Markets

YPF, Argentine’s state-run oil and gas producer, is seeking to sell a partial cargo from its Tango floating liquefaction unit at Bahia Blanca in a first step to turn the country into a major shale gas exporter. Growing production from the Vaca Muerta shale gas play is meant to cover domestic demand and leave a surplus for export.

Stockpiles of thermal coal in the United States have fallen to the lowest level in a decade as more and more coal-fired power plants retire and the lost capacity is being replaced with gas-fired plants and renewables. Coal stockpiles decreased to 98.7 million tons in February 2019, their lowest value in more than a decade, and the EIA expects them to remain relatively low for the rest of this year.

Texas is at risk of power emergency alerts this summer, and may even face rotating blackouts, the Electric Reliability Council of Texas (ERCOT) warned, as the current 8.6% electric reserve margin may prove insufficient to meet strong electric demand growth. Power grid operators typically aim for reserve margins of 10% to 15% and ERCOT itself had set a target of 13.75%.

Two Czech billionaires and energy infrastructure investors are understood to have teamed up with state-run CEZ to bid or Alpiq’s gas- and coal-fired power plants in the Czech Republic. Having posted high losses in 2018, the Swiss firm Alpiq has been considering the sale of some power plants.

The Government of Morocco has made “positive efforts” to improve energy access for all citizens and end fossil fuel subsidies to establish a more competitive energy pricing regime, said Dr Fatih Birol, Executive Director of the International Energy Agency (IEA). With the exception of bottled butane, fuel prices are now linked to the international market.

The power sector is attracting more investment than the oil and gas industry, with developers having spent over $1.8 trillion globally in 2018 on energy-related projects. Though the overall spent has stabilized after three years of decline, investors increasingly focus on projects with shorter lead times, the IEA’s World Energy Investment 2019 report finds.

General Electric has outperformed its rivals Siemens and Mitsubishi Hitachi Power Systems (MHPS) by winning the most orders for HA-class gas turbines in Q1-2019, according to the latest McCoy Power Report. GE booked six orders, up from zero a year ago – MHPS won five orders, while Siemens booked four.

Shell Petroleum Development Company of Nigeria (SPDC) has said it expects to produce enough natural gas from its new Assa North/Ohaji South development to provide fuel for generating about 2,400 MW of electricity. The move is part of Shell’s strategy to shift to a more gas-orientated business, said SPDC’s general manager, Igo Weli.

The coal-to-gas switch is gathering pace in the United States. Natural gas will provide the largest share of U.S. generation this summer at 40%, up from 39% last summer, EIA projections show. Coal, meanwhile, is seen losing market share to 25%, down from 28% a year earlier.

The intensifying trade war between the US and China is starting to impact shipments of US LNG to China and slows Beijing’s efforts to switch from coal to gas use in the power sector. Only four US LNG cargoes have been delivered to China since September, when a 10% tariffs came into effect. Now, Beijing hiked this levy to 25% - in retaliation to Washington’s move to expand import tariffs on Chinese goods.

Energy giant E.ON has delivered a strong operating performance in the first quarter of this year in all markets except the UK. The Essen-based company blamed Britain’s new regulatory cap on energy price for the €90 million decline in its earnings there.

Germany-based MAN Energy Solution has opened its new U.S. headquarters in Brookshire, some 30 miles west of Houston, Texas. The new workshop and office complex combines engine and turbomachinery repair operations, which were formerly located at two different Gulf Coast sites.

Falling gas prices in Europe and Asia pose no risk of reducing US LNG exports, the Cheniere CEO Jack Fusco told analysts. “There haven’t been any spot cargos that haven’t cleared the US and made a margin,” he said in his company’s Q1-2019 earnings call.

US demand for coal to generate electricity will keep falling in the coming months, federal officials said Thursday. This is despite President Trump’s efforts to shore up the struggling industry. Renewable energy sources including wind, solar and hydropower are expected to fill much of the gap left by coal's decline, according to the Energy Information Administration (EIA). However, natural gas is expected to remain the fuel of choice for power generation with an expected 40% share of US markets this summer.

China’s switch from coal to gas, to de-carbonise its energy mix and tackle pollution under its Blue Sky policy, requires importing considerably more gas imports and investment in related infrastructure, DNV GL said in a report. Gas currently accounts for only 7% of China’s energy mix, compared to a global average of 22% – but the Chinese government aims to boost that share to 10% by 2020, and as much as 15% by 2030.

Page 4 of 151

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.