MonitorsPublished on Apr 27, 2004
Energy News Monitor I Volume I, Issue 45
Demand-Side Management (DSM) in the Power Sector

The article is an overview on the findings of Prayas Energy Group(Pune) on the subject of DSM in the Electricity Sector:Urgent Need for Regulatory Action and Utility-Driven Programs they prepared for Climate Change & Energy Programme, World Wide Fund for Nature-India, New Delhi in February 2005.  Electricity plays a crucial role in the development of modern society. Electricity consumption in India has increased by nearly 60 times, since independence. The Government of India is planning to double the capacity of power generation during the coming decade! Increasing the use of electricity not only brings more opportunities to earn livelihoods and provides more comforts but also has certain adverse impacts on people and on the environment. 75% of India’s electricity comes from burning of coal and 9% comes from burning gas/oil in power plants. Burning fossil fuels like coal or oil/gas has significantly adverse impacts on the environment and on society. The mining and transport of coal, ash dumps, ground water contamination and air pollution affect the populations living around the mining sites and power plants. The carbon dioxide emission due to combustion of fossil fuel contributes substantially to global warming - that threatens the stability of the earth’s climate. The power sector contributes nearly 40% of India’s carbon dioxide emissions. India has signed the Kyoto Protocol – an acknowledgement that we share the concern of global warming, which also expresses our commitment to slow down climate change.


Share of electricity generation by energy source


466618 GWh (Thermal): 84%,


17720 Gwh (Nuclear):       3%,


73796 Gwh (Hydro):        13%

(Source: Energy Profile of India, MoP, 31st March 2004)


One of the ways to mitigate the adverse impacts of the power sector is to conserve electricity. Energy conservation can be achieved not only by avoiding the use of electricity but also by using it more efficiently, e.g., by getting the same amount of light from a lower quantity of electricity by using more efficient lamps. Every consumer is finally interested in “energy services” like heat, light and motive power and not in the quantity of electricity use per se. Hence, there is a need to differentiate between electricity consumption and the provision of energy services.  Any reduction in energy use at the point of end-use has a multiplier effect. One unit of electricity saved at the consumer end avoids 1.4 units of electricity generation, which implies a saving of about one kg of coal. In other words, a reduction of just 50 W on the consumer side (that works out to say 6 hours a day), avoids coal usage of 110 kg per year!


Large potential for cost effective improvements in efficiency


A number of studies have demonstrated that energy conservation or, more correctly, efficiency improvements have a large potential. Most of this potential should be achieved from a purely economic / financial point of view. In other words, it is far cheaper to save electricity in many situations, than to build new generation plants and strengthen the existing transmission and distribution networks. This section takes an overview of studies done in India that quantify the potential for saving energy by such cost effective measures. These studies by Indian as well as foreign researchers, consultants or institutions were conducted during the last 15 years. They may be broadly classified into three types:


A. Potential and cost estimation studies – focus on the evaluation of one or more options for energy conservation or efficiency improvement. Typically, such studies estimate the potential for saving energy through improvement in end-use efficiency, either based on field experiments or on literature and cost analysis. A combination of more efficient equipment use and optimum system design is considered in such studies.


B. Integrated Resource Plans – Integrated Resource Plan (IRP) or Least Cost Plan (LCP) studies repeat the planning process in the power sector, by avoiding the mistakes done by the mainstream planning process i.e. avoiding the bias for the supply side and in favour of large projects. IRP studies project the demand for electricity and identify the least cost options to meet this demand. In this approach, a number of available options, including centralised or de-centralised generation, efficiency improvement, or change in load pattern, are evaluated for potential and costs. Out of such ‘candidate’ options, the combination of options, which best satisfy the projected demand at least cost are selected.


C. Program and implementation plans– These studies focus on some particular end-use or sector, and are aimed at developing programs/ packages for implementation of options to improve efficiency.  Often, terms like efficiency improvement, energy efficiency, or DSM are used loosely. DSM must be distinguished from the other general terms. According to the definition adopted by the California Public Utilities Commission, DSM is “Planning, implementation, and evaluation of utility-sponsored programs to influence the amount or timing of customers' energy use.” (Ref.: Glossary of words on the website of California Energy Commission). Indian regulatory commissions have used the term DSM in contrast to the supply side management, implying reduction or alteration of demand. The regulatory commissions in India have also used the tariff signal induced change in consumer behaviour, or reduced energy use due to mandatory standards as DSM. But utilities in India have rarely implemented DSM schemes; whatever has been implemented has not gone beyond the pilot level. Demand for power is increasing rapidly, partly due to the rapid growth of stock of inefficient equipment. Hence DSM schemes must urgently be implemented to limit this demand growth for power arising out of such inefficiency. This will not only be economical but also reduce power shortages, resulting in social benefits. On this backdrop, this report takes an overview of the potential for DSM, the studies conducted in India, the legal position and the role of different actors. The report outlines why utilities should undertake DSM, summarises the representative studies carried out in the past, gives a summary of the implemented DSM schemes, the legal backdrop and the regulatory vision on the issue alongwith some international experiences. The report argues that regulatory commissions should direct the utilities to implement DSM schemes and to monitor their experiences thus gathered with DSM in order to improve the schemes. The report urges consumer groups to pursue DSM with the regulatory commissions and utilities and to create public awareness for the success of such schemes.


Kazakhstan Ranks 3rd for Uranium Extraction


May 3, 2005. Kazakhstan ranked world’s 3rd for uranium extraction last year, reports the press service of the Kazatomprom national nuclear industrial company. Canada led the world, with 29.2 per cent of global extraction, Australia coming second, with 22.6 per cent, and Kazakhstan following with 9.4 per cent, company PR said to Novosti with reference to the Ux Weekly, authoritative US-based periodical specializing in the nuclear fuel cycle. Kazakhstan extracted a lump 3,719 tons of uranium last year, as against 3,346 tons for 2003. The Kazatomprom accounted for 3,363 tons out of the total for 2004. The company intends to spectacularly increase uranium extraction, and hit a 15,000-ton mark by 2010, to make its country world leader. With all shares government-held, the Kazatomprom is Kazakhstan’s sole uranium export(Rs billion)import dealer.

(Courtesy: RIA Novosti)


India’s Reforms in the Hydrocarbon Sector

What Has Been Accomplished?

What Remains to be done?-II


Continued from Issue 44


Consumption of petroleum products increased from 3.7 million tonnes (27 million barrels) in 1952 to 9.5 tonnes (69.6 million tonnes) in 1962.  In that period, the compound growth rate for oil products was 9.6 per cent but growth rates varied across products.  In 1952, kerosene was the main product consumed followed by petrol which together accounted for 50 per cent of the demand.  In general consumption of petroleum products increased rapidly while consumption pattern changed in line with changes in the industrial sector.  


1960-1990: Discovery and Development


Upstream: Golden Era


This was a period of intensive exploration for oil to increase indigenous resources.  The strategy was to increase domestic production to match demand and reduce the dependence on imports. However prospects of finding oil in the country looked dim.  Exploration carried out with Canadian Technical Assistance under Colombo Plan had not borne fruit.  The Indo-Stanvac Petroleum Project meant for oil exploration of oil in West Bengal basin also proved a failure. But then followed a period of technical collaboration with the Soviet Union which proved crucial in dramatically transforming the oil scene in the country.


Exploration by ONGC during the Second Plan (1956-61) period led to the discovery of oil & gas in the Cambay-Ankleshwar in Gujarat and Sibsagar in Assam.  By the end of the Third Plan (1961-65), about 172 million tonnes of initial recoverable reserves had been established.


Though this was followed by a brief period of stagnation - which gave rise to the perception that false hopes had been given about the extent of potential reserves - huge discoveries were made by ONGC in the west coast in 1967.  Encouraged by these developments outlay for exploration was significantly enhanced in the Fifth Plan.


Discovery of the giant oil field Bombay High, now known as Mumbai High, was a significant turning point.  Production went up to 195 million tonnes in the period 1969-74.  A gas field of substantial size was also found at South Bassein in the same area.  Further exploration in the Bombay offshore region resulted in the discovery of a number of oil and gas fields like North Bassein, South Bassein, South Tapti, B-37, B-38, etc. On land, significant additions to oil reserves were made both in the Cambay and the Assam—Arakan basins. Oil was discovered at Kharasin in Arunachal Pradesh by Oil India. By 1978, the total initial recoverable reserves had increased to about 452 million tonnes.


During the period 1978-80, oil exploration continued to receive high priority. On land, exploratory activities in the prospective Assam-Arakan region were considerably stepped up until the widespread disturbances in the region towards the end of the year 1979 impeded the progress. While a brisk pace of exploration was maintained in the western region, a cautious approach was adopted in other areas on account of the high risk to reward ratio. Offshore, detailed seismic surveys were conducted over a large part of the continental shelf. Exploratory drilling was done by ONGC in the Bombay offshore area and off the Godavari basin, Kerala coast and Managalore coast.


The outstanding discoveries made during the period were of oil and gas in the Godavari basin and of oil, at Ratnagiri-9 and Ratnagiri-12 structures. Oil India Limited (OIL) also began offshore exploration in the Mahanadi delta.  By the end of 1980, OIL & ONGC had together drilled over 3100 wells totalling about 4.9 million meters and the inventory of geological reserves of oil reached over 2.3 billion tonnes, of which 478 million tonnes were considered recoverable. The balance of recoverable reserves of oil stood at about 360 million tonnes in 1980.


Discovery of additional oil reserves enabled augmentation of indigenous production. Starting from a meagre 0.45 million tonnes in 1960, domestic crude production went up to 5.6 million tonnes by the end of the Third Plan, 7.2 million tonnes by the end of the Fourth Plan and 11.77 million tonnes by 1979-80. Up to 1975-76, the production of oil was exclusively from the on-land fields of Cambay and Assam-Arakan basins.


Thereafter an increasing contribution has been made by the Bombay High offshore field which attained a production potential of 5.0 million tonnes of oil per year after the completion of the Phase III of the development in December, 1978.  Production from Bombay High increased rapidly until 1983-84. Oil and associated gas from Bombay High was pumped through submarine pipelines to Uran on the mainland, where facilities for crude stabilisation, and fractionation were established.


Downstream: Keeping up the momentum


The Koyali refinery was established in the Third Plan (1961-66) and the Cochin refinery thereafter.  The refinery in Madras was completed in the Fourth Plan (1969-74) and capacities of the old refineries were expanded.  As a result the refining capacity went up from 16 million tonnes to 21 million tonnes at the end of the plan. 


During the Fifth Plan the new refinery at Haldia was added and Baruni and Koyali were expanded.  The Sixth Plan (1980-85) witnessed a quantum jump in refinery capacity which went up 18 million tonnes with the new refinery at Mathura and Bongaigaon and expansion of Koyali.  In the seventh plan refining capacity increased by 6.5 million tonnes to 52 million tonnes. The consumption of petroleum products increased nearly five fold from a little over 5 million tonnes in 1956 to about 24 million tonnes in 1973.  It was steady at this level following the steep rise in oil prices in the following years.  However demand revived in the late 70s.  


While the consumption of each petroleum product increased steadily since 1952, the unprecedented crude price hike in 1974 led to a brief fall in consumption of some products.  Consumption of kerosene increased by 60 per cent over the period 1961-1971 but it declined marginally in 1973 and further by 21.5 per cent in 1974.  It then increased in 1977 to the level attained in 1972 and has continuously increased since then.  HSDO recorded the highest rate of growth of consumption. 


The combined growth rate of kerosene and HSDO in the twelve years from 1960 to 1972 was about 8.2 per annum and fell marginally to 7.54 per cent during 1972-80.  As against this, combined growth rate, consumption of HSDO increased at the rate of 10.6 per cent per annum.  By 1964 the share of HSDO increased and the relative significance of motor gasoline and kerosene.  With increasing use of Naphtha in the fertilizer and petrochemical industries since 1968 the combined share of gasoline and naphtha (known as light distillates) increased from 9 per cent of total in 1964 to 13 per cent of the total in 1971.  The proportion of kerosene and aviation turbine fuel (ATF) which was about 26 per cent during 1964 declined to an average of 20 per cent during 1971 and dropped further to 16 per cent in 1980.  The consumption of HSDO however increased steadily from 0.26 million tonnes in 1952 to 9.6 million tonnes in 1979 increasing the share of HSDO from 7 per cent in 1952 to 31 per cent in 1979.



Trends in Petroleum Consumption 1961-1980 (‘000 tonnes)


































































































































































































1960-1990: What was achieved?


Discoveries in the 60s and 70s altered the general perception of the times that India was an unattractive prospect for hydrocarbons.  This phenomenal change in status of the upstream sector in India must be hailed as a success of the early planning era under the leadership of K D Malvia the then Minister for Natural Resources who also headed ONGC. His faith in the upstream potential of India, which went against conventional wisdom, led to active exploration and discoveries that enabled India to develop core competence in Exploration & Production activities while at the same time reinforcing India’s chosen path of self-reliance. ONGC also ventured overseas fairly early. In the 1950s it participated in oil exploration in the Persian Gulf. This led to the discovery of the giant Raksh and Rustam fields off the coast of Iran. It also ventured to Tanzania where the Songo gas field was discovered. ONGC’s early overseas success was not necessarily welcomed by foreign oil companies as they refused to process the crude that was ONGC's share in the venture in the Persian Gulf. While optimism on India’s prospects in the upstream sector in this period could be justified, it probably contributed to an overemphasis on hydrocarbons through the ‘dieselisation’ strategy.  The Fourth Plan (1969-74) for the transportation segment advocated expanding the ‘dieselisation’ programme for the railways while exploration for  oil and refining capacity were to be ‘increased in-line with projected growth’. It was only in the sixth plan period that the folly of this strategy was realised. 

Team Energy ORF

To be continued

Supertanker For Safe Oil Transportation on Baltic Sea Is Being Designed.


April 29, 2005. Russian Sovkomflot and Swedish Stena Bulk are beginning a joint project to build a tanker, which will ensure safe transportation of crude oil on the Baltic Sea, the companies' joint press release reads. The companies signed a protocol of intentions, which envisages their joint participation in building a new generation supertanker, tentatively named B-Max. The appearance of the new craft will lead to the enhancement of safety and economic efficiency of transportation. The main purpose of the B-Max (Baltic Max) project is to develop and build a ship with unprecedented characteristics of safety of navigation and high economic indicators. This ship will be offered to the companies exporting crude oil from the Baltic region. From 2001 the export of Russian oil from the Baltic ports will substantially increase within the broadening energy dialogue Russia - Western counterparts. It is intended to fit out the craft of the B-Max type, along with a double hull, also with two main engines placed in different machine compartments, a double rudder and a double control system, two propeller screws and a duplicating control system similar to that which is used in civil aviation. The small draught of the tanker will make it possible to ensure its load-carrying capacity of 200,000-250,000 tons, i.e., to increase it by 60-80% compared to the bulk oil-carrying ships, which currently operate on the Baltic Sea. This will enable the number of ships required for transporting oil from the Baltic region to be reduced, and the cost of cargo transportation to be cut. General director of OAO Sovkomflot Sergei Frank noted in this connection, "It is our direct duty as the largest Russian ship owner to support the growing energy sector of Russia and to focus on export transportation of Russian oil. The B-Max project implies reduction of our clients' transport expenses with simultaneously increasing safety of transportation in the Baltic region. We like such correlation." General director of Stena Bulk Ulf Ryder said, "The aim we have stated - to ensure safety of tanker transportation - is visibly confirmed by our ship-building program." Stena company specializes in developing types of craft possessing higher load-carrying capacity and distinguished by the highest safety standards. Ten tankers of the Max series have already been freighted by the leading oil companies. Since both companies have the same obligations before the Baltic region," Stena Bulk's general director noted. A mock-up of the B-Max craft will be developed and tested during 2005. The construction of the tanker must begin by the end of 2006.

(Courtesy: RIA Novosti)





Qatar Petroleum to help set up LNG terminal


May 2, 2005. The government has invited Qatar Petroleum for joining Oil and Natural Gas Corporation in setting up a liquefied natural gas terminal at Mangalore in Karnataka. Natural gas for this terminal could be sourced from Qatar’s North Field and sold to power projects like the one being planned by the Hindujas in Tamil Nadu. ONGC had in early April announced the signing of a memorandum of understanding (MoU) with Ashok Leyland Project Services, an associate of the US$800-million commercial vehicle major Ashok Leyland, for its Rs 25,000-crore (Rs 250 billion) mega project involving an LNG terminal, power plant and petrochemical complex. The option of receiving natural gas at both Mangalore and Ennore was explored but it was found that it was cheaper to receive LNG from West Asia at Mangalore and then pipe it to Ennore than setting up a regasification facility in Ennore itself.  


Gas production in the Bay of Bengal


April 28, 2005. Reliance Industries has received the government approval for production of natural gas in the Bay of Bengal. The Director General of Hydrocarbon has approved RIL’s plan for production of 40 million standard cubic meters per day of gas from Dhirubhai 1 and 3 of KG-D6 block. Also the Mining lease for 20 years effective from March 2, 2005 has been granted. The company has found gas in 9 out of the 12 wells drilled in KG-D6 and the first three discoveries - Dhirubhai 1, 2 and 3 have been declared commercial. Of these, Reliance proposes to develop Dhirubhai 1 and 3 in the first phase. Building on the giant Dhirubhai gas discovery, Reliance continued with the exploratory drilling campaign in the discovery block KG-DWN-98/3 in the Krishna Godavari basin. RIL is the largest exploration acreage holder among the private sector with 30 domestic exploration blocks covering an area of about 300,000 square kilometres. This is in addition to its interest in one exploration block in Yemen and a block recently awarded in Oman. Reliance also has 5 coal bed methane blocks covering an area of about 4000 sqkm. RIL also holds a 30 per cent interest in an unincorporated Joint venture with British Gas and ONGC, to develop the proven Panna-Mukta and Tapti oil & gas fields. British Gas has a 30 per cent share and ONGC the balance 40 per cent share. 


IOC to up import from Iraq


April 27, 2005. Indian Oil Corporation is showing increasing preference for Iraq crude, better known as `Basra Light', primarily due to the price advantage it offers. The company procured 4.8-million tonne (mt) Basra Light from Iraq in 2004-05. It is now planning to step up imports from Iraq to 8 mt during the current fiscal, on term contract basis. BPCL and HPCL, the two other public sector oil majors, which had also entered the Iraq market last year, however, have so far "maintained their presence in the market" and are not considering any major increase in procurement. The two put together procure lower quantities from the world crude market compared to IOC. The largest Indian refiner, IndianOil procures close to 40 mt of crude from the world market to feed its seven refineries. Of this, 25-26 mt are on annual term contract basis and the rest are spot purchases. While a price advantage to the tune of 50 cents to US$1 over comparable sour light variety available in the neighbouring region is described as a major reason behind IOC's shift towards Basra Light, the company might also replace a part of the light-sweet variety, generally costlier than the light sour crude, in the current year underlining a change in refining strategy especially in regard to the increasing demand for Euro-III fuel. Apart from Iraq, the other countries from which IOC is expected to procure in substantial quantities on term contract basis during 2005-06 are Kuwait (7 mt), Saudi Arabia (4.5 mt), UAE (2 mt), Iran (2 mt) and Nigeria (2 mt). Brunei crude which was a regular feature in the shopping list until very recently, is largely replaced.


British Gas-ONGC-RIL plans to invest US$500 m


April 26, 2005. The three-way joint venture by British Gas, ONGC and Reliance Industries Ltd that operates the Panna, Mukta and Tapti gas fields announced an investment plan of US$500 million for the development and expansion of the Tapti gas field, offshore Mumbai. The joint venture has made total commitment of over US$900 million in the project, to be done in phases. The Government has approved the plan for the development of the mid-Tapti field with installation of a processing platform and new compression facilities to increase production in 2007. A single wellhead platform will be installed to drill eight new wells to raise gas production from 250 million standard cubic feet per day (mmscfd) to 450 mmscfd. Further, a new 20-inch export pipeline will be laid; in the initial stage, four wells will be drilled.


Of the total production of 10.8 million standard cubic metres of gas per day (mscmpd) from the three gas fields on the western offshore, the joint venture will directly sell 4.8 mscmpd at a competitive price, which is expected to be US$4.08 per million British thermal units (mBtu). The remaining six mmscmpd are to be sold to GAIL (India) Ltd at US$3.86 per mBtu. Earlier, the joint venture sold its entire gas output to GAIL at a price of US$3.11 per mBtu. However, GAIL was not lifting the entire quantity marked for the company. As per the understanding, GAIL is expected to pick up the marked quantity and then supply the gas to fertiliser and power plants through the Hazira-Bijaipur-Jagdishpura pipeline. Recently, the consortium tied up with Gujarat State Petroleum Corporation Ltd, Gujarat Gas Corporation Ltd, Indian Petro Chemical Corporation Ltd and Reliance for direct sale of PMT gas at US$4.08 per mBtu.


ONGC, Cairn Energy plan SPV


April 28, 2005. ONGC and the Scottish energy major, Cairn Energy will set up a special purpose vehicle (SPV)—Rajasthan Refineries Limited—to implement a chain of projects in Rajasthan. This includes a well head oil refinery along with processing facilities for high residue lube cracking, power generation project and other infrastructure for marketing petroleum products. The SPV will have 50:50 participation from ONGC-MRPL combine and Cairn Energy respectively and will be funded in such a way that it retains the private sector status.


IOC to buy Cairn crude in Rajasthan


April 28, 2005. Indian Oil Corporation will buy the crude oil produced by Cairn Energy of UK from the Rajasthan oilfields, which are being targeted to bring production from October 2007. IOC can either set up a refinery in Barmer district or lay a pipeline to transport the crude for processing at its Panipat refinery.


Shell India opens retail station in Chennai


April 27, 2005. On the busy and crowded Arcot Road in Vadapalani, sharing space with a row of offices and shopping complexes and film studios is Shell India's swanky new retail station, its first in Chennai and third in the country. Uniformed attendants wave in motorists — directing two-wheelers into a separate lane, autorickshaws into another lane and cars and other four-wheelers to other dispensing pumps. And, as you wait to fill in fuel, attendants spray a soapy liquid on to the windshield and clean it away. The sleek fuel dispensers manufactured by Tatsuno Corporation of Japan also have facilities to print out receipts at the press of a button. The fuel station has a convenience store that sells chocolates, biscuits, beverages, light eats, batteries and film rolls. Shell India Marketing Pvt Ltd, a 100 per cent subsidiary of Shell India Pvt Ltd and which is incorporated in Tamil Nadu, is implementing Shell India's retail initiative in India. Its authorised share capital is Rs 2,000 crore (Rs 20 billion). This is the company's third retail station in India, the other two are in Bangalore. It inaugurated its first fuel station in Bangalore in November 2004 and has the Union Government approval for setting up 2,000 retail stations all over the country. It has earmarked Rs 250 crore (Rs 2.5 billion) for the first phase of its retail operations in India. Shell India currently sources petrol and diesel from Indian refiners, according to the company.

Transportation / Trade

India sets stiff terms for Iran pipeline gas 


May 2, 2005. India is not willing to pay more than US$2.25 per mmbtu as the delivered price of piped gas from Iran beginning 2009. Of the proposed 60 mmscmd of gas imports from Tehran, India is keen on starting with 36 mmscmd of supplies (60%) in 2009 and subsequently increasing it to 48 mmscmd (80%) and 60 mmscmd (100%). Moreover, in line with international practice and citing Myanmar-Thailand gas exports, India has demanded a 25% discount from Iran on the “subsequent quantities” of gas to be imported beyond 2009.


AP to have gas grid by 2007-08


May 2, 2005. Andhra Pradesh will have a gas grid put in place connecting all the districts when Reliance and ONGC get ready for producing "enough gas" for industrial use by the end of 2007 or early 2008. The State would emerge as the largest producer of natural gas in the country.


British Gas looks at expansion in South India


April 30, 2005. British Gas, which supplies natural gas to domestic and industrial customers in Gujarat and Maharashtra, is considering entering South India. The company is studying prospects of selling piped natural gas for domestic users and compressed natural gas for industrial and vehicular users in major South Indian cities. The company is looking for possible joint venture opportunities similar to its tie-up with GAIL (India) Ltd in Mumbai where it sells 300 million metric standard cubic metres a day (mmscmd) gas through Mahanagar Gas, its joint venture with GAIL. But plans will depend on tying up natural gas supplies.


GAIL plans mega gas grid in AP 


April 30, 2005. Given the increasing demand from power projects and fertiliser units, public sector Gas Authority of India Limited (GAIL) is planning to put up a mega gas pipeline network of 1,600 km in Andhra Pradesh at an estimated cost of Rs 4,800 crore. The company, which is already operating around 750 km of pipeline in the Krishna-Godavari basin, supplying around 7.2 mmscmd of natural gas to around 32 customers, is planning to put up a new gas pipeline to exploit the increasing demand from newer projects. As part of the 12,000 km of national gas pipeline network at an estimated investment of Rs 25,000 crore (Rs 250 billion) over the next five years, the company was working out plans to take up 1,600 km AP project. Proposed routes in the state include Ichapur-Srikakulam-Rajamundhry section on Kakinada-Kolkatta pipeline, Ongole-Sulurpet section on the Kakinada-Chennai pipeline and Tuljapur-Secunderabad-Kakinada section on Kakinada-Uran route. GAIL expects to complete these pipelines by the third quarter of 2006 matching with the commissioning of new independent power projects.

Policy / Performance

National grid, a dream


May 3, 2005. Two decades have gone by since plans for a nation-wide gas pipeline network were chalked out but the government is yet to make a move on the project. Issues surrounding the planned network remain unresolved even though the gas market is moving towards greater competition. The national gas grid was supposed to be a network of inter- connected transmission pipelines providing linkage to various supply sources. But the ministry of petroleum and natural gas has taken a stand that the grid need not be taken up as a separate project and be allowed to evolve with the development of gas markets. There are varying views on this stand of the government. Private companies in gas business, like Reliance and BG India, which have formed the Gas Industry Group, are pitching for open access to the existing pipelines. But the parliamentary committee on petroleum has envisaged a bigger role for public sector Gail (India) Ltd, which is the current owner of the network. “In view of the increasing gas availability from various sources, the committee recommends that the government should develop a national gas grid on the lines of the power grid, under government control, to ensure regional balance, keeping in view the uneven availability of gas in various regions of the country,” says the committee in its report.


Losses of oil companies should be supplemented


May 2, 2005. Keeping in pace with the hike in international prices, steps should be taken to supplement the loss of revenue to oil companies, failing which the losses will mount. The oil companies has been incurring a loss of Rs 20,000 crore (Rs 200 billion) for the last five months as prices have not been raised during this period. If steps were not taken, the losses would mount to Rs 37,000 crore (Rs 370 billion). Any decision on raising the petroleum prices would be taken by the Union Petroleum Ministry only after consulting the UPA allies which is ongoing.


Natural Gas Availability


May 2005. Production of Natural Gas during 2004-05 period was of the order of 88 MMSCMD. Contribution from various sources is detailed below




% age














Apart from domestic production, RLNG from PLL Dahej contributed additional 9 MMSCMD, taking the total availability of gas to 97 MMSCMD. Supply of natural gas had been of the order of 83 MMSCMD with internal consumption of 11 MMSCMD. Balance 3 MMSCMD was flared, mostly technical flaring.


Time to come clean


April 29, 2005. In deciding on what petroleum product prices should be, the issue is not whether Finance Minister’s  duty changes for the oil sector were revenue neutral or not, though it is true that this was shown to be so only by excluding the Rs 3,000-odd crore (Rs 30 billion) he will get from the increased road cess. The issue is whether the oil companies should continue to incur notional “losses” (by not being allowed to hike prices in line with global trends) since they are in any case making a comfortable level of profits. Refinery margins in India are higher than global margins by around a fourth or a fifth, thanks to excessive import duty protection, as shown most clearly by the latest results of Reliance Industries. But while global oil majors like Shell and Exxon have a pre-tax profit-to-revenue ratio of 15-16 per cent, this is 7-8 per cent in the case of Indian oil majors like IOC and HPCL. Once you add back the “under-recoveries” of Rs 19,000 crore (Rs 190 billion) that these oil majors had to bear last year, their profit margins jump to global levels. In other words, there is little doubt that Indian oil-refining and -marketing firms need to be allowed to hike prices to global levels. 


The next issue is how this burden is to be shared, and whether it should all be passed on to the consumer. This is where the government needs to come clean. The finance ministry’s gains should exceed comfortably the Rs 3,000 crore (Rs 30 billion) that it will get by way of additional road cess, since the calculations of revenue neutrality were made on the basis of Brent prices of US$35 a barrel, compared to the current US$55. If this is indeed the case, the finance ministry must come clean on how much extra it collects for each dollar spurt in crude prices, and it should be willing to shed some of the unplanned gain so as to spare the general public a price hike. That’s not all. While it is true that the oil-marketing companies are not being allowed to charge consumers “international parity” prices, there is more to this story, too. Around 30 per cent of the crude purchased by the oil-marketing firms is sold to them by ONGC at US$4-5 less per barrel than the international price, and this saves them around Rs 4,000 crore (Rs 40 billion). In other words, when the firms are asking for international parity pricing while selling their products, what they’re not saying is that all their inputs haven’t been paid for at international prices, either. Similar opacity prevails when it comes to the marketing and other margins charged by the firms. The petroleum ministry needs to come out with the details of how it calculates the under-recoveries. In short, there has to be greater transparency all round when talking of petro-product products. It will not do to simply keep milking the consumer.


March crude output exceeds Govt target


April 28, 2005. The crude oil production in March was more than Government output target of 2.703 million tonnes (mt). During the month, the crude oil production was 2.917 mt. This was a surplus of 7.9 per cent. According to an official data, the production for the fiscal 2004-05 was 33.981 mt against 33.373 mt (2003-04). The planned target for 2004-05 was 33.145 mt. The refineries production (in terms of crude throughput) was 10.896 mt in March against the planned target of 10.106 mt. The crude throughput was less than the target in IOC (Barauni, Koyali and Panipat) and HPCL (Mumbai) due to shutdown and repairs. The refinery capacity utilisation for 2004-05 was 99.8 per cent while in 2003-04 it was 101.7 per cent. The data also indicated that, in March, the natural gas production of 2,825 million cubic metres (MCM) was a surplus of 15.3 per cent when compared with the planned target of 2,451 MCM. For the fiscal 2004-05, the actual production was 31,774 MCM, a surplus of 2.7 per cent from the planned target of 30,927 MCM. However, the natural gas production in 2003-04 was 31,962 MCM.


Formula for uniform VAT rate on diesel


April 27, 2005. The empowered committee of state finance ministers on value-added tax (VAT) has come up with a novel solution to encourage states to adopt a uniform floor rate of 20 per cent for diesel. It has been suggested that states like Delhi could continue with the 20 per cent tax slab for diesel but reduce the effective rate to 12.5 per cent. The differential could be extended as a subsidy by the Delhi government directly to the oil companies. The issue had become complex with Delhi adopting the 20 per cent floor rate but other states like Punjab and Haryana maintaining their earlier rates. The suggestion was mooted by the chairman of the empowered committee, Asim Dasgupta, for all states so that a uniform floor rate could be achieved for diesel. 


Similarly, in the case of LPG also, the Delhi government can maintain the rate at 12.5 per cent but bring down the effective rate to the earlier rate of 8 per cent. Here also the difference could be extended as a subsidy by the Delhi government. Effectively, on account of the subsidy the prices of diesel and LPG in the capital can come down to the level prevailing earlier. Delhi government, however, said it was difficult to implement the proposal since states like Punjab and Haryana had made it clear that they would not adopt the 20 per cent floor rate.The two states levy 8.8 per cent and 12.5 per cent sales tax on diesel respectively. 


Mitsubishi to set up carbon dioxide units for Iffco


April 27, 2005. Mitsubishi Heavy Industries Ltd (MHI), in collaboration with Mitsubishi Corporation, has signed a contract with the Indian Farmers Fertiliser Cooperative (Iffco) for setting up two carbon dioxide (CO2) recovery units at its Aonla and Phulpur fertiliser plants. Each of these units has a production capacity of 450 tonne per day. The switch over from gas or naphtha to liquified natural gas as the feedstock for fertiliser production normally causes CO2 shortage for fertiliser production. The CO2 recovery plants help supply enough CO2 to not only maintain the current urea production level but also for future production expansion. Iffco’s objective for undertaking this project is to increase urea production capacity and to cut down overall energy consumption in its ammonia/urea plants. The CO2 recovery technology is currently possessed by only three companies in the world — MHI, Fluor Daniel and ABB. The MHI constructed its first CO2 recovery plant with its own technology for an ammonia/urea plant in Malaysia in 1999. The MHI’s contract with Iffco is to provide its technology directly to Iffco as the process licensor. The plant will be constructed by Tecnimont ICB, India, in about two years. CO2 has its uses in other sectors as well, such as capacity enhancement of methanol plants and food grade carbonated drinks. Besides, it is used for increasing oil recovery from crude reservoirs by CO2 injection technology. Moreover, CO2 recovery could contribute to global CO2 reduction as envisaged under the Kyoto Protocol on climate change which became effective in last February. 



NTPC to invest in West Bengal


April 29, 2005. Power PSU National Thermal Power Corporation Ltd would invest around Rs 2,450 crore (Rs 24.50 billion) in West Bengal for augmenting generation in thermal and hydel sectors. The PSU would build a 500-MW thermal plant at Farakka, for which the investment required would be Rs 2,000 crore (Rs 20 billion). The Farraka plant would come up during the 11th five year plan in 2007-2011. With that, NTPC's generating capacity in West Bengal would go up from 1400 MW to 1900 MW. NTPC would provide 30 per cent of the project cost from its own resources, while 70 per cent would be from debt raised from the market. The PSU had also decided to issue bonds as part of the company's borrowings plan to meet the funds requirement for the fiscal 2005-06. 


NTPC Hydro inks pact with Bengal 


April 28, 2005. NTPC Hydro Ltd, a subsidiary of NTPC, has signed an MoU with West Bengal State Electricity Board (WBSEB) for implementation of the 90 MW capacity Rammam Stage-III hydroelectric power project. This will be NTPC Hydro's first hydroelectric power generation venture in the eastern region. Rammam Stage-III is one of the run of the river (ROR) schemes similar to Rammam Stage-I (36 MW) and Stage-II (51 MW). Rammam Stage-IV (30 MW) is a storage scheme at the terminal stage of the river basin. Of the four stages on the Rammam river finalised by WBSEB, only Stage-II has been commissioned. The other schemes are yet to be developed.


The Rammam river, one of the tributaries of the Teesta river originating from Phalut-Sandakphu range at 3,631 m above sea level, forms a natural boundary between West Bengal and Sikkim all along its meandering course of 42 km up to its confluence with the Rangeet. NTPC entered the hydroelectric power generation business with the implementation of Koldam Hydro Electric Power Project (800 MW) in Himachal Pradesh. Two more projects - Loharinag-Pala (600 MW) and Tapovan Vishnugad (520 MW) - are also under implementation. NTPC had set NTPC Hydro Ltd in order to give a boost to hydro capacity addition and an exclusive thrust to small and medium-sized hydroelectric power projects up to 250 MW capacity. The subsidiary's maiden venture is the 125 MW capacity Lata-Tapovan hydroelectric project in Uttaranchal. The DPR has been completed and project implementation is being initiated. NTPC Hydro has been able to begin operations in West Bengal after concluding an agreement with WBSEB. All hydroelectric projects of NTPC and NTPC Hydro Ltd would be commissioned during the 11th Plan period.


Himachal hydro project to start in May


April 27, 2005. Prime Minister will lay the foundation stone of a major hydro project in Himachal Pradesh next month. The 430-MW Rampur project (there’s a 1500-MW Nathpa Jhakri power project) is to be built on the Sutlej river according to the Sutlej Jal Vidyut Nigam Limted (SJVNL), a major central power public sector company. The Rampur project will be built by the SJVNL and the state government at Rs 2,500 crore (Rs 25 billion). The diverted Sutlej waters of the Nathpa Jhakri power project will be used to build the Rampur project to save money, which is expected to be completed in about four years. The Nathpa Jhakri power project is the country's largest hydro-power project and was completed a year ago. So far, the project has generated 6.6 billion units of power and generated Rs 1,550 crore (Rs 15.50 billion) as revenue. The Himachal government, which has a 30 per cent equity in the Nathpa Jhakri project, will make Rs 220 crore (Rs 2.20 billion) per year.  


CIL eyes power generation


April 27, 2005. Coal India Ltd (CIL) is looking at the possibility of setting up a joint venture power plant in collaboration with the National Thermal Power Corporation (NTPC). Meanwhile, CIL has firmed up Rs 14,000 crore (Rs 140 billion) investments for the 11th Five Year plan period and has targeted total coal production of 550 million tonne. In 2005-06 the company has set a goal of 343 million tonne. In 2004-05 CIL mined close to 323 million tonne. The environment related litigation had affected 58 CIL mines. This could result in their closure. 


If closed down, the country would see a shortage of around 80 million tonne (mt) of coal, which would lead to acute shortage for power sector and other users. Meanwhile, the joint venture power plant envisaged with Neyveli Lignite Corporation (NLC) to be set up in West Bengal has hit a road block with coal linkage not being available for the project. CIL was also in the process of setting up a power plant at Ranigunj through its subsidiary ECL. This plant was slated to use coal mine methane as fuel. Coal mines in India, specially in the Ranigunj area, have large reserves of methane gas which gets released into the atmosphere when mining activities are initiated. CIL is also toying with the idea to setting up a joint venture company with a power producer to run the plant that would come up close to a mining block. CIL had plans to add value to its coal by diversifying operations. All its seven production subsidiaries would give priority to produce more washed and proper sized coal which sell at higher prices. 

Transmission/ Distribution / Trade

Gail to sweat North


May 3, 2005. The rest of the summer could be worse for power consumers. Going by the present trends on the fuel front, power shortages are set to escalate in the coming months. Gas supplies for at least six gas-based NTPC plants have been slashed, impacting power generation particularly in states like Delhi, Haryana, UP and Rajasthan. This comes at a time when the peak power shortage in the country has hit double digits and is at a high of negative 11.7%, crossing last year’s average shortage of 7.1%. The western region is the worst affected with a peaking shortage of over 22%. The increase in the demand-supply gap has led to power outages and prolonged hours of blackouts. The gas-based power plants operating below average capacity include Kawas, Gandhar, Anta, Aurya, Dadri and Faridabad. Power secretary has written to petroleum secretary to take up the matter and get gas supplies restored urgently.


Gas supplies along the HBJ have been reduced by more than 1.55 mmscmd in the last one month. This has brought down generation by 129 million units in April. Gail India recently asked NTPC to pay higher price for additional gas supplies given the hike in gas price supplied by Panna-Mukta-Tapti fields. However, the power ministry has contested this. It has argued that the allocations of subsidised gas to NTPC were made in 1990 by the Gas Linkage Committee. 


Power supply to improve in Kollam district


April 29, 2005. The power scenario in Kollam district is poised to brighten up once the new 220 kV sub-station of the Kerala State Electricity Board (KSEB) at Kundara, a Rs. 80-crore (Rs 800 million) project, will be commissioned in May. The new sub-station will replace the existing 110 kV Kundara Sub-Station and it will be the KSEB's 14th 220 kV sub-station. The sub-station would mean uninterrupted supply of better quality power. Frequent power failures and low voltage problem would appreciably come down in the areas covered by the sub-station, he said. The areas in the district to benefit from the sub-station include Kollam city and the townships of Chavara, Sasthamcotta, Karunagapally, Kottiyam, Chathannur, Paripally and Kottarakara in addition to Kundara and several other panchayats falling between these townships. In order to remain in tune with upgrading of the Kundara sub-station, all 66 kV sub stations in the beneficiary area in the district, except Karunagapally, were being upgraded as 110 kV sub-stations. It was in February, 2004, that work on the sub-station started. The target was to complete the work in eighteen months. But in spite of several hurdles, work progressed at a fast pace so as to enable the project to get commissioned within fourteen months.

Policy / Performance

MSEB takes stock of power crisis


May 3, 2005. The Maharashtra State Electricity Board (MSEB) is planning to enter into an arrangement with Tata Power Company (TPC) to ramp up its peak hour power supply in the state by 400 mw per day. This is one of a series of steps being undertaken by the MSEB to tackle the worst ever power crisis in the state. The board has also inked short-term three-month contracts with Adani Exports, Power Trading Corporation (PTC) and NTPC’s subsidiary NTPC Vidyut Vyapar Nigam Ltd to raise power supply by around 200 mw and 900 mw during peak and non-peak hours, respectively.  The power shortage in Maharashtra is estimated to be around 3,000 mw with vast stretches of the state reeling under bouts of power cuts daily. Mumbai alone requires 2,250 mw of power during peak hours. TPC will supply the MSEB with around 200 mw of power during non-peak hours (10 pm to 7 am). This will allow the state electricity board not to use power from the Koyna hydro project during the non-peak hours. The water that otherwise would have been utilised to run the Koyna project during these nine hours will thus be saved and utilised by the MSEB to supply around 400 mw of power from the Koyna project during peak hours. TPC will also sell its excess power (unutilised power from its Mumbai grid) to the MSEB to meet the shortfall in other parts of the state. The short-term contracts with the three power traders is expected to yield an additional 200 mw of power daily during peak hours and up to 900 mw during non-peak hours. The contracts came into force on April 1, 2005 and are expected to realise a maximum power yield in the month of May, when the power situation in the state is at its worst.


Petroleum Ministry seeks second tranche of oil bonds


May 2, 2005. The Petroleum Ministry has asked the Finance Ministry to issue Special Government Bonds amounting to Rs 5,762.85 crore (Rs 57.63 billion) to oil companies in order to liquidate the balance payable to these firms from the Oil Pool Account. Consequent to the dismantling of the administered price mechanism (APM) from April 1, 2002, the Oil Pool Account was also wound up from the same date. With a view to partially liquidating the outstanding of the oil companies of the oil companies against the Oil Pool Account, the Government had issued oil bonds amounting to Rs 9,000 crore (Rs 90 billion) on March 30, 2002. It was also decided then that the balance payable to these companies from the Oil Pool Account as on April 1, 2002 would be liquidated by issuance of Special Government Bonds after completion of special audit of these accounts, as directed by the Comptroller and Auditor General of India (CAG).


As for subsidised sale of petroleum products and the losses that oil companies were incurring due to it, public sector oil marketing companies were currently getting subsidy from the Government on kerosene supplied through the public distribution system (PDS) and on domestic LPG cylinders. There is no subsidy on petrol and diesel. However, with international crude prices on the rise, the oil marketing companies have ended up with under-recoveries on PDS kerosene and domestic LPG during the last three years.


DVC gets captive coal 


May 2, 2005. Fifty years after its inception, Damodar Valley Corporation has finally been offered captive coal linkage by the Centre. The Government recently awarded the lease of three blocks with a combined reserve of 150 million tonnes of coal, currently under Eastern Coalfields and Central Coalfields, to DVC for captive consumption at the corporation's biggest thermal power plant at Mejia (840 mw) and the proposed 1,000-mw greenfield venture at Durgapur. The Mejia thermal power station is due for a 500-mw capacity expansion in the 11th Plan period. Currently, the corporation holds a small reserve at Bermo, which was obtained through the acquisition of a thermal power facility of Bokaro Steel in the 1950's. The reserve has almost been exhausted and it produces a maximum of 3.5 million tonnes coal, against the existing requirement of six million tonnes. The requirement will go up to 15 million tonnes once Mejia goes into expansion and the Durgapur Steel power station is commissioned.


AP panel for energy conservation


May 1, 2005. The State Government has constituted a high-level committee to continuously monitor energy conservation measures and ensure that the agriculture consumers benefit. The power utilities have also been advised to intensify efforts at conservation and judicious use of the power, especially in view of the State's commitment to free power and the cause of farmers. Transmission Corporation of APTransco has urged agriculture consumers to adopt conservation measures and fix quality capacitors and frictionless foot valves to their pump sets by the end of March, 2006. If the agriculture consumers do not take this step, they will have to pay 50 paisa per unit or Rs 525 per H.P. per annum. By fixing these energy conservation devices, the farmers can see the results in getting quality power during the kharif season itself, besides reduction in consumption and consequent money saving. For example by fixing two capacitors to 5 H.P. pump sets at a cost of Rs 500 would reduce transformer failures and motor burnouts. It would improve the voltage level at least by 10 per cent besides improving the system frequency and save 10-15 per cent power, the APTransco claimed. According to the modified power policy in place from April 1, and the Tariff Order 2005-06 issued by the AP Energy Regulatory Commission, capacitors are to be installed by `non paying category' farmers by March, 2006. Simultaneously the APTransco and the Distribution Companies (Discoms), have launched awareness programmes for farmers called `Rythu Chaitanya Yatras', which would reach all districts till May 15 to educate farmers on overall energy conservation measures.


Petroleum, coal & steel pull down core sector  


April 30, 2005. The growth of six infrastructure industries slipped to 4.4% during 2004-05 compared to 6.2% in the previous year. Dismal performance of petroleum refining products, coal and steel sectors in the last four months of the fiscal weighed down the overall growth. The decline is at odds with the general economic buoyancy. In March too, the combined growth of the core sector was lower at 3.7%, compared with a healthy 8.3% in the corresponding month last fiscal, according to official data released. It may be noted that sharpest decline of growth was reported in February at -0.3% (11.6%). In March, petroleum refining products registered negative growth of -2.2% as compared to 10.1% growth in the corresponding period in the previous year, while finished steel showed a growth of 4.4% (9.3%).


REL will also penalise users for over-consumption


April 30, 2005. After best, it’s the turn of Reliance Energy (REL) to dangle a surcharge-rebate scheme and advise customers to reduce their power consumption in the evening, regarded as peak hours. The private power utility said that as per the recent order of the Maharashtra Electricity Regulatory Commission (MERC), a ‘load management charge’ will be levied on all consumers whose consumption exceeds 500 units per month in the billing months of May and June ’05. This charge will be levied at the rate of Re 1 per unit for power consumed in excess of 80% of the consumption recorded in the corresponding billing months of ’04. Similarly, those whose consumption is less than 80% as compared to the corresponding period in ’04 will be given a ‘load management rebate’ of 50p per unit.


Power connection to seafood units to be cut


April 28, 2005. The Kerala State Pollution Control Board issued notice to officials of Ambalappuzha electrical major section of the Kerala State Electricity Board to sever power connection to seafood processing units at Kakkazham near Ambalappuzha which had failed to implement pollution control measures. The pollution control board issued notice to these units on March 4 to close down, following complaints of local people that they were polluting Kappithode, a canal, causing severe ecological problems. But the owners of the units approached the Kerala High Court which provided time till April 14 for the units to implement pollution control measures. The board officials conducted inspection again on April 15 and found that several units did not implement the measures.


REL to finish Dahanu anti-pollution project


April 27, 2005. In what is seen as a gain for environment protection, Reliance Energy (REL) has committed before the Bombay High Court, a commitment recorded in an order, to set up a flue gas desulphurisation (FGD) plant at its Dahanu power station by October ‘07. The court has also ordered the company to furnish a bank guarantee of Rs 100 crore (Rs 1 billion) to ensure the completion of the environmental project. The High Court reduced the bank guarantee of Rs 300 crore (Rs 3 billion) demanded by the Dahanu Taluka Environment Protection Authority (DTEPA) to Rs 100 core (Rs 1 billion). The counsel for REL had pleaded that Rs 300 crore (Rs 3 billion) represented the entire cost of the project and was ‘unreasonable’. At the same time, to ensure compliance, the court has ordered REL to file quarterly reports on the progress of the installation of the pollution control plant.


Power Tariff Policy to be finalised soon


April 26, 2005. The Government is close to finalising its long-pending Power Tariff Policy, which would be placed before the Union Cabinet in about a couple of weeks time. The Centre, under the provisions of the Electricity Act 2003, has to establish an Appellate Tribunal for Electricity to hear appeals of stakeholders against the orders of Electricity Regulatory Commissions. There was need to continue with the regulatory mechanism in the power sector as there still existed a demand-supply gap favouring the sellers. There is a lot of untapped captive power potential which should be tapped to correct the mismatch. Electricity from captive power, with a potential of 40,000 MW, to grid would help alleviate shortages in the different parts of the country.


Govt tells NTPC to monitor shortage


April 27, 2005. The Power Ministry has pressed the panic button. Coal shortages have begun taking a toll on power generation in the country and the government is taking no chances. NTPC, the country’s largest power generation company, has been directed to monitor coal shortfalls in its plants. The coal supply situation is precarious in at least three of NTPC’s plants — Unchahar, Dadri and Barh. Though requirements for the last fiscal were somehow met, the coal shortage is now threatening to escalate. NTPC has been asked to take up the matter with the coal and rail ministries. Given the precarious situation, the ministry has suggested that NTPC hire a private agency to monitor the daily coal situation in its plants. Coal reserves in the Dadri and Unchahar plants should last for 10-15 days. The story is different in Barh, a greenfield project, which runs the risk of being delayed and may even have cost escalation since work on the link mine is yet to begin.




Occidental ousts Shell 


May 1, 2005. Occidental Petroleum Corp, the fourth-largest US oil company by market value, will replace Royal Dutch/Shell Group in developing an oil field in Oman at a cost of more than US$2 billion. Occidental and its partner Abu Dhabi’s Liwa Energy Ltd have committed to raising production from the Mukhaizna deposit to 150,000 barrels a day ‘within a few years’ from the current 10,000 barrels. Shell lost the right to develop the 2.4 billion-barrel Mukhaizna field, Oman’s sixth-largest, because of a disagreement with the Oman government over how best to tap the oil. The Gulf state needs billions of dollars of investment to reverse a four-year decline in output. Petroleum Development Oman, in which Shell holds a 34% stake, controls 94% of Oman’s oil production. The company, which had planned to spend US$1.8 billion boosting output from the field to 100,000 barrels a day, will still be offered the chance to retain a reduced stake in the Mukhaizna field, with Occidental acting as the field’s main operator.


Luca Technologies Confirms Real-Time Methane Generation


April 28, 2005. Luca Technologies LLC announced that its researchers have confirmed the presence of a resident, methane-generating community of microorganisms ("microbial consortium") in substrate samples taken from the 110,000 acre Monument Butte oil field located in North Eastern Utah. This site represents the latest in a series of active "Geobioreactors(TM)" that Luca Technologies has identified since its first demonstration of this phenomenon in the Powder River Basin coalfields of Wyoming. Geobioreactors are sites where microbial conversion of underground hydrocarbon deposits (oil, oil shales, and coal) to methane is ongoing. Such Geobioreactors may offer the potential of turning currently finite energy reserves into methane "farms" capable of long-term, sustainable energy generation. Oil within the Monument Butte field has a waxy composition that may facilitate the strong real-time methane generation we see at this site. If so, then areas with large accumulations of waxy oil -- for example, the Daqing Field in Northeast China -- could prove to be important sites for the bioconversion of residual oil to methane and the restoration of these 'spent' sites to economic energy production.


It has long been known that certain microorganisms are "methanogens" -- microbes that generate methane by metabolizing organic materials including various hydrocarbons. While it has also been generally accepted that many of the known methane deposits were produced by such organisms, most of this production was thought to have occurred millions of years ago, when the hydrocarbon deposits were less mature and closer to the surface of the earth. Luca scientists, employing the tools of modern biotechnology and genomics, have now shown that living methane generating, microbial consortia are present and actively forming methane within some of these hydrocarbon substrates. In addition to demonstrating that methane formation by these microbes can be stimulated by the introduction of nutrients or suppressed by heat sterilization or the introduction of oxygen, Luca has shown that radio-labeled CO2 (carbon dioxide) introduced to these substrate samples is converted to radio-labeled methane. This demonstrates that the methane formation is the result of a biological process occurring today.


Anadarko finds oil in deepwater Gulf of Mexico


April 27, 2005. Anadarko Petroleum Corp. discovered oil in a deepwater well in the Gulf of Mexico, a region that forms the cornerstone in the oil producer's growth strategy. The company said first production is expected in 2006 from the discovery at the Genghis Khan well. Anadarko plans to drill six more exploration wells in the Gulf of Mexico this year.


New opportunities in Pak


April 27, 2005. Pakistan on Wednesday signed six US$42 million agreements with international companies to carry out exploration in the oil and gas sector in Sindh, NWFP and Balochistan. Petroleum Secretary Ahmed Waqar signed the agreements on behalf of the Pakistan government. The companies that signed the agreements are Premier Oil Pakistan Offshore BV and BHP Billiton which would join hands to carry out the drilling in the Jhangara Block in Sindh; Irish firm Tullow Development Pakistan, which in cooperation with Tullow Pakistan Operation would carry out exploration work in Kohat and Bannu West Block. Nativus Resources and RDC International would do the exploration in Huramzai and Laogasht in Balochistan. RDC International will also carry our out exploration in Chaghai. Initial period of these agreements is three years which is considered the first phase in such accords, while another two years as the second phase. These companies would do the exploration work under terms and conditions of the petroleum exploration licence and concession agreement of Pakistan.


The petroleum secretary said that Pakistan was holding negotiations with Turkmenistan, Iran and Qatar to import gas to meet its needs and added that if India showed interest in importing gas from Iran via Pakistan, it would be welcomed. Referring to security concerns in Afghanistan on which financial viability of the gas project depends, the petroleum secretary said that the Asian Development Bank had agreed to conduct a study in this regard. He said the route of the pipeline, pricing and transaction structure was discussed during Prime Minister Shaukat Aziz’s visit to Tehran in February. He said that the deputy prime minister of Qatar had also held talks with the Pakistani authorities on the gas project. He said Beijing companies were involved in drilling in the mineral sector and added that ever since the Chinese company, MCC, had taken over the Saindak project, there had been a marked improvement there. Some Chinese firms were also involved in exploration of copper in Dudhar and Thar coal, he added.


Gulf Oil to set up plants in Philippines, Gulf 


May 2, 2005. Gulf Oil Corporation is setting up plants across the South East Asia and Gulf countries. The company has projected a turnover of Rs 1,000 crore (Rs 10 billion or US$230 m) in the next two years. It has already set up 20,000 tonne per year plants in Bangladesh and Indonesia respectively, and now, we are setting up a 30,000 tonne per annum lubricant plant in China. Its aim is to aggressively exploit the Indian technical and managerial expertise and the famous Gulf brand across the Asia Pacific and Gulf countries. It plans to have manufacturing plants across strategic locations to cater to the growing demand in the Asia Pacific.


Kaneb Acquires Amsterdam Terminal


May 2, 2005. Kaneb Pipe Line Partners, L.P. (KPP) announced that its newly formed Dutch subsidiary has purchased a petroleum terminal in Amsterdam, The Netherlands. The terminal, situated in Amsterdam harbor, has over 1.1 million barrels of storage capacity, three barge and one ship docks, a 10,000 barrel a day distillation tower with a vacuum unit and several asphalt upgrade facilities.


KANEB is a single business represented by two separate publicly traded entities on the New York Stock Exchange. KANEB's business is focused on mid-stream energy assets - refined petroleum product pipelines, and petroleum and specialty liquids storage and terminaling facilities. KANEB is a major transporter of refined petroleum products in the Midwest and is the third largest independent liquids terminaling company in the world. Worldwide operations include facilities in 29 states, Canada, the Netherlands Antilles, Australia, New Zealand and the United Kingdom. Its publicly traded entities are Kaneb Services LLC and Kaneb Pipe Line Partners, L.P.


Bush may propose using old bases for refinery 


April 28, 2005. President George W Bush, whose energy plan has been stalled in Congress for four years, will propose using closed military bases as sites for oil refineries as one of five initiatives to expand US energy production. The president also wants the Department of Energy and Congress to work on streamlining the process for licensing new nuclear power plants and to give federal regulators full authority over selecting sites for liquefied natural gas terminals. The proposals are intended to address the underlying causes of high energy prices by increasing domestic production. The high cost of fuel is crimping US consumer spending. Bush offered an energy policy and legislative recommendations in May 2001. His proposals have been stalled in the Senate by Democrats who objected to a measure allowing drilling in Alaska's Arctic National Wildlife Refuge and to some of the tax incentives for producers added by congressional Republicans.

Transportation / Trade

Global Gas Trade


May 2005. Global gas trade has grown in 2004 but at a lower rate than its preceding year. Internationally traded gas now accounts for 29.3% of worldwide marketed gas production which grew 3% to 2.77 TCM. The rate of increase in world gas trade is 6.4% in 2004, with volumes totaling 811 BCM. Traded gas flows by pipeline grew by 6.8% to 633 BCM. Growth in LNG trade was at 5.4% to 178 BCM. Gas production increased in Russia and Iran while it remained flat in Canada and slipped in US and UK. Amid soaring gas prices, key industrialized nations namely US, Canada and Japan consumed less in 2004. Elsewhere consumption continued to increase. China saw 14% growth in consumption to 39.1 BCM.


Angolan Sonangol invests in US LNG project


April 29, 2005. Angola's state oil and gas company Sonangol has bought a stake in a project to build a liquefied natural gas import terminal on the U.S. Gulf Coast. Sonangol has invested in Gulf LNG Energy which is planning to build a liquefied natural gas (LNG) terminal at Pascagoula in Mississippi. French oilfield services company Technip has been awarded the contract for the front end engineering and design for the terminal. The state company has a 22.8 percent stake in Angola LNG in a joint venture with ChevronTexaco, BP  and ExxonMobil. Angola LNG plans to build a five million tonne/year LNG plant by late 2009. The project is expected to cost between US$3 billion and US$5 billion.


Bay Gas Storage in development of a Storage Cavern


April 29, 2005. Bay Gas Storage Co. LTD., a subsidiary of EnergySouth, Inc., will begin development of its third underground natural gas storage cavern and related facilities in May 2005. Designed to add 5.0 Bcf of working gas capacity, the initial phase of the new cavern is expected to be in service by the summer of 2007.

Bay Gas also announced that it reached an agreement with BP Energy Company to supply storage services, subject to receipt of approvals and other arrangements satisfactory to Bay Gas Storage and completion of the expanded storage capacity. Bay Gas Storage currently operates two salt-dome natural gas storage caverns at its storage facility located about 40 miles north of Mobile. The company has direct pipeline interconnects with Florida Gas Transmission Company, Gulf South Pipeline and Mobile Gas Service Corporation. Bay Gas Storage's two existing caverns have a combined working gas capacity of approximately 6.0 Bcf with injection and withdrawal capacities of 200 MMcf and 610 MMcf per day, respectively and are currently fully subscribed on a firm basis.


Admiral Bay To Buy Gas From Indepedent Operators


April 28, 2005. Admiral Bay Resources Inc. contracts to purchase gas from private operators in the Devon project area, in southeast Kansas. The parties are projecting initial sales of gas into the Company's joint venture pipeline of 300 MCFGPD and 100 MCFGPD respectively. It is expected that the line to each of the seller's projects will be completed in May, with sales to begin by June 1, 2005. The joint venture will pay the sellers 70% of the posted gas price on a month by month basis. Admiral Bay will receive 50% of the gross profit under the joint venture agreement, excluding taxes, compression, dehydration and nitrogen removal, if any. Cost of compression and dehydrating is expected to be less than 5% of the total cost of the gas or less than 1% of the gross proceeds. Admiral Bay receives 99% of the posted NYMEX price for its gas. Present gas prices have ranged between US$7.00 and US$7.25. At the Devon Project, Admiral Bay has 22 wells currently connected and producing 150 to 160 MCFGPD into the sales line. These wells are primarily coal bed methane wells and are in the process of dewatering. Admiral Bay Resources Inc. is a Canadian listed oil and gas exploration and development company focused on developing its U.S. projects in the Cherokee Basin in southeast Kansas and the Appalachian Basin, in Pennsylvania. Coalbed methane (CBM) and conventional oil & gas production has begun at the Shiloh, Devon and Quest projects in Kansas and Utah. 


EnCana sells M. Gulf stakes to Statoil, US$2 bn


April 28, 2005. EnCana Corp., North America's biggest independent oil producer, agreed to sell its interests in the Gulf of Mexico to Norwegian energy group Statoil for US$2 billion. The deal will take Statoil a big step towards its goal of producing 300,000 barrels of oil equivalent (boed) per day outside Norway in 2007, up from 115,000 boed in 2004, while production from the Norwegian shelf is seen stabilising. Statoil aims to keep production just over 1 million boed on the Norwegian shelf, for total 2007 output of 1.4 million boed. It is one of the biggest single overseas investments ever made by a Norwegian company. Up to now Angola, Azerbaijan and Algeria have been on track to be core. Venezuela and Russia are seen with potential to become so. Statoil said the acquired assets had potential to deliver 30,000 net barrels of oil equivalent per day (boed) by 2008-09.


Cairn poised to explore gas in new offshore areas


April 27, 2005. Cairn, the official operator of Sangu gas field, wants to launch exploration activities at Meghanama, Monpura and Hatia, new areas located in Bay of Bengal under Sangu gas field. If Petrobangla approves the amendment of the agreement, then we will start exploratory well-digging work by November 2005. Energy Ministry sources said that though the Cairn signed an agreement with Petrobangla for exploration and development of the country’s lone offshore field, it failed to fulfil its commitment under PSC agreement. It may be mentioned that according to the PSC, the IOCs should dig three exploratory wells in potential areas within three years of PSC signing. Due to non-fulfilment of PSC commitment, Cairn needs fresh permission from Petrobnagla to engage in activities under this field.


New gas line may bypass Russia


April 27, 2005. Ukraine may embark on building a gas pipeline from Turkmenistan in central Asia to Europe, bypassing Russia via the Caspian Sea, Azerbaijan and Georgia. The Russian Government is considering this proposal, calculating economic, political and other benefits. Russia, Ukraine, Turkmenistan, Uzbekistan and Kazakhstan are possible members of the new alliance. Russia routed 138 billion cubic meters through Ukraine last year, and 128.1 billion cubic meters are planned for this year. As payment for the transit services, Moscow supplied 29.2 billion cubic meters of gas to Ukraine in 2004. Twenty-three billion cubic meters are planned for 2005.


Stolt Offshore S.A. Awarded US$50 m Contract


April 27, 2005. Stolt Offshore S.A. had been awarded a contract valued at approximately US$50 million by Hydro Oil and Energy for the installation of an export pipeline from the Njord FPU to the Asgard transportation pipeline. The contract is for the installation of 40 kilometers of twelve inch diameter pipe together with the design, fabrication and installation of associated structures, trenching, rock dumping and the tie-in of the pipeline. Stolt Offshore is a leading offshore contractor to the oil and gas industry, specialising in technologically sophisticated deepwater engineering, flowline and pipeline lay, construction, inspection and maintenance services. The Company operates in Europe, the Middle East, West Africa, Asia Pacific, and the Americas.


Pakistan lures British investors in oil, gas sector


April 27, 2005. Federal Minister for Petroleum and Natural Resources Amanullah Khan Jadoon urged British businessmen to exploit the untapped potential of 27 billion barrels of oil and 280 Trillion Cubic Feet of gas in Pakistan to reap attractive dividends of their investment. British investors were offered 20 new blocks for carrying out onshore and off shore exploration and were assured the government would facilitate them and help start joint-ventures if they so decided. Jadoon said that given the increasing oil price in the international market, which had already touched US$50 per barrel, the Government was mounting efforts to exploit oil and gas resources of the country. He said the country would give preference to indigenous gas to meet its energy needs and gas would be imported only to bridge the gap between its availability and requirements of its growing economy. Pakistan’s commercially exploitable energy resources consist of natural gas, oil, coal, and hydropower. The country’s current yearly energy supply is about 52 million metric tonnes of oil equivalent. Petroleum and natural gas meet about 83 per cent of these requirements.


China Bank to Help Build Brazil Pipeline


April 26, 2005. Brazil's state-owned petroleum company has closed a deal with the Chinese Export-Import Bank to finance the construction of a US$1.2 billion natural gas pipeline. The deal, initially announced late last year, calls for a pipeline to link Brazil's northern natural gas fields to the country's industrialized south. It would cost US$1 billion.

Policy / Performance

China growing influence in the Persian Gulf


May 2005. China’s ascent to economic powerhouse status carries with it important implications for energy security. To fuel economic growth by meeting growing demand of Oil & Gas, China has strategically concentrated on countries in which the western presence is minimal namely Iran, Sudan etc. Iran can help China meets its energy requirements while China may be willing to furnish Iran with military needs. China’s technical support will enhance Iran’s ability to withstand US sanctions.


Bolivia approves 32 pct cent tax on oil firms


April 29, 2005. Bolivia's Senate approved early a new hydrocarbons law that imposes a 32 per cent direct tax on foreign-owned energy companies, but the controversial bill must get the Chamber of Deputies' final approval. The 12 foreign oil companies operating in Bolivia were expected to give their opinion on the new bill. Brazil's Petrobras, Spain's Repsol and Britain's BP are among the main companies operating in Bolivia. The country's 53 trillion cubic feet of natural gas reserves have attracted energy investors and the government has granted 76 contracts for exploration, exploitation and commercialization. Major oil companies have invested US$3.5 billion in Bolivian gas, but new activities are paralyzed by the legal uncertainties.


Verrillon for Second Generation of Robust Optical Fibers for Oil & Gas Applications


April 28, 2005. Verrillon, Inc., a leading specialty optical fiber and components manufacturer, released its second generation of graded index multimode optical fibers for harsh environment applications such as Oil & Gas and geothermal exploration. The new generation of fibers exhibits a significant improvement in performance in hydrogen-rich environments relative to currently used hermetic fibers. Verrillon's harsh environment fibers are designed to be used in the petroleum industry for real-time downhole temperature and pressure measurements, data transmission and imaging applications. The second generation of hermetic fibers has been designed with higher resistance to hydrogen ingression effects than its predecessor across a broad spectral range extending from 800nm to 1700nm. In the critical 1060nm window, where most Raman-DTS systems operate, the new generation of fibers provides a four-fold improvement in resistance to hydrogen darkening compared to the current generation of hermetic fibers. For systems operating at 1550nm, the enhancement is even greater, approaching a ten-fold improvement in hydrogen resistance.


Trinidad and Tobago Named Country of the Year by Energy Magazine


April 28, 2005. Energy(TM) Magazine announced that the 2005 "Country of the Year" is Trinidad and Tobago. The Trinidad and Tobago Industries providing gas, oil, refining, petrochemicals and alternative energy to the global and regional community. Energy Magazine is a contemporary journal that is dedicated to providing a pulpit for energy leaders, business, academia and consumers to share.


Jakarta offers more sops to boost oilfields 


April 27, 2005. Indonesia will cover more of oil companies' development costs in order to increase their rate of return on marginal fields to 30%, as Asia's only Opec member struggles to maintain crude production. Jakarta estimates crude production will fall 6% in 2005 from last year's 968,000 barrels per day (bpd), but it aims to raise output by around 25% to 1.18 million bpd by 2008. Indonesian output was 952,000 bpd in March.


The government would increase by 20% the cost recovery to oil contractors investing in marginal fields in order to boost their return rates to 30%. The rate of return in marginal fields is low, or around 15%. The government will give 20% more to oil contractors in developing the marginal fields. Eight companies had proposed marginal field development. They included Caltex Pacific Indonesia, top Chinese offshore oil and gas producer CNOOC, British oil giant BP and Medco Energi Internasional Tbk. Output has been declining steady in Southeast Asia's biggest producer due to production problems at ageing wells and a lack of fresh investment. The country became a net crude importer for several months last year.


Amerada eyes grass roots production in Russia


April 27, 2005.U.S. oil company Amerada Hess Corp. fresh from inking a deal to enter Russia had plans to expand in the oil-rich country revolve around producing oil and gas rather than looking at other opportunities like building refineries. Last month, Amerada bought a majority stake in Trabant Holdings International, which owns ZAO Samara-Nafta, an exploration and production company based in the Volga-Urals region of the Russian Federation. Looking at opportunities in liquefied natural gas and refining, for example, would come much further down the road, if at all. U.S. companies have been eager to tap into Russia's vast oil and gas wealth but their efforts have been complicated by the Kremlin's assault on Russian oil producer YUKOS and mixed signals on the type of foreign investment the government desires.


PetroKazakhstan cuts production


April 26, 2005. PetroKazakhstan Inc. has begun cutting oil and gas production at its Kumkol oilfields to a level that would eliminate gas flaring. This is the latest snag to entangle the Canadian company, involved in an antitrust dispute with the government of the south Asian country of Kazakhstan, where it has all its operations, and a lawsuit with Russia's.




Lafayette Utilities System for 100-Megawatt Generating Station


May 2, 2005. Researched by that Lafayette Utilities System (LUS) (Lafayette, Louisiana) has started construction on a US$40 million, 100-megawatt generating unit. is the leading provider of global industrial and energy market research. We specialize in helping companies maximize their sales and marketing efforts, by providing real-time dynamic information solutions, covering project spending, plant expansion, new construction, plant/maintenance activities, news, radio, trends, maps, contact lists, analysis, and forecasting

Transmission / Distribution / Trade

Unique Sewage Treatment Electrical Project Gets Green Light


April 28, 2005. Mariah Energy has been selected by the Alberta Capital Region Waste Water Commission (ACRWC) to provide technology to convert methane gas emissions from ACRWC's waste water facility to produce electric power. The first stage of the project will involve a pilot installation which can be expanded once the testing period is successfully completed. The project will not only advance the Region's commitment to the environment but will do so in a way that reduces the cost of electricity that it requires to operate the facility. No longer flaring methane gas is a major step towards reducing greenhouse gas emissions. At the same time ACRWC will produce electricity, thus reducing costs of operations. The Mariah Energy technology used generates on location power. The company will help ACRWC with its evaluation and is able to provide a complete turnkey service to the organization.

Policy / Performance

'Eco-green' coal Trials to Begin in 2005 to Stem Global Warming


May 2, 2005. Green Energy Resources (nasdaq otc. gains international recognition for its "eco-green" coal technology. "Eco-green" coal is a premixed wood biomass and coal that is "boiler" ready. Tests plans are being drawn up to deliver the product to utility plants in the Midwest, where the dirtiest greenhouse gas emitters are located. "Eco- green" coal is expected to begin trials later this year in the US market, and could become an international export product by 2006. Green Energy Resources will be featured today on WMEL radio in Melbourne, Florida; This week in the "Orlando Sentinel" (Orlando Florida), and the "Milwaukee Business Journal". On May 11th & 12th, Green Energy Resources will be a featured speaker at the European Investment Community in New York City, discussing international franchising of "Eco-green" coal technology and environmental certification. Green Energy Resources urges US utility companies to convert to cofiring as soon as possible. Cofiring is an environmentally friendly application of mixing biomass with coal to reduce harmful green house gases.


Cofiring can be achieved by industry with no capital investment costs, and is the only policy to radically and immediately reduce greenhouse gases. All other renewable energy plans and clean coal technologies take in excess of 30 years to positively impact the earths environment. Coal energy accounts for 51% of American electric power supplies and makes the United States the largest emitter of green house gases in the world.  Global warming and green houses gases are accelerating according to last weeks "Journal Science" report, noted by Associated Press. In a related story last week, data provided more evidence of the melting of the polar icecaps.  Except for historical information contained herein, the statements in this release are forward-looking statements that are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the companies' actual results in future periods to differ materially from forecasted results. Such risks and uncertainties include, but are not limited to, market conditions, competitive factors, the ability to successfully complete additional financings and other risks.


Kansas City Power & Light Files Agreement with Kansas


April 28, 2005. Kansas City Power & Light (KCP&L), a subsidiary of Great Plains Energy, has filed an agreement recommending the approval and implementation of a long-term energy plan with the Kansas Corporation Commission (KCC). The comprehensive plan contained in the agreement is designed to meet the growing demand by Kansas customers for additional electricity while delivering significant economic and environmental benefits to the Kansas City area. The parties to the proceedings who support the agreement include the KCC Staff, Sprint and the Kansas Hospital Association. The KCC is expected to hold hearings prior to its ruling on the agreement. KCP&L, which provides service to approximately 500,000 customers in eastern Kansas and western Missouri, previously filed a substantially similar agreement with the Missouri Public Service Commission on March 28.


Sempra looks at coal for power as gas prices soar


April 28, 2005. Sempra Generation is looking to build two coal-fired power plants and expand another with interest spurred by soaring natural gas prices. It is looking at coal because it felt it could produce lower cost energy. Noting natural gas prices have risen to around US$7 per million British thermal units from about US$2.50 per mBtu five years ago. Sempra Generation, a unit of San Diego-based Sempra Energy, is currently looking at a US$2 billion project to build a 1,450 megawatt coal-fired plant in northern Nevada. The company may file an air permit application in the third quarter of this year for the project, known as Granite Fox. The plant could come on line in 2011 or 2012. One megawatt is roughly enough power for 1,000 homes. Sempra has also expressed interest in building a coal-fired plant in Idaho and expanding its Twin Oaks coal-fired plant in central Texas.


US plans nuclear power plants, oil refineries


April 28, 2005.  President George W Bush, confronting growing unrest over high energy prices, wants government action to spur construction of new nuclear power plants and oil refineries and sales of fuel-efficient hybrid and clean-diesel automobiles. In a speech to a small business group, the president plans to urge using closed military bases as sites for new oil refineries.  The Energy Department is being ordered to step up discussions with communities near such bases to try to get refineries built. He will call on Congress to provide a "risk insurance" plan to insulate the nuclear industry against regulatory delays if they build new nuclear power plants. And he will endorse giving federal regulators final say over the location of liquefied natural gas (LNG) import terminals. The president’s proposals were outlined late on Tuesday by senior White House officials, speaking in general terms and on condition of anonymity in advance of the remarks. The officials acknowledged the proposals were not expected to provide any short-term relief from soaring gasoline and oil prices, but rather are designed to demonstrate how technology can be used to encourage more energy production from diverse sources. It is Bush’s second speech on energy within a week.  The increased attention reflects the growing concern in the White House over potential political damage from high energy prices that are beginning to affect economic growth as well as the president’s approval rating. As he did last week, he will call on Congress to give him an energy bill by this summer.  The White House officials said Bush believes the country needs a diverse supply of energy and more should be done to get new power reactors, refineries and liquefied natural gas plants built. There has not been a new commercial nuclear power plant ordered in the United States since 1973 and no new refinery built in nearly 30 years, although many existing ones have been expanded. LNG terminal projects have been stymied in some regions by local opposition, even though the need for more LNG imports has been widely accepted.  Bush’s support for giving the federal government clear authority in locating LNG terminals comes after the House included such a provision in the energy bill it passed last week.  Some lawmakers strongly opposed the measure, arguing it would deprive states and communities of a say in locating LNG import terminals, even in heavily populated areas.


Renewable Energy Trends


US$68.9 m for green energy project


May 3, 2005. An integrated renewable energy project worth Rs 300 crore (Rs 3 billion) to be set up with part German investment to provide electricity to over 3.5 lakh people of the Sunderbans region according to the West Bengal Renewable Energy Development Agency (WBREDA). The master plan is being drafted and will be completed within two months, with the government of India to pay Rs 150 crore (Rs 1.5 billion) and the other half to be borne jointly by the state government and with grants from Germany. WBREDA recently installed India’s first wind-diesel hybrid power plant at Sagar Island and also the country’s largest off-grid bio-mass gasifier power plant to electrify five villages in the Sunderbans region. 


According to plans, most of the Sunderbans would get electricity by 2012. By 2010, at least 10 per cent of Bengal’s power generation should come from renewable energy, with 20 lakh people being suitable for power from renewable energy projects. Renewable energy aided distributed generation and off-grid supply in remote rural areas where grid connection was expensive and time consuming. Without electricity, the information technology spurt in West Bengal would never realise its full potential. Martin Seissler, project manager of the renewable energy division of Deutsche Energie Agentur (DENA), heading a German delegation, said, “West Bengal has a tremendous potential in the area of renewable energy.” Besides solar energy and biomass, wind turbines could be used for small projects requiring low wind speeds specially in the coastal regions, Seissler explained. Bangladesh had trained Gramin Bank employees to maintain solar units and micro credit organisations in Bengal could be used to help train and maintain small scale projects in rural areas.  At least two or three German companies would invest in projects. The German companies met Webel SL Energy Systems Ltd (WSES) as it had emerged as one of the largest exporters of solar panels in India. WSES was keen on joint venture opportunities with German companies for manufacture of silicon wafers. WSES exported products to Germany, United States of America and Australia and would expand into markets like Spain and France this year. WSES sales in the last fiscal touched Rs 56 crore (Rs 560 million) and was expected to rise to Rs 80 crore (Rs 800 million) this fiscal. It will increase it capacity to 10MW this fiscal and to 30MW by 2006.


Pioneer Asia forms wind turbine JV with Gamesa 


April 30, 2005. Pioneer Asia Wind Turbines, a Pioneer Asia Group company, has launched a joint venture with Gamesa Eolica of Spain to manufacture and market 850 kW wind turbine generators in the country. With an initial investment of Rs 100 crore, Gamesa will have majority equity holding in the new venture named as Gamesa Pioneer Wind India (Pvt) Ltd. Gamesa Eolica is ranked fourth in the world. It has already installed 4000 mw of wind turbines across the globe and has a turnover of 900 million euro. Pioneer Asia has already demonstrated the technological capabilities of Gamesa wind turbines in the Indian context. The first seven 850 kW wind turbines were erected, commissioned and stabilised around September 2004.


Biodiesel trials successful: Minister


April 29, 2005. The Petroleum and Natural Gas Ministry has successfully completed trial runs of biodiesel in the Haryana Road Transport Corporation, BEST in Mumbai and the Indian Railways leaving a bright scope for the fuel extracted from non-edible seeds being used as transport fuel. A Ministry-Gujarat Government initiative, commercial use of biodiesel had begun successfully in Gujarat Road Transport Corporation buses. This was launched on March 12 to commemorate the 75th anniversary of the Dandi March. The National Mission on Biodiesel, of which the Rural Development Ministry is the nodal agency, evolved a plan to involve panchayat raj institutions in the propagation of this initiative. The key questions in the biodiesel project were: how soon the country could have enough jatropha saplings, main source of seeds for the raw material, and the price the consumer would be willing to pay and ensuring a remunerative price to farmers who grew the plant. The Planning Commission initiated a discussion on the pricing. The main concern was the price should be remunerative to producers and attractive to consumers.


Panchayati institutions to be involved in jatropha cultivation


April 28, 2005. A joint committee of the Ministries of Petroleum and Natural Gas and Panchayati Raj has been set up to make recommendations on modalities of involving Panchayati Raj Institutions in growing jatropha plantations. Besides providing a source of supplementary income and employment in the rural sector, the plantation of oilseed-bearing plants such as Jatropha curcus and Pongomia (from which bio-diesel is extracted) can lead to gainful use of waste/semi-arid land involving Panchayati Raj institutions. Cultivation of Jatropha curcus has been identified as a business activity to transform the rural economy, such as the Green Revolution of the past, he said addressing a joint meeting of Consultative Committee of Ministries of Petroleum and Natural Gas and Panchayati Raj on Tuesday. The plants could be raised on community land as an additional crop without altering the cropping pattern of an area, the Minister said. Harnessing alternative fuels such as bio-diesel is of tremendous importance with over 7 per cent growth envisaged for the economy. One of the critical ingredients to achieving that is the energy security when the country is about 70 per cent import-dependent for oil, which would further go up to about 85 per cent by 2020. Bio-diesel is also highly environment-friendly.


Considering the significant implication of producing bio-diesel, the Government has envisaged a National Mission on Bio-diesel and a Detailed Project Report (DPR) has been prepared for obtaining `in principle' approval of the Planning Commission. The Petroleum Ministry has committed to the nodal Ministry — the Ministry of Rural Development — that the oil marketing companies will extend blending and marketing support for purchasing bio-diesel produced through the National Mission. Adopting plantation of bio-diesel plants as a centrally sponsored scheme, the Minister said this would also be considered by the Government when the DPR is taken up with the Planning Commission. The details about cost-economics of undertaking jatropha plantations would also be made public for the benefit of farmers and Panchayati Raj Institutions. The experiments by oil-marketing companies in use of bio-diesel blended with diesel in transportation have given technically satisfactory results.


Micro hydro plants can provide cheap power to villagers


April 27, 2005. Quality electricity for villagers at affordable rates may sound strange considering the present situation in the country. But it is possible to provide reliable electricity to villagers using their own resources, according to Indian Institute of Technology, New Delhi. Power would be available for villagers with their own resources at Rs 3 a unit with an investment of Rs 1.41 lakh per kilowatt. Future of the country will be in decentralised power generation. In the case of centralised power generation, one unit of electricity will cost around Rs 20 for a villager. Five such hydroelectric plants have been established in Western Ghat region of Karnataka under a Department of Science and Technology project. While the Banjaru micro hydroelectric project in Dakshina Kannada district is generating 8 kilowatt of power catering to the needs of 33 houses in Banjaru village, a 5-kilowatt plant at Menasinahadya village in Chikmagalur district is providing electricity to 20 houses. The 3-kilowatt Asolli plant in Uttara Kannada district is supplying electricity to seven houses and the 4-kilowatt Sirimane plant in Chikmagalur district to 12 houses. A single house in Jambardi village of Hassan district is getting power from a 3-kilowatt plant, he said. A 10-kilowatt plant is enough to supply electricity to a small village. The water resources of the Western Ghat region can be effectively utilised in establishing many such projects, Prof Murthy said he is ready to share his expertise on the subject with the interested entrepreneurs. There is also a need to explore the export potential of this technology to South America, Canada, Nepal, Sri Lanka and Indonesia, he added.


Global warming rate discovered


April 29, 2005. The world is getting warmer — and U.S. scientists now know precisely how much warmer. They calculated the radiation from the sun, the heat reflected back into space, and the rising temperature of the seas and say the extra warmth is equivalent to a one watt lightbulb shining constantly over an area of one sq metre everywhere on the planet. That would raise average temperatures by 0.6C before the end of the century, they report in the journal Science. Warming at that level, maintained over 10,000 years, would melt enough ice to raise sea levels by a km. Most of the world — with the exception of the U.S. and Australia — has signed up to the Kyoto protocol to limit greenhouse gas emissions and further global warming. The U.S. Government has repeatedly argued that scientific opinion about global warming is divided. With this new research, U.S. Government-funded scientists have once again told the U.S. administration that they believe global warming is real, and inexorable. Computer models of future global warming suggest that planetary temperatures could rise by as much as 5.8C in the next century, with sea level rises of a metre. Since 1993, the world's oceans have risen at the rate of 3.2 cm per decade.


Powered By the Sun


April 29, 2005. Shell Solar and the Semitropic Water Storage District announce the dedication of a 980-kilowatt solar electric power system at the water district's treatment and storage facility in Wasco, California. Designed and installed by Shell Solar, the system utilizes a unique patent-pending single-axis tracking system. Shell Solar developed this new tracking system specifically for this project to deliver maximum energy production by allowing the panels in the solar arrays to move and "follow the sun" across the sky. For enhanced reliability and lower installation costs, Shell Solar made use of its distinctive "panelization" process whereby multiple modules are factory assembled into large panels at its Camarillo manufacturing facility. Comprised of 1,920 Shell PowerMax(TM) Ultra panels, the system covers an area approximately the size of four football fields. Pacific Gas & Electric contributed to the value of the system by offsetting about half the cost through the Self Generation Incentive Program. Widely known as a leader in energy conservation, this solar energy system will be the 'crown jewel' for Semitropic to demonstrate their dedication toward environmental stewardship among the water districts. Nearly half the cost of the system is covered by Pacific Gas and Electric under their Self-Generation Incentive Program. The solar project is on track to receive a US$2,986,050 rebate from Pacific Gas and Electric Company, the single largest solar rebate check handed out by the utility to date. Installing a large solar power system has proven to be a sound, economic investment. Calculated over the expected 25-year lifespan of the system, the predicted energy savings for the district is nearly US$3.3 million. Annually the system is projected to deliver 1,729,000 kilowatt hours of electricity or 10,000 acre feet of water shipped to customers. Solar is also good for the community and the environment. The community benefits from the Shell Solar photovoltaic system employing local contractors for the installation of this massive project. As a non-emitting power source, this installation will ease the significant air pollution issue in the Central Valley of California. The system is projected to avoid 1,763,000 pounds of CO2 emissions annually.


Top Green Power Purchasers in the U.S.


April 28, 2005. Pepco Energy Services, a subsidiary of Pepco Holdings, Inc., announced that its client, the U.S. General Services Administration's Energy Center of Expertise (GSA), has been recognized as the fifth largest purchaser of green power by the U.S. Environmental Protection Agency (EPA). The top 25 green power purchasers are buying over 1.6 million MWh of green power annually -- enough electricity to power more than 150,000 homes a year. The top-25 list includes a diverse set of companies and organizations that have voluntarily bought the most renewable energy and are part of EPA's Green Power Partnership. Green power is electricity produced with environmentally-preferable renewable resources, such as solar, wind, landfill gas or geothermal power. Green power currently accounts for about two percent of America's electricity supply, but voluntary purchasing of renewable energy is accelerating renewable energy development. Under GSA's three-year contract, Pepco Energy Services is supplying over 110 million kilowatt-hours of renewable energy certificates to the EPA's headquarters located in Washington, D.C. The landfill gas facilities that comprise a significant portion of these renewable energy resources are located in the mid-Atlantic region. Electricity produced from renewable resources reduces the amount of carbon dioxide (CO2), a key greenhouse gas, as well as sulfur dioxide (SO2) and nitrogen oxides (NOx) emitted into the atmosphere.



PG&E utility to purchase California wind power


April 27, 2005. Pacific Gas & Electric Co., California's biggest utility, said on Wednesday it will add more wind power to its energy mix under three long-term power purchase deals. The PG&E Corp subsidiary said it will purchase 158 megawatts of wind power from California wind farms operated by FPL Group, Buena Vista Energy and Pacific Renewable Energy Group. The electricity will be purchased over 15 to 20 years and will supply about 120,000 homes. PG&E sent the agreements to the California Public Utilities Commission for review. California is working on a number of programs to add more renewable energy supplies. The state legislature is debating a bill to add solar panels to homes and commercial buildings to save 3,000 MW of electricity during peak demand periods by 2018, equivalent to 30 new 100MW peaking plants. California's energy plan calls for making renewable energy 20 percent of the state's electricity resources by 2017.


Strong Demand for Renewable Energy


April 27, 2005. Renewable energy developers have provided a strong response to Consumers Energy's request for proposals for Michigan-based projects. Consumers Energy received 26 proposals involving 22 projects, representing more capacity than the 265,000 megawatt-hours of renewable energy sought in a competitive bid process, in accord with a recent order by the Michigan Public Service Commission (MPSC) approving the renewable energy program. Renewable energy projects proposed by developers include facilities expected to be located in Michigan's Lower Peninsula that would generate electricity using landfill gas, hydro, waste wood, wind and biomass as fuels. Consumers Energy will follow guidelines established by the MPSC as part of the next steps for this program. This includes careful evaluation of the proposed projects, negotiation of contracts with projects selected, and subsequent submittal to the MPSC of the final projects and contracts. The contracted projects ultimately could increase the amount of renewable energy purchased by Consumers Energy by about 25 percent. Currently, approximately five percent of the electric capacity generated or purchased by the utility comes from renewable energy sources.


LIPA, FPL to file with Engineers to build wind farm


April 26, 2005. The Long Island Power Authority and FPL Energy, the biggest wind power company in the United States said they will jointly file a permit application with the U.S. Army Corps of Engineers to build a 140-megawatt offshore wind park.  The project could be operating by 2008, LIPA and FPL said. In January 2003, LIPA issued a request for proposals to build, own and operate an offshore wind park. Of the two proposals submitted, LIPA selected FPL's proposal last summer to build 40 3.6-megawatt wind turbines in a cluster in the Atlantic Ocean about 3 miles off the coast. FPL Energy is an unregulated subsidiary of Florida-based energy company FPL Group Inc. LIPA owns the electric system on Long Island, and transmits and distributes power to about 1.1 million customers. FPL's subsidiaries own and operate more than 31,000 MW of generating capacity across the United States, market energy commodities, and transmit and distribute electricity to more than 4.2 million customers in Florida.


US wind energy to add 2,500 MW in 2005


April 26, 2005. The U.S. wind energy industry will add as much as 2,500 megawatts of new production capacity in 2005, more than previously expected, the American Wind Energy Association. A megawatt of wind capacity can provide roughly the amount of electricity needed by 250 to 300 households, so the new forecast translates into the equivalent of power for some 700,000 homes. Wind projects now under construction include a 198 MW plant in upstate New York for PPM Energy and Zilkha Renewable Energy; a 220 MW Texas plant for FPL Group Inc (FPL.N: Quote, Profile, Research) ; and a pair of plants in Iowa to generate 310 MW for MidAmerican Energy. The American Wind Energy Association said it raised its 2005 forecast for new U.S. capacity to as much as 2,500 megawatts, based on a private survey of wind turbine manufacturer plans. Previously, the trade group said it expected capacity to grow by at least 2,000 megawatts.


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