MonitorsPublished on Sep 26, 2007
Energy News Monitor |Volume III, Issue 14
AN ORF CRM exclusive directly from USA

The 11th Commandment: ‘Thou Shall Have No Emission Caps?’

 

 

T

o the uninitiated, the inclusion of religious groups as witnesses in the hearing of the United States Senate Committee on Environment and Public Works may come as a surprise.  Surely God had nothing to do with global warming. But to the expert, finding agents of God in the policy-making tables of the US may be no surprise.  Policy making in the US has never been considered free from moral struggles between ‘good’ and ‘evil’ even of the concerned policy if of vital strategic importance such as its war on terror.

 

The moral struggle has now been extended to the US war on Kyoto Protocol.  Capitalizing on a clever mix of religion and politics, faith-based organizations have been called upon to endorse the US government stand by characterizing the emission caps prescribed by Kyoto Protocol as an ‘evil’ measure against the poor.  Faith based entities have been happy to oblige as this falls within their business of sorting out ‘good’ and ‘evil’ but there seems to be some confusion over what is ‘good ‘ and what is ‘evil’ as far as the poor are concerned. 

 

‘A Call to Truth, Prudence, and Protection of the Poor: An Evangelical Response to Global Warming’ by the Interfaith Stewardship Alliance (ISA) is endorsed by 113 evangelical and 19 non-evangelical leaders which includes experts in climate science and environmental economics.  It argues that human activity may only be a minor cause of global warming while solar or natural causes may be more important.  The paper says that that the impact of global warming is within the bounds of natural variability and that it has both harmful and beneficial effects because of which it is unlikely to become a catastrophe.  The paper categorically states that mandatory carbon emission targets will harm the world’s poor and calls instead for economic development in poor countries to enable to adapt them to whatever climate the future holds. 

 

On the other hand, ‘Climate Change: A Call to Action’ by the Evangelical Climate Change Initiative (ECI) endorsed by 86 evangelical leaders mostly Christian college presidents, mega church pastors and mission leaders asserts that increased atmospheric carbon dioxide is caused by human activities of burning coal, oil and natural gas.  It argues that current global warming is already causing extensive harm, and will become a catastrophe, especially for the poor, if ‘something’ is not done about it right now. 

  

Both camps justify their differing stands using the mandate from the Bible to ‘remember the poor’. The ISA argues that mandatory emission targets would sustain impoverishment of poor people in developing countries, as it would discourage the production and consumption of power and the use of cheap and abundant fossil fuels.  It asserts that the hundreds of billions of dollars it would cost the global economy to significantly reduce CO2 emissions would be of little or no use in reducing CO2 emissions.

 

The report uses the results Copenhagen Consensus initiative to make its case.  The Copenhagen Consensus sought the world’s best scholars to rank seventeen challenges facing humanity and as per their ranking, the three best investments for humanity were fighting communicable diseases, fighting malnutrition and hunger by providing micronutrients, and liberalizing trade, while the three worst investments all had to do with reducing CO2 emissions to mitigate global warming. 

 

Drawing from this ranking, the ISA report calls for electrifying the billion or more homes that use wood and dung as their chief fuels for heating and cooking to eliminate most of the 1.6 million premature deaths per year that the World Health Organization attributes to indoor smoke. It endorses the position of the Asia Pacific Partnership on Clean Development that sharing technology with rapidly growing economies like India and China would speed both their adoption of cleaner fuels and their economic development.  The report underscores the strong correlation between economic development and improved health and life expectancy to bring out the morality of the policy.

 

As per the report, it would be morally unconscionable to force the world’s developing countries to delay their climb out of poverty by denying them, as would any serious cuts in CO2 emissions, the cheap, abundant energy available from carbon fuels.  According to ISA, a morally preferable Climate Policy would help poorer countries to adapt to whatever temperature the future holds than by slowing their economic development, condemning them to additional generations of poverty and its attendant suffering, and depriving them of the wealth they need to triumph over any future catastrophe of global warming or the possibility of mitigating it.

 

On the other hand, the ECI paper argues that without government action to curb CO2 emissions poorer countries will be destroyed by the consequences of global warming such as rising sea levels, frequent heat waves, droughts and extreme weather events such as torrential rains and floods, increased tropical diseases in now temperate regions, hurricanes that are more intense and reduction in agricultural output.  The paper calls senators who endorse this stand to act on their belief in policy making.  The paper applauds steps taken by companies such as BP, Shell, General Electric, Cinergy, Duke Energy, and DuPont, which have ‘moved ahead of the pace of government action’ through innovative measures implemented within their companies in the U.S. and around the world. 

 

Some measures that the paper commends are energy efficiency, the use of renewable energy, low CO2 emitting technologies, and the purchase of hybrid vehicles. The paper argues that these efforts can be shown to save money, save energy, reduce global warming pollution as well as air pollution that harm human health, and eventually pay for the investments made. Though the ECI paper calls for government action to mitigate the effects of climate, it does not make any specific recommendation. On the other hand, the ISA paper strongly argues against mandating emission targets in line with the current US position on Kyoto Protocol. 

 

These reports by no means prove the influence of ‘faith-based’ entities on US policy making. Faith based organizations are just one among the many ‘interest groups’ that compete for government action in the pluralistic system of policy making in the US.  The demand for environmental protection and accessible energy provide a unique example of how a number of political actors balance competing calls for government action, whether addressing economic growth or promoting environmental collective action.  The fast growing evangelical movement convinced of the vital importance of ‘remembering the poor’ and ‘caring for the environment’ provides a solid core of popular support for government action to control global warming.

 

Background on the hearing before the United States Senate Committee on Environment and Public Works examining approaches in the Asia Pacific Partnership on Clean Development and Climate

 

The hearing before the United States Senate Committee on Environment and Public Works held in September examined the approaches embodied in the Asia Pacific Partnership on Clean Development and Climate announced on last year and launched in January 2006 by President Bush and the leaders of Australia, China, India, Japan and South Korea.  Presented as an alternative to the Kyoto Protocol, this initiative calls for an innovative public-private collaboration for addressing the interconnected challenges of assuring economic growth and development, poverty eradication, energy security, pollution reduction and mitigating climate change. 

 

Opening Statements included those of:

 

Sen. James M. Inhofe, of Oklahoma, Sen. Christopher S. Bond, of Missouri.Sen. Lisa Murkowski, of Alaska, Sen. James M. Jeffords, of Vermont, Sen. Joseph I. Lieberman, of Connecticut, Sen. Barbara Boxer, California, Sen. Thomas R. Carper, of Delaware, Sen. Frank Lautenberg, of New Jersey.

 

Witnesses included:

 

James L. Connaughton, Chairman Council on Environmental Quality, Bjorn Lomborg, Ph.D. and Adjunct Professor Copenhagen Consensus Center, Copenhagen Business School, David D. Doniger Policy Director, Climate Center, Natural Resources Defense Council; E. Calvin Beisner, Ph.D., Associate Professor of Historical Theology and Social Ethics, Knox Theological Seminary, Spokesman for the Interfaith Stewardship Alliance

 

The testimony of the Chairman of the White House Council on Environmental Quality Mr James L. Connaughton listed the merits of the proposal:  The Partnership’s six members represented about half the world’s economy, population, and energy use. Together they produced about 68 percent of the world’s coal, 61 percent of its cement, 50 percent of its net electricity generation, 54 percent of its steel, and 40 percent of its aluminum. Partner countries also emitted around 50 percent of the world’s carbon dioxide from burning fossil fuels. 

 

The Asia Pacific Partnership is ambitiously designed to work initially in eight major sectors to ‘share technologies and practices, open up markets and reduce barriers, to significantly increase investment in the best of today’s technologies and accelerate the development and use of the best technologies working their ways through public and private research’. The outcomes expected are to ‘achieve practical outcomes in the areas of: cleaner and lower carbon emission fossil power technology, renewable and distributed energy systems, power generation and transmission efficiency, steel, aluminum, cement, coal mining, and buildings and appliances.

 

 

 

 

 

 

 

Next Generation Vehicle and Fuels Technology

(Edited text of the statement of Alexander Karsner, Assistant Secretary Office of Energy Efficiency and Renewable Energy, DoE, USA before the Subcommittee on Energy and Air Quality Committee on Energy and Commerce, U.S. House of Representatives on May 24, 2006)

P

resident Bush mentioned in his State of the Union address this year, breaking the US national addiction to oil would be an important task for the USA.  Today, no sector of energy consumption is more in the spotlight than vehicles (cars and trucks), and the fuel that propels them. In the President’s Advanced Energy Initiative, a broad program for developing cleaner, cheaper, and more reliable alternative energy sources and technologies, vehicle and fuels initiatives hold a central place. The Department of Energy’s (DOE) has taken up research and development (R&D) programs in these areas, including technologies that will make a difference for today’s drivers, and those that can usher in a generational change. In general, the Department supports efforts that would reduce petroleum consumption both through improved efficiency of use and through substitution of domestic alternatives to petroleum, such as biomass derived ethanol.

Biofuels

Biomass is the predominant clean, renewable energy source that can make a short-term impact on diversifying the liquid transportation fuels, thereby reducing the dependency on imported oil. The President’s Biofuels Initiative aims to make cellulosic ethanol cost competitive by 2012. If successful, this research could lead to the production of biofuels equivalent to 30 percent of today’s gasoline consumption by 2030. The program’s research focus is in three areas: Feedstock Infrastructure, for reducing the cost of collecting and preparing raw biomass, and for the sustainable production and delivery of future energy crops; Platforms R&D, for reducing the cost of outputs and byproducts from biochemical and thermo chemical processes; and Utilization of Platform Outputs, for developing technologies and processes that utilize intermediates such as sugars and syngas to co-produce fuels, value added chemicals and materials, and heat and power. The program’s strategy is to integrate those technologies and processes in bio-refinery configurations that industry will validate at an industrial scale. Ultimately it is envisioned that the development of bio-refineries will produce transportation fuels along with value-added chemicals and materials, and/or power from non-conventional, low-cost feed-stocks such as agricultural and forest residues and other biomass. For the near-term, the program supports expansion of the existing biofuels industry by helping current producers become the early adopters of our advanced cellulosic conversion technology. The leveraging of the technology through the use of the existing plant and delivery infrastructure should enable earlier deployment. The deployment is supported by the current cost-shared projects, and it is planned to continue this support. Government’s focus has expanded in two important ways. The first is meeting the President’s objective of cost competitive cellulostic ethanol by 2012. The Department is accelerating research and development efforts to continue to reduce the barriers to cost effectiveness. Second, is to continue to work with industry to apply that research and reduce the capital, operating costs, and risks associated with these future facilities. Deployment may be initiated in the further expansion of the existing industry and through niche opportunities ultimately leading to sustainable bio-refineries.

EERE’s Biomass Program’s long-term focus is on further reducing the cost of producing domestic bio-fuels by continuing to develop advanced technologies to transform the Nation’s domestic biomass resources into affordable bio-fuels, bio-power, and high-value bio-products. Working with the U.S. Department of Agriculture (USDA), the program leads a multi-agency initiative that coordinates and accelerates all Federal bio-energy R&D in accordance with the Biomass Research and Development Act of 2000. The long-term objectives require the development of the feedstock and the associated infrastructure discussed by the USDA and DOE in their jointly published ‘Billion Ton Study’ report. It is anticipated that feedstock development will be the culmination of regional feedstock development efforts leading to cost effective collection and use of agricultural and forest residues as well as regionally indigenous energy crops, such as switch grass in the South Central region and willow in the Northeast.  Research efforts combined with limited, targeted demonstrations to further focus research efforts should continue to lower conversion costs leading to the growth of the bio-fuels industry.

Vehicle Technologies

The Department presently addresses near, middle and long-term vehicle technology outcomes with two cooperative Government/industry activities: the FreedomCAR and Fuel Partnership (where CAR stands for Cooperative Automotive Research) and the 21st Century Truck Partnership. The FreedomCAR and Fuel Partnership is a collaborative effort among the U.S. Council for Automotive Research, five energy companies, and DOE for research on advanced automotive technologies that may possess significant potential to reduce oil consumption. The National Research Council of the National Academies published a 2005 report on the research program of the partnership, describing it as ‘an extremely challenging program, whose ultimate vision involves a fundamental transformation of automotive technologies and the supporting fuel infrastructure’ The report went on to say that ‘the committee believes that research in support of this vision is justified by the potentially enormous beneficial impact for the nation.’ Activities in FreedomCAR focus on the technical challenges of advanced and high-efficiency vehicle technologies, such as fuel cells, advanced combustion engines and enabling fuels, hybrid and plug-in hybrid vehicle systems (including high-power and high-energy batteries, power electronics, and motors) and light weight materials. Hybrid technologies can lead to near-term oil savings when used in advanced combustion hybrid electric vehicles; they are also the foundation for the hydrogen fuel cell hybrid vehicles of tomorrow.

Advances in battery and other technologies can help accelerate development of ‘plug-in’ hybrid electric vehicles. It is anticipated that plug-in hybrid electric vehicles should look and perform much like regular cars, but have a high energy battery that can be charged from an electrical outlet. Plug-ins would run on the stored energy for much of a typical day's driving – depending on the size of the battery - up to 40 miles per charge, satisfying the daily commuting needs of many Americans. In fact, some analysts say that a 40-mile battery range would allow substitution of electricity for petroleum in up to two-thirds of all miles driven by average Americans. Most of the goods consumed today cover part of their journey by truck. The 21st Century Truck Partnership involves key members of the commercial highway vehicle industry such as truck equipment and engine manufacturers, along with three other Federal agencies. The R&D centers on improving the efficiency of large combustion engine and fuel systems, while reducing ‘parasitic’ losses (such as wind resistance and rolling resistance) to decrease the overall fuel consumption of highway freight transportation. Other activities focus on accelerating the adoption of alternative fuel and advanced technology vehicles, deployment of alternative fuel infrastructure, and expansion of advanced vehicle fleet evaluations to include plug-in hybrids. There are three activities -- regulatory and rulemaking support for the Energy Policy Acts of 1992 and 2005, alternative fuel and fleet activities, and Clean Cities -- that work to accelerate alternative fuel infrastructure installation. Clean Cities promotes deployment of vehicle technologies and alternative fuels that can reduce petroleum consumption. Advanced Vehicle Competitions provide educational opportunities for university students to learn and use real-world engineering skills while demonstrating the performance of advanced vehicle technologies. Near-term activities also include developing and deploying bio-fuels to displace petroleum. Depending on the results of a solicitation out right now, the total committed to E-85 deployment could reach $4.5 million. And each DOE dollar will be leveraged by cost-share from the private sector or state and local governments. Through ongoing discussions with automakers, the Department is encouraging increased production of flex Fuel vehicles. The Department is also working with the National Biodiesel Board to tighten fuel standards and to develop real-time fuel quality tests for biodiesel to enhance performance in advanced engines. Advanced catalysis research at the National Laboratories could enable more efficient diesel engines to replace gasoline engines in light duty vehicles without sacrificing air quality. In the mid-term, advanced combustion research seeks to use electronic controls and new fuel formulations to operate compression ignition engines in the zone between soot formation and nitrogen oxide formation. Research success in homogeneous charge compression ignition (HCCI) and other low temperature combustion regimes could result in passenger vehicles greater than 40 percent more fuel-efficient than today’s best gasoline cars. Additional gains are possible since advanced combustion engines will still generate waste heat. One of the most tantalizing research opportunities is the direct conversion of waste heat to electricity using solid state thermoelectric devices.

Research on hybrid electric vehicle (HEV) technologies (batteries, power electronics, motors), addresses reduced component cost, improved performance, and extended lifetimes. Efforts are being expanded to include technologies that would enable plug-in HEVs. Materials research emphasizes new processes to make raw carbon fiber cheaper, and allow carbon fiber parts to be manufactured at speeds appropriate for automotive mass production. Use of carbon fiber parts, along with magnesium, titanium and lightweight steel alloys would enable fabrication of lighter vehicles that use less fuel while maintaining occupant safety and comfort. A new process for recycling these vehicles in the pilot recycling facility at Argonne National Laboratory is also being examined. Research focused on advanced batteries, power electronics, motors and lightweight materials is essential for improved hybrid electric vehicles in the near- and mid-term as well as fuel cell hybrid electric vehicles in the long-term.

The Hydrogen Frontier

Hydrogen offers a strategy for long-term energy security and reduced emissions. Hydrogen is a transportation fuel that can be made from a variety of domestically available resources, while removing pollutants and carbon from the tailpipes of vehicles. The Department’s research explores pathways to manufacture and deliver hydrogen from fossil, nuclear and renewable resources.  Much progress has been made since 2003 when President Bush committed $1.2 billion over five years to accelerate hydrogen research. Since then, the Department’s program has been twice reviewed by the National Academies. In the latest review released last summer, the chair of the review committee said the program ‘is making significant headway’ and that ‘it could have an enormous beneficial impact on energy security and the U.S. economy.’ The hydrogen program is focused on research to overcome the technology barriers that would be a precondition to broad commercialization. Over three years, the ongoing research has contributed to reducing the high-volume cost of automotive fuel cells from $275 per kilowatt in 2002 to $110 per kilowatt in 2005. Further research and development are required to meet the ultimate cost target of $30 per kilowatt. In FY 2007, the Department will initiate new projects in several areas, including improved fuel cell membranes, cold-weather start-up and operation, and the effects of impurities on fuel cells. In addition to supporting fuel cell cost reduction, the durability target of 5,000 hours that equates to the vehicle lifetime required may also be achieved.

Hydrogen storage on board a vehicle to meet all performance and cost requirements is one of the most technically challenging barriers. The Department has a diverse portfolio through three Centers of Excellence as well as independent projects both in applied and basic science with a total of about 40 universities, 15 companies and 10 Federal laboratories. In just one year promising results have been observed with some completely new materials being developed in different areas such as metal hydrides, chemical hydrides, and carbon-based materials. Some of these materials can store 6 to 9 percent by weight of hydrogen. This is up from a maximum of 5.5 weight percent a year ago. Another step taken is to tailor these materials for storing and releasing hydrogen under practical temperature and pressure conditions. Further research breakthroughs on materials and systems engineering is required to meet the system target to provide consumers with a 300-mile driving range. The Department’s basic research is carefully coordinated with our applied research in materials development for hydrogen storage. Transition scenarios on how the Nation might initiate hydrogen production and delivery infrastructure investment may be made during the early years of potential vehicle market penetration and growth is also being analysed. Working with nuclear and basic science offices, revolutionary approaches to hydrogen production are pursued. For example, heat from nuclear reactors or solar energy can be used to split water into hydrogen and oxygen. This approach involves thermo-chemical cycles that are still under development. Other high risk, high pay-off production approaches also involve harnessing the huge potential resource of solar energy. Working with the DOE Office of Science, a ‘photobiological’ hydrogen production where microorganisms produce hydrogen and ‘photoelectrochemical’ hydrogen production where solid-state devices use photon energy to convert water into hydrogen and oxygen are being studied.

In the coal-based hydrogen program, the plan is to scale up membrane reactors for separating hydrogen gas and carbon dioxide streams. This research is closely coordinated with the FutureGen effort to create the world’s first near zero-emission fossil fuel plant by using clean coal technology and sequestering of greenhouse gas emissions. In the nuclear-based hydrogen program, the assembly and preliminary testing of a laboratory system to demonstrate hydrogen production by using nuclear heat to drive chemical cycles that split water to produce hydrogen and oxygen will be tested. In another approach, hydrogen production from a higher temperature electrolysis system that can be more efficient than electrolyzers used today in standard industry practice is to be demonstrated. Through cost-shared partnerships with the automotive and energy industries, four teams are installing hydrogen refueling stations and putting cars on the road to test the technology in real world conditions as part of the Department’s Learning Demonstration. Data collected on vehicle performance, durability and fuel economy is feeding back into the research program to ensure the research is focused on the most relevant problems. The manufacturing research and development effort is new in FY 2007 and will address the need for high-volume manufacturing processes for components like fuel cells that are currently hand-built. These processes are important to lowering the costs of fuel cells and to developing a supplier base. Establishing an early supply base for fuel cell applications such as portable, stationary, remote and emergency backup power lays the groundwork for much larger supply chains needed for automotive applications. In January, Secretary Bodman released a draft roadmap for public comment on manufacturing research for the hydrogen economy. This roadmap is being finalized and will be the foundation for executing this important research. Investments are not only occurring in the Federal Government but also at the state and local level. These diverse investments increase the probability of success in solving technology barriers that would enable industry to make fuel cell vehicles that consumers will want to buy and to invest in hydrogen refueling infrastructure that is profitable. These investments can ultimately help displace demand for oil and reduce greenhouse gas emissions.

Conclusion

America’s pathway to a secure energy future will be composed of a variety of invaluable components, from making today’s internal combustion engines more efficient to developing home-grown biofuels, plugging in our cars, and harnessing the renewable, pollution-free potential of hydrogen. Working with partners in the academic community, National Labs, and in private industry, research dollars are being invested in the most promising areas to address critical technical barriers.

NEWS BRIEF

NATIONAL

OIL & GAS

Upstream

 

Norwegian help for oil extraction

 

September 23, 2006. ONGC has joined hands with the National Geophysical Research Institute (NGRI) and Norwegian University of Science and Technology, Trondheim, Norway, to carry out collaborative work to improve secondary recovery of oil from Indian oilfields operated by ONGC. To materialise this, ONGC signed a memorandum of understanding with NGRI and the Norwegian University recently. The MoU is unique as this is the first Indo-Norwegian collaboration agreement. The average oil recovery rate in India, which is about 25 per cent, is much lower than Norway’s which is more than 60 per cent. This is a move to increase production from low-producing Indian oil fields using advanced techniques. Besides, the agreement facilitates a set of project activities on reservoir modeling for enhanced oil recovery using 4-D seismic through the Indo-Norwegian programme of cooperation.

 

ONGC, Sinopec bag Colombian co for $850 mn

 

September 22, 2006. ONGC’s overseas investment arm, OVL, and Chinese oil and petrochem major Sinopec’s subsidiary, Sinopec International Petroleum Exploration and Production Corporation (SIPC), have acquired Omimex de Colombia from Texas-based Omimex Resources. The stake was acquired for $850 mn. The two partners will pump in $425 mn each for the acquisition. This is second instance after Syria, where Indian and Chinese oil companies have together given other majors a run for their money. Omimex Resources, which owns 100 per cent of Omimex de Colombia, is a privately held oil & gas exploration and production company with operations in the US, Canada and Colombia. OVL was advised by UBS Investment Bank, SIPC by Citigroup Global Markets and Omimex Resources by Scotia Waterous in the deal. Omimex has oil & gas operations exclusively in Colombia. These include onshore production and exploration areas with gross proved reserves of more than 300 m barrels of oil and current daily production at about 20,000 barrels. Omimex’s assets constitute a 100 per cent interest in the light oil Velasquez fee mineral property and a 50 per cent interest in the Nare and Cocorna association contracts where the Colombian national oil company, Ecopetrol, holds 50 per cent. Omimex also owns 100 per cent of the Velasquez-Galan pipeline, which runs 189 km from the Velasquez property to Ecopetrol’s Barrancabermeja refinery. The total production of the target company — Omimex de Colombia — is 1 m tonne per annum. Since OVL has a 50 per cent stake in the JV, this should add 0.5 m tonne to OVL’s annual production.

 

MRPL to evacuate crude from Barmer

 

September 20, 2006. MRPL, a government nominee for offtake of crude from RJ-ON-90/1 field in Barmer, Rajasthan, has taken several steps to evacuate crude from Aishwarya, Mangla, Saraswati and Raageshwari fields. SECON Pvt. Ltd is carrying out survey and acquisition activities and securing right of use for a pipeline from Barmer to Mundra/Kandla. Work is expected to be completed by June 2007. Engineers India Ltd is preparing detailed feasibility reports for the requisite pipeline configuration commensurate with crude quality and the thermal insulation for the pipeline along with pumping stations having heating facilities.

 

Gas reserves may exceed 50 tcf : Reliance

 

September 20, 2006.  India's Reliance Industries said that its natural gas reserves could exceed 50 trillion cubic feet (tcf) and that it was hoping to start up a new refinery six months earlier than planned. Reliance said that one of Reliance's discoveries at a site could yield 1 billion barrels of oil. Reliance made one of the world's largest gas finds at the Krishna Godavari (KG) basin in 2002. Previously, the KG find was estimated to contain 35 tcf. Reliance is also targeting commercial coal bed methane production in 2008. The company also hoped to enter Iraq "at the appropriate time" either on its own or with partners.

Downstream

 

Reliance plans $6 bn refinery expansion

 

September 25, 2006.  India’s largest conglomerate is pinning its hopes on an Arabian Sea coast Jamnagar oil refinery, poised to become the world’s largest, to catapult it and the country to industrial giant status. The sprawling facility in Gujarat state, which opened in December 1999, occupies 30 square kilometres – one-third the size of Manhattan – and has helped move India from being a net importer of refined petroleum product to an exporter. Reliance is set to invest a further $6 bn in the refinery in a bid to double its output.

 

OIL to pick 25 pc in HPCL’s Bathinda refinery

 

September 22, 2006. HPCL is set to rope in domestic exploration firm Oil India Ltd as its new joint venture partner for the proposed Rs 17,934.61 crore ($3.89 bn) Bathinda refinery-cum- pipeline project. HPCL has offered 25 per cent stake to OIL in the 9-million-tonne-per-annum refinery. A 25 per cent stake will mean an equity investment of Rs 1,500 crore ($325 mn) by OIL in the project to be funded through a debt-equity mix of 2:1. The refinery is estimated to cost Rs 14,144 crore ($3.07 bn). HPCL has planned a 1,011-km crude oil pipeline from the Mundra port in Gujarat to the inland refinery location at Bathinda in Punjab that is expected to cost Rs 3,790 crore ($822 mn). OIL has constituted a committee of experts to carry out technical, market and financial due diligence of the proposal.

 

OIL’s proposed move to foray into the refining business comes at a time when the government has not taken kindly to state-owned exploration major ONGC’s overtures to diversify in areas other than its core business of oil and gas exploration. Unlike other state-owned refineries, the Bathinda refinery has been configured to process both heavy and sour crude. Like Reliance Industries’ Jamnagar refinery, this, too, will have the flexibility to cater for variations in crude availability and product demand in the short-term.

 

Essar brings crude to fire up refinery next month

 

September 22, 2006.  Gujarat has come one step closer to becoming a global refining hub, with the Ruias-promoted Essar Oil importing the first cargo of crude to fire up its 10.5 mt refinery in the state by the end of October or early November. The company started unloading the cargo of one million barrels at Vadinar. The cargo consists of Saharan blend sweet crude imported from Algeria. The company is getting another cargo of one-million barrels of Dubai light next week from Vitol. The cargoes now set the stage for trial runs to begin.

 

The refinery will initially produce 7 mt of petrol and diesel only. The plant will reach its full capacity by March next year. The company will focus on exporting its products as domestic sale is a loss-making proposition for private retailers due to the artificially low price set by the government. The refinery is designed to process various grades of crude which will allow flexibility in operations and crude procurement. The refinery will bring on stream the various units to extract byproducts in stages. The refinery will produce motor fuels conforming to Euro-III and Euro-IV category.

 

RIL, Chevron weigh fuel retail outlets in E Europe

 

September 20, 2006.  The two oil majors, Reliance Industries (RIL) and Chevron, are planning to move on to the retail fuel market options of setting up retail outlets in the East European and African markets which are rich in crude oil but have to depend on imported products to meet their demand. Most of the African nations, which are oil-rich, lack basic infrastructure like refineries and pipelines. RIL and Chevron, which had planned to expand their partnership in other related areas in the hydrocarbon chain, see this as a natural extension of their business. While higher grades of petrol and other auto fuels from the new refinery at Jamnagar are expected to be exported to the US markets where it would be sold at the Chevron retail markets, part of the fuel produced at the existing refinery is likely to be marketed in the African and East European markets. The idea for the duo is to enter new retail markets where neither Chevron nor RIL has any retail play. So, while RIL will continue to be only a bulk supplier for Chevron’s retail market in the US, it will operate its retail outlets in India on its own. The two will, however, draw up joint retail plans which may include co-branding and co-marketing in the new markets.  

Transportation / Distribution / Trade

 

Dahej-Uran pipeline project to Chinese-led consortium

 

September 26, 2006. Chinese companies seem all set to tap gas pipeline projects in the country. After winning in the international bidding process of Reliance Industries Ltd (RIL), China has emerged a winner once again for a key project of State-owned GAIL (India) Ltd. A consortium led by the Chinese company DQE has been awarded work for Spread-II of GAIL's Dahej-Uran pipeline project (DUPL). Earlier, China Petroleum Pipeline Engineering Corporation had been awarded the project to lay the east-west and east-north pipelines of RIL, which will carry gas from the KG Basin to the western and northern markets. The work for Spread-II of DUPL, for the 147-km Jalalpur (Gujarat)-Bhoirpada (Maharashtra) stretch, was awarded middle of this year at a cost of Rs 129.88 crore ($28 mn) to DQE-Essar. The estimated project cost of DUPL is Rs 1,830 crore ($398 mn). With the completion of the DUPL project, the Maharashtra market will benefit the most. The inter-state gas pipeline would link the two important gas markets of Gujarat and Maharashtra. The 474-km long DUPL pipeline will have a capacity of 12 million standard cubic metre per day of gas.

GAIL to invest $1.28 bn in national gas grid

 

September 25, 2006. State-run GAIL (India) Ltd has submitted a Rs 58.87 bn plan to lay a nationwide gas grid over the next five years. The company recently submitted plans to the Petroleum Ministry to lay within next five years eight trunk lines. The trunk lines proposed include Auriya-Jagdishpur- Haldia pipeline, Dadri-Nagal line, Kakinada-Hyderabad, Bangalore-Kochi and Bangalore-Chennai line, Myanmar-Mizoram- Assam-Bihar pipeline, Kolkata-Kakinada-Chennai line and Dabhol-Bangalore-Kochi line. Petroleum Ministry wants GAIL to first tie- up gas supplies and downstream customers before beginning work on the pipeline projects. GAIL says the grid would supply natural gas to West Bengal, Bihar and Orissa, along with industries near Bangalore, Chennai, Cochin and Hyderabad. The company was talking to Reliance Industries, Oil and Natural Gas Corp (ONGC), Gujarat State Petroleum Corp (GSPC) and Cairn Energy to transport gas found in Bay of Bengal to markets in the north and west.

 

Petronet to offer up to 30 pc equity to world gas firms

 

September 25, 2006. Gas majors of Oman, Qatar and Algeria may soon come on board Petronet LNG Ltd, which is open to offering them equity up to 30 per cent in lieu of long-term LNG supplies. Talks with Oman Oil company are in an advanced stage and preliminary discussions are also on with Rasgas of Qatar and Sonatarch of Algeria. PLL has offered 5 per cent-15 per cent stake to companies offering anywhere between one and five mtpa of LNG under a long-term contract. The quantum and price of LNG will be the two main guiding factors. PLL currently needs Rs 4,000 crore ($0.87 bn) for expanding its LNG terminals at Dahej and Kochi.

 

IOC, Reliance in talks for gas distribution

 

September 23, 2006. Indian Oil Corporation (IOC) is in negotiations with Reliance Industries (RIL) to source Krishna-Godavari basin gas for city gas distribution (CGD) projects. Both companies are expected to form separate joint venture (JV) companies to undertake different CGD projects across various cities in India. IOC has already set up a joint venture company with GAIL for city gas distribution. Apart from CGD, IOC is also planning to enter into shipping business. IOC has lined up capex of Rs 8,000 crore ($1.74 bn) for the current fiscal, most of which will be spent on refinery upgradation and petrochemical projects. With the softening of international crude oil prices below $60 a barrel, the company expects to cut down its under recoveries from Rs 2,000 crore ($436 mn) per month to around Rs 1,000 crore ($218 mn) a month. IOC’s refinery margins for the current quarter averaged around $6. The company is optimistic of implementing the 5 per cent of mandatory blending of ethanol with petrol from the third quarter of the current fiscal.

Policy / Performance

 

Poor diplomacy hits ONGC Kazakh deal

 

September 26, 2006. India’s oil diplomacy seems to be losing sheen with the Kazakhstan government now offering only a minority 30-35 per cent stake in the Satpayev block in Caspian sea against the earlier 50 per cent. The Kazhaks had offered India a 50 per cent stake in the Satpayev block on nomination basis during a government-to-government dialogue last year. However, indications are that Kazakh’s national oil and gas company, KazMunaiGaz (KMG), will now offer only a minority stake to the joint venture of ONGC and LN Mittal, ONGC Mittal Energy Ltd. Clearly, what was conceived as a lucrative deal for ONGC under bilateral talks between the two countries, is finally turning out to be a commercial transaction, wherein ONGC may end up paying a high transaction fee together with a hefty exploration bonus. OVL is using the good offices of Mittal, who has a big presence in Kazakhstan, to get the best commercial terms for purchasing a stake in the block. This will be India’s first venture in Kazakhstan, which is Central Asia’s largest producer of oil and gas.

 

DGH rules out single regulator for oil sector

 

September 25, 2006. The directorate general of hydrocarbons (DGH) disfavoured a single regulator for the entire oil sector, arguing that the regulatory mechanisms for both downstream and upstream would be enough to address various issues. The Planning Commission has, in its integrated energy policy, recommended an independent oil regulator to ensure a level-playing field, besides regulating LPG prices on a cost plus basis. At present, the directorate general hydrocarbons acts as a regulator for the upstream sector while a regulator for the downstream sector has been proposed by the government. The proposed downstream regulator will cater to the gas sector as well.

 

India, Pakistan need more than two pipeline schemes: ADB

 

September 23, 2006. India and Pakistan may require more than two pipeline schemes for importing gas from countries like Iran, Turkmenistan, Qatar and Oman as the demand in the two nations is slated to increase to 50 billion cubic meters in the long term. It said that the $7 bn scheme to pipe natural gas from Iran to Pakistan and India is gaining momentum and with long-term gas demand from India and Pakistan estimated at 50 bcm a year, there was a need for more pipelines. It is of the view that the proposed $3.3 bn pipeline project to carry gas from Turkmenistan to India and Pakistan would be lower than expected. It said that India already imports gas and demand will soar in the next decade while Pakistan, with its own reserves declining, is expected to begin importing gas after 2008.

 

‘Oil block risk to be factored in’: MoPNG

 

September 23, 2006. In an attempt to expedite exploitation of reserves and to attract foreign firms with latest technical skills, the ministry of petroleum and natural gas is planning changes in the policy for award of exploration acreages to oil companies. The ministry said that instead of having uniform bid evaluation criteria for all blocks (deep sea, shallow water and onland), there should be separate categorisation of blocks based on risk involved.

 

‘Opaque pricing root of the petro problem’: NCAER

 

September 23, 2006. The latest report of think-tank NCAER titled ‘Trouble in oily waters’ has suggested that the government move back to the single import duty rate for crude as well as petroleum products. Seeking transparency, NCAER said the government uses “extremely opaque” pricing mechanisms. As a result the consumer, at least, has no way of knowing how exactly petro products are priced, especially the amount paid to oil marketing companies as ‘international oil parity price’. The report said that the international oil price parity formula assumes all crude is procured at international prices, even 30 per cent crude which is domestically produced by Oil and Natural Gas Corp (ONGC). This swells ONGC’s coffers artificially and hides its inefficiencies, the report said. The web of cross subsidies also can be comprehended fully by only a few, the report remarked. Asserting that petro products were heavily taxed in India, NCAER said that taxes were much lower in the US, while they were comparable in the European Union countries. Import duties were lowered last year under pressure from Left parties.

 

India, China, S-Korea in race for Myanmar gas

 

September 22, 2006. India is pitted against China, South Korea and Thailand in the race to secure a huge gas field found in offshore Myanmar. While India, China and Thailand had proposed to lay pipelines to their respective countries for transporting gas from the Shwe gas field in Bay of Bengal, South Korea had proposed to liquefy it and transport it in form of liquefied natural gas (LNG). New Delhi has proposed to lay a 1,400-km India-Myanmar pipeline, originating from Sittwe (Akyab) in Myanmar and entering India through Mizoram. It will pass through Aizawl, Dispur and Guwahati in Assam and Shiliguri in West Bengal to join the Jagdishpur-Haldia pipeline at Gaya in Bihar. China on the other hand proposed to lay a 2,380-km long pipeline originating from Kyaukphyu in Myanmar and terminating at Ruili in China’s Yunan province after passing through Pagun Tuywintanuag and Mandalay. Thailand has proposed a 1,100-km pipeline. Myanmar is looking for a buyer that will pay the maximum price for the gas found in Block A-1 and in the adjacent A-3 block.

 

Energy security at risk as oil nations act tough

 

September 22, 2006. Iran isn’t the only oil producing country making use of its newfound bargaining power. Oil exporting countries are using their new-found muscle to negotiate more favourable deals with foreign oil companies operating their reserves. This trend towards resource nationalism could threaten India’s quest for oil security. Indian companies like ONGC Videsh and Reliance are increasingly moving overseas in quest for oil. India had her own share of troubles in concluding the natural gas deal with Iran.

 

Recently, Russia’s ministry of natural resources withdrew the environmental clearance for an LNG project — Sakhalin II. This means that the Shell-led consortium will be unable to execute plans to build the LNG plant and puts supply contracts with the US, Korea and Japan in a jeopardy. Russians feel that many of the oil deals concluded in the mid-1990s served Western interests more than theirs, and they feel that earlier losses need to be reversed. ONGC Videsh is involved with Sakhalin I, a nearby oil production project that accounted for almost a third of the company’s oil production in ’05-06. In May ’06, the president of Bolivia ordered troops to seize the country’s gas fields. Bolivia had privatised its natural gas sector in the mid-1990s, after which the country’s gas reserves shot up from 3.8 trillion cubic feet to 26 tcf. Venezuela, which has amongst the largest oil reserves globally, had also invited a number of foreign companies in the petroleum sector in the 1990s. International oil majors such as Chevron, BP, Total and Repsol-YPF entered into operating service agreements (OSA). In ’01, the country passed a new set of laws governing the hydrocarbon sector, which superseded the old laws and raised the royalty and tax rates for the foreign operators. The foreign operators also had to convert OSAs into joint ventures with the state-owned oil companies. Unlike Russia, where the issue is mostly commercial, Venezuela is also using oil as a political tool. The African state of Chad is also embroiled in a similar tussle to get better terms from a Chevron-Petronas consortium producing oil in that country. One reason for the bickering is that because of higher oil prices, there is more to fight over. Secondly, many of these contracts had been negotiated in the 1990s, when oil prices were lower and these countries were in need of cash. Their bargaining position has strengthened considerably since. The spike in oil prices also means there are many more billion to fight over. This bickering could hurt India’s quest for energy security. India’s two oil majors, ONGC and Reliance, are increasingly venturing overseas in search for exploration acreage.

 

PSU oil firms to anchor petrochem investment areas

 

September 21, 2006. The government has decided to set petrochemicals, petroleum and chemicals investment regions (PCPIRs) for oil companies. The government has decided to rope in public sector oil companies to anchor the proposed investments in the country. Companies like Oil and Natural Gas Corporation (ONGC), Indian Oil (IOCL), Hindustan Petroleum (HPCL), Bharat Petroleum (BPCL) and Gail could take a lead in the seven zones identified by the government. The move to identify the locations for setting up PCPIRs, is mainly for the export market. According to the draft policy, the anchor tenant has to be a refinery or a petrochemical feedstock unit. ONGC is likely to anchor the PCPIR to be set up in Mangalore (Karnataka) and Dahej (Gujarat). Similarly, IOC is expected to anchor the proposed PCPIRs in Paradeep (Orissa), Panipat (Haryana) and Haldia (West Bengal). HPCL could be the lead developer at Vizag (Andhra Pradesh), while BPCL or GAIL could work out the Kochi (Kerala) project. The government is planning to invest around Rs 3,000 crore to Rs 5,000 crore ($654 mn-1.09 bn) to develop each of the regions. The petrochemical hubs would be set up in area of 250 square km and 40 per cent of it have to be the minimum processing area. The government has appointed Mott McDonalds as the advisors to the process.

POWER

Generation

 

Orissa to become power hub

 

September 26, 2006. The Orissa Government signed memorandums of understanding with different companies for setting up 10 thermal power plants in the State. The 10 coal-fired thermal power plants will be set up with an investment of Rs 45,000 crore ($9.79 bn) to produce 10,920 MW power.

 

According to the MoUs, Tata Power will set up a 1,000 MW coal-fired plant in Cuttack district at a cost of R. 4,348 crore ($0.95 bn). Visa Power will also set up a 1,000 MW power plant in Cuttack district at a cost of Rs 3,698 crore ($804 mn). Monnet Ispat and Energy Ltd will set up a 600 MW plant in Angul district with an investment of Rs 2,852 crore ($620 mn). The Lanco Group will set up a 1,320 MW plant in Dhenkanal district with an investment of Rs 4,200 crore ($914 mn). KVK Nilachal will set up a 600 MW plant in Cuttack district with an investment of Rs 2,580 crore ($561 mn); Calcutta Electricity Supply Corporation will set up a 1,000 MW plant in Dhenkanal district with an investment of Rs 4,042.61 crore ($879 mn); Essar Power will set up a 1,000 MW plant in Angul district with an investment of Rs 4,602 crore ($1 bn); Jindal Photo Ltd will set up a 1,000 MW plant in Angul district with an investment of Rs 4,525 crore ($0.98 bn); Bhusan Energy will set up a 1,000 MW plant in Angul district with an investment of Rs 8,483 crore ($1.85 bn); and Sterlite Energy will set up a 2,400 MW plant in Dhenkanal with an investment of Rs 7,481 crore ($1.63 bn).

 

The Government, however, did not sign the agreement with Reliance Energy Ltd. With the 10 MoUs Orissa was set to become the country's powerhouse. These plants will create direct employment for 10,000 persons and indirect employment for another 20,000.

 

NCL to set up 2 power plants

 

September 24, 2006.  Northern Coalfields Ltd (NCL), a subsidiary of Coal India Ltd (CIL), has initiated talks with Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd (UPRVUNL) and Neyveli Lignite Corporation (NLC) for setting up two power plants of 1,000 MW each in joint venture at an investment of Rs 9,000 crore ($1.97 bn). UPRVUNL has already given its consent for entering into joint venture with NCL. Two power plants having a capacity of 1,000 MW each would require an investment of Rs 4,500 crore ($0.98 bn) each. NLC would have 30 per cent equity in both the plants.

 

Adani group outlines plans for power SEZ in Mundra

 

September 22, 2006. The Adani Group has plans to set up a power SEZ in Mundra. Initially, the SEZ will not be a part of the proposed multi-product SEZ that the group is setting up in Mundra. The group had approached the government for necessary approvals. Adani Power, a wholly-owned subsidiary of Adani Exports is going to set up a 1,200 MW power project at Mundra. 

 

NPCL, APGenco set to develop nuke plant

 

September 21, 2006. APGenco and the Nuclear Power Corporation Ltd (NPCL) have entered into an alliance for the development of a 2,000-MW nuclear power plant in Andhra Pradesh. This is for the first time that NPCL has preferred to join hands with a state utility to pursue its plan. This is close on the heels of state-run NTPC’s plan to form a joint venture with NPCL to set up a nuclear power project.

As a beginning, APGenco, on behalf of NPCL, has invited tenders to conduct geological and geo-technical investigations for the upcoming nuclear power plant at Kovvada village in Srikakulam district. A preliminary report about the nuclear power plant was completed five years ago, and if the current advanced survey finds the place suitable for the project, it would go to the next stage of land acquisition. 

Transmission / Distribution / Trade

 

Ukrainian firm lands Bharat Coking deal

 

September 26, 2006. Engineering Plant (DEP), a Ukrainian firm, has pipped Chinese mining major China Coal Overseas Development Corporation (Codco) in the race for one of the biggest mining contracts from Bharat Coking Coal (BCCL) in Jharkhand. The project involves mining a section of reserves at Munidih mines in Jharkhand. The total contract value may be a shade above Rs 300 crore ($65 mn). Capital investment for the project is envisaged at Rs 100-110 crore ($21-23.9 mn). DEP would extract about 4m tonnes of coking coal from Top Seam 16 at Munidih over a period of six years. Coal extracted by the foreign company will be supplied to SAIL for further use.

 

Ratnagiri Gas allowed to sell power to Maharashtra

 

September 26, 2006. The Central Electricity Regulatory Commission (CERC) allowed Ratnagiri Gas and Power Pvt Ltd (RGPPL), the new owner of the Dabhol power project, to sell electricity to Maharashtra from October till March 2007. The CERC permitted RGPPL to enter into an agreement for selling power to Maharashtra State Electricity Distribution Company Ltd (MSEDCL) in case the State utility was willing to buy electricity generated using naphtha as fuel. However, the Commission did not fix any tariff as it observed that RGPPL's proposal was a stopgap arrangement for sale of power and the plant was yet to start commercial generation.

 

ONGC, PowerGrid to share risks in Tripura power project

 

September 25, 2006. Oil & Natural Gas Corporation and PowerGrid Corporation are making headways for the laying of transmission network for the proposed 740 MW gas-based project at Pallatana, Tripura. The two will soon start talks on sharing risk involved in laying transmission network. The project with an estimated cost of Rs 1,990 crore ($434 mn), is expected to be commissioned by 2009. ONGC will execute the generation project while transmission project would be undertaken by SPV.

 

The PowerGrid Corporation has also approached the finance ministry with a plea that the PSU should be exempted from the guidelines regarding formulation, appraisal and approval of public-private partnership projects (PPPPs). The state-run power company entered into an MoU with ONGC/IL&FS, Essar Power, Torrent Group, Jaiprakash Group and Countrywide Power Transmission for setting up dedicated transmission systems through JVs.

 

TELK sees tie-up with NTPC as lifeline

 

September 22, 2006. Transformers and Electricals Kerala Limited (TELK), the state-owned public sector company, will soon enter into a strategic tie up with the National Thermal Power Corporation (NTPC) in order to set up a world-class transformer manufacturing facility.  A memorandum of understanding for the tie-up would be signed soon. The Kerala government has given its green signal to the new venture as it is very keen to bail out the ailing public sector company, which commenced operations in 1963. 

 

CCEA approves NE power project

 

September 21, 2006. The Cabinet Committee on Economic Affairs (CCEA) approved a Rs 975.96-crore ($213 mn) project to strengthen power lines in north eastern region. The approval for Eastern Region Strengthening Scheme-I of Power Grid Corporation of India. The project would be completed within 36 months. Besides benefiting the constituents of the Eastern Region, the transmission project would facilitate transfer of surplus power from Eastern part of the Eastern Region grid to the central areas from where it would get further transmitted through the existing transmission system.

Policy / Performance

 

Jharkhand likely to get ultra mega project

 

September 26, 2006. Even as the debate on the viability of the ultra mega power projects of 4,000 MW each continues, their count is likely to go up to nine, with Jharkhand joining the list of states interested in the projects. The power ministry is looking for a site for a coal pithead project in the state. The Central Electricity Authority has been instructed to identify a site in Jharkhand and Tamil Nadu. The power ministry feels that Jharkhand can offer an ideal location for such a project in terms of coal and water linkages and land allocation. The coal ministry had earlier suggested that the ultra mega power projects be set up in Orissa and Jharkhand, where coal is abundantly available. 

 

Each state will have 2 ultra mega power units

 

September 26, 2006. The government is working towards a plan where each state may have two ultra mega power plants. Though concrete progress has been made on only two- Sasan and Mundra. The power purchase agreement (PPA) for the Sasan and Mundra ultra mega power projects will be signed early in October, power ministry said. The ministry is of the view that "fiscal concessions are required for the projects must be given." The first of the ultra mega power projects are expected to be commissioned in ’12. At present, the government is concentrating on awarding the Sasan (Madhya Pradesh) and Mundra (Gujarat) projects by the end of the year. Next in line are the projects in the Ib Valley (Orissa) and Krishnapatnam in Andhra Pradesh. However, the Akaltara ultra mega power project in Chattisgarh, which among the initial four to be developed has been abandoned. The state had demanded for free power on lines of the hydro projects.

 

Hydro-power units to help in local development

 

September 25, 2006. Beginning with the recent Memorandums of Understanding (MoUs) between Arunachal Pradesh and the three Central power generating PSUs (NHPC, NTPC and Neepco) for generating 15,000 MW hydro-electricity, the government has decided that every hydro power developer in states would have to contribute one paise per unit of electricity generated towards setting up a special fund for local area development. The decision will be applicable in all states, including Arunachal Pradesh, Sikkim, Himachal Pradesh, Uttaranchal and Jammu and Kashmir. This amount would be in addition to the 12 per cent free power given to states where the project is located for development activities. The ministry of power is promoting hydroelectric plants as these projects are cheaper than those based on coal or gas and also environment-friendly. India has a total potential to generate 1,50,000 MW of hydro-electric power, but the country has so far tapped just about 33,000 MW.

 

Ministry ropes in CEA to prepare safety norms for power projects

 

September 25, 2006. The Centre is planning to do away with the existing multi-level ‘inspection raj’ applicable for safety norms. The power ministry may consider the option of deploying private agencies to carry out the inspection of power plants, but with a rider that there would not be any compromise on safety principle. The power ministry has directed the Central Electricity Authority (CEA) to specify regulations pertaining to safety and electricity supply soon in order to avoid delays and inconvenience in the development of projects. It has held discussions with state governments to find out ways to ensure compliance with safety measures to be specified by the CEA. Some states have suggested that competent private parties should be accredited for discharging the functions of electrical inspectors in order to downsize the government and to curb delays and corruption. The move is significant in the present context, with state governments putting in place different mechanisms for safety-related inspections.

 

Panel clears 20 mt coal linkage for power units

 

September 23, 2006. The coal linkage committee approved monthly coal linkage of more than 20 mt for power utilities and captive power plants (CPPs). The linkage has been granted for the October-December quarter at a time all utilities are facing acute coal shortage and have to resort to imports as a short term measure to meet requirements. Of the 20 mt, as much as 9 mt has been approved for the power plants of National Thermal Power Corporation (NTPC), 2.75 mt for Maharashtra State Power Generation Company, 1.5 mt for the unbundled Gujarat Electricity Board, 1 mt each for Tamil Nadu Electricity Board, Punjab State Electricity Board and Rajasthan. The Haryana State Electricity Board has been granted 0.8 mt. Nearly 2.5 mt of coal linkage for 80 captive power plants have also been approved.

 

State boards pitch for coal regulatory body

 

September 20, 2006. In an attempt to clinch better deal, a large number of state electricity boards (SEBs) and their unbundled entities have made a fresh appeal to the power ministry to set up a coal regulatory authority. According to the Chhattisgarh state electricity board (CSEB) such an authority would provide proper control over the increasing price of coal in a changed scenario, which often is not totally linked up with the rise in cost of inputs but to the irrational approach and unbridled monopolistic attitude of the Coal India Ltd (CIL) and its subsidiaries. The board has sought the power ministry’s intervention in organising a meeting of all power utilities, including state, private and captive mine owners, to get suggestions and feedback on the proposed body in place of the existing regime dominated largely by CIL. CSEB and other utilities have argued that determination of coal transportation cost should also be part of the regulatory authority as there has been increase in coal transportation cost by about 40 per cent, resulting in avoidable loading on power cost. These utilities, which have received support from private players, have brought to the notice of the power ministry various anomalies in the determination of coal prices by CIL. According to these utilities, CIL increases the coal prices more than once in a year, which is not justified as private entrepreneur’s cost of mining is only 60 to 65 per cent of CIL’s cost for the same type of coal block mining. 

INTERNATIONAL

OIL & GAS

Upstream

 

Canadian firm to invest $5 bn in HC exploration in Pak

 

September 25, 2006.  Canadian company Cathy Oil and Gas Ltd has decided to invest US $5 bn in hydrocarbon sector (HC) basically in oil and gas exploration, development production and commercialisation in Pakistan. A memorandum of understanding was signed by Pakistan and the company. The agreement envisages an initial investment of US $2.05 bn while the company would make an investment of about US $5 bn in the field.

 

Kodiak signs agreement on Oil and Gas assets in New Mexico

 

September 22, 2006. Kodiak Energy, Inc., has entered into a joint venture agreement on oil and gas assets with Thunder River Energy Inc. of Calgary, and Thunder River Energy's subsidiary holding company in New Mexico. The properties are located in Northeast New Mexico. The Thunder River prospects offer Kodiak the potential of finding substantial economical oil, gas, CO2 (and possible helium) reserves in the near term. These high impact prospects are well documented and located near existing infrastructure and at shallow to medium drilling depths. Kodiak Energy, Inc is a Calgary based oil and gas company focused on creating a portfolio of North American assets that offer not only immediate production and cash flow but growth through exploration.

Downstream

 

CB&I wins LNG Expansion Project in Australia

 

September 25, 2006. CB&I has been awarded a contract valued in excess of $200 mn by Woodside Energy Ltd., operator of the North West Shelf Venture onshore gas plant near Karratha, Western Australia. CB&I will be the mechanical erection contractor for construction of a fifth liquefied natural gas (LNG) production train with a design capacity of 4.2 million tonnes per year. The Phase V expansion will increase the plant's capacity to 15.9 million tonnes per year, making it one of the single largest LNG complexes in the Asia-Pacific region. CB&I's work scope for the project includes the installation and hook-up of modular LNG units, as well as structural, mechanical and piping works installation. The six equal participants in the North West Shelf Venture are Woodside Energy Ltd. (operator), BHP Billiton Petroleum (North West Shelf) Pty. Ltd., BP Developments Australia Pty. Ltd., Chevron Australia Pty. Ltd., Japan Australia LNG (MIMI) Pty. Ltd., and Shell Development (Australia) Proprietary Limited.

 

Tehran Refinery turns out 8million lit. gasoline per day

 

September 23, 2006. Tehran Refinery offers a daily output of 8 million liters of gasoline which is equivalent to 50,000 barrels crude. The nominal capacity of North and South plants stands at 250,000 barrels of oil per day and the projects to increase the refining capacity and octane improvement from 82 to 90 are underway. Plans to boost gasoline production by 22 per cent as one of the primary tasks of the refinery. Kerosene, fuel oil, diesel fuel, liquid gas, jet fuel, sulfur and engine oil are among Tehran Refinery’s major products.

 

BP plans $3 bn refinery upgrade

 

September 20, 2006. BP will spend $3 bn to upgrade its oil refinery in northwest Indiana so it can process significantly more heavy crude from Canada while also boosting its production of motor fuels at the site by up to 15 per cent. The Whiting refinery, about 10 miles from Gary, currently produces about 290,000 barrels a day of transportation fuels such as gasoline and diesel. The project will modernize the equipment at the refinery and competitively reposition it as a top tier refinery well into the future. The output from the Whiting refinery accounts for a tiny fraction of the country's consumption.

 

Petrobras buys 50 pc stake in Pasadena refinery

 

September 20, 2006. Petróleo Brasileiro SA (Petrobras) has completed a $360-mn acquisition of a 50 percent stake in Pasadena Refinery System Inc., in a move to expand the company's presence in U.S. downstream operations. The Pasadena refinery, located next to the Houston Ship Channel, has a processing capacity of 100,000 barrels per day. Petrobras, is exploring a way to boost capacity at the refinery by as much as 100,000 barrels per day. The expansion plans incorporate units that will enable the refinery to process heavier oils, such as Petrobras' Marlim crude, as well as deliver products that will meet all U.S. regulatory and environmental requirements.

Transportation / Distribution / Trade

 

IFT to supply DiesoLift fuel for fuel efficiency

 

September 21, 2006. International Fuel Technology, Inc. (IFT) will make the first major commercial shipment of its DiesoLIFT (TM) fuel additive to the Philippines intended for National Power Corporation (Napocor), a government-owned division of the Philippine Department of Energy, for use in diesel-fueled stationary power generation units. This shipment will also provide supply to big diesel fuel industrial users like the other power generation companies, mining and construction companies, transportation, and other utility companies throughout the Philippines. Napocor's order is for DiesoLIFT to improve fuel performance of stationary power generation units that use diesel fuel. Napocor, which currently consumes in excess of 150,000 tons of diesel fuel annually, expects to realize substantial fuel cost savings.

 

Gazprom sets sights on Asian fuel market

 

September 21, 2006. Gazprom is setting a sweeping plan for controlling supplies in the Asia-Pacific region. A strategy that some analysts say would replicate in Asia a strategy that served the Russian energy company well in Europe. Gazprom has detailed plans to link Sakhalin by pipeline with natural gas fields in eastern Siberia, and ultimately western Russia, to form a system that will supply both domestic users and customers in Asia. Already, today Gazprom possesses more reserves of natural gas than all countries of the Asia-Pacific region combined. Mostly untapped natural gas deposits in Sakhalin, Irkutsk, Krasnoyarsk and Yakutia would power this integrated domestic- and export-oriented system. Russia exports 3 per cent of its energy to Asia, but President Vladimir Putin wanted to see that it should rise to 30 per cent within a decade.

 

Sasol faces competition for gas in Mozambique

 

September 21, 2006. Sasol is facing stiff competition for access to Mozambican natural gas from a number of oil exploration companies that are exploring in Mozambique. Sasol first mooted building a gas pipeline from Mozambique to South Africa in 1998. Gas was finally delivered from Temane in Mozambique to Secunda in South Africa along an 865 km pipeline in February 2004. Numerous companies had received licences to explore for gas in Mozambique. Companies with exploration licences include US-based Anadarko Petroleum, Canada's Artumas Group, Italy's ENI, Malaysia's Petronas, and Norway's Norsk Hydro and DNO. By the end of the year, more oil companies, mainly from the US, UK and India, could get licences. Sasol, which operates the Temane-Secunda pipeline, is looking to increase the pipeline's capacity from close to 100 megajoules in the year to June to 240 megajoules a year. The current maximum capacity is 120 megajoules. A first expansion will take it to 180 megajoules, followed by a second expansion to 240 megajoules.

Policy / Performance

 

China to issue a ‘white paper’ on energy

 

September 26, 2006.  In an effort to update overseas markets on the country's energy development China is compiling a 'white paper' on the subject through the National Development and Reform Commission (NDRC). The document is being jointly compiled by the Energy Bureau and the Institute of Macro Economics which both come under the NDRC. The 'white paper' will highlight China's strategy and goals as well as elaborate on the country's energy policies and related measures that have been taken. The 'white paper' aimed to increase the transparency of China's policies and assist build up a good international environment for the country's energy development. China consumed 2.22 billion tons of standard coal last year with the output of non-renewable energy reaching 2.06 billion tons. China is now the world's second largest energy producer and consumer. China's net imports of petroleum in 2005 were 136 million tons accounting for six percent of the total world trade volume of crude oil that year. According to the Energy Bureau the preliminary draft of the 'white paper' has been completed and is ready to be submitted for comment. China issued 'white papers' on annual energy development in 1995 and 1997. Since then a number of significant changes have taken place in the country’s energy affairs and policies.

 

Mena requires $395 bn to expand energy capacity

 

September 25, 2006. The Middle East and North Africa (Mena) needs to pump a whopping $395 bn to increase the region's oil production capacity and also to invest in other energy projects in the next five years. Figures released by Saudi Arabia-based Arab Petro-leum Investment Corp (Apicorp) indicate about $345 bn will have to be invested by the Gulf and the remaining Arab producers during 2007-11. The estimates are sharply higher than previous reviews. Apicorp said the rise was a result of larger projects, an increase in the prices of industrial materials, higher financing costs and other factors.

 

Previous reviews showed energy investment requirements in the Mena region were estimated at about $260 bn during 2006-10, a sharp increase of nearly 52 per cent, according to Apicorp, an affiliate of the Organisation of Arab Petroleum Exporting Countries (Oapec). Apicorp's current review of energy investments for the five-year period 2007-11 yielded several notable findings. One of them is simply the continuing upsurge in the cumulative investment requirements, which now stand at $395 bn for the Mena region including around $345 bn for the Arab world.

 

Nigeria to auction 50 oil and gas blks

 

September 25, 2006. Nigeria is preparing to auction 50 oil and gas exploration blocks in October, the third licensing round in just over a year. The blocks on offer would be located all over Africa's biggest oil producer inland, in the Niger Delta and offshore. The Department of Petroleum Resources (DPR) had not concluded its valuation of the blocks and had yet to finalise dates for the auction. The DPR would impose stringent conditions on bidders to avoid a repeat of a major auction last August, after which Nigeria received less than half of the $2.6 bn originally pledged because many bidders were unable to pay up. Among other conditions, bidders would have to put down deposits worth 25 per cent of their offers on the day of the auction to secure blocks.

 

Gazprom may redirect natural gas resources to Europe - Putin

 

September 25, 2006. Russian energy giant Gazprom may in the foreseeable future decide to redirect a part of resources from the Shtokman gas field to European markets, President Vladimir Putin said. The Shtokman deposit holds an estimated 3.2 trillion cubic meters of natural gas, and 31 million metric tons of gas condensate in the Barents Sea. Some $12-14 bn will be invested in the project’s first phase, and production will start in 2011. He also said Russia had no intention to cut energy transit via traditional routes and pledged to honor all commitments in the energy sphere.

 

Gazprom is considering partners for the unique project off Russia’s Arctic shelf, which could be operated under a production-sharing agreement. A shortlist of companies competing for the project unveiled last September includes Norway’s Statoil and Norsk Hydro, France’s Total, and U.S. giants Chevron and ConocoPhillips. Gazprom will select two or three partners from the shortlist to form a consortium for the project. Gazprom, however, has repeatedly postponed the selection of Shtokman partners. The event was initially scheduled to take place in spring, then in August, but no partner has been selected so far.

 

China oil demand growth at 9.2 pc in August

 

September 25, 2006.  China's implied oil demand rose 9.2 per cent in August, easing off four months of double-digit growth. Growing domestic refinery output and the likelihood of Beijing keeping fuel prices little changed amid falling crude may continue to prop up demand, analysts say, helping the world's number-two consumer beat forecasts of 6 per cent growth. Supported by a warm summer and strong economy, implied oil product demand refinery output plus net fuel imports but excluding inventory changes which China does not report was 6.55 million barrels per day (bpd) in August. China's surprise 15 per cent fuel demand growth in 2004 was one main driver behind oil's rally to $70, before it eased to just above 3 per cent last year but quickened since the second quarter of 2006.

 

France offers India help in energy front

 

September 24, 2006. France can help India in a big way in the energy sector where New Delhi’s position is “rather fragile”, the visiting French MP, Mr Jean-Jacques Guillet, said. During his visit over the weekend, Mr Guillet met the petroleum and natural gas minister, Mr Murli Deora, and they reviewed the existing Indo-French cooperation in the field of energy and explore means to develop it further.

 

EU dependence on imported energy rises to 56 pc

 

September 23, 2006. The total amount of energy required to meet the demand of the 25 member states of the European Union in 2005 remained stable compared to 2004, at 1,637 million tons of oil equivalent (toe). However, EU production of all sources of energy fell by 4.2 per cent in 2005, resulting in an increase in net imports of 4.5 per cent. As a consequence, the first estimate for 2005 shows that the EU depended on imports for 56 per cent of its energy needs, up from 54 per cent in 2004. These figures were published by Eurostat, the Statistical Office of the European Union.

 

Energy imports were dominated by oil and gas, accounting for around 60 per cent and 25 per cent respectively of the EU net imports. Net imports of crude oil and oil products to the EU rose by 2.9 per cent in 2005 compared to 2004, while net imports of gas rose by 9.2 per cent. Energy consumption per capita in the EU was equivalent to 3.6 toe in 2005, compared to 7.8 toe/capita for the USA and 4.1 toe/capita for Japan (both 2003 data). Per capita energy consumption varies greatly from one EU Member State to another, reflecting in particular economic development, the degree of industrialization and the climate. Finland, at 5.2 toe/capita, had the largest energy consumption per capita, followed by Belgium (5.0 toe/capita), the Netherlands (4.9 toe/capita) and Sweden (4.6 toe/capita).

 

U.S. agency shores up Gulf royalties with BP, Shell

 

September 22, 2006. The United States will not seek $1.3 bn in back oil royalties on some Gulf of Mexico drilling leases but is negotiating a deal with BP and Shell to make payments on those offshore tracts in the future. The Interior Department's Minerals Management Service (MMS), which oversees offshore energy exploration, mistakenly left out language in drilling contracts signed with energy companies in 1998 and 1999 that would have ended a waiver of royalties when oil prices rose to certain levels.

 

Companies generally pay royalties based on 12.5 percent to 16.6 percent of the value of the oil they drill. But the department waived those royalties on initial oil production in the very deep Gulf waters where it is more expensive to drill. The royalty break was supposed to end if oil rose to about $38 a barrel, but MMS did not include that provision in the 1998 and 1999 drilling leases. The agency is talking with other firms, including Chevron (Charts), to also get them to voluntarily pay.

 

S. Korea, Libya to expand energy cooperation

 

September 22, 2006.  South Korea and Libya have agreed to expand cooperative ties in energy and resource development areas. The agreement was reached on the sidelines of South Korean Prime Minister Han Myeong-sook's trip to Tripoli. The two countries saw eye-to-eye on the need to expand ties in oil and gas field development projects and energy-related infrastructure.

Oil price could slide to $40 a barrel: ex-OPEC official

 

September 21, 2006.  World oil prices could drop to as low as $40 a barrel by mid-2007 over receding geopolitical concerns but a collapse to pre-2003 prices is ruled out, OPEC’s former acting secretary general said. He is of the view that strong fundamentals of supply and demand, which underwent a dramatic change over the past three years, will continue to support a price of between $40 and $60 a barrel and may be higher. He said that the current price swings were mainly due to geopolitical factors, such as the crisis over Iran’s nuclear programme, Iraq and Middle East tension. He said that prices are moderating because the fear factor has receded and the fear factor accounts for between $10 and $20 of the price. He also said that OPEC could face some difficult days next year when some two million barrelsa day of additional production by non-OPEC oil producers will enter the market and this would require OPEC to take decisions with regards to the production ceiling and how much of its spare capacity should be introduced to the market. He is of the view that the mid to long-term future for OPEC members is very promising as almost all the increase in the crude supplies in the post-2012 will come from OPEC countries.

 

UAE plans to boost output to 3.5 mbpd

 

September 21, 2006. Tapping its huge oil and gas reserves, the UAE is planning to increase its oil output capacity to 3.5 million barrels per day by early next decade and its refining capacity to 1.1 million barrels per day. The UAE is currently producing more than 2.7 million barrels of crude oil per day and 65 billion cubic metres of natural gas annually. Petroleum production is expected to rise to 3.5 million barrels of crude oil per day by the beginning of the next decade. In the downstream sector, the UAE currently has a refining capacity of 600,000 barrels per day and plans to increase that capacity to 1.1 million barrels per day in the very near future.

Power

Generation

 

Qeshm to have gas power plant

 

September 26, 2006. A gas-fuelled power plant will be constructed in the southern island of Qeshm, Bushehr Province to supply electricity to the island. The power plant will be set up on the BOO (build-own-operate) basis, and will have a 160-MW unit. Qeshm power plant will be fed by the gas field located nearby, and it is expected to use 50,000 cu. m. of gas per hour. The project is scheduled to become operational in 2007. Being as large as 1,500 sq. km, Qeshm Island is one of the most humid and hottest regions in southern Iran. It is classified among the country’s free zones with regard to its tourism and industrial centers.

 

Yazd Solar Thermal Power Plant boosts production

 

September 26, 2006. Electricity production was boosted at Yazd Solar Thermal Power Plant (a combined cycle power plant) through installation of an additional burner at the plant in Iran. Each gas turbine at Yazd power plant has already generated 100 MW of electricity. Presently, the electricity production has increased to 150 MW through equipping heat recovery boilers at the power plant with additional burner. Yazd Solar Thermal Power Plant is located in the central province of Yazd, and its steam unit was synchronized with the national power grid in late July.

 

Darlington eyed for nuclear expansion

 

September 23, 2006. Ontario's government-owned power generation utility has applied for approval to build new nuclear plants at Darlington, just east of Toronto, the first step in a plan to boost the province's power supply by thousands of megawatts. Ontario Power Generation formally filed an application with the Canadian Nuclear Safety Commission for a licence to begin preparing the site for an as-yet-undetermined number of reactors. The proposed new nuclear power plants still have to win federal approval for the project description, pass an environmental impact assessment and gain a construction licence. The province spend $40-bn on new plants to maintain nuclear power's 50% share of the province's energy supply.

 

Nine firms vie to set up coal-based power plant in Pak

 

September 22, 2006. Nine major international companies are seriously competing to set up a 1,200 MW power plant near Karachi in response to the government’s emergency efforts to overcome power shortages. The companies had submitted their statements of qualifications (SOQs) by deadline given by the government to set up a 1,000-1,200 MW integrated imported coal-based power project near Karachi. The companies include Sumitomo of Japan, Siemens and Reinhaul of Germany, Al-Jumaih Group of Saudi Arabia, AES Corporation of the US and Malakoff of Malaysia. The successful bidder will be required to carry out a detailed feasibility study and then negotiate tariff.

 

Although Pakistan has one of the world’s largest coal reserves in Thar but efforts to generate electricity have not materialised yet. Pakistan was a coal-rich country with more than 185 billion tons of coal reserves, but the reserves had not been developed due to lack of infrastructure and other reasons.

 

Aquila to purchase Aries power plant

 

September 22, 2006. Aquila, Inc. has agreed to purchase a 580-MW, natural gas-fired power plant, known as the ``Aries'' plant, in Pleasant Hill, Missouri, from Calpine Corporation for $158.5 mn. Aquila intends to utilize the Aries facility as an ``intermediate-capacity'' power plant. Intermediate power plants are generally used to provide power over an extended period of time to supplement base load coal and nuclear power plants. Based in Kansas City, Missouri, Aquila operates electric and natural gas utilities serving approximately one million customers in Colorado, Iowa, Kansas, Missouri and Nebraska.

 

Duke breaks ground on $425 mn emissions project

 

September 20, 2006.  Duke Energy Corp. has broken ground on a project to reduce 95 percent of the sulfur dioxide emissions at the Allen Steam Station, a 1,140-MW coal-fired power plant on Lake Wylie. The project, slated to cost $425 mn, is the third of four power plants in which Duke is installing sulfur dioxide scrubbers in North Carolina. The other plants are the Marshall Steam Station near Lake Norman, the Belews Creek plant in Stokes County and the Cliffside Steam Station in Rutherford and Cleveland counties. The scrubbers remove sulfur dioxide by injecting a mixture of limestone and water into the emissions stream. The Allen Steam Station project is expected to be completed in 2009.

 

Duke seeks to recover costs on proposed plant

 

September 20, 2006. Duke Energy Corp. is asking the N.C. Utilities Commission to allow it to increase utility rates to cover the costs of building a proposed nuclear plant in Cherokee County, S.C. Approval would mark a major change in the Carolinas, where utilities have been required to put a plant in operation before recovering the expense. Charlotte-based Duke expects to invest $125 mn by the end of 2007 toward developing the proposed William States Lee III Nuclear Station in Cherokee County, which will be jointly owned with Southern Co. of Atlanta. The company is scheduled to make a decision on building the plant, projected to cost $4 bn to $6 bn, by the end of 2010. The plant could begin electricity production in 2016.

Transmission / Distribution / Trade

 

AES sells U.K. power plant for $60 mn

 

September 25, 2006.  AES has sold a power plant in the United Kingdom for about $60 mn. The Arlington-based company, which is one of the world's largest power suppliers, says that after paying down existing project debt the sale will result in a net return of about $28 mn. AES Indian Queens Power Ltd., a subsidiary that runs a 140 MW power plant in Cornwall, U. K., was sold to International Power IQ Ltd, a subsidiary of International Power Ltd. AES acquired the Indian Queens in 1997.

 

GE to supply rental power to Wapda

 

September 25, 2006.  The General Electric Energy Rentals (GE) and Wapda inked an agreement for the supply of 150MW rental power near Sheikhupura on a fast-track basis. The power would be available on national grid by January 2007. It will be a 36- month contract in which GE would be responsible to operate, maintain and supply rental power to Wapda. Wapda is in a dire need to cater for the worsening electricity shortage and fast track rental power is quick solution to this problem. GE is the world’s leader in power generation equipment & technologies. Wapda has entered earlier into similar agreement with Alstom Power Rental of USA for 136 MW rental power near Bhikki.

 

Reliant Energy to Serve Electricity Aggregation Groups

 

September 20, 2006. Two large, Texas electricity aggregation groups, including a number of major public entities, have chosen Reliant Energy to provide competitive electricity supply to their members. The organizations, Public Power Pool (P3) and Association Power (AP), have a total of 147 members, including Harris County, the city of Dallas, Dallas Independent School District and Dallas and Tarrant counties, with a combined peak load of 500 MW and more than 8,000 service locations. The contract terms vary and begin in January 2007. The organizations have conducted a thorough, competitive selection process that identified Reliant as providing the best overall value and services to our members.

Policy / Performance

 

Risks to power plants based on imported coal

 

September 25, 2006. The Private Power and Infrastructure Board (PPIB) has invited expressions of interest from potential investors for the development of integrated power project based on imported coal, on non-exclusive basis, proposed to be set up near Karachi. The two top ranking parties will be pre-qualified to install 1,000-1,200 MW capacity each power plant, with the provision of expansion in future. But the project poses numerous issues, problems and challenges and the government of Sindh has already reacted sharply against it. The development of a coal-fired power plant based on imported coal is a complicated and arduous process. The project may run into snags. The nation may end up losing opportunities presently available to it to develop domestic coal reserves, an activity which obviously cannot be undertaken in parallel to establishing a power plant based on imported coal. It is not consistent with the government’s committed policies.

 

Egypt to begin nuclear programme

 

September 25, 2006. Egypt has said it will re-launch its nuclear energy programme after a 20-year freeze as it announced plans to build a nuclear power station on the Mediterranean coast. The government's supreme council for energy met to discuss alternative energy options for the first time in 18 years. The Egyptian minister of electricity told that the country could have an operational power plant within 10 years if the project is approved. Egypt will build a 1,000-MW nuclear power plant at a cost of between $1.5 bn and $2 bn. Egypt's nuclear programme was frozen in 1986 following the Chernobyl nuclear disaster in what was then the Soviet Union.

 

S. Africa to support India for civil nuke programme

 

September 24, 2006. Ahead of Prime Minister Manmohan Singh's visit to South Africa, the uranium-rich country has expressed its readiness for civil nuclear cooperation with India and hinted at supporting New Delhi's case at the Nuclear Suppliers Group (NSG). South Africa is of the view that all countries have the right to use nuclear energy for peaceful purposes. The readiness of South Africa, a key player in the 45-member NSG, for cooperating with India in the civil nuclear field significantly comes as the Indo-US civil nuclear deal nears completion of the legislative process in America.

 

New transmission policies are needed to realize renewable: National Grid

 

September 21, 2006. National Grid urged federal and state policymakers to address current inadequacies in U.S. transmission policies that create obstacles for wind and other renewable generators in accessing the country's electric grid. In the paper, entitled "Transmission and Wind Energy: Capturing the Prevailing Winds for the Benefit of Customers," National Grid advocates for the development of a consistent and appropriate policy approach to support the transmission investment needed to harness wind power and integrate it into the U.S. electricity grid while continuing to maintain system reliability, and deliver its full benefits to electricity market users and customers. National Grid contends that in order to tap the vast potential of new generation sources, policies must support investment needed to deliver renewable energy to customers. National Grid also proposes incentives to continue FERC's encouragement of independent transmission ownership, which can help wind development. National Grid, through the transmission and distribution of electricity and natural gas, serves close to 4 million across 29,000 square miles of Massachusetts, New Hampshire, New York and Rhode Island.

 

Iran calls on WB to invest in developing nuclear energy

 

September 21, 2006.  Iran’s Minister of Economic Affairs and Finance Davud Danesh-Jafari on Wednesday called on the World Bank and other international investment organizations to support further investments for developing nuclear energy. “With regards to the serious dangers of the climate change that is caused by using fossil fuels, we ask the World Bank to invest in developing clean energies and technologies such as natural gas and nuclear energy,” said the minister. He said that Iran is taking a step toward developing the private sector and believes that privatization is the prerequisite for economic growth and therefore, Iran welcomes foreign investors.

 

Japanese firm keen to invest in power projects in Pak

 

September 20, 2006.  A Japanese company, Marubeni Corporation has shown keen interest to Ministry of Water and Power of Pakistan in four thermal based projects including 450MW Uch-II power project at Kashmore, 400MW at Faisalabad and 350MW at Chichokimalian being processed through International Competitive Bidding (ICB) by Private Power Infrastructure Board (PPIB) and another 450MW Thermal power Plant at Chichokimalian by Wapda. The Japanese company had successfully implemented and executed a number of power projects world over in a span of three decades and interested to invest handsome capital in power sector in Pakistan. As of today, the company has completed EPC projects with an aggregate capacity of about 69,000 MW, and is currently constructing 20 power plant projects around the world.

Renewable Energy Trends

National

 

Chamber urges PM to boost bio-diesel sector

 

September 26, 2006. The Sattur Chamber of Commerce and Industry has urged Prime Minister Dr Manmohan Singh to provide an impetus to the production of bio-diesel as an alternative fuel. While welcoming the Central Government's plan to promote bio-diesel production from jatropha in the context of high international crude prices and the likely shortage of petroleum products in future years, the Chamber has observed that unless it becomes available at Rs 20 per litre, the scheme may not prove remunerative. The other scheme to produce bio-diesel from the Pungai tree will also be remunerative only if it is available at Rs 20 per litre. The oil from Pungai may cost less relatively as the tree needs to be maintained only for a year, after which it grows on its own to give yields for 30 years.

 

India ranked 5th in world ethanol production

 

September 25, 2006.  India ranks fifth in ethanol production next to European Union, China, US and Brazil, says a Goldman Sachs report on biofuel and food security. While China produced 3.65 bn litres in ’04, India stood at 1.75 bn the same year. Brazil topped the chart with 15.24 bn. India’s total annual petrol consumption is 10 bn litres. Ethanol-doped petrol can fulfil about 5 per cent of this at about 0.5 bn, according to data provided by ministry of petroleum. While India and China are still in the process of formulating a biofuel policy, China already has embarked on a National Fuel Ethanol Programme, says the report. This has made it mandatory for 10 per cent ethanol blend in five provinces of China since ’04. The country intends to add 26 more cities to the list. India, on the other hand, will see use of 5 per cent oil doped with ethanol in all states except for the North-east after November ’06, says the ministry of petroleum. It will be mandatory for public oil companies to buy oil produced from jathropa, pongamia and other plant oils and sell it as a 5 per cent blend, rising to 20 per cent by ’20. According to the report, India is, however, struggling to reach its current production target. With regard to fiscal incentives, while the 5 per cent ethanol-doped petrol is exempted from central excise duty in India, China provided subsidies for corn growth for ethanol of up to $225 per tonnes in ’04. There are four ethanol plants currently operating in China benefiting from this subsidy. Also, fuel ethanol is exempted from consumption tax and value added tax in China.

 

Ministry signs biomass pact with UNDP Fund, KfW

 

September 25, 2006. The Ministry of Non-Conventional Energy Sources has signed a $39.15 mn (Rs 1.8 bn) project with UNDP Global Environment Fund (UNDPGEF) and German financial institution KfW to develop projects for harnessing biomass energy resources in the country. The three-year project would be financed by UNDPGEF to the tune of $5.65 mn (Rs 259 mn) and co-financed by the Ministry, which will chip in with $5.24 mn (Rs 240 mn), while KfW would leverage finances of the order of $24.82 mn (Rs 1.14 bn). The financial institutions/private entities that are expected to join the project would contribute an amount of around $3.44 mn (Rs 158 mn). The project aims at removal of barriers to the development of such projects, sustained supply of biomass, technology upgradation, equipment supply and development of standards for biomass energy projects. It is also expected to contribute in exploiting the potential for setting up power projects based on biomass and co-generation. As these projects' potential sites are comparative smaller in size and scattered over different parts of country, development of standards for them assumes significance. According to Government estimates, biomass energy has an established potential of about 19,000 MW, while the co-generation power projects have a potential of about 5,000 MW in the country. At present power projects of over 1,000 MW capacity based on biomass and co-generation have been set up in India.

 

Gujarat emerges as hub for windmill manufacturing

 

September 25, 2006. Even as the state’s large wind energy generation potential remains largely untapped, Gujarat, which is bestowed with a 1,600 km long coastline, is fast-emerging as a manufacturing hub for wind power equipment. Apart from Suzlon Energy’s unit in Vadodara, players like Essar group and Elecon Engineering are planning to set up facilities. Vadodara-based engineering goods maker Jyoti Ltd, which manufacturers wind power components is planning to improve its product range. While the Essar Group is scouting for a suitable location in Gujarat, Suzlon is expanding its manufacturing facilities in the state. Vadodara based Jyoti Ltd that was so far engaged in supplying generators to windmill companies is considering venturing into offering complete solutions for wind energy. Similarly, Anand based Elecon Engineering is all set to commission its first project early next year. The wind energy sector has been witnessing rapid growth for the last couple of years on account of tax benefits and its viability. Global major Enercon GmbH’s Indian venture Enercon India Ltd has also set up concrete tower factory in Jamnagar in Gujarat. Elecon were also aiming to set up 10 windmills by the end of current fiscal. Elecon, which has plans to set up 60 windmills in first phase. It is going to expand its capacity to manufacture turbines with capacity for over 1 MW mills. 

 

Poultry litter to fetch carbon credits

 

September 23, 2006. A unique Indian project involving poultry litter has been registered at the UN as a clean development mechanism to earn carbon credits. The project, which is to be commissioned in November at Pochampally village (near Hyderabad), envisages producing electricity from poultry litter. SLT Power and Infrastructure Projects Pvt Ltd, the company driving the project, has entered into tie-ups with 16-17 poultry farms in the 35 km radius of plant site for supply of 37,872 tonnes of poultry litter per annum. The litter, along with some amount of rice husk would be used as raw material in the 3.5 MW power plant set up by the company. The project envisages reducing emissions of methane, which would be equivalent to about 65,794 tonnes of carbon dioxide per annum. The project document for the UNFCCC approval for earning carbon credits was prepared by Ecosecurities. On the electricity production side, the company has entered into a tie-up with Andhra Pradesh Transco for power supply at the APRC price. For setting up the 3.5 MW plant, the company has spent in the range of Rs 45 mn per MW. Given the large number of poultry around Hyderabad, the company plans to replicate the project and put up another 7.5 MW plant on similar lines.

 

K’taka aims for 800 MW from renewable energy

 

September 21, 2006. Power-hungry Karnataka has worked out a comprehensive plan to add 800 MW to the state grid over the next two years by tapping renewable energy resources for an estimated investment of Rs 4,000 crore ($0.87 bn). Currently, the state has an installed capacity of 7,784 MW, of which hydropower contributes a large chunk (3,427 MW). While 2,848 MW comes from coal-fired units, 136 MW comes from nuclear energy sources and 1,016 MW from renewable energy sources. The state has assigned the Karnataka Renewable Energy Development Ltd (KREDL), a government undertaking, with the task of the capacity addition. New locations have been opened up for investment in wind power, mini-hydel power, cogeneration and biomass power-based projects throughout the state. At present, Karnataka is the third largest producer of power from renewable energy resources, after Tamil Nadu and Maharashtra. According to the Central Electricity Authority, the annualised power load growth rate for Karnataka is projected at 5 per cent for the next 10 years. Accordingly, the peak demand will double to 14,071 MW in 2016 from the present 7,700 MW. The energy requirements are expected to surge to 81 billion units from 34.5 billion units. The state government wants the KREDL to enhance power generation from renewable energy resources to 6,911 MW over a period of five years, by 2011 (wind -- 5,592.62 MW, cogeneration -- 846.10 MW and biomass – 473.20 MW). So far, the KREDL has commissioned projects to the extent of 1,016 MW (wind – 597.18 MW, cogeneration – 339.90 MW and biomass – 79.50 MW). 

 

Punjab to have 12 renewable energy shops

 

September 21, 2006. The ministry of non-conventional energy has given its nod for setting up 12 Akshay Urja Shops (Renewable Energy Shop, which will showcase solar energy and energy conservation products and would also provide after-sales repair and maintenance services) by private entrepreneurs in Punjab. These shops will be opened in 12 districts of Punjab including Jalandhar, Ludhiana and Mohali. Also, it is expected that these shops are likely to be operational by March of next year. With a view to increase the outreach of renewable systems and devices, a scheme of Akshay Urja Shops was launched by MNES to cover every district of the country to ensure easy availability of such systems and devices, apart from catering to repair and maintenance needs. With the setting-up of these shops and other related initiatives, it is expected that the common man will embrace renewable energy technologies in a big way for augmenting energy needs of cooking, lighting and motive power.  Also, as per the scheme, for the eligible candidates, soft loan at an interest rate of 7 per cent to a maximum of 85 per cent, of the cost of establishment of the shop, is available. Apart from that, the shop owners would be entitled to a monthly recurring grant of Rs 5,000 per month towards manpower, electricity, telephone bills and other miscellaneous expenses. 

Global

 

Xcel Energy for Largest PV Central Solar Power Plant in the United States

 

September 25, 2006.  Xcel Energy has selected an affiliate of SunEdison, LLC, North America's leading solar energy service provider, to build, own and operate an 8 MW central solar power plant in south central Colorado. The power plant will house two solar technologies, concentrating photovoltaic and advanced flat-plate solar panel units. Both the flat-plate solar panel segment of the plant and the concentrating solar segment will be the largest of their type in the United States. Approximately 1.2 MW will come from concentrating photovoltaic units. The remaining approximately 6.8 MW of generation will be advanced flat-plate solar panel units. The plant is expected to be on line by the end of 2007. Public Service Company of Colorado will purchase the power and the Renewable Energy Credits associated with the plant. Producing power through concentrating photovoltaic units is accomplished by concentrating sunlight into a beam of light 500-times greater than normal light. That beam is then focused on a photovoltaic cell that converts the highly concentrated light into electricity at an efficiency greater than non-concentrated cells. The solar electricity is converted from direct current (DC) to alternating current (AC) then sent to a power substation and fed into the power grid.

 

Wood-fuelled power station planned in UK

 

September. Plans for a wood-fuelled power station capable of supplying electricity to thousands of homes have been unveiled. The £30 mn scheme, claimed to be the first of its kind in the UK, is planned for former industrial land at Lochaber, near Fort William. The combined heat and power (CHP) plant would use locally-sourced wood and have an output of more than 18 MW. It will also supply heat to a nearby processing plant, and local firms and private homes may also get the chance to connect up for heating and hot water. Energy firm Tanaris has signed an agreement with Alcan Aluminium to develop the plant on Alcan land. The electricity from the plant will be available two years later. The plant would provide enough electricity for the equivalent of more than 40,000 homes. It is environmentally friendly and can take a range of biomass fuels, with the residue from the process being used for fertiliser.

 

Clinton launches $1b renewable energy fund

 

September 25, 2006. A day after British business mogul Richard Branson pledged $3 bn to battle global warming, former President Bill Clinton has announced the launch of a $1 bn investment fund for renewable energy. The new Green Fund would focus on reducing dependence on fossil fuels, creating jobs, lessening pollution, and helping to reduce global warming while getting returns on capital invested.

 

New wind power project opened in Alberta

 

September 22, 2006. Acciona Wind Energy Canada Inc., Enbridge Inc., and Suncor Energy Products Inc. opened their newest joint venture wind power project in Alberta, a $60 mn, 30-MW facility located southwest of Taber. The facility consists of 20 1.5-MW turbines. It is expected to generate enough clean electricity to power approximately 14,000 Alberta homes and displace the equivalent of at least 88,000 tonnes of carbon dioxide per year. Power generated from the facility is expected to be available to the grid in late October 2006. In the meantime, the companies will focus on safely commissioning each turbine and completing the 20 kilometre transmission line.

 

Wind may generate 30 pc of power by ’30: Greenpeace

 

September 20 2006. Wind power could generate almost 30 per cent of the world's electricity by 2030 and is growing faster than any other clean energy source, a wind business group and environmental lobby Greenpeace said. At good locations wind can compete with the cost of both coal and gas-fired power, the Global Wind Energy Council (GWEC) and Greenpeace said in the study. The two said that wind, which now accounts for 0.8 percent of the world's electricity supply, was expanding faster than other renewable energies such as solar, geothermal or tidal power in a shift from fossil fuels. Wind energy could provide as much as 29 per cent of the world's electricity needs by 2030, given the political will to promote its large scale development paired with far-reaching energy efficiency measures, the report said. Many countries are seeking non-polluting energy sources because of high oil prices and concerns about global warming, widely blamed on burning fossil fuels in power plants, factories and cars. Nations now generating most wind power are Germany, Spain, the United States, India and Denmark.

 

CNOOC in biodiesel expansion

 

September 20, 2006. China National Offshore Oil Corp, the nation's third-biggest oil company, plans to build a 2.4 bn yuan (HK$2.35 bn) biodiesel plant in southwestern Sichuan province. Its CNOOC Oil Base Group unit has signed an agreement with the government of Panzhihua city to develop a plant designed to produce 100,000 tonnes of biodiesel a year by 2010. China wants sources such as sunlight, wind and water to account for 16 per cent of energy supply by 2020. The Sichuan project will use Barbados nuts planted locally as the feedstock for producing biodiesel. The nut's nonedible seeds have an oil content of about 40 per cent. CNOOC Oil Base signed an initial agreement with a Malaysian firm to develop palm oil-based biodiesel in July. CNOOC Oil Base will build a 120,000-tonne plant on Hainan. China National Offshore may buy one million tonnes of palm oil from Malaysia to make biodiesel. 

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