Gasum Annual Report 2010

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ENERGY GASES The products of Gasum’s Energy Gases business are biogas and liqueﬁed natural gas. Gasum signed the ﬁrst agreement for the supply of biogas in Kouvola in 2010. A new natural gas liquefaction plant began operations in Kilpilahti, Porvoo. Energy Gases expands Gasum’s business into new customer and usage sites and into domestic gas sources. The business covers development work, sales and marketing related to biogas and liqueﬁed natural gas. BIOGAS IS A LOCAL AND RENEWABLE FUEL Upgraded biogas has properties that correspond to those of natural gas and can be used in the same sites as natural gas. Raw materials available for biogas production include waste water sludge, separately collected biowaste and agricultural by-products such as cattle manure or ﬁeld biomass not included in the food chain.The product of largescale gasiﬁcation of biomass (such as wood) is also referred to as bio-synthetic natural gas (bio-SNG). Gasum is developing the biogas business in cooperation with its partners. Gasum’s particular aim is to develop such biogas business that utilises the efﬁcient gas transmission network in its logistics. Gasum is a 20% shareholder of Biovakka Suomi Oy, a company that has biogas production plants in Vehmaa and Topinoja, Turku. LNG USED OUTSIDE THE PIPELINE NETWORK Liqueﬁed natural gas enables access to natural gas among customers outside the pipeline network catchment area. In natural gas liquefaction liquid nitrogen is used to cool gas to -160°C. LNG can be transported to end users by truck or ship. Between 1996 and 2010 Gasum sold LNG produced at a plant owned by AGA. Finnish uses of LNG have included trial runs of gas engines and as a reserve fuel for natural gas. In June 2010 Gasum opened a new liquefaction plant that quadrupled the LNG production capacity and improved LNG marketing opportunities. BIOGAS BUSINESS DEVELOPED FAVOURABLY IN 2010 Gasum and Biovakka began planning work towards the construction of a biogas facility in Nastola in March 2010. Project costs are estimated to total around €13 million. The facility will have annual capacity to process 120,000 tonnes of biomass, equivalent to 25 GWh of energy from biogas. Gasum signed the ﬁrst agreement on the supply of biogas in September, under which biogas will be produced by Kymen Bioenergia Oy, a company owned jointly by energy, waste and water utilities. The plant where biogas will be puriﬁed and its relative methane content increased will be constructed by KSS Energia Oy. Gasum will construct a pressurisation, measurement and analysis system in conjunction with the plant, enabling the injection of upgraded biogas into the natural gas transmission network and the measurement of gas quality and quantity. Biogas production will commence in early 2011, with biogas injection into Gasum’s network due to begin in the autumn. The annual objective is to produce around 7 GWh of biogas for the gas network. LNG MARKET REVIEW Gasum sold a total of 9,960 tonnes of LNG in 2010. In addition to LNG manufactured at the Porvoo facility, Gasum imported LNG from a plant located in Kingisepp, Russia. As well as Finland, LNG was also sold to Sweden where it is used as a reserve fuel for biogas at NGV ﬁlling stations. In Finland trial runs of gas engines comprise the main LNG market. LNG is also stored by Gasum for use as a reserve fuel for natural gas, with LNG enabling Gasum’s deliveries of natural gas to customers during pipeline maintenance. LNG is a low-emission alternative as a shipping fuel. In June 2010 Gasum acquired a land and sea area in Tolkkinen, Porvoo, that is suitable for the construction of an LNG reception terminal. Gasum completed several studies and conducted negotiations with potential customers in the shipping industry. Some of these customers could be provided with LNG supplied by the Porvoo plant. Regular and large-scale use calls for LNG imports and storage in the port. BIOGAS AND LNG BUSINESS DEVELOPMENT OUTLOOK In Gasum’s view biogas should be utilised, particularly as a transport fuel. A Government Decree on the feed-in tariff for electricity generated using renewable energy was adopted in 2010.This Decree will result in a considerable share of biogas ending up in power generation. In Gasum’s opinion the methods of biogas utilisation should be treated equally. The model of biogas production and distribution for use as a transport fuel implemented in Kouvola would also work in the Helsinki Metropolitan Area. Biogas available in the capital region would enable the switch of all gas-fuelled buses currently in service in the region to biogas. LNG export from Finland to Sweden is likely to end once the construction of the AGA LNG terminal Nynäshamn is completed in late 2011, while the development prospects for the Finnish LNG market are quite good. Potential customers include small and medium-sized enterprises operating outside the area covered by the natural gas network. The development of the LNG market in this segment depends on the competitiveness of the product against alternative fuels, liqueﬁed petroleum gas (LPG) and light fuel oil. Major customer potential for LNG can be found among shipping fuel consumers. The coming years will see stricter regulations on shipping emissions in the Baltic Sea, with the ﬁrst emissions restrictions to enter into force in 2015. Sulphur, nitrogen and particulate emission limits in particular will become considerably stricter. LNG-fuelled vessels do not need expensive special equipment to comply with the new restrictions. Many shipping companies and vessel engine manufacturers ﬁnd several beneﬁts in the use of LNG as a shipping fuel. 15

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