IEA: Long-term gas supply security a threat as demand rises

Doris Leblond
OGJ Correspondent

PARIS, Oct. 7 -- Over the last 18 months, natural gas prices have continued to rise steadily in both established and new markets "not only a reflection of higher demand, but also of a delayed supply response," said Nabuo Tanaka, executive director of Paris-based International Energy Agency, in his introduction of the 2008 Natural Gas Market Review.

"Investments uncertainties, cost increases, and delays continue to be a major problem in most gas markets and are continuing to constitute a threat to long-term security of supply," Tanaka stressed. These factors no doubt will be compounded by the world financial turmoil, which has erupted since the review was published and which will forcibly result in a credit squeeze for energy investments.

Investment lag
Ian Cronshaw, head of IEA's Energy Diversification Division, who designed and managed the review, was already concerned that increasing gas demand, especially for power generation, was not being met by sufficient investment. While he said projects currently under way will proceed, he also said the lag in LNG investments beyond 2012 "is a concern for all gas users in both the IEA and non-IEA markets."

The review pointed out other issues that pose a threat to long-term supply security: the escalation of engineering, procurement, and construction costs (EPC); the tight engineering market; and the growing propensity of producing countries to reserve a greater share of gas production for their own growing domestic markets.

High natural gas prices, which also are pushing up electricity prices because of the close link being established between gas and power, have not slowed demand in consuming markets either inside the IEA or nonmember countries. In the US gas demand grew by 6.5% in 2007 and about 4% in first-quarter 2008. In Japan, growth in 2007-08 was 9% on the back of a 50% lower nuclear power utilization.

In Europe, gas consumption was dampened by warm weather but in early 2008, growth jumped to more than 8%, most notably in Spain, where first-half 2008 demand increased by 20% despite an economic slowdown.

Meeting gas demand
To meet this growing demand LNG trade is on the way to playing a stronger role in regional markets within the Organization for Economic Cooperation and Development (OECD) countries in the short and medium term, forecasts the review. While LNG is already pivotal in OECD Pacific, it is expected to reach 20% in Europe, where imports will account for over half of total supplies.

In North America, indigenous production will still supply more than 90% of expected demand by 2015, yet LNG imports are expected to more than double 2007 levels.

Increasing LNG trade will globalize regional gas markets, a trend that seems irreversible, says the review. Driving global interactions are the prevalence of more producing and consuming countries, a growing dependence on external markets in OECD Europe, tighter balances, increasing volumes of spot and short-term LNG, and higher gas prices.

But, insists the review, to benefit from the globalization of the gas market, improved transparency on flows and prices and more-competitive internal markets are needed. Interregional competition will improve global gas security in the long term. Making its point, the review notes that liquidity on European hubs—both on the UK's National Balancing Points and on most continental hubs—has "grown considerably, promoting more flexible market responses, more transparency, and more-accurate price signals."

Gas traded among regions will grow to 17% in 2015 from 13% in 2005, with LNG accounting for about 84% of the increase in interregional trade as exports grow to some 400 billion cu m in 2015 from 192 billion cu m in 2005.

Gas supply sufficient
Examining gas supply, IEA's review sees worldwide gas resources more than sufficient to meet global demand, which it establishes at 3.689 trillion cu m by 2015, up from 2.854 trillion cu m in 2005, always subject to timely investment. The biggest regional increase in absolute terms is in the Middle East, but there is also a marked increase in Africa and Latin America. All told, production is expected to increase in all major regions except OECD Europe, where North Sea output is declining. North American production growth should slow after 2015.

Natural gas supplies will continue to come mainly from conventional sources but coalbed methane and other nonconventional supplies, such as shale gas, should be playing a growing role in some regions, notably North America.

The great uncertainty, however, is how major resource holders will meet increasing demand, rapidly rising costs, and development of more-remote gas.

Pipeline delays
Looking at the needed infrastructure to deal with increasing gas flows, both regional and global, Tanaka was concerned that "progress on major pipelines, outside the United States is slow." Improvements to market functioning are especially urgent in Europe, he noted, because of the region's growing demand for gas. Also needed in Europe are greater cross-border gasline connections.

Noted, also, were the many delays in pipeline infrastructure development last year globally as well as increased costs. Particularly mentioned were Nabucco and Nord Stream in Europe and the Alaska pipeline in North America.

In LNG there are similar trends, as many projects are planned but not all are going ahead. In this area, the review notes the unprecedented and major expansion in regasification capacity worldwide, which risks being underutilized for it greatly exceeds liquefaction capacity. On the other hand, concedes the review, this could be a source of flexibility.

The review is prolific and detailed on all these developments. It also includes data and forecasts on OECD and non-OECD regions to 2015 and in-depth reviews of five OECD countries and regions, including the European Union.

Source: Oil & Gas Journal

High Pressure Centrifugal Blowers in Series by Canada Blower

Author: Oleg Tchetchel

Canada Blower Co. has developed high pressure blowers-in-series systems to achieve static pressure, previously unachievable by single stage centrifugal blowers.

Series and parallel connected blower installations are often used to meet performance ranges beyond normal single stage blower capacities. For systems that require high ststic pressure, and especially high pressure TOGETHER with high temperature (where standard multi stage, positive displacement, screw, or regenerative type blowers can not be used) series of single stage centrifugal blowers can be used. Many times additional blower in the system can be advantageous. For instance, where two blowers are operating in series and one breaks down, the other may be able to "limp" the system along while the necessary maintenance is performed. Having on blower continue in operation can often allow limited production while the other is being repaired. Also, there are cases where having one blower continue in operation could prevent or at least minimize system or equipment damage from such things as high temperature ot contaminated airstreams.

Another advantage of blowers in series is that of the availbale space. If system must be expanded and increaases the CFM requirements, the allotted space for the original blower may not be large enough for a single large blower, but might be large enough to istall two smaller blowers in series to obtain the necessary pressure.

One more potentail advatage for series operation is the likehood of initial cost savings. Although each case must be evaluated individually, it is often more economical to select two "smaller" blowers with their respectice smaller motors and drives than to select one "larger" blower to do the job.

Series connected blowers are those which have the outlet of the one blower exhausting into the inlet of another blower. By connecting blowersa in such a manner, high static pressures can be attained. This is accomplished as the second blower adds its pressure capability to the system, increasing the capacity beyond the capabilities of the first blower.

Ideally, two identical blowers installed in series would result in the same CFM at the outlet of the second blower as the inlet of the first one, and nearly twice the static pressure as that rated for either blower alone. However, some variation will result in both air flow and combined pressure because of the tendency of air to compress under pressure. A good understanding of how atnoshperic pressure and absolute temperature affect density is required. Both of these factors are involved in the proper selection of blowers. Density is directly proportional to atmospheric pressure and is inversely proportional to absolute temperature (degrees Rankine).

Caution is necessary in selecting blowers for series installtion. It is generally accepted that most pre-engineered blowers are capable of withstanding twice their catalog rated static pressure. In other words, where two blowers are installed in series the second blower housing should withstand the higher pressure. There is, however, a need for concern when the combined pressure exceeds twice the rated static pressure for one blower. In series applications involving three or more blowers, or in any system in which positive or negative pressure exists prior to the consideration of the blowers, special housing reinforcement may be necessary.
Source: Source: http://www.articlesbase.com