Markets

China will more than double its natural gas consumption over the next five years, the International Energy Agency (IEA) forecasts in its Medium-Term Gas Market Report 2012, released at the World Gas Conference 2012.

"As gas competes against other energy sources in all market segments, notably in the power sector, pricing conditions are a key element to keep it competitive everywhere," IEA Executive Director, Maria van der Hoeven, said at the official presentation of the report on Thursday.

Uncertainty surrounding China's future energy mix is alerting key global gas suppliers such as Qatar's Rasgas. "The Chinese power market is perhaps the biggest demand uncertainty in Asia. Coal has been the fuel of choice so far, but as environmental concerns increase, gas has a vast opportunity to have an increased role in the market," Al Mohannadi, general manager of the Qatari LNG producer Rasgas he told delegates at the World Gas Conference (WGC2012) in Kuala Lumpur on Wednesday.

Germany's gas consumption could rise markedly in the medium term as a result of the nuclear phase out – it could impact prices across Europe, say analysts. Much depends, however, on whether Chancellor Merkel's energy policy – alias 'Energiewende' – will ultimately work out.

E.ON, Germany's largest utility, is facing a loss in the lower double-digit million euro range on deals of an ex-trader. E.ON did not disclose whether the losses were incurred by traded contracts of natural gas or electricity in the forward market.

To launch capacity payment schemes at a national level in EU countries makes "no sense", said Philip Lowe, Director General for DG Energy in the European Commission. Only pan-European mechanisms could make sense and would support investment in new gas-fired plants, he said at Eurelectric's annual conference in Malta on Tuesday.

Investments in carbon capture storage (CCS) for new-built and operational power plants has a softening effect the carbon price - albeit not a big one, Energy Brainpool's chief analyst Tobias Federico said. Gas-fired power plants are allowed to operate without CCS until 2045 in the U.K., the Department of Energy and Climate Change (DECC) confirmed.

Amid gas replacing coal as the fuel choice for American power plant operators, the stockpile of coal has risen to a record high, latest data from the U.S. Energy Information Administration (EIA) shows.

Demand for natural gas is estimated to surge by more than 50% by 2035, provided that vast global resources of unconventional gas can be tapped in a profitable and environmentally friendly manner, the International Energy Agency (IEA) said in a special report.

The U.S. is experiencing a boom in shale gas production, with gas prices on record lows and power producers switching from coal to comparatively cheap and less carbon-intensive gas.

Hong Kong is running out of natural gas and is looking to augment its supply sources, Maggie Go, Business Engineer at Hong Kong power utility CLP said in Singapore today. "Demand for natural gas in power generation - a cleaner and more environmentally friendly alternative to coal - is burgeoning," Go told delegates at IBC Asia's 6th annual Gas Turbines Conference.

The dynamics of European energy prices are intertwined with those relative to the Euro area debt crisis. "As long as markets do not perceive a real turning point, there will continue to be a lot of volatility and – at times – some lack of strong direction coming from the fundamentals," the French investment bank Société Générale forecasts.

Turkey is close to importing natural gas from Iraq's autonomous Kurdish region with the buyer understood to have earmarked some of the volumes for gas-to-power generation. A deal could be struck soon: "A buyer is out there, right next door to Iraq," said Ibrahim Palaz, general manager of Botas International.

As the UK government is searching for a cheap and quick fix to avert a looming gap in power generation capacity, new gas-fired power plants are likely to emerge as the preferred solution, investment bank JP Morgan said today.

EU power demand is holding up better than anticipated despite declining gas consumption, Société Générale said today. Between January and April, EU gas consumption declined by 1.8% year-on-year (yoy) while electricity demand increased by 0.7%, respectively, figures in the bank's monthly demand report 'SG Energy Pulse' show.

Profitability of combined cycle power plants (CCGTs) in Spain is likely to deteriorate further on rising electricity supply from solar PV and wind power generation. “We may not have reached the bottom yet. No investment in new CCGTs is likely in the next 10 to 15 years,” James Cox, Principal Consultant, Poery Energy Consulting, said at the ‘Gas to Power conference’ in Valencia today.

The share of LNG re-exports from Spain has risen to a record 30% of import volumes in 2012 as shippers divert cargoes contracted on flexible terms to profit from high gas prices in Asia, lga Vedernikova, LNG Divisions Director at Clarksons said today. Spain gas demand is forecast to remain on low levels, leaving regas capacity underutilized.

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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.