SUPPLY AND DEMAND WITHOUT TYRA

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1 Supply and demand without Tyra 1/13 To: The Danish and Swedish gas market Energinet.dk Tonne Kjærsvej 65 DK-7000 Fredericia Analysis SUPPLY AND DEMAND WITHOUT TYRA VAT no Date: 28. august 2017 Author: JBJ/HOG Contents 1. Background Conclusion Assumptions Supply and demand situation per month Supply and demand in extreme winter conditions Time schedule and future process Dok. 16/ Til arbejdsbrug/restricted

2 1. Background Offentliggjort udgave august af Supply and demand without Tyra 2/13 On 4 April 2016, Maersk Oil published a press release: FUTURE SOLUTION FOR TYRA FIELD TO BE IDENTIFIED THIS YEAR Maersk Oil has today issued a notification to the Danish gas market. The notification announces that production from Tyra East and Tyra West in the Danish North Sea will cease on 1 October 2018, if an economically viable solution for continued operations is not identified during Under EU regulatory requirements, a decision to end production must be notified to the market in a timely manner. Furthermore, Maersk Oil submitted a REMIT: (Regulation (EU) No 1227/2011 on wholesale Energy Market Integrity and Transparency): Company: Maersk Olie og Gas Asset Type Affected: Offshore gas production Name of Asset Affected: Tyra East platform/field Start time: End time: Causes: Maintenance Flow Capacity Reduction: MWh/day Maersk Oil has today made a decision to cease production of oil and gas from the two main facilities, Tyra East and Tyra West, in the Tyra field in the Danish North Sea on 1 October 2018, if an economically viable solution for continued operations is not identified during This decision has been made because the existing facilities are approaching the end of their operational life due to a combination of more than 30 years of production and subsidence of the underground chalk reservoir, reducing the gap between the facilities and the sea. The Tyra field is valuable for Denmark and for the Danish Underground Consortium (DUC), with significant gas resources that remain to be extracted. On 22 March 2017 Maersk Oil published a new press re- lease: encouraging-a-full-redevelopment-of-the-tyra-field The main conclusion is as follows: Maersk Oil has today, on behalf of the Danish Underground Consortium (DUC), reached an agreement with the Government of Denmark which will facilitate future oil and gas investments in the Danish North Sea and protect industry jobs in Denmark. The agreement provides the terms that enable the DUC partners to progress a full redevelopment plan for the Tyra facilties towards a decision to invest in the project by the end of And further: The full redevelopment programme requires a resequencing of engineering activities versus the decommisioning and partial redevelopment scenario outlined to the gas markets on 30 December Maersk Oil today issued a further REMIT notice to the gas markets on behalf of all DUC partners outlining that, pending a final investment decision, production from Tyra is now expected to shut in December 2019 and restart in March More information on the revised schedule for a full redevelopment of Tyra will be made available on final investment decision later this year. The question is how ceasing of gas production from Tyra in the period December 2019 to March 2022 may affect the supply and demand situation in Denmark and Sweden. On 20 April 2016, Energinet submitted a preliminary statement concerning the issue.

3 Offentliggjort udgave august af Supply and demand without Tyra 3/13 Regarding a potential closure of Tyra, the statement concludes: Denmark has a welldeveloped gas network and can provide gas to Danish and Swedish customers through the pipeline from Germany, which connects us to the European gas market, and the Danish gas storage facilities. In August 2016 Energinet analysed the supply and demand situation further and published the result. In July 2017 Energinet published the new long term assumptions for electricity and gas analysis. Based on these assumptions Energinet has made an update of the analysis from 2016 describing how the market in may be affected, and how potential adverse effects can be mitigated. Compared to the description from August 2016 the situation has improved. The expected storage volume capacity has decreased but the expected decrease in the Danish market fully compensates for this. However, the demand forecast is uncertain in the sense that several factors may influence actual demand.

4 2. Conclusion Offentliggjort udgave august af Supply and demand without Tyra 4/13 The gas system was originally designed to have one primary source, the North Sea. Since then, the transmission system towards Germany has been expanded substantially so that currently there are two main supply routes, and the supply situation for Denmark and Sweden has never been better. Should a substantial part of the production in the North Sea lapse, the gas system will return to a situation with one primary source of supply and two storage facilities as in Energinet has no exact knowledge of the situation with Tyra except for statements published by Mærsk Oil and Gas. In this analysis, it is assumed that Tyra will shut down for the period 1. December March The main conclusion from the analysis is that Danish and Swedish consumers will continue to experience a robust supply situation if Tyra shuts down. When, at the same time, the majority of the Danish production in the North Sea is closed down for a number of years, the system becomes less flexible and more vulnerable to incidents occurring compared to today s supply situation. Energinet intends to take various measures both in relation to the market and to infrastructure in order to secure maximum infrastructure capacity. The situation requires preparation and awareness on the part of Energinet, the adjacent systems and the market players if the gas supply is to be secured. An extremely long and hard winter with disruption of the supply sources will be challenging. However, careful planning and focusing on the optimal use of the capacity in the system will mitigate the risk of supply failure.

3. Assumptions Offentliggjort udgave august af Supply and demand 2019-2022 without Tyra 5/13 Energinet s general assumptions for gas analysis 2016-2040 can be found on the homepage and in appendix 1:

5 3. Assumptions Offentliggjort udgave august af Supply and demand without Tyra 5/13 Energinet s general assumptions for gas analysis can be found on the homepage and in appendix 1: Forskning/Analyseforudsaetninger/Analyseforudsaetninger-2017 The supply and demand situation is illustrated below. This scenario is based on the following assumptions: The Danish North Sea production is as estimated by the Danish Energy Agency in its yearly report 2016 from April pdf Production includes Energinet's expectation for the Trym field and the estimated reduction for the Hejre field, which is not expected to be producing until 2022 The Tyra field is in production again March 2022 The Danish gas market is decreasing The Swedish market amounts to 900 million m 3 /year from 2017 to 2025 The gross calorific value from Germany is assumed to be 11.2 kwh/m 3. Supply from Tyra to Nybro is substituted by supply from Germany for 3 years in the overall yearly illustration In this paper, it is assumed that no gas will be delivered from the pipeline Tyra-Nybro from 1 December 2019 to 1 March It is also assumed that Tyra will be renovated and be in full operation 1 March 2022.

6 Offentliggjort udgave august af Supply and demand without Tyra 6/13 4. Supply and demand situation per month It is important that players are aware of the reduced flexibility in normal operation and the consequences of operational incidents in 2019 when the supplies from Tyra-Nybro are stopped. The robustness of the system depends on the players' ability to optimise the use of the limited capacity. Especially, the exploitation of the northbound capacity at Ellund and the use of storage are important as both options are affected by limitations. The capacity at Ellund is limited by the capacity in the North German gas transmission system, and injection and withdrawal as well as volume capacity in the Danish storage facilities are assumed affected by limitations. Energinet has described the potential overall supply and demand scenario in the years based on a normal year and with the following assumptions: 1. Expected demand in Denmark and Sweden in a normal year, ie average temperatures in a normal year each month 2. Maximum capacity in storage facilities: a. Volume capacity of 790 million m 3 (reduced compared to 2016 because of water filled cavern in Ll. Torup, less expected working volume in Stenlille and filling of storage with German gas quality in 2020) b. Withdrawal capacity of 16.2 million m 3 /day c. Injection capacity of 8.4 million m 3 /day 3. Northbound firm Ellund capacity from Germany of 10.0 million m 3 /day 4. Storage injection is started in spring, when possible, and the injection period is evenly distributed over spring/summer/autumn (maximum injection capacity is not fully used) 5. Storage withdrawal, when necessary, ie when Entry Ellund and North Sea supply from South Arne are not sufficient to cover the market's demand In , the supply and demand scenario may look as illustrated below. In this scenario, northbound Ellund looks as illustrated below.

7 Offentliggjort udgave august af Supply and demand without Tyra 7/13 The northbound capacity at Ellund is assumed fully utilised from November to March, and during the rest of the year - April to October - the capacity is utilised to a minimum of 60%. The volume in the storage facilities at the end of each month can be illustrated as below. It is assumed that the storage facilities are not emptied in March (Energinet is assumed to reserve volume for Emergency purpose, and storage customers are assumed to be prepared for cold winter) and are completely filled at the end of September. The decrease in max. storage facility volume from end 2020 is due to filling of storage facilities with German gas, which has a lower calorific value than gas from the North Sea. The situation concerning northbound Ellund and storage facilities in a normal year and in a cold year (every 20 years) is illustrated below.

8 Offentliggjort udgave august af Supply and demand without Tyra 8/13 The conclusion regarding average gas balances over the year is that consumers will also have access to gas without special measures being taken. However, the system becomes less flexible and more vulnerable to incidents. Energinet may take various measures both in relation to the market and to infrastructure in order to establish sufficient security of supply. However, the situation mainly requires preparation and awareness of the market players in order to secure the gas supply. The aspect is further described in chapter 5. Further information on the potential supply scenario year by year is illustrated in the enclosed PowerPoint slides.

Offentliggjort udgave august af Supply and demand 2019-2022 without Tyra 9/13 5.

9 Offentliggjort udgave august af Supply and demand without Tyra 9/13 5. Supply and demand in extreme winter conditions The figure below illustrates the expected supply and demand in extreme winter conditions ( C) if Tyra is still in operation. If Tyra is closed down 1 October 2019, the situation could be as illustrated below.

10 Offentliggjort udgave august af Supply and demand without Tyra 10/13 The supply from Tyra-Nybro is substituted by gas from Germany, and the necessary capacity is available both on the Danish and the German side as firm capacity. The withdrawal capacity from the storage facilities may be increased. However, this may require minor infrastructure modifications, which will be investigated further to mitigate risks. If a severe supply failure should occur in such an extreme supply situation, it would be necessary to declare Emergency. The conclusion in relation to gas balances in extreme weather conditions is that the consumers can also be supplied gas in the years However, the system becomes less flexible and more vulnerable to incidents. Energinet will take the appropriate measures regarding the market as well as the infrastructure in order to provide maximum security of supply. However, the situation mainly requires preparation and extreme awareness on the part of the market players in order to secure the gas supply also in extreme winter conditions. An extremely long and hard winter with disruptions of supply sources will be challenging. However, with preparation and awareness on the part of the market players with regard to securing the gas supply and with a well-developed security of supply model, such situations can also be handled with limited impact on the Danish and Swedish gas market.

11 Offentliggjort udgave august af Supply and demand without Tyra 11/13 6. Time schedule and future process During the coming year, Energinet will involve the market, to discuss how Rules for Gas Transport should reflect the future situation. It will also be discussed which tools are necessary, and how the supply/demand situation should be communicated during a period with Tyra shutdown. The indicative timeline for when the market will be involved in the process of changing the market measures is illustrated below:

12 Offentliggjort udgave august af Supply and demand without Tyra 12/13 Appendix 1, Supply and demand forecast Danish-and-Swedish-customers-can-be-maintained.aspx Year Denmark Sweden Sweden + Denmark Export Germany Total demand [GWh] upper calorific value , , , , , , , , , , , , , , , , , , , , , , , ,

13 Offentliggjort udgave august af Supply and demand without Tyra 13/13 Year Nybro BNG Import Germany Total supply [GWh]

EMERGENCY WORKSHOP. Rules & Practice. Ballerup 25 January 2018

EMERGENCY WORKSHOP. Rules & Practice. Ballerup 25 January 2018 EMERGENCY WORKSHOP Rules & Practice Ballerup 25 January 2018 1 HOST EMERGENCY EXIT DEFRIBILLATOR (AED) MEETING POINT PURPOSE & EXPECTATION Purpose To learn more about the rules of security of supply in