Markets

Over-the counter (OCT) traded gas volumes in European brokered markets amounted to 2,309 TWh in August, up 14% year-on-year. Trading at the Dutch Title Transfer Facility (TTF) rose 13.5% to 1,833 TWh, while German NCG contracts soared 25% to 125 TWh, according to the London Energy Brokers’ Association (Leba).

European utilities are courted by more and more sellers marketing long-term LNG volumes from pre-FID LNG supply projects. To gain access to attractively-prices US LNG, however, European buyers need to turn their back on hub-pricing and open up to Henry Hub-indexation, instead.

Natural gas and wind are the fastest growing sources of U.S. electricity generation, both rising 6% this year. In 2020, gas power will rise another 2% while generation from wind is seen surge 14%, according to the EIA’s latest Short-Term Energy Outlook.

Though Europe’s green energy transition is gaining pace, natural gas demand is seen grow significantly. Wood Mackenzie advises European utilities to share some cross-hub price risk with LNG producers, or else they risk losing market space to international oil companies or state-run energy majors like Gazprom.

Manila Electric Co. (Meralco) has warned the Philippine island of Luzon may face power shortages in the first week of October, when up to 900 MW of gas-fired capacity will be offline for maintenance. Repairs coincide with the four days maintenance shutdown of the huge Malampaya gas field.

The U.S. shale revolution and falling capital costs for renewables are reshaping the power mix both domestically and abroad, the International Energy Agency (IEA) noted. Future production growth and exports will depend on the complementary build-out of oil and gas pipelines, as well as LNG terminals.

By 2030, new-build renewables will outcompete existing fossil fuel generation on energy cost in most regions. According to McKinsey analysts, the northwest of the United States is “the exception with tipping-points post 2035,” due to low gas prices and limited potential for solar photovoltalic.

Drone strikes have reduced Saudi Arabia’s oil output by half which is feared to have reverberations on global energy markets. An increase in oil prices is likely to lead to a corresponding rise in gas and electricity prices, which will be reflected in higher tariffs for customers in the UK and most western economies.

Construction is being fast-tracked on the Thi Vai LNG import terminal and adjacent Nhon Trach unit-3 and 4 power units in the southeastern region of Vietnam. Samsung C&T and PetroVietnam seek to get the integrated LNG-to-Power project on stream by 2022 for an investment of about $286 million.

Gas and variable renewables will be the only energy sources for which demand is higher in 2050 than today. Rapidly falling capital costs for solar photovoltaic will make the technology 25% to 50% cheaper than new gas-fired power projects, DNV GL analysts told Gas to Power Journal.

Electric utilities in Turkey are burdened with $47 billion debt of which up to $13 billion are at risk of defaulting. Before the end of this year, loans worth some $10 billion, mostly for gas-fired power plants, will need to be restructured, the Banks Association of Turkey (TBB) warned.

Rising dry gas production in the United States will be sufficient to meet demand for power generation and exports at a lower price than forecast. With this assement, the U.S. Energy Administration (EIA) lowered its Henry Hub spot price forecast for 2020 by 20 cents to an average of $2.55 per million British thermal units (mmBtu).

Northwest European near-curve gas prices have fallen in recent days. With the TTF Oct-19 trading as low as 3.86 $/mmbtu, this low price drives up demand for LNG shipping to higher-priced markets in Asia. Energy Aspects says the TTF Oct-19 contract has already priced in much of the incremental demand from the power sector switching to gas from coal.

Nearly 16 gigawatt of utility-scale gas power generation has been added in Florida between 2008 and 2018 – the most in any U.S. state. The share of natural gas in Florida’s energy mix surged from 47% to 72%, and EIA analysts anticipate gas-fired generation will continue to displace less cost-competitive plants fuelled by coal and petroleum liquids.

Spot LNG deliveries to Japan have decreased despite record-low prices as power generators like Jera, Tepco, Kepco and Chubu Electric prefer thermal coal over natural gas. Peak electricity demand is now largely met by thermal coal which remains the cheapest fuel source.

Page 7 of 162

News in Brief

Norway’s oil fund starts investing in renewables

Dec 11 – The Norwegian Government Pension Fund Global (GPFG), traditionally heavily exposed to the oil and gas industry, has been permitted to shift its strategy. Acknowledging heavy losses of the world’s largest pension fund, worth an estimated $1 trillion, the government in Oslo has allowed GPFG fund managers to also invest in unlisted infrastructure, notably renewable energy sources and alternative fuels, including hydrogen.

ENGIE invests in wind energy in Italy and France

Dec 10 – France’s largest energy company ENGIE has completed the acquisition of Renvico from Macquarie Infrastructure and Real Assets and KRR. The move contributes to utility’s ambition of boosting its renewable energy assets to 3 GW in Europe and 9 GW worldwide by 2021. The Renvico takeover comprises 329 MW of operating wind farms of which 142 MW in Italy and 187 MW in France. It also includes a 300 MW greenfield portfolio of various fossil power assets.

Dominion issues Scammer Alert

Dec 9 – Dominion Energy Ohio has reminded customers they will begin receiving the next U.S tax credits automatically, beginning in April 2020, in their monthly bills. Customers were warned not to provide banking details to scammers who claim such data is required to receive the federal tax credits.

BOL finances entire 220 MW plant in Nassau

Dec 6 – Bahamas Power and Light (BPL) has agreed to cover the entire costs to build a 220 MW power plant at the Clifton Pier site in Nassau, and transfer the assets to Shell North America. BPL and Shell had agreed to jointly develop a 220 MW power plant plus LNG regas terminal, but the Bahamas state utility later signed a $95 million contract with Wärtsilä to install a 132 MW engine-driven power plant at the same site.

Kepco to operate CCGT in Uruguay

Dec 5 – Kepco KPS has been awarded a contract to operate and maintain the recently commissioned combined cycle gas turbine (CCGT) power plant in Punta del Tigre, Uruguay. Under the O&M contract, Kepco said it expects to earn 17 billion Won in sales every year, for a maximum eight years.

Siemens to create thermal twin for Bajaj Energy plant

Dec 4 – Lalitpur Power Generation Company Ltd (LPGCL), part of Bajaj Group, has contracted Siemens to create a complete twin for its fossil power plant in Uttar Pradesh, India. The thermal twin, powered by thermodynamic analysis and machine learning, allows power plant operators to diagnose performance gaps for every asset in the cycle in real time.

Talks between Gazprom and Naftogaz continue

Dec 3 – Russia’s Gazprom and Naftogaz Ukrainy have continued difficult negotiations about an extension of Russian gas supplies and transit after the current contract expires on December 31, 2019. The two state-run companies are embroiled in a legal dispute that still needs resolving, however, they confirmed talks are underway and focus on the technical aspects of transiting Russian gas to Europe from 2020 onwards.

Asia seen add 400 GW by 2030

Dec 2 – Asian nations are expected to add more than 400 gigawatts (GW) of electrical capacity to the grid over the next decade — equaling about twice the installed capacity of Germany. Much of the new capacity will be renewables, backed up by some 140 GW of dependable gas-fired capacity, according to GE Energy findings. Hence, the U.S. turbine manufacturer decided to invest up to US$60 million to convert its Singapore repair center into a HA engineering and development center.

Total starts up hybrid plant with energy storage

Nov 29 – Total Quadran has started up the largest hybrid power plant combined with energy storage to harness the ample solar power potential of New Caledonia, a French overseas territory. With an installed capacity of 16 MW-peak, the plant also features a 10 MW lithium-ion energy storage system. Combining of hybrid solar PV units and possibly gas-powered generator sets with energy storage balance out supply swings and enhances the reliability of the electricity grid.

Rolls-Royce, AVK partner on standby gensets

Nov 28 – AVK, Britain’s largest supplier of critical power solutions for data centres and the financial sector, has partnered with Rolls-Royce’s MTU brand for standby gensets in UK and Ireland. The deal covers MTU Series 2000 and 4000 diesel systems in a range from 825 to 4,000 kVA. In the past 30 years, AVK has developed into the largest solutions provider in the UK’s critical power market and has to date supplied gensets equipped with MTU engines with a total capacity of more than 3.5 GW.

Golar suffers setback amid restructuring

Nov 27 – Golar LNG, owner of a fleet of 27 vessels, has seen operating revenues plunge 20% to $98.67 million, in the first nine month of this year, while net losses amounted to over $236 million. Bermuda-registered Golar in May 2019 announced plans to spin off its LNG carrier fleet with the aim of becoming a gas project developer. It recently won a contract for the Barcarena power project (605 MW) in northeastern Brazil.

Burckhardt buys remaining share of Arkos

Nov 26 – Burckhardt Compression’s subsidiary in North America has purchased the remaining 60% of Arkos Group. The US has the world’s largest installed base of reciprocating compressors, and the integration of Burckhardt and Arkos Field Services, will turn the company into the only independent one-stop provider for equipment and service in the upstream, midstream and downstream business.

Gazprom’s exports to Austria reach fresh record

Nov 25 – Supplies of Russian gas to Austria and transits to Western Europe have already exceeded record levels set last year. From January 1 through November 21, 2019, Gazprom delivered over 12.7 billion cubic meters of natural gas – 33.5% more than in the same period in 2018. Austria’s OMV imports Russian gas under a long-term contract that was recently extended until 2040.

OGUK responds to Labour Party Manifesto

Nov 21 – The UK North Sea industry association Oil & Gas UK (OGUK) has warned of an investment hiatus in reaction to Labour’s pledge to introduce a windfall tax on oil and gas companies, if it wins the General Election on December 12. Responding to this, OGUK said any increase in tax rates would drive investors away, damage the competitiveness of the UK’s offshore oil and gas industry, and could potentially increase the country’s reliance on imports. OGUK underlined it has put in place a ‘Roadmap 2035 a blueprint for net zero emission’ and is investing in technology to achieve this goal.

France, Germany and UK led on demand-side flexibility

Nov 21 – France, Germany and the UK are leading on demand-side flexibility (DSF) and grid-integration of decentralized energy sources while Sweden, Spain and Portugal are lagging behind the rest of Europe, the consultancy Delta-EE and SmartEN finds. Areas covered by their new DSF monitoring tool include availability and accessibility of demand-side response, and its monetization across the gas value chain.

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.