Markets

Tight oil and gas production in the United States could soon become less sensitive to price as super-majors like Chevron and ExxonMobil increase their shale acreage and commit to development spending. BP’s chief economist Spencer Dale said “cash-rich supermajors can smooth through price variations” and just keep fracking regardless.

As electrification accelerates around the globe, three-quarters of the entire growth in primary energy will likely be used for power generation, with half of all primary energy being burnt to produce electricity by 2040. According to the BP 2019 Energy Outlook, nearly all power demand stems from just two developing economies – China and India.

Michael Bloomberg, the former New York City Mayor and news tycoon, is giving $500 million to a ‘Beyond Carbon’ campaign with the aim to prop up political candidates who share his vision of shutting all coal power plants by 2030, and restricting the use of natural gas for power generation.

Dirty king coal is still a stronghold in the American energy mix, and nearly all the coal consumed is produced domestically. Of the more than 755 million short tons (MMst) of coal produced in the United States last year, the electric power sector burnt 636 MMst, while industry consumed 50 MMst and another 115 MMst went for export.

By 2030, the United Kingdom will see its share of variable renewables account for half of the country’s total energy mix, the International Energy Agency (IEA) forecasts. To mitigate the intermittency risk, analysts see an urgent need for flexible gas peaking plants, energy storage, demand response and new interconnectors to neighbouring EU countries.

Joe Kaeser, CEO of Siemens, seeks to carve out further company units and prepare them for a stock market listing or a merger with a rival manufacturer. The aims its simplify operations by separating the Siemens conglomerate into what Kaeser called “a fleet of speedboats” which are meant to thrive under their own steam.

Siemens seeks to offload its loss-making Power & Gas unit in an Initial Public Offering (IPO) in early 2019, and has chosen the former Osram CFO Klaus Patzak to manage the process swiftly and effectively. The unit’s profit margin used to be around 4% in the last few years, but is intended to rise to 8% or even 10% by 2023.

Rolling out a network of electric vehicles (EV) charging stations across Britain to fast-track consumer adoption could reduce National Grid’s need to build extra power storage, potentially saving the network some £1.16 billion a year. Smart chargers can help balance the grid as they would allow for EV only to be charged outside of peak demand hours.

Gazprom Neft, Repsol and Shell have agreed to set up joint venture to develop the Leskinsky and Pukhutsyayakhsky license blocks on the Gydan Peninsula, situated on the Siberian coast in the Kara Sea. The signatories of the memorandum plan to have detailed terms in place before year-end, aiming for contracts to be signed in 2020.

Demand from Asia is set to power the growth of the global gas industry over the next five years, the International Energy Agency (IEA) says, forecasting annual growth rates of over 4% in Asia and 1.6% worldwide until 2024. China’s policy drive to switch from coal-to-gas in the power sector plays a major role in driving demand in Asia-Pacific.

NASDAQ-listed New Fortress Energy has signed a Memorandum of Understanding (MoU) with the Angolan Ministry of Mineral Resources and Petroleum to fund, build and operate an LNG regas terminal to supply gas for use in Angola’s industrial and power generation sectors.

Events, particularly major sporting shows, require fast-track power solutions that can maintain a stable, continuous energy supply. RnRMarketResearch sees the market expand at over 8% per annum, and forecasts it will be worth nearly $20.7 billion by 2022.

Eager to reduce fuel costs, Saudi Arabia has reigned it the use of crude oil in the electric power sector to an average 0.4 million barrels per day (b/d), mainly by burning associated gas or fuel oil instead. A steady population growth keeps driving electricity consumption, although the government seeks to dedicate most crude oil production for export and incentivises solar power.

General Electric has vowed to find ways to keep open its Belfort manufacturing site despite plans for downsizing and job cuts. Hugh Bailey, general manager of GE in France said the company is looking for alternatives such as building aeronautical parts at Belfort - instead of large turbines. “I want to be clear, Belfort will not close. It will remain GE Power’s number one industrial site in Europe,” he told French media.

Brazil, second-largest producer of hydropower in the world after China, is implementing policy measures to add more solar PV capacity to the country’s energy mix, backed up by flexible gas gensets and energy storage. As part of the government’s 10-year energy expansion plan, nonhydro renewables is intended to grow 3% per year and reach up to 28% of Brazil’s domestic energy mix by 2027.

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News in Brief

Gazprom seeks to partner with Fortum

June 27 – The heads of Gazprom and Forum, Alexey Miller and Pekka Lundmark, have met in St. Petersburg to discuss a potential cooperation in the field of power generation. The Finish energy company Fortum owns 29.5% of the Russian power plant TGC-1 as well as a 49.99% share in the German utility Uniper. Through the talks, Gazprom could gain Fortum’s support to expand its firm long-term deliveries of Russian gas to Finland and Germany.

Quarrels over contract award

June 26 – Guam Power Authority’s decision to award a contract to finance, build and operate a new 180 MW power station on the island to Korea Electric Power has sparked protest by rival bidders. Four companies had submitted proposals – Korea Electric, Osaka Gas, Powerflex and Hanwha Energy Corp. Declining to comment on the quarrels over the contract awarding process, GPA said the deal with Korea Electric is expected to close by September 9, pending a related impact study.

PTT steps up power sector investment

June 25 – Thailand's state-run PTT Pcl has decided to boost investments in the retail and industrial power sectors to help insulate the energy company against the impact of a global economic slowdown on its oil refining and chemical businesses. Referring to the Sino-U.S. trade war as a global challenge, PTT chief executive Chansin Treenuchagron said the company is looking “how we can survive in the short term.”

APR helps power Libya’s recovery

June 24 – Libya’s state-owned GECOL has asked APR Energy to bring in temporary generators to provide a rapid 450 MW boost. Under the latest contracts, APR provided mobile gas turbines at four key sites in Libya (250 MW) as well as 200 MW of diesel generators at two sites.

GE supplies SCADA to New Zealand

June 21 – GE’s Renewable Energy Grid Solution’s business has won an order from two New Zealand utilities to upgrade their traditional Supervisory Control and Data Acquisition (SCADA) systems with GE’s Advanced Distribution Management Solutions (ADMS). The orders were placed by Top Energy Ltd with some 31,000 customers and Northpower serving over 60,000 customers, though the contract values were not disclosed.

Top 5 OEMs to rule two thirds of global wind market

June 20 – After a decade of fragmentation, the top 5 turbine OEMs are consolidating again and Wood Mackenzie anticipates key players will surpass a combined market share of 68% by 2020, up from 47% five years ago. Vestas, SGRE and GE remain the top 3 wind turbine producers wwhile the Chinese leaders, Goldwind and Envision, are becoming increasingly popular due to their product reliability and track record.

Keane to merge with C&J Energy

June 19 – Oil- and gasfield service providers C&J Energy Services and Keane Group have agreed a merger-of-equals in a $746 deal that will give the two companies the necessary uplift in an industry burdened by budget cuts of hydrocarbon producers. The 50:50 merger will create a company will create a company with a combined enterprise value of $1.8 billion, including $255 million in debt. The deal is expected to close in the fourth quarter of this year.

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.