Markets

With heat waves becoming more frequent and widespread, an additional 720 million people will seek to get access to air-conditioning by 2050. According to the International Energy Agency’s (IEA) ‘Cooling for All’ this would require roughly 105 terawatt-hours (TWh) of electricity in 2050.

Summer gas prices in the United States are increasingly likely to fall to record lows not seen over the past 20 years due to high gas inventories and abundant new supply. For June, July and August, Henry Hub spot prices will average $2.37/MMBtu – some 19% lower than last summer’s average, the U.S. Energy Information Administration (EIA) forecasts.

Indiana-based Cummins has made an indicative offer to acquire MAN Energy Solutions, the large engine unit of Volkswagen Group. The German car maker reportedly also approached other MAN rivals to divest the engine maker before year-end, hoping to fetch some 3 billion Euros.

The French power grid operator RTE has halted operations of three nuclear power plants with a combined capacity of 3 GW amid a lack of cooling water as Europe’s latest heat wave unfolds. The onus is now on flexible combined-cycle gas power stations to balance the grid as demand for air conditioning surges amid scorching temperatures.

As Japan’s gas-burn in the power sector falls amid competition from coal, nuclear and renewables, the country is expected to lose its position as the world’s No.1 LNG importer to China by 2022. Despite sustained low LNG spot prices, it is cheaper for Japanese utilities to burn coal than natural gas.

With Europe’s gas demand seen surge nearly 30% to 400 Bcm by 2035, Russia is eager to grow its market share. Wood Mackenzie expects Gazprom will review its traditional, pipeline-based export model and turn to LNG instead, avoiding quarrels over new interconnectors like Nord Stream 2.

Jamaica’s Prime Minister Andrew Holness has confirmed the country is on track to generate half of its electricity from imported natural gas and renewables. The recent commissioning of New Fortress Energy's floating storage and regasification unit (FSRU) at Old Harbour helped boost the share of clean fuels to 44% of Jamaica’s energy mix.

CNPC, Eni, Socar and commodities trader Trafigura are striving to win a LNG tender for 240 cargoes over 10 years from Pakistan LNG, which seeks to secure stable gas imports for power generation. Analysts said the tender is likely to cost up to $6 billion at today’s prices, or $25 million per cargo.

Diversifying supply sources, Pakistan strives to secure attractively-priced LNG for power generation. Qatar is currently the country’s main supplier but the Pakistani government hopes to buy LNG from Australia and the U.S. at a price of around $3.5 per million British thermal units in the near future.

Chart Industries, the US LNG and energy equipment maker, has posted a rise in net income and revenues after receiving orders across all sectors from large liquefaction plants to small-scale LNG-to-Power installations and completed the acquisition of Harsco Air-X-Changers.

China Energy Group has decided to build 6 gigawatts (GW) of ultra-low emission coal-fired capacity this year. In regions with poor renewables potential, the government supports the use of coal as a “practical measure,” the utility said, as “gas is still too expensive.”

Wärtsila’s energy segment has lost market share as the performance in the second quarter was burdened by fewer power plant deliveries, as well as an unfavourable project and equipment mix. “We still need some orders to come through in the energy sector, but the sales pipeline is good and we expect those orders to be signed,” said Wärtsilä CEO Jaakko Eskola.

In the Permian, the gas-to-oil ratio keeps rising at mature shale plays. The mismatch between surging gas production and constrained takeaway pipelines has pushed down gas prices into negative territory, forcing well shut-ins from producers like Apache and Chevron.

High carbon and low fuel prices in June gave Germany’s gas power plants a competitive edge over lignite-fired generation. According to Fraunhofer ISE findings, gas units’ fuel and carbon costs at €24-28/MWh outcompeted costs of lignite plants at €30-40/MWh, at a time when power prices averaged just under €32/MWh.

Switching from coal to existing gas-fired plants could help avoid up to 1.2 Gigatonnes (Gt) of carbon emissions, lowering global power sector emissions by 10%, the International Energy Agency finds. Most potential for fuel switching is seen in the United States and in Europe.

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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.