Underground reserves Natural gas storage facilities are at the top of the EU’s energy policy agenda. But a uniform strategy for gas storage has yet to be put in place.

MAINTENANCE: Andreas Schulz (rear), operations manager in Rehden, and Mario Larski inspect the facility. Photos Frank Schinski

Executive Summary

1. Security of supply One of the most important goals of the European energy policy is to ensure the security of supply for natural gas. Gas storage facilities play a crucial role.

2. European Union
The European Commission is planning a joint political strategy for natural gas storage facilities and LNG terminals that extends beyond national borders. Within the industry there are different positions regarding the plan.

3. Capacities The storage capacities of individual European countries are very different. Germany is the front-runner in the EU, followed by the Netherlands and France.

4. Germany It’s not only within the EU that Germany is well positioned. With a total working gas volume of over 24 billion cubic meters, the German gas industry has the fourth-largest natural gas storage capacity in the world.

Ensuring a reliable supply of natural gas is currently one of the most important issues of Europe’s energy policy. Despite the continuing debate, an EU Commission spokesperson confirmed it intends to develop a comprehensive gas storage and LNG strategy for Europe. “A collective strategy for natural gas storage can help to anchor the gas storage facilities in the overall regulatory system,” Ulrich Duda, Director of INES, the Association of Natural Gas Storage Operators in Germany, underlines. “Storage facilities play a central role in the energy supply, since gas from storage facilities is fast, reliable, safe, and available close to the consumers,” he continues.

Germany is the leading country in the EU for gas storage. In the last few years the German gas industry has developed the largest storage volume in terms of working gas – that is, the natural gas actually used. Germany also fares well in international comparison, coming in fourth behind the United States, Russia, and Ukraine. Other EU countries featuring in the top eight of these global rankings are Italy, the Netherlands, and France. Germany’s storage potential means the country will play an important role in the EU. “With its considerable storage potential, which is set to grow even more in the future according to current plans, Germany will in the future assume a leading role as a central hub for gas in Western Europe,” according to a study by the LBEG, the State Authority for Mining, Energy, and Geology.

Storage nation

Natural gas is still the number one form of energy used for heating in Germany. In the first half of 2015, natural gas heating was installed in almost half of new flats built. And over 49 percent of the existing almost 41 million flats are also heated with gas. Consumers list the following reasons for why they prefer gas: for one thing, natural gas is the most environmentally friendly of the fossil fuels. When natural gas is burned, it emits around 25 percent less CO2 than when heating oil is burned. Furthermore, in combination with solar thermal power or biomethane, natural gas also helps to integrate renewable energies into the heating market. However, the reserves of natural gas in Germany continue to decline – and production volumes along with them. In 2014 the production volume was 10.1 billion cubic meters, 5.8 percent below the previous year’s volume. That covers less than 10 percent of the 2014 consumption volume: 823 billion kilowatt hours. The rest is imported. “Gas storage facilities play a central role in supply security because they back up natural gas imports and balance out seasonal fluctuations,” INES Director Duda says. Germany has 59 underground gas storage facilities at its disposal at 37 locations. Collectively the storage facilities can store over 24 billion cubic meters of useable gas, which corresponds to around one-third of annual consumption, and is enough to provide a full supply of natural gas for about 80 days on average.

PRECISION WORK: astora employee Mario Larski adjusts the measuring devices on the fuel gas supply, which are responsible for powering the compressor turbine at Rehden, Western Europe’s largest natural gas storage facility. Photo: Frank Schinski

The debate about natural gas supply security was partly reignited by calls from Bavaria’s economics minister, Ilse Aigner, for a national gas reserve. But since then the German government has decided against a national reserve. The German gas market is “very well positioned” in this regard according to federal economics minister, Sigmar Gabriel. Germany, he said, had a diverse and reliable array of suppliers, robust infrastructure with the necessary safeguards, and resilient trading markets. Gabriel is in favor of more flexibility on the gas market, which he would like to achieve with small adjustments rather than major reforms.

This is no easy task, as the German Association of Energy and Water Industries (BDEW) points out, since the important role played by gas storage facilities in terms of supply security is threatened by the difficult market environment for operators. “The risk is that storage facilities can no longer be operated profitably because the expansion and extensive diversification of the import infrastructure also leads to a structural surplus of flexibility options,” BDEW spokesperson Jan Ulland explains.

GETTING TO WORK: The operating grounds of the facility in Rehden stretch over eight hectares. The actual natural gas storage facility is located 2,100 meters underground. Photo: Frank Schinski

A June 2015 study on natural gas storage commissioned by the German Federal Ministry for Economics and Energy (BMWi) also leaves no doubt about the essential role of storage facilities in ensuring the security of the gas supply. The study shows several regulatory and legislative possibilities for enhancing the gas supply even further. Meanwhile, in the industry, a controversial debate still rages on this issue. The industry association BDEW prefers a storage reserve run by the pipeline network operators based on the free market model. The advantages of this would be “a great openness towards technology, compatibility with the existing regulatory framework, and incentives for market players to take measures with the greatest possible cost-efficiency within a competitive market,” Ulland underlines. INES, the association of natural gas storage operators in Germany, considers the mandatory provision of household customers necessary, but is more critical of a strategic reserve and favors a process of tendering minimum levels in gas storage facilities via those responsible for the market zones.

Western Europe’s largest facility  

However, the industry is in agreement on one point: natural gas storage facilities contribute to supply security and grid stability in Germany and Europe. WINGAS subsidiary astora is one of the most important storage operators in Europe. The storage company operates the largest facility in western Europe at Rehden, Lower Saxony; holds capacities in the second-largest storage facility in central Europe at Haidach, Austria; and is building a storage facility in Jemgum, in Germany’s East Frisia region.

DISCHARGE LINE of the gas-drying facility at the Rehden gas storage location. This is where the pressure is reduced, and the gas
is pre-heated and dried. Photo: Frank Schinski

Jemgum is a new cavern storage facility, which offers access to both the German market and the Dutch market. “It ensures system stability in two markets by providing storage capacity for either country if needed,” astora managing director Andreas Renner explains. In Rehden alone, up to 4.4 billion cubic meters of useable natural gas can be stored. That equals about 20 percent of the total storage capacity available in Germany.

It is enough to supply about two million single-family homes for a year. The location of the underground porous storage facility is ideal – it is situated at a major intersection of several natural gas pipelines in Germany. “Up until a few years ago it was purely a seasonal facility,” operations manager Andreas Schulz explains. Gas was stored there in the summer, and then withdrawn in the winter. “But today, with gas increasingly traded on the spot markets and gas supply agreements becoming increasingly short-term, gas storage facilities have to be able to inject and withdraw gas constantly.” Hence, along with technical safety – the plant is monitored round the clock with a special process control system, it is inspected and serviced regularly, and the staff are trained continuously – flexibility plays an increasingly important role in storage operations.

By Kristina Simons | Photos Frank Schinski

Interview: »Market-based solutions take priority«

Wolfgang Kratzmüller, Head of Business Development at astora, on the current storage debate.

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