Natural Gas in Croatian Energy Future.doc by shensengvf


									Natural Gas in Croatian Energy Future

Daria Karasalihović, Lidia Maurović, Snježana Šunjerga
Department of Petroleum Engineering, Faculty of Mining, Geology and Petroleum Engineering, Zagreb, Croatia

Key words: natural gas, supply, environment


   Energy, which makes modern society possible is not as available as it used to be. World energy crises, the
impending decline of fossil fuel supplies and uncertainty of nuclear power's future have increased interest in
renewable natural energy sources. But, nevertheless, non of them is expected to take up the role of oil and
natural gas any time soon.
   Due to recent assessments, the global natural gas supplies, if the expected growth of consumption is taken
into consideration, should be sufficient for many years. On the basis of today global production and average
annual consumption, the, so- called, statistic time rate of sufficient production, can be calculated. It's
approximately 60 years.
   In this thesis we'll try to characterise gas position among the different energy resources serving the worlds
energy demand today. Croatia produces and utilises the following primary energy sources: coal, fuel wood,
crude oil, natural gas and hydropower.
   How gas competes with other fuels?
   So in this moment natural gas is to be a truly competitive fuel with respect to other fuels. Gas will be
promoted through the development and liberalisation of the energy market as well as the problem of storage. The
price and environmental considerations render gas the most efficient fuel, to be widely used in its primary form
as heat energy.
   Also very important thing is that greater utilisation of natural gas could dramatically improve environmental
conditions in Croatia. Developing the natural gas sector makes sense economically and also stimulate significant
new foreign investment for gas projects. By improving natural gas consumption Croatia is beginning to
acknowledge its rules in shaping a response to the problem of global ecological issues.

   1. Natural Gas in the World

   The role of natural gas in the world’s energy supply is growing rapidly. Natural gas is produced or utilized in
over 100 countries across the globe. This number is constantly increasing. Natural gas is daily replacing other
fuels in residential and commercial sector. Resource availability, cost and environmental issues all favour
growing gas application in industry and power plants (electricity generation) as well as in emerging markets such
as transportation cogeneration and cooling. The share of natural gas in global primary energy consumption
amounts to 23% and is steadily increasing.
     Growing demand for natural gas is expected in all regions of the world. Over the next two decades, natural
gas use is estimated to rise at more than three times the rate for oil use, with an expected increment of annual gas
use of about 1870× 109 cubic meters (figure 1).
     The highest growth rates in natural gas demand are projected for the developing countries of the world,
where overall demand in the reference case rises by 5.0% annually between 1995 and 2015 (figure 2). Much of
this growth will be used for electricity generation, industrial energy and also infrastructure construction for
natural gas to replace polluting home heating and cooking flues in major cities. Gas markets are also expected to
undergo substantial development during next 10 to 15 years.
     Industrialized countries, where natural gas markets are most mature, will also increase their reliance on
natural gas. Over the next two decades, demand in the industrialized countries is expected to grow by 2.6%
annually, more than twice the rate of increase in oil use. In the United States, gas demand is expected to rise by
1.7% annually, mainly because of growth of electricity generation.
     It is estimated that, industrialized regions of Western Europe, will have highest growth rate in natural gas
use (3.8%). Resource availability, government energy policy and infrastructure development all favour increased
use of natural gas in Europe. Privatisation and restructuring of energy sector in many W. Europe countries has
resulted with increase of natural gas use for electricity generation. Government’s environmental policy also
encourages natural gas use. Based on a fact that natural gas is one of environment- friendly fuels many countries
consider natural gas as one way to cut air pollutant emission from energy sector and to decrease greenhouse
effect. Considering all previously stated, and also as a way to cut the reliance on oil and coal, use of natural gas
as well as the development of gas infrastructure is encouraged by many W. European governments.
     Natural gas consumption in Eastern Europe and the former Soviet Union region is expected to rise by 2.7%
annually. Much of the presumed growth in this region is related to the countries of Eastern Europe than the
former S. Union. Most of the E. Europe industry is still controlled by national governments. The process of
privatisation and restructuring is lately beginning to take hold. It is estimated that foreign investment is likely to
play a big role in future development of natural gas industry. In addition to the estimated growth in natural gas
consumption within E. Europe and former S. Union region, Russia sees Europe as strong market and is
positioning itself as dominate supplier.
     Over next 20 years natural gas consumption in Central and South America is expected to grow by 5.3%
annually. The countries with the least amount of present natural gas infrastructure are expected to be the fastest
growing markets for natural gas.
     Natural gas consumption in Asia, as a whole, is expected to triple considering current levels. On that
continent analyst and natural gas suppliers consider South Korea as one of the most important markets for
natural gas.
     In Africa, natural gas markets are dominated by Algeria and Libya, although there have been significant gas
discoveries in Tunisia and off the coast of Egypt. Much of the resulting gas production is for marketing Southern
Europe, although there are an increasing number of projects aimed at fueling domestic gas- fried power plants.
     At Middle East Iran established itself as major gas exporter.
     Natural gas reserves are less concentrated than oil reserves worldwide. Despite high rates of increased gas
consumption, especially over the past decade, regional reserves- to- production rates tend to be high. Over past
two decades natural gas reserves in the industrialized countries were fairly stable, although they slightly
decreased since 1993 (figure 3,4,11). On the other hand in Eastern Europe, former Soviet Union and developing
countries the reserves have dramatically increased. Proven natural gas reserves suffice for more than 70 years of
current production. Additional recoverable reserves will be added over time and are currently estimated at more
than 100 years of current production. In addition, significant volumes of natural gas will become available from
various sources such as advanced coal gasification, waste or hydrates.
     About 73% of the world’s reserves are located in former Soviet Union and countries of the Middle East.
Eastern Europe and former Soviet Union account for approximately 40% of world’s proven natural gas reserves.
Russia alone has 33% of the world’s total proven gas reserves what’s more than any other country in the world.
Russia’s potential gas reserves may be even five times greater than proven. As for natural gas production, Russia
currently accounts for more than 26% of the world’s total production. The Middle East has reserves to
production ratio of more than 100 years, the E. Europe/former Soviet Union 80.4 years and Central and South
America 73.9 years. In many regions, deposits of gas are known to exist but are not considered to be reserves
because the lack of infrastructure needed to gather and distribute the gas makes them, at this moment, non-
     Although average LNG prices have, in most regions, remained higher than prices of competing fuels, LNG
markets appear to expand with a more diversified range of customers and suppliers. There are a growing number
of LNG supply contracts worldwide. The growth in relatively high- cost LNG market is considered to be a direct
consequence of rapid expansion of natural gas in recent years. The costs associated with processing and
transporting LNG make it an expensive source of fuel. Bringing LNG to the costumer is not as simple as
bringing natural gas. It must be converted to liquid before shipping, must be shipped in specially designed
refrigerated ships and delivered to specially equipped ports. Finally, it must be regasified and distributed to

2. Gas as a fuel

     The synthesis of different energy fuel use represents the final essence of energetic. One of energy sources is
not enough for covering entire state economy that is why combination of single energy fuel is inevitable.
     Technology development, different needs of human society and significant environmental issues are
causing the transfer from one energy fuel to another. This kind of transition is a long term process. In this
moment Croatia is in unenviable condition with necessary objective review of energy analysis in front. It is of
great importance that all energetic institutions establish the same knowledge that the natural gas is the fuel of the
future. In order more objective and realistic review, it is necessary that evaluation of fuels is carried out.
Evaluation can be reviewed through fuel reserves analysis, useful energy amount, investment level and market
price, environmental impact, development and availability of new technology.
     Defining of particular fuels use is done by utilization level and market price with different socio-political
factors. Fuel consumption leads to loses while fuel is transformed into efficiency. Biggest losses are formed
through commercial energy production. During the process of energy transformation into another form of energy
41% of commercial energy is lost, almost 43% is lost trough energy transformation and only 16% ends as
efficient energy. Particular fuel and energy processes evaluation is possible if the net energy is introduced. It
represents efficient energy that can be gained from particular energy source and reduced for amount of energy
spent for efficient rate of work and loses in the process of finding, production, storage and transportation.(figure
        Further, electricity is not acceptable for heating and fuel oil, natural gas and solar energy are the most
adequate fuels. Since, solar energy still has not got strong economic justification and fuel oil represents
environmental threat, gas stays as most perspective fuel of future. Comparison of energy per units price also
favours gas as future fuel. Beside the primary part of natural gas and its preference ahead other fuels, it is
necessary to mention cogeneration as a way of combined production of electricity and heat and also combi
processes. The efficiency of heat consumption represents the basic difference between those two processes.
Utilization level of cogeneration process it is at high level of 85-95%. Electricity produced from cogeneration
plant is consumed for its own purposes or it is delivered into central energy system. Beside natural gas, other
fuels are used for cogeneration plants although their share is minor. Except 37% of primary energy savings of
cogeneration plants, it is essential also to mention reduced emission of CO2 (59%) and nitrogen oxides(26%).
Combi processes plants run with gas or steam turbine and they are characterized with both production of
electricity and heat. Beside previously mentioned, the gas fuelled microcogeneration, energy installations of
minor power (< 100 kW), must also be taken into consideration. Those kinds of plants are adequate for
household and smaller industry needs. Cogenerations can provide safe supply with sufficient power and better
adaptation to customer needs that is why are considered to be a big competition to conventional energy and heat
systems. This represents the great energy potential and also the possibility of change in the future energy routes.

        Furthermore, market price is another advantage of natural gas among other fuel that should be considered.
It is one of the most sensitive issue in whole energy analysis. Beside the investment into energy fuel
transformation plants, it is necessary to compare the basic fuel price. The comparison is possible considering
heat equivalent or fuels amount that can provide the same amount of heat (in this case 11,63 kWh-Figure 6). It is
obvious that electricity as energy fuel is several time expensive than gas, although is considered to be highly
practical. Fuel oil is very common on market but its environmental unfriendly issues make it an unfavourable
        Today natural gas price fluctuate among different suppliers, but nevertheless gas is still fuel with lowest
market price. Fuel wood and its net calorific value depending on wood quality and sort, is the only fuel with
similar market price but the comfort of its use makes it also unfavourable.
Other important natural gas characteristics are: no secondary products while burning (ash), its air mixture
availability, η > 90%, lower heat losses, clean fuel and other numerous advantages related to primary
consumption possibility and fuel comfort.
        Final Establishment of natural gas as a future prime and widespread fuel it is done through gas reserves
consideration. (Figure 2)
        Environmental aspects of energy development and future use of particular fuels are nowadays of great
concern. The consumption of all energy form is both directly and indirectly affecting our environment. These
impacts can occur during energy extraction, processing, conversion, transportation, distribution and
consumption. Considering environmental issues, nowadays a strong environmental initiative to replace high-
sulphur heavy fuel oil with cleaner burning natural gas is taking place. Governmental environmental policy also
encourages natural gas use as away for reducing the greenhouse gas emission. (Figure 7)
     The nations must seek to reduce the environmental impacts associated with both conventional and
renewable forms of energy. While energy is usually linked with air- quality issues, its impacts on land and water
should also be considered. When all types of environmental impacts are considered, natural gas stands out as a
most clean energy form that is now in use and as that, natural gas can meet today’s but also future’s
environmental challenges.
3. Gas in Croatia
     In 2000 the total primary energy supply amounted to 359.2 PJ (table 1). Natural gas participated with the
highest rate ever, i.e. 32.4 percent (figure 8,14). The share of natural gas in total primary energy supply grew by
1 percent compared to the previous period and amounted to 26.4 percent, a typical share level of this source.
     As regards to domestic production of natural gas, from 68 percent in 1996, production dropped till 1999 to
59 percent and in 2000 it grew to 62,5 percent. (Table 2)
     In energy transformation gas was participating with 10.1 percent. Consumption of the liquid fuels was the
highest, 69,8 percent. A disturbing fact is that the highest increase, comparing to previous years, was realised in
the consumption of coal, as much as 159 percent, due to operation commencement of the Plomin 2 thermal
power plant. We can say that this power plant was one of the mistakes in Croatia energy development.
     If we analyse the share of individual energy forms within energy sector own use, we notice that by far the
largest share is taken by natural gas. In final energy demand the biggest share decrease was realised in the
consumption of natural gas, so that with the 15.3 percent present the lowest level recorded. Better situation was
in final energy demand in industry where natural gas was participating with 25.4 percent (figure 9).
     In the final energy demand, in sector like households, services, agriculture and construction, natural gas
participate with 19.8 percent, right after electricity and liquid fuels. Unfortunately in transport natural gas does
not have important role. Share of LPG remained on the lowest value of 0.7 percent.
     Figure 13 show the structure of natural gas consumption in some sectors for period from 1988 to 1999. We
can see that consumption in industry decreased regarded to war that took place in Croatia during this decade. But
increase of consumption in households and services is noticeable as well as hardly the same consumption of gas
in agriculture during this period.[3]

Production and Processing
     Natural gas is produced from 17 gas fields, which covers about 60 percent of total consumption. The largest
quantities come from the Molve, Kalinovac and Stari Gradec fields, where the Central Gas Plants for processing
and transportation were built-Molve I, II and III. (Table 3)
     Natural gas transport system comprises 2178 km of high pressure pipelines with diameters ranging from
DN 80 to DN 700. The system was designed for the pressure of 50 bar and partially 75 bar. During peak
demands the system transports 540 thous.m3/hour. The system also includes 139 reduction-metering stations
(RMS) with 210 metering points. (Table 4, figure 12)
        There are 38 distribution companies in the Republic of Croatia and their gas pipeline length is 14027 kms.
Also, there are three distribution companies for town gas and LPG/air mixture, and their gas pipeline length is
339 kms. Total pipeline length is 14366 kms.

Exploration and Production of Natural Gas
        In last few years INA-industry of oil and gas, which is at the moment only company in Croatia dealing with
oil and gas (state own), has increased activities at domestic gas fields. The biggest project is joint project with
Italian AGIP on offshore north Adriatic gas fields. Furthermore there is “re-entry” program off drilling at old
fields Molve and Kalinovac. Decreasing rate of gas production fall is accomplished.
        Also during the last twenty years few smaller gas accumulation have been discovered. [4]

        In consideration of our desire and need to become part of “new” world where natural gas is described as the
bridge to a renewable future, Croatian government has initiated energy program called PLINCRO with main
goal of gas consumption increase in total energy supply. Very intensively is worked on main gas transmission
lines. Emphasis is on areas that have not been connected at gas lines, so use of gas was restricted. Gasification
has to be one the main concern since it can solve plenty of energy problems in country.
        If forecasted gas consumption, figure 10, is mainly correct gas consumption will increase as well as
domestic production. So existing gas transmission lines will not be enough for complete gas supply of Croatia.

    At the moment on account of this problem few new project are analysed:
    -      GEA – Gas Energy Adria – submarine gas pipeline that would connect Italian coast (Cassaborsetti) with
           Croatian coast (bay near Pula). It would also link Croatian territory with gas field “Ivana”.
    -      Connection with Hungary – supplement of existing system for import of Russian gas. By this pipeline
           Croatia would import gas from Russia but by connection with MOL system.
    -      Expansion of system for gas import from Russia – some analyses have shown that for additional gas
           supply of gas, the existing system ( Austria-Slovenia-Croatia) should be expended.

    Future of gasification will depend upon possibilities of natural gas supply respectively on realization of
GEA project.

4. Conclusion
        The role of natural gas in the world’s energy supply is growing rapidly. The price and environmental
consideration render natural gas as one of the most acceptable form of energy today. Although the renewable
energy resources are very appealing due to their characteristics, their use in near future is still questionable. In
consideration of desire and need to become part of “new” world, where natural gas is described as the bridge to
renewable future, Croatia has to build energy system on new standards and expectations. If forecasted gas
consumption is nearly true, a gasification of Croatia is unenviable. It is important for Croatia to realize the
importance of this issue, in order to provide consumers safe supply and to keep up with rest of modern world.
The first step is to get rid of old habits of slow reaction on changeable present. Development of pipeline system
is the prerequisite for new market liberalization and will provide supply diversification. Market economy and
transparent state energy policy are the basis of independent future gas system development. Consider the fact
that one of the most prospecting aspects of Croatian economy is tourisms, natural gas is likely to play a role of
best ally in future.
     Becoming familiar with natural gas is not negotiable.


[1] Web site –
[2] 15th International Scientific Meeting of Gas Experts, M. Sunic, 21stCentury Energy Will be Marked by Gas
     and Electricity, Opatija 2000
[3] Ministry of Economy, Annual Energy Report, 2001
[4] Croatian Energy Institute, PLINCRO, Zagreb 2001

Figures and Table

                         Total Primary Energy Suply in 2000

                                     4%     5%        4%
                                                                                      natural gas
             26%                                                   45%

Figure 8 Total primary energy supply in 2000
                Percentage of Natural Gas in Total Primary
                             Energy Supply

                    1988     1990       1992      1994       1996   1998

Figure 9 Precentage of natural gas in total primary energy supply

                       Gas Consumption Forecast in Croatia

   500000                                                                  2000
   400000                                                                  2005
   200000                                                                  2010
        0                                                                  2015
           Fe ary


             Au l y
           pt s t

           ec be r

              em r


            O er

         N obe



        S e gu










Figure 10 Gas sonsumption forecast in Croatia
                                                   Prices of Energy Demand in Households in Croatia





                                               Electricity     Fuel Oils   Natural Gas          LNG        Coal   Fuel Wood

Figure 6 Prices of energy demand in households in Croatia

                                                             Net energy ratio

                          passive solar
    electric resistance

                               natural gas
                                    fuel oil
                               active solar

                                 town gas

                                               0        1          2       3         4     5           6    7
                                                                       net energy ratio

Figure 5 Net energy ratio

                               Average environmental pollution generated by
                                         fossil-fuel power plants

                          40                                                              solid fuel

                          30                                                              oil
                          20                                                              natural gas
                                       SO2                   NOX               CO2
Figure 7 Averege environmental pollution generated by fossil-fuel power plants

             World natural gas reserves (145 785 billions cubic metres) in
                                        2000                  Former U.S.S.R.
                                     4436                                                     Middle East
                                                                                              Western hemisphere
      13616                                                                                   Asia Pacific (including

                                49554                                                          Western Europe


Figure 11 World natural gas reserves

                                     Natural Gas Production (MTOE)

        1000                                                                                                   2000
         800                                                                                                   2010
         600                                                                                                   2020
           0      OECD North          OECD Europe   OECD Pacific   Transition     China   Rest of World
                America (including                                 Economies

Figure 4. Natural gas production
Figure 3. Proved reserves at end 2000.

                                   Natural Gas Consumption
   1 000 000 000 000 cubic m

                               3                        Law Economy
                               2                        Growth
                               1                        High Economic
                               0                        Growth
                                                        Reference case
                               19 2,5
                               19 7,5
                               19 2,5
                               19 7.5
                               19 2.5

                                 20 5
                                 20 5
                                 20 0


Figure 1. Natural gas consumption
                                                                               R U
                                                                                                                     M .S R E D IŠ Ć E

                                                                                 S IJ A
                                                                                                          V A R A Ž D IN
                                                                                                                                         G O L A
                                                                              R O G A T E C
                                                                                                   Z A B O K
                                            SLOVENI A                                                                                Đ U R Đ E V A C  MAĐARSKA
                                                                                                      Z A G R E B
                                                                                                                               B J E L O V A R

                                                                                                 IV A N IĆ G R A D                                                   D
                                                                                                                                                      V IR O V IT IC A .M IH O L J A C     B .M A N A S T IR
                                                                                   K A R L O V A C
                                                                                             P S P O K O L I                   K U T IN A
                                                                                                                                                             P S P B O K Š IĆ                O S IJ E K
                       U M A G                                                                                     S IS A K
                                                                    V R B O V S K O                                                                                                                   V U K O V A R
                                                         D E L N IC E                              P E T R IN J A
                         P A Z IN     R IJ E K A                                                                               N O V S K A                                           V IN K O V C I
                                                                        O G U L IN
                                                   O M IŠ A L J                           S L U N J                                                                                                            IL O K
                                                                                                                                               S L A V O N S K IB R O D
                                                                        O T O Č A C
                                                                                                 B IH A Ć                                                                                    Ž U P A N J A

                            P U L A
                                                                              G O S P IĆ

                                                                                            G R A Č A C
                                                                                                                       BOSNA I                                             Z E N IC A

                                                                  Z A D A R
                                                                                B E N K O V A C                        HERCEGOVINA
                                                                                                          K N IN
                                                                                                                                                                                         S A R A J E V O
                                                                                            Š IB E N IK

                                                                                                                          S IN J

                      I ALI A
                      T J
                                                                                                                                                               M O S T A R
                                                                                                          S P L IT
                                                                                                                                         M E T K O V IĆ

                                                                                                                                               P L O Č E

                       EXISTING PIPELINE SYSTEM 50 ×105 Pa
                                                                                                                                                                    D U B R O V N K
                       EXISTING PIPELINE SYSTEM 75 ×105 Pa
                       PLANNED PIPELINE SYSTEM 75 ×105 Pa
                       UNDERGROUND GAS STORAGE

Figure 12 Pipeline system in Croatia

                                                          Natural gas consumption
    billion cub. m

                              1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Figure 13 Natural gas consumption in Croatia
                        Energy Share of Primary Energy Production

                                       0%     9%
                   31%                                        COAL
                                                       28%    FUEL WOOD
                                                              CRUDE OIL
                                                              NATURAL GAS
                                                              HYDRO POWER

Figure 14. Energy share of primary energy production
                                              Particular fuel in world energy demand in past and future




                                                                                                                 fuel wood
         60                                                                                                      coal
                                                                                                                 crude oil

                                                                                                                 natural gas
         40                                                                                                      nuclear fuel


          1800                  1850                  1900            1950        2000            2050    2100


Figure 2. Particular fuel in world energy demand in past and furure
Table 1.Key Energy Indicators in 2000

Population (million)                    4.50       GDP (US$ 95/ per capita):              5500
Total primary energy supply
                                     359.2         Electricity Consumption in TWe:           -
in PJ
TPES/population (toe per                           TPES/GDP (toe per million US$95
                                        1.9                                               268
capita):                                           dollars):

Table 2 Natural Gas Balances
     Natural Gas           106m3                        31.12.1999.            31.12.2000.
               Reserves                                   33595.6                29204,5
              Production                                   1550,5                 1658,5
                Import                                     1109,0                 1108,0
            Energy supply                                  2680,8                 2704,8
        Energy sector own use                               126,2                  140,5
     Total transformation sector                            855,7                  962,2
           Non-energy use                                   548,8                  546,9
                Losses                                       78,3                    71
        Final energy demand                                1071,8                  984,2
               Industry                                      368                    374
             Other sectors                                  703,8                  609,3

Table 3 Production Capacities of the Central Gas Stations
           Central Gas Station                        Installed Capacities (mln.m3/day)
                Molve I                                               1
                Molve II                                              3
               Molve III                                              5
                TOTAL                                                 9

Table 4 Length of Transport Pipelines in Croatia
                    Pipeline                                  Length (kms)
International                                                      33.0
Main Transmission Lines                                           685.6
Regional                                                         1055.4
Local Linking Lines                                               105.0
Technological                                                     300.0
Total                                                             2178

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