Markets

Investment bank Goldman Sachs said today a 14 pence price rise of NBP gas contracts for delivery between July and end-September is needed to prompt diversions of LNG cargoes from higher-yielding Asian destinations to the U.K. European power producers are advised to hedge forward gas in anticipation of rising prices.

The share of gas-fired power generation in the U.S. is forecast to surge by about 17% in 2012, amid a 10% decline in coal-based power generation, the U.S. Energy Information Administration (EIA) said in its short-term energy and summer fuels outlook.

India's gas shortage has reached alarming levels, undermining the Government's aims to boost the share of gas-to-power production. Operation of three gas-fired plants - with a combined capacity of 1,730 MW - had to be halted in India's National Capital Region (NCR) region due to a lack of gas supply to fuel the plants.

The growth pace of natural gas production in North America is set to slow down this year in reaction to low gas prices in the U.S. "More producers expect the drilling pullback in their dry gas plays to lead to a y/y [year-on-year] drop in their natural gas production," BarCap analyst Shiyang Wang said in a research note.

Eurelectric, the Union of the European Electricity Industry, calls on policy makers to improve the current negative political and economic climate for investments in the electricity sector. "Utilities need to get a proper return for their existing conventional power plants", it said today.

French investment bank Société Générale forecasts gas prices at the National Balancing Point (NBP) to turn south as the UK markets are well supplies and demand tepid. "Prices will start agreeing with fundamentals and turn south from their present levels," SocGen analysts Emmanuel Fages, Thierry Bros and Paolo Coghe said in a recent research note.

Natural gas is likely to take up a growing share in the U.K.'s energy mix, making up for any eventual capacity shortage following the withdrawal of E.ON and RWE npower from developing new nuclear capacity in the U.K under the Horizon Nuclear Venture. "Gas will fill the gap," Deutsche Bank analyst, James Brand, told Gas-to-Power Journal.

A growing number of power plant operators in the U.S. are choosing to retire coal-fired power plants in favour of gas-to-power generation in a move likely to propel up demand for domestic shale gas production.

Overcapacity in the German power generation mix and deteriorating economics of fossil-fuel plants has prompted Deutsche Bank to forecast closures, particularly of gas-fired power plants, until 2015.

Natural gas consumption in India and China has witnessed annual growth rates of 14% and 18%, respectively, over the last five years. Inaugurating the 7th Asia Gas Partnership Summit, in New Delhi today, India's Prime Minister, Dr. Manmohan Singh highlighted the role of gas as "an efficient fuel for power generation".

Electricity prices in Turkey have surged as markets are concerned about a looming reduction in Russian gas supply as well as bottlenecks in the country's gas transmission infrastructure, energy traders told ‘Gas-to-Power Journal’.

E.ON, the world’s largest utility by sales, is not planning to mothball any of its gas-fired power plants in Germany, despite the negative impact of oil-indexed gas purchase on the economics of operating power plants, a spokesman said today.

Electricity generated from gas still has an important role to play over the coming decades as the U.K. transitions to a low carbon economy, Energy and Climate Secretary, Edward Davey, said. "We can't take our foot off the gas for some time yet," he said with reference to the closure of a fifth of the UK's ageing fleet of power stations this decade.

French investment bank BNP Paribas sees "little hope" that the U.S. gas industry will sell more gas to electric utilities during the upcoming peak summer month based on increased cooling requirements.

Demand for natural gas in the EU will reach pre-crisis levels only by 2018, the French investment bank Société Générale said in a recent report.

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News in Brief

SPIG wins contract for Al Dur Phase II

Sept 23 – Italy-based SPIG, part of Babcock & Wilcox Enterprises, has won a contract to provide seawater cooling tower system to SEPCOIII for the Al Dur Phase II project in Bahrain. The Al Dur Phase II is a combined-cycle gas-turbine plant to generate 1,500 MW of electricity and approximately 50 million gallons fresh water per day.

MHI-MME to take over turbocharger production

Sept 20 – Mitsubishi Hitachi Power Systems will no longer produce MET turbochargers, the standard worldwide exhaust gas turbochargers used in stationary engines. Starting from January 1, 2020, these devises will be produced by Mitsubishi Heavy Industries Marine Machinery & Equipment (MHI-MME) instead.

Japan starts electricity futures trading

Sept 19 – Tokyo Commodity Exchange (TOCOM) has launched trading in electricity futures to advance price competition in Japan’s liberalized energy market. The East Area peakload electricity contract for October delivery first traded at 10.9 Yen per kWh, lower than the standard price of 11 Yen set by TOCOM in advance.

Duke to reduce rates in 2020

Sept 18 – Duke Energy Florida (DEF) customers will see lower bills in 2020. The utility filed a proposal with the Florida Public Service Commission to reduce rates for electricity and gas by more than 3% while adding more solar power and making grid improvements.

Myanmar approves three power projects

Sept 17 – Myanmar’s Ministry of Electricity and Energy has given the green light to plans for a 1,230 MW gas-fired power plant in Kanpauk, Taninthayi region, a 377 MW gas-fired unit in Ahlon, Yangon region and a 1,390 MW thermal plant in Milaunggyine in Ayeyawady region. The conflict-ridden country is currently producing electricity from 5,600 MW installed capacity, derived both from state- private-owned power stations.

Bonny Train-7 to cost $6.5bn

Sept 16 – Nigeria LNG is preparing to add a seventh processing train to Bonny LNG, bringing total capacity from 22 million tons per annum (mtpa) to 30 mtpa. Estimated to cost $6.5 billion, Bonny Train-6 will include a new liquefaction unit, a storage and a condensate tank as well as three gas turbine generators.

Schneider to complete L&T takeover by early 2020

Sept 13 – Venturing into India, Schneider Electric hopes to finalise the Rs 14,000 crore acquisition of Larsen & Toubro's electrical and automation business by early 2020. After the transaction is completed, Schneider will have a 65% stake in L&T, while the remainder will be held by Temasek.

MHI to advice China on energy conservation

Sept 12 – Mitsubishi Heavy Industries Thermal Systems, part of MHI, has set up a joint venture withan affiliate of State Grid Corporation of China (SGCC) to perform technical consulting for energy conservation projects in China. The focus of SGCC lies on building new decentralized power stations, biomass-derived power gensets and energy saving solutions.

Tender extended

Sept 11 – Turkmengas has extended a tender for the overhaul of the gas turbine engines of the NK-12ST and NK-14ST brands. Bidders need to pay to receive the tender documents, and then submit a written application to Turkmenistan’s state gas company.

Gas power units to buffer Germany’s coal exit

Sept 10 – Electricity output of Germany’s fleet of gas-fired power plants has risen to a over 13,5 billion kilowatt-hours in the three months from June to August, Fraunhofer ISE figures show. These productivity gains put CCGTs in pole position to balance supply swings in connection with the German coal exit.

Power of Siberia gas flows to start on Dec 1

Sept 9 – Russian gas supplies to China via the eastern route are going to start on December 1, 2019, Gazprom chairman Alexey Miller told his counterpart at CNPC in Beijing. The huge Chayandinskoye field, containing some 1.2 trillion cbm of gas, had already been connected to the 38 Bcm per year ‘Power of Siberia’ gas pipeline in August.

Hurricane Dorian causes havoc in the Bahamas

Sept 6 – In the aftermath of Hurricane Doran, a Category 5 storm, Bahamas Power and Light has said there is a total blackout in New Providence, the most populous island of the archipelago. Dorian made landfall twice on Sunday, ripping off roofs and electricity lines. In most parts, electricity has not been restored.

LNG cargoes via Bab-el Mandeb decrease

Aug 30 – Northbound LNG shipments via Bab el-Mandeb, a sea route chokepoint between the Horn of Africa and the Middle East, have fallen over the past three years as Egypt imports less natural gas from the Persian Gulf. In 2015 and 2016, both Jordan and Egypt imported up to 1.4 Bcf/d of LNG into Red Sea ports but these shipments fell sharply following the development of large gas finds in the Mediterranean.

Hokuriku Electric buys LNG cargo

Aug 29 – Japanese utility Hokuriku Electric has purchased an LNG cargo for delivery in November as soaring temperatures drew down gas in storage for the autumn. The cargo is understood to be scheduled for delivery in the second half of November from Malaysia’s Petronas and may well be destined for Hokuriku Electric’s first LNG-fired power generation unit,  the Toyama Shinko plant.

Technip spins off LNG activities

Aug 28 – TechnipFMC, has decided to spin off its European-based engineering and construction operations into a separate business, leaving the American half of the firm as an equipment supplier to the oil and gas sector. The split is due to be completed in the first half of 2020.

FLNG power market to top $930m by 2023

Aug 27 – The global market for floating LNG power vessel is projected to reach $ 931.6 million by 2023, up from $ 860.1 million seen last year, according to ReportsnReports. Major vendors of FLNG power vessels are Siemens, MAN, Wärtsilä, Caterpilar and GE which are targeting to use the technology to supply decentralized power to island nations in Southeast Asia and along the coast of sub-Saharan Africa and the Americas.

EIA monitors grid hourly

Aug 26 – The U.S. Energy Information Administration (EIA) has launched a beta release of its hourly electric grid monitor. The enhanced version analyses hourly generation by energy source and hourly sub-regional demand for certain balancing authorities in the Lower 48 states.