Interview

Vasile Carstea, GM of Depogaz, Reveals How Romania Can Contribute to the Creation of a Regional Energy Hub

Depogaz, the main underground natural gas storage operator in Romania, holds a share of approximately 90.23% of the total active storage capacity of the country.

The ample discussion with Vasile Carstea – General Manager shows how Depogaz – by modernizing the existing capacities and creating an increased degree of flexibility, contributes to supporting a competitive national market and to developing the energy markets and regional energy security mechanisms.

 

Dear Mr. Vasile Carstea, you graduated from the Oil and Gas Institute of Ploiesti in 1984. How did your career evolve since then?

Vasile Carstea: I graduated from the Oil and Gas Institute of Ploiesti in 1984, as engineer, specialized in Well drilling and exploration of oil and gas fields. From a professional point of view, I started my activity as trainee engineer in 1984, within SPGN Ploiesti, the gas production branch. At the same employer, I held one by one the positions of executive site manager (1985-1990), head of department (1990-2001), then production manager (2001-2005), branch manager (2005-2018) and general manager of storage subsidiary (since 2018). I mention that the entity operating the underground storage facilities has repeatedly changed its name from 1984 up until now.

In April 2018, following the separation of the storage activity from SNGN ROMGAZ, according to EC Directive no. 73/2009 and to the Electricity and Gas Law No. 123/2012, Art. 141, Depogaz Ploiesti became a natural gas storage operator, the sole shareholder of the company being SNGN Romgaz SA. The selection procedure was also started at that time according to the provisions of GEO 109/2011 on corporate governance of public enterprises, following which I was selected both Member of the Board of Directors and General Manager of Depogaz, with a mandate contract for 4 years.

 

What are the most important aspects relating to the activity carried out by Depogaz?

Vasile Carstea: The underground storage facilities have the role of ensuring the safety of gas supply to consumers during the cold season and of increasing the efficiency of the national gas transmission network. At the same time, the underground storage of natural gas has the strategic role of ensuring gas supply from the underground storage facilities, in cases of force majeure (calamities, earthquakes and other unforeseen events).

As known, in Romania, the underground gas storage facilities are developed in depleted reservoirs, which, following extensive research studies, have proven to fulfill the technical conditions to be transformed into underground storage facilities. The performance of these facilities is greater as energy stored is higher.

Depogaz, a subsidiary of Romgaz, carries out the natural gas storage activity based on License no. 1942/2014, issued by the National Regulatory Authority for Energy (ANRE), pursuant to the Electricity and Natural Gas Law no. 123/2012, as amended and supplemented, as well as based on the provisions of ANRE Order no. 34/2013, as amended and supplemented.

Through its activity, Depogaz aims at permanent supply of quality services and contributes to the improvement of flexibility in the gas supply process, in conditions of safety. Through the investments planned, Depogaz will contribute both to the development of local and regional energy markets and to achieving a regional energy hub.

 

Currently, in Romania there are 6 underground gas storage facilities, of which 5 operational. Please mention some significant (technical) data about them, as well as their total storage capacity. What is the ratio between the working gas volume and the annual consumption, lately, compared to European values?

Vasile Carstea: In Romania, Depogaz used to operate 6 underground gas storage facilities, of which currently 5 are operational. Research studies and measurements showed that the sixth storage facility, Cetatea de Balta, was not a ‘tight trap’, therefore it was decided to transform it into an extraction reservoir. The other 5 storage facilities are operational and have the following technical characteristics:

  • Bilciurești is the largest storage facility, having a capacity of 1,310 billion m3.
  • Sarmasel currently has a capacity of 0.9 billion m3. Depogaz already has in progress a project for increasing the storage capacity for this facility to 1.550 billion m3. We plan to achieve this increase in capacity using also funds from the European Union, funds which are granted for projects of common interest. For this purpose, the project is already included in List 4 of Projects of Common Interest at the European Commission and, concurrently, we have initiated discussions with the European Investment Bank to cover the additional costs necessary to implement this project.
  • Ghercesti is a natural gas storage with an operational capacity of 0.15 billion m3, but has the infrastructure built for a capacity of 0.6 billion m3. In the following period we plan to modernize the storage by building a compressor station, which is already subject to a feasibility study in progress, the final purpose being to increase the operational capacity of the storage facility.
  • Urziceni storage has a capacity of 0.36 billion m3. This facility benefits from a new infrastructure, commissioned in 2014.
  • Balaceanca has a capacity of 0.05 billion m3 and, due to its geographical position, ensures safety of gas supply for the entire ring of Bucharest.

The total capacity of the 5 underground storages is 2.76 billion m3/cycle. In terms of gas injection, currently Depogaz injects 20 million m3/day, while the maximum withdrawal capacity is 29.2 million m3/day.

We have proven to have a high technical capability in the injection process, in the current storage cycle, 2019-2020, we have been able to ensure an injection flow of 22.5 million m3/day.

As regards the ratio between the volume of working gas stored and the annual national consumption compared to European values, I can refer to data published for 2018, when, in Romania, this ratio was 24.8%, compared to the European level where the ratio had a value of approximately 25%.

 

What is the situation of quantities injected/extracted for 2019?

Vasile Carstea: In the current storage cycle, following requests received from our clients, Depogaz has decided to extend the injection activity from November 1st, 2019 until December 31st, 2019. Clients and beneficiaries of our services have chosen the injection services as a result of special weather conditions, respectively temperatures way above the normal monthly average, which has determined a decrease in gas consumption at national level and allowed the existence of necessary gas sources to be injected.

Until the end of the extended injection cycle, 2.58 billion m3 of natural gas were injected in the 5 underground storages operated by Depogaz, this quantity representing a filling level of 92%. We have, therefore, promptly responded to market requirements, we ensured the stability of the national transmission system and we offered flexibility in the gas supply process to all customers on the domestic market.

As operator of the underground gas storage facilities, through its technical capability, Depogaz provides services that support the continuous functioning of gas supply to national consumers. A proof in this regard is, for example, I would like to remember the critical period occurred in March 2019, when due to very low temperatures compared to the usual average for that period, Depogaz intervened with the gas surplus needed to support the gas supply activity in optimal technical conditions.

 

What are the risks of the underground gas storage activity in caverns or in depleted reservoirs and how can they be prevented?

Vasile Carstea: The most important characteristic of any storage facility is the capability to hold natural gas. This is essential for both facilities in depleted reservoirs and those established in salt caverns. Any storage facility whether in salt cavern or in depleted reservoir, should have the capability to hold the natural gas in order to prevent the loss of significant quantities of energy stored. As previously mentioned, the underground storage facilities operated by Depogaz are built in depleted reservoirs, formations that have already been exhausted of most of their recoverable oil and natural gas and have been transformed into storage facilities.

Depogaz currently has an interest in developing underground gas storage facilities in salt caverns. For this purpose, preliminary discussions have been started with the National Agency for Mineral Resources so that we can identify, on the territory of Romania, potential salt caverns that could be transformed into underground gas storage facilities.

From a technical point of view, we have already identified a salt cavern that could be of interest for us, therefore it will be the future subject of a detailed analysis, all the more so as it is near the route of BRUA pipeline. This potential future natural gas storage could be a viable solution in discharging gas from BRUA pipeline, all the more so as we take into account the natural gas exploration in the Black Sea, a new important future source of gas to be taken over into the national gas transport system. This will contribute, as previously mentioned, to the importance of Depogaz’s role in achieving a regional energy hub.

 

Over the recent years, a trend of reducing storage has been noticed at European level. How does it affect the security of supply and investments in energy production?

Vasile Carstea: Indeed, at European level this trend has lately been to reduce natural gas storage, therefore this subject has been highlighted and discussed at regional level. For this purpose, a number of studies were launched at European level, on the role that natural gas storage has in the European energy system.

The underground gas storage facilities have already proven along all this time that they are key components of this complex system of gas infrastructure, as they allow covering a large part of demand, they offer seasonal flexibility and also, they allow the energy system to cope with conditions of cold weather or certain crisis situations.

One of the latest studies covering the importance of gas storage infrastructure was organized by Gas Infrastructure Europe in collaboration with Artelys, a consulting company from France. The main objective of the study was to understand the cross-sectoral implications of a lower gas storage capacity, and to assess the capacity value of gas storage for the electricity sector. The study performed a quantitative analysis of the cross-sectoral impacts of a reduced gas storage capacity for the ability of the electricity system to meet the demand

The results of the study support the importance of underground storage facilities and their essential role in the entire energy system, proving the clear value and importance of underground gas storage facilities from the point of the electricity sector.

The simulations carried out in various scenarios considered in the study demonstrated extremely interesting and important aspects, namely that the presence of operational storage facilities prevents the occurrence of additional investment costs and operational costs for generating electricity; and more, that gas storage assets reduce the variability of power prices.

The study shows that, from a financial point of view, underground storage facilities allow the optimal use of the resources available in the energy system. In conclusion, the results of the study highlight the essential role of natural gas storage as promoter of the energy transition.

16 European storage operators from 12 European countries, including Depogaz, contributed to this study.

 

In the context of energy needs at the level of Romania and also of the European Union, which are the most important projects carried out by Depogaz? What are their benefits?

Vasile Carstea: The Investment Plan of the Natural Gas Storage System for the period 2019-2023, prepared in accordance with the provisions of the Electricity and Natural Gas Law No. 123/2012 and with the objectives proposed in the Energy Strategy of Romania 2019-2030, with an outlook to 2050, answers the requirements of the European energy policy on ensuring safety in gas supply, increasing flexibility of the gas storage system and creating the integrated natural gas market at European Union level. The directions of development of the storage system of Depogaz are: increasing the total storage capacity from 2.76 bcm to 4.2 bcm, increasing the daily injection capacity from 20 to 30 mcm and increasing the daily withdrawal capacity from 29.2 to 42 mcm.

As an illustration, on a cold day in Romania, the natural gas consumption is around 70 mcm. Having as reference the source of domestic production of approximately 30 mcm of natural gas/day, we can easily conclude that an increase in the daily withdrawal capacity from storage activity to 40-42 mcm would make Romania independent from an energy point of view.

For this purpose, Depogaz aims to implement the following investment projects:

a) Upgrading the infrastructure of the gas storage system at Bilciuresti Storage

The project aims to increase the daily gas delivery capacity from the Bilciuresti storage facility to 20 mcm and to ensure an increased degree of safety in operation. The project aims to modernize the separation unit, measurement and drying facilities of the Bilciuresti groups, the systemization and modernization of the suction/discharge piping system and the modernization of the cooling system at the Butimanu compressor station. We plan to upgrade 19 injection/withdrawal wells, drill another 4 new wells and a new pipeline (11 km) for natural gas transport between Bilciuresti storage facility and Butimanu compressor station.

To avoid disrupting the gas storage activity, the project will be implemented gradually, the design stage following to be completed in 2020. The schedule of the project estimates 2025 as the commissioning date. The estimated total value of the investment is EUR 59 million.

b) Increasing the underground gas storage capacity of Ghercesti storage facility

The project aims to upgrade the infrastructure of Ghercesti gas storage facility to ensure operating conditions for a capacity of 600 mcm/cycle. The project includes a new gas compressor station, expansion of gas drying and metering facilities, upgrading of 20 injection/withdrawal wells and setting up an inactive gas stock. The project is estimated to be completed in 2026, the estimated total value of the investment being around EUR 122 million.

c) New underground gas storage facility in Falticeni

The project aims to develop a new natural gas underground storage in north-eastern Romania (Falticeni area) by transforming one or several depleted reservoirs into an underground storage. The new storage facility will have a total storage capacity of approximately 200 mcm/cycle with an injection capacity of approximately 1.4 mcm/day and a withdrawal capacity of approximately 2 mcm/day.

The project will consist of a compressor station, gas drying and metering facilities, and technological installations for injection/withdrawal wells, drilling of injection/withdrawal wells, setting up the cushion gas and interconnection to the NTS.

The investment will amount to EUR 80 million.

d) Increasing the underground gas storage capacity of Sarmasel facility

The project aims to develop the existing underground storage facility in Sarmasel from the capacity of 900 mcm/cycle up to 1,550 mcm/cycle (an increase by 650 mcm/cycle), increasing the injection capacity by 4 mcm/day, up to a total of 10 mcm/day and the withdrawal capacity by 4 mcm/day, up to a total of 12 mcm/day. The project will also increase the compressor capacity, provide new surface infrastructure for 59 injection-withdrawal wells, drilling of 15 new wells and upgrade for 46 injection/withdrawal wells.

The feasibility study is currently in progress, the completion time being estimated for 2024. The total value of the project is EUR 136 million.

The project is part of the list of projects of common interest at European level, being included in the NSI East Gas Corridor – (North-South East Gas Interconnection) for Central and Eastern Europe Region, PIC reference number 6.20.6.

 

How does Romania fit into the overall picture of the European natural gas infrastructure and its future evolution towards 2030?

Vasile Carstea: Through planned investments, Depogaz intends to become an important player in the local and European energy market. In this regard, we hope that all planned investments will lead to the fulfillment of this goal.

All future projects of Depogaz, mentioned earlier, are also included in the 10 Year Development Plan of the national gas transmission system. We insisted to include them in the development plan of the NTS operator because the construction of technical facilities without taking into account the operating parameters of the NTS could lead to additional costs which, sooner or later, will be transposed into tariffs. Thus, we aim to optimize all costs so that the future tariffs obtained are sustainable and affordable for the beneficiaries of the natural gas storage services. In this regard, meetings are held periodically between the high-level management of the two companies, of the transmission operator and of the storage operator, and in the next period, a memorandum of understanding will be concluded between the two entities for collaboration in the implementation of the proposed projects.

 

What collaborations are worth mentioning between Depogaz and other companies in the energy market at national and international level?

Vasile Carstea: At the time of unbundling of the natural gas storage activity within Romgaz, on 01.04.2018, Depogaz had a portfolio of 20 clients. After one and a half years, the number of clients increased significantly, with Depogaz currently having over 60 clients. Their number has increased because Depogaz offered services of very good quality, ensuring flexibility and security in the supply of natural gas to the customers that the beneficiaries of our services have in their portfolio.

I would like to mention that Depogaz has responded to market demands with a new type of service, namely alternative operation storage regime. In the Ghercesti and Sarmasel storage facilities we have ensured the technical conditions so that in the situations where we need injection or extraction or in the situations where we have to ensure the stability of the gas transport system and the security of gas supply, we can inject or withdraw natural gas regardless of the season. This new service was realized through investment efforts of the operator Depogaz, considering that the market is currently demanding and will continue to need this service to ensure flexibility in gas supply for all the consumers in the Romanian energy market.

 

How does the situation of the clients you provide services to evolve, as a percentage, compared to the previous years? What are the most important clients of Depogaz?

Vasile Carstea: As previously mentioned, Depogaz has over 60 clients at this time, the number of clients increasing by 300% from the moment of unbundling of activity (2018) until now. All clients are important to us, but from economical point of view, our most important clients are Romgaz, Engie, OMV Petrom and E.ON.

 

What is the investment program for 2020?

Vasile Carstea: The value of the investment program for 2020 amounts to RON 90 million and aims to increase the total storage capacity, and to increase the daily injection/withdrawal capacities. At the same time, we have planned different investments that will allow us to maintain and improve the quality of the gas, this way continuously ensuring the quality of gas according to standards required by the legislation in force.

As mentioned before, we have a number of feasibility studies in progress for Ghercesti, Bilciuresti, Sarmasel and Balaceanca storage facilities, and in the following months we also plan to sign an agreement for the feasibility study for the new storage facility in Falticeni, whose capacity will be approximately 200-250 mcm. By implementing this project, we aim to support the natural gas supply and cover the consumption peaks in the cold season both in the North-Eastern region of Romania, and for our neighbors of the Republic of Moldova, all the more so as we know that the Romanian NTS operator, Transgaz, has also taken over the transport system of natural gas in the Republic of Moldova.

 

What is the status of projects for the development of the gas storage system included in the investment plan related to the period 2019-2023?

Vasile Carstea: The status of development projects is the following:

Regarding the modernization of the gas storage system infrastructure in Bilciuresti, works were started and completed in 2019 with the following objectives:

  • Upgrade of 3 injection/withdrawal wells;
  • Procurement of services for the Feasibility Study ‘Analysis of possibilities to increase the daily natural gas withdrawal capacity at the BILCIURESTI underground storage facility’;
  • Procurement of services for ‘Systematization of gas suction/discharge collectors SC Butimanu and collector Butimanu – Bilciuresti’;
  • Tender book elaboration for the construction of a new natural gas drying station with a capacity of 5.3 thousand cubic meters/day.

Regarding the project for increasing the underground gas storage capacity of Ghercesti storage facility, we by the end of 2019 we managed to procure the related consulting services for the Feasibility Study ‘Increasing the underground gas storage capacity in Ghercesti storage facility from 150 million cubic meters/cycle to 600 million cubic meters/cycle’.

The surface infrastructure for a capacity of 600 mcm is already built. Our aim at Ghercesti is to obtain an injection capacity of 4.5-5 mcm/day and a withdrawal capacity of 5 mcm/day. This capacity will be achieved by building a compressor station to work with suction pressure at 5 bars and discharge at the pressure of the NTS, i.e. 45 bars, as established following the project meetings that took place with participation of the natural gas transmission operator.

Part of the gas quantities from the storage facility will be consumed locally, in Craiova area. Regarding this aspect, we have already been contacted by representatives of the coal and power complex CE Oltenia, which we estimate will soon become and end client for gas storage, after finalising the modernisation works planned to retrofit its units for burning natural gas (instead of lignite, currently used), as part of the UE program to reduce CO2 emissions.

In the future, if the market demands it, Depogaz can further increase the natural gas storage capacity of Ghercesti up to 1 bcm, given the geographical position of this storage facility, near the BRUA pipeline, which transforms it into the ideal candidate for discharging gas transported by BRUA either from exploration in the Black Sea, or from elsewhere in the world.

In 2019, we also completed the tender book for the procurement of services for the Feasibility Study ‘New underground gas storage facility FALTICENI’.

Regarding the project for increasing the underground gas storage capacity of Sarmasel storage, we have procured the services for the Feasibility Study ‘INCREASING THE UNDERGROUND GAS STORAGE CAPACITY IN SARMASEL STORAGE FACILITY FROM 900 thousand cubic meters/cycle to 1,550 thousand cubic meters/cycle’ and we have also managed to upgrade 6 injection/withdrawal wells and procure services for the upgrading of other 12 injection/withdrawal wells.

A great accomplishment for us was to maintain this project in the 4th List of Projects of Common Interest (PCI) of the European Union, list that was published on October 31st, 2019, PIC code 6.20.6 ‘Sarmasel underground gas storage in Romania’.

 

At the end of October 2019, Romgaz increased the share capital of Depogaz from RON 50 million to RON 66.05 million, recently increasing it again with the in-kind contribution to the capital of the subsidiary of fixed assets owned by Romgaz which contribute to the storage activity. What impact will it have on company’s activity?

Vasile Carstea: Ownership of assets represents a factor of stability and an important condition for obtaining results aimed to ensure the functioning and future implementation of the strategy for the company’s development.

The impact of taking over the fixed assets is extremely positive for both the employees of the company and its management, as it eliminates a number of inconveniences in the current and future activities of the subsidiary.

At the same time, this contribution to the capital of the subsidiary supports Depogaz from an economical point of view, in achieving the investment programs assumed before the state authorities and entities with which Depogaz collaborates directly.

 

What major development directions does Depogaz consider for the following years?

Vasile Carstea: For the future, Depogaz will take into account the objectives proposed in the Energy Strategy of Romania 2019-2030, with perspective of 2050 and the investment plan of the natural gas storage system. For this purpose, the main development directions of Depogaz are the following:

– Increasing the total storage capacity of storage facilities from 2.76 bcm to 4.2-4.5 bcm;

– Increasing the daily injection capacity of the storage facilities from 20 mcm to 30 mcm;

– Increasing the daily withdrawal capacity of the storage facilities from 29.2 mcm to 42 mcm;

Depogaz also aims to ensure new services in the market, such as hourly withdrawal services and hourly injection services. In this regard, the entire development program is conceived so that switching from a minimum hourly injection program to a maximum hourly injection program can be made with high degree of flexibility.

We also plan to develop the alternative operation service in Balaceanca storage facility, where we plan to improve the technical performance, so that the facility can be operated both during injection and during withdrawal periods at the capacity of 1.5 mcm/day. To increase the profitability of this storage facility, a new compressor station is necessary, to answer to market request for this type of service, while raising the quality standards in the operation of the storage facility.

All development directions aim to increase the security of supply to customers and increase the flexibility in order to obtain Romania’s energy independence.

Further development directions of Depogaz will also take into account the quantities of natural gas to be transported through BRUA pipeline and the quantities of gas extracted from the Black Sea blocks. In this regard, Depogaz is considering the development of new storage facilities in depleted reservoirs, which are currently operated by SNGN Romgaz, such as, for example, Doba Slatina, Hurezani, Piscu Stejari or Bibesti, located in the vicinity of BRUA pipeline route. Depogaz wants to contribute to achieving a higher quantity of gas stored, so that Romania becomes an important player in the European energy market contributing to the creation of a regional energy hub.

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Lavinia Iancu

Lavinia has an experience of over 20 years in business management and has attended in-depth management courses. She is licensed in the field of Industrial Engineering, Welding Technology and Equipment specialization, and in Psychology. She is currently Co-Founder and CEO of Industry Media Vector and coordinates the newsroom team of Energy Industry Review publication, having a rich experience as energy business analyst. She has been involved in the organization of events dedicated to the energy industry for over 14 years.

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