Markets

Seeking to streamline Siemens AG, chief executive Joe Kaeser is actively considering various options including the sale of the company’s large gas turbine business. Talks are being held with Mitsubishi Heavy Industries (MHI) about a partial sale of the division or a joint venture, but no final decision has been taken.

Seeking to secure attractively-priced LNG for its power plant fleet, Thailand’s state-run Electricity Generating Authority (EGAT) has announced it will hold a bidding round in May and June. To qualify, interested bidders need to register by April 18. EGAT will then shortlist participants for the first auction in early May.

Renewable generation in the United States has nearly doubled over the past ten years, reaching a new record of 742 million MWh of electricity, or 17.9% of the total U.S. power supply. Amid a steep drop in construction costs, the contribution of wind and solar surged to nearly 90% installed renewable capacity, and the IEA anticipates more capacity additions in the near-term future.

U.S. gas pipeline operator Williams and the Canada Pension Plan Investment Board (CPPIB) have set up a US$3.8 billion joint venture that centers around Williams' Ohio Valley Midstream (OVM) and Utica East Ohio (UEO) Midstream systems. CPPIB agreed to invest about $1.34 billion for a 35% ownership stake in the joint venture, while William will retain the majority stake.

Investment in wind power is largely driven by China, where removal of regulatory restrictions in the country's northern provinces sparked a 2 GW, or 37%, rise in 2018 to a total installed capacity of 5.6 GW. Worldwide, nearly 52.2 GW of net wind power capacity was added last year – a 4% annual rise, according to Wood Mackenzie’s Global Wind Power Market Outlook Update: Q1-2019.

Fitch Group affiliate BMI Research expects natural gas will contribute more than half of the UK’s electricity needs in less than 10 years, up from currently about 45%. Gas gains importance in the UK power sector amid Government policies to exit coal power by 2025, and as private investors cancelled some new nuclear power projects.

Aspiring full electrification by 2030, the Government of Myanmar has vowed to fast-track several gas-fired power projects as it aims to add some 3,000 MW to effectively double the country’s installed capacity over the next two to three years. Realizing this plan comes with a price tag of $5.16 billion, according to estimates by Myanmar’s Ministry of Electricity and Energy (MOEE).

Global CO2 intensity has decoupled from electricity demand growth since the mid-2010s, and this trend intensified when China and other major Asian economies started to turn their back on coal use for power generation, while falling costs for wind and solar PV made clean energy more attractive.

The South African arm of AEP Energy is about to purchase two power plants in Nairobi from Iberafrica and considers converting these units from diesel to natural gas. In Kenya, diesel-generated electricity is about 3 times costlier than geothermal, wind and hydropower and about 2.5 times more expensive than gas power.

Length in natural gas supply the U.S. Mid-Atlantic and Ohio region is building up amid rising production from the Marcellus and Utica Shale. Simultaneously, growing demand in the South Central region for feed-gas for LNG export facilities on the Gulf Coast has caused a reversal in gas flows on key interstate pipelines.

Latest earnings calls from publicly-traded U.S. gas producers show a slowdown in 2019 gas production as the role of private producers increase. The 25 firms sampled by Energy Aspects have a combined base output of 23.1 billion cubic feet per day (bcf/d), and said they expect 1.3 bcf/d annual production gains in 2019. This projected 6% uplift is less than their earlier growth 9% forecast.

Spain’s gas network operator Enagás has agreed to pay $590 million for a 10.93% ownership interest in Tallgrass Energy (TGE), the operator of several U.S. interstate pipelines. To finance the deal, Enagás partnered with the private equity firm Blackstone and Singapore’s sovereign wealth fund GIC.

As the second wave of the US shale revolution unfolds, the United States is forecast to account for 70% of the rise in global oil production and some 75% of the expansion in LNG trade over the next five years. On global oil markets, the U.S. has “essentially compensated for recent production shortfalls in Venezuela and Iran,“ commented Dr Fatih Birol, Executive Director of the International Energy Agency (IEA).

State-owned utility Taiwan Power Company (Taipower) has signed two non-binding LNG supply deals, seeking to start shipments from 2023. The imported fuel is designated for Taipower’s combined-cycle gas power project at Taichung, where unit 1 of 2 is scheduled to start up in early 2024.

Electricity consumption in the United States will continue to grow but at a slower pace than in recent years, the EIA forecasts, as global trade tension have an adverse effect on economic growth and reduce electricity demand from the manufacturing sector. Though net U.S. electricity output rose 4% last year to a record high of 4,178 million MWh, the EIA attributes this to a one-off weather related effect.

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News in Brief

Evol LNG helps power Australian gold mine

June 18 – Kirkalocka Gold Mine in Western Australia will use Evol LNG to fuel Zenith Energy’s 14.5 MW power station with regasified natural gas starting from September 2019. The mine is run by Adaman Resources and had been relying on diesel to cover its energy needs. Based on the current diesel price, Adaman Resources expects to reduce fuel costs by more than A$13 million (US$9 million) during the first six years of operation of the new onsite LNG-to-Power plant.

Shell Energy ordered to refund overcharged UK customers

June 17 – UK energy regulator Ofgem has ordered Shell Energy Retail to refund around 12000 customers who were overcharged after the Government’s cap on gas and electricity prices came into force in January. Shell Energy Retail s agreed to refund these customers by paying £29,000 in compensation (£5 per fuel), and also pay an additional £200,000 into Ofgem’s voluntary redress fund.

BASF enters battery market

June 14 – German chemical company BASF is using NGK Insulators’ sodium sulfur batteries as its entry point into the energy market. The Japanese manufacturer NGK is currently the only maker of the large-scale sodium sulfur (NAS) batteries, capable to store several hours of energy. A joint project in northern Germany uses NAS batteries that store energy for five hours, while a recently completed project in Abu Dhabi using 108MW / 648MWh of the systems with a full six hours storage duration.

CNPC boosts domestic gas production

June 13 – China National Petroleum Corp (CNPC), the largest Chinese oil and gas company, has announced plans for domestic natural gas output to reach 55% of overall domestic supply by 2025. Last year, CNPC managed to boost production by 5.9% to reach 138.02 billion cubic metres, while also increasing imports of pipeline gas and LNG.

Gazprom taps new gas deposits for Nord Stream 2

June 12 – Gazprom is fast-tracking hydrocarbon production in northwest Russia to boost reserves for export through the Nord Stream 2 pipeline (55 Bcm/y), currently being built through the Baltic Sea. At a meeting with Nord Stream shareholders, Gazprom noted that its Yuzhno-Russkoye field has yielded about 276 Bcm of natural gas, including 0.9 Bcm of hard-to-recover Turonian gas, since the start of operations. Turonian gas reserves, consisting of about 99% methane with no heavy residues, lie at a depth of 800–850 meters in reservoirs with low permeability. Commercial production at the Turonian deposit is scheduled to start in late 2019.

PG&E turns off electricity to avoid wild fires

June 11 – Pacific Gas and Electric Company (PG&E) has turned off electricity for some Californian communities at risk of a wildfire during the lastest heat wave. The authorized blackout started on Saturday in Napa, Solano and Yolo counties, with electricity being gradually restored over the course of Monday. Approximately 16,000 customers have been affected.

Gazprom to build power plants in Serbia

June 10 – Gazprom Energoholding has signed an Agreement of Intent (AoI) to build an upgrade several gas-fired power plants in Serbia. Together with Novi Sad, Gazprom Energoholding is already building a CCGT with some 200 MW capacity near a refinery in the Serbian town of Pancevo.

U.S. fund splashes out $4bn to buy El Paso Electric

June 7 – Infrastructure Investment Fund (IIF), a private investment vehicle within J.P. Morgan Inc., has agreed to acquire the U.S. utility El Paso Electric Co for $68.25 per share in a cash transaction. The enterprise value on the transaction is estimated at $4.3 billion. El Paso Electric customers will receive a total $21 million in bill credits over three years.

Caterpillar gensets back up Finnish data center

June 6 – The Swedish telecom giant Telia has ordered 12 Caterpillar gensets to provide standby emergency power to back up operations at its new data center in Helsinki. The Cat dealer Witraktor figured a system which includes eight Cat 3516B and four 3516E generator sets. The Telia Helsinki Data Center is the largest such facility in Finland, and its primary electric power supply comes from a combination of wind, hydroelectric and biomass.

Capstone wins orders in Iraq

June 5 – Micro-turbine producer Capstone has secured an order for two C600 Signature Series microturbines to provide 1.2 MW of energy to power a triethylene glycol (TEG) dehydration facility near Basra, in southern Iraq. The contract also includes Capstone’s new self-cleaning pulse filtration system, allowing the turbines to better withstand hot and sandy conditions with minimal maintenance.

Gas to supply record 43% of US power needs

June 4 – This summer, natural gas is forecast to cover between 40% and 43% of 2019 peak electricity demand in all U.S. states except Texas, according to projections by the Energy Information Administration (EIA). Gas demand soared to nearly 10,700 billion cubic feet (Bcf) last summer, a 16% rise from 2017 levels. Should there be another heat wave this year, that record may well be broken. Capacity wise, natural gas is on course to top its 45% share in the U.S. power mix.

Lukoil to upgrade CHP at Krasnodar

June 3 – Russia’s oil and gas company Lukoil has received government approval to modernize and expand three combined heat and power units in Krasnodar. The gas-fired CHP units have more than 400,000 hours and ran an average 74% utilization rate, the operator said. The upgrade will add 150 MW of power generation capacity and Lukoil said it expects the revamped power plant to be ready for commissioning as early as 2022.

GE commissions Al-Qudus CCGT in Iraq

May 31 – GE Power has installed and commissioned a new 9E gas turbine at the Al-Qudus combined-cycle gas power plant, run by the Iraqi Ministry of Electricity’s (MoE). The CCGT was previously capable of generating up to 1,125 MW and the turbine upgrade adds another 125 MW of capacity.

Groundbreaking takes place for Ohio CCGT project

May 30 – This Thursday morning, groundbreaking will take place for the $500 million Long Ridge Energy Generation Project in Hannibal, Ohio. Long Ridge, a 485 MW combined-cycle power project, is being developed by Fortress Transportation and Infrastructure Investors (FTAI). It will create up to 350 construction jobs and some 25 permanent jobs. The CCGT is expected to open in 2021.

Asia to spend more on renewables than oil & gas by 2020

May 29 – Utilities in Asia-Pacific region will invest more in renewables than on oil and gas exploration by 2020. Total capital expenditure in renewables will rise above $30 billion in the region by 2020, according to forecast of the consultancy Rystad Energy. India, Australia, Japan, Vietnam and South Korea will led the way in Asia’s green energy transition.

Ichthys LNG looses court claim against power sub-contractor

May 28 – JKC Australia LNG consortium, developer of the US$34 billion Inpex-built Ichthys LNG plant near Darwin, has lost a US$1.9 billion court case claim against a power station sub-contractor. Construction of the power station was subcontracted to UGL-led group which CIMIC took over in 2016 and subsequently cancelled the Ichthys power contract. The Western Australian Supreme Court in Perth now dismissed an application by JKC Australia LNG for upfront payment of damages. The power plant’s five gas turbines have already been handed over to Inpex, and KBR aims for the plant to be ready for commissioning this autumn.

San Miguel Energy claims $6.19bn subsidy for Ilijan plant

May 24 – South Premier Power Corp. (SPPC), San Miguel Energy’s development vehicle for the 1,200-MW Ilijan gas power project, has claimed that it already paid $6.19 billion in subsidies to state-run Power Sector Assets and Liabilities Management Corp (PSALM) for its financial obligations as independent administrator. The build-operate-transfer (BOT) contract for the Ilijan plant will expire in 2022; and by that time, SPPC will get ownership of the plant.