Ireland's gas demand to continue to grow: CER

Dublin (Platts)--18Aug2005

In its recently published Gas Capacity Statement covering 2005 to 2012,
Ireland's Commission for Energy Regulation forecast that total gas demand in
Ireland will grow at an average of 7% between 2005 and the end of 2008 and
between 4% and 6% between 2009 and the end of 2012. 
     While this represents a slowdown on the rate of growth, it shows that the
inexorable growth in demand of natural gas is set to continue. The CER report
shows that demand for natural gas in Ireland grew at an annual average rate of
9% between 1999 and 2004 and the natural gas share of the Total Primary Energy
Requirement has grown from 15% in 1990 to 25% in 2004. 
     This high level of growth has been driven mainly by an increased demand
for natural gas-fired electricity generation and growth in the residential and
small commercial sector. At the end of 2004 the power generation sector
accounted for 60% of total gas demand and natural gas accounted for
approximately 50% of the total fuels used for power generation. 
     The latest Generation Adequacy Report from ESB National Grid says there
is 932MW of committed gas-fired generation coming onto the system over the
next few years including 150MW at Aughinish Alumina, 382MW at Tynagh and 400MW
at Huntstown II, with the Aughinish and Tynagh plants coming onto the system
in the 2005/06 gas year. In sharp contrast to just eight years ago, when
indigenous gas fields supplied over 80% of the market, in 2004, Ireland
imported 81% of its total gas requirements. 
     Ireland imports its gas from the UK via two interconnectors with
Scotland. According to the CER, network analysis shows that if there is low
indigenous supply, such as a delay in production from the Corrib gas field,
the need to import high rates of gas will cause the flow at the Beattock and
Brighouse Bay compressor stations in Scotland to marginally exceed the maximum
design throughput by the end of 2008. Even under relatively benign conditions,
where Corrib comes on stream as forecast in Q2 2007 and production rates
increase, as forecast, from Ramco's Seven Heads gas field, reinforcement on
this route is required by late 2012. 
     Given the uncertainties in supply forecasting, and the sustained growth
in the gas market, the CER recommends that any reinforcement project be
advanced to 2011. The CER points out that further growth in gas demand is
likely over the forecast period. As a result, Ireland's gas dependence in the
total energy portfolio is expected to increase from current levels. 
     In respect of power generation, the gas share is also projected to
increase further, driven partly by environmental considerations. In the event
of a delay to first gas from Corrib, the CER is of the view that alternative
commercial or physical means could be considered to overcome this deficit. 
     There is an ongoing investigation into the capability of the onshore
Scotland facilities, by testing the infrastructure with a view to confirming
the limiting capabilities of the compression facilities. In the long-term
reinforcement of the system onshore Scotland will be necessary. 
     This may require a duplicate of Cluden to Brighouse Bay pipeline at an
estimated cost of Eur75-mil to Eur85-mil. An upgrade of the Beattock
compressor station is estimated to cost in the range of Eur55-mil to
Eur70-mil. A Brighouse Bay compressor enhancement would cost in the region of
Eur50-mil to Eur65-mil. In the absence of any further indigenous supplies then
all projects would be necessary and the choice and timing can be based on the
economic merit of each project.

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