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Natural Gas Storage
in Brazilin Brazil
Prof.: Marcelo ColomerFederal University of Rio de Janeiro
Storage Importance
Traditional Storage
Usage
Security of supply
Price arbitration
Flexibility of supply contracts
Emergency contingency
Demand and Supply Management
Special Usage in
Natural Gas Industry
Better sizing of the transportation network
Management of associated gas wells production
Better importation contract
Storage Importance
Special Usage in
Natural Gas Industry
Better sizing of the transportation network
Management of associated gas wells production
Better importation contract
Management of Associated Gas Wells
Production
50,00
60,00
70,00
80,00
90,00
100,00
mcm
/d
Natural Gas ProductionNatural Gas Production in Brazil
increase 150% between 2000
and 2014,…
…specially on offshore basins,
what explain the high cost to
bring it to the market;
Natural Gas Domestic Production in Brazil Increase
Constantly in last 50th years
0,00
10,00
20,00
30,00
40,00
50,00
19
54
19
56
19
58
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
mcm
/d
Source: ANP.
Natural Gas Production
However, that Increase Depends from Oil Exploration
• The natural gas production
increase due mainly to
Petrobras exploration efforts of
oil;…
• … it explain why the natural
gas production is mostly
Natural Gas Production
40,00
50,00
60,00
70,00
80,00
90,00
mcm
/d
Source: ANP.
gas production is mostly
associated with oil production.
• 75% of Brazilian production is
offshore and associated with
oil.0,00
10,00
20,00
30,00
40,00
Associated Non-associated
Used by producers to manage production flows of the fields:
• Avoid interruption in oil production due to interruption in gas transferring;
• Compensate fluctuations in natural gas production from:
Management of associated gas wells production
• Compensate fluctuations in natural gas production from:
I. maintenance;
II. Unexpected failures;
III. Variation in production in associated fields
IV. Extreme weather events
Better Importation Contract
Demand is increasing faster than production
• The natural gas consumption in
Brazil, goes from 27 to 100
MMcm per day between 2000
and 2014;
• Industrial sector used to be the
mainly consumption sector.
Although,…
Natural Gas Consumption
60
80
100
120
Mcm
/d
Source: Abegás.
Although,…
• …recently changes in power
sector, increased demand from
natural gas power thermal
plants; 0
20
40
60
jan
-11
ma
r-1
1
ma
i-1
1
jul-
11
se
t-1
1
no
v-1
1
jan
-12
ma
r-1
2
ma
i-1
2
jul-
12
se
t-1
2
no
v-1
2
jan
-13
ma
r-1
3
ma
i-1
3
jul-
13
se
t-1
3
no
v-1
3
jan
-14
ma
r-1
4
ma
i-1
4
jul-
14
se
t-1
4
no
v-1
4
Mcm
/d
Other Comercial Residential Co-generation Transport Industry Power Generation
Brazil Natural Gas Imports
• Natural gas imports in Brazil
increase from 6 to 51
MMcm/d between 2000 and
2014;
• Until 2010, natural gas
importation came mainly
from Bolivia;
Natural Gas Imports
Source: MME
• However, since 2010, LNG
imports has increase fast
due to thermal demand of
natural gas;
• The absence of storage
facilities and the
characteristics of thermal
demand explain why Brazil
buy LNG on spot market;
• LNG imports are mainly used to
supply peaks from thermal
power plants demand, as a
backup for the hydropower
system;
• It explain the high prices of LNG
cargos to Brazil. In 2014, the
average price of LNG imported
Imports x Power Generation
Brazil: LNG Imports
0
2
4
6
8
10
12
14
16
18
20
US
D/M
MB
tu
average price of LNG imported
in Brazil was USD 14,8 per
MMbtu;
• Although Brazilian participation
in LNG market is small, he
pushes the marginal spot price
up.
Source: MME
Brazil: LNG Price
Considering the dispatch model of Brazilian thermoelectric power
plants...
...storage can provide better LNG contract or...
...even reduce LNG importation.
Better Importation Contract
Other important use of storage in Brazil is optimizing pipeline usage
Better Sizing of the Transportation Network
Volatility of Thermal Power Dispatch in Brazil
20%
30%
40%
50%
60%
1.500.000
2.000.000
2.500.000
3.000.000
3.500.000
4.000.000
m3/d
High sensitivity of pipelines in
relation to the thermal dispatch..
Very large fluctuations in the
thermal dispatch can bring
supply problems or idleness of
pipelines
Utilization rate Urucu-Manaus
0%
10%
20%
0
500.000
1.000.000
2011 2012 2013 2014 2015
Térmicas Manaus
Fator de Utilização Urucu-Manaus
0,00
2.000,00
4.000,00
6.000,00
8.000,00
10.000,00
12.000,00
14.000,00
16.000,00
18.000,00
jan
-10
ma
i-1
0
se
t-1
0
jan
-11
ma
i-1
1
se
t-1
1
jan
-12
ma
i-1
2
se
t-1
2
jan
-13
ma
i-1
3
se
t-1
3
jan
-14
ma
i-1
4
se
t-1
4
jan
-15
ma
i-1
5
Mw
med
SIN Dispatch
• Average demand;
• Reduces idle period of the ducts;
• It avoids the need for oversizing;
• Reduces Capex of
Better sizing of the transportation network
• Reduces Capex of transportation projects
It is Not Easy to Develop the Storage Business
in Brazil
Compra
Vende
Vende• In the US, the gains with price
arbitrage between demand cycles are the main form of financing storage activity;
• Storage answer price signals;
It is not easy to develop the storage business
in Brazil/1
• In Brazil, high unpredictability of demand variation when compared to the US and European markets;
• Price signals are reduced;
• Difficult financing of storage activity.
It is not easy to develop the storage business
in Brazil/2
Net Storage Withdrawal in US
Natural Gas Demand in Brasil
• The storage has a high importance in mature market;
• Besides the traditional benefits associated with storage of anyproduct, such as security of supply, the gas storage has someimportant benefits for the Brazilian natural gas industry;
I. The better management of production wells with associatedgas;
Conclusions
II. The complementarity imports of LNG;
III. The best design and use of the transportation network;
• The characteristics of Brazilian natural gas industry, however, requirespecifics funding models;
• In this sense, the action of the State is very important in thedevelopment of storage in Brazil;
• Not only developing a regulation to attract private investment, as wellas development of specific financing models.
