Results in 2014

Customers and market

Optimising the value of our existing assets

Our gas transport and infrastructure activities are central to our strategy; we carry them out as efficiently as possible. Through our network operators, GTS and Gasunie Deutschland, we ensure the proper functioning and development of the gas transport network. We do this by means of guaranteed security of supply and by offering various services to our customers. Our guiding values in this are safety, reliability and operational excellence.

Gas transport

The year 2014 was relatively warm. This led, in the Netherlands, Germany and surrounding countries, to lower demand for natural gas than in the previous year. Part of the transported volume relates to the throughput of gas from and to other countries. In this respect, our network functions as an international hub.

In 2014, we transported 1,233 billion kWh (126 billion m3) of gas for our customers through our network for the benefit of end users in the Netherlands and other countries, of which 976 billion kWh (100 billion m3) flowed through our Dutch network and 257 billion kWh (26 billion m3) through our German network.

Transport revenues

With the transport of gas and related services, we generated revenues of € 1,445 million: € 1,183 million in the Netherlands and € 262 million in Germany.

The new pipeline that was put into operation between Odiliapeel and Melick in the Netherlands and the first phase of the ExEll expansion project from North Germany to Denmark made a positive contribution to the revenues. Thanks to this expansion of our infrastructure, we sold more capacity.

In 2014, GTS’s revenues were higher than in 2013. This is mainly due to the expiry of the tariff settlement repayment obligation that was still in force in 2013. If the 2013 revenues are adjusted to take this into account, then the revenues achieved in 2014 were lower than the revised revenues in 2013. This can largely be explained by the lower tariffs in 2014 and by lower than expected sales. The latter will be settled in the tariffs in 2016.

Gasunie Deutschland’s tariffs rose in 2014 compared to 2013. This was caused by the steep decline in the number of capacity bookings in 2014 (particularly long-term bookings), and the investments made in the expansion of the transport capacity. Because the tariffs are calculated on the basis of the expected booking profile, we have adjusted this profile on the basis of experiences over the past few years.

Transport costs

Due to the lower demand for gas in 2014 in the Netherlands, less energy was used for the transport of gas, and transport costs were lower than in 2013. In Germany, the putting into operation of NEL (the connecting pipeline between Nord Stream and our German network) led to lower compression costs. Thanks to the NEL pipeline, North Germany can now receive gas via Nord Stream. In the past, more frequent use was made of the route from the North Sea, via Emden. In addition, because of the higher temperatures, less use was made of the gas stored in the gas storage installations in Germany in 2014, which meant less gas transport was needed to refill the storage.

A priority for us is to create a safe and healthy workplace and to minimise risk to the natural environment.

Safety performance

The safety of our employees and the environment in which we work is an important enabling factor for carrying out our activities. A priority for us is therefore to create a safe and healthy workplace and to minimise risk to the natural environment. Despite all our efforts in the field of safety, our safety results in 2014 were less positive than they were in 2013. The number of injuries resulting in absence doubled, not only in the case of our own employees (from 2 to 4), but also relating to our contractors’ employees (from 3 to 7). The number of reportables per one million hours worked also rose. This was mainly caused by personal behaviour. We therefore started a programme to improve safety awareness.
The Decree on the External Safety of Pipelines (Besluit Externe Veiligheid Buisleidingen (BEVB)) aims to ensure that pipelines are situated in safe locations. In 2014, we resolved the last bottlenecks in this regard.

High level of security of supply

In addition to safety, security of supply also has a high priority within our company. In 2014, the security of supply was at a very high level. With the exception of one very short interruption, we achieved full security of supply in the Netherlands and Germany. The interruption of the gas transport affected one company in the Netherlands. For a very short period of time, this company could not receive gas. We carried out research into the cause of this transport interruption and drew up improvement points to bring the risk of interruptions down to zero.

In 2014, the security of supply was at a very high level.

Expansion of infrastructure

In 2014, as part of our expansion activities, we put into operation two new pipeline routes in the Netherlands: Beverwijk–Wijngaarden and Westerschelde West–Cambron. Both routes were part of our ‘Integrated Open Season’, during which we asked customers about their long-term transport needs. Customers entered into contracts for additional transport capacity, and on that basis we expanded our transport capacity. In addition, we strengthened the capacity of our East–West route by expanding the Grijpskerk compressor station.

The Open Season 2019 that was started by GTS in 2013 was completed in 2014. This time, the bi-annual process did not lead to additional capacity bookings. However, several parties offered secondary capacity. Customers indicate that, due to developments such as the transition to auction mechanisms that follow from European legislation and regulations, the market is more interested in short-term bundled capacity than the long-term Open Season capacity.

Expansion towards the north

Various developments have led to an increased demand for extra transport capacity through Germany, towards the north. For example, domestic gas production in Denmark is in decline, and there is more demand for natural gas in Schleswig-Holstein and the Hamburg region as a consequence of the German Energiewende. We have therefore initiated an expansion project called Exit Ellund (ExEll). The first phase was delivered in 2014 on time and within budget. The second phase is expected to be completed by the end of 2015. Completion of the entire project is planned for mid-2016.

Deepening the Elbe culvert

Deepening and widening the River Elbe requires an adjustment to be made to what is known as the ‘Elbe Culvert’. This culvert will otherwise no longer be sufficiently deep, as a result of which it will no longer comply with the permits. Gasunie Deutschland is co-owner of the culvert, together with OGE, Telekom and WSV. The Elbe culvert is of major importance for gas transport to Hamburg, Schleswig-Holstein, Denmark and Sweden. It is also important for the Scandinavian telecom market. The shareholders have agreed that Gasunie will take on both the commercial and the technical management of this project, including the permit procedure.

Execution of this project was started at the beginning of 2014 and completed in December. The new culvert has a length of 1.5 kilometres and a diameter of 2.6 metres. In April 2015, it will be connected to the existing infrastructure and put into operation. Subsequently, the old pipeline parts will be removed.

Magnitude project

The province of Groningen has been confronted with an increasing number of earthquakes caused by gas extraction. Moreover, the strength of these earthquakes is also increasing. The Ministry of Economic Affairs has informed GTS that, for the time being, the maximum force of earthquakes is assumed to be 5.0 on the Richter scale. When the gas transport system was constructed, however, no account was taken of earthquakes of that magnitude. For this reason, GTS commissioned studies into possible measures it can take to ensure that its infrastructure can withstand these forces.

On the basis of these studies, it was concluded that a large majority of the pipelines can withstand earthquakes of the maximum magnitude expected over the coming years. However, for approximately 4% (about 80 kilometres) of GTS’s regional grid in the earthquake zone this cannot be guaranteed. This concerns pipelines constructed before 1964, which were taken over by Gasunie when it was founded. Research shows that gas transport through these pipelines under current circumstances is not at risk, but if the maximum strength of the earthquakes increases to 5.0 on the Richter scale in the future, it may be at risk. It has been decided to make preventive adjustments to this part of the pipeline network. These adjustments will partly involve replacements, but gas transport via other routes will also be considered. On the basis of studies, the Minister of Economic Affairs has indicated that, although the chances of earthquakes with a magnitude of 5 on the Richter scale are increasing, they will still be very small and almost negligible in the next five years. That is why GTS has set up a programme to implement all necessary measures in the coming years, starting with installations and pipelines that are most at risk. The programme is due for completion no later than 2020.

In addition to pipeline measures, GTS is also taking construction measures at stations and installations. At a number of places, preventive reinforcements are being installed to prevent risks for gas transport and to ensure that our employees can keep working safely at our locations. This involves, for example, reinforcing floors and ceilings, and reinforcing supports for pipeline parts above the ground. These construction measures are expected to be completed for all installations and stations by the end of 2016.

Developments in regulation

The Netherlands

Method decision

In 2013, the regulator ACM determined the regulatory method for 2014–2016. GTS filed an appeal against this. In the method decision, ACM determines the regulatory framework for the five statutory duties of transport, balancing, quality conversion, existing connections and new connections. The main reasons for appeal relate to the determination of the weighted average cost of capital (WACC) and the determination of the productivity improvement that is used to calculate the annual reduction of permitted costs. An intermediate ruling by the Court of Appeal (CBb) on 5 March 2015 has not yet had any consequences for the status of the method decision, and gives ACM an opportunity to repair its failure to state reasons in the method decision. The Court of Appeal will not make a final judgement in this appeal against the method decision before the end of 2015.

Tariff decision

Besides this appeal, a number of other regulatory cases were relevant in 2014. For example, ACM upheld most of GTS’s objections regarding the tariff decision 2013. As a result of this, the 2014 and 2015 tariffs have been corrected. The reasons for this are a faulty calculation of the construction period interest in the 2013 tariffs and the fact that the investment project Nitrogen Buffer Heiligerlee was judged to be more efficient (after appeal, the efficiency of that project was determined at 99.4%).

Cost benchmark

In 2014, ACM’s intention to determine GTS’s efficiency by means of a cost benchmark also played a role. ACM wishes to compare GTS’s total costs, i.e., both operating costs and historical capital costs, with those of the German network operators. ACM is considering including the results of this benchmark in the revenue regulation for GTS as of 2017.

When GTS discussed ACM’s intention with ACM in 2014, GTS expressed its objections to ACM’s approach. It pointed out that the significant differences between Dutch and German network operators play an important role, which means a simplified comparison of the total costs of German network operators and those of GTS is not feasible. For example, there are differences in terms of legal tasks relating to security of supply and quality conversion, as well as differences in terms of the structure and organisation of the gas and gas transport market. In addition, ACM uses a small comparison group of 12 network operators. Using such a small data set, GTS believes it is impossible to make robust and validated links between costs and output.

In 2015, ACM will start preparing the regulatory period as of 2017. It will then become clear if ACM will go ahead with its intention to implement this benchmark.

Legislation and access conditions

Due to internationalisation and the increasing variety in the composition of gas, the Minister of Economic Affairs has decided to assign a new legal task to GTS. By means of a change in legislation, GTS has been given the task, if necessary, of adjusting not only the Wobbe index but also other characteristics of gas. The requirements for gas have been laid down in a Ministerial Regulation on gas quality (“MR Gaskwaliteit”), which came into force on 1 October 2014. This regulation ensures that all market parties and households will continue to be able make safe use of natural gas.

Germany

In May, BNetzA took a definitive decision with regard to the permitted revenues for the regulatory period of 2013 up to and including 2017, for which the efficiency of Gasunie Deutschland Transport Services GmbH was determined at 100%.

In April, BNetzA started a consultation process to map the requirements with regard to the tariffs for short-term bookings, interruptible capacity, and entry and exit points of gas storage installations. BNetzA is prepared to change its tariff system in order to make long-term bookings more attractive than short-term bookings. This could stabilise the number of bookings, which is currently very volatile and difficult to predict. This change is expected to be implemented on 1 January 2016.

In 2014, BNetzA evaluated the effects of revenue regulation. The report on this was sent to the German government in 2015. The adjustments are expected to be implemented in the next regulatory period (as of 2018). It is not yet clear how this will actually affect Gasunie Deutschland.

Changing gas composition

As a result of the internationalisation of gas flows in Europe, the composition of the gas in our network is becoming more varied. In addition, the production of natural gas in north-west Europe, including production from the Dutch gas fields, will decline. This has consequences for the end-user. In the Netherlands, we have two separate gas transport networks, one for low-calorific and one for high-calorific gas. The settings of domestic appliances and much of the industrial equipment in the Netherlands are geared to the relatively constant composition of the low-calorific Groningen gas (G gas). In the long term, these appliances will also need to be able to use gas of a different composition.

The Ministry of Economic Affairs has asked a number of parties in the market to take steps to give the end-users of gas sufficient time to adjust their equipment, if necessary. For the G gas market, there will be a transitional period that will run to 2030 at least. During this period, GTS will ensure that the market in the Netherlands will receive gas with a composition similar to that of G gas.

In the Netherlands, approximately 80 companies use H gas, while all other companies and households use G gas. The Ministry of Economic Affairs had also made a transitional arrangement for users of the high-calorific H gas to adjust their equipment, if necessary, to the increasing variety in the composition of gas. That arrangement ended on 1 October 2014. In the meantime, all these companies have taken measures to ensure that they can continue to make safe use of H gas.

The forthcoming dwindling production of Groningen gas has given rise to a study into the required amount of quality conversion means and nitrogen production. In the process of quality conversion, GTS adds nitrogen to high-calorific gas (H gas), in order to give the gas a quality that makes it suitable for the Dutch market (G gas). Because of the declining production at the Groningen field, nitrogen will need to be used much more frequently in order to provide users with low-calorific gas at times of great demand. The study showed that, probably around 2020, the peaks in demand will no longer be able to be met by existing and currently planned means. At the request of the Minister of Economic Affairs, GTS has started preparing the expansion of its quality conversion facilities, which it is expecting to put into operation at the end of 2019, in order to safeguard security of supply for customers as of 2020.

Besides the falling production of gas in the Netherlands, German production is also rapidly decreasing. It is expected that the export capacity from the Netherlands to Germany will decrease as of 2020, and will be reduced to zero in 2029. In the German Netzentwicklungsplan (NEP) 2013, the technical measures required have already been laid down, which means that the German market will be completely converted from low-calorific gas to high-calorific gas. The aim is to have a fully converted market by 2030.
Gasunie Deutschland has taken on a leading role in developing the conditions under which the conversion process will need to take place. These conditions will be laid down in the Kooperationsvereinbarung (KoV) between the German TSOs.

Together with neighbouring network operator Stadtwerke Schneverdingen, Gasunie Deutschland has entered into a conversion agreement to carry out a pilot project in 2015. In this project, the neighbouring regional network will be converted into a network for high-calorific gas. The experience gained in this pilot will be used for new projects with other regional networks, which are planned for 2016, in conformity with the Netzentwicklungsplan.

What else happened in 2014?

  • We scaled up our multi-year replacement programme in the Netherlands. This programme consists of renovating and partly replacing valve stations, metering and regulating stations and gas receiving stations. The replacement programme has an expected duration of between 15 and 20 years.
  • In December 2014, it was established that GTS meets the requirements for certification in conformity with NTA 8120. This Dutch technological agreement sets out the requirements that the asset management system must meet, defining in more detail the specific requirements of safety, quality and capacity management.
  • As of 1 January 2014, Gasunie transferred the ownership of the gas transport network in the Netherlands and the associated assets, liabilities and activities to GTS. The transfer was part of GTS’s certification as an independent network operator.
  • As an extension of the transfer of assets from Gasunie to GTS, as of 1 January 2014, the assets and activities relating to the Peakshaver installations on the Maasvlakte transferred to a separate company, Gasunie Peakshaver BV.
  • Because parties in the market are booking capacity at increasingly shorter notice and for shorter durations, GTS has less insight into the demand for capacity in the longer term. In 2014, in anticipation of the STROOM change in legislation in 2015, GTS started setting up a network development plan (NDP). This plan illustrates possible developments affecting GTS’s gas transport network on the basis of a series of plausible energy scenarios. For the NDP, the parties in the market will also be consulted. This consultation phase will take place in mid-2015. The NDP replaces the former Open Seasons.

Strengthening our leading position as a cross-border gas infrastructure company

Energy users benefit from strong international gas connections and a liquid gas market, as these are good for the availability and affordability of gas. In an energy world that is becoming increasingly international, we want to keep making optimum use of our infrastructure, and maintain or even grow its value. It is therefore important that market players prefer our infrastructure for their gas transport. We analyse their needs and develop services that fit in with these needs, where possible at European level. In addition, we will continue to look for opportunities for cooperating more intensively with other gas infrastructure companies in order to further expand and strengthen the gas roundabout.

Growing gas trading points promote market liquidity

A well-functioning gas market is an important part of the gas roundabout, because it attracts gas flows and increases competition in supply and demand. We want to expand the current leading position of the TTF gas trading point, the most liquid and authoritative hub in continental Europe. We do this by optimising existing services and developing new ones.

TTF

TTF is the Dutch virtual trading point where gas can be traded. Over the past few years, TTF has grown into one of the most prominent liquid gas hubs in Europe, alongside the English National Balancing Point (NBP). Despite the declining demand for gas in north-west Europe, in 2014 much more volume was traded on TTF than ever before. The bilateral Over-The-Counter (OTC) trade showed particularly strong growth, which meant that TTF succeeded in taking over the No. 1 position from NBP, which had led the European OTC market for years. TTF products were also traded more via gas exchanges than in previous years. A well-functioning TTF strengthens the security of supply, and also ensures that supply and demand function properly in a transparent and liquid market. To further enhance market forces, as of 1 June 2014, GTS offers the use of the trading point to shippers free of charge.

A well-functioning TTF strengthens the security of supply, and also ensures that supply and demand function properly.

In 2014, a total of 13,216 billion kWh of gas was traded via TTF, compared to 8,287 kWh in 2013. The physical volume flowing through TTF (the net TTF volume) was 430 billion kWh in 2014, compared to 447 billion kWh in 2013. This means that, just as in the two previous years, the physical TTF volume is larger than the domestic gas consumption in the Netherlands. Both the Netherlands and other countries use TTF to meet their demand for gas. In 2013, the number of active TTF traders again increased. At 127, this number was well above that of 2013 (113).

GASPOOL

We also see growth at the North-German virtual gas trading point GASPOOL. Both the traded volumes and liquidity increased in 2014. The traded volume was 1,291 billion kWh in 2014 (1,251 billion kWh in 2013). The net volume decreased to 400 billion kWh (2013: 444 billion kWh). At the end of 2014, the number of traders on GASPOOL had increased by 43 to 398 (355 in 2013).

ICE Endex

As an exchange for spot gas and derivatives markets, ICE Endex facilitates, amongst other things, the trade flows on TTF. In 2014, ICE Endex increased its market share in its primary market (TTF Futures) from approximately 10% at the beginning of the year to 20% towards the end of the year. Combined with a strong year for the TTF Futures market as a whole, this has led to a significant increase in the traded TTF Futures contracts by approximately 70% compared to 2013. This has also strengthened the position of TTF as the most liquid continental hub and price-maker in north-west Europe.

Cooperation at European level

Developments in the European gas market

In order to stimulate the development of a competitive European gas market and to promote market liquidity, Transmission System Operators (TSOs) work together. One context in which this collaboration takes place, for example, is ENTSOG (European Network of Transmission System Operators for Gas). Within ENTSOG, TSOs coordinate their plans in the field of European network codes, the ten-year network development plan, the promotion of transparency, and more.

The harmonisation of gas transport services promotes cross-border gas trade. In 2014, GTS and Gasunie Deutschland therefore worked hard on helping to shape the new European network codes. In addition, the previously approved network codes in the field of capacity allocation (CAM) and congestion management (CMP) and in the field of balancing were (further) implemented. The implementation of the network code for balancing means, amongst other things, that GTS now makes use of the Within Day gas market of gas exchange ICE Endex for its balancing transactions. This strengthens the liquidity on the Within Day gas market, so that shippers can balance more efficiently and cost-effectively.

The harmonisation of gas transport services promotes cross-border gas trade.

Auctioning via PRISMA

The auctioning platform PRISMA already enabled shippers to book capacity (or bundled capacity) with GTS and Gasunie Deutschland at the border point of Oude Statenzijl. Since January 2014, the offering of capacity via this auctioning platform has been expanded to all GTS border points. Here the capacity is bundled with capacity of neighbouring network operators. The implementation of parts of CMP via the PRISMA platform has now also been enabled: shippers can return capacity and GTS can overbook capacity and, if necessary, buy it back.

Besides TSOs from the countries that started the PRISMA platform (The Netherlands, Belgium, Germany, Denmark, France, Italy and Austria), BBL became a shareholder in 2014. In addition, TSOs from the United Kingdom, Ireland and Slovenia now offer transport capacity via the PRISMA platform. In 2015, Spain and Portugal, among other countries, are also expected to join.

Flexibility services via fast-cycle gas storage

The transition towards a sustainable energy mix requires smart and fast flexibility services. Our fast-cycle gas storage EnergyStock (previously Gasunie Zuidwending) therefore offers customised solutions for energy companies and traders. Thanks to the services provided by EnergyStock, they can optimise their energy portfolios, insure back-ups, manage their risks, and improve their trading opportunities. EnergyStock’s services are available via TTF. In 2014, EnergyStock organised two auctions. Both auctions were successful: a large amount of capacity was traded and new customers were attracted.

The transition towards a sustainable energy mix requires smart and fast flexibility services.

What else happened in 2014?

  • Besides paying back deposited capital, Nord Stream also paid out its first dividend (€ 9.6 million) to Gasunie. This dividend will increase in the coming years.
  • On 3 June 2014, GTS successfully changed over to the new balancing regime. The biggest change in the new system is that the bidding ladder has been replaced by the Within Day market van ICE Endex. This means the new regime has been brought fully in line with the European network code for balancing.
  • In 2014, BBL joined ENTSOG, the European organisation of gas network operators.

Together with other European gas infrastructure companies, one of our goals is to make the provision of gas CO2 neutral by 2050.

The transition towards more sustainable use of energy

Gasunie believes in a sustainable energy supply. To give tangible shape to our role in the transition towards more sustainable use of energy, we have set up New Energy. This department focuses exclusively on projects in the field of sustainable energy. We prefer to tackle these kinds of projects in collaboration with other parties, both inside and outside the energy chain.

Together with other European gas infrastructure companies, one of our goals is to make the provision of gas CO2 neutral by 2050. In addition, we are looking at ways in which our infrastructure could contribute to a sustainable energy future, for instance in the heat market, or even outside the gas chain.

Seeking smarter energy solutions, together with partners

New LNG services

Liquefied natural gas (LNG) is a cleaner transport fuel than diesel, for instance, and it therefore makes an important contribution to reducing emissions in shipping and road transport. In addition, engines running on LNG are quieter, reducing noise pollution. What is more, LNG, as a portable fuel, could be an ideal solution for industries that need gas but are located in areas that lack gas pipelines.

In 2014, Gate terminal (Gate) further developed as an LNG hub, with a multi-faceted offering of LNG services for its customers. In this way, Gate contributes to diversifying the gas supply routes and thus to the security of supply in Europe.

In 2014, the number of ships for supply and throughput of LNG compared to 2013 grew from 23 to 34. This growth was mainly caused by the increase in small-scale (particularly truck loading) and reloading activities, whereby LNG loads are split into smaller quantities and then transported onwards. This enables Gate customers to distribute LNG as fuel for sea-going vessels, ferries and trucks, and for use in industry.

In January 2014, Gate took into operation a loading station for LNG tank trucks and containers with a total capacity of 5,000 tank trucks per year. In addition, together with Vopak, we announced on 3 July that Gate will be expanding its break-bulk infrastructure and services.

In the summer, the construction phase started. This will result in the construction of a third jetty and associated installations, specifically intended for break-bulk activities. The completion of the installation and the start of the first services are planned for mid-2016.

Power-to-gas

To enable the transition towards a more sustainable energy supply, new solutions are needed for the storage and transport of energy. The supply of electricity from wind and solar power is very variable, depending on weather conditions, and it is therefore not always in line with demand. Power-to-gas, in combination with the existing gas infrastructure, offers a solution to ensure that the oversupply of sustainably produced energy is not entirely lost. In an electrolysis installation, sustainably generated electricity (solar and wind) can be used to split water into oxygen and hydrogen. By combining the hydrogen with carbon dioxide, it is even possible to produce methane, which is the main ingredient of natural gas. This is a process that is clean and sustainable.
Both the hydrogen and the methane can then be fed into the gas infrastructure. In this way, temporary surpluses of sustainable energy can be stored for later use. Overload of the electricity networks can thus be prevented and no investments need to be made to expand them. Gas is easy to store, and it is also the cheapest form of energy to transport. This creates a new role for the natural gas infrastructure, namely as a place of storage and a means of transport for sustainable energy.

Power-to-gas, in combination with the existing gas infrastructure, offers a solution to ensure that the oversupply of sustainably produced energy is not entirely lost.

In 2014, together with Energy Valley, Torrgas, Siemens, Stedin, A.Hak and Hanzehogeschool/ Entrance, we set up a consortium that will carry out research into power-to-gas. The consortium aims to complete the construction of the first large-scale and fully integrated power-to-gas-installation in the Netherlands within two years. The installation in Delfzijl will have a production capacity of 12 Megawatt, and will produce hydrogen and syngas for the chemical industry.

Green gas: from grass to gas

Gasunie aims to increase the share of green gas in the energy mix by developing, together with third parties, new concepts and revenue models. That is why, in 2014, New Energy joined forces with HarvestaGG to build an installation in the province of Groningen that HarvestaGG can use to produce biogas (amongst other things) from biomass (grass), after which we treat and liquefy it into bio-LNG. HarvestaGG has developed a process that fully utilises the value of the biomass. From approximately 150,000 tonnes of grass, it will produce some 20 million m3 of biogas, which, after upgrading (removal of CO2) and liquefying, will result in approximately 6,500 tonnes of bio-LNG. In addition, the same process produces some 12,000 tonnes of liquid feed in the form of grass juice (used as feed for pigs, for example), some 17 million kg of biological CO2 (which can be reused), and some 28,000 tonnes of fertiliser pellets. This is an example of bio-based business. The installation will stimulate the local economy in terms of new jobs, as it will employ some 20 direct FTEs and 15 indirect FTEs. The permit is expected to be granted at the end of 2015, after which construction can start. Before that time, some extra steps will need to be taken in order to establish a broadly supported investment and find strategic partners who can take on the construction of these and future installations.

Green-gas booster

With a green-gas booster, green gas can be transferred from one network to another. In 2014, together with various parties, we considered the wishes and possibilities in the Netherlands with regard to such transfers. For example, together with Attéro and Enexis, we decided that a green-gas booster will be necessary in Wijster in order to transfer the share of green gas that cannot be taken in by the RNB network to GTS’s network. We are setting up a pilot for this, and will take a definitive investment decision in the spring of 2015. We plan to have these facilities completed in 2016.

Vertogas

Vertogas, one of our subsidiaries, is an autonomous and independent company which facilitates the trade in green gas through its certification system. Vertogas certificates state the origin of the green gas and the types of biomass used in its production. This provides green-gas traders and customers with a guarantee that they are dealing with genuine green gas. A recognised green gas certification system is essential for the further development of the green-gas market. Since 1 January 2015, the role of Vertogas as certification authority for renewable gas (green gas) has changed. As of 1 January, Vertogas acts on behalf of the Minister of Economic Affairs, and carries out its task on the basis of the new energy legislation, which also includes certification of renewable energy.
In the course of 2014, 530,000 certificates were issued, certifying 53 million m3 of green gas (calculated over a period of eleven months due to the changeover to a different book year). In 2014, one new producer applied for certification; in total, 21 producers are using green-gas certificates. In 2014, nine new traders joined; in total, 28 traders are now using the system.

Henk Herremans

Director Visser & Smit Hanab Contractors

Henk Herremans

Director Visser & Smit Hanab Contractors

Henk Herremans is Director of Visser & Smit Hanab (V&SH). Making connections is in the company’s DNA. The company aims for long-term relationships through which they invest in a sustainable society.

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Henk Herremans is Director of Visser & Smit Hanab (V&SH). Making connections is in the company’s DNA. The company aims for long-term relationships through which they invest in a sustainable society.

‘V&SH and Gasunie have actually been partners ever since the start of the construction of the gas infrastructure in the Netherlands. Gasunie is one of our major clients. Our day-to-day activities cover all aspects of maintaining, modifying and expanding the existing facilities and networks. These include regular maintenance, breakdown services and large new-build projects. Gasunie is a partner we engage with at the highest level, and our relationship is based on equality. We set high standards for ourselves and each other, because – like Gasunie – we highly value quality, safety and professionalism.

As contractor and client, we continuously work towards a common goal, although we may differ in our priorities. We, for instance, always seek to ensure that our employees are continuously deployed, while Gasunie is mainly concerned to ensure availability within the context of security of supply. This results in a productive spirit of cooperation.

Gasunie is a partner we engage with at the highest level, and our relationship is based on equality.

For the future, I would like us to be able to continue to develop the forward integration we both aspire to. We would like to be part of the process early on, to share our knowledge and experience during the designing and planning processes. We have been preparing for this for quite some time, and trust that we will shortly be taking this next step together.’

Jan Cees Vogelaar

Director HarvestaGG

Jan Cees Vogelaar

Director HarvestaGG

Jan Cees Vogelaar is Director of HarvestaGG, a company with a mission ‘to make the world a little greener’. HarvestaGG aims to help make agriculture and the transport sector more sustainable.

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Jan Cees Vogelaar is Director of HarvestaGG, a company with a mission ‘to make the world a little greener’. HarvestaGG aims to help make agriculture and the transport sector more sustainable.

‘I first came into contact with Gasunie at a meeting about the bio-based economy. As part of the agri sector, HarvestaGG has developed a good business concept for producing biogas from grass. We were looking for partners to complete the production chain. The concept appealed to Gasunie. In 2014, we started talks to see how we could strengthen each other, and we found a good way of doing that. We produce green gas from grass, which Gasunie can then upgrade to bio LNG and feed into its network.

In this project, we combine two different worlds – the agri sector and the energy sector – I think that’s special.

Our concept creates a win-win situation for everyone. Farmers have to become greener, due in part to EU legislation. Growing grass fits into this. And grass is also an excellent soil improver that can be harvested several times a year. For farmers, this is more profitable than, for instance, growing winter wheat. We turn it into fuel and so make our energy supply “greener”.

Gasunie is a company with a different, much more conservative, business model than I am used to in my sector. I’ve noticed that financing is a tricky issue – innovations naturally involve certain risks. It is difficult for Gasunie to invest using risk-bearing capital, because the company has a public task and must justify its investments.

I like to communicate in an open and transparent way, and that is appreciated. I get the same in return, which creates mutual trust in our collaboration. In this project, we combine two different worlds – the agri sector and the energy sector – I think that’s special.

If this project goes well, we’ll be able to start production in 2016. I hope that the first three or four locations in the Netherlands will be operational within five years. And then? This concept provides opportunities for the whole of Europe, and I like looking beyond borders. Perhaps we’ll also have one or two installations in Belgium by then.’

Dr. Martin Bürgel

Executive Vice President, Director Oil and Gas, PSI Aktiengesellschaft für Produkte und Systeme der Informationstechnologie

Dr. Martin Bürgel

Executive Vice President, Director Oil and Gas, PSI Aktiengesellschaft für Produkte und Systeme der Informationstechnologie

Dr. Martin Bürgel is Executive Vice President, Director Oil and Gas at the PSI Group in Berlin. PSI develops and integrates software solutions and complete systems for organisations, including...

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Dr. Martin Bürgel is Executive Vice President, Director Oil and Gas at the PSI Group in Berlin. PSI develops and integrates software solutions and complete systems for organisations, including infrastructure companies. The company is the supplier of Gasunie Deutschland’s important network control system.

‘PSI has developed a long-term business relationship with Gasunie Deutschland, reaching back to the old BEB Transport GmbH times. In 2008, a new chapter started when Gasunie Deutschland ordered INGa – the Integrated Network control system for Gas transport. As Gasunie Deutschland’s core IT system, INGa is now deeply rooted in the Gasunie Deutschland organisation and connected with many departments within the company.

Every complex, long-term collaboration project shows facets of a marriage – you get to know each other, you walk through difficult times together, find solutions, gain trust and create something new together. And you do all that in the rapidly changing world around you. This is just what we experienced with Gasunie Deutschland. It was a lot of work, and at times it was a huge challenge to implement all the new requirements. The results we achieved with regard to gas transport management and information security have been successful, and are now also being applied by other international TSOs.

You get to know each other, you walk through difficult times together, find solutions, gain trust and create something new together.

Both Gasunie Deutschland and PSI operate and support the system 24/7, and the jointly developed redundancy concepts and information security systems are the basis of the high reliability of the management of the physical gas flows. The development of this information system coincided with a period when both IT developments and European gas markets were in transition. For example, Gasunie Deutschland was faced with more shippers, shippers who had been separated from the infrastructure companies, and new transparency and flexibility requirements from the regulator.

Our cooperation is successful, because Gasunie Deutschland now operates one of the world’s best gas management systems. But the job isn’t finished. Our joint future challenge will remain the development of adequate software solutions that we can use to make the most of opportunities and developments that arise both within the IT sector and within the energy sector.’

Gert van der Tas

Director, Dura Vermeer Ondergrondse Infra

Gert van der Tas

Director, Dura Vermeer Ondergrondse Infra

Gert van der Tas is Director of Dura Vermeer Ondergrondse Infra. Dura Vermeer is active in construction, infrastructure, engineering and services. With its knowledge, experience and craftsmanship,...

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Gert van der Tas is Director of Dura Vermeer Ondergrondse Infra. Dura Vermeer is active in construction, infrastructure, engineering and services. With its knowledge, experience and craftsmanship, Dura Vermeer aims to help its customers achieve their objectives.

What matters is that you listen to each other and do something with each other’s ideas.

‘Together with four other companies specialising in underground infrastructure, we carry out medium-sized projects for Gasunie. We’ve been working for Gasunie for several decades, and to everyone’s complete satisfaction. For us, the most important thing is a serious relationship with the customer. We’re partners, and that’s how we work. What matters here is that you listen to each other and do something with each other’s ideas. Our relationship with Gasunie is open and straightforward – we respect each other and know each other’s expectations. If at some point something is not quite right, it is recognised and acknowledged, so that together we can look for a solution.

We’ve noticed that the projects that Gasunie is working on are becoming more complex. This also means that more is required of us, such as extra training for our employees – an investment we’re happy to make. However, we’ve also noticed that, subsequently, Gasunie itself is not yet always ready to take such a step. It’s a large organisation, which means many people are involved in the decision-making process. It would be good if we could better align this process.

A growing trend now is “forward integration”. We’d like to be involved in the discussions as early as in the planning phase. This would enable us, for instance, to contribute to the environment and detail engineering. In this way, we can benefit even more from each other’s expertise and create maximum added value.’

Jörn Maurer

Managing director Stadtwerke Schneverdingen-Neuenkirchen GmbH

Jörn Maurer

Managing director Stadtwerke Schneverdingen-Neuenkirchen GmbH

Jörn Maurer is Managing Director of the regional gas network Stadtwerke Schneverdingen-Neuenkirchen GmbH in North Germany, with 6,000 gas customers. As of October 2015, the network will be the...

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Jörn Maurer is Managing Director of the regional gas network Stadtwerke Schneverdingen-Neuenkirchen GmbH in North Germany, with 6,000 gas customers. As of October 2015, the network will be the first in Germany to convert from low-calorific to high-calorific gas.

‘Initially, another network, i.e., the Stadtwerke Achim network, was going to be the first market conversion area to convert to high-calorific gas. However, due to the technical complexity in Achim and the more favourable surrounding conditions in Schneverdingen, our Stadtwerk became the pilot project instead. Together with Gasunie Deutschland, we discussed the challenges of this market conversion and we agreed on good solutions.

Together with Gasunie Deutschland, we discussed the challenges of this market conversion and we agreed on good solutions.

In Germany, we have had previous experience with the transition from L gas to H gas, so the technical knowledge is there. Our main challenge is planning and coordinating the process between all external stakeholders involved, and mitigating potential risks. Gasunie was very helpful in this process, and our direct communication brought good results.

Being the first involves opportunities and risks. The regulator in Niedersachsen is particularly interested in the distinction between costs solely related to the market conversion and costs relating to the original network operation. Due to the size of our company and in order to be as transparent as possible, we have chosen to outsource the necessary services. This enables clear mapping of the costs related exclusively to the conversion process.

The main bottleneck has been the shortage of companies with sufficient manpower to facilitate the technical conversion process in time. We opted for a diversified tendering process. This mitigates the risks and allows competition to bring costs down. In our experience, there is no need to fear European tendering processes. It’s all manageable.’

Financial results

Key figures (reported)

Key figures (reported)
In millions of euros 2014 2013 revised *)
Revenues 1,651 1,464
Total expenses -758 -707
     
Operating result 893 757
Financial income and expenses -88 -140
     
Result before taxation 805 617
Taxes -202 -153
     
Result after taxation 603 464
     

*) For more information, see Note 1 ‘Revised figures due to IFRS 11 Joint Arrangements’ in the consolidated financial statements.

Revenues

Revenues realised were € 187 million higher than in 2013. This was mainly the result of the expiry at the end of 2013 of the tariff settlement repayment obligation relating to method decisions of GTS from the past.

Operating result

The operating result rose by € 136 million. In addition to the aforementioned increase in revenues, expenses were higher, mainly because in 2013 the Dutch part of the pension provision was released due to a new pension scheme. In addition, the higher temperatures in 2014 meant we used less energy for transport, resulting in lower energy costs compared to 2013. These will be settled in the tariffs in the future. The putting into operation of NEL also led to lower transport and energy costs, and in Germany the warm weather meant less gas transport was needed to refill the gas storage facilities. As expected, maintenance costs rose in 2014, but this was more than set off by lower other costs.

Key figures (normalised)

Key figures (normalised)
In millions of euros 2014 2013 revised *)
Revenues 1,651 1,670
Total expenses -758 -797
     
Operating result 893 873
Financial income and expenses -88 -140
     
Result before taxation 805 733
Taxes -202 -182
     
Result after taxation 603 551
     

*) For more information, see Note 1 ‘Revised figures due to IFRS 11 Joint Arrangements’ in the consolidated financial statements.

In this financial overview, the figures for 2013 have been normalised for the effects of the method decisions 2010–2013 on the revenues (approximately € 206 million) and the release of a part of the pension provision. In 2014, no effects occurred that require normalisation. The 2014 revenues are lower than the normalised revenues in 2013. This is due to the efficiency discounts imposed by the Dutch regulator and to lower capacity bookings at GTS. These are largely set off by higher revenues from GOAL and infrastructure being built at GUD. Financing expenses were lower due to the refinancing of the loans in 2013 and a lower debt position in 2014.

Investments

Over the past few years, we have invested heavily in the further development of the gas roundabout. For instance, in 2014, we delivered the new gas transport pipelines from Beverwijk to Wijngaarden and from Westerschelde West to Cambron, and in 2015 we will complete the Exit Ellund expansion project. Investment expenses in 2014 were lower than expected, due to the favourable development of the costs of materials and services. In addition, a number of projects were delayed or moved forward to 2015.
With regard to new expansion projects, we are anticipating projects that should enable the transition from H gas to L gas in Germany and the construction of a new nitrogen facility in the Netherlands. For the latter, an investment decision will be taken in the fourth quarter of 2015.

Expected financial results

On the basis of current insights, Gasunie expects to achieve a lower operating result from normal business operations in 2015. Revenues will decline, mainly due to the efficiency discount determined by the regulator in the Netherlands (1.3%). In addition, operating expenses are expected to increase due to rising maintenance costs for the network. This is directly related to the multi-year replacement programme.

In 2015, the focus will be on optimising new regulatory periods (2017 for GTS and 2018 for GUD). In 2017, a static efficiency benchmark may possibly also become part of the regulatory methods for GTS. The regulatory methods and the underlying parameters determine (to a large degree) the earning capacity of our regulated assets. With regard to the non-regulated business, the coming years will focus on further optimising the utilisation of existing assets and developing new assets where necessary. In general, we see a shift in the market from long-term to short-term contracts.

In the coming years, the emphasis will be on replacement and maintenance. In 2012, we started a multi-year programme in the Netherlands that focuses on enabling safe and reliable gas transport in the future. The total maintenance and replacement programme is expected to result in an annual investment level of approximately € 200 million. For the next three years, we expect an annual total investment level (replacement and expansion investments) of approximately € 300 million.

Regulatory receivables and debts

The tariffs that GTS and GUD charge their customers are regulated. They are determined by the regulators in the Netherlands and Germany respectively on the basis of the expected permitted revenues and the expected capacity bookings. If the actual revenues deviate from the expected revenues, the difference is settled in the tariffs of later years. For the energy costs of gas transport, a settlement mechanism also applies. For the sake of completeness, we refer to the description of the business models of GTS and GUD elsewhere in this report.

As at the end of 2014, the following amounts are outstanding, split in accordance with the periods in which the amounts are settled:

In millions of euros Outstanding as at end of To be settled in tariffs  
   2014  2015 2016 and beyond
To be settled by GTS 7 -14 21
To be settled by GUD -33 -9 -24
       
Total -26 -23 -3
       

Given the currently applicable IFRS rules, these positions may not be included in the balance sheet, but will be accounted for in the profit and loss account as soon as they have been settled in the tariffs of the year in question (cash basis).

In 2014, in the revenues in the Netherlands and in Germany, repayments were settled of € 12 million and € 9 million respectively.

Financing

In 2014, we did not make any significant repayments on our long-term loans. Given that our investment programme was relatively modest, we did not need to attract any bond loans in 2014. However, at the end of 2014, we did make use of the loan facility that the European Investment Bank (EIB) placed at our disposal for the financing of the pipeline construction between Odiliapeel‒Melick and Beverwijk‒Wijngaarden. We drew € 50 million on this facility with a duration of 10 years. Because the investment expenses of these projects were lower than expected, we cancelled the remaining amount of the loan facility.

During 2014, our current financing liabilities increased from € 406 million to € 697 million. This increase was mainly due to the fact that the remaining duration of one of the long-term bonds fell below 12 months. Besides short-term deposits on the money market, we made frequent use of the Euro Commercial Paper (ECP) programme.

The total interest-bearing loan at the end of 2014 was € 4,103 million, a decrease of € 181 million compared to the end of 2013. The balance sheet item ‘Cash and cash equivalents’ increased and was € 47 million at the end of 2014 (end of 2013: € 36 million). As a result, our net debt position (interest-bearing loan minus cash) decreased in 2014 by € 192 million to € 4,056 million.

In July 2014, we renewed our committed stand-by credit facility. The new facility amounts to € 750 million, has an initial duration of five years that can be extended twice by one year, and has been concluded with nine international banks.

Solvency at year-end 2014 was 53% (2013: 51%). The increase in solvency is due to retained earnings and positive cash flows.

In our financing policy, besides seeking to maintain our liquidity position at an adequate level, we also strive to have sufficient access to financing alternatives and to attract financing as efficiently as possible. To adequately meet these objectives, we make use of the Euro Medium Term Note (EMTN) programme, the ECP programme mentioned above, and our own activities on the private money and capital markets.

Looking ahead, a € 500 million bond loan will need to be repaid in October 2015. Because we expect a positive cash flow from operating activities in 2015, our long-term financing need in 2015 will be lower than the above-mentioned repayment amount. During 2016 and 2017, we will need to repay bond loans of € 700 million and € 750 million respectively. During 2015, we will determine whether these repayment peaks will be lowered in 2016 and 2017 through a proactive financing policy.

Credit ratings

In 2014, the rating agencies Standard & Poor’s and Moody’s Investors Service did not change Gasunie’s credit ratings. Our long-term credit rating with Standard & Poor’s is A+ with a stable outlook and the short-term rating is A-1. With Moody’s Investors Service, the long-term credit rating is A2 with a stable outlook and the short-term rating is P-1.

Safety and the environment

As part of the gas value chain, we aim to deal responsibly with our environment. We do this in various ways, such as by developing sustainable business activities, dealing safely and responsibly with the environment, and reducing our own carbon footprint.

Safety: always a priority

An important enabling factor for carrying out our activities is the safety of our employees and the communities in which we work. A priority for us is therefore to create a safe and healthy workplace and to minimise risk to the natural environment. Since safety is an important indicator of the quality of our work, we want to be one of the best international gas infrastructure companies in terms of safety performance. European benchmarking of similar gas transport companies, carried out by Marcogaz (the representative body of the European natural gas industry on all technical issues), shows that we are already performing well within our reference group, and we naturally strive to maintain this position. In this section, we describe our main safety results. Other safety-related topics are discussed in Annex IV.

Our results in the field of occupational safety

Despite all our efforts in the field of safety, the results in 2014 show a less positive picture than in 2013. The number of injuries resulting in absence doubled, not only in the case of our own employees (from 2 to 4), but also relating to our contractors’ employees (from 3 to 7). The number of reportables per one million hours worked also increased (from 3.6 to 5.0). We investigated the cause of these incidents and started a programme to improve safety awareness (see Safety: opportunities for improvement). We also record the number of potentially dangerous incidents (incidents that did not result in injury but could have had serious consequences). In 2014, we registered 17 of these, compared to 20 in 2013. We always carefully analyse these potentially dangerous incidents to prevent recurrence.

We carry out ongoing inspections, which play a key role in helping us to ensure the integrity of our transport system.

Technical safety: safe management and maintenance of our pipelines and installations

All our installations, including our transport installations, comply with the legal requirements for external safety. To keep our underground pipelines in good condition, we take both preventative and corrective measures. In particular, we carry out ongoing inspections, which play a key role in helping us to ensure the integrity of our transport system.

We inspect our underground pipelines, both on the inside and on the outside. For inspecting inside the pipelines, we use intelligent ʻpigsʼ, detection equipment that is carried through the pipeline by the gas flow. In 2014, we inspected 339 kilometres of HTL pipelines in the Netherlands on the inside (2013: 267) and 186 kilometres of RTL pipelines (2013: 196). In Germany, we inspected 331 kilometres. For 135 kilometres of pipeline for which we could not use the intelligent pigs, we used an above-ground inspection method: the External Corrosion Direct Assessment (ECDA). ECDA is a method we developed ourselves for inspecting pipeline segments that cannot (or only with difficulty) be examined by pigs.

Besides providing information, placing marker poles above the pipelines and carrying out visual inspections, we also carry out aerial surveys of our pipeline routes by helicopter. In 2014, these aerial surveys revealed various anomalies that led to immediate action to maintain a safe situation.

External safety: bottlenecks resolved

In 2011, the Decree on the External Safety of Pipelines came into force in the Netherlands. This decree, which is designed to ensure that pipelines are situated in safe locations, requires that measures are taken within three years to resolve bottlenecks at locations that have vulnerable objects within the ʻ10-6 contourʼ. To comply with this legislation, we mapped out existing and potential bottlenecks. We then asked all local authorities involved whether the situation we had mapped out indeed reflected the situation on the ground (e.g., with regard to the presence of people and buildings). On that basis, we have since developed and applied appropriate measures in each case.
In 2014, we solved the last five bottlenecks that we had mapped out, which completed the redevelopment programme. However, in the future, new bottlenecks may arise if hitherto unused building options available under existing zoning plans are taken up.

Pipeline incidents

To guarantee safe and reliable gas transport, our infrastructure should not be disturbed. We therefore strive to make sure that our pipelines are not damaged. Should there be any damage to our pipelines in spite of our efforts, we will do our utmost to prevent gas leaks. Excavation works are the main cause of damage to our underground pipeline network.

In 2014, in the Netherlands, we reported three incidents of pipeline damage caused by mechanical excavation. In none of these cases did any gas leak into the air. In 2013, there were six such incidents, none of which involved a gas leak. At Gasunie in Germany, as in 2013, there were no incidents of pipeline damage in 2014.

Our results compared with others: European benchmark for pipeline incidents (EGIG)

As all European gas transport companies record their pipeline incidents in the same way, we can easily compare our performance in this part of the gas transport chain with that of other companies. The European Gas Pipeline Incident Data Group (EGIG) registers the performance of European gas transport companies. With regard to pipeline incidents with gas leaks, we score better than the European average. In 2013, our average number of incidents over the past five years was 0.099 incidents per 1,000 kilometres. The average recorded by EGIG was 0.158. In 2014, our average was 0.094 incidents per 1,000 kilometres. The EGIG average for 2014 was not yet known at the time of publication of this annual report.

Safety: opportunities for improvement

We go to great lengths to make sure that our safety performance is excellent. However, in some respects, there is still room for improvement.

Promoting safety awareness

It is not without reason that we put the bar very high where our safety performance is concerned. This year, we were dissatisfied with our results, because we failed to achieve our goal with regard to the maximum number of reportables per one million hours worked. To improve our safety performance, we set up two programmes to take the safety awareness of our employees and contractors to an even higher level.

Veilig werken? Zeker weten!

The first initiative is a campaign to promote safe behaviour: Veilig werken? Zeker weten! (Working safely? Of course!). Before they start working on pipelines and installations, our employees must always carry out a last-minute risk analysis (LMRA) to make sure they do not overlook unexpected risks. If they detect an unsafe situation or observe unsafe behaviour, they should take action.

Employees play a key role in working safely. However, management will need to create the right conditions; for instance, by ensuring that employees have the appropriate knowledge and skills and by making sufficient time and suitable means available. The role of our managers in this regard has been laid down in the HSE Management Code. Our Executive Committee goes on field visits every quarter, both in the Netherlands and in Germany, to underline the importance they attach to working safely.

Roadmap to Safer Behaviour

We asked TNO to support us in developing a roadmap, in which we bring together existing and new initiatives in the field of safety and safe behaviour, and which we want to use to improve our safety performance in the coming years. As a basis for the roadmap, we mapped the current situation in 2014 by means of employee surveys. Because every employee plays a role in our safety performance, all employees are involved, both in the office and in the field. Temporary workers and a selection of contractors also participate. In 2015, we will continue with this.

Because every employee plays a role in our safety performance, all employees are involved.

Increasing safety regarding integrity of purchased materials

Over the past few years, as a result of incidents involving materials such as pipe tees, line pipes and reducing tees, we have conducted several investigations into the supply of materials that do not conform to the specifications in our orders. From our own internal research and external research by the sector, it appears that statements made by suppliers regarding the composition and requirements of the products delivered cannot always be relied upon to be accurate, also if the suppliers are being supervised by an external inspectorate. This does not necessarily mean that the materials deviate from the order to such an extent that they pose a threat to process safety, but it is certainly true that they are more likely to do so if the properties of the materials are not as ordered. Moreover, if the discrepancy is discovered just before the materials are needed, the project may be delayed if the materials require further inspection and no other, demonstrably correct, materials are available.

We have therefore reviewed our materials purchasing policy. To increase the reliability of the delivered materials – and thus reducing process safety risks as well as project risks – we modified our purchasing strategy and the supervision of the delivered materials in 2014. Part of the new policy is that we buy materials under the supervision of our own certified inspectorate. We check the qualifications of our suppliers by scrutinising their technical skills, their organisation and their quality management. These qualifications will need to be renewed periodically.
In the meantime, we check the reliability of our suppliers by carrying out spot checks. Since this process is very time-consuming, we look for suppliers with whom we can build up long-term relationships. In 2014, we started auditing existing and potential suppliers; we visited 20 suppliers this year. In total, we want to visit about 30 companies, starting with the most risky products for our company, which are evaluated on the basis of safety, purchasing criteria and project risks.
Initial results indicate that not all suppliers have their purchasing process in order when it comes to traceability of materials. We have noticed that it is difficult to convince the other suppliers to change their procurement process in this regard.
In addition, we have found that some companies do not produce and deliver in accordance with our Gasunie Technical Standards. We are therefore now using a tightened inspection policy, combined with a higher frequency of inspections.

We do everything in our power to keep harmful emissions to soil, water and air to a minimum.

Environmental performance

Minimising our impact on the environment

Some of our business activities – activities characteristic of the gas industry – have an impact on the environment. These include the laying of pipelines, the construction of gas installations, the pressurising, transporting and blending of natural gas, metering and regulating gas flows, reducing gas pressure and maintaining installations. Such activities require energy, and that brings with it the occurrence of emissions. In addition, substances we use to ensure the safe functioning of gas transport installations, such as glycol and lubricating oil, also affect the environment, as do the activities in our offices, albeit to only a limited extent. We do everything in our power to keep harmful emissions to soil, water and air to a minimum.

Certified environmental care

To guarantee that we take the environment well into account in relevant business processes, we have an environmental management system (EMS) that is certified to the ISO 14001 standard. To ensure compliance with this standard, our management system is checked annually by an external auditing agency.

CO2 emissions

It is our ambition to take a leading role in reducing CO2 emissions. The historical base year on the basis of which we have formulated our reduction targets and measure our performance is 1990, which is also used as a baseline internationally, as agreed in the Kyoto protocol. In cooperation with a number of European network operators, we aim to have in place CO2-neutral energy provision by 2050. In order to fulfil this ambition, we have set out a strategy with an interim milestone. This milestone is a 40% reduction of CO2 equivalents by 2030. This is in line with related developments in Europe. We can achieve this reduction across the whole scope of the Green House Gas Protocol (GHG Protocol), as explained below. We will continue to observe the reduction target that we had already set for 2020.

In an absolute sense, our target entails a reduction of 124 kilotonnes of CO2 equivalents. As of 2013, we have been reporting in accordance with the standard of the Greenhouse Gas Protocol (GHG Protocol). This protocol for greenhouse gases distinguishes various categories (scopes), ranked according to the origin of the greenhouse gas. These scopes are:

  • Scope 1
    Scope 1 includes all emissions that are a direct result of our own activities (e.g., the CO2 emissions of gas-fired compressors and engines used for compression; our own gas consumption for heating buildings and for the boilers at gas receiving stations). Scope 1 also includes the CO2 equivalents from methane emissions, and the emission of hydrofluorocarbons (HFCs), which are used in cooling processes.
  • Scope 2
    Scope 2 includes the indirect emissions of energy that has been procured (e.g., from an electricity company). In our case, the CO2 equivalents in Scope 2 come mainly from the use of electricity for electrical compressors and for the production of nitrogen. Scope 2 also includes the electricity consumed in our offices and our installation buildings.
  • Scope 3
    Scope 3 includes all other indirect emissions resulting from our business operations (e.g., road, air and rail travel and energy required for producing the nitrogen we procure).

In 2013, a number of network operators in the Netherlands developed a new model for reporting CO2 emissions on the basis of the Green House Gas Protocol. We are applying this model as of the year under review. Since the model is not entirely the same as the model of previous years, our current report only includes the totals of Scopes 1, 2 and 3 when referring to years prior to 2013.

CO2-equivalent emissions according to the Greenhouse Gas Protocol
CO2-equivalent emissions according to the Greenhouse Gas Protocol

In 2014, the total CO2-equivalent emissions were significantly lower than in 2013. This is mainly due to lower fuel consumption in 2014, which led to considerably lower emissions under Scope 1. Because of the relatively mild winter in 2014, less gas was transported through our network, so that less compression was required for transporting the gas.
Of the 117 kilotonnes of CO2 equivalents caused by gas consumption in our installations, approximately 20% was due to the deployment of a flare on the Peakshaver, the same as in 2013. CO2 equivalents due to electricity consumption in 2014 were similar to figures in 2013. The electricity consumption was mainly due to the deployment of electric compressors (65%), the liquefaction of natural gas on the Peakshaver (10%) and the production of nitrogen at Ommen and Kootstertille (3%).

Methane emissions

Our methane emissions in 2014 (8,379 tonnes) were lower than in 2013 (10,204 tonnes). Some 60% of this decrease in emissions in 2014 compared to 2013 is due to the fact that we paid a great deal of attention to measuring and repairing small leaks at gas receiving stations and metering and regulating stations. We will continue to do this in the coming years.

Methane emissions not only occur in the form of fugitive emissions, but are also due to gas venting during maintenance work. In Germany, methane emissions decreased compared to 2013, because there was less work on the pipelines and less gas therefore needed to be vented. Venting is necessary to enable work to be carried out safely. Of course, we try to prevent these emissions as much as possible. (See below: Recompression for work on pipelines). Methane is also released when the compressors are started and stopped and during the use of measuring equipment.

Footprint reduction

In 2014, we continued to investigate ways of reducing our footprint, and carried out various projects for this purpose, including an elaborate ‘leak detection and repair’ (LDAR) programme, which we carried out at our large compressor stations and at the Peakshaver. In addition, in 2014, we measured and assessed approximately 388 gas receiving stations, 22 valve stations and 11 metering and regulating stations. Gasunie Deutschland also carried out many inspections in the context of our LDAR programme. On the basis of these details, we will be able to take appropriate measures to reduce the number of identified leaks.

In 2014, we continued to investigate ways of reducing our footprint, and carried out various projects for this purpose.

Recompression for work on pipelines

We try to avoid venting gas during pipeline activities as much as possible. However, it is sometimes necessary to vent the gas so that work on the natural gas pipelines can be carried out safely. For some years, we have been using a mobile recompression unit with which we recompress as much as possible of the gas that would otherwise have had to be vented, and transfer it to another pipeline. This reduces the amount of gas vented. In 2014, we recompressed 1.9 million m³(n) of natural gas, which means that we managed to prevent the emission of 28 kilotonnes of CO2 equivalents. We estimate that we saved nearly 0.5 million euros on natural gas costs in 2014 by deploying the mobile recompressor.

We apply various techniques to empty our pipelines of gas. The table below gives an overview of the volumes of natural gas that were released using these techniques, or whose release we prevented.

Technique for emptying pipelines of gas

Technique for emptying pipelines of gas
   2013  2014
  m3 x 1,000 gas m3 x 1,000 gas
Release of gas prevented by:    
Decreasing line pack 1,826 * 2,201
Recompression 2,268 1,946
Total 4,094 4,147
Gas released during:    
Flaring  0 250
Venting 1,152 959
Total 1,152 1,209

This is an estimate based on switch programmes that we use during pipeline operations. These enable us to safely make pipelines gas-free and continue gas transport without interruption by means of re-routing.

One occasion that made venting necessary was a major project involving the renewal of gas receiving stations and metering and regulating stations. To be able to carry out these activities, these stations first needed to be depressurised. In addition, we also had to depressurise pipeline segments on a number of occasions in order to be able to work on them. In 2014, slightly less gas was vented than in 2013.

Waste

The very diverse activities we carry out result in waste. In the light of safety considerations, environmental regulations, the need for good environmental care and maintaining good cost control, we naturally want to dispose of this waste responsibly. We comply with the regulations laid down in the Environmental Management Act and the various environmental permits that we obtain for our activities.

In 2014, in the Netherlands and Germany, we disposed a total of 5,880 kilotonnes of hazardous waste and 18,418 kilotonnes of non-hazardous waste. Compared to 2013, the total amount of waste increased from 20,430 kilotonnes to 24,298 kilotonnes, which was mainly due to the fact that we disposed more construction and demolition waste from polluted locations.

The ever-diminishing availability of raw materials makes it increasingly attractive to use waste as semi-finished products. This makes waste valuable – although it also means that requirements regarding the separation of waste at source will be stricter than before.
At our locations, waste such as chemicals, oils, fats and detergents are collected separately and then taken by accredited waste collection agencies to approved waste processing plants.
Approximately 7% of the waste comprises metal, which can almost entirely be re-used.

We prefer to have the waste resulting from our operations in the Netherlands processed in the country itself, to prevent unnecessary transport. If it has to be processed elsewhere, we make it clear that the use of child labour in processing the waste is totally unacceptable.

Natural gas consumption

For the transport of natural gas, we make use of gas turbines and gas motors. Many of these run on natural gas. We also use natural gas to heat gas at gas receiving stations (because gas cools off when pressure is reduced). Finally, we use natural gas for heating our offices and utility buildings.

The amount of natural gas we transport and the fuel we use for compression depends, among other things, on the weather and the demand for natural gas. In 2014, due to the mild winter, we used only 81 million m3 of natural gas. This is a significant decrease compared to previous years. In addition, by moving the gas flows (swaps) at intake and exit points of neighbouring network operators, we tried to reduce the amount of compression required. In doing this, we prefer to use electrically driven compressors rather than gas-driven compressors, because environmental legislation limits the emission of nitrogen oxides. This measure also led to a reduction of our own gas consumption.

Electricity consumption

We use electricity for the production of nitrogen, for the compression of natural gas, for liquefying natural gas, for the compression that is required for storing natural gas in salt caverns, and for our offices and utility buildings.

Since 2006, as a result of putting the new electric compressors into operation at the locations in Grijpskerk, Anna Paulowna, Scheemda, Wijngaarden and Zuidwending, electricity consumption for the purpose of compression has increased. Electricity consumption in 2014 was slightly lower than in 2013. The compressors in Wijngaarden, Anna Paulowna and Scheemda were used less often, mainly because less compression was needed due to the mild winter weather at the beginning of 2014. The difference in energy consumption compared to 2013 is more significant for gas turbines than for electrically driven compressors.

Together, the compressors at the installations at Scheemda, Anna Paulowna and Wijngaarden used approximately 64% of the total volume of electricity. The underground storage facility EnergyStock at Zuidwending used approximately 16%, and the Peakshaver at the Maasvlakte site used 10% of the total volume of electricity. In 2014, 2% of the total volume of electricity was needed for the production of nitrogen at Ommen, Kootstertille and Zuidbroek. As the production of G gas will gradually decrease over the next few years and we will increasingly need to work with H gas, it is expected that, in the future, more nitrogen will be required to bring H gas to the required quality, which will also require more electricity.

Water consumption

We mainly use water for the cooling process in our Peakshaver at the Maasvlakte site, for cleaning purposes and sanitary facilities. In 2014, we used approximately 13.3 million m3 of surface water (2013: 8.7 million m3) and 36,000 m3 of mains water (2013: 46,451 m3). In 2014, the mains water consumption at Gasunie Deutschland was 2,670 m3 (2013: 1,791 m3).

Green-gas cars

Cars that run on green gas release less CO2 and fine particles than cars that run on other fuels. Three years ago, as part of our footprint reduction policy, we started to ʻgreenifyʼ our fleet of vehicles. We initiated a pilot project with 21 company vehicles used by staff to maintain our gas transport network. In due course, we aim to have our whole fleet of 284 vehicles running on green gas. Experiences so far have been positive. In 2014, it was therefore decided to expand the number of green-gas vehicles in 2015 by 15 vehicles of a different type, to gain new experiences. With these extra fifteen green-gas Transporters, which together will cover some 390,000 kilometres per year, we want to save approximately 50,000 kg of CO2 and some 65,000 litres of fossil fuel per year. The cars were taken into use in the first quarter of 2015. In 2015, we also aim to place three green-gas cars at the disposal of our employees, which they can share to drive to and from meeting locations across the Netherlands. Employees who are eligible for a lease car are also given the opportunity to choose a lease car that runs on green gas.