Energy News Monitor I Volume VI, Issue 40

Civil Liability for Nuclear Damage Bill: Yet another Crutch to the Nuclear Industry

he nuclear power industry is the offspring of military research and development work in atomic energy in the United States after the Second World War. The transition from military to civilian power in the country was critically important in shaping the character of the industry. After the Second World War, there was no economic pressure to find alternatives to fossil fuels as energy costs from conventional fossil fuels were low and declining. The idea of developing nuclear power generation was initiated for political reasons – primarily to demonstrate the peaceful uses of nuclear power. This birth-defect of nuclear power generation industry continues to haunt its life even today.

The first American prototype reactor built at Shippingspost Pennsylvania was originally designed to power an aircraft carrier. It began supplying power to the grid in 1957. Then beginning in the 1960s, first General Electric and then Westinghouse and several other manufacturers began to build reactors for the generation of electricity. The companies involved were chosen by the Government and not surprisingly the handful of companies that came to dominate the industry were in most instances the same companies that had been selected on non competitive basis to do military work for the Atomic Energy Corporation in the previous years. The Government provided fuel for free, contributed research results, bought back information generated by reactors and even undertook to protect utility companies by limiting their liability to offsite claims in case of a nuclear accident.

The story unfolding in the Indian nuclear energy industry is hardly different. Since its inception, it has employed almost all conceivable forms of direct and indirect subsidies including R & D investment, the waiving of user charges on nuclear fuels and other materials, fuel reprocessing and waste storage and payments after construction for a specific period and purpose. The Civil Nuclear Liabilities Bill, despite its pretence of providing framework beyond the existing legal structure for liability claims that failed the Bhopal gas victims, is just another crutch being offered to the nuclear industry. While the granular details in the Bill can be debated ad infinitum, there is a fundamental flaw in the current Bill that is hard to defend: it fails to protect the interests of the victim. There are other loopholes such as the absence of liability in the case of accidents occurring on subsidiary activities of the nuclear industry and the authority given to the Nuclear Energy Regulatory Authority to decide whether or not there has been serious damage, these are mere technicalities compared to the major failing of the Bill in protecting the victim.

Among the arguments dispersed by articulate spokespersons of the Congress Party in defence of the Bill is the argument that India must become a part of an international regime in settling nuclear liability claims. To this end, the Bill is intended to facilitate India’s participation in the International Convention on Supplementary Compensation for Nuclear Damage (CSC) which is not yet in force. The CSC calls for a two tier system of compensation in which the first tier alone calls for a minimum of 300 million Special Drawing Rights (SDRs) to compensate victims in case of a nuclear accident. The Indian Bill which draws on the CSC sets Rs 500 crore as the maximum that can be claimed from the operator in case of an accident. This is less than one fourth of the minimum level set by CSC. The switch between the terms ‘minimum’ and ‘maximum’ is not insignificant enough to be dismissed as an unintended error. Furthermore, the substantial lowering of the first tier liability barrier is nothing short of an ‘apartheid of low expectations’ imposed on the potential poverty stricken Indian victim of nuclear accidents. In the event of a disastrous nuclear accident, the 70,000 odd people supposedly living within 16 km of the Koodankulam nuclear plant will, in theory, receive about Rs 71,000 each provided the accident occurs the year that the Bill is signed into Law. If the accident occurs ten years after the Bill becomes law, an average inflation rate of about 4 percent per annum will wipe out over 30 percent of the value of the amount. If the number of claimants increases either due to the scale and scope of the accident or due to increase in the number of people pushed into dangerous areas around nuclear plants out of poverty, the average compensation will not even cover a days hospitalisation costs. This is not a story made up to make ones case but a reflection on the reality that the average compensation received by a Bhopal victim is in the order of Rs 12,500. The Bill is sloppy even if its real objective is to protect the operator as there is no clause in the Bill that categorically excludes other legal routes to extract liability damages from the operator.

American companies which are said to be demanding the Liability Bill to be passed are used to the luxury of the Price Anderson Act and it is no surprise that they want similar comforts in India. Under the Act, the maximum liability for any facility licensed by the AEC was fixed in 1957 at the amount of liability insurance available from private sources. For any damages above that the Atomic Energy Commission (AEC) of America agreed to indemnify and hold harmless the licensee and other persons indemnified from public liability. Since the total amount of private liability insurance available in 1957 was $ 60 million, the aggregate liability was set at $ 560 million. By many accounts the figure of $ 500 million was chosen arbitrarily. One rationale advanced was that this sum would not seriously distort the budget.

The original expiration date of the Price Anderson Act was August 1967. The rationale behind the 10 year lifespan for the Act was the hope that sufficient experience would accumulate in that period to allow the amount of commercial liability insurance to be large enough to make the Act unnecessary. By 1965 private liability insurance had not increased even by a single dollar. In that year the Act was extended until 1977 and the only significant change made was that aggregate liability was capped at $ 560 million. With private insurance having grown only to $ 125 million by 1975, the Act was extended again until August 1987. The latest extension of 20 years was given through the Energy Policy Act of 2005.

The second argument put forth by the defendants of the Bill in its current form is that India does not have the luxury of closing any energy option. When all energy options have been closed for half the Indian population for over six decades what luxury are we talking about here? Such generous offer of crutches will only promote the growth of the industry long before economic conditions in India make it attractive to private players. These circumstances are important because they represent a type of public involvement in the emergence of an energy industry that is very distinctive. In no other regime are market forces and competitive processes so systematically set aside even in the determination of what liabilities the industry will be subjected to.

When competition finally emerges in the industry it will only be over who would get a chance to profit from the construction of a technical system developed under Government direction – under strong political pressure to produce something of perceived value in terms of energy and environmental security, not over which company, which fuel or which technology could provide the most economical means of generating clean electricity for masses of impoverished people in India. In any other competitive industry such investments would have been considered speculative at best and reckless at worst. The Congress Party which has seems to be in the business of purveying the ‘right’ to this or that in return for votes should think twice before selling off the peoples right to life just to pamper a spoilt industry.

Globally the coal industry which is characterised by its large labour force has almost never matched the lobbying capacity of the cash rich oil industry or the concentrated and government support laden nuclear industry. The plight of the Indian coal industry which currently accounts for over 70 percent of power generated in India is such that it is expected to treat trees with greater care than nuclear industry is expected to treat people. Ironically, it is on the back of the very same ‘people’, who have no access to electricity or access to legal recourse in the case of an industrial accident, that the nuclear establishment is loading its reason for existence. In the international arena, India skilfully uses the number of ‘people’ without electricity to gain access to exclusive nuclear clubs and to project low per capita energy consumption and emission figures to exempt it from emission obligations. In the end, the impoverished will remain impoverished and without access to electricity even as they continue to be used by the privileged few to gain concessions to further their interests.

A shorter version of the article appeared in the Pioneer of 20^th March 2010; views are those of the author

You can reach the author at [email protected]

Gas in India – Issues, Opportunities and Challenges (part –XIII)

Continued from Volume VI, Issue No. 22…

Natural Gas Utilisation Policy

s of 2008, gas available under the APM mechanism was around 57 mmscmd and gas available under private and JV gas was about 20 mmscmd. RLNG including long-term and spot LNG purchased accounted for another 26 mmscmd totalling about 103 mmscmd.

TABLE 10: NATURAL GAS AVAILABILITY IN 2008

Category	Quantity (MMSCMD) in 2008
APM Gas (ONGC+OIL)	~ 57*
Pvt. /JV Gas	~ 20*
RLNG (incl. Spot RLNG)	~ 26
Total	~ 103

Power consumed about 40 percent of this total gas, and fertilizer consumed about 30 percent which means that about 70 percent of the total gas went to the anchor customers in the power and fertilizer sector both of which are regulated sectors.

FIGURE 8: NATURAL GAS CONSUMPTION IN INDIA

In 2008, gas based power generation accounted for about 13,400 MW. At 90 percent PLF this would require about 66 mmscmd of gas. Gas based power capacity which is ready but not able to be commissioned for want of gas was around 1129 MW which required 5.4 mmscmd of gas. Liquid based plants that can run on gas was around 1002 MW. The total requirement of natural gas for these power plants was 77 mmscmd while the availability was 39 mmscmd. What this implied was that about 7,000 MW of additional power could have been added to the grid if gas were made available.

TABLE 11: NATURAL GAS SHORTAGE IN THE POWER SECTOR IN 2008

	MW	Gas Requirement @ 90% PLF
Gas-based Power Capacity (as on 31.03.08)	13,409 MW	66 MMSCMD
Gas-based Power Capacity Ready, but not able to commission for want of gas	1129 MW	5.43 MMSCMD
Liquid based plants that can run on Gas	1002 MW	~5 MMSCMD
Total		~ 77 MMSCMD
Gas/RLNG Availability		~39 MMSCMD
Gas shortage		~38 MMSCMD

Gas demand projections from the power sector stands at around 80 mmscmd and it is expected to increase to around127 mmscmd. These demands are based on the working group on petroleum and natural gas for eleventh plan documents.

TABLE 12: GAS DEMAND PROJECTIONS

In mmscmd	2007-08	2008-09	2009-10	2010-11	2011-12
Power	80	91	103	114	127
Fertilizer	41	43	52	79	79
City Gas	12	13	14	15	16
Industrial	15	16	17	18	20
Petro-Chem/Refinary	25	27	29	31	33
Sponge Iron/Steel	6	6	7	7	8
Total	179	196	222	264	283

As it is evident from the table above, natural gas is likely to remain the anchor customer of natural gas for the near term future. The demand-supply gap was around 68 mmscmd in 2008. If the optimistic gas supply scenario in which private gas production become s available materialises, the demand supply gap could be around 30 mmscmd. Gas based power generation is less carbon intensive, it has higher thermal efficiency and lower capital cost, its gestation period is short and requires less land and water compared to generation from other fuels. Moreover, generation can be quickly ramped up or down in response to the variation in power demand.

TABLE 13: DEMAND – SUPPLY GAP FOR NATURAL GAS

	07-08	08-09	09-10	10-11	11-12
Domestic Gas Availability (Mmscmd)
Ongc +Oil	57.19	57.06	57.69	51.45	51.65
Pvt/Jvs(As Per Dgh)	21.2	62.67	82.57	82.03	102.57
Additional RIL (NEC)					2.0
Gspc				3.5	4.5
Additional Gas Anticipated				3.5	6.5
Total Projected (Optimistic) Supply From Domestic Sources(A)	79.4	119.73	140.26	146.98	170.72
Rlng (Mtpa)
Dahej	6.5				12
Hazira	2.50				2.50
Dabhol					5.00
Kochi					2.5
Managalore					1.25*
Total Lng Supply (Mmtpa)	9.0				23.25
Total Lng Supply (Mmscmd) (B)	31.5				81.38
Total Projected Availability (Mmscmd) (A)+(B))	110.9				252.09

World wide gas has been a preferred fuel for power generation (see table onside cover page). In India gas based power generation capacity accounts for 11 percent of total installed capacity as against a global average of around 19 percent. World average is expected to increase to around 25 percent over the next few years. If India continues to add gas based capacity at the current rate, capacity could increase to around 16 percent. Power generating capacity by the year 2031-32 is estimated at around 800 GW and gas based capacity should be increased to at least maintain its current share. Even though coal is likely to remain the dominant fuel for power generation in the next two to three decades a shortage of domestic coal is anticipated. By 2012 domestic coal shortage is estimated to be at least 60 to 100 million tonnes.

FIGURE 9: GAS BASED POWER GENERATION CAPACITY

With regard to the import of coal, many issues remain unaddressed. The first is the volatility in international coal prices to which India will be exposed. Second is the infrastructure required to import coal and transport the coal to power generation stations. Given the growing constraints over carbon emissions, the environmental viability of coal is also an important issue. The techno commercial viability of clean coal technology like IGCC, CCS etc remains a distant dream as far as India is concerned.

The National Action Plan on Climate Change recommends additional gas based power generation in view of discovery of significant gas reserves in India, thus deriving the environmental benefits of low carbon intensity power generation. The Standing Committee on Energy in their 25th Report on Demand for Grants (2008-09) recommended Power sector be accorded priority over all other sectors including the Fertilizer sector in the Gas Utilization Policy. Priority for gas allocation should be for Power sector, both for the existing Gas & Liquid-based power plants, and for Expansion of existing plants as well as for greenfield gas-based power plants. The Policy should cover gas from NELP & Pre-NELP fields (like PMT, Rava), CBM fields and future Trans-national piped gas imported into India by GoI. At least 40 percent of the Gas should be earmarked for the Power sector (both for Existing and Expansion/Greenfield Power plants with Priority for the existing Gas & Liquid-based power plants).

Excerpts from the integrated power policy relating to Gas Utilization Policy:

· As long as there is shortage of gas in the country and two major users of gas, namely Fertilizer and Power work in a regulated cost plus environment, the competitive market determined price would be highly distorted.

· For the foreseeable future, domestic gas supplies to both the Fertilizer and the Power sector that together account for about 80 percent of the current gas usage, would need to be allocated based on availability and charged at regulated price that reflects cost of production and reasonable profit.

· Gas must compete with Coal as key alternative for power generation.

to be continued…

Summary of proceedings at the 7^th Petro India Conference on ‘Gas in India – Issues, Opportunities and Challenges’ organized by the Observer Research Foundation (ORF) and the India Energy Forum (IEF) on 25th & 26th September 2008, New Delhi.

The Two Sides of the Nuclear Liability Bill (part II)

Rajeev Sharma, Senior Fellow, Vivekanand International Foundation

Continued from Volume VI, Issue No. 39…

nti-nuclear campaigner Greenpeace too has upped its ante on the nuclear liability bill and has written to all 795 members of both houses of Parliament to dump the bill. Greenpeace finds the bill unacceptable because it not only allows US companies to go scot free in case of a nuclear mishap but also uses Indian taxpayers’ money to pay for the damages. It has taken exception to the clause to cap the liability of the operator to Rs 2,385 crore (when in the US the Liability is $10 billion or Rs 46,000 crore).

The government is keen on passing the bill as it feels that there is a real urgency to join the international legal liability compensation regime. India can only join the international legal compensation regime once the bill is passed. Science and Technology Minister Prithviraj Chavan went on record saying on March 15 that "India is not a part of any legal compensation regime and we would like to become a member." India is aiming to join the International convention on supplementary compensation (CSC), which already has 55 countries as members. India had also examined Vienna and Paris Conventions.

As the Indian government has launched a massive nuclear capacity addition of 65 GWe by 2032, it cannot achieve its goal without first creating civil nuclear liability regime within India as this would pave the way for India joining the international convention. The 2008-09 Economic Survey had pin pointedly mentioned that efforts to get foreign nuclear companies to invest in India had not succeeded in the absence of legislation on liability. Major global players such as Areva, GE, Westinghouse and Rosatom Corp, have so far not gone beyond the talking stage with NPCIL and other domestic firms in the absence of legislation on liability. The law is part of the "unfinished business" between India and US in the wake of the nuclear deal.

The government is dismissive of the allegation that the Bill favours the US by attempting to protect US reactor suppliers from claims of liability and compensation as the bill has no specific reference to any particular country supplier and its provisions are applicable to suppliers from all countries. It maintains that the proposed legislation is not going to be any different from either the international conventions or any of the national laws of the six countries that do not subscribe to any international conventions.

The UPA government is conscious of the fact that it has to be a part of the international liability regime if its string of civilian nuclear cooperation agreements is to result in concrete deliverables. India with 18 nuclear power plants (NPP) and Pakistan that operates two NPPs are the only two of the 30 countries that operate civil nuclear power that do not have any nuclear liability act in force in their territories. The rest of the 28 countries that run 436 NPPs have such legislation in place. If India enacts a nuclear liability act it can give a much-needed impetus to nuclear power generation. Such an Act becomes all the more necessary because the Indian Atomic Energy Act, 1962, does not provide for either nuclear liability or compensation for nuclear damage due to nuclear accident.

Concluded

Views are those of the author

Author can be contacted at [email protected]

Subpriming the Pump (part II)

Mahmoud A. El-Gamal, Amy Myers Jaffe

Continued from Volume VI, Issue No. 39…

uring boom times, as we saw in the years leading up to 1973 and again after 2002, the rise in oil demand strengthens oil producers, which reap massive profits by intentionally underinvesting in oil-production capacity. Oil prices continue to rise, filling their treasuries with a sudden influx of capital that cannot be absorbed at home. Petrodollars flow out, seeking returns in already inflating financial markets and pushing bubbles to dangerous levels.

As the business cycle turns, the euphoria begins to wane. Investors assess financial risks more accurately. Interest rates rise, further feeding the downswing. The irrational exuberance that amplified the boom quickly reverses course, accelerating the bust. Demand for oil collapses, causing oil prices to crash. Petrodollar flows dry up, hitting financial markets and real-sector growth still harder. Then, reduced liquidity and credit prevent oil exporters from investing sufficiently in productive capacity during the recession, and our story eventually repeats, each time more dramatically than before.

The geopolitical component of this megacycle is equally insidious. As oil-producing countries amass substantial financial reserves, they tend to allocate investment and expenditure disproportionately less to oil-production capacity and more toward areas that benefit the ruling elites. In the Middle East, significant portions of oil receipts have been spent on arms purchases, which protect the ruling class from both external threats and internal challenges -- indirectly, by appeasing military leaders who might pose a threat, and directly, by stifling opposition through robust internal security spending. (Military personnel as a percentage of the labor force is a very high 3 percent in the Middle East and North Africa, and military expenditures as a percentage of GDP are also consistently high, for example 9 percent in Saudi Arabia.)

Oil-importing advanced economies such as France and the United States, which eagerly sell weapons as a means of recycling petrodollars, cannot escape their own complicity in this game. Middle Eastern arms races boost not only the arsenals of national militaries, but also of subnational militias and even terrorist organizations. Iran's long-standing support of Hezbollah, for example, is well documented. The flow of weapons increases geopolitical risks, once again increasing oil prices as fears grow that military conflict or terrorist threats will disrupt supplies. Put bluntly, a little bit of terrorism is good for oil exporters.

And the links between oil and terrorism don't stop there. As oil exporters mimic the consumption behavior of advanced economies during booms, young populations develop highly unrealistic expectations, premised on a sense of entitlement to oil wealth. It's these frustrated expectations that drive youth toward radical and militant ideologies, not poverty per se. In Saudi Arabia, for example, real per capita income in the early 1980s was higher than that of the United States. Saudi nationals were accustomed to free housing, guaranteed incomes, and subsidized electricity and gasoline until low oil prices caused budget cutbacks in the mid-1990s. The Sept. 11, 2001, hijackers, after all, were mainly educated middle-class men. They were undoubtedly influenced by the arguments of Osama bin Laden, who in the 1990s was raging against "the greatest theft in history," arguing that the real price of oil in late 1979 should have persisted for the next two decades.

Needless to say, military spending, distribution of oil rents to favored segments of society, and the resulting culture of consumerism do little to ensure long-term economic development. When oil revenues shrink in the downturn of the cycle, unemployment and reduced rent redistributions feed anger, just when the state's ability to spend on security and population appeasement is waning.

How can we escape the global oil curse? Diversifying and developing Middle Eastern economies to create employment opportunities and absorb occasional petrodollar flows is crucial. Oil exporters also need to think more strategically by investing in oil-production capacity during recessions and amassing aboveground reserves when prices are low to sell when prices are high.

Oil consumers also have long-term options. Large economies such as the United States, Japan, and China can reduce their oil consumption by investing in alternative energy, fuel-efficient technology, and public transportation. They can also wield their strategic oil stockpiles as a cudgel against speculators -- as U.S. President Bill Clinton did with success in the 1990s. During economic downturns, they can restock those reserves to stabilize oil revenues for producers, in the process selling high and buying low. Careful regulation of oil derivatives markets can help to curb harmful speculation.

These sorts of technocratic policy fixes, however, are not nearly enough to address the larger problem. We need high-level international coordination, in part through platforms such as World Trade Organization and G-20 summits. Over the past 50 years, oil importers and exporters have repeatedly sought temporary advantage by treating their mutual relationship as a repeated zero-sum game. Major consuming countries limit access to refining, marketing, and retail fuel outlets and lecture producers on the virtues of free markets when prices are low. In turn, producers invoke nationalism and curb supply when prices are high (while giving the same lectures on the virtues of free markets). Invariably, however, as the cycle has continued to rage on, the resulting gains for one side or the other have been fleeting. Worse, globalization has ensured that economic, geopolitical, and security problems in one part of the world now spill quickly into others, further negating any short-term benefits of myopic self-interest.

Without a change, the next phase of the cycle could be catastrophic. The next banking crisis, for example, might be accompanied by a currency crisis for the U.S. dollar, which has been the linchpin of the international financial system since World War II. Or conventional Middle Eastern arms races could easily turn into unconventional ones, increasing the chances that terrorists will get their hands on weapons of mass destruction.

Today's problems will look trivial in comparison.

Mahmoud A. El-Gamal is chair and professor of economics at Rice University. Amy Myers Jaffe is Wallace S. Wilson fellow at Rice University's Baker Institute for Public Policy.

Concluded

Views are those of the author

Courtesy: Foreign Policy, Sept. / Oct. 2009

Note: Part V of the article on Oil & Gas Discovery & Production in India: Historical Milestones will be published in Volume VI, Issue 41

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

Cairn India discovers more oil in Rajasthan block

March 23, 2010. Highly placed sources in the Petroleum Ministry have said that Cairn India has discovered new oil reserves in Rajasthan oilfields. The company is likely to make an announcement shortly.

New oil reserve will increase India's domestic oil production by about 23 percent in financial year 2011. This essentially means that these reserves are very big. Rahul Dhir, the Chief Executive of Cairn India has met the Petroleum Minister Murli Deora who in turn has congratulated him and the company for the discovery.

Cairn India extracts oil from the Barmer region of Rajasthan. Cairn started output from Mangala - the nation's largest onland oil find in more than two decades in late August 2009.

Reliance misses chance to bid for Venezuelan block

March 23, 2010. Reliance Industries (RIL) wanted to join Oil & Natural Gas Corp (ONGC)-led consortium that picked up a stake in Carabobo-1 oil block in Venezuela, but has missed the opportunity.

Venezuela had awarded the $19-billion project to the ONGC consortium last month. ONGC’s foreign arm ONGC Videsh (OVL) managing director RS Butola said the company is open to join hands with RIL and bid for other Venezuelan oil & gas assets in the future.

RIL recently expressed interest in joining the consortium, which was awarded a 40% stake in the Carabobo-1 oil block last month. Last year, RIL and ONGC were in talks to jointly bid for the project, but RIL later lost interest due to its preoccupation with proposed LyondellBasell acquisition.

ONGC in talks with 3 Russian cos for partnerships

March 22, 2010. State-run Oil and Natural Gas Corp is in talks with three Russian companies for oil and gas partnerships in Russia and the CIS region, its chairman said. The Russian firms are Rosneft, fifth-biggest oil producer Gazprom Neft and oil-to-telecoms group Sistema, RS Sharma said.

Downstream

IOC-OIL may hike its 400 mn pound bid for Gulfsands Petroleum

March 21, 2010. State-owned Indian Oil Corp and Oil India Ltd combine may hike their takover offer for Middle East-focused oil firm Gulfsands Petroleum Plc after the UK- based firm rejected their 400 million pound bid. The Syria-focused oil explorer said it had rejected an unsolicited offer by an company it did not identify, for being too low. "The board is unanimously of the view that the proposal is wholly inadequate and materially undervalues the company," Gulfsands said in a statement. IOC-OIL have teamed up for acquiring overseas assets and share cost and investment in 50:50 ratio.

Transportation / Trade

Gail in talks to buy stake in Papua New Guinea LNG project

March 23, 2010. State-owned gas utility Gail India said it is talking to Canadian oil firm Interoil for a possible stake in its proposed liquefied natural gas (LNG) project in Papua New Guinea. Papua New Guinea last year granted initial approvals for the Pacific nation’s second LNG project, which would follow a plant proposed by an Exxon Mobil-led venture. The venture would cost about $5 billion for a plant producing 3.5 million tonne (MT) a year of LNG, with shipments due to start in 2014. LNG is natural gas chilled to liquid form for transportation by tankers to destinations not connected by pipeline. China National Offshore Oil, China’s biggest offshore petroleum explorer, is already working with Interoil and the Papua New Guinea-owned Petromin PNG Holdings on commercial terms for financing the government’s stake in the project.

GAIL seeks natural gas supplies from Qatar for petrochem plant

March 22, 2010. State-owned GAIL India Ltd has sought assured natural gas supplies from Qatar to set up a $1.3 billion mega petrochemical plant with Reliance Industries in the gas-rich nation. GAIL had last year held preliminary discussions with Qatar Petrochemical Company (QAPCO) and would now discuss the project in more details. RIL and GAIL had on December 4, 2007 signed an MoU to jointly set up a mega gas-based petrochemical plant. They had initially identified 10 countries -- Qatar, Abu Dhabi, Bahrain, Vietnam, Australia, South Africa, Angola, Mexico, Russia and the Former Soviet Union -- for exploring possibilities of setting up a 1.9-million-tonne chemical plant.

India to add 7,450 km to gas pipeline network in 3 yrs

March 22, 2010. India will add over 7,450 km of gas pipeline network over the next 2-3 years to ramp up its supply lines to keep pace with the growing demand from the consumption centres in the country.

Asia's second fastest growing economy has most of the gas pipeline infrastructure concentrated in west and north while the south and east have largely been left untouched by the revolution increased availability of gas is bringing. The present natural gas transportation infrastructure in the country is around 10,800 km with a capacity to move 270 million standard cubic meters of gas per day.

Industry-specific uniform gas price under study

March 21, 2010. The option of having an industry-specific uniform gas price is being considered by the stakeholders, including industry players and the Government.

The Government is looking at the feasibility of a uniform price regime for gas and GAIL Ltd was asked to conduct the study. GAIL had appointed a Spanish consultant, Marcados Energy Market Pvt Ltd, to undertake a study on the feasibility of such a proposal, including legal and technical issues to be addressed in case of a uniform price.

The final report is expected next month. Iindustry-specific uniform gas price would mean that the end-consumers of the said sector, whether it is fertiliser or power, get gas at the pooled price derived for that industry category.

In other words, if the allocation of gas for the power sector is 40 million standard cubic metres a day (mscmd), a pooled price from all the gas sources would be worked out for that quantity.

CNG prices up 50 paise to Rs 21.70 per kg

March 20, 2010. Indraprasthan Gas Ltd, the sole supplier of CNG to automobiles in the national capital, on Saturday raised the price of compressed natural gas (CNG) marginally by Rs 0.50 per kg. CNG will cost Rs 21.70 per kg.

The fuel price in Noida/Greater Noida and Ghaziabad have also been raised by Rs 0.50 to Rs 23.50 per kg and Rs 25.50 per kg, respectively.

CNG would still offer 67 per cent savings in running cost when compared to petrol driven vehicles at the current level of prices. It offered 39 per cent saving when compared with diesel driven vehicles.

Policy / Performance

Govt may hike ONGC, OIL gas prices by 30 pc: Petroleum Secy

March 22, 2010. The government may soon raise prices of natural gas produced by state-owned ONGC and Oil India by as much as 30 per cent, Petroleum Secretary S Sundareshan said. Price of gas produced by Oil and Natural Gas Corp (ONGC) and OIL from fields given to them on nomination basis were last revised in 2005. Current rates of Rs 3,200 per thousand cubic meters ($1.79 per million British thermal unit) are less than half of the $4.2 per mmBtu price of gas from KG-D6 field of Reliance Industries. The Oil Ministry has circulated a Cabinet note for hiking price of gas under administered pricing mechanism (APM) to Rs 4,142 per thousand cubic meters ($2.32 per mmBtu).

Govt mulls differential pricing for Euro IV compliant fuel

March 22, 2010. The government is considering differential pricing for Euro IV-compliant fuel to be sold in select cities from April 1, Oil Secretary S. Sundareshan said. He did not give details. India is keen to cut emissions as Asia's third-largest economy expands rapidly and aim to catch up with fuel quality in Europe, which now follows Euro V standards. It has been gradually reducing sulphur from 2000, when fuel had 500 parts per million (ppm). Motorists in major cities will now move to Euro-IV norms, locally known as Bharat Stage-IV, that allow up to 50 ppm sulphur.

India's natural gas demand to double by 2015: McKinsey

March 22, 2010. Country's natural gas demand is expected to nearly double to 320 million standard cubic meters per day by 2015, global consultancy firm McKinsey said in a study. In a report released at the VI Asia Gas Partnership Summit, Mckinsey said the current demand of 166 mmscmd-- made up of nearly 132 mmscmd supplies from domestic fields and the rest from imported LNG-- is likely to rise to at least a minimum of 230 mmscmd and a maximum of 320 mmscmd by 2015. There was an upside of 280 mmscmd if gas was made available at a delivered price of USD 10 to 11 per million British thermal unit.

South India will get K-G gas by 2012, says Petroleum Secy

March 20, 2010. South India will start getting natural gas produced from the Krishna-Godavari basin from 2012, the Union Petroleum Secretary, Mr S. Sundareshan said. Stressing that he was “extremely concerned about (gas) pipeline connectivity to Tamil Nadu”, Mr Sundareshan said that the Ministry of Petroleum and Natural Gas had called for a meeting of Reliance Industries Ltd (which owns the gas fields) and GAIL (India) Ltd (which lays pipelines) about 10 days ago and told them to implement the project in a “strict timeframe”.

CCEA clears 33 of 36 O&G bids; ONGC top winner

March 20, 2010. The Cabinet Committee on Economic Affairs (CCEA) approved award of 33 out of 36 oil and gas blocks that were bid for in the last New Exploration Licensing Policy (NELP) round. With the approval, decks have been cleared for the signing of production sharing contracts (PSC) between the government and the winning bidders. Oil and Natural Gas Corporation and its partners emerged as the most successful in the NELP-VIII round, bagging 17 out of a total of 25 areas for which they bid for. The NELP-VIII bidding closed on October 12, 2009. The government offered 70 blocks under NELP-VIII round including 24 deep water blocks, 28 shallow water blocks and 18 on-land blocks. But the round evoked lukewarm response, with only 36 blocks witnessing bids. Among the deep water blocks put on offer, only 8 received bids, that too single bids. Of them ONGC and partners bagged seven, while Cairn Energy of UK won the other.

ONGC aims Rs 140.63 bn net in FY11

March 19, 2010. State-owned Oil and Natural Gas Corp said it is targeting a net profit of Rs 140.63 bn in fiscal 2010-11 on the back of higher crude oil production. Oil and Natural Gas Corp (ONGC) had in 2008-09 reported a net profit of Rs 161.26 bn driven by high crude oil prices. This fiscal, it has reported Rs 129.911 bn net profit in the first nine months. The company signed an agreement with the Petroleum Ministry targeting 27 million tonnes of oil production in 2010 -11, 8.4 per cent more than 24.9 million tonnes output expected this fiscal, a company statement said here. Oil production in the current year is lower than 25.9 million tonnes target because of fall in output from ageing fields and delay in new fields coming on stream. The output in 2007-08 was 25.37 million tonnes. ONGC, according to the performance Memorandum of Understanding, is targeting production of 25 billion cubic meters of gas and gas sales of 20 bcm.

Govt clears ONGC & partners' Venezuela investment

March 19, 2010. The government gave Oil and Natural Gas Corp (ONGC) and partners approval to invest USD 2.181 billion in a giant oilfield in Venezuela that will give energy deficient India 3.6 million tons a year of crude oil. ONGC Videsh Ltd, the overseas arm of the state explorer, will invest USD 1.333 billion between 2010 and 2015 as its share of spending in the 400,000 barrels per day 'Carabobo-1' project. Indian Oil Corp (IOC) and Oil India will invest USD 454 million each in the project.

Rs 500 mn security blanket for east coast oilfields

March 17, 2010. The oil ministry is setting up an elaborate surveillance system to safeguard mid-sea oil and gas production facilities spread across the east coast, which account for a major chunk of domestic production, against snooping, damage from stray vessels and attacks by pirates or terrorists. The surveillance system, known as VATMS (vessel and air traffic management system), consists of a network of radars and other mechanisms to track marine and air traffic. It gives advance warning against unwanted or stray boats orships as well as aircraft. This in turn alerts oilmen on platforms and coastal and air defence forces to initiate preventive action.

POWER

Generation

Caparo Group announces entry into power generation

March 19, 2010. Lord Swraj Paul-owned Caparo Group announced entry into the power generation business through a joint venture with Finland-based Wartsila at a project cost of Rs 1.15 bn. The joint venture firm, in which Caparo Group holds 51 per cent stake and Wartsila 19 per cent, will set up a 26 MW gas-based environment-friendly power plant at Bawal in Haryana. Natural gas being the cleanest of all fossil fuels helps reduce harmful emissions into the atmosphere compared to coal. The plant will cater to the captive energy requirements of the group's joint venture with Maruti Udyog as also several other Maruti vendors like Mothersons Sumi, Asahi India, Talbros, Sankei India and Asian Paints located in the area.

PEs commit $425 mn to India's power sector

March 17, 2010. In one of biggest PE fundings in India's power sector, a clutch of global of investors, including General Atlantic, has committed $425 million to Asian Genco, which has interests in the country's power generation companies. Singapore-based infrastructure company Asian Genco in a statement said it has got a commitment of over $425 million (about Rs 20 bn) from a consortium of global investors, which include Morgan Stanley, General Atlantic Goldman Sachs Investment Management,Everstone Capital, Norwest Venture Partners, PTC India and its financial arm PTC India Financial Services.

Transmission / Distribution / Trade

Costly leak: Power cos lose Rs 300 bn every year

March 21, 2010. The average cost of electricity in India may be the highest in the world but distribution utilities are losing around Rs 300 bn annually because they cannot recover the cost due to theft and poor billing practices, an industry euphemism for `transmission and distribution losses'. Indicating that outdated networks are adding to the losses of distribution companies, the Planning Commission sees the average cost of taking power to the consumer's doorstep increasing from Rs 3.60 per unit in 2005-06 to Rs 4.16 per unit in 2009-10, or an increase of 15.5 percemt. Against this level of rise in the costs, average tariff has increased from Rs 2.87 per unit to Rs 3.37 in the same period, marking a 17.4 percent increase. "The gap has increased to around 89 paise per unit in 2009-10,'' the panel says in its mid-term review of the 11th Plan.

Power Exchange plans State-centric operations

March 20, 2010. Power Exchange India Ltd (PXIL) is in the process of setting up State-centric operations aimed at partly decongesting heavily clogged power supply networks in the country beginning with Andhra Pradesh. The Southern regional grid is extremely congested. It is now faced with a shortage of over 4,000 MW. Both the networks comprising S1 (Andhra Pradesh and Karnataka) and S2 (Tamil Nadu and Kerala) are faced with congestion that hampers transfer of power even when there is possibility. The demand-supply gap has shot up significantly due to onset of summer months, buoyancy in the economy and higher consumption by the industrial segments. The peak demand-supply gap in the country is estimated to be about 15,000 MW (about 16 per cent short) and the energy demand shortage is about 12 per cent.

Merchant power tariff would not touch last year's peak

March 18, 2010. Merchant power tariffs have picked up and they have gone up about 61 percent month-on-month to Rs 5 a unit and currently trading at their highest levels after August of 2009. So the big question here now is that, can we expect tariffs to actually ease off or do you think its still going to be a rise from here especially as we were coming into the peak months of the summer? Now as the summer season is coming, naturally, the demand will go up. With additional capacity more power will come to the market and therefore there will be larger volumes for trade. As far as trading companies are concerned they are not price sensitive because they charge a fixed margin - as now CRC has revised the margin from 4 paise to 7 paise for sale price of over Rs 3 - so the tariff companies can take only that amount of margins and price can be Rs 4, price can be Rs 7 the volumes should come to the markets say experts.

Fedders Lloyd Corp bags Rs 2.57 bn power project

March 18, 2010. Fedders Lloyd Corporation said the company in a consortium with Spain's Cobra Instalaciones has bagged a power distribution project worth Rs 2.57 bn from Madhya Pradesh Kshetra Vidyut Vitaran Company. The scope of the work includes supply, installation and maintenance of high voltage distribution systems in various districts of Madhya Pradesh, Fedders Lloyd said in a filing to Bombay Stock Exchange (BSE).

Policy / Performance

CAG to look into NTPC project delays

March 23, 2010. Concerned over inordinate delay in implementation of National Thermal Power Corporation (NTPC) projects, the Comptroller and Auditor General of India (CAG) will look into contractual agreements entered into by the company with various suppliers and contractors to find out the reasons for delays. Over a dozen large-size projects of NTPC, costing thousands of crores, have been stalled at various levels of implementation, largely due to loopholes in the agreements entered into by the power sector PSU. CAG’s audit into the contractual terms, guiding various projects of NTPC, is aimed at finding ways to speed up the PSU’s performance metrics as the government considers Maharatna status for the power major, which will give it more functional autonomy.

Govt wants Coal India to forge overseas pacts only with ‘listed' players

March 23, 2010. In a change of mind, the Centre now wants Coal India Ltd (CIL) to explore the possibility of forging “strategic alliance” only with ‘listed' overseas coal producers. While the reasons behind the new stipulation — as suggested by the Government nominees on CIL board at a recent meeting — are not known, it, nevertheless, forced the Indian coal major to immediately narrow down its options, from as many as 10 proposals forwarded by six companies to five proposals by three companies, for striking overseas mining joint venture or equity participation in specific overseas mining projects (in Indonesia, the US, Australia and South Africa). Coal India is slated to firm up the proposals through a tendering process following completion of the due-diligence exercise. The company recently appointed merchant bankers for conducting the due diligence. CIL previously shortlisted proposals from three Indonesian companies (Trishakti, Harvest Indo and Sinar Mas) and three US companies (Murray Energy, Peabody and Massey Energy).

NTPC cannot sell power in open market: Govt

March 23, 2010. The Centre has no plans to allow state-owned generator NTPC Ltd to get into merchant power sales, the Power Secretary, Mr H.S. Brahma, said. Merchant power refers to electricity sold in the open market at market prices, as against the energy being tied up in long-term agreements with a single buyer at an agreed rate. Mr Brahma said certain States are hit by droughts, floods and cyclones, and under such conditions they will not be able to pay higher market rates for buying electricity.

JSPL to set up Rs 420 bn CTL plant in Orissa

March 22, 2010. Naveen Jindal-led Jindal Steel and Power (JSPL) said it will set up a coal-to-liquid (CTL) plant entailing an investment of Rs 420 bn in Orissa. This is the second such proposal by any investor for setting up a CTL plant in the state. Earlier, Tata Group in collaboration with Sasol had evinced interest in setting up a similar CTL plant in the state.

The proposed plant would come up over 5,500 acre of land, comprising CTL plant with an investment of Rs 300 bn, coal washery (Rs 20 bn) and a thermal power plant of 2000 MW capacity for Rs 100 bn, the company said on in the proposal submitted to the state government.

JSPL which had already been alloted a coal block in the state, would complete its proposed CTL petroleum project in eight years, Jindal said, adding that about 32,000 people would get employment. The company, setting up a 6-mtpa steel plant in Angul district, said was optimistic of starting the first phase of power generation from its 810 MW CPP in September next.

NTPC inks agreement with GPCL for 500 MW power projects in Gujarat

March 22, 2010. State-owned NTPC said it has signed an agreement with Gujarat Power Corporation for executing 500 MW renewable power projects in the state.

NTPC Ltd and Gujarat Power Corporation Ltd (GPCL) has signed a Memorandum of Understanding (MoU) for development of 500 MW renewable energy based projects, preferably wind and solar energy in the state.

States get invite as hydropower projects put on the fast track

March 22, 2010. The government has put large hydro-power projects on the fast track with an empowered group of ministers asking states to come forward with proposals. Large hydel projects have been envisaged on the lines of the coal-based ultra mega power projects (UMPPs). Once the projects are identified, the process of securing land and other clearances would begin, followed by a tariff-based bidding. The procedure is expected to reduce risk associated with hydro projects to a large extent thereby attracting more investments and participation from companies. India has an estimated hydro-power potential of 1,50,000 mw, of which only about 37,000 mw has been tapped. The threshold size of large hydel projects is likely to be kept at as much lower 500 mw to make them feasible and avoid large scale dislocation and environmental hazards. A coal-based UMPP has a capacity of 4000 mw.

N-power generation to touch 35 GW by 2020: AEC chief

March 21, 2010. The country is expected to produce 35,000 mw nuclear power by 2020, Atomic Energy Commission chairman S Banerjee said. He admitted that private players can play only a minor role in power generation. "The present Atomic Energy Act allows private parties to be only the minor stakeholders in generation of power. No private company can jump into the production which does not have the expertise. A lot of safety and security concerns are there," he said. He said now there are many joint ventures in the pipeline, including that of private-public partnership model, for nuclear power. "NTPC has already signed an agreement with Nuclear Power Corporation of India. There are a lot of activities going on and companies like Nalco have also come forward to enter nuclear power generation," he said.

No power cuts between 6-6 during SSC exams: Rosaiah

March 21, 2010. The Chief Minister, Mr K Rosaiah, directed the officials of AP Transco to ensure adequate power supply to farmers and students. In view of the 10^th class public examinations which would commence from March 23, there should not be any power cut (load shedding) between 6 am and 6 pm everyday, the Chief Minister said in a review meeting with Transco officials here. He had also asked the officials to ensure at least seven hours of power supply to the farmers in two spells to save the standing rabi crops. To ensure adequate power supply in the State, the officials could go for need-based purchase of power from outside besides maximising generation from captive generators located in the State, he said. The officials informed Mr K Rosaiah that the power consumption in the State had gone up along with the number of new connections.

$1600/kW is benchmark cost for light water reactor imports

March 21, 2010. The Centre has pegged the benchmark capital cost for the new Light Water Reactor (LWR) imports that are under discussion with Russia, France and the US at $1,600 per kilowatt, or around Rs 72 mn per mega watt. The capital cost sanctioned to the Department of Atomic Energy is $1600 per kilowatt for each of the four Russian ‘VVER' reactors coming up at Koodankulam. This will be the broad benchmark for reactors proposals under discussion by State-owned Nuclear Power Corporation of India Ltd (NPCIL) with reactor vendors from France and the US as well. The capital cost estimates compare with around Rs 40-60 mn per MW for Greenfield thermal stations and over Rs 50 mn for a new hydro project. In the case of first two ‘VVER-1000' units that are currently under construction at Koodankulam, the total construction cost was estimated at $2.6 billion.

Adani’s Tiroda project stuck for want of coal supply

March 19, 2010. Commissioning of Adani Power’s 3,300-mega watt power plant at Tiroda in Maharashtra runs the risk of getting delayed for want of fuel due to an environment hurdle in mining coal, said a person familiar with the development. Top government officials decided not to grant an alternative coal mining block now after the environment ministry ruled out clearance for mining in an area adjacent to tiger reserves, citing that it would ruin the environment. But they seek to overcome the problem. Adani Power, which is building a 3,300 mw power project for around Rs 160 bn, said it has written to the government for securing coal supply.

Coal India divestment likely by Aug

March 19, 2010. Coal India Ltd (CIL) said that the Government would divest up to 10 per cent stake in the company by July-August. The company expects to file the Draft Red Herring Prospectus (DRHP) for its initial public offering with the Securities and Exchange Board of India (SEBI) by June 15, said the CIL Chairman, Mr Partha S. Bhattacharyya. Mr Bhattacharyya said that about 63 crore shares will be offered to the public through the IPO. The company is also in talks with SEBI to reserve one per cent or 6.3 crore shares for its employees. The strategic disinvestment in CIL is part of the Government's larger plan to manage the burgeoning fiscal deficit by raising around Rs 400 bn in the next fiscal from PSU stake sales.

Govt turns to tech for helping land-starved power projects

March 18, 2010. Faced with rising disputes over land acquisition in many states, including mineral-rich Orissa, search has begun for ways to reduce land requirement for industrial and infrastructure projects. The Planning Commission has asked the Rakesh Mohan Committee, set up by the Prime Minister to give recommendations for integrated development of the transport sector, to look at measures to encourage use of new technologies in power projects to ensure optimal land utilisation. The power ministry has also been asked to undertake a review of projects and use of technology where less land is required.

Visa denial to Chinese jolts 8 GW projects

March 17, 2010. The government’s dilly-dallying over granting visas to expat technicians, especially Chinese workers, has affected the progress of about a dozen power projects with combined capacity of 8000 mw, a power ministry official said. Last year the government tightened visa regulations to refuse extension to expats working on Indian projects under business visas. It mandated that all people working on projects should seek work visas that are difficult to obtain. The government had set a target of 78,700 mw capacity addition for the Eleventh Plan (2007-12 ) period. However, it later said that a capacity of only around 62,000 mw may be achieved during the period. The projects facing delays include Mundra thermal power project of Adani Power, Lanco group’s Kondapalli extension-II , JSW Energy’s Ratnagiri thermal power project, Sterlite Energy’s Tirora project, Raj West Power’s Jallipa-Kapurdi project, NPCL’s Udupi project and NDPL’s Rithala project. Together these power projects, scheduled for commissioning between 2010 and 2011, were slated to generate about 8000 mw of power.

Centre favours consensus on nuclear liability Bill

March 17, 2010. Pushed to a corner on the nuclear liability Bill issue, the Government said that it was open to discussing the specifics in the draft legislation, including the liability cap provisions. The Civil Liability for Nuclear Damage Bill, 2010 proposes a national liability cap of 300 million Special Drawing Rights (around $468 million or about Rs 21 bn) and a Rs 5 bn cap on the power plant operator. The Bill is now expected to be introduced in the Lok Sabha after the Parliamentary recess, with the Government hopeful of renewed attempts at consensus building with the Opposition parties.

Tata, Chevron bid for Indonesian geothermal project

March 17, 2010. Tata Power Co Ltd and Chevron Corp's Indonesian unit are among several firms which have submitted bids for a geothermal power project in Indonesia, a ministry official said. Indonesia's PT Medco Energi Internasional is part of a consortium with Ormat Technologies, and several other local firms made separate bids for the project. Tata, India's largest private-sector utility, is part of a consortium with Indonesian firm PT Supraco Energy. The bids are to build a geothermal power plant in Sorik Merapi, North Sumatra, with initial capacity of 55 megawatts (MW) gradually increasing to 200 MW. Indonesia has launched the first phase of the programme to add 10,000 MW of generating capacity from 35 new coal-fired power plants, which are mostly still under construction.

INTERNATIONAL

OIL & GAS

Upstream

Petrobras turns on taps at Tiro & Sidon offshore Brazil

March 23, 2010. Aboard the semisubmersible SS-11 Atlantic Zephyr platform, Petrobras celebrated the commencement of first oil from the Tiro and Sídon oil accumulations, located in the Santos Basin. Additionally, Petrobras has initiated the Extended Well Test (EWT) for the Tiro and Sídon areas by means of the installation of the Atlantic Zephyr platform, which has a capacity to produce 20,000 barrels of oil per day (bpd) and to treat 475,720 cubic meters of gas per day.

PTT Exploration withdraws stake in Indonesia block

March 22, 2010. Thai PTT Exploration and Production PCL said its PTTEP Bengara subsidiary has withdrawn the entire 40 percent participation interest from Block Bengara I, Indonesia, it told the exchange. The withdrawal will be fully effective upon receiving approval from an Indonesian government authority. Currently, PTTEP has another investment in an exploration project in Indonesia, Semai II, where it and the other joint venture partners plan to drill an exploration well within 2010.

Petrobras may boost investment to tap pre-salt

March 22, 2010. Petroleo Brasileiro SA, Brazil’s state-run oil producer, aims to boost spending by as much as 26 percent in the five years through 2014 as it develops the Americas’ largest discovery in three decades. Investments will rise to between $200 billion and $220 billion, compared with a previous plan of $174.4 billion for the 2009-2013 period. The plan includes tapping Tupi, the Western Hemisphere’s biggest crude find since Mexico’s Cantarell in 1976. Petrobras, which in 2010 aims to invest more than any other oil company, including Royal Dutch Shell Plc and Exxon Mobil Corp seeks to sell shares this year as part of a plan to swap stock for oil off Brazil’s coast.

Range cites 'best estimate' of 1.6 billion barrels in Kurdistan

March 22, 2010. Range Energy Resources announced that Citadel Engineering has completed an independent, initial resource assessment of the Khalakan Block, located in the Kurdistan Region of Iraq. Citadel has estimated an unrisked "Best Estimate" of 1.642 billion barrels of petroleum in place as of March 1, 2010. Range has an indirect 24.95 percent working interest in the Khalakan Block. Several structures have been outlined using satellite mapping that will be detailed by shooting approximately 250 kilometers of seismic scheduled to start this month. Processing and interpretation of the seismic data and procuring tangibles for the initial well suggests a spud date towards the end of the current year.

Shell, Nexen make oil discovery in Gulf of Mexico

March 19, 2010. Royal Dutch Shell Plc and Nexen Inc. made a “significant” oil discovery in the Gulf of Mexico, adding to finds in the area last year. Shell and Nexen found oil in the Mississippi Canyon blocks 391 and 392 at the Appomattox prospect at a depth of 2,200 meters (7,218 feet), the company said in a statement. Additional appraisal activities are planned later in the year, it said. Advances in technology have opened up access to deeper water deposits in the Gulf of Mexico. BP Plc announced in September that its Tiber discovery in the region may hold 3 billion barrels of crude and gas. Shell’s Perdido project is currently in the commissioning stage.

Shale gas stirs energy hopes, health concerns

March 18, 2010. The boom in shale natural gas drilling has raised hopes that the United States will be able to rely on the cleaner-burning fuel to meet future energy needs, but concerns about its impact on water quality could slow the industry's ability to tap this resource. The U.S. Environmental Protection Agency said it will begin to take a closer look at the environmental and human health impact of shale gas drilling, which could mean new regulations on a booming sector of the energy market. Shale gas is natural gas -- largely methane -- produced and stored in shale formations a mile or more underground in many of the lower 48 U.S. states. Together with other "unconventional" natural gas sources such as tight sands and coalbed methane, shale gas accounts for 60 percent of technically recoverable U.S. onshore reserves, according to the U.S. Department of Energy.

Downstream

Valero CEO says EPA rules will freeze investment

March 22, 2010. The U.S. refining industry will freeze investment in anything beyond maintaining operations if the Environmental Protection Agency moves to regulate carbon pollution, the chief executive of Valero Energy Corp said. Bill Klesse, also chairman of the National Petrochemical and Refiners Association, said that such regulation would increase costs for an industry already struggling with low margins and sluggish demand amid a slow economic recovery. The EPA says it will take steps to regulate carbon emissions on its own if Congress fails to pass a climate control bill.

Chinese refining glut concerns may stymie new investors

March 19, 2010. Foreign investors seeking a foothold in China's oil refining sector are facing a long wait to get their proposed investments approved, as Beijing worries about overcapacity and risks to the environment. That was the message from many delegates to the National People's Congress, China's annual legislative session which drew parallels between the rapid construction of new refineries and the serious overcapacity in China's steel industry. Most at risk are likely to be proposed refinery investments by Western oil majors. That's because they do not bring guarantees of crude oil supplies, unlike state-owned competitors from resource-rich countries such as Venezuela and Saudi Arabia.

Chinese refinery utilization to stay in 80 pc territory

March 17, 2010. The operating rate at Chinese domestic oil refineries will remain at around 80 percent for some time in the future, estimate analysts with C1 Energy. Statistics from the market research institute show the operating rate of domestic refineries came to 81.63 percent in the first two weeks of March, down 1.27 percentage points from the preceding two weeks but still 6 percentage points higher than the same period last year. The operating rates of refineries in eastern and southern China dipped from the end of February to 78.95 percent and 83.88 percent respectively. Those in northern and northwest China increased respectively by 3.11 percentage points and 4.37 percentage points to 81.9 percent and 80.88 percent.

Transportation / Trade

Ecopetrol Clarifies on oil pipeline project in Colombia

March 23, 2010. In relation to the information that appeared in certain media outlets, regarding the search for a strategic partner to build a pipeline, with an estimated investment of US $3,500 million, Ecopetrol has made the following clarifications: Ecopetrol aims to reach a production of one million barrels of oil equivalent per day in 2015, also includes investments to modernize and expand the capacity of refineries and transportation systems in accordance with the expected production increases. In recent years Ecopetrol has increased the capacity of its transportation systems and is evaluating additional options. Currently the company is carrying out negotiations with other oil production companies with a view towards establishing future capacity requirements. Once transportation needs are defined, the size of an eventual oil pipeline project, the required investment and business model for its development will be established.

Dubai Exchange studies LNG futures contract

March 22, 2010. The Dubai Mercantile Exchange is studying the possibility of a Liquefied Natural Gas futures contract but any commercial feasibility is still at least five years away, the DME chief executive officer said. The Commodities Futures Trading Commission is in the final stages of approving four new contracts for the DME related to its Oman physical crude contract. The new contracts include two options and two cleared swaps contracts aimed at increasing the benchmark contract's liquidity.

Technip wins Nord Stream project

March 18, 2010. Technip has been awarded by Nord Stream AG a frame contract, worth approximately €35 million, for the Nord Stream project in the Baltic Sea. Technip's operating center in Stavanger, Norway will execute this contract. The contract covers four tie-ins on the two parallel pipelines that will run through the Baltic Sea, from Vyborg in Russia to Lubmin in Germany crossing Russian, Finnish, Swedish, Danish and German waters. The pipelines will have a total length of approximately 1,220 kilometers. The subsea tie-in operations will be performed using the PRS and the Skandi Arctic, one of the diving support vessels from Technip's fleet, and are scheduled for mid-2011 for the first pipeline, and mid-2012 for the second one. Pipeline Repair System (PRS): this system comprises a wide range of equipment for pipeline repair, both manned and remotely operated, including welding machines, installation structures or pipeline retrieval tools. Technip is responsible for maintenance and modification services for the PRS, which is operated by Statoil.

Danish utility, Iberdrola enter LNG supply deal

March 17, 2010. Danish state-owned utility Dong Energy said that Spanish sector player Iberdrola SA will deliver to it liquefied natural gas (LNG), equal to about 1 billion cu m per year from the end of 2011. No financial details were available. The ten-year agreement includes an option for a five-year extension. Completion and signing of the final contract is expected by mid-2010. Iberdrola will supply the LNG to Gate terminal in the port of Rotterdam, the Netherlands, from where Dutch transmission system provides access to the northwestern European gas market. Dong Energy holds 5 percent in the terminal and also has part of the import capacity at its disposal. The Danish utility aims to contribute to the security of supply in the markets where it operates, via ensuring supplies from different sources.

Petrobras launches weekly NG sales to distributors

March 17, 2010. Petrobras held the 10th electronic natural gas auction, offering 22 million cubic meters per day for a period of six months and with deliveries scheduled to begin on April 1. New rules encourage increased consumption with the progressive reduction of the average gas purchase price as sales grow compared to what is being consumed today. This auction gives continuity to Petrobras' strategy, kicked-off in 2009, for the development of the secondary market for natural gas. Sixteen natural gas distributors participated and bought volumes in the auction. The auction reached record sales of 6.87 million cubic meters of gas per day. This was the largest sales volume of all the natural gas auctions held by Petrobras since May 2009. The average discount recorded in this auction was 47percent compared to prices of the long-term contracts.

UAE oil exports to skip Hormuz, Iran threat

March 17, 2010. Contractors are working flat out in the United Arab Emirates to build a giant oil pipeline that will divert up to 1.8 million barrels a day of crude exports away from the Strait of Hormuz, a narrow shipping channel watched over by Iran. Completion of the pipeline could transform the sleepy port of Fujairah on the East coast of the country where tankers will eventually dock to pick up oil instead of sailing an extra day into the Persian Gulf to the existing loading terminal. Shifting about 78 percent of the U.A.E.'s current oil exports away from the existing route out of the Persian Gulf comes as the U.S. tries to turn up the heat on Iran with tougher sanctions to halt its nuclear program. The Islamic republic has threatened shipping in the Gulf previously and could in theory close of the 33-mile-wide Hormuz channel between Iran and Oman at the entrance of the Persian Gulf if challenged.

Policy / Performance

Alaska Railroad may take on in-state gas pipeline construction

March 23, 2010. The bill putting a proposed in-state natural gas pipeline into the hands of the Alaska Railroad rolled through its first Senate committee Monday, after a chorus of legislators said that pipeline dreams going back more than 60 years need to give way to action.

The Senate Resources Committee passed the railroad bill 4-1 after amending it to make clear the railroad wasn't being told to build and operate the line -- yet. The measure directs the railroad to plan the design, construction, financing and overseas gas marketing for the line.

Speculators’ bets on natural gas drop reach a record, CFTC says

March 22, 2010. Hedge-fund managers and other large speculators increased their net-short positions, or bets that natural gas will fall, to a record, according to the U.S. Commodity Futures Trading Commission. The wagers that prices will decline outnumbered those that prices will rise increased by 12,414 to 186,983 contracts, according to the commission’s Commitments of Traders report. There was said to be “heavy, heavy managed money” buying in oil and selling in natural gas. Natural gas for April delivery fell 16.9 cents, or 3.7 percent, to 4.347 per million British thermal units for the week ended March 16 on the New York Mercantile Exchange. Speculators increased net-long positions for crude oil by 14,829 to 124,143 contracts in the same period, according to the commission.

Shell, PetroChina to acquire Arrow for $3.2 bn

March 22, 2010. Royal Dutch Shell Plc and PetroChina Co. agreed to acquire Arrow Energy Ltd. after raising their offer to A$3.5 billion ($3.2 billion), gaining access to the reserves of the Australian coal-seam gas producer.

Shell and PetroChina will pay A$4.70 a share for Arrow’s Australian business, the Brisbane-based company said. The bid is 5.6 percent more than a A$4.45 offer made March 8. Arrow investors will also get stock in Dart Energy Ltd., a new company housing its international assets, which may be worth as much as A$400 million, according to analysts. Shell and PetroChina join BG Plc and Malaysia’s Petroliam Nasional Bhd. in snapping up coal-seam gas assets in Queensland to feed planned liquefied natural gas projects. The deal is the biggest since ConocoPhillips paid $5 billion for a stake in Origin Energy Ltd’s gas assets in 2008. Still, Shell and PetroChina are paying less for Arrow’s gas reserves than similar deals in the past.

Woodside to change reporting currency to U.S. dollars

March 22, 2010. Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, said it will switch to reporting in U.S. dollars to give shareholders a more accurate reflection of underlying performance. The change from Australian dollars will start from the 2010 financial year, Perth-based Woodside said. About 90 percent of the company’s revenue and more than 90 percent of its debt are denominated in U.S. dollars, it said.

Activists unveil anti oil-sands game

March 22, 2010. Activists launched an online video game to attack leading politicians' support for development of Canada's oil sands, which greens portray as a crime against nature. Tar Nation, which is set on the grounds of a dirty refinery, allows players to spray oil at Canadian Prime Minister Stephen Harper and opposition leader Michael Ignatieff "to get them out of the tar sands". Once the two men have been blasted with enough oil, the game ends and up pops a pre-written protest email addressed to the two leaders. The energy industry dismissed the game as misguided.

Gasoil backwardation extended by European oil-refining slowdown

March 19, 2010. European gasoil prices are trading in backwardation, whereby prompt prices are higher than the next delivery month, for the longest stretch in 16 months, as exports from Europe and falling refinery output reduce supply.

Gasoil stockpiles in independent storage in Europe’s Amsterdam-Rotterdam-Antwerp area, the delivery point for ICE gasoil futures, fell 5.2 percent to 2.22 million metric tons, the lowest since March 26, 2009, consultant PJK International BV, said. Oil products being stored in ships off Europe decreased by almost 3 million barrels in February to 54 million barrels, the International Energy Agency, said in its March 12 report, citing the “weakening contango in the gasoil futures curve.” Markets are said to be in contango when later months are priced higher than prompt months, the reverse of backwardation.

South Korea national oil firm eyes Ghana's Jubilee

March 19, 2010. South Korea's national oil company is interested in buying a stake in Ghana's giant Jubilee oil field, the Korean firm and Ghana's state oil agency said. Discussions between the two parties were at a preliminary stage. GNPC is in protracted talks to buy the Jubilee stake owned by privately-held Kosmos Energy. The Ghanaian government wants to block a reported deal for Kosmos to sell its interest in the field to Exxon Mobil for $4 billion. Jubilee, forecast to begin producing later this year, has recoverable reserves of 800 million barrels.

Fla. Deepwater LNG project advances with $30 mn deal

March 18, 2010. The Manatee County Port Authority approved a long-term $30 million agreement with Port Dolphin Energy LLC, providing Florida with a second major source of natural gas. Port Dolphin officials estimate its project will generate more than $150 million in direct economic impact within Manatee County during the next 20 years. Construction of the project is expected to begin in 2012 with completion in 2013. During the first five years of the agreement, Port Manatee will receive more than $16 million in cash and assets, followed by about $15 million over the remainder of the agreement.

POWER

Generation

Russian firm gets contract for hydropower project construction in Belarus

March 23, 2010. Russia's Technopromoexport will construct a new hydropower project on the Western Dvina River in Polotsk, Belarus. The 23-MW hydro project will be financed by the European Bank for Reconstruction and Development. The contract is worth an estimated $100 million. Four hydroelectric power plants are planned for construction on the Western Dvina, with the Polotsk project being the first of them. The four projects will have a combined installed capacity of about 120 megawatts.

Toshiba, Bill Gates’s TerraPower may develop reactor

March 23, 2010. Toshiba Corp. and Bill Gates- controlled TerraPower of the U.S. may jointly develop a small- sized nuclear generator to tap rising demand. Toshiba and TerraPower signed a non-disclosure agreement in November to exchange information on the design and engineering know-how. The deal was sealed when Gates visited the Japanese maker’s nuclear research center in Yokohama near Tokyo in November. The technology of an atomic plant known as the Traveling-Wave Reactor is one possible aspect of the collaboration. TerraPower said it has been studying the TWR reactor, which can operate for 50 to 100 years without the need to refuel or remove used nuclear fuel, according to TerraPower. Toshiba has developed its own small-sized reactor. The company’s “4S Reactor” is aimed at tapping demand for compact nuclear plants from remote areas and villages including those in Alaska in the U.S.

Japanese companies eye Indian power sector

March 18, 2010. Japanese power companies, including Tokyo Electric Power Company (Tepco) and J-Power, seek to make their presence felt in India. Tepco, the largest Japanese and the world’s fourth-largest power generator, has a capacity of 64.3 gigawatts, while J-Power, which operates 67 plants, has a capacity of 16,985 Mw. India has plans to add 78,000 Mw of power generation capacity in the 11th Five Year Plan and these companies want to seize this opportunity. Japanese companies can look at the opportunity as they already have a presence in the equipment side of the power market. India is a huge market, with high requirement of electricity, leading to a demand supply skew towards power generators.

Policy / Performance

US Public support for nuclear power at new peak

March 22, 2010. The majority of Americans who favor nuclear-generated electricity hit a new high this year, according to a poll that suggests growing support for President Barack Obama's aid to the nuclear industry. Sixty-two percent of 1,014 U.S. adults, who were surveyed by Gallup, said they favored nuclear energy as one way to meet national electricity needs. Though a majority of Americans has long supported nuclear power, Gallup said the latest rating is the highest since it began polling on the issue in 1994. Hoping to advance climate legislation in Congress, Obama announced $8.3 billion in loan guarantees for new plant construction in February. The guarantees will help build the first new U.S. nuclear power facilities in nearly three decades.

Japan nuclear firms set to profit from CO₂ cuts

March 22, 2010. Japan's power industry has a compelling business case to raise nuclear run rates as cabinet approval of a climate bill adds to pressure to reduce carbon emissions. By stepping up rates to 80 percent, against just 65 percent in 2009, Japan could save at least 52 million tonnes of carbon emissions a year by 2020, industry and government figures show, worth around $800 million at current carbon prices. What's good for the environment is also good for business, with each extra percentage point of run rates worth around 40 billion yen ($443 million) in extra profit for operators, says the Federation of Electric Power Companies of Japan (FEPC), as they cut use of expensive alternatives like fuel oil. But nuclear plants may struggle to overcome safety-related fears that have kept run rates in earthquake-prone Japan well short of the 90 percent achieved in the United States.

NY AG opposes Entergy Indian Point reactor renewal

March 19, 2010. New York Attorney General Andrew Cuomo has filed new objections to renewing the license of Entergy Corp's Indian Point nuclear power reactors, saying the plant poses too much of a safety risk to the densely populated New York City area. The continued operation of the 2,045-megawatt plant for an additional 20 years has the potential to affect more people than any other reactor in the country, Cuomo said in his filing last week with the U.S. Nuclear Regulatory Commission, which has been considering renewing the plant's license since 2007. Indian Point is located just 45 miles (72 km) north of New York City.

Consol deal shows coal sector eyeing natgas

March 18, 2010. Consol Energy's $3.5 billion purchase of shale gas assets from Dominion Resources could be a precursor to other coal companies diversifying toward cleaner energy sources. U.S. coal companies, which a few years ago enjoyed a boom in coal-fired power plant development, must diversify as concern about climate change grows. Utilities are shutting old coal plants and replacing them with generators fuelled by natural gas, which when burned emits 50 percent less greenhouse gas than coal. Other coal companies could follow Consol's lead. Massey Energy has expressed interest in gas production.

Renewable Energy / Climate Change Trends

National

Azure Power gets $10 mn from IFC for solar projects

March 22, 2010. The World Bank's private sector lending arm International Finance Corporation (IFC) will invest $10 million (around Rs 460 mn) in renewable power company Azure Power. The funds will be used to set up solar plants to generate electricity in villages. This is the first solar project under the lending agency's new clean technology investment programme. Helion Venture Partners and Foundation Capital, leading venture capital investors in clean technology companies also funded Azure's solar power initiative in September 2008.

Surana Telecom merges solar biz with Ventures

March 19, 2010. The solar power business of the Hyderabad-based Surana Telecom and Power Ltd, will be shortly demerged from the latter and merged with Surana Ventures Ltd (SVL), a unit focussing on solar photovoltaic business including solar pharms. After the merger of the solar business with Surana Ventures Ltd, the company is considering listing at the AIM in the London Stock Exchange. It has initiated parleys with Nomads (Nominal advisors) for the listing-related issue. This could possibly enable it to raise additional funds for expansion projects, which includes setting up of solar farms.

Renewable energy projects: No equity for farmers

March 19, 2010. Farmers in Karnataka who lost their land to renewable energy projects were promised 5 per cent equity in the forthcoming projects in the Renewable Energy Policy. However, the Karnataka Energy Department did a Uturn on it by saying that it was mulling scrapping the clause. Bodies representing the Indian wind power sector in the country and the state had been holding meetings with the energy department. The Indian Wind Turbine Manufacturers Association and the Karnataka Chapter of Indian Wind Power Association (IWPA) announced that the changes were being considered in the Renewable Energy Policy. Further, as per the demands of the energy producers, the Energy department is also considering withdrawing the provision, which says that the power produced should compulsorily be sold to the state utilities.

Birla Power to invest Rs 50 bn in thermal & solar power projects

March 18, 2010. Birla Power Solutions will invest nearly Rs 50 bn to set up thermal and solar power projects in the next three years, according to chairman Yash Birla. Mr Birla said his group has floated a special purpose vehicle (SPV) — Birla Urja — to run the power business. Birla Power holds a 51 percent stake in the SPV, while the balance is with group companies. According to him, his group will set up 600 mw of thermal power plant capacity in Maharashtra and 125 mw solar power capacity in Andhra Pradesh, Rajasthan, Uttaranchal and Haryana. The investments in the power projects will have a debt-equity ratio of 70:30.

Solar energy players launch industry body

March 18, 2010. To help in policy development, awareness creation, as well as training and capacity building for solar energy is the main focus of Solar Thermal Federation of India (STFI). Subsequent to the launch of the Jawaharlal Nehru National Solar Mission, players who claim to control over 75 per cent of the market have come together to launch STFI, which will not only help expand solar water heating usage, but also promote applications beyond that.

NTPC, IOC plan JV for biodiesel, lubricants

March 18, 2010. India’s largest energy firms NTPC and Indian Oil Corp (IOC) will together explore the possibility of producing bio-diesel and manufacturing specialised lubricants for power plants. Both the companies confirmed the development. The two companies are also considering to set up a bio-diesel plant. IOC and NTPC are yet to formalise details of the projects. The Companies also plans to develop suitable technology to use biomass for power generation. These projects aim at building strong partnerships on environmental-friendly technologies.

Global

Chevron sets up test site for 7 solar technologies

March 22, 2010. Chevron Corp, the second-largest U.S. oil company, said it has installed some 7,700 solar panels at a California site to test various technologies that help turn sunlight into electricity. Project Brightfield, located in Bakersfield, California, will evaluate seven technologies: six panels that use thin-film, and one that uses crystalline-silicon photovoltaic technology, the company said. The race is on in the solar industry to find the most efficient and lowest-cost way to harness the sun's energy. The Chevron project, which sits where a company refinery used to, is expected to generate roughly 740 kilowatts of electricity, which will feed the local utility grid as well as Chevron's oil operations at the Kern River Field.

Iberdrola to build 400 MW Baltic offshore wind farm

March 22, 2010. Iberdrola Renovables has bought 100percent of the rights to build the Ventotec Ost 2 offshore wind complex in the German zone of the Baltic Sea.

The rights were purchased from a German joint venture comprising Deutsche Erneuerbare Energien GmbH and Ventotec GmbH. They were awarded the permit in 2007. The company is also involved in the development of several further offshore projects in Germany and has a pipeline of 2,300 MW in the United Kingdom.

Wind energy investment of $65 bn may curb fossil fuel use

March 22, 2010. China WindPower Group Ltd., Iberdrola SA and Duke Energy Corp. will lead development of an estimated $65 billion of wind-power plants this year that let utilities reduce their reliance on fossil fuels. The estimate assumes a 9 percent increase in global installations of wind turbines this year, adding as much as 41 gigawatts of generation capacity. That’s the equivalent of 34 new nuclear power stations. Utilities that built natural gas-fired generators during the last decade are increasingly erecting turbines and buying wind power from competitors, tapping a renewable-energy source as governments consider ways to penalize carbon-based fuels. While gas-fired plants are relatively cheap to build and pollute less than coal plants, they still emit carbon dioxide, which will carry higher costs if governments tighten environmental rules.

Egypt to host solar energy materials plant

March 21, 2010. Egypt has said it will be the home to a factory producing raw materials and gas used to generate solar energy, with $460m of investments in total. The new plant is expected to produce 3,000 tonnes of polysilicon annually, a key material in most solar cells, and 1,500 tonnes of a gas also used in the manufacture of cells. Egypt has been developing wind power along its eastern Red Sea coast, where it has wind farms at Zafarana and Hurghada, and has so far installed capacity of 430 MW of wind energy.

UK to launch $3 bn green investment bank

March 21, 2010. The Labour government will unveil a 2 billion pound ($3 billion) "green" investment bank in its budget to help Britain's transformation to a low carbon economy, a government source said. The green bank, designed to help finance projects such as railways, offshore wind power generation and eco-friendly waste management, will be half-funded from government asset sales with the remaining one billion pounds coming from the private sector. It is estimated that Britain needs well over 150 billion pounds to modernize its energy mix. It also has to meet climate change targets -- cutting greenhouse gas emissions by a third and sourcing 15 percent of its energy from renewables by 2020.

Britain's Conservatives propose carbon levy

March 19, 2010. A Conservative British government would impose a carbon tax on electricity generation, to create a clear incentive for long-term investment in renewable energies, the party said. Unveiling its energy strategy, the opposition Conservative party said it would reform an existing Climate Change Levy (CCL), imposing a levy instead on the carbon content of power production. Utilities would only have to pay the levy if the European carbon price fell below the level of the levy, which would thereby act as a floor price for carbon emissions in Britain.

U.K. Conservatives propose carbon floor to boost nuclear power

March 19, 2010. The U.K. could adopt measures including a carbon floor price and feed-in tariffs to promote nuclear and renewable energy under a plan outlined by the country’s main opposition party. A minimum price for carbon dioxide would “provide a reliable signal for investment in all forms of low carbon energy including nuclear power,” the Conservatives said in an energy policy green paper. Taxpayers shouldn’t be called on to subsidize cost overruns, they said.

Wind, solar energy IPOs may rise this year, Morgan Stanley says

March 19, 2010. Renewable energy companies may tap financial markets for more funds this year instead of looking to mergers with utilities as a way of funding expansion, said Morgan Stanley, manager of the most initial public offerings for the industry in 2009.

Morgan Stanley managed $2.85 billion in IPOs for wind, solar and biomass companies in 2009, surpassing the previous leader Credit Suisse Group AG, according to a study. Credit Suisse last year slipped to sixth with $539 million in IPOs, trailing UBS AG with $1.59 billion and Citigroup Inc. with $844 million.

European utilities may have to spend more than 1 trillion euros ($1.36 trillion) in the next decade to replace power stations, rebuild aging transmission networks and meet environmental targets, Citigroup estimates. Global investment in renewable energy fell 6 percent to $162 billion in 2009, New Energy Finance estimates.

Wind farm plans stir up storm over military radar

March 19, 2010. The U.S. military is growing increasingly concerned that proposed wind farms can disrupt or block radar designed to detect threats and protect America's skies, a problem that is stalling the alternative energy projects around the country.

A top U.S. general told Congress that federal agencies need to work better together on a formal vetting process for the wind projects to prevent them from being built where they will interfere with radar defences.

Canadian government 'hiding truth about climate change', report claims

March 18, 2010. Canada's climate researchers are being muzzled, their funding slashed, research stations closed, findings ignored and advice on the critical issue of the century unsought by Prime Minister Stephen Harper's government, according to a 40-page report by a coalition of 60 non-governmental organisations.

Climate change is not an abstract concept. It already results in the deaths of 300,000 people a year, virtually all in the world's poorest countries. Some 325 million people are being seriously affected, with economic losses averaging 125 billion dollars a year, according to "The Anatomy of a Silent Crisis", the first detailed look at climate change and the human impacts. Released last fall by the Geneva-based Global Humanitarian Forum, the report notes that these deaths and losses are not just from the rise in severe weather events but mainly from the gradual environmental degradation due to climate change.

Climate change cited as Mont. leases suspended

March 18, 2010. A federal judge in USA has approved a first-of-its-kind settlement requiring the government to suspend 38,000 acres of oil and gas leases in Montana so it can gauge how oil field activities contribute to climate change. At issue are the greenhouse gases emitted by drilling machinery and industry practices such as venting natural gas directly into the atmosphere.

Environmentalists — who sued when the Montana leases were sold in 2008 — argued the industry has allowed too much waste and uses inefficient technologies that could easily be updated. Under the deal approved by U.S. District Judge Donald Molloy in Missoula, the Bureau of Land Management will suspend the 61 leases in Montana within 90 days. They will have to go through a new round of environmental reviews before the suspensions can be lifted.

Pattern Energy acquires 283 MW Gulf Wind project

March 18, 2010. Pattern Energy Group LP has acquired the 283-megawatt (MW) Gulf Wind project from Babcock & Brown. Gulf Wind includes 118 wind turbines and is located on the Gulf Coast in Kenedy County, Texas. The project is in close proximity to transmission lines that allow for the efficient delivery of power to nearby markets. Pattern was formed as an independent company eight months ago and now has nearly 400 MW of premium wind projects in operation or under construction across North America, counting the addition of Gulf Wind.

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