Markets

The Japanese trading house Itochu has pulled the plug on investments in thermal coal mines and coal-fired power projects. Having just sold its stake in the Rollestone mine in Queensland, the Japanese firm said it seeks to increase the renewables ratio in its power plant portfolio to over 20% by the end of fiscal 2031.

Abundant supply of cost-competitive shale gas, combined with technological advances, has led to an ever-increasing average size of a combined-cycle gas power block in the United States. While the average CCGT had about 500 MW installed capacity before 2014, the power block capacity has since then increased to an average 820 MW, according to the EIA’s electric generator report.

Indonesia's upstream regulator SKK Migas has announced a significant gas discovery at the Repsol-operated Sakakemang PSC onshore Central Sumatra, Indonesia. If pre-drill estimates are realised, it would be the largest discovery in the country since ExxonMobil's Cepu find in 2001. The latest discovery has the potential to alter Indonesia’s gas supply balance and power generation mix.

New hybrid energy sources, consisting of a combination of renewabes and flexible gas generators, will cover up to 85% of the world’s energy demand growth through 2040, according to BP’s latest Energy Outlook. Fast-developing countries in Asia are expected to push up global energy demand by a third from today’s levels.

Production and use of refined coal – processed to reduce emission when burned – has reached record highs the United States, particularly in the power sector. According to EIA estimates, refined coal’s share of total coal tonnage consumed for U.S. electricity generation will have increased from 15% in 2016 to more than 18% through October 2018.

Sulfur dioxide (SO2), nitrogen oxides (NOx), and carbon dioxide (CO2) emission of the U.S. power sector will remain relatively flat, according to EIA projections, despite an anticipated 23% rise in electricity generation from 2018 to 2050, as most added generation will come from renewables of natural gas.

With electric cars gaining popularity, the global electric vehicle battery market is anticipated to grow at a record 18% rate to reach a size of $120 billion by 2027. Government initiatives and more wide-spread environmental concern in western countries are driving the electrification of the transport sector.

Mexico’s state-run electric utility Comisión Federal de Electricidad (CFE) is aiming to renegotiate take-or-pay clauses it had agreed with North American gas pipeline developers, including TransCanada and Sempra’s IEnova. CFE is the anchor customer for most new pipelines under construction, but the company's new CEO Manuel Bartlett wants to focus on hydropower, diesel and coal instead of gas-fired generation.

Beginning with the February billing cycle, customers of SCE&G, a wholly owned subsidiary of Dominion Energy, will start seeing the benefits of the Dominion Energy-SCANA merger reflected in their monthly energy bills. Typical customers will see their bills drop 15%, with further reductions in May for fuel and Demand-Side Management participants.

Seasonal imports of LNG help meet peakload gas demand in New England’s industrial and power sector. During the freeze in the first week of February, more than 800,000 million cubic metres per day of gas was imported via Excelerate’s Northeast Gateway floating regas facility offshore Boston.

Price will largely determine the share of gas-fired generation in the future power mix of the United States. Scenario analysis in the EIA’s latest Annual Energy Outlook (AEO2019) shows that natural gas could provide between 21% and 54% of all U.S. electricity generation, dependent on fuel prices and relative technology costs.

Implementing the German coal exit will see 12.5 GW of coal-fired capacity being closed by 2022, pushing up the country’s gas demand. To fully replace these shuttered coal plants with gas-fired generation would create a need for additional 81 TWh in gas supply, equating to an 8% rise of German gas demand, says the lobby group Zukunft Erdgas.

The UK government’s Department for Business, Energy and Industrial Strategy (BEIS) is inviting applications for funding under a new £320 million Heat Networks Investment Project (HNIP). Designated as ‘gap funding,’ the monies will be is offered through a combination of grants and loans over a period of up to three years.

If the asset swap of RWE and E.ON goes ahead, the resulting companies would have “unprecedented market power”, say Ines Zenke from energy law firm Becker Büttner Held. In 2018, E.ON agreed to buy RWE's subsidiary innogy and the two utilities agreed to exchange large parts of their assets. The swap will leave E.ON focused on regulated distribution grid with stable returns, while RWE takes on E.ON's and innogy's renewable business, on top of fossil power plants.

Natural gas is bound to gain importance in the German power mix starting from the mid-2020s when coal-fired capacity is gradually being phased-out. Energy Aspects says Germany’s coal exit will help more of the global LNG oversupply find a home in Northwest Europe. The 2022 start-up of the Wilhelmshaven FSRU will support this trend.

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News in Brief

Evol LNG helps power Australian gold mine

June 18 – Kirkalocka Gold Mine in Western Australia will use Evol LNG to fuel Zenith Energy’s 14.5 MW power station with regasified natural gas starting from September 2019. The mine is run by Adaman Resources and had been relying on diesel to cover its energy needs. Based on the current diesel price, Adaman Resources expects to reduce fuel costs by more than A$13 million (US$9 million) during the first six years of operation of the new onsite LNG-to-Power plant.

Shell Energy ordered to refund overcharged UK customers

June 17 – UK energy regulator Ofgem has ordered Shell Energy Retail to refund around 12000 customers who were overcharged after the Government’s cap on gas and electricity prices came into force in January. Shell Energy Retail s agreed to refund these customers by paying £29,000 in compensation (£5 per fuel), and also pay an additional £200,000 into Ofgem’s voluntary redress fund.

BASF enters battery market

June 14 – German chemical company BASF is using NGK Insulators’ sodium sulfur batteries as its entry point into the energy market. The Japanese manufacturer NGK is currently the only maker of the large-scale sodium sulfur (NAS) batteries, capable to store several hours of energy. A joint project in northern Germany uses NAS batteries that store energy for five hours, while a recently completed project in Abu Dhabi using 108MW / 648MWh of the systems with a full six hours storage duration.

CNPC boosts domestic gas production

June 13 – China National Petroleum Corp (CNPC), the largest Chinese oil and gas company, has announced plans for domestic natural gas output to reach 55% of overall domestic supply by 2025. Last year, CNPC managed to boost production by 5.9% to reach 138.02 billion cubic metres, while also increasing imports of pipeline gas and LNG.

Gazprom taps new gas deposits for Nord Stream 2

June 12 – Gazprom is fast-tracking hydrocarbon production in northwest Russia to boost reserves for export through the Nord Stream 2 pipeline (55 Bcm/y), currently being built through the Baltic Sea. At a meeting with Nord Stream shareholders, Gazprom noted that its Yuzhno-Russkoye field has yielded about 276 Bcm of natural gas, including 0.9 Bcm of hard-to-recover Turonian gas, since the start of operations. Turonian gas reserves, consisting of about 99% methane with no heavy residues, lie at a depth of 800–850 meters in reservoirs with low permeability. Commercial production at the Turonian deposit is scheduled to start in late 2019.

PG&E turns off electricity to avoid wild fires

June 11 – Pacific Gas and Electric Company (PG&E) has turned off electricity for some Californian communities at risk of a wildfire during the lastest heat wave. The authorized blackout started on Saturday in Napa, Solano and Yolo counties, with electricity being gradually restored over the course of Monday. Approximately 16,000 customers have been affected.

Gazprom to build power plants in Serbia

June 10 – Gazprom Energoholding has signed an Agreement of Intent (AoI) to build an upgrade several gas-fired power plants in Serbia. Together with Novi Sad, Gazprom Energoholding is already building a CCGT with some 200 MW capacity near a refinery in the Serbian town of Pancevo.

U.S. fund splashes out $4bn to buy El Paso Electric

June 7 – Infrastructure Investment Fund (IIF), a private investment vehicle within J.P. Morgan Inc., has agreed to acquire the U.S. utility El Paso Electric Co for $68.25 per share in a cash transaction. The enterprise value on the transaction is estimated at $4.3 billion. El Paso Electric customers will receive a total $21 million in bill credits over three years.

Caterpillar gensets back up Finnish data center

June 6 – The Swedish telecom giant Telia has ordered 12 Caterpillar gensets to provide standby emergency power to back up operations at its new data center in Helsinki. The Cat dealer Witraktor figured a system which includes eight Cat 3516B and four 3516E generator sets. The Telia Helsinki Data Center is the largest such facility in Finland, and its primary electric power supply comes from a combination of wind, hydroelectric and biomass.

Capstone wins orders in Iraq

June 5 – Micro-turbine producer Capstone has secured an order for two C600 Signature Series microturbines to provide 1.2 MW of energy to power a triethylene glycol (TEG) dehydration facility near Basra, in southern Iraq. The contract also includes Capstone’s new self-cleaning pulse filtration system, allowing the turbines to better withstand hot and sandy conditions with minimal maintenance.

Gas to supply record 43% of US power needs

June 4 – This summer, natural gas is forecast to cover between 40% and 43% of 2019 peak electricity demand in all U.S. states except Texas, according to projections by the Energy Information Administration (EIA). Gas demand soared to nearly 10,700 billion cubic feet (Bcf) last summer, a 16% rise from 2017 levels. Should there be another heat wave this year, that record may well be broken. Capacity wise, natural gas is on course to top its 45% share in the U.S. power mix.

Lukoil to upgrade CHP at Krasnodar

June 3 – Russia’s oil and gas company Lukoil has received government approval to modernize and expand three combined heat and power units in Krasnodar. The gas-fired CHP units have more than 400,000 hours and ran an average 74% utilization rate, the operator said. The upgrade will add 150 MW of power generation capacity and Lukoil said it expects the revamped power plant to be ready for commissioning as early as 2022.

GE commissions Al-Qudus CCGT in Iraq

May 31 – GE Power has installed and commissioned a new 9E gas turbine at the Al-Qudus combined-cycle gas power plant, run by the Iraqi Ministry of Electricity’s (MoE). The CCGT was previously capable of generating up to 1,125 MW and the turbine upgrade adds another 125 MW of capacity.

Groundbreaking takes place for Ohio CCGT project

May 30 – This Thursday morning, groundbreaking will take place for the $500 million Long Ridge Energy Generation Project in Hannibal, Ohio. Long Ridge, a 485 MW combined-cycle power project, is being developed by Fortress Transportation and Infrastructure Investors (FTAI). It will create up to 350 construction jobs and some 25 permanent jobs. The CCGT is expected to open in 2021.

Asia to spend more on renewables than oil & gas by 2020

May 29 – Utilities in Asia-Pacific region will invest more in renewables than on oil and gas exploration by 2020. Total capital expenditure in renewables will rise above $30 billion in the region by 2020, according to forecast of the consultancy Rystad Energy. India, Australia, Japan, Vietnam and South Korea will led the way in Asia’s green energy transition.

Ichthys LNG looses court claim against power sub-contractor

May 28 – JKC Australia LNG consortium, developer of the US$34 billion Inpex-built Ichthys LNG plant near Darwin, has lost a US$1.9 billion court case claim against a power station sub-contractor. Construction of the power station was subcontracted to UGL-led group which CIMIC took over in 2016 and subsequently cancelled the Ichthys power contract. The Western Australian Supreme Court in Perth now dismissed an application by JKC Australia LNG for upfront payment of damages. The power plant’s five gas turbines have already been handed over to Inpex, and KBR aims for the plant to be ready for commissioning this autumn.

San Miguel Energy claims $6.19bn subsidy for Ilijan plant

May 24 – South Premier Power Corp. (SPPC), San Miguel Energy’s development vehicle for the 1,200-MW Ilijan gas power project, has claimed that it already paid $6.19 billion in subsidies to state-run Power Sector Assets and Liabilities Management Corp (PSALM) for its financial obligations as independent administrator. The build-operate-transfer (BOT) contract for the Ilijan plant will expire in 2022; and by that time, SPPC will get ownership of the plant.