Central Infrastructure of the Gas Industry

Outline of the Unified Gas Supply System of Russia

The Unified Gas Supply System of Russia is a complex of gas production, processing, transportation, storage, and distribution facilities.

The Unified Gas Supply System of Russia includes the following:

· 155,000 km of trunk gas pipelines and their branches;

· 6,100 km of gas condensate pipelines;

· 268 compressor stations with a total capacity of 44.8 million kW;

· 6 gas and condensate processing complexes; and

· 24 underground gas storage facilities.

Unified Gas Supply System consists of soviet assets whose amortization is completed

The Unified Gas Supply System of Russia is the largest gas transportation and distribution system on the world. More than 50% of the Unified Gas Supply System consists of large-diameter (1420 mm and 1220 mm) gas pipelines.

The Unified Gas Supply System has been developed over more than 50 years, for which reason its equipment is characterized by high wear and tear. The age structure of its compressor farm reveals its physical and moral ageing: more than 40% of facilities are in service for over 20 years, and more than 20% of them have outlived their useful service period (of 100,000 hours).

Considerable modernization works are required because of non-uniform commissioning of facilities

The facilities of the Unified Gas Supply System were commissioned and put into operation in very different periods, most of them (with a total capacity of 2.5 million kW a year) in 1979-1988, which makes their upgrading and modernization required today very difficult after 20-25 years of their intensive service. For example, 322 gas compressor units with an overall capacity of 4.94 million kW was modernized and upgraded in 1996-2003 at a rate of approximately 1 million kW a year, which is absolutely insufficient now and in the nearest future.

Age structure of the linear part and compressor stations, %

Source: OJSC Gazprom

Unified Gas Supply System: key corridors, throughput capacities, and development prospects

The Unified Gas Supply System is conventionally divided into three main directions of gas transportation from the main fields.

Сonventional division of the Unified Gas Supply System into gas transportation directions

Source: OJSC Gazprom

The central direction includes the following main gas pipelines: Urengoi-Uzhgorod pipeline, Urengoi-Center pipeline, Progress pipeline, Yamburg-Tula pipeline, Yamburg-Yelets pipeline, Yamburg-Povolzhye pipeline, and North Tyumen Region-Ural pipeline. More than 2/3 of gas supplied from West Siberia to central regions and abroad is transported in this direction. Most gas pipelines of the central direction are in operation for 11-30 years (95%).

The northern direction includes the following main gas pipelines:

· to the compressor station Punga: Urengoi-Nadym pipeline, Urengoi-Petrovsk pipeline, Urengoi-Novopskov pipeline, Nadym-Punga pipeline, Medvezhye-Nadym pipeline, and North Tyumen Region-Torzhok pipeline;

· from the compressor station Punga: North Tyumen Region-Torzhok pipeline, Punga-Ukhta-Gryazovets pipeline, Punga-Vuktyl-Ukhta pipeline, Ukhta-Torzhok pipeline, and Gryazovets-Torzhok pipeline.

A large number of gas pipelines of the northern direction are in operation for 21-30 years (47%). Construction of the new North Tyumen Region-Torzhok gas pipeline is currently under construction, certain parts of which are already put into operation.

The gas pipelines of the northern direction are characterized by frequent failures and breakdowns due to stress-corrosion cracking. Maintenance of these gas pipelines in satisfactory technical conditions requires more investments per kilometer than the gas pipelines of the central direction due to a large number of defects.

The southern direction includes the following main gas pipelines: Urengoi-Surgut-Chelyabinsk pipeline and North Tyumen Region-Surgut-Omsk pipeline. Most gas pipelines of the southern direction are in operation for 21-30 years (75.5%).

Designed and actual capacity of the gas transportation system

The designed throughput capacity of the existing gas transportation system transporting gas from the Nadym-Pur-Taz gas-producing region, the main region of gas production, is 577.8 billion cubic meters a year. The actual throughput capacity of the existing gas pipelines is characterized by their technically possible throughput capacity that is determined by their technical conditions.

In the period 1991-2004, due to ageing and technical degradation of gas transportation facilities, the difference between the designed and technically possible throughput capacity of the gas transportation system (known as the deficit of technically possible throughput capacity) increased from 24 to 55.6 billion cubic meters a year.

Apart from technical deterioration of equipment, one of the main problems of the gas transportation system is the high load of a number of gas pipelines. The Attachment to this review presents a complete list of overloaded and under-loaded segments of the gas transportation system.

Segments of the gas transportation system where the load is over 90%

Source: NP Gas Market Coordinator

The gas transportation system requires modernization: transition to gas, de-bottlenecking, and increase of its efficiency

OJSC Gazprom has developed a program for modernization of facilities of the gas transportation system in the period 2006-2030. This program implies reconstruction of the linear part of the gas transportation system and compressor stations in the following volume (calculations were carried out for 12 versions differing in the time of commissioning of the Shtokman field, period of field development on the Yamal Peninsula and East Siberia, and volumes of gas supplied from Central Asia):

Dynamics of average volumes of gas transportation system reconstruction works

Source: estimates of ERTA-Consult

The capital investments calculated in the framework of this program include investments into reconstruction, development and decommissioning of facilities of the gas transportation system and investments into development of the gas transportation system of East Siberia and Far East. The upper and lower boundaries of capital investments into development of the system of gas transportation on the territory of the Russian Federation in the period 2006-2030 are represented in the following diagram:

Consolidated capital investments ino the gas transportation system, US $ million

Source: estimates of ERTA-Consult

One of the programs for modernization of the gas transportation system is the program for transition of gas compressors from the use of electric power to the use of gas. Large-scale integration of these innovations may tangibly increase gas consumption for the own needs of the gas transportation system.

Underground gas storages as an instrument of seasonal gas balancing

Currently, Russia has a well-developed system of underground gas storage, which includes 24 underground gas storage facilities. All these gas storages have been created in porous media in depleted gas field and water-bearing strata.

Active reserves of gas in underground gas storages are necessary, first of all, for covering the seasonal non-uniformity of gas consumption. Apart from that, gas storages ensure reliability of gas supply in emergency situations and scheduled (or forced) limitation of gas supply. Gas storages provide gas reserves in cases of abnormally cold winters, emergency situations in the gas transportation system, possible delays in commissioning of production facilities, and gas transportation system maintenance works.

Underground gas storages: key storages and their characteristics

The overall active volume of underground gas storages in Russia is 70.7 billion cubic meters according to the design, 98.6 billion cubic meters according to the actual volume of pumped gas, and 570 million cubic meters according to the maximum daily yield. Russian gas is stored in gas storages on the territory of Russia, Ukraine, Latvia, and Germany.

Location of underground gas storages in Russia

Source: SmartMoney

The current ratio between the volume of gas taken from underground gas storages and gas consumption does not exceed 10%. The optimal value of this ratio for the contemporary structure of gas consumption is 12-13%. Apart from that, export supplies of gas make it necessary to maintain additional seasonal reserves of gas equal to 5-7% of these export supplies. Thus, OJSC Gazprom is now facing the task of building the capacity of underground storages of gas up to 17-19% of the annual gas consumption volume.

The capacity of underground gas storage facilities in North Caucasus and the Saratov Region exceed the levels of gas consumption regulation in these regions, which makes it necessary to supply gas to other regions and thus complicate the gas transportation schemes. The capacity of active underground gas storages in Northwest Russia is insufficient, which makes it necessary to supply gas to these underground gas storages from other regions.

Trunk gas pipelines themselves provide certain possibilities for regulating gas consumption peaks.

Characteristics of underground gas storages in Russia, billion cubic meters

Source: OJSC Gazprom, estimates of ERTA-Consult

Today, OJSC Gazprom is constructing five new underground gas storages and designing five more. By 2010, OJSC Gazprom will increase the volume of active gas up to 82 billion cubic meters. Construction of gas storage facilities costs $130-160 per 1000 cubic meters of stored gas.

In winter 2006, the gas storage system of OJSC Gazprom worked at its maximum capacity

In January-February: 5.5 billion cubic meters of gas withdrawn from underground gas storages

2.8 billion cubic meters of gas produced in excess of the plan

Total volume of gas in excess of the supply plan = 8.3 billion cubic meters

4 billion cubic meters of gas supplied to Russian consumers in excess of the plan

of which 1.6 billion cubic meters was supplied for electric power generation

Underground gas storages: access of independent companies

The currently effective legislation does not regulate gas storage services. Moreover, despite the fact that only OJSC Gazprom has gas storage facilities, gas storage services, unlike gas transportation services, are not considered as natural monopoly activities and, therefore, are not subject to state regulation.

For internal budget purposes, OJSC Gazprom regularly sets internal tariffs for services of gas storing in underground gas storages rendered by gas transportation organizations.

Internal tariffs of OJSC Gazprom for gas storing services, rubles per 1000 cubic meters

Source: OJSC Gazprom, estimates of ERTA-Consult

In spite of the fact that the gas storage procedure is non-transparent for external customers, beginning from 2004 OJSC Gazprom sets tariffs for services of storing gas in underground gas storages rendered by gas transportation organizations to independent companies.

Tariffs for gas storage services for independent companies, rubles per 1000 cubic meters

Source: OJSC Gazprom, estimates of ERTA-Consult

Central Infrastructure in the Regions of Russia

The following information and expert estimates are presented below for the regions of strategic interests:

· gas transportation organizations;

· trunk gas pipelines traversing the region;

· planned load and capacity of the trunk gas pipeline;

· planned injection into and withdrawal from underground gas storages.

Gas transportation organizations

Perm Krai

Gas transportation organization: Permtransgaz LLC

Omsk Region

Gas transportation organization: Tomsktransgaz LLC

Novosibirsk Region

Gas transportation organization: Tomsktransgaz LLC

Note: there are two lines (720 mm and 1020 mm) running from Novosibirsk: one to Prokokovo (720 mm) and the other to Barnaul (1020 mm).

Samara Region

Gas transportation organization: Samaratransgaz LLC

Penza Region

Gas transportation organization: Volgotransgaz LLC and Yugtransgaz LLC

Republic of Mordovia

Gas transportation organization: Volgotransgaz LLC

Kemerovo Region

Gas transportation organization: Tomsktransgaz LLC

Orel Region

Gas transportation organization: Mostransgaz LLC

Ryazan Region

Gas transportation organization: Mostransgaz LLC

Expert estimates of gas pipeline loads

Perm Krai, billion cubic meters

Следует отметить высокую загруженность магистральных газопроводов.

Omsk Region

Novosibirsk Region

Negative values of transportation volume means redirection of gas flows to Kemerovo

Samara Region

Penza Region

Republic of Mordovia

Kemerovo Region

Orel Region

Ryazan Region

Gas storage infrastructure in the regions of strategic interests

Underground gas storages are available in four of the nine regions of strategic interests: the Samara Region, Perm Krai, Penza Region, and Ryazan Region.

Samara Region

There are 4 underground gas storages at the border with the Orenburg Region created in depleted oil and gas fields: Amanakskoe, Dmitrovskoe, Mikhailovskoe, and Kiryushinskoe underground gas storages, also collectively known as the Samara underground gas storages. The active volume of the Samara underground gas storages is 0.5 billion cubic meters. Gas is injected into and withdrawn from these storages by Samaratransgaz LLC.

Injection and withdrawal of gas planned by OJSC Gazprom for the Samara underground gas storages,

billion cubic meters

Ryazan Region

There are 2 underground gas storages in the northwest of the Ryazan Region: Kasimovskoe and Uvyazovskoe underground gas storages. Gas is injected into and withdrawn from these storages by the Kasimovskoe underground Gas Storage Directorate, a branch of Mostransgaz LLC.

The Kasimovskoe underground gas storage is the largest gas storage created in water-bearing formations. The active volume of the Kasimovskoe underground gas storage is 5.5 billion cubic meters. Works are currently underway for increasing its up to 9 billion cubic meters.

Injection and withdrawal of gas planned by OJSC Gazprom for the Kasimovskoe gas storage,

billion cubic meters

The Uvyazovskoe underground gas storage is currently under pilot industrial operation. The active volume of the Uvyazovskoe underground gas storage is 2.5 billion cubic meters.

Injection and withdrawal of gas planned by OJSC Gazprom for the Uvyazovskoe underground gas storage,

billion cubic meters

Penza Region

The Bednodemyanovskoe underground gas storage is being created in water-bearing structures at the border of the Penza region and the Republic of Mordovia. The active volume of the Bednodemyanovskoe underground gas storage is 2 billion cubic meters. The storage will be commissioned and put into operation in 2008.

Injection and withdrawal of gas planned by OJSC Gazprom for the Bednodemyanovskoe underground gas storage, billion cubic meters

Perm Krai

The Bereznikovskoe underground gas storage is being created in 150 km from the town of Solikamsk in salt-bearing structures (which is untypical for underground gas storages on the territory of Russia). The active volume of the Bereznikovskoe underground gas storage is 0.3 billion cubic meters. The storage will be commissioned and put into operation in 2010.

Injection and withdrawal of gas planned by OJSC Gazprom for the Bereznikovskoe underground gas storage, billion cubic meters

Apart from that, it should be mentioned that a promising location for creating an underground gas storage in a water-bearing formation in West Siberia is the Kolmakovskaya structure situated on the route of the Omsk-Novosibirsk trunk gas pipeline near the town of Barabinsk (in the Novosibirsk Region), where, after completion of geological exploration works, an underground gas storage with an active volume of 1000 million cubic meters may be created. This gas storage will add reliability to the operation of the Omsk-Novosibirsk-Tomsk trunk gas pipeline.

Summary

1. The gas transportation system of Russia is the largest in the world, is considerably worn out, and requires regular investments for reconstruction and development.

2. The gas transportation system of Russia has three conditionally independent gas transportation corridors. Each gas transportation corridor contains sizeable segments loaded up to 90%. Gas production growth is possible only after solving the problem of the throughput capacity of the gas transportation system. Reconstruction and modernization of the system is yet another factor that will increase gas prices.

3. The main instrument for seasonal balancing of the gas transportation system of Russia is underground gas storages. underground gas storages in Russia are inert. Development of the gas transportation system requires construction of new gas storages. The problems of peak consumption may only be solved by organization of new types of gas storages in regions, such as has holders, liquefied natural gas storages, etc.

4. Construction and efficient use of gas storages requires commercialization of this service, determination of tariffs for it, and elaboration of correct rules of gas storage and access to gas storages.

5. The regions with the best developed gas transportation infrastructure are the Perm Krai, Republic of Mordovia, and Samara Region. OJSC Gazprom is not planning to find any radical solution to the situation with the capacity of the gas transportation system in Omsk, Novosibirsk, and Samara.

6. Underground gas storages are available in four of the nine regions of interest: the Samara, Region, Perm Krai, Penza Region, and Ryazan Region. The Bednodemyanovsk underground gas storage is being constructed now at the border between the Penza Region and the Republic of Mordovia. The Bereznikovsk salt-bed underground gas storage is being created in 150 km from the town of Solikamsk in the Perm Krai. The Kolmakovsk structure located on the route of the Omsk-Novosibirsk trunk gas pipeline near the town of Barabinsk in the Novosibirsk Region is a promising structure for creating a underground gas storage.