Markets

Escalating output of U.S. gas production has launched a "race to the bottom", with gas prices reacting negatively to rising production. Gas-for-coal substitution, meanwhile, is starting to put significant pressure on coal prices, Deutsche Bank said today.

China will increasingly favour of environmentally friendly gas-to-power plants over coal-fired plants. In 2050, China's gas demand to power sector is forecast to surge to 413 Mtoe (BLUE Map scenario), compared to 195 Mtoe (Baseline scenario), Hirohisa Yamada, IEA energy analyst, told Gas-to-Power Journal in an interview today.

Cold weather conditions across Europe will prolong the recent rally for gas and power demand, but still weak fundamentals may mitigate its impact on prices, Societe Generale forecasts. Recent macro data and sentiment surveys conducted in January "all surprise to the upside", it added.

Deutsche Bank has issued a bullish estimate on a continued increase in gas-coal substitution in the U.S. The current situation in the markets is "unchartered territory", it said in a report today.

The Department of Energy and Climate Change (Decc) has reported the "largest ever three-month gas demand fall" in the UK fir the three months ending November 2011, with gas demand plunging by 19.1% to around 188 TW.

The U.S. is awash with cheap gas supplies for power generation due to rising domestic shale gas production, with Canadian natgas imports providing a "reliable backstop" for US gas-to-power demand, Louis Caron, energy risk specialist at Risk Advisory, SAS Group, told Gas-to-Power Journal today.

Energy shortages and rolling blackouts could become a real possibility in the UK in five years' time, warns Pilgrim Beart, founder of AlertMe. "A large fraction of our coal power stations are scheduled to be decommissioned in 2016. If you reduce supply without reducing demand then you get rolling blackouts," he told Gas-to-Power Journal.

Weakness in UK power markets is forecast to continue until 2013 as significant oversupply of power generation capacity is cutting into profit margins of gas and coal-fired plans, JP Morgan Cazenove (JPMC) said today in a research report. "UK power demand is worse than anaemic," JCMC analyst, Edmund Reid, said with reference to a drop in electricity demand below 2009 levels.

Societe Generale forecasts Europe's electricity demand in 2012 will see a mere 0.7% rise in annual demand as economic growth remains lacklustre. "Consumption should recover in 2012, but overall growth will likely to be modest," the bank said in its latest Energy Pulse report.

North American Electric Reliability Corporation (NERC) has alerted the U.S. energy industry of a growing reliance on natural gas as the primary fuel source at times of peak electricity demand. "The growing dependence on natural gas as a primary fuel source of on-peak capacity must be considered in planning, and operational measures must be in place to minimize interdependency risks," NERC told Gas-to-Power Journal.

The European Energy Exchange (EEX) will start OTC clearing for UK gas futures on 29 February, the bourse said Wednesday. Trading participants that are already admitted on the EEX Derivatives Market for natural gas can use the new service once they have registered for it at ECC, the clearing house of EEX.

Declining demand for Spanish gas-fired generation combined with unusually warm weather conditions this winter has led to an 8.7% drop in LNG imports to Europe in the second half of 2011, according to Deutsche Bank. Gas demand growth in Spain is forecast to remain sluggish as utilities are likely to favour coal over gas due to Spain's domestic coal subsidy scheme that will remain in place until 2014, analysts led by Mark Lewis in Deutsche Bank's latest European gas report.

China's State Electricity Regulatory Commission (SERC) has forecast an 8.5% drop in power consumption in 2012 on the back a slow-down in China's economic growth. Compared with the 11.7% surge in electricity demand to 4.7 trillion kilowatts hours in 2011, this development marks a significant decline in China's energy hunger.

Power cut hit Turkey's north-western region including the city of Istanbul over the weekend, following a system failure in a gas-fired power plant in the city of Bursa.

The link to Trayport's 'Global Vision (GV) Screen' as a trading interface has helped to boost the liquidity at the European Energy Exchange (EEX). "At the EEX, future trades are effectuated via Eurex and spot trades via Comserv, but trades can also be made directly via the GV Screen interface. This helped to boost liquidity together with other steps undertaken in 2011 such as extended Cross-Margining in the clearing process," EEX marketing representative, Eileen Hieke, told Gas-to-Power Journal today.

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News in Brief

AI predicts peak in power use

Nov 20 – ABB and Verdigris Technologies have developed machine-learning algorithms to predict unplanned peaks in electricity consumption and help avoid them. The Energy Forecasting app will enable users to reduce their electricity bills by reducing peak demand charges.

India’s first UHVDC link commissioned

Nov 19 – GE Grid Solutions has commissioned Pole-3 - the ultra high-voltage direct current (UHVDC) transmission line in India, capable to transmit 4,500 MW of electricity. Once completed the Champa-Kurukshetra UHVDC project will be expanded to transmit 6,000 MW of electricity at 800 kV, serving customers in the areas of Punjab, Haryana, Delhi, Uttar Pradesh.

COP25 urged to step up climate efforts

Nov 18 – The COP25 UN climate conference in Madrid is urged to enshrine greater commitments from the world's industrialised nations to curb their greenhouse gas emissions. “Europe will have to play a key role in this regard,“ environment minister Svenja Schulze said, adding Germany's recently announced climate package marks a "restart" in the country's climate policy.

Wärtsilä launches ‘Expertise Centre’ in Singapore

Nov 15 – The Finish technology group Wärtsilä has chosen Singapore as the location for its latest Expertise Centre (EC) that provides operational support and dynamic maintenance planning, both for marine and energy business customers. All of Wärtsilä’s Expertise Centres combined currently monitor some 900 installations with more than 2,000 engines around the world.

U.S. storage injection hits record high

Nov 14 – Near-record volumes of natural gas have been placed into storage in the United States in the current injection season. According to the U.S. Energy Information Administration (EIA), the amount of gas held in storage in 2019 surged from a relatively low value of 1,155 billion cubic feet (Bcf) at the beginning of April to 3,724 Bcf at the end of October.

SaskPower proceeds with Moose Jaw project

Nov 13 – Canadian utility SaskPower has taken a significant step towards realizing a 350 MW gas power plant at Moose Jaw. The project was first proposed in 2017, but in the Canadian federal government June last year introduced new regulations for gas generation coming online after January 1, 2021, which stalled the plans. Having completed its regulatory review, Sask Power was now granted permission to proceed from the municipality of Moose Jaw. Major Fraser Tolmie said “this $700-million investment into the city of Moose Jaw, will ensure we have base-load power in the province of Saskatchewan and to maintain our power independence.”

Sembcorp powers up first BESS unit in the UK

Nov 12 – Sembcorp Energy UK, part of Singapore-based Sempcorp Group, has started to operate the first 60 MW unit of its battery energy storage system (BESS) fleet, supplied by GE. Combined, the three storage units in Leicestershire and Cheshire will bring Sembcorp Energy UK’s total energy portfolio to 973 MW.

Global gas glut may clear in 2021

Nov 11 – Economics of exporting American liquefied natural gas to Europe no longer add up. With Henry Hub spot prices around $2.7/MMBtu, moving LNG cargoes from the U.S. Gulf Coast to Europe is “not workable,” BP analysts said, indicating that production shut-ins could help clear the massive supply overhang towards the end of 2021.

Gazprom reassures Germany of Ukraine gas transits

Nov 8 – Alexey Miller, chairman of the Gazprom Management Committee, has been trying to reassure the German government commissioner Georg Graf Waldersee that Russia was ready to signing a new transit contract with Naftogaz if both companies mutually waive claims. Before gas flows can proceed, however, Ukraine will have to create an independent gas transmission operator by January 1, 2020.

GE makes gains in wind power

Nov 7 – GE Power is gradually turning away from its loss-making fossil power segment to focus on the fast-growing renewable business. This week, GE struck a deal for its new Haliade-X turbines to be used at Dogger Bank Wind Farms. The three 1.2 GW Dogger Bank projects, situated offshore the UK’s Yorkshire coast, are expected to trigger approximately £9 billion of capital investment between 2020 and 2026.

PetroVietnam eyes LNG-to-Power project

Nov 6 – PetroVietnam has signed an agreement with B.Grimm Power Public Company (BGRIM) to jointly study the development of an integrated LNG import and power generation project. The aim is to build a 3,000 MW gas-fuelled power plant and an adjacent LNG import terminal. The location of the project has not been disclosed.

ABB launches ‘Smart City’

Nov 5 – Electrification specialists of the Swiss manufacturer ABB have designed an interactive ‘Smart City’ that contains smart buildings, e-mobility, energy management and data centers. The use of smart technologies and digitalization are encouraged by the United Nations as a way to help decarbonize cities around the world.

Gazprom, BASF cooperate on sulfur separation

Nov 4 – The Russian major Gazprom and the German chemical company BASF have agreed to devise a comprehensive solution for separation of sulfur from natural gas. The aim is to  enhance eco-efficiency of the Astrakhan gas processing plant and improve operational efficiency of BASF’s amine gas treatment units at the Orenburg gas-fired power plant.

Germany’s emission fall ‘markedly’

Nov 1 – Germany is headed for second consecutive year of substantial reductions in carbon emissions, amid a sharp drop in coal-burn in the power sector and an overall decline in energy use in 2019. If this trend continues, the country could get much closer to its 2020 climate target than widely anticipated.

Exmar to refinance Tango FLNG

Oct 31 – Exmar, the Belgian shipping company, is trying to refinance the Tango FLNG vessel, moored offshore Argentina on behalf of YPF. The aim is to generate around $60 million in additional capital, Exmar said, suggesting a deal will likely be struck in the first months of 2020.

Petronet doubles net profit

Oct 30 – Indian LNG importer Petronet has nearly doubled its net profits in the third quarter although revenues fell by 13%. Net profits came in at 1,089 crore rupees ($153.6m), an increase of 90% on the same period in 2018 as the company benefited from India’s lower corporate tax rates. Third-quarter revenues, in contrast, fell to 9,449 crore rupees ($1.33 billion).

Wildfires spread around LA

Oct 29 – Thousands of Los Angeles residents have been evacuated as wildfires spread fast around the metropolis and power outages brought life close to a standstill. The risk of fires caused by overland transmission lines prompted Pacific Gas & Electric (PG&E) to prolong precautionary blackouts that could last up to three days.