Markets

Natural gas future prices for May at the U.S. benchmark Henry Hub have firmed to $2.535/MMBtu due to increased demand from the power sector and for feedgas for a growing number of liquefaction and export plants. Energy Aspects flow data shows Sabine Pass LNG is taking 3.4 bcf/d would indicate all five trains are operating.

Imports of liquefied natural gas to Japan have dropped for a fifth straight month as thermal coal imports is outcompeting gas in the power sector. In March, some 9.58 million tons of thermal coal was imported, up 3% on February, while LNG cargoes delivered in the same month totaled nearly 7.3 mt, down from 7.93 mt a month earlier, according to Japanese custom’s data.

Working natural gas inventories in the U.S. have ended the withdrawal season on 30% lower levels than the previous five-year average for that time of year. According to EIA figures, natural gas in storage in the Lower 48 states at the end of March totaled 1,137 billion cubic feet (Bcf).

Resurgent economic growth in many developing countries will push the market for steam turbines to over $32 billion by 2024. Analysts at Global Market Insights anticipate the <3 MW steam turbine market will grow over 2% annually, with demand driven by decentralized cogeneration and geothermal units.

The Indian government may give way to utilities’ demands and allow power plants running on regasified liquefied natural gas (RLNG) to sell electricity into the higher-priced spot market, without having to adhere to their power purchase agreements. The proposed e-RLNG scheme will likely require fewer subsidies than in past years due to the fall in global oil prices.

Working natural gas in storage in the Lower 48 United States ended the heating season on March 31 at 1,137 billion cubic feet (Bcf) – the lowest level since 2014. The 2018–19 heating season was characterized by periods of significantly colder-than-normal temperatures, particularly in the Upper Midwest, the EIA said in its latest Weekly Natural Gas Storage Report.

Chevron’s $33 billion takeover of Anadarko, one of the world’s largest independent oil companies, will boosts its lead in the Permian Shale, and grow its midstream and LNG export business. Chevron CEO, Michael Wirth commented: “The transaction underscores our commitment to short-cycle, higher-return investments.”

Demand for natural gas in the U.S. power sector keeps rising as the number of combined-cycle gas turbine (CCGT) power plants has overtaken coal-fired plants, making the power sector compete for fuel with LNG export projects. Thankfully, the production of U.S. dry gas is going from strength to strength.

The U.S. Energy Information Administration (EIA) expects natural gas prices at the benchmark Henry Hub will to fall to an average $2.82/MMBtu this year, and decline further in 2020. The bearish sentiment is caused by a continuous rise in U.S. dry gas production, forecast to expand by 7.6 billion cubic feet per day (Bcf/d) this year to reach around 91.0 Bcf/d.

In the wake of Egypt’s latest tender for exploration licenses in the Red Sea, the Petroleum and Mineral Resources Minister Tarek El-Molla has forecast the country's overall natural gas output will reach more than 5 billion cubic feet per day (bcf/d) by the early 2020s. Anticipating a substantial gas surplus, the Government aims to use these volumes to increase power generation and to meet Egypt's LNG export obligations.

Updated data for 2019 by the International Energy Agency (IEA) show Chinese-added power generation capacities in Sub-Saharan Africa will total 9 GW over the decade between 2014 and 2024.  This does not include two large dams currently under construction  – the 2,160 MW Cacula dam in Angola and the 3,048 MW Mambila dam in Nigeria, which are unlikely completed before 2024.

Saudi Arabia will become the largest Middle East wind power market, Wood Mackenzie finds, with developers expected to build 6.2GW of wind capacitry, or 46% of the region’s total wind capacity addition, between 2019 and 2028. Flexible gas turbine or engine-driven power plants will be an ideal backup for rising volumes of intermittent wind energy.

JERA Co Inc., the largest Japanese LNG buyer and owner of power generation assets, has announced an overhaul of its business to increase medium-term LNG purchase activities, striving to cater for an anticipated rise in gas-burn in the Japanese power sector through 2030.

California, dubbed the Sunshine State, remains the largest net importer of all United States, receiving an average of 77 million megawatthours (MWh) annually, according to EIA figures. Pennsylvania was the largest net exporter, sending an annual average of 59 million MWh of electricity outside the state.

Global energy majors should take action to help governments promote the use of LNG and clean energy sources to meet national carbon emission targets, says Woodside Petroleum CEO Peter Coleman. Implementing carbon pricing internationally, in his view, would be “the most effective mechanism” to reduce emissions.

Page 9 of 154

News in Brief

Tohoku Electric tenders for LNG cargo

Aug 19 – Tohoku Electric Power, the fourth-largest electric utility in Japan in terms of revenue behind Tepco, Kepco and Chubu, is understood to be seeking an LNG cargo for delivery in September. A tender process is ongoing.

Cost for decarbonizing industry tops $21tr

Aug 16 – Total costs to fully decarbonize the four most polluting industries – cement, steel, ammonia and ethylene – are estimated to amount to $21 trillion between today and 2050. McKinsey said this could be lowered to about $11 trillion if zero-carbon electricity prices come down further compared to fossil fuel prices. In this event, industry could switch to using electricity for heating processes.

Co-firing Braskem plant with hydrogen

Aug 15 – Siemens is making fossil energy greener at the Braskem onsite power plant in Brazil. In this modernization project two SGT-600 gas turbines are co-fired up to 60% with hydrogen, enhancing efficiency for the production process of the adjacent the petrochemical complex.

Canada's CO2 tax to hit CCGTs

Aug 5 – Change in Canada’s carbon emissions tax regulation for new power plants has changed to also affect cleaner-burning, gas combined-cycle power stations starting from 2021. The move could significantly lower the profitability of gas generation and could prompt SaskPower reconsider its planned Moose Jaw gas power station.

GE CFO steps down

Aug 2 – Jamie S. Miller, General Electric’s chief financial officer, has decided to quit after two years in the job and 11 years with the company. Having overseen GE’s fiscal activities during a period of intense restructuring, Miller will remain in office while the GE board is looking for a successor.

Siemens HR boss quits

Aug 1 – Janina Kugel, Siemens chief HR officer, is leaving the company amid an apparently scattered working relationship and stark personal differences with CEO Joe Kaeser. Her contract will expire by mutual agreement on January 31, 2020.

ABB standardizes eBus chargers

July 31 – Zurich-based ABB, a member of the ASSURED consortium, is working on standardizing the specifications for automatic charging of heavy vehicles. The aim is to drive down the total cost of ownership for electric fleet operators, helping increase adoption of eBuses and eTrucks. Conformance and interoperability tests will be carried out in Q4-2019.

U.S. Senate helps fund EV charging stations

July 30 – The need for expanded electric vehicle charging infrastructure is greater than expected given that there had been over 1.75 million electric vehicles (EV) in North America at the end of 2018, a nearly 60% increase from the previous year. To help fund additional charging stations, among other things, the U.S. Senate approved the $287 billion America’s Transportation Infrastructure Act (ATIA).

PNOC, Lloyds to develop merchant LNG-to-Power projects

July 29 – Philippine National Oil Co. (PNOC) has signed a Memorandum of Understanding (MoU) with Lloyds Energy to develop a 1,200 MW LNG-fuelled power plant in partnership with Mitsubishi. Dubai-based Lloyds Energy is looking at ways to develop integrated LNG import facilities and gas power plants on a merchant basis in Bataan and Batangas provinces.

Macquarie finances CCGT in Mexico

July 26 – Macquarie Capital has chosen Credit Agricole, Natixis and SMBC to co-finance a $380 million combined-cycle gas power plant. The 560 MW plant is designated to be built in San Louis Potosi, a city in central Mexico.

Naturgy cashes in on gas network

July 25 – Spanish gas utility Naturgy has posted a 7% rise in core earnings for the first half of the year due to strong gains from its gas network business that helped offset falling revenues from power generation and slimmer LNG margins.

French court rejects appeal against Total CCGT

July 24 – Judges at an appeal court in Nantes have thrown out an appeal by environmentalist against Total’s planned Landivisiau combined-cycle gas power plant in Brittany. The 440 MW project, initiated by Direct Energy which was since acquired by Total, is over two years behind schedule. The French grid operator RTE has singled out the Landivisiau CCGT as “critical” in guaranteeing supply security in winter 2020/21 due to the planned shutdown of four coal power plants.

U.S. gas production falls in wake of ‘Barry’

July 23 – Shut-ins related to Hurricane Barry have scaled back U.S. gas production by 1.6 billion cubic feet per day, compared to last week, while power sector gas demand rose by just over 2.0 bcf/d. Consequently, there is significantly less gas available for storage so the injection rate has halved, according to Energy Aspects figures.

Blackout after fire at Madison substation

July 22 – Electricity is gradually being restored at Madison, Wisconsin, after 13,000 people experience a blackout following an explosion at a substation near Madison Gas & Electric’s 100 MW gas-fired Blount Generating Station. No injuries were reported.

Fuel switch could abate 1.2bn tons of CO2

July 19 – Some 1.2 billion tonnes of CO2 could be abated by switching to gas using existing infrastructure, if prices and regulation are supportive. According to the International Energy Agency (IEA), this would be enough to bring global CO2 emissions back down to where they were in 2013.

IEA launches methane tracker

July 18 – A new ‘methane tracker’, launched by the International Energy Agency (IEA), provides up-to-date estimates of current oil and gas methane emissions by drawing on the best available data. Analysts stressed methane emissions could be reduced by nearly half at no net cost.

Canada’s CO2 tax also affects gas power

July 17 – Change in Canada’s carbon tax regulation for new power plants has changed to also affect cleaner-burning, gas combined-cycle power stations starting from 2021. The move could cause SaskPower to reconsider its planned upcoming Moose Jaw gas power station.