blue fuel

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Content

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Natural gas, the ideal fuel to help develop renewable energy sources and enable constructing buildings with very low fuel use Marc Florette. Research & Innovation President Gaz de France

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New business growth opportunities for StatoilHydro Margareth Øvrum. Chief Executive Vice-president for the Technology & New Energy business area

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The environment: one of our priorities Alexei Miller. Chairman of the Board, OAO Gazprom

Ensuring a secure, reliable and “green” supply of the “Blue Fuel” Alexander Medvedev. Deputy Chairman of OAO Gazprom Management Committee and Director General of OOO Gazprom Export

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GAZPROM GROUP: CONCERN FOR ECOLOGY Aleksandr ISHKOV. Doctor of Chemistry, Professor. Deputy Head of OAO Gazprom’s Gas Transportation, Underground Storage and Utilization Department and Head of the Energy Conservation and Ecology Department

Carbon trading as a tool for low carbon solutions and the role of GM&T Vitaly Vasiliev. Chief Executive Officer of Gazprom Marketing & Trading London

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08 The Baltic Sea: an Ecosystem 09 under Pressure Financial Turmoil 10 and the Impact on Energy Markets Italy: some 570,000 NGVs in 2008: 11 agas European record in the natural vehicles market that will The Geopolitics of Gas in Europe Philippe Copinschi. French Expert

Olof Lindén. Professor Sweden

Coby van der Linde. Clingendael International Energy Programme (CIEP), The Netherlands

be increased in 2009–2010 Sergio A. Rossi. Italian analyst

12 Ecology and oil-and-gas 13 production in the Arctic

Why are so many Italian motorists switching to gas? Angelantonio Rosato. Italian journalist

Environmental Protection Policy – Economic Structural Policy Klaus Töpfer. Professor and Honorary Doctor of Science

Anatoly Dmitrievsky. Academic at the Russian Academy of Sciences (RAS), Director of the Oil and Gas Research Institute of the RAS Vyacheslav Maksimov. Deputy Director of the Oil and Gas Research Institute of the RAS

The environment: one of our priorities Alexei Miller Chairman of the Board, ОАО Gazprom

As one of the world’s largest energy companies, Gazprom not only strives to attain the highest production efficiency, but also to use natural resources wisely in order to protect the long-term sustainability of the environment. One of Gazprom’s firm priorities is to preserve the environmental sustainability. We have a wide-ranging number of environmental goals, including being particularly attentive to the environment in areas where our gas industry operates, and using natural resources in a sustainable manner. We work hard to ensure a safe environment for hydrocarbon exploration, transportation and storage, as well as creating a safe and healthy working environment for our employees. With natural gas being the most environmentally-friendly fossil fuel available, Gazprom has a minimal impact on the environment. We nevertheless continue our efforts to decrease this impact even further. We implement energy-saving and environmentally-friendly technology annually and are constantly improving our environmental management system. This requires substantial financial investments. In 2007, Gazprom spent more than twelve billion rubles on environmental protection. That same year, capital investment in environmental protection was 1.5 billion rubles. This large-scale financial backing allows us to fulfill our goals in an efficient manner, carry out short-term and long-term plans while abiding by internationally-recognized regulations and rules for rational natural resource management and environmental protection. Gazprom’s environmental management system took many years to create. At present, it unites more than two thousand environmentalists working in practically all research and development areas. In 2007, Gazprom created an ecological inspection group and a committee for coordinating environmental protection issues in order to enhance the existing system. An independent audit of Gazprom’s environmental management system, completed in 2007, endorsed the efforts made to abide by environmental legislation. The conclusions of this audit confirm that Gazprom continues to perfect its environmental management system in order to be certified as compliant with the standards set by the International Standardization Organization (ISO) 14001.

dated and analyzed together with the pollution data from the surrounding areas where the company’s operations are located. This allows us to be extremely confident in naming the causes for higher-than-usual amounts of pollution and in determining the source(s). Efforts to save energy around the world are a part of Gazprom’s general policy. Increasing the efficiency of using natural gas, electricity, thermal energy and various types of fuel during production helps achieve energy conservation. Energy saving is a relevant issue, primarily because of the significant volumes of fuel resources used for gas extraction, transport, processing and storage, due to the fact that production has to be moved to areas which are increasingly further away from consumers. Energy conservation, particularly with regards to decreasing gas usage and loss during processing, will allow us to significantly lower emissions. The Gazprom Energy Conservation Program 2007–2010 is testimony to the importance of the environment within the company’s operations. Through this program, we aim to save 9.3 billion cubic meters of natural gas, 1175 million kilowatt hours of electricity and 1294 thousand Gcal of thermal energy in three years. The program will cost 8.5 billion rubles but will allow savings of 16.4 billion rubles. Gazprom does not stand at the sidelines, but gets actively involved in other sectors too. Automobiles are known as one of the main sources of environmental pollution. For Gazprom, a supplier of the most environmentally clean fossil fuel available, not to address this problem would just not seem right. Natural gas is currently the best-placed energy source to replace gasoline. Natural gas has numerous advantages compared to gasoline, the main ones being that it is clean-burning and affordable.

Gazprom’s environmental protection measures are monitored through a system for industrial environmental controls. Control gauges installed on emission sources record information that is consoli-

Today, a fleet of over 9.5 million cars run on natural gas which constitutes just a fraction of the total transportation fleet. Gazprom is making efforts to increase this figure, amongst other by coordinating a program called Developing the Network of Natural Gas Gasoline-Stations and Cars Running on Natural Gas 2007–2015. This program calls for building 200 gasoline stations which would offer compressed natural gas, equipping all gasoline stations on federal and regional roads with natural gas fuel supplies and thus decreasing CO2 emissions by 960 thousand tons per year. We welcome inter-

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national efforts like the Blue Corridor project in Europe, designed to help having freight transferred on vehicles that run on compressed natural gas. Just as in any other sphere, people working on ecology issues must be professionals. Systematic educational courses for managers and specialists aiming to increase their qualifications in the environmental fields seem the way forward to ensure an adequate skill level. Gazprom is also doing its part in this area. Gazprom’s continuous vocational education system includes the scholarly research center for advanced training at the Gubkin Russian State Oil and Gas University in Moscow, the Industrial Research and Development Training Center in Kaliningrad, and the Gazprom Corporate Institute. Gazprom takes an open approach to working on environmental sustainability. We are willing to share our knowledge and achievements with anyone who may find them interesting or useful. We are active participants in Russian and international fora, conferences and exhibitions where we present the environmental aspects of our work and aspire to learn from our colleagues. In 1995, we were one of the first in Russia to adopt our own environmental policy. In 2008, an amended and advanced policy was approved. Gazprom’s responsibilities on preserving the environment and on environmentally-safe production, along with its ecological and social obligations, are becoming ever more important as the company grows internationally. There is a direct correlation between our company’s stable growth and new ways of using natural resources and preserving the environment for future generations.

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Ensuring a secure, reliable and “green” supply of the “Blue Fuel” Alexander Medvedev Deputy Chairman of OAO Gazprom Management Committee and Director General of OOO Gazprom Export

Natural gas is the cleanest hydrocarbon fuel known today. At Gazprom, we are dedicated to ensuring that natural gas is produced and transported in an environmentally-friendly and reliable way. It has been the cornerstone of our business for nearly 40 years, and is central to our long-term goal of securing the world’s energy and environmental future. According to the International Energy Agency (IEA), European imports of natural gas are expected to “rise continuously to more than two-thirds by 2030.” With regard to the United States, the Department of Energy estimates that natural gas consumption in the U.S. could increase from 634 billion cubic meters in 2004 to 733 billion cubic meters by 2015, a jump of over 15%. Our company is prepared to meet this growing demand. Russia possesses one third of the world’s known natural gas reserves, and currently one-quarter of the world’s production. Gazprom is the largest Russian company in the natural gas industry, with 60% of Russia’s proven reserves, 85% of its production, and 98% of its gas transportation network. Under Russian law, Gazprom has the exclusive right to export gas, which makes it responsible for one quarter of world gas exports. In producing and exporting gas to our customers in over 20 countries, we are committed to living up to our ecological responsibilities. The main objective of Gazprom’s strategy is to ensure stable economic growth while preserving the natural environment everywhere our facilities operate – all the while constantly assessing the effects of our projects on the environment. In 2007, Gazprom spent more than 12 billion RUB to protect the environment, an 8.4% increase from 2006. We have set up an Environmental Inspectorate whose goal is to improve the efficiency and mitigate the carbon footprint of companies in the Gazprom Group. In 2007, water consumption, water removal and waste of Gazprom subsidiaries were reduced by 2–3%. Pollutant emissions slightly increased by 1.6%, but above-level emissions were reduced by 70%. Our work does not end here. As Gazprom expands into new markets and diversifies its business activities, our focus will always be on continuing the reliable, secure supply of natural gas, and ensuring that the “Blue Fuel” is as green as possible.

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GAZPROM GROUP: CONCERN FOR ECOLOGY Aleksandr Ishkov Doctor of Chemistry, Professor. Deputy Head of OAO Gazprom’s Gas Transportation, Underground Storage and Utilization Department and Head of the Energy Conservatio and Ecology Department

In September, 2008, the Management Committee of OAO Gazprom adopted a new ecological policy for the company. Gazprom has always contributed to the improvement of the ecological situation not only in Russia, but also in European countries. The large city of Moscow as well as many major industrial cities of Russia experienced a dramatic improvement in the 1980s when they switched from coal and fuel oil to natural gas. The first supplies of gas to Germany resulted in a significant decrease in hazardous emissions from thermal stations and power plants, and then in a decrease in greenhouse gas emissions. Today, it is impossible to imagine the cities of Germany, Austria, Italy and other countries with a high quality of life without Russian gas. We’ve always thought of ourselves not only as a supplier of energy, but of cleaner air as well. This is why Gazprom declares the principle of sustainable development as its basic operating principle. The basis of our company’s strategy may be briefly described as follows: dynamic economic development alongside optimal rational use of natural resources and the maintenance of a favorable environment for future generations.

The parameters for the planned South Stream sea pipeline are similar. Alongside renewable energy sources, using Russian gas transported through a system of pipelines is in effect the only way to implement the ambitious plans to decrease greenhouse gas emissions in Europe by 2020. Beside the energy sector, the ecological situation is greatly affected by the transport sector. The Gazprom Group is actively working towards the conversion of various types of vehicles to natural gas. In Russia, the price of gas for automobile transport is 2–2.5 times lower than the price of petrol. Gazprom’s program envisages the construction of 200 gas filling stations in Russia, which will make it possible to decrease emissions of toxic substances by almost 1.5  mmt, while automobiles using natural gas will reduce greenhouse gas emissions by 25%. In June, 2008, Gazprom Management Committee’s Chairman Mr. Alexei Miller proposed to European shareholders of OAO Gazprom a project to create a large-scale network of automobile gas filling stations in Europe. The first stage may be the project of the “Blue corridor” from Rome to Helsinki intended for the use of natural gas (see the map below).

Cost-effective resource use and energy efficiency are the main components of Gazprom Group’s ecological policy. Every year, the company reduces its own use of natural gas for its technological needs and the losses of gas during its extraction and transportation by 3–5%. After the ratification of the Kyoto protocol, Gazprom was among the first Russian companies to begin tracking greenhouse gas emissions. We adopted a specific energy-saving program which will make it possible to decrease greenhouse gas emissions by 165 mmt until 2012.

In the future, it will be possible to create such corridors alongside European highways. This may become one more factor in cleaning up European transport, primarily with view to trucks and buses.

It will allow an additional annual export of 55 bcm of Russian gas to European countries, which will increase the share of natural gas in the energy balance and will be a significant help to Europe in meeting its obligations under the Kyoto protocol. The Nord Stream project is the most environmentally friendly way to supply Russian gas. Transporting gas to Germany through the underwater pipeline will produce only 1.47 mmt of СО2 compared with 2.06 mmt if it were transported overland or 14.48 mmt if it were transported in LNG form.*

Annual expenditures on environmental protection measures in the extraction and transportation of natural gas amount to about €250 million. In new projects, environmental protection measures constitute up to 5% of their total cost.

As part of our ecological strategy, we constantly decrease the negative influence of all the factors of economic activity upon the environment. OAO Gazprom is the leader in the realization of ecological programs in Russia.

* taken over an operating life of 50 years, transporting gas to Germany throudh the underwater pipeline will produce 200 million tonnes less CO2 than if it were transported overland. Sourse: Wintershall, 2009, Nord Stream Eco-Efficiency Analisis, January 2009, page 12

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Helsinki ST. PETERSBURG

Kaliningrad

BERLIN

warsaw

MOSCOW

ject to public consultations on different levels. During the earliest design stages, the opinions of international and regional ecological organizations are taken into account. By combining the economic and ecological advantages of natural gas, OAO Gazprom strives to become not only a global energy company but also a leader in the quest for sustainable development.

MINSK

MUNCHEN Florence

Rome

Large-scale gasification programs for Eastern Siberia and the Far East will make it possible to decrease the consumption of fuel oil in these regions and reduce greenhouse gas emissions by 25–30 mmt a year by 2020. The planned decrease of toxic substance emissions is very important for the delicate and unique ecological systems of Siberia and the Far East. By 2011, OAO Gazprom and its associated companies (primarily its subsidiary OAO Gazprom Neft) will increase the use of associated petroleum gas and low pressure gas to 95%, thus nearly ending the practice of gas flaring. The Gazprom Group has established a special company to tap the gases of the Kuzbass coal beds, which will significantly improve the ecological situation in the region through the use of the extracted gas in public utilities and the transportation sector. Gazprom employs a lot of ecological experts. We place great importance on cooperation with Russian and international nongovernmental organizations. All of Gazprom Group’s projects are sub-

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Carbon trading as a tool for low carbon solutions and the role of GM&T Vitaly Vasiliev

Chief Executive Officer of Gazprom Marketing & Trading London

Growing scientific evidence of the impact of human activities on climate change and a high economic price which may be paid by communities for inaction led governments to come up with an international regime aimed at combating the adverse conditions of climate change. Resulting carbon trading activities prompted the development of a new environmental market, which is expected to be valued at €400 billion by 2012. The Kyoto Protocol, which established the market rules, came into force in February 2005. The major feature of the Protocol is that it sets mandatory emission reduction targets for signatories, ranging from -8% to +10% of countries’ 1990 baseline emission levels. These targets aim to reduce overall emissions by 5.2% below the baseline during the first commitment period from 2008 to 2012. The Kyoto Protocol incorporates three market-based mechanisms aimed at providing flexible means of complying with carbon reduction targets. These are: i) International Emissions Trading, ii) Clean Development Mechanism (CDM) and iii) Joint Implementation (JI). These mechanisms were designed to help identify the lowest-cost opportunities for reducing emissions by allowing investment into countries where abatement costs per tonne of CO2 are cheaper than in industrialised countries. CDM helps developing countries to achieve sustainable development by permitting industrialised countries to finance emission reduction projects in developing countries. JI works in a similar fashion, except the investment is made in a country that has a binding emission reduction target. Additionally, a JI country willing to participate in carbon trading activities should fulfil certain eligibility criteria to ensure accurate calculation and recording of all carbon emission reduction units. Those units are recorded in the national registry and deducted from a JI country’s assigned amount units (AAUs).

ances (EUAs) which consequently cap the amount of CO2 that may be emitted into the atmosphere. Given that energy production and consumption is responsible for just over 80% of total EU-25 greenhouse gas emissions, the power sector shows the highest need for offsetting emissions, either by switching to a lower carbon fuels such as natural gas, or introducing energy efficiency measures at installation, reducing energy consumption and, hence, CO2 released into the atmosphere. Alternatively, they could purchase additional emission reduction units to fulfil their compliance up to the limit permitted by each Member State. Generally speaking, carbon prices are affecting investment decisions by power generators going forward both in terms of wanting to burn clean fuel efficiently and diversifying the technologies used.

Russia and the Kyoto Protocol Ratification of the Kyoto Protocol by Russia has so far been the biggest milestone in world action against climate change and is by far the most significant achievement of modern environmental politics, economics and law. To come into force, Kyoto needed to be ratified by developed nations that account for at least 55% of global greenhouse gas (GHG) emissions. After the USA pulled out, that figure could only be reached with the support of Russia, which accounts for 17% of world GHG emissions. Ratification by Russia was therefore critical in making the aspirations of Kyoto legally binding. Russia’s individual target under Kyoto is to maintain GHG emissions at 1990 levels up until 2012. However, years of economic decline and collapse of the USSR has resulted in Russia’s current emissions being lower than 1990, creating a surplus of AAUs more commonly known as “hot air”.

Demand for carbon credits is largely driven by the European Union Emissions Trading Scheme (EU ETS), which is the largest cap-and-trade system worldwide. A large proportion of the most carbon intensive installations corresponding to 45% of total CO2 emissions in the EU have received a free allocation of allow-

Russia’s surplus, without any further measures and policies, stands at 5.4Gt over the Kyoto period. It means that if Russia continues emitting more GHG that it currently does, it is still likely to comply with 1990 levels by 2012. However, this surplus could be quickly “eaten up” by the developing economy, leaving no room for manoeuvre in the future. Given that energy use per unit of GDP in Russia is estimated to be at least three times greater than for EU-15, Russia should be promoting energy savings and creating economic

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EU ETS and power sector

incentives for Russian businesses not to waste energy resources. Therefore, financial resources should be attracted to Russia through the JI mechanism as they would promote implementation of low carbon technologies and environmentally friendly industry practices.

our customers carbon neutral natural gas. The strength of our underlying gas portfolio provides the platform to trade across all energy commodities. We are continuing to build a multi-commodity trading desk offering gas, LNG, power, carbon and oil, which will boost our competitive edge.

The Russian JI Project Pipeline

GM&T has a unique position to bridge carbon positions of its customers in Western Europe and upstream CDM and JI project opportunities, which GM&T could derive from the Gazprom Group carbon project portfolio as well as Gazprom’s business partners across the globe. A combination of a natural position in the biggest JI market along with well-developed customer networks in the countries of high Kyoto compliance demand puts GM&T in an advantageous position to become the leading carbon market player in the world.

On 28th May 2007, the Russian government adopted the first set of provisions able to allow approval of JI projects and trading of carbon credits. However, those set of provisions have not been put into practice so far as no approval has been granted by the Russian government to a JI project. As of June 20, 2008 Russia has fulfilled eligibility requirements for trading carbon emission reductions. However, without an operational approval system no trades can be completed. Despite those hurdles, the Russian pipeline now consists of 84 projects expected to reduce emissions by 135 million t of CO2e by 2012. Given the global role Russia has as the dominant global gas supplier, it is not a coincidence that the majority of projects both by number and by volume are gas related. Methane avoidance at distribution pipelines tops the list with other types such as associated gas flaring, fuel switch from coal to gas and energy efficiency projects contributing to infrastructure upgrade and promotion of energy saving technologies.

We pay a great deal of attention to the development of post-2012 negotiations, with firm belief that a consensus between the developed and developing world will be found in order to safeguard a sustainable future for generations to come.

If 1.5 billion t CO2e of project-based emission reductions are transacted on the international carbon market, the Russian industries may receive up to 30 (billion Euro) in carbon revenues. The carbon market players, including GM&T are closely overseeing the development of JI market in Russia. We are certain that the Russian government will capitalise on the opportunities offered by the JI Mechanism and undertake all necessary steps to support and nourish this emerging market.

GM&T’s role in carbon markets GM&T, as a trading arm of Gazprom, aims to maximise the value of the supply portfolio by delivering competitive and innovative products to our energy customers in liberalising markets. Through our UK retail business we were the first company to offer

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Environmental Protection Policy – Economic Structural Policy Klaus Töpfer Professor and Honorary Doctor of Science, Germany

1. Environmental policies, and in particular those policies which focus on concrete and effective measures to tackle climate change, have finally become a topic of discussion in the most important circles – they now form part of negotiations and decision-making among heads of state and government. If one had to name all the spheres of German life to be declared a “matter of national importance” in recent years, it would be a long list. Of course the development of pensions and healthcare system spending, the minimum wage and the availability of kindergarten spaces are all key challenges for the future of an aging and shrinking population, which is becoming ever more heterogeneous as a consequence of globalization and worldwide migration flows. But what about environmental policy? In a best case scenario, it represents a wonderful topic of discussion for the ministers of natural resources and economics experts, accompanied by scepticism from ministers of the economy, business communities and even trade unions. Again and again, either directly or indirectly, questions arise whether an environmental protection policy might hurt a region’s industrial competitiveness. Does it not result in restrictions for the nation’s citizens? But there is a call to only take action once all the world’s nations become equally involved in the process, without any emphasis placed on their dramatically diverging initial conditions. According to this populist demand, every country represented in the United Nations must restrict its CO2 emissions by equal levels – regardless of whether it has spent years or even decades releasing enormous amounts of CO2 into the atmosphere for free, and continues to release 20 tons of CO2 per capita per year, or whether its per capita emissions stand at no more than three tons per year, or whether it pollutes the atmosphere with just one ton of CO2 per capita per year. The above figures are the exact actual data for the United States, China and India. One may thus conclude that it is the emerging nations, including India and China, that keep bringing us back to the principle adopted at the Rio de Janeiro summit in 1992: “A common, but differentiated responsibility” which called for a global, yet locally differentiated, approach to tackling climate change.

suggests that if we are unable to halt this process, a rise of 2°C will result in significant changes to people’s living conditions. Glaciers melting, a sharp reduction in the amounts of polar ice, changes in vegetation, desertification, violent weather that will become ever more frequent and severe – these are the measurable consequences of the climate change that is already proven to be caused by mankind. 3. Moreover, the latest scientific data confirms that the degree of warming we have seen so far does not reflect the true extent of climate change that has already been caused. There are also reports that air pollution caused by particles contained in the aerosols, primarily in Asian countries (China and India), has resulted in a slowdown of the climate change process. Therefore, the successful clean-air policy that is so urgently needed to ensure the health of these regions’ populations would simultaneously result in an acceleration of the warming process itself. Taking this effect into consideration it becomes clear that the world is already facing harmful climate gases that may cause temperatures to rise by more than 2°C. 4. These scientific findings clearly show that the so-called “three D strategy” is completely irresponsible: “Deny” the facts; “Delay” specific actions and measures; and, consequently, “Do nothing.” People across the world can no longer accept this strategy, which would lead to the climate change process crossing that threshold at which we will be able to tackle it with economically justifiable costs and technical ability. In a detailed study commissioned by the British government, former World Bank Chief Economist Sir Nicholas Stern calculated the critical cost of a climate change process that has gone out of control. However, it is essential to be conscious of the following fact: some of the damage caused by climate change is already irreparable and needs to be minimised. The developing nations, which are bearing the brunt of this unavoidable change, have neither the financial nor technical means to correct it and, justifiably, are expecting support from the industrialized nations.

2. The developed nations’ argument was severely hurt by data from the Intergovernmental Panel on Climate Change. Open to scientists from across the world, this scientific research association, which was created to study the causes and factors affecting climate change, presented powerful evidence that CO2 and other gases contained in the atmosphere are the real cause of global warming. Global average temperatures were shown to have risen by about 0.8°C. There is striking evidence that this relatively small global warming has already had severe effects on the environment. This

5. This is evident: we cannot afford any further delays in implementing an effective climate change policy. Certain economic difficulties cannot warrant the delay or substantial weakening of an environmental protection policy. However deep the effects of economic crises and critical times may be, they are rectifiable, albeit with significant negative consequences for many people. As we see today, an almost deliberately ruined global financial system is being rescued with the help of the guarantees of billions of dollars. But we will

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never be able to regain control of a ruined planet or a climate change process that has gone beyond its ‘tipping point’. The effects that climate change will have on future generations are unpredictable. Climate change will lead to the destabilization of societies and substantial migration flows across the globe. On those grounds, an effective and credible environmental protection policy is a crucial instrument of preserving peace in our time. 6. A successful and consistent environmental protection policy is necessary to safeguard people’s living conditions and their peaceful development. An energy policy that provides the utmost support to an environmental policy represents a highly profitable investment in the future. An increasing demand for energy from a growing world population and global economy – an economy that simply must undergo internal reforms that are urgently needed to overcome poverty in the world’s emerging nations – can no longer be met by fossil fuels such as coal, oil and natural gas alone. However at this stage more than 70% of the world’s energy demand is met by fossil fuels. Recent years have shown that the surging demand for energy is significantly outpacing supplies. The latest changes in fossil fuel prices cannot hide the fact that this correlation between supply and demand will become even more acute in the future. This will substantially affect energy security and competitiveness in various economies. For this reason, further global economic growth will need a diversification of energy sources and an almost revolutionary improvement in energy efficiency. Achieving this will be only possible with the introduction of progressive technologies to our energy markets. Accordingly, investment in the development and utilization of non-fossil fuels – in particular renewable energy sources – is a prerequisite of any environmental policy. This is equally the case for intensive research into ways to increase energy efficiency.

7. Environmentally friendly and low-carbon energy supplies, as well as the efficient utilization of our growing energy demand, offer tremendous prospects for the German economy. The introduction of new energy products to the market and taking a leading role in the development of energy saving technologies will create new areas of production and additional jobs. The promotion of such a modernization in energy policy, focusing on supply and demand, is an effective tool for overcoming economic crises – which will also be of crucial importance on a global scale. It is clear that a tremendous wealth gap still exists between people in the world. Ever since the days of the Rio de Janeiro Summit in 1992, the ‘Rio Principles’ include the “right to development” that applies to all societies and people across the globe. It is essential to eliminate poverty and existing wealth inequalities if we want to ensure our planet’s peaceful development. “Development is the new name of peace,” Pope Paul VI prophetically noted in his “On the Development of the Peoples” (“Populorum Progressio”) address. The Nobel Laureates invited by Doctor Schellnhuber to the Potsdam Institute for Climate Impact Research had every right to emphasize particularly this two-fold challenge. It is essential to prevent further climate change, without hindering the development of a major part of the world’s population. Combining these two goals is the fundamental challenge for our world.

The focus of these studies must include energy transportation, particularly on ways to transmit electric currents. New solutions in the area of high-voltage direct current transmission technology are opening new prospects for the transmission of electricity over great distances, which is currently inefficient. Decentralized power generation places different demands on power grids than those they have to meet today. Further, it is necessary to increase substantially the volume of research conducted into energy storage, particularly in batteries as well as the storage and utilization of hydrogen. In addition, there is an emerging need to establish a direct link between the consumers and producers of energy by using intelligent IT solutions. So-called Smart Grid research and development projects are now a priority. They have already reached a development level that permits large-scale pilot projects. Their universal implementation will help save energy and cut costs while creating new opportunities in the job market.

8. In order to achieve the transition from energy supplies, which are over 70% based on fossil fuels, to low-carbon supplies, the individual energy sources must make different contributions. It is undeniable that, of the fossil fuels, natural gas is the most favourable in terms of the CO2 emissions involved in power generation. It is therefore rational to explain how carbon emissions may be reduced by using gas in highly efficient power generation installations. Close cooperation between the power generation industry and builders of power plants is crucial. A transition to new levels of efficiency has already been achieved. Further efficiency improvements are possible through the introduction of new technologies, mainly by a consistent use of tri-generation. It should be further stressed that in its material application, gas plays an important role in the value creation – especially in the chemical industry. For this reason, investments in a reliable gas supply system and the efficient utilization of energy – in both its power generating and material use – are key to an environmental policy in times of transition to a sustainable energy supply structure. At the same time, gas can clearly gain added significance for clean coal technologies. The utilization of clean coal will, if only because of its availability in fast growing developing nations, require significant research and the development of practical technologies in the industrialized nations. At the same time effective use of the various fossil fuels could make an important contribution to the transition phase of our environmental protection policy and help ensure world economic stability.

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Natural gas, the ideal fuel to help develop renewable energy sources and enable constructing buildings with very low fuel use Marc Florette Research & Innovation President Gaz de France

In France, buildings consume 42.5% of the total energy volume and account for 23% of greenhouse gas emissions. The housing construction sector has a huge potential in reducing energy consumption, and politicians are putting high stakes on reducing demand for energy resources to provide Factor Four.

Grenelle Environment Round Table Proposals: a breakthrough in new construction and unprecedented scale of thermal modernization of existing buildings

New construction is already regulated by stricter and stricter thermal requirements, however, these requirements have only recently begun to be applied to old buildings.

Ambitious proposals of Grenelle Environment Round Table in the field of decreasing the energy use in buildings should be realized taking into consideration the comfort and quality of air inside the building. This will be achieved by means of effective ventilation (in particular a dual air stream recuperating heat from expelled air) and also acoustic qualities of the building. Finally, it will be necessary to provide inhabitants with simple and practical control facilities aimed at optimizing the operational cost.

The market for repair works has especially great potential value, as it represents 99% of stock, and 3/4 of buildings. However, technical specifications are most essential to already existing objects, as it is a question of not only replacing systems, but also about strengthening building’s insulation, while simultaneously preserving good ventilation. Increasing building efficiency demands development of pioneering global concepts for new construction or modernization. In this context, Gaz de France is promoting a “bioclimatic concept” which optimally adapts a building to its environment and promotes a decrease in heating energy consumption and optimization of comfort during the summer periods. This global concept includes interaction of all building construction chain factors which did not exist before. The situation becomes more complicated because the variety of energy sources existing in a building will increase. Hence it will not only be gas and electricity, but also solar energy, that is more and more in demand, and photoelectric solar energy to be used for the production of electricity. All these energy sources should coexist, reduce the cost of investments and provide good returns. If at present, the construction of a building with very high power efficiency means a rise in cost of 10–15%, the cost will be partially compensated during its life cycle (i.e. construction, operation and demolition).

There are also other requirements to support the efforts of those involved. The regulation for thermal specifications of already built buildings will be officially applied to areas exceeding 1000m2 and with modernization work exceeding 25% of the total value of the building built since April 1998. However since July 2007 this decision concerned only the replacement of power supply systems. Diagnostics of energy savings are also added at the time of the sale or rent of the real estate object. This are good means to stimulate the tenant or to allow him or her to evaluate his building in terms of energy savings, and also a way to supervise the level of building legislation application. However, two conditions are added to this: updating these means on a scientific basis with the purpose of understanding the real power efficiency of various systems, and training how to use these various systems.

Natural gas: the most efficient fuel in terms of CO2 in comparison with other non-renewable energy sources In this context, natural gas provides efficiency which is required from various points of view. First of all, this is the fuel producing least greenhouse gases among all types of mineral raw materials used for power generation, and it directly challenges heating by means of electricity.

An advantage-trio – meaning a building corresponding to bioclimatic criteria, with good insulation, equipped with a highly effective gas heating system, combined with renewable energy sources provides an answer to forthcoming changes in French energy policy suggested by the Grenelle Environment Round Table.

Indeed, heating with natural gas generates less greenhouse gas emissions than direct electric heating. This in fact produces a corresponding amount of electricity generated by the French or European thermal power stations which emit a lot of СО2. These power stations emit from

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400g СО2 per kW/hour (the most effective, with a combined gas cycle) and up to almost 1000g СО2, in the case of coal-fired power stations. The contents of СО2 per kW/hour of electricity produced for provision of the electric heating corresponds to approximately 600g СО2 per kW/hour of electricity. For comparison, we can say that natural gas used for heating emits approximately 230g СО2 per kW/hour.

However, despite the fact that condensation technology is already quite developed today, it needs technical improvement in two key aspects. First is the concept of modulating heat at a lower capacity to decrease energy use of buildings, and secondly, perfection of technical solutions in removing combustion products in re-erected and existing collective buildings.

In addition, natural gas allows evolutionary solutions which will take various forms in the future: condenser boilers and mixed systems using thermal sun energy with natural gas are already widespread on the French market; combined heaters – electric generators and gas thermal pumps provide the opportunity for innovative solutions with a notable increase in energy savings. All these solutions are intended for efficient supply of energy needs at existing buildings, and simultaneously provide answers for ambitious aims of achieving a level of efficiency proposed within the framework of the Grenelle Environment Round Table.

Electric generator heater: soon to appear on the individual consumer market

Condenser boiler: it is already a highly effective solution to problems in preserving the environment

The heater designed for the private market, with an electric generator and Stirling motor develops 1kw of electricity (kWe) per 14 or 28 watt of heat (kWth). It would cover, 100% of heating and hot water supply needs, and also a part of electricity needs for standard habitation.

The condensation technology provides an efficiency increase of 10–20% in comparison with traditional boilers and allows the achievement of a very high level of standards namely HPE (High Energy Performance), THPE (Very High Energy Performance) and even BBC (Low Energy Consumption). The last standard was put forward by the Grenelle Environment Round Table for year 2012 (50kW/hour/m2 per year).

Such heating devices can be wall or floor-mounted, and provide the user with significant financial savings, allowing a reduction of 10–15% of an energy bill. As for condenser heating devices, they provide excellent efficiency, and remain in the range of traditional tariffs and parameters. For even greater increase of efficiency, they can be combined with solar energy converters for the production of hot water for technical purposes.

This technology, whose market share is naturally increasing every year, answers the growing demands of consumers who are more and more concerned with environmental problems. Its development will not slow down in the coming few years, especially if one combines a condenser boiler with an individual solar hot water panel for the production of hot water for sanitation needs. Indeed, condensation combining renewable energy sources with solar energy in particular is very effective These technical solutions are already available on the market. Over 300 000m2 thermal converters of solar energy were installed in 2006, of which 220 000 in France; this is a growth of 83% in comparison with 2005 (source: EU-Observer) and proves the dynamic development of the sector.

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Development of technical solutions with the use of natural gas will allow moving further down the path of constructing buildings with very low energy consumption levels. An electric generator heater, capable of providing very effective heating with simultaneous production of electricity is one specific example of production that will be developed in the next few years.

Two or three manufacturers have already begun this development. They will present their models at the next international exhibition (Interclima 2008), before releasing them on the French, German or Dutch markets in 2009. Gaz de France heartily supports this technology and promotes it at demonstration events. Of forty installations intended for practical tests during the winter 2007–2008 period, eight have already been put into operation and the clients are very satisfied. In the long-term future, these heating installations could also be equipped with a fuel element. This is a very effective technology however it is still underdeveloped n in terms of costs and operational life.

39

Gas thermal pumps: systems using free-of-charge energy from the environment The thermal gas pump (PAC gaz) is a heating solution providing comfortable temperatures at home, partially owing to the use of free-of-charge energy, recuperated from the environment. This advantage gives it first class power efficiency, with high efficiency in primary energy, from 1.2 to 1.6, which corresponds to sizes from 3.1 to 4.2 in efficiency equivalents of electric thermal pumps (PAC). Therefore they will play their role in technical solutions of the future, aiming at more power efficiency. These products are already available in the market for public buildings, services and the housing sector and their capacity is 20–80kw. These products are usually reversible, and also allow comfort during the summer period if required. Certainly, an optimized concept of a building should include this compatibility. As for private houses, thermal gas pumps of small capacity – no more 10kw – are in the stage of development. They will provide an energy saving of 20–30% in comparison with a condenser boiler. Some builders are talking of industrial production prospects by 2010, and Gaz de France is working on releasing these products on the French market as soon as possible. Unfortunately, the fact that research in the field of traditional energy sources, carried out by power engineers and equipment manufacturers allows significant improvements in power efficiency that results in big savings for the consumer is not publicized often. In particular, this research allows gas technology to derive maximum advantage of the environmental qualities of this type of energy accessible on the broadest scale. This brief overview of technology for building construction shows a variety of solutions offered when using natural gas at the time when France and the European Union have started their fight against climate change.

40

New business growth opportunities for StatoilHydro Margareth Øvrum

Executive Vice-president for the Technology & New Energy business area

StatoilHydro has decided to increase its efforts regarding renewable energy sources. We already see our natural gas position as an important bridge to provide a cleaner energy future. By entering into renewables the main aim is to support StatoilHydro’s growth ambition by building a profitable and scalable business also within this energy sector.

Some of the drivers for new energy – climate change, security of supply and local pollution – also pose challenges to StatoilHydro’s oil and gas activities. We would like a strong company for the future realising material oil and gas developments, as well as growing renewable energy as a new growth area – creating value for the shareholders.

Such engagements both leverage our competencies and positions from the oil and gas sector, and can provide added value to our oil and gas position by broadening and deepening our market presence as energy producers in key consumer regions.

Can renewable energy oust fossil fuels?

Renewable energy development should not be regarded as a defensive measure, but rather as a business opportunity which is being enlarged by the climate change challenge. It is also a fact that the growth in the renewable energy sector has outperformed oil and gas stocks over the last five years. StatoilHydro’s renewable energy engagement can be grouped into the following main categories: Renewable power production Sustainable fuel production Our main emphasis is built around the areas: Wind and offshore renewables Sustainable biofuel The emerging nature of many new energy opportunities makes it difficult to “pick the winners” of the future. In order to build our capabilities and a long term portfolio we also develop some options in other selected areas like hydrogen, solar and geothermal.

Why focus on renewable energy The attractiveness of the renewable industry is increasing due to its large growth potential, increasing environmental concerns (especially related to the climate challenge and local air quality), high fossil energy prices and concerns related to security of supply. Even though renewable energy sources still account for a small amount of the total global energy mix, it is a fast growing industry, with significant value creation for investors, and also providing an increasingly important contribution to combat climate change.

44

Most new energy forms require some form of premium, or incentives, to be cost competitive for consumers today. However, the most developed forms of renewable energy, such as onshore wind and bio power, are already competitive with the expected costs of coal and gas power in many regions. Questions have been asked about whether a “subsidised” market is by nature inefficient. This challenge is important to consider, but it is often a question of how much time it takes to bring new technologies into a commercial market position. As technology is improved and market volumes increase we have realised strong cost reductions within both wind, bio power and solar. As for most other industrial sectors a certain innovation stimulus has also been required for renewable energy. Needless to say, the cost of CO 2 will also have an effect on the relative competitiveness of renewable energy. The countries with most efforts within renewable energy today are countries within the European Union as well as the US, with a combination of strong political ambitions, mandatory targets and a range of government incentives to bring forward the alternatives to fossil fuels. It should also be noted that fossil fuel markets are upheld by heavy regional subsidies at the consumer end. Still, in order to close the gap between cost of fossil-based energy and renewable energy, renewable energy need to become less capital intensive and more cost efficient (the energy cost is however normally free!). Focus will therefore be on achieving economy of scale, technology improvements, increased capacity of the installations, as well as improved solutions for operation and maintenance.

45

Considerations for renewable power production The global power demand is anticipated to grow further. The power sector is commonly considered as the sector with the largest opportunity to reduce greenhouse gas emissions at the lowest possible cost, mainly due to its large single point sources of CO2 output, with potential for both increased energy efficiency and introduction of renewable energy. Some of the key considerations for introduction of renewables into the power sector includes assessments of what renewables are available resources for the particular region – e.g. such as wind, solar, geothermal or other? Other important issues to consider are whether the renewable sources provide base load or peak load energy, whether grid capacity is sufficient and at what cost the renewable source can be phased into the energy portfolio over time. There is a wide variation in sources and potential, and today we can see countries like Denmark and Spain being supplied by more than 15–20% renewable energy from onshore wind production, whereas other countries like the UK and US have strong growth ambitions from a small initial renewable position.

StatoilHydro aims to build a business on sustainable biofuel production. At the same time, we wish to position ourselves for longer term growth in low cost next generation biofuel technology as well as hydrogen technology for the transportation sector. Biofuel provides an attractive business growth opportunity based on a large political demand for biofuel in transportation. Biofuels based on appropriate feedstock also represent a clear CO2 reduction opportunity within the transportation sector being achievable in the short to medium term. Ethanol produced from tropical sugar has a production cost competitive with gasoline. However, tariff barriers protecting agricultural interests in the US and EU represent a real economic challenge in moving these products into the market. Significant criticism has been raised regarding the sustainability of biofuels. This scepticism is a challenge to the business. StatoilHydro has developed internal policies for sourcing and production of biofuels to address these concerns and has a clear target of only entering into sustainable biofuel production. Development of new second generation biofuel technology is also expected to mitigate many of these challenges.

Offshore wind energy has a large potential and is a rapidly growing business. It is expected to be one of the most important tools for achieving Europe’s goal on CO2 emission reductions in the power sector. The main challenge to offshore power production is to bring the costs. StatoilHydro’s ambition is to become a leading offshore renewable energy provider based on a unique technology position. Offshore power production is based on our core offshore competence.

Sustainable biofuel production The transport sector is among the largest sources of CO2 emissions, with few alternatives to cut emissions than simply reduce driving. There is a political push for alternative fuels, partly driven by climate concerns, but also to a large extent by a desire for energy security and to support regional agricultural industry.

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47

The Geopolitics of Gas in Europe Philippe Copinschi French Expert

Gas, Energy of the Future Even though for many years, storage difficulties and high transmission costs have seen gas largely abandoned in favor of oil and coal, natural gas has reached its zenith today. Although gas still faces competition from other energy sources, the global consumption of natural gas has been steadily on the rise over the past 30 years or so. At the moment, gas is responsible for 20% of the overall global consumption of primary energy sources, compared to 16% in 1973. According to the International Energy Agency (IEA), the share held by gas will continue to grow and reach 24% by 2030. This trend is even more clearly pronounced in Europe. Alongside renewable energy sources, gas is one of the energy resources whose usage is growing fastest of all: European gas consumption has doubled over the past 30 years, while that of oil has remained almost at one level over the same period. Natural gas is primarily used in sectors requiring the production of thermal energy: the housing sector and commerce, to provide heat for premises and for kitchen use, in industry and electrical power production. The current rise in demand for gas is explained by a number of advantages enjoyed by this primary source of energy. First of all, the global reserves of natural gas are substantially greater than those of oil: at the current rate of production, the world has enough gas reserves to last for at least 60 years. In comparison, this figure stands at around 40 years for oil. Second of all, gas is a considerably less polluting source of energy than the other fossil fuels. Gas does not emit any dust or sulfur oxides when burning. And most importantly, it emits a substantially smaller amount of greenhouse gases than either coal or oil do. Thirdly, gas is perfectly suited for the combined production of electric power and heat: the energy efficiency of gas-fired power plants stands at about 60% for combined cycle power plants. In other words, their efficiency is substantially higher than that of traditional coal-fire power plants (45% at best) and nuclear power plants (just 35%). This ratio approaches 90% at co-generating plants that use natural gas to simultaneously produce both electric and thermal power. Fourth of all, the construction cost of gas-fired power plants (per kilowatt of installation) is relatively low in comparison to other types of power plants. Finally, the development of liquefied natural gas (LNG) technology is now permitting gas to be transported in tankers over great distances. This, in turn, is leading to the diversification of markets, for both the producers and the customers.

sions while at the same time ensuring that its economy is supplied with reliable and cheap sources of energy. A number of European Union nations are producing natural gas on their territories, including the Netherlands, Britain and Denmark (three exporting nations), as well as Italy and France. The European Union’s domestic production provides for about 45% of its total consumption. The remainder is imported, primarily from Russia, Norway and North Africa (Algeria and Libya). Holding the largest gas reserves in the world (around 30% of global reserves), Russia is for obvious geographic reasons a historical and privileged supplier for Europe. Despite the increased competition with other suppliers bordering Europe – countries such as Algeria, Libya and Norway (which do not, however, have considerable reserves) – energy ties between Europe and Russia are of strategic importance to both partners. Russian gas deliveries to Europe, which are based on long-term contractual relations, have never been interrupted, even during the days of the Cold War. In return, European gas sales provided Russia with the much needed capital ensuring its economic development. The gradual depletion of gas reserves in the North Sea is forcing Europeans to establish new supply routes. After all, the transmission of gas requires the construction of heavy infrastructure – either in the form of pipelines, or in the form of terminals for gas liquefaction (in producing nations) or regasification (in importing ones) when dealing with LNG transports. Numerous gas terminals are currently being built in all major countries of Europe (Britain, Spain, Italy, France, and so on). They are meant to ensure that over time, natural gas may be imported from more distant countries such as Qatar or the sub-Sahara nations in Africa. Eventually, around 25% of all the gas imported to Europe will arrive in the form of LNG.

For all these reasons, gas is an energy source that Europe will require in ever-greater amounts if it wants to achieve its political, economic and environmental goals: in other words, to reduce its greenhouse gas emis-

But the most strategic projects for ensuring future European supplies involve the construction of new pipelines – North Stream and South Stream  – that will be enable the delivery of gas from fields that are currently undergoing development. These projects are of critical importance to the longterm reliability of supplies in Europe, whose domestic resources (primarily those in the North Sea) are dwindling fast. It is essential that Europe ensures that these infrastructure projects are being realised, since they will guarantee Europe that the gas produced in Russia and Central Europe is destined for its own needs. In fact, this type of infrastructure places both sides (the suppliers and the customers) in a state of interdependence. On the other hand, that is exactly where things between Europe and Russia stand now: while 25% of the gas consumed in Europe is being imported from Russia, the gas that Europe imports represents 75% of all of Russia’s exports. Under such circumstances, both parties remain interested in observing their contractual obligations, just as Europe and Russia have always done.

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51

Europe and Russia, Historical and Privileged Partners

The Baltic Sea: an Ecosystem under Pressure Olof Lindén Professor, Sweden

The history of the Baltic Sea The Baltic Sea is a relatively young part of the Atlantic Ocean. During the last ice-age which ended only about 15,000 years ago, the entire Baltic basin was covered with a huge glacier. During the subsequent 5,000 to 8,000 years, the area where the present Baltic Sea is situated went through a series of developmental stages characterized by fresh water alternating with completely marine conditions, interrupted by short periods of brackish water. The Baltic Sea of today is a product of these dramatic changes and we should remember that the changes continue. Therefore we have to understand that some of the changes we witness today are in fact reflections of these ongoing geological post-glacial processes.

The Present Baltic The ecosystem of the present Baltic Sea is very much characterized by the brackish water conditions. This is also what makes the Baltic Sea unique among other marginal seas of the world. The salinity of the Baltic proper is about 8 o/oo in the south and 6 o/oo in the north at Åland. This is only about 1/5 of the normal Atlantic salinity. The salinity drops further north in the Bothnian Sea and the Bothnian Bay to on 2 to 3 o/oo in the far north. The salinity is an important ecological factor affecting the distribution of plants and animals in the area. Most aquatic organisms are either of marine or limnic (freshwater) origin. Few organisms are adapted to survive in brackish water conditions and the result is an impoverished ecosystem with a limited number of species either of marine of limnic origin. Hence in the Skagerrak there are about 130 species of fish, several thousand invertebrates and several hundred different algae. In the Baltic on the other hand there is only a fraction of this number, in total about 70 including fish, marine (macro-) invertebrates and algae. If the number of species in the Baltic Sea is comparatively low, the abundance of some of these species is instead very high. Hence plant species such as the bladder wrack (Fucus vesiculosus) and the eel grass (Zostera maritima) form dense mono-specific belts covering extensive areas of shallow seabed. Animal species such as the blue mussel (Mytilus edulis) cover practically all shallow hard substrates in the Baltic proper.

About half of this population lives in Poland. The urbanization rate is relatively high particularly in Denmark, Sweden and Germany with more than 80% of the population in the drainage area living in urban areas. The population is primarily distributed in settlements along the coast. The population density in the whole catchment area varies considerably from over 500 inhabitants in urban areas of Poland, Germany and Denmark to less than 10 per km2 in northern Finland and Sweden. All countries around the Baltic Sea are considered industrialized and during the last decade the industrial sector has grown significantly, particularly in the former East Block states. The industrial sectors with the most harmful effects on the environment of the Baltic Sea are the pulp and paper, chemical, mining and food processing industries. There is however major differences in the technologies applied in the different countries, which has an influence on how much the industrial sector affects the ecosystem. In contrast to the industrial sector, the agriculture productivity has decreased significantly in the last decade. The proportion of the land area used for agriculture varies markedly from over 60% in Poland to less than 7% in Finland. Generally non-point source pollution in the form of nutrients and organic matter originating from agriculture is having a very significant impact on the Baltic ecosystem. There is no doubt, human activities have very significant impacts on the Baltic Sea. Some impacts are more perceived than real – they may for example be very local or cause very limited effects, while others have direct impacts on the productivity and services provided by the ecosystem, endangering the survival of species and may pose a threat human heath. Below I will discuss some of the more serious problems that have a fundamental impact on the ecosystem of the Baltic Sea, affecting the productivity and the survival of species of the Baltic Sea. To this category I count the problem of eutrophication, the release of persistent pollutants and large volumes of oil. To this category we must also count overfishing which has fundamentally affected the ecosystem of the Baltic Sea.

Eutrophication

The Baltic Sea catchment area is about 1,720 thousand km2, with a population of about 85 million.

Eutrophication is the term used to describe the impacts of too much nutrients in an ecosystem. The high concentrations of nutrients result in increased production of plants plankton algae. When this excess of plant material dies and sinks into deeper water and to the seabed, the degradation process consumes the available oxygen in the water, thus leading to anoxic conditions. When the levels of oxygen approach 0 higher life can no longer survive. We have now a situation where between 1/3 and 50% of the deep water of the Baltic Sea is with-

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55

The Human Element

out oxygen. This has resulted in large areas of dead seabed to extend East, South and partly West of Gotland, in the Gdansk Basin and around Bornholm in the South. The eutrophication is no doubt one of the most serious threats to the Baltic Sea. The entire ecosystem is affected and the impacts are clearly visible. The factors leading to the eutrophication is not as simple as just excess release of nutrients. Marine sediments from the seabed of the Baltic Sea show that periods of anoxic conditions have occurred long before humans caused any significant release of nutrients. In addition, there are clear indications that much of the situation today was caused by nutrients and organic matter released long time ago. The very slow renewal time of the water in the Baltic Sea and the fact that much of the nutrients that are impacting the ecosystem comes from remineralisation processes, means that attempts to cut the emissions of nutrients will only show.

Persistent substances The input of persistent substances such as PCBs, various agrochemicals, and organometals (mainly mercury and tin) is a matter of serious concern both from an ecosystem standpoint and from a biodiversity standpoint. In addition, for some substances there is even a human health aspect. Fortunately several of the substances that caused sever physiological effects in seals and eagles during the last 30 to 40 years are now decreasing. However, we cannot say the danger is over. There are still substances such as organotin in far too high concentrations in the Baltic ecosystem. In addition, the environmental toxicologists are worried that new, so far undetected substances are present in the environment causing negative effects in various parts of the ecosystem.

Oil Spills There are hundreds of small oil spills in the Baltic Sea every year. These spills kill on average between 100,000 and 200,000 seabirds every winter. A potentially even greater threat to the Baltic Sea is the release of large quantities of oil. If a spill of 10 to 50 thousand tonnes occurs we can expect dramatic effects on for example the Baltic populations of several different species of seabirds.

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For some of these bird species, even the entire or a significant part of the world population may be at risk. Also, the oil will contaminate large stretches of coastline and the clean-up costs will very high.

Overfishing The modern fishing is another factor of human origin which is causing very drastic ecological effects on the ecosystem. The intensive industrialized fishing, particularly for cod has reduced the cod-stocks to a small fraction of what they were in the 1950’s. The cod is the most important top predator in the Baltic Sea and the overfishing of the cod has contributed to ecological effects such as the large algal blooms that now occur every summer. Some of the methods used in fishing are also highly destructive to the environment, in particular the bottom trawling. In contrast to the factors discussed above which all are causing dramatic negative effects on the environment of the Baltic Sea, there are a some human activities which from an environmental standpoint have limited or no impacts but that has given rise to a fierce debate sometimes full of emotions. In this category we have activities like dredging and the building of offshore wind power plants. The issue of the proposed Nord Stream pipeline has resulted in another debate characterized more by perception than reality. Based on the experiences from other seas where oil and gas is transported in pipelines on the seabed, the most likely scenario is that there will be only a temporary and local impact when the pipeline is deposited on the seabed. Some disturbance can be expected due to turbidity (silt etc in the water). However, such impacts are likely to be local and temporary. During the operational phase, based on observations, for example, in the North Sea and the Gulf of Mexico, we have no reason to expect any significant impacts of a pipeline on the seabed of the Baltic Sea.

Further reading regarding Baltic environmental issues: The Helsinki Commission web site has a long list of publications of relevance to the environmental situation in the Baltic Sea. (http://www.helcom.fi/publications) Baltic Sea – GIWA Regional Assessment 17 (Lääne, Kraav, Titova). UNEP, Nairobi. (www.unep.org/dewa/giwa/publications/r17.asp) Change Beneath the Surface, (Barnes) Swedish Environmental Protection Agency, (www.naturvardsverket.se/bokhandeln)

57

Financial Turmoil and the Impact on Energy Markets Coby van der Linde

Clingendael International Energy Programme (CIEP), The Netherlands

With the turmoil still raging on the international financial markets, the first impacts on the energy sector are beginning to be noticeable. International Oil Companies, IOC’s, are already delaying development of their marginal oil and gas projects, and other projects are bound to follow. The cost inflation of recent years is coming to a temporary end and with prices of almost everything, except perhaps credit, coming down, companies are trying to renegotiate contracts with their suppliers in order to match cost of development with the new price reality in the market. It is very difficult to determine if the current prices of oil and gas are reflecting the new demand and supply equilibriums or that it is, above all, a reflection of the current state of complete mistrust and uncertainty about the creditworthiness of counterparties, about the impact on the real economy and therefore demand for energy. The current sharp realignment of the international economy comes at particularly bad time for the international oil and gas industry. Although some consumer countries might welcome the easing of the energy prices after a period of increasing tightness of the oil, gas and coal markets, the recent price collapse also heralds the next round of price increases when vital investments in the energy value chain are seriously delayed. The relief felt in consuming countries can easily turn out to be very short lived, particularly when the investments in new production capacity are faltering. New concerns about energy security will resurface, while the ability to calm these concerns will have diminished due to the long lead times to adjust supply. Much depends on the ability of companies and governments to turn the tide of investment delays. Some producing governments can opt to maintain investments financed from their structural funds, but this is not a foregone course. Their integration in the world’s financial markets have increased the call on government assistance in other domestic sectors, and despite the long term importance of the energy sector for their economy, priorities with social-economic stability also apply to producing countries. The financial crisis is seriously reshuffling the world’s energy deck of cards and could negatively impact energy diplomacy in the years to come if the world fails to respond level headed.

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Italy: some 570,000 NGVs in 2008: a European record in the natural gas vehicles market that will be increased in 2009–2010 Sergio A. Rossi Italian analyst

Today, Italy is the biggest European market in terms of number of natural gas vehicles, or NGVs. Its fleet expected to reach at least some 570,000 vehicles by the end of 2008, with a network of some 780 refuelling stations throughout the country. In comparison, Russia hardly reaches 100,000 vehicles, Germany 70,000, Sweden 16,000 and France 11,000 natural gas vehicles.

Actually, the first deep methane field in Western Europe was discovered by Eni, the Italian oil and gas State Company, in June 1959 near Lodi in Lombardy (Northern Italy), while the second field discovered was offshore, in the Adriatic Sea, not far from the city of Ravenna. Nowadays there are offshore platforms in the Ionio sea near Crotone (Calabria Region), where Eni extracts 15% of the national consumption of gas, both for domestic and for industrial use, while the rest is imported, mostly from Russia and Algeria.

True, at a worldwide scale, Italy is ranking only 6th, after Argentina, Pakistan, Brazil, Iran and India, and before China, for number of total NGVs, but for number of natural gas passenger cars it outranks also India, raising to the 5th place. Moreover, most of these countries have either particular local conditions and facilities, such as Argentina and Brazil in South America, or specific differences from Italy in terms of quite larger populations and lower level of economic development, together with a significantly low purchasing power of their average consumers.

Top 10 World Countries for number of NGVs (Natural Gas Vehicles)

Of which Cars/ LDVs

Refuelling Stations (RS)

RS under construction

Monthly consumption Mln. m3

1

Argentina

1,721.1

1,721.1

1,784

n.a.

227,6

2

Pakistan

1,658.0

1,599.9

1,923

200

n.a.

3

Brazil

1,155.8

1.155.8

1,654

n.a.

222,6 n.a.

Country

NGVs Total (thousands)

The reasons why Italy is ahead of the pack, namely among the advanced industrialized countries, are at least three. The first, as observed by some experts (for example Pierre Fischer, of the Swagelok Company), is that “the Italian gas industry just made the most of easy access to natural gas. Thanks to a pipeline running from North Africa through Italy, gas companies saw a ‘natural’ opportunity to sell gas and they seized it”.

Number of NGVs (Natural Gas Vehicles) – Top 10 World Countries

4

Iran

826.6

823.9

519

680

5

India

821.8

315.2

325

60

52,

6

Italy

570.0

566.5

700

80

49,0

7

China

336,0

95.5

561

n.a.

193.3

8

Colombia

261.4

179.3

377

n.a.

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9

Bangladesh

180.0

46.6

229

13

21,3

10

Ukraine

120.0

7.0

224

n.a.

46,0

Sources: ngvgroup.com, federmetano.it, ilsole24ore.com, October 2008 Argentina 1721,1 Pakistan 1658 Brazil 1155,8 Iran 826,6 India 821,8 Italy 570 China 336 Colombia 261,4 Bangladesh 180 Ukraine 120

Sources: ngvgroup.com, federmetano.it, ilsole24ore.com, October 2008.

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- thousands of NGVs

The second reason is that the Italian gas industry companies started quite soon the production of methane gas and Gpl tanks, equipments and Kits, so that even private citizens, besides small auto services and repair stations, could install them in existing petrol fueled cars, converting into NGVs. And all this, with sizable savings on the current price of normal car petrol. Also the Italian automobile industry followed suit, although with some delay, starting to produce the first dedicated cars for natural gas, methane or Lpg fuels, or, as it is very trendy now, dual-fueled (petrol/gasoline and natural gas) cars, that may be switched instantly from one fuel type to another, and vice-versa. 86% of new methane fuelled cars in Italy are produced by the Fiat company of Turin, and particularly popular has been the natural gas version of the small Panda model. Well over 40,000 natural gas fuelled Pandas were sold only in 2007. In

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Since 2007 however, pushed by the new boom of NGVs sales, construction of new refuelling stations has been somewhat accelerated, with Federmetano claiming that the pace of construction has reached 2 new refuelling stations per week in 2008, with a forecast of reaching 780 stations by end-December.

A third and very important reason, is a whole range of State and regional incentives for drivers who will prefer to buy NGVs. And this because methane fuelled cars are judged today to be the most ecological type of vehicles, with the exception of the electrical propelled cars. Current codified incentives in Italy for methane fuelled cars include a bonus of 2,000 euros for buying vehicles with CO2 emissions below 120 grams/ Km. This sum is lowered to 1,500 euros if the car emissions are higher than the above mentioned level.

One of the problem to be solved for the further development of NGVs in Italy is the still inadequate national network of refuelling stations. While it has taken some four decades to build in Italy the about 700 stations now operating, in less than three years Germany has installed 800 refuelling stations (as October 2008) on its territory, serving a fleet of natural gas vehicles that is eight times smaller that the Italian one. Moreover, the present network of refuelling stations for NGVs is rather unevenly distributed on the national territory, and it is concentrated

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Other

Refuel-ling Stations 700

49,00

Oct.08

46,00

Dic.07

214

8

23,80

Mar.08

8,000

35,000 34,000 222

5

24,00

Dic.07

50,620

1,444

11,900

490

804

n.a.

10,76

Sept.08

40,255

40,000

200

20

35

56

15

7,00

Dec.07

Sweden

15,474

14,278

808

388



118

n.a.

4,90

June 08

8

France

10,150

7,500

2,000

650



125

15

n.a.

March 07

9

Switzerland

Dec.07

1

Italy

580,000 576,500 2,234

2

Ukraine

120,000

3

Armenia

101,352 69,971

9,831

19,626

4

Russia

95,000

18,000

5

Germany

64,454

6

Bulgaria

7

7,000

1,924

Last Update

80 n,a.

Buses

Monthly Consum-ption Mln. m3

Trucks



Under Cons-truction

An additional reason to switch from petrol/gasoline to methane, is that this type of vehicles is and will be currently exempted from several energy-saving and ecological measures that are often taken by central and regional authorities, such as Sunday bans of circulating in metropolitan cities or cities centers, alternate weekly days of allowed circulation for even or odd car number plates, etc.

1,166

30,500 29,500 59,000 224

Country

Moreover, regional laws, for example in Piedmont, decree that methane fuelled vehicles of categories Euro 2,3 and 4, will be freed from the automobile property tax for a five-years period, while “converted” or “transformed” vehicles will be free of tax for a 3 years period. This incentive is limited to cars with engines up to 100 Kw (136 Hp), but it will be available to car owners who have installed and certified the natural gas kit since November 2006.

Number of NGVs (Natural Gas Vehicles) – Top 20 European Countries

Cars/ LDVs

For what concerns particularly savings, today in Italy, according to data by Federmetano (the Italian Federation of companies distributing and transporting methane gas), for the same amount of km covered by a normal petrol/gasoline-fuelled car, a methane fuelled car will save up to 65%, while savings will be up to 45% in comparison to Gpl, and up to 50% on diesel powered engines.

more than 51% in Northern Italy, mainly in the regions of Emilia-Romagna (Bologna), Lombardy (Milan), Veneto (Venice, Trento) and Piedmont (Turin), followed by 31% in Central Italy, mostly in Marche (Ancona), Tuscany (Florence) and Lazio (Rome). Only 18% of refuelling stations are in the South, mainly in Campania (Neaples), Sicily and Puglia (Bari).

NGVs Total

addition to new NGV sold, it must be underlined that in 2006, the number of conversions of used cars, switched from petrol/gasoline to methane, was 38,400 and in 2007 it went also beyond 40,000.

5,830

5,638

138

54



97

6

0,66

10 Belarus

5,500

5,500







25

n.a.

3,00

Dec.07

11 Moldova

5,000

5,000







14

n.a

1,00

Dec.07

12 Turkey

3,056

2,564

492





9

1

0,40

July 08

13 Georgia

3,000

3,000







4

n.a.

n.a.

Dec.07

14 Austria

2,980

2,950

25

5



164

35

1,00

July 08

15 Spain

1,846

200

845

758

43

42

n.a

2,00

July 08

16 Poland

1,470

800

240

430



28

5

0,76

Dec.07

17 Czech Republic

1,153

880

215

35

23

33

8

0,31

Aug.08 June 08

18 Netherlands

858

740

95

15

8

16

10

n.a.

19 Latvia

500

30

10

187

273

4

n.a

n.a.

Dec.07

20 Greece

416

0

416

0

n.a.

1

n.a.

n.a.

Dec.07

Sources: ngvgroup.com, federmetano.it, ilsole24ore.com, October 2008

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Perspectives Perspectives for a further growth in Italy of the NGV market look promising. A first confirmation is that in 2008, a year of a worldwide and European economic and financial problems, overall car sales in Italy declined some 10% in the first 9 months, but sales of NGVs, on the contrary, increased by an estimated 30%, with specific sales of natural gas commercial vehicles soaring more that 50%. In mid-October 2008, Fiat has introduced the Grande Punto Natural Power, a new dual fuel (gasoline / natural gas) model, with a 1.4-liter 8v Fire unit, Euro 5 compliant. Range from its 84-liter natural gas tank is 310 km (192 miles), but the 45-liter (12 gallon) gasoline tank extends that to a total range of more than 1,000 km (620 miles). With natural gas, fuel consumption is 6.4 m3/100km, with CO2 emissions of 115 g/km. On natural gas, power delivered is 70 hp (51 kW), and top speed is 156 kph (97 mph), instead of 77 hp and 162 kph (100 mph) under gasoline. According to company sources, during the period January-August 2008, Fiat sold approximately 43,000 natural gas vehicles in Italy, compared with 33,000 during the same period in 2007. That means a projected sales level by Fiat of some 64,000 NGV by December 2008, and an overall Italian NGV sales figure of some 74–75,000 new NGV. But for 2009, Fiat forecasts it is ready to sell some 100,000 NGVs, which means over 110–115,000 vehicles of total Italian sales. In this way, Italy will approach fast, if not already overcome, the objective, supported at the II Word Fair of NGVs, of a national target according to which the clean fuel market share will be 6%, enough to consider NGV as a traditional fuel and not an alternative one. In fact, already in 2008, the share of NGVs in Italy (new sales plus converted vehicles) should reach for the first time at least 5.3–5.4% of the total yearly number of cars, with a share of some 53,3% for gasoline and 41,3% for diesel cars.

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Why are so many Italian motorists switching to gas? Angelantonio Rosato Italian journalist

Personal experience For many years now, I have been driving a bi-fuel car powered with gasoline and methane. I can say from personal experience that I have found several advantages of this car. The first benefit is the economy that derives from the substantial fuel savings. Then there is the advantage of moving freely in Italy’s major urban centers like my home-city Rome, where driving a petrol-powered car is very complicated. Driving gas-powered cars is possible even under the frequently-imposed traffic limitation days or on “ecological Sundays” when the circulation of other cars is banned. There are some who say that all of these advantages are offset by the lower MPG and power of gas-powered cars, especially in the winter months. But I can reply with certainty that the difference in the performance of gas and petrol-powered cars is marginal, especially when compared to the great savings on fuel prices. As for the winter argument, some people say that methanepowered cars work poorly during the cold season because of low temperatures. In reality, every Italian motorist who regularly uses a gas-powered car during the winter can testify that this is not relevant as Italy is known for its mild winter temperatures. In addition, bi-fuel models that operate on gasoline and methane have gasoline ignitions, so there are no serious problems when starting a car even at very low temperatures. The fuel supply automatically switches from petrol to natural gas once the engine warms up. But the most common stereotype is that methane is highly explosive and makes cars with such installations dangerous. Although methane is economic, ecological and has many others advantages it has to be stored in a particular way which creates certain fear among people. Some even think that a car with a methane installation parked in the sun is a ticking bomb! Some also believe that natural gas should be stored following certain and very expensive standards, while others still believe that parking of methanefuelled car in the underground garage is prohibited.

cylinders, the maximum allowable pressure is 200 atmospheres. As an extra measure of precaution these cylinders are tested at much higher pressures every 5 years. So even if the vehicle catches fire, the methane inside the tank will warm up increasing the pressure, but the strength of the cylinder will prevent the gas from exploding. Moreover, the cylinder valve automatically closes as the engine shuts down. In conclusion, methane is not only an ecological and economical, but also is one of the safest fuels for Italian motorists. Over the first five months of 2008, the registration of new methane-fuelled cars in Italy increased by 26.5% compared to the same period for the previous year. How can this growing interest be explained? Why are more and more Italian motorists switching to methane gas? The explanation lies in the combination of rebates and incentives which benefit the Italian consumers when they purchase a new car. For example, state incentives for methane-fuelled cars, incentives for reutilisation and manufacturers’ or dealers’ discounts add up to savings of up to 30% off the purchase price. But these incentives are not the only reason behind the boom in methane-powered car purchases, according to Italy’s Methane Auto trade magazine. Among a list of other advantages enjoyed by Italy’s consumers, two in particular stand out. The first is that methane is the cheapest fuel available, which is certainly a matter of crucial importance. The second is that methane is also the most environmentally friendly fuel on the market today, which benefits both the environment and the motorists, who now enjoy the additional advantage of avoiding traffic limitations that are being imposed in a growing number of Italian cities.

The final framework of incentives for 2008 is enclosed below

In case of methane leakage in a ventilated room, such as garages or ferries, the gas disperses into the environment without forming explosive mixtures because it is lighter than air. If methane is stored in steel or light-alloy

Under a Financial Company incentives package that went into effect on January 1, 2007, individuals and legal entities who switch their cars to LPG or methane within three years of their car’s registration date receive a 650 EUR subsidy. The amount is sent directly to the workshop or a concessionaire. This category also includes new vehicles purchased from concessionaires that are already equipped with LPG or methane installation but which have not been approved by the manufacturer to run on gas. As of January 12, 2007, a person has also been able to receive a government subsidy who convert their Euro 0 and Euro 1 vehicles to methane or LPG fuel. The subsidy amounts to 350 Euro for each conversion. Both subsidies, will be available until the allocated government fund runs out. In 2007, the fund had around 52 million Euro reserved. To access the money, one needs to apply for conversion at a workshop or a concessionaire who have agreed to join the program. The latter should do all the paperwork. The list of documents required is available from ECOGAS (toll-free tel. number 800 500 501). There is also an incentive available for people who purchase new cars – automobiles and trucks – that have been approved or even exclusively made for LPG or methane use. Drivers can benefit from a 1,500-Euro discount that is paid directly by the concessionaire. That discount grows to 2,000 Euro if the vehicle produces less than 120g/km of CO2. These benefits apply to sales contracts signed between 3/10/2006 and 31/12/2009. The cars must be registered before 31/03/2010. Both the 650-Euro equipment contribution and the 1,500-Euro discount for cars that meet certain requirements are added to the reutilisation incentive.

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73

In reality, however there is no particular risk of explosion comparing methane-fuelled cars with normal petrol-powered ones or those equipped with catalytic exhaust silencers. For many years now, methane-fuelled cars have been accepted at both underground parking lots and on ferries.

A list of cars and their gas supplies available to buyers in Italy [without bi-fuel GPL and LPG models] Cars

Price (Euro)

Citroen Berlingo 1.4 Multispace Methane

18.711

Citroen C3 Elegance Bi Energy M

16.801

DR Motor Company Dr5 1.6 16V (price stated at the sale point)

17.051

Fiat Panda 1.2 Natural Power Dynamic

13.861

Fiat Panda 1.2 Natural Power Climbing

15.651

Fiat Punto 1.2 Natural Power 5P

15.361

Fiat Dobl 1.6 16V Natural Power Active

17.471

Fiat Multipla 1.6 Natural Power Active

22.171

Fiat Multipla 1.6 Natural Power Dynamic

24.321

Fiat Multipla 1.6 Natural Power Emotion

25.631

Below, I include an example of an ad from one car company that advertises the advantages of gas-powered cars (prices as of today): XXXXXX model cars (Methane): This is a message for intelligent travellers: XXXXXX is now available for those who want to save money and drive even when traffic limitations are valid. It has an extraordinary boot space due to methane tanks located under the floor. The dual gasoline-methane fuel supply allows drivers to cover large distances without refuelling (310 km extra-urban cycle with a full tank of methane). Also, the car is environmentally-friendly because it reduces emissions by 23% and helps you to save money because of lower gas costs. So think, wouldn’t it be a pity not to have it?

FEATURES:

/ Engine volume 1242 cm3 / ecological level: Euro 4 /

maximum power CE: gasoline 44 kw (60cv) at 5000 cycles/min

Methane 38 kw (52cv) at 5000 cycles /min

Maximum engine torque CE:

Methane- and Gas-powered Cars New Nissan Qashqai 2 more space, 7 seats

www.nissan.it/Qashqai

gasoline 102 Nm (10.4 kg-m) at 2500 cycles /min

Methane 88 Nm (9.0 kg-m) at 3000 cycles /min

Maximum speed: Methane-powered cars: Cars

Price (Euro)

Mercedes E 200 NGT Bi-Power Classic

47.301

Mercedes E 200 NGT Bi-Power Elegance

49.218

Mercedes E 200 NGT Bi-Power Avantgarde

51.561

Opel Combo 1.6 CNG Methane Club

17.868

Opel Combo 1.6 CNG Methane Enjoy

18.948

Opel Zafira 1.6 16V ecoM Club

21.701

Opel Zafira 1.6 16V ecoM Enjoy

23.601

Opel Zafira 1.6 16V ecoM Cosmo

26.081

Renault Kangoo 1.6 16V Comfort B/M

18.206

Renault Kangoo 1.6 16V Luxe B/M

19.276

Tata Indica 1.4 GLX Bi Fuel Methane

11.149

Tata Indigo 1.4 GLX Bi Fuel Methane

15.163

Volkswagen Caddy Life 2.0 Ecofuel

21.304

Volkswagen Touran 2.0 Conceptline Ecofuel

23.751

Volkswagen Touran 2.0 Trendline Ecofuel

26.076

Volkswagen Touran 2.0 Highline Ecofuel

27.826

gasoline 148 km/h

Methane 140 km/h

Fuel consumption, Directive CE 1999/100: gasoline (l/100 km) urban 7.9 / Extra-urban 5.2 combined 6.2

Methane (kg/100 km) urban 5.3 / Extra-urban 3.5 combined 4.2*

CO2 emissions: gasoline 146 g/km

Methane 114 g/km

* – autonomy 270 km Turnkey (base) car price €13,910.00 (with fog lights, air conditioner, etc. = €14,810.00) + IPT (local taxes) = €196.00 Total payable = €15,006.00 The final price is calculated after the deduction of a €2,000.00 state subsidy for the purchase of a methane-fuelled car.

There are few models in total but they range across all vehicle types, including economy and singlevolume cars. Fiat leads by number of offers, followed by Tata and Volkswagen. The price list ranges from just over 11,000 Euro for a Tata Indica to almost 28,000 Euro for a Volkswagen Touran Highline and over 50,000 Euro for a Mercedes E-Class.

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75

Ecology and oil-and-gas production in the Arctic Anatoly Dmitrievsky Academic at the Russian Academy of Sciences (RAS), Director of the Oil and Gas Research Institute of the RAS

Vyacheslav Maksimov Deputy Director of the Oil and Gas Research Institute of the RAS

Nowadays, the word “Arctic” evoces a feeling of contained but stabile optimism among specialists involved in oil and natural gas production as it points to one of the potential directions of the sector’s development. At the same time, nobody in Russia turns a blind eye to the apparent difficulties in developing the enormous natural wealth of this still virgin region of the planet, nor to the potential risks for the environment. Gazprom deals with these problems very seriously, reconciling its plans with the recommendations of scientists. We present a short review of the ecological component of oil-and-gas production in the Arctic prepared by two leading Russian scientists who are specially engaged in solving these problems. The evolution of civilization will be inevitably accompanied by even more intensive intrusion into the world of sea waters and oceans. The development of oil and gas fields will proceed especially actively. Offshore fields account for 35% of the world’s oil production and 32% of the world’s gas production, and these shares will increase. However, one cannot rule out a negative impact on the water environment caused by humans: e.g., as a result of deviations from operating practices, organizational malfunctions or as a result of the naturally existing risk of equipment damage during the exploration, prospecting and development of oil and gas fields as well as the transportation and

processing of oil and gas.

Ecological risks are exacerbated by some natural phenomena. In this connection, it is necessary to consider the geodynamics of regions, to identify areas with low-density deposits taking into account the increased avalanche danger in these regions.

New theoretical, methodological, organizational and technological solutions serving as the basis for geo-ecological monitoring allow real-time collection of representative and trustworthy information about all significant changes in objects under study. Systematic organization and streamlining of the work helps to decrease total expenses of time and money, ensuring the efficient collection of informative data. Dynamic ecological models that can register a great number of factors in their interrelation and remote damages of influences in the framework of existing scientific knowledge should become the basis for ecological monitoring of the sea environment. The construction of such models requires real-time monitoring of a significant number of factors, intimate knowledge of biological processes, and an integrated approach to the ecosystem. As practice shows, prospecting and development of gas fields on the continental shelf usually involve the development and creation of regional ecological monitoring systems that can take into account the features of the given region. Therefore we need extensive databases on specific regions, as well as appropriate research technologies and equipment. The proposed approach on the basis of a new technology for continuous geo-ecological monitoring of water areas and the results of mathematical modeling makes it possible to assess the state of the ecological system alongside the development of the oil-and-gas complex, analyze ecological risk and calculate its dynamics. The Arctic Ocean and the Arctic shelf occupy a special place among the oceans of the Earth because of their extensive submarine permafrost zone, which is defined by two main factors: the negative temperature of benthonic layers of water (modern conditions) and the deeply frozen ground developed over past geological periods (Paleolithic conditions). The permafrost zone can be frozen (ice-containing) and unfrozen, marked by cooled mineralized waters and materials.

The creation of a uniform system for geo-ecological monitoring and simultaneous efforts underwater, underground, aboveground, above-water and from space is envisaged. Such monitoring work can be performed by equipment ranging from high-orbit technical complexes to mid- and low-orbit, aero-altitude, medium-altitude and helicopter complexes to above-ground, above- and underwater, and underground measuring points. Most of the information is received from aerospace subsystems. Above-ground, underground and above- and underwater researches are carried out on reference sites and their results are used in the testing of remote information.

The “cooled” sediments occupy the central, northern and southeastern parts of the sea surrounding Novaya Zemlya. The contours of this zone almost coincide with the zero isotherm annual temperature of the seabed. The Shtokman field, like many others, is situated in the zone of ground deposits with negative temperatures.

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79

In the Pechora Sea, the submarine permafrost zone coincides with the lenses of the residual degrading long-term permafrost at depths of 40–100 m below the sea bottom. The permafrost is discontinuous in character.

In terms of engineering and geology, the frozen and gas carrying hydrate deposits represent a category of materials of a special structure, condition and properties and require a specific approach for the development of the oil and gas resources of the Arctic water areas. In particular, these features should be considered when solving such important practical questions as building fixed, ice proof platforms on the Arctic shelf as well as building and operating pipelines and other facilities. It is also necessary to take into account possible disturbances of the natural thermal conditions in the top sedimentary cover during well drilling and operation. One of the possible risk factors and negative consequences of the development of gas deposits is surface subsidence above the field as a result of decreasing initial formational pressure in the producing layers and their deformation, which is well studied in world practice. Surface subsidence is also possible due to the unfreezing of benthonic gas hydrates. Estimating the extent of seabed surface subsidence is especially important since the requirements for the conservation of earth resources as well as the reliability of well operation, sea platforms and underwater modules are stricter for offshore fields. All this shows the need to thoroughly study and forecast possible human caused complications from the point of view of the safety of offshore drilling rigs on the Arctic shelf. Russian scientists and technical experts are deeply engaged in tackling this issue.

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127006, Moscow, Strastnoy Blvd., 9. Telephone: +7-499-503-6161, Fax: +7-499-503-6333. E-mail: [email protected]; [email protected] http: www.gazpromexport.com