Markets

Winter has come early in northern China this year and municipalities fired up district heating plants from November 1, causing stock-draws and encouraging buyers to look for spot LNG. Seasonal LNG demand also keeps rising in South Korea due to coal power plant closures, widening the JKM-TTF spread.

The pandemic has slashed the UK’s energy demand by 12% in the first three quarters of the year as the economy contracted by 11.3%. Up to 30,000 jobs in Britain’s oil and gas industry are at risk and the lobby group OGUK urges to government to help the industry transition to a green energy future.

Fast-start capability is vital for peaking plants and about a quarter of US power generation capacity can start up within one hour. Most hydroelectric turbines can go from cold start to full operations in less than 10 minutes, as can aero-derivative and some flexible combustion turbines.

Gazprom says the global health and economic crisis in 2020 keeps a lid on high-cost shale gas production, with US LNG exports seen as “insufficiently competitive.” The current economic slowdown could create a niche especially in China and Europe, to be filled by cheaper Russian conventional gas.

Economies of oil exporting countries in the Middle East will shrink 6.6% this year compared to 1.1% for importers, the International Energy Agency (IEA) forecasts. But analysts urged cash-strapped utilities to make use of cheap energy from solar PV to produce hydrogen for export instead.

Germans are embracing electric cars more quickly than initially assumed, so carmakers now calculate over 14.8 million pure electric cars and plug-in hybrids could be on the roads by 2030. This fast e-vehicle adoption would require more charging infrastructure and boosts electricity demand.

Russia’s Gazprom has been delivering more natural gas than contracted to China through the ‘Power of Siberia’ pipeline. Upon request by China’s CNPC, daily deliveries were raised by up to 25% in October and during the first twenty days of November. Further increases are planned in 2021.

Factoring in health impacts of air pollution into the Levelized Cost of Electricity (LCOE) would promote coal-to-gas switching across Asia. Boston Consulting Group finds that levying a price of $40 per ton on carbon emissions in China would render gas-burn 30% cheaper than coal.

Build-out of India’s power interconnectors and electricity trade between regions will likely result in more power generation from solar and less from coal. Modelling varying load shapes by region, analysts expect low-cost solar PV to account for 62% of India’s power mix by 2050.

Importing more Russian gas through Nord Stream 2 is “the cheapest option for Germany” as demand rises from currently just above 90 Bcm per year to 110 Bcm by 2034. Short-term marginal cost of Russian gas is $2.6 per MMBtu, according to Rystad data, compared to $4/MMBtu for US LNG.

From December 2020 to March 2021, South Korea is preparing to restrict the runtime of coal-fired power plants to curb air pollution, boosting dispatch of gas-fired generation and LNG imports. State-owned KOGAS already tendered for six cargoes for delivery through January.

Qatar, Russia, China and the US – also known as the ‘Big 4’ – are expected to invest almost $2 trillion to meet 60% of global gas demand by 2040. Shifting to a 2-degree climate pathway, however, would slash Capex to a more modest $700 billion as gas demand peaks earlier.

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News in Brief

Mitsubishi produces methanol in Trinidad

Jan 20 – Mitsubishi Gas Chemical Company has launched commercial operations of a methanol and dimethyl ether plant in Trinidad and Tobago. The plant has an annual production capacity of one million tons of methanol and 20,000 tons of dimethyl ether, which can be used as an alternative fuel for cars and power generation.

First 8-cylinder B36:45 engine delivered

Jan 19 – Rolls-Royce has delivered the first 8-cylinder variant of its Bergen B36:45 gas engine to a tomato producer in Belgium. The medium speed genset is planned for delivery this spring and will drive an onsite power plant that generates 4700 kW electricity and 5520 kW heat. The new engine offers a 20% increase in power per cylinder and will replace an existing Bergen 12-cylinder B35:40 genset.

Moody’s upgrades Enel to Baa1

Jan 18 – Moody’s Investors Service has upgraded Enel’s long-term rating to Baa1, with a stable outlook. The upgrade reflects Enel’s progress in reducing its risk profile, analysts said, pointing at the Italian utilities ongoing investment in networks and renewables, growing geographical diversification and focus on centralised financing.

GE sues Siemens Energy

Jan 15 – General Electric has sued its German rival Siemens Energy over the alleged use of stolen trade secrets to win gas turbine contracts worth several billion dollars. GE told the US district court in Virginia that Siemens received the secret information from a Dominion Energy employee.

Orbital Energy launches Eclipse

Jan 14 – Nasdaq-listed Orbital Energy Group has launched a new subsidiary, Eclipse Foundation, a drilled shaft construction company. The new company specialises in providing services for power transmission and substations, communication tower and a disaster restoration through emergency power.

S’Korean coal and LNG imports slide

Jan 13 – South Korea’s imports of thermal coal and LNG have fallen 12% and 11%, respectively, as the government cracks down on fossil fuel usage to curb air pollution. Customs data shows that coal imports amounted to 10.2 million tons in December, down 1.4 million tons from the same month last year but up from November’s imports of 9.5 million tons.

SMC builds 1.7 GW CCGT in Batangas

Jan 13 – Excellent Energy Resources, part of SMC Global Power Holdings, is building a 1,700 MW combined cycle gas power plant in Barangay Dela Paz and Ilijan in Batangas City with investments of about 67.863 billion Philippine Pesos ($1.41bn). The project is estimated to be completed in 36 to 40 months.

UK’s National Grid issues supply warning

Jan 12 – Natural gas prices in the UK surged as National Grid issued warnings on supply deficit as LNG cargoes are being diverted to North Asia. Prices at the British NBP gas trading hub soared to the equivalent of $8.95 per MMBtu, while the JKM price for North Asian spot LNG cargoes for February 2021 was last at $19.700 per MMBt.

Fortistar invests in hydrogen

Jan 11 – Fortistar, a privately-held fund, has joined an equity investment of up to $157 million in hydrogen producer BayoTech. Cottonwood Technology Funds and the New Mexico State Investment Council also participated in the latest financing round. BayoTech’s systems produce local hydrogen close to the application, serving end users in the industrial gas and petrochemical segment as well as those who use of hydrogen to power fuel cells.

Ashtead appoints new CFO

Jan 5 - Ashtead Technology has appointed a chief financial officer (CFO) and five managers for newly created roles across its international team. The appointments are meant to cement the company’s position in the offshore energy market, including offshore wind and decommissioning of thermal power plants

NFE secures LNG for Puerto Rico, Mexico and Nicaragua

Dec 23 – New Fortress Energy (NFE) has agreed to purchase Henry-Hub-indexed LNG for its integrated gas and power businesses in Puerto Rico, Mexico and Nicaragua. The New York-based project developer said it now has covered 80% of its expected needs throughout Latin America, thus reducing its need for spot purchases and its exposure to changes in the market price for LNG.

China and Korea mandate coal-to-gas switch

Dec 22 – The Chinese government has launched a coal-to-gas boiler switching programme, targeting 7.1 million homes, which makes gas demand more weather-sensitive this winter. Similarly, South Korea mandated the closure of 15 coal-fired plants since the start of December in an effort to reduce air pollution. Analysts expect this will accelerate the drawdown of LNG terminal inventories going into Q1-2021.

GE repowers oil field in Brazil

Dec 21 – GE Power Conversion has been awarded a contract by Sulzer Pumps UK to supply motors for four water injection pumps of a Floating Production Storage and Offloading (FPSO) vessel. The 8,000 kW, two pole motors will run at 3,600 rpm with a limitation of the starting current at 300%, enabling the oil and gas field operator to optimise the generator which supplies electricity on the FPSO.

VELO distributes Sapphire Metal 3D-Printers in the US

Dec 18 – California-based VELO3D has formed a distribution partnership with GoEngineer for Flow pre-print software, Sapphire metal AM printer, and Assure quality assurance and controls. GoEngineer will be VELO’s only distributor in the United States.

Indian electric boats to achieve zero emissions

Dec 17 – Cochin Shipyard, India’s largest shipbuilder, has asked Siemens Energy to equip India’s first fleet of 23 boats with electric propulsion drive train, integrated with batteries and vessel automation. Combining the electric propulsion drive trains, energy storage, and automation systems is expected to significantly reduce fuel consumption.

Terna BESS auction six times oversubscribed

Dec 16 – A pilot auction, held by the Italian TSO Terna, for battery energy storage systems (BESS) to provide reserve grid services has been six times oversubscribed. The auction was held with an expectation that around 230 MW would be on offer, but Terna received 1,327 MW worth of bids and eventually awarded contracts for 249.9 MW.

New £150m link to UK’s Easington terminal

Dec 15 – National Grid has completed a gas pipeline under the River Humber, build in 18 months and at a cost £150 million, as new link to the import terminal at Easington. Following commissioning, the pipeline is now operational and can now transport between 70 to 100 million cubic metres - around a quarter of Britain's gas needs.

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