SLIDE 1
2
Rough Storage use for Winter 06 and beyond
1. Introductions to CSL 2. The role of storage in GB 3. Rough Recovery
- Options for Energy Buyers (1) – Rough Update
Options for Energy Buyers Options for Energy Buyers Bloomberg - - PowerPoint PPT Presentation
Options for Energy Buyers Options for Energy Buyers Bloomberg - - PowerPoint PPT Presentation
Options for Energy Buyers Options for Energy Buyers Bloomberg Offices Bloomberg Offices 8 November 2006 8 November 2006 Centrica Storage Limited Rough Storage use for Winter 06 and beyond 1. Introductions to CSL 2. The role of storage in
SLIDE 2
SLIDE 3
3
An introduction to Centrica Storage
- Centrica Storage Limited is a wholly owned subsidiary of Centrica plc
- Centrica Storage is a ring-fenced part of Centrica plc, separated from
the supply side legally, physically and financially (Chinese walls). Undertakings agreed with Secretary of State December 2003 governing operation of Rough
SLIDE 4
4 47/8A Installed 1977 6 wells 24/7 Operation Easington Terminal Rough gas processing Amethyst gas processing Tie in to National Transmission System 24/7 Operation Hedon, near Hull Administration/engineering Venture House, Staines Headquarters and Commercial
- ffice
24/7 Operation
AMETHYST
10 20 km
EASINGTON TERMINAL 29 km @ 36" 29 km @ 16"
ROUGH
York
47/3B Installed 1983 24 wells 24/7 Operation
Introduction to CSL - Facilities overview
SLIDE 5
5 Rough York
Easington Terminal To National Transmission System
36” Pipeline Riser Shaft
AP BD BP CD AD
16” Pipeline 36” Submarine Pipeline 18 Miles 18”Inter-field Pipeline 1.25 Miles
47/3B 47/8A
- Represents 74% of UK
storage and supplies 10% of UK peak winter demand
- Largest offshore gas storage
facility in Western Europe (strategically important).
- 185 billion cubic feet
(bcf) cushion gas
- ~118 bcf storage
capacity
- Deliverability max
44.8mcm/day
- Average Injection
~15mcm/day
- Onshore processing
terminal at Easington for Rough, Amethyst, Rose and Helvellyn processing (third party gas).
Introduction to Centrica Storage – Process Overview
SLIDE 6
6
Actual GB Load Duration Curve 05/06
50 100 150 200 250 300 350 400 450 1 26 51 76 101 126 151 176 201 226 251 276 301 326 351 m cm Beach Supply Isle of Grain IUK Rough MRS SRS Rough injection Supply 04/05
Storage Year 05/06
Rough Injections Rough Injections
Rough storage is used to provide seasonal swing to the market
Continued indigenous production declines
Storage prices from market spread
SLIDE 7
7
200 400 600 800 1000 1200 1400 1 16 31 46 61 76 Time to empty - Days GWh Glenmavis Partington Avonmouth Dynevor Arms Hole House Farm Hornsea Hatfield Moor Humbly Grove Rough
Existing UK Storage Facilities Winter 05/06 Rough
Winter 06/7 Humbly Grove available for the Winter More deliverability from Hole House
SLIDE 8
8
Rough’s place in the storage and gas market
Storage Capacity Rough 74% Hafield Moor 3% Hornsea 8% Humbly Grove 7% Hole House 1% National Grid LNG 7%
Deliverability Rough 35% Hafield Moor 2% Hornsea 15% Humbly Grove 6% Hole House 2% National Grid LNG 40% Average Injection - Summer 06 Rough 66% Hafield Moor 4% Hornsea 8% Humbly Grove 6% Hole House 13% National Grid LNG 3%
SLIDE 9
9
Recovery Program - Statistics
Phased Recovery completed to plan
- Phase 1 – remanning: full extent of damage unknown, installations ‘black’
- Phase 2 – reinstatement of injection operations
- Phase 3 – reinstatement of production operations
- Potential for reoccurrence eliminated
Over 400,000 man-hours worked Safety
- Zero lost time accidents
- No Safety or Environmental incidents
Quality
- >500 Flange Joints made
- No hydrocarbon leaks, minimal rework - start up first time to plan
Time
- Phase 2 - 112 Days from incident to recommence injection
- Phase 3 - 217 Days from incident to become production ready
Cost
- Circa £30 million project
Execution
- Planned, resourced, managed and implemented by CSL
SLIDE 10
10
CSL – Rough Flows
Net Storage Movement
- 300,000,000
- 200,000,000
- 100,000,000
100,000,000 200,000,000 300,000,000 400,000,000 500,000,000 600,000,000 01/01/05 01/02/05 01/03/05 01/04/05 01/05/05 01/06/05 01/07/05 01/08/05 01/09/05 01/10/05 01/11/05 01/12/05 01/01/06 01/02/06 01/03/06 01/04/06 01/05/06 01/06/06 01/07/06 01/08/06 01/09/06 01/10/06 01/11/06
- Near 100% reliability for 2005
- High summer load factor on injection 2005
- Highest withdrawal rate 492 GWh
- Sand monitoring & 8 Alpha
- Highest volume injected in a season
- Release of peak production rates Nov-Jan
- Cycling from November to late January
£ £50> million spent on Rough by CSL to date! 50> million spent on Rough by CSL to date!
- Near 100% load factor on injection
- High level of availability
- Inj Rates higher than forecast
- Original space targets met
- Production tested – 5th October
- Production starts – 2nd November
Facility closed for repairs
SLIDE 11
11
B D B P C D
- Heli-deck
- Accommodation
- 12 wells
- All gas processing facilities
- Gas compression (injection)
- Main power generation
- 12 wells
Centrica Storage Limited – New Production Process
SLIDE 12
12
Process Changes Bypassing dehydration and running sealine wet
- Modifications based upon running the Rough 36” sea line ‘wet’
- Bypass the Rough 3B Glycol Dehydration Trains
- Installation of large header and return pipework
- Glycol Contactors, Production Separators and Glycol Regeneration
Packages become redundant
- ESD System extensively modified to reflect changes
- Install new Hydrate / Corrosion Inhibitor Chemical Injection Skid on both
Rough 8A and Rough 3B
- Two Injection aftercoolers modified to eliminate failure mode and return to
four injection cooler operation
- Outcome:
- Offshore production process simplified
- Injection aftercooler duty improved
- Pipeline corrosion management regime enhanced
SLIDE 13
13
1st NOVEMBER – ROUGH STORAGE FULL 116.5 bcf! (78 day service)
- FM on Injection lifted from Gas Day 18th July 2006
- Rough returned to injection early June – 112 days after the FM
- Since the return to physical injection operations in June CSL has
filled in excess of 58 bcf of space before the end of winter
- Full production rates available following the return from annual
maintenance in September
- All production trains were tested in turn 5th October 2006
- Commercial withdrawals began 2nd November 2006!
SLIDE 14
14
Options for Energy Buyers (2) - Storage Information
- http://www.nationalgrid.com/uk/Gas/Data/misc/
- http://storit.centrica-sl.co.uk (aggregate site nominations within day)
- CSL supportive of attempts to drive forward transparency in the UK and Europe
where appropriate
SLIDE 15
15
Purchases Sales
Initial Hedge Shape to give 2.27 x (Q1-Summer) p/SBU Optimal hedge Shape to give 2.4 x (Q1-Summer) p/SBU D J F M A M J J A S
The Q1-Summer spread fits the shape of the SBU and provides a good hedge in forward markets. Summer Contract Q1 Contract Once market monthly contracts trade one can optimise position to fit optimal profile
Options for Energy Buyers (3) – Book storage Rough – SBU pricing and intrinsic value
Standard Bundled Unit (SBU) Withdrawal 1 kWh/day Space 67 kWh Injection 0.35 kWh/day 455m SBU’s sold 1 SBU provides space equivalent to 2.27 therms
SLIDE 16
16
Note: Each SBU contains 2.27 therms, therefore to convert from pence/SBU into pence/Therm divide by 2.27
Unlocking the extrinsic value
Extrinsic Intrinsic
2.27 2.4 2.8 to 3.2
Sales activity range
Poor Rough Reliability Injection Cancellation Long Injection Period Force Majeure Good Rough Reliability from high availability
- f the asset to CSL and customers
Customers able to reshape the CSL product or sell/buy unused capacity as firm or interruptible Customers able to buy/sell gas in store Ability to re-nominate withdrawal/injection with short lead times Customers nominated quantities equal their allocated quantities – irrespective of asset availability Market volatility provides cycling ability to leverage greater value from a Rough SBU Extrinsic value from use of Rough on 100+ days beyond intrinsic valuation Potential upside to 2.4 intrinsic as Dec – Mar spread increases on Fundamental change to winter contract Re-optimise hedge in more liquid market – further intrinsic value Initial Intrinsic Hedge in product-limited market fits shape of Rough
SLIDE 17
17
Site Map
Nominations Capacity Management Inventory and Allocation Billing Overview Enter Nomination View Nomination View Profile Activity report Enter Transfer View Transfer Accept Transfer Capacity Transfer Capacity Availability Enter Transfer View Transfer Accept Transfer View Inventory View Charges Centrica Storage Bulletins Public Bulletins Private Bulletins Bulletin Board View Bulletin Enter Bulletin Edit Bulletin Administration (AR functions) Change Password New Account Edit Account
SLIDE 18
18
Nomination
STORI T
Allocation
Within the Gas Day Before the gas day After the gas day
SLIDE 19
19
Summary
- Storage has a key role to play in efficient gas market and
balancing
- Market responding to need for more storage - duration
still an issue but far better placed for demand/supply shocks in future
- Subject to planning consents!
- Increased interconnection may increase the potential for
storage cycling
- CSL has spent £50m> investing in Rough and plans to
spend more
- Rough was full before the onset of Winter
- Rough back producing/storing our customers gas
SLIDE 20
20