIO SABBIONCELLO SETTALA RIPALTA Start: mid ’60s FIUME TRESTE OPERATONAL

  5. THE ITALIAN MARKET PERSPECTIVE THE DEMAND AND SUPPLY FRAMEWORK: • Substantial gas demand increase in the power generation sector • 2000-2005: from 35,3% to 48,5% of electricity generation (Jan 2006-Jan 2005: + 27,8% growth) • Impact on storage: forecasted increase of demand of about 2-3 Bcm during the withdrawal season in 2006-07 and 2007-08 • Continuous reduction of national production • Increasing dependency on imports

  6. Mcm/d Actual withdrawal Cold winter (43 years) Normal winter (43 years) THE ITALIAN MARKET PERSPECTIVE 2005-2006 Withdrawal

  7. STOGIT actions: past and future THE ITALIAN MARKET PERSPECTIVE INFRASTRUCTURE DEVELOPMENT (FOCUS ON LNG AND STORAGE): • LNG: • many projects • … too many “no’s” and delays: effective response only • possible in the medium-long run • STORAGE: • desire to have ready made capacity • no “pro-investments” regulation in the past years

  8. DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE Stogit - Working capacity for modulation Quest for the limit in increasing capacity from operational fields: + 2 Bcm (+31%) volume in 5 years

  9. DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE VOLUME INCREASE IN EXISTING FIELDS THROUGH: • Higher pressure limits in depleted fields • Technical update • Safety monitoring • Dynamic flows optimisation for Storage System • Simulations for better volume profiles and capacity adjustment factors Positive features: rapid and cost-efficient capacity increase. Why not more ? Why not now ? It’s so easy ! “External Downside”:

  10. DEVELOPING CAPACITIES: OPTIMISING PERFORMANCE • SO: WHY NOT MORE AND NOT NOW ? Underground gas storage is not “a car factory”: • 1st: It is not a factory • System performances are affected by its utilisation path • Experience curve and simulation tools • 2nd: It is not a car • It is an underground porous multi-fluid media, with physical and chemical interactions • Learning on the fields’ reaction to stress allow to understand how to workwith the reservoir • Risk evaluation is key when exceeding initial conditions

  11. Why in “my backyard” ? NEW FIELDS: THE ENVIRONMENTAL CHALLENGE • Environment is a fundamental feature of new fields development: • Safety: a business pre-requisite • Environmental impacts, affecting local populations sensitivity, are becoming crucial: • Noise • Visual impact • … Stakeholders’ involvement

  12. NEW FIELDS: THE ENVIRONMENTAL CHALLENGE • An Italian example: location for a possible new field …

  13. Stogit 2010 target: doubling of 2001 working gas capacities. NEXT STEPS • Timely response to market needs can be given if technical and financial concerns are correctly “supported”: • Proper regulation • Stakeholders’ involvement in finding solutions (…, see USA approach)

  14. SOME CONCLUSIONS (FOR STORAGE) • Technical improvements are needed for ensuring both capacity increases and safety of the operations when limits are reached • Timely supply developments can be mostly driven by an appropriate investment framework • Local sustainability of the projects is to be achieved for responding to global needs … and we have seen how views can be different on this !

  15. Thank you ! www.stogit.it andrea.stegher@stogit.it

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