PROSPECTS FOR 2022, 2030, 2050
2022 OUTLOOK with an extension until 2026 (the time horizon of the PGNiG Group’s business strategy).
- The Yamal contract between PGNiG and Gazprom expires on December 31st 2022.
- Key infrastructure to diversify directions and sources of natural gas supplies to Poland is to be built by that date:
- construction of the Norwegian Corridor to link Poland’s transmission network with fields in Norway through the Danish transmission system and a subsea connection from Denmark to Poland, enabling transport of gas from the Norwegian Continental Shelf. The project will involve the construction of connections between Norway and Denmark (Nordic Pipe – Tie-in) and between Denmark and Poland (Baltic Pipe), and the extension of the Danish transmission system. The project will be completed by 2022, enabling import of approximately 10 bcm of natural gas.
- expansion of the President Lech Kaczyński LNG terminal in Świnoujście – its annual regasification capacity is to increase from 5 bcm to 7.5 bcm (receiving and regasification capacity).
- Completion of cross-border gas projects in Poland, which will increase the country’s import and export capabilities and will involve either the construction or extension of links with:
- Slovakia – raising annual import and export capacities to 5.7 bcm and 4.7 bcm respectively (by 2021),
- Lithuania (GIPL) – raising annual import and export capacities to 1.7 bcm and 2.4 bcm respectively (by 2021),
- Czech Republic (Stork II) – raising annual import and export capacities to 6.5 bcm and 5 bcm respectively (by 2022),
- Ukraine – raising annual import and export capacities to 5 bcm (by 2020).
- Digital Field has substantially improved the efficiency of oil and gas production from PGNiG’s fields. The deployment of this analytical platform, integrating the work of specialists in various disciplines into a single field model, has allowed the Group to increase recovery rates and economic efficiency. A case in point is the work currently under way on the Paproć field, which shows a five-fold increase in efficiency compared with work done using traditional methods.
- 90% of Poland’s population have access to the gas network thanks to distribution network extensions and off-grid LNG regasification stations.
- Decarbonisation of Poland’s energy sector is under way:
- Gas projects implemented by power plants, construction of gas-fired furnaces and phase-out of coal-fired ones
- Development of renewable energy sources and steady growth in RES generation capacities
- Development of alternative sources, including hydrogen
- COVID-19 – the economy is recovering from the pandemic lockdown:
- Higher day-to-day operating costs incurred by companies to comply with stricter workplace health and safety requirements
- Increased financial support for healthcare providers and local communities, including members of the social groups most heavily affected by the pandemic
- Complex customer service options using online tools, expansion of electronic customer service centres
- Remote work options and tools introduced as a permanent solution
By 2022, the PGNiG Group is set to become the leader in Poland and a major player on the gas market in Central and Eastern Europe that has created a gas hub serving customers across the region via the LNG terminal in Świnoujście and extensive cross-border infrastructure. Gas infrastructure expansion projects have allowed PGNiG to effectively diversify its sources and directions of natural gas supplies, with the diversification being a cornerstone of Poland’s energy security.
The PGNiG Group is constantly advancing gas mobility based on CNG and LNG technologies. A growing number of public transport vehicles in Poland are powered by CNG, an environmentally-friendly fuel. According to PGNiG Obrót Detaliczny, Poland will soon have a total of 500 CNG-powered buses on the roads, with the figure expected to more than double by 2023.
The PGNiG Group complements its traditional gas exploration and production business with the new fast-growing RES segment. It constantly expands its presence in and integrates the heat generation sector, growing its assets and effectively decarbonising the energy sector by gradually switching to gas-powered or RES power plants, thus replacing old coal-fired furnaces. The Group maintains its commitment to the development of hydrogen and other new technologies and their implementation in business. PGNiG is poised to create a coherent chain of hydrogen capabilities by 2022, enabling further growth of this business line.
2030 is the time horizon of the European Union’s climate and energy policy
- The National Energy and Climate Plan 2021–2030 envisages:
- Further decarbonisation of Poland’s energy sector, with the target share of coal in the energy mix at 56%–60% (compared with 77% now)
- 21%–23% share of RES in gross final energy consumption (compared with 15% in the base year 2015), with the target share of RES in power generation at ca. 32%
- Development of environmentally-friendly and efficient heating systems. By 2030, at least 85% of the heating or cooling systems with contracted capacity exceeding 5 MW are to meet the criteria of an energy-efficient heating system. This goal is to be achieved through:
- expansion of cogeneration
- adaptation of power plants for heat production
- increased use of RES and natural gas in the heat generation sector
- increased use of waste in energy generation
- creating conditions conducive to increased use of district heating
- Maintaining Poland’s annual natural gas production at ca. 4 bcm and seeking to increase the output with innovative technologies helping to improve production efficiency
- Expanding underground gas storage capacity to at least 4 bcm by the 2030/2031 winter season and expanding the maximum daily withdrawal capacity from 48.7 mcm to at least 60 mcm
- Advancement of electric mobility and alternative fuels in transport, including natural gas (CNG and LNG) and hydrogen, driven by efforts promoting alternative fuels in transport and simultaneous expansion of the distribution infrastructure
The Fourth Industrial Revolution, also known as Industry 4.0, is influencing almost all branches of manufacturing. The concept uses and integrates various digital techniques, including the Internet of Things (IoT), Big Data, smart sensors and Augmented Reality (AR), in order to fully automate the production process and pass some decision making on to the artificial intelligence (AI) level.
This major industrial trend has had an impact on the gas, fuels and energy sectors and has allowed companies to digitally optimise most of their business areas. According to the Digital Oilfield Market report published by MarketsandMarkets, the global Digital Oilfield Market is expected to grow by 26% on 2019, to USD 30.4bn by 2024.
An example of an industrial process digitalisation project implemented in Poland is the Integrated Deposit Management System supporting the efforts to optimise PGNiG’s production operations. Geologists, field and production engineers and economists are involved in exploration for and extraction of mineral resources. Massive amounts of data are generated, stored and used in each of these fields. The Digital Field platform integrates the results of work of specialists across various disciplines into a single field model, facilitating optimum use of the data. The digital model is used to simulate various scenarios for production from several fields at a time, increase forecast accuracy, optimise the drilling programme, analyse the effects of planned capital projects (CAPEX) and optimise energy consumption (OPEX) and supply chains.
As an unavoidable effect of ongoing digitalisation and advancement of Industry 4.0, companies have started to generate and accumulate a new type of resource: data. In contrast to primary applications which used the most recent data describing process status, advanced applications increasingly value historical data. The latter can be used to develop a plant and machinery failure prediction model, optimise production processes, enable virtual exploration for natural resources, etc. Companies in traditional industries still have a rather limited knowledge of what data they have, how they can use it and what its potential value is. This will change over time, and for the most active and agile sector companies data and data-based services may even become a new business line. Before they explore and actually use the newly-built asset, companies must face a number of new challenges and tasks involving an informed approach to data, information and knowledge management by implementing, for instance, Data Governance processes and solutions (for more information, see W kierunku energii przyszłości [Towards the energy of the future], a report published by PGNiG in 2019, at http://pgnig.pl/raport-innowacje-2019 ).
Hydrogen technologies will play a vital role in the development of the entire energy sector in the near term. According to The Future of Hydrogen report published by IEA in 2019, approximately 70 million tonnes of hydrogen is consumed globally every year, mainly in oil refining and chemical production. Hydrogen is now obtained mainly from fossil fuels, which generates a significant carbon footprint. The fuel of the future is ‘pure’ hydrogen that can be obtained through electrolysis, a method which does not produce the adverse effects related to CO2 emissions.
The method employs a temporary surplus of electricity typically occurring in renewable sources (wind or solar). The cost of the electricity is very low, and its withdrawal often comes as a rescue for the power system, where excess electricity poses a significant problem. In this case, hydrogen generation can be economically viable even with an energy-intensive method such as electrolysis. In Poland, research work designed to develop state-of-the-art technology for hydrogen generation from renewable sources through electrolysis has been carried out by PGNiG since 2018 under the ELIZA project. In 2020, PGNiG unveiled Hydrogen – Clean Fuel for the Future, its new comprehensive hydrogen programme consisting of several projects ranging from ‘green hydrogen’ production, through hydrogen storage and distribution, to industrial power generation applications. The programme provides for the construction of a test hydrogen refuelling station (Hydra Tank); hydrogen purity analysis and research of alternative fuels, use of hydrogen in industrial power generation (New Fuel Lab); RES-based hydrogen production and research of technical viability of transporting hydrogen via natural gas distribution networks (InGrid – Power to Gas), and use of underground gas storage facilities to store hydrogen.
There is also a trend in research to investigate the possibility of using hydrogen as an additive to other fuels, including natural gas, which is also part of PGNiG’s programme. A modern gas system offers new opportunities for interoperation between power and gas systems, creating an energy macrosystem of sorts. Nowadays, gas networks use modern materials and complex telemetry, monitoring and diagnostic systems. Although the functionality and operation of the system as a whole have not changed significantly, new challenges arise which the future system will need to tackle, one of them being the possible presence of gases with a more diverse composition (natural gas mixture containing hydrogen, etc.) in gas networks, or greater volatility with respect to connections and disconnections of new gas sources. The new gas network will have to be more dynamic and have the ability to operate in variable conditions and environments.
As a gas company, PGNiG operates sufficient hydrogen injection and storage capacities. Gas systems alone can be regarded as massive energy storage facilities. An average size gas system in Europe is estimated to have the capacity of approximately tens or hundreds of TWh. Salt caverns can also be an attractive option for storing hydrogen. They have very high gas injection and gas withdrawal capacities relative to working capacities. They require no extensive surface facilities, and the facilities are much cheaper and quicker to build than in the case of traditional gas storage solutions. They are also easier to monitor and operate. Injection and withdrawal cycles in salt cavern gas storage facilities can take place several time per year. They are also relatively safe in terms of tightness.
Advancement of work on fuel cells and transport in general is an important area of technology. Hydrogen-powered vehicles are expected to replace battery-powered ones in the long term, especially those used in heavy transport, where long range and short charging/refuelling times are critical.A hydrogen technology development map according to which 6.2 million fuel cell electric vehicles (FCEVs) will be produced by 2040, created by South Korea, one of the world’s leading car manufacturers, demonstrates how important the development of hydrogen technologies is for the future of global transport. In the context of advancing hydrogen technologies, it is crucial for the industry to build an entire value chain, including the links responsible for hydrogen consumption, so that supply meets demand (for more information, see W kierunku energii przyszłości [Towards the energy of the future], a report published by PGNiG in 2019, at http://pgnig.pl/raport-innowacje-2019 ).
Obtaining energy from renewable energy sources is currently one of the key technological challenges for the gas, fuels and energy sectors. It is supported by the EU’s climate neutrality policy (European Green Deal), which translates into preferential funding for RES projects. At the same time, the need for decarbonising the energy sector is conducive to the development of RES. Natural gas for RES may serve as a system stabiliser.
Analysis of trends prevailing on the renewable energy market shows that the fastest-growing technology is photovoltaic solar panels, which in 2018 accounted for more than half of the total newly installed RES capacity worldwide. Wind technologies are equally important and rapidly growing RES technologies. According to the IEA’s Renewables 2018 report, by 2023 the total wind power capacity will increase by more than 60% worldwide relative to 2018. Off-shore wind projects seem particularly interesting, as they are larger, more efficient and cause less nuisance to people.
Wind power is also a pronounced trend among businesses in Poland. Examples include the PGE Group, which, according to the statement by the company’s representatives during the Economic Forum in Krynica in 2019, is to generate 1.6 GW and 2.5 GW of wind power by 2025 and 2030, respectively.
Another driving factor behind RES growth is stimulating the market for small energy producers, prosumers and companies creating innovative solutions in RES generation, distribution and storage (for more information, see W kierunku energii przyszłości [Towards the energy of the future], a report published by PGNiG in 2019, at http://pgnig.pl/raport-innowacje-2019).
Biomethane obtained from biomass fermentation (biogas produced in the process is purified and turned into biomethane) may be an important renewable source for the gas industry. The PGNiG Group’s target volume of biomethane in Poland’s distribution network is ca. 4 bcm by the end of 2030.
PGNiG sees renewables as an opportunity to stabilise its financial performance. Renewable energy sources are not sensitive to movements in hydrocarbon prices, which have a strong effect on the PGNiG Group’s Exploration and Production, Trade and Storage segments.
By 2030, the PGNiG Group will become the leader of the heat generation industry, continuing the decarbonisation process based on natural gas and RES as the industry integrator. Hydrogen solutions will form a separate business segment, and the hydrogen technology development programme will be continued.
2050 is the target date for the European Union to become climate-neutral.
- Climate neutrality – the EU becomes climate-neutral. In 2019, the European Council announced its goal to make Europe climate-neutral by 2050. As requested by the European Parliament and the European Council, the Commission’s vision of the climate-neutral future covers nearly all EU policies and is in line with the Paris Agreement objective to keep the global temperature increase to well below 2°C and pursue efforts to limit the increase to 1.5°C (for more information, visit https://ec.europa.eu/clima/policies/strategies/2050_pl).
Liquefied natural gas (LNG) is a fuel which begins to play an increasingly important role in both global and domestic energy mix, and which is given particular attention in terms of innovation advancement. This is due to LNG’s significant advantage over other fossil energy carriers, in particular:
- low environmental impact: LNG combustion does not produce any harmful dust or smoke, and CO₂ emissions are 30% lower compared with burning fuel oil or coal
- multiple applications – LNG can be used as a traditional fuel for generating energy in large-scale power plants, as a fuel for local businesses’ small-scale energy generating units, and can also be successfully used as a fuel for internal combustion engines used in road, rail and water transport.
All that makes LNG increasingly popular, as confirmed by forecasts that put annual LNG output at 630 million tonnes in 2050, almost three times the 2016 figure. The LNG technology areas on which development work will focus in the coming years include in particular:
- Floating Liquefied Natural Gas (FLNG) technologies that enable the production of LNG at sea, directly at offshore gas fields, which reduces the cost of LNG production by as much as 50% (IGU’s Global Natural Gas Insights – 2019 Edition)
- transport-related technologies, including refuelling infrastructure and the development of more efficient LNG-powered vehicles.
The development of LNG technologies is a catalyst of growth in gas mobility, which can be an alternative to electric vehicles, particularly in heavy transport. The trend allows sector companies to develop new business models targeted at both retail and institutional customers. Since liquefied natural gas meets stringent requirements of the International Maritime Organisation (IMO), both ports and ship manufacturers keep tabs on technologies that enable the use of LNG to power ships. It should be noted that in the spring of 2019 one of the first commercial bunkering operations was carried out in Poland. It took place in the Port of Gdynia and used LNG supplied by PGNiG (for more information, see W kierunku energii przyszłości [Towards the energy of the future], a report published by PGNiG in 2019, at http://pgnig.pl/raport-innowacje-2019).