Energy News Monitor |Volume V, Issue 1

The Renewable Route to Climate Mitigation

Rajendra Kharul, Fellow and Head, Centre for Wind Power, WISE

 

bout 61% of total emissions in India are contributed by the energy production sector. The country is hugely dependent (about 65%) on coal and lignite-based power plants for power generation. In addition to the present (approx) 75 GW coal and lignite-based power plants (out of 140 GW installed total capacity), an additional 50 GW (out of 100 GW new capacity planned) are coal-based. These are in the planning stage or under construction up to 2012. This coal dominance in the power sector will certainly increase the intensity of carbon emissions in India in the near future. The real and major solution to emissions reduction would then come from a planned transition to a low-carbon economy by deploying renewable energy (RE).

RE Potential and Status: The worldwide accepted measure to cut CO2 emissions are adoption of renewable and clean energy technologies on a large scale. Power generation through natural sources like the sun, wind, water, biomass and other new energy generating technologies like waste to electricity, and energy efficiency measures, can play a significant role in reducing emissions in India.

Table 1: Grid Connected Renewable Potential and Achievement in India

(As per MNRE, GoI)

Source/Systems	Approx. Potential (MW)	Achievement (MW)
Wind Energy	45000	7884.57
Small Hydro Power	15000	2045.61
Co-generation, Bagasse	5000	719.83
Bio-power (woody biomass)	61000	605.80
Waste-to-Energy	7000	55.20
Solar Photovoltaic Systems (4-7 kWh/ Sq.m/day)	20 MW/Sq. Km.	2. 12
Total (Grid Interactive)	133,000	11,273.13

(Potential & achievements till December 2007)

Renewables offer a basket of technologies for various applications like grid connected power, off-grid application of lighting, pumping, thermal energy or heat generation, and transportation. In addition to an estimated 133 GW potential, 50 GW potential exists for distributed power generation through biomass and energy recovery application, bringing the total present assessed potential to 185 GW. This may further increase by few hundreds of GW in case we consider marine renewable energy technologies like offshore wind potential, ocean thermal energy, tidal energy potential and land-based geothermal energy sources, for which full scale scientific assessment has not been carried out as yet. The new solar power generation technologies like Concentrating Solar Power (CSP) and Concentrating Photovoltaics (CPV) which are on the horizon and will be commercially available worldwide in the next decade, opens up new opportunities for mitigating CO2 emissions through large-scale power generation from the sun. It would be surprising to note that the present Indian electricity production of 700 billion units per year can be met with only CSP technology of approximately 200 GW production size, which offers up to 40% plant load factor with 7 hours of storage facility. To do this, the area requirement is just 8000 sq. km (approx 90 km x 90 km) only.

Table 2: Revised Estimate Projection for Grid Connected Renewables in India

Source	Capacity  (MW)	Assumed PLF	Annual Energy Generation in billion kWh	Estimated costs @ Present prices in Rs (Crore)
Wind*	100000	25%	219.0	650000
Small Hydro	15000	35%	46.0	60000
Bagasse	5000	60%	26.3	20000
Biomass	61000	75%	400.8	244000
Large Hydro (existing & future)	100000	60%	525.6	350000
Large Hydro in Bhutan	16000	60%	84.1	64000
Waste To Energy	7000	20%	12.3	42000
Solar CSP based power generation*	200000*	35%	613.2	4600000
Solar PV/CPV based power generation*	200000*	20%	350.4	2800000
Geothermal	10000	80%	70.1	100000
Total	714000		2347.7	8930000
Average annual investment in RE power till 2032, in Rupees (crore)				446500

Note: Resource potential of other RE sources including offshore, wind, wave, tidal, biogas-based power, and solar PV is yet to be studied in India.

* WISE estimates based on discussion with industry professionals. Of a 2 total desert area of 208110 sq km in India, only roughly 20000 sq km will be required for 400 GW power generation from solar. (20 MW / sq. km)

In India, the present renewable energy mix contributes to about 8% in total installed capacity. However, the contribution to energy generation is about 2% only. The current assessment is extremely conventional and does not take into account new technologies like CSP and CPV which are being commercially deployed in the western world. A conservative revised estimate as given in Table 2 shows that India can generate more than 7,14,000 MW grid-connected electricity from renewables, i.e. five times our current installed capacity.

From the above table, it is very clear that India can generate more than 50% of its electrical energy needs till 2032 through renewable energy technologies. Most importantly, this will reduce our import dependence on fossil fuels to a larger extent. Depending on how CSP and CPV technologies develop and costs are reduced, we can further expand the programme without any limitations. It is estimated that this 50% scenario will help us to reduce more than 2.0 billion tonnes of CO2 (~ 2 billion CERs) every year, throughout the life of the projects. It also holds huge potential to earn revenues through carbon trading. Besides these renewable power generation technologies, off-grid renewable technologies like solar water heating, biogas, PV-based lighting systems, etc., also hold huge potential to reduce carbon emissions.

New Pathways: Wind technology is already established in the country and is poised to reach greater heights in the near future. CSP technology and CPV technology which are emerging very fast at the global level, can play a major role in avoidance of CO2. In CPV technology, using optical lenses, sunlight is concentrated on multi-junction solar cells with higher efficiencies of upto 40%. These high efficiency solar cells clubbed with concentration ratios in the range of 500- 1200 generates DC power and heat, giving solar to electric conversion efficiencies upto 22%-25%. The DC power can then be converted into AC using power grid quality inverters and fed into the grid directly.

Act Now: To achieve these transition goals of either 10%, 20% or 50% of RE power in the mix of power generation, there is a need for strong policy and regulatory support. Governance needs to be set up through legislative actions like a renewable energy law. Mandatory targets need to be fixed for the country as well as for states considering the RE potential in each state. India needs to evolve RE power plans for each state to accommodate these sources in their portfolios. The present RPS mechanism can be helpful in this regard. Worldwide, policy measures like preferential feed-in tariff, mandatory quotas of purchase of renewable power through RPS targets, supported by effective legislation have made huge impacts in this sector. We can also follow suit. We just need to change our mindset.

 

The Impending Oil Shock (part – V)

By Nader Elhefnawy

 

 

Continued from Volume IV, Issue No. 52…

 

The nuclear threat  

xpansion of nuclear power as an alternative energy source is especially likely to compound international security problems. Oil shortages, or the prospect of them, are already putting pressure on states to follow the path France took in the 1970s and invest heavily in nuclear power for their electric grids.

There are currently 443 nuclear reactors operating worldwide, which as of 2004 produced 2,619bn kilowatt-hours of electricity every year.⁸⁷ This amounts to roughly 17% of global electricity consumption. France, by contrast,   gets 77% of its electricity this way. Were the entire world to follow the same path, this would mean a nearly fivefold increase in output, and perhaps 2,000 reactors online. From a technical standpoint, this would seem a reasonable way of reducing the world economy’s oil dependence, and many analysts are advocating exactly this path.⁸⁸

Nonetheless, a global rush to build another 1,600 (or more) atomic reactors is no cause for comfort. While nuclear-power advocates are confident that properly built, operated and maintained reactors are safe, there is no   assurance that the reactors providing these new energy supplies will be   any of these. A rushed enlargement of the number of working nuclear reactors   in poorer, less-developed nations would be extremely dangerous.

A repeat of the 1986 Chernobyl accident cannot be ruled out, and given the   threat that such an incident poses to neighbouring states, the political wrangling over reactor construction programmes can be expected to multiply. Controversies like the one over Cuba’s Juragua nuclear power plant could well become routine.⁸⁹ The safe storage of spent nuclear fuel, given the long-term radioactivity of its waste products, is also a problem unresolved after more than five decades of experience, and underlies the controversy in the United States over the Yucca Mountain Repository.⁹⁰  

The burden on the surveillance mechanisms charged with protecting the non-proliferation regime will also grow, as trade in nuclear technology expands and the list of installations needing monitoring lengthens. This   will heighten the risk of nuclear proliferation, though it is difficult to say by how much, given uncertainties about, for instance, the types of nuclear technology that energy purchasers will opt for.

Of most concern are fast-breeder reactors, which are so called because they produce more fissile material than they consume by converting non-fissile uranium isotopes into fissile plutonium. In the 1970s this feature raised   the possibility of a ‘plutonium economy’ in which the world economy would depend on plutonium-fueled reactors for its electricity.⁹¹

Higher-than-expected costs and surprisingly low uranium prices diminished the   attractiveness of this path. However, this model is being actively pursued in   several countries, including China, India and Japan, and changes in uranium   prices (already rising) or the technological state of the art may bring back the concept on a broader scale.⁹²

Increased production of fissile material by itself does not necessarily mean more nuclear states. The non-proliferation regime works largely because potential nuclear-weapons states commonly calculate that the weapons would do little to improve their security position. In future, however, the increased use of nuclear power could coincide with generally   greater insecurity, altering those calculations.

In particular, the nuclearisation of a single state can produce a chain reaction across its region in which other countries arm themselves, especially as it becomes easier to do so. The possibility that North Korea’s nuclearisation may lead South Korea, Japan or even Taiwan to acquire nuclear weapons of their own is frequently raised. In the Middle East there have been signs that Saudi Arabia is reviewing its nuclear option, and a nuclear-armed Iran would be a strong spur to Saudi nuclearisation.⁹³   

Additionally, even if the risks of nuclear accidents, and of more states with nuclear-weapons programmes, were ameliorated, there would still be more facilities vulnerable to terrorist attack. It should be noted that it would be extremely difficult for terrorists to attack a reactor so as to produce a large-scale release of radiation; in theory even an 11 September-style attack with a hijacked airliner would be insufficient, at least in the case of US reactors. Nonetheless, there would be more targets, and an attack on a reactor can have effects far outside the targeted country, both from the radiation release, and the political and economic consequences that could follow. There would also be a larger stock of fissile material susceptible to theft, frequently in countries unable to bear the cost of securing it.

Responding to the crisis

In the face of growing resource scarcity oil importers must seek to minimise the cost of their imports and the leverage energy exporters enjoy over them. Governments must see that they do not fall behind other nations in maximising their energy efficiency and developing alternative energy sources. It is also in the interest of most nations to minimise the disruption resulting from conflicts over resources (sometimes, but not always, at the margins of the global economy); the dangers of an enlarged dependence on nuclear power; and the threat to international order posed by additional state failures.

In the global struggle to respond to the oil crisis traditional military means will have some uses. When a genuine threat appears to resources on which states depend – whether for foreign earnings or to keep vital infrastructure   running – they will find it in their interest to at least have the option of military action.

Situations of conventional conflict between sizeable military forces are likely to remain rare, however, as today’s resource conflicts tend  to take the shape of civil wars (in which outside countries are, to be sure, likely to intervene), and there is little reason to expect this to change. It is more likely that the major militaries will be called on to perform missions ‘other than war’, such as peacekeeping, as a result of the tightening of the world’s oil supply, and greater alertness and enlarged capabilities in these areas (which, at any rate, are only partly military) would be desirable.

In the end, then, a nation’s ability to sustain its economy and preserve its influence will depend less on military capability and more on an ability to insulate its economy from oil shocks: in short, on its success in reducing its reliance on fossil fuels sooner rather than later. The question all nations must confront is how to effect a speedy change.  

The experience of the United States since the 1980s, especially when compared to that of Europe and Japan (which have had much greater success at de-linking their economic growth from expanded fossil-fuel use), demonstrates the practical limitations of a ‘market-led’ approach. Such a project would preferably be undertaken before the tightening of supplies becomes so serious that the market finally forces consumers to make a change, not only in the interest of minimising the difficulties of the transition, but because such a moment would be an especially poor starting point for such an ambitious  programme.⁹⁴  

The high profits energy companies (already given to a short-term, low research and development outlook) will make from scarce, expensive oil, and the likelihood that depressed economic circumstances will discourage investment and exacerbate conflicts over priorities, will complicate efforts to reconstitute an energy base. Neoliberals, confident in the market’s penchant for creative destruction and its ability to deliver ‘disruptive technologies’ like renewable energy, offer information and communications technologies as examples of how innovations previously overcame such resistance.⁹⁵

But other technologies, especially capital- and infrastructure-intensive  technologies like energy production, tend to proliferate much less rapidly.   Additionally, even in the case of mobile phones a stable regulatory framework the Global System for Mobile communications established by the EU was key to rapid proliferation. Replacing the fossil-fuel economy will be far more complex than putting a mobile phone in each hand.  

As with other national priorities, governments must set energy targets, and make active efforts to meet those targets. They must encourage energy conservation and energy production from alternative sources, to include unconventional oil and possibly nuclear power in the near term, but with   renewable energy production ultimately winning the day.

Unfortunately, with the exception of hydroelectric energy, which is a major energy source, there has been a tendency to dismiss renewable sources, or defer their use to an indeterminate ‘future’ date in which they have been made economically viable by ‘more research’. Such rhetoric is often a way of avoiding present action. It also implies that renewable energy sources are too expensive, too difficult to scale up or too dependent on a fossil-fuel platform to represent even a partial solution today.  

The evidence contradicts such assertions. ‘Cheap’ oil is only deceptively so. Subsidies aside, the per-barrel price of oil represents the externalisation of much of its cost, as the price of health problems caused by air pollution from the burning of oil, the clean-up of ecological damage caused by pipeline leaks and tanker spills, and, of course, the consequences of climate change, appears elsewhere.⁹⁶ Additionally, the price of oil seems to be set on an upward trajectory, measured both in dollars and cents and in the energy that must be invested to get each additional barrel.

Similarly, the arguments against the scalability of renewable energy production tend to be straw men. It is not necessary for a single type of energy production to satisfy 100% of the needs of a nation’s economy, any more than this is expected of coal, oil, gas or nuclear energy. Moreover, wind turbines   have already been successfully used to supply industrialised nations with as much as a quarter of their electricity, and that with current technology. Innovations such as windmills based on floating platforms, and (rather more experimental) ‘flying windmills’, may ultimately revolutionise the field.⁹⁷

Solar energy is more expensive, but more efficient in land use and   more easily installed because, rather than requiring tall towers, any rooftop will do. This form of energy may be particularly helpful when incorporated into energy-efficient buildings, which can become net energy producers.⁹⁸ Tidal energy, scarcely exploited because of high capital costs, also promises high returns.

While large-scale, high-return energy production from renewable sources only requires a ‘fossil-fuel platform’ for the initial set-up, if at all, other industries are likely to remain dependent on conventional oil for much longer. Modern agriculture and industry depend on oil-based plastics, pharmaceuticals and fertiliser, and there are no obvious substitutes for many of these (though they are comparatively minor users of fossil fuels).

Transportation, long the largest user of oil, also remains an issue – this is the main reason why France’s nuclear use has freed it from reliance on natural   gas and coal to a much higher degree than on oil. In the short term there are numerous ways to maximise the transportation industry’s efficient use of oil, and every barrel of conventional or unconventional oil not used to power an electric grid is freed up for other uses.⁹⁹ Over the longer term, however, much will depend on the degree to which vehicles like buses, cars  and trains shift to electric power; and the ability to translate electrical generation from renewables into gaseous fuels like hydrogen and ethanol, the large-scale economies of which remain unproven.¹⁰⁰

Achieving a combination of energy conservation and expanded energy production from non-fossil-fuel sources will bring demand closer in line with the sustainable supply.¹⁰¹ However, this goal is unlikely to be achieved without significant state inputs. The contribution of public money to research and development efforts would be a necessary part, but is not the only role that government can play.

Other actions could include setting high fuel-efficiency standards for vehicle fleets; requiring utility companies to produce set portions of their total energy output from alternatives; purchasing energy from renewable sources whenever possible; and offering   assorted subsidies, such as tax breaks and loans, to defray the costs of the changeover to consumers.¹⁰²  

Efforts in this area have so far been piecemeal, with modest goals: a common target across the industrialised world is to attain a double-digit percentage of energy needs from renewable sources by 2010 or 2020, much of that to come from long-established hydroelectric power. Nonetheless, there are signs that governments are beginning to consider more ambitious and comprehensive plans. Last year, for instance, the Swedish government announced a plan to end Sweden’s dependence on fossil fuels by 2020.¹⁰³  

Accomplishing this in 15 years may seem over ambitious, and not every country enjoys Sweden’s combination of affluence and geography. Nonetheless, that time frame is an accurate reflection of both the problem’s severity and the availability of practical tools for coping with it, and is a model for other states following the same course, ideally in cooperation with one another.

As with climate change, the impending oil shock is too complex for any nation to fully address on its own. The global integration of the economy, the fact that every country draws on a common pool of oil, and the particular difficulties facing underdeveloped states, make carefully considered collaboration on the planetary level the only way forward.

 

Notes:

87 Energy Information Administration, ‘World Net Nuclear Power Generation, 1980–2004’, 7 July 2006,      http://www.eia.doe.gov/fuelnuclear.html.     

88 This includes proponents of the ‘hydrogen economy’, who envision nuclear-generated electricity producing fuels for vehicles (like hydrogen), rather than renewable sources like wind and solar. Thomas P. Barnett, Blueprint for Action: A Future Worth Creating (New York: Putnam, 2005).     

89 See ‘Cuba’s Nuclear Power Plants at Juragua’, FAS.org, http://www.fas.org/nuke/guide/cuba/main.html.    

 90 Office of Civilian Radioactive Waste Management, Department of Energy, Yucca Mountain Repository, July 2007, http://www.ocrwm.doe.gov/index. shtml.     

91 H.A. Feveison, T.B. Taylor, F. von Hippel and R.H. Williams, ‘Plutonium Economy’, Bulletin of the Atomic Scientists, vol. 32, no. 10, December  1976, pp. 10–21, 46–55.     

92 Arjun Makhijani, Plutonium End Game:  Managing Global Stocks of Separated Weapons-Usable Commercial and Surplus  Nuclear Weapons Plutonium, Institute  for Energy and Environmental  Research, Report, Jan. 2001.     

93 Ewen Askill and Ian Traynor, ‘Saudis Consider Nuclear Bomb’, Guardian, 18 September 2003, http://www.guardian.  co.uk/saudi/story/0,11599,1044402,00.html.     

94 Thomas Homer-Dixon notes that ‘as environmental degradation proceeds, the size of the potential social      disruption will increase, while our capacity to … prevent this disruption decreases. It is therefore not a reasonable      policy response to assume we can intervene at a late stage, when the crisis is upon us.’ See Homer-Dixon, ‘On The Threshold: Environmental Changes as Acute Causes of Conflict’,   International Security, vol. 16, no. 2, Fall 1991, pp. 76–116.     

95 Clayton Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fall (Cambridge, MA: Harvard University Press, 1997).     

96 For an examination of how conventional economic measures distort      cost–benefit calculations, see Clifford      Cobb, Ted Halstead and Jonathan Rowe, ‘If the GDP is Up, Why is America Down?’, The Atlantic Monthly, vol. 276, no. 4, October 1995, pp.  59–78.  

97 Windmills on floating platforms (compared with conventional offshore windmills that take advantage of stronger offshore winds) may cost only a third as much to build and set up, and can be redeployed easily to meet shifting demand and operated in a wider range of locations (such as in deep water, hundreds of miles out to sea), while possibly tripling the output  of land-based turbines. Ker Than, ‘Floating Ocean Windmills Designed to Generate More Power’, LiveScience, http://www.livescience.com/technology/ 060918_floating_windmills.html. Flying windmills exploit the wind stream and return the energy produced to electrical grids on the ground through a tether. Given the very high   levels of relatively inexpensive power a small number of such clusters can produce (it has been estimated that a few thousand could meet Canada’s present demand for electricity), this approach would seem especially attractive for the purposes of a rapid changeover. Lawrence Solomon,‘Flying Windmills’, National Post, 19 March 2005, http://windenergynews. blogspot.com/2005_03_01_archive. html.    

 98 See Andrew Murr, ‘No More Electric Bills’, Newsweek, 15 August 2005, p. 43.     

99 The options include not just more  mass transit, rail lines, telecommuting and small cars, but diesel engines,      electric cars, hybrid vehicles making partial use of batteries, internal combustion engines using ‘lean burn‘      technologies, and new materials that  are lighter and stronger than those  presently used. 

100 At this point one of the highest priorities for research and development in this area is arguably to develop  methods that maximise the energy  efficiency of biofuels processing.   

101 Some studies contend that the growth in energy efficiency can outpace plausible economic growth rates in   the advanced economies. See Ernst von Weizsacker, Amory Lovins and Hunter Lovins, Factor Four: Doubling Wealth, Halving Resource Use, the New Report to the Club of Rome (London: Earthscan, 1997).    

 102 Such initiatives can of course be financed through money withdrawn from subsidies for fossil-fuel use,      and fuel taxes, which also appear to have been a powerful contributor to      Europe’s relative fuel efficiency.

 103 ‘Sweden Aims for Oil-Free Economy’, BBC News, 8 February 2006, http://news.bbc.co.uk/2/hi/science/nature /4694152.stm. John Vidal, ‘Sweden Plans to be World’s First Oil-Free Economy’, Guardian, 8 February 2006, http://www.guardian.co.uk/environment/2006/feb/08/frontpagenews.oilandpetrol.

   

Concluded

 

 

NEWS BRIEF

OIL & GAS

BPCL, Videocon eye stake in Mozambique block

June 23, 2008. BPCL and Videocon Industries Ltd. are close to buying a 20% stake in Mozambique's Rovuma Offshore Area 1 block from US-based firm Anadarko Petroleum Corp. Currently, Anadarko owns 56.5% of the asset, while Canada's Artumas Group has 8.5%, Japan's Mitsui & Co. 20% and Empresa Nacional de Hidrocarbonetos de Mozambique 15%. BPCL would spend up to US$200 mn in the current financial year to March, targeting small stakes in overseas oil and gas assets. The public sector oil company has stakes in 24 oil and gas blocks in India and abroad. Videocon and Bharat PetroResources Ltd., the exploration unit of BPCL are equal partners in a consortium that will buy the holding in the Mozambique's offshore exploration block. Last year, the two companies together bought EnCana's stakes in 10 Brazilian deepwater offshore exploration blocks in four concessions. They are also partners in a block in a joint development area between East Timor and Australia, and a separate asset in Oman.

NELP VII bid submission date not to be deferred

June 23, 2008. The June 30 bid submission date for the seventh round of New Exploration and Licensing Policy (NELP VII) will not be deferred. Mr M.S. Srinivasan, Secretary, Ministry of Petroleum, said, “There is no postponement…We will make the position abundantly clear to bidders to factor in tax holiday issues.” The bid dates for the forthcoming rounds have been postponed thrice earlier due to the lack of clarity on taxation issues. The initial closing date for bid submission was April 11, which was extended to April 25, and then to May 16 before finally being deferred to June. Bids for 57 oil and gas blocks are due on June 30. The confusion came when the Finance Ministry said that the seven-year tax holidays were only for crude oil production, and that natural gas producers cannot avail themselves of the benefit. The tax incentive has been part of the NELP bid documents.

Aban Offshore rides high on rising crude

June 19, 2008. Aban offers drilling and oil field services for offshore exploration and production to the oil industry both in India and internationally. Rising crude prices have lead to a rise in exploration activity, which in turn have caused hiring rates for Aban’s services to soar new heights. Analysts tracking the company had feared that high capacity addition this year by the industry would lead to a correction in hiring rates. But rates, which had risen substantially in the past few years, have held. Now, with crude prices soaring to new heights, some analysts feel that rates can only go up. According to Macquarie Research, Aban is best placed to benefit from the current shortage of rigs and the resulting rise in day rates. It explains that India has the fourth largest number of offshore rigs operating in the world and Aban is ideally poised since more than half of its fleet is positioned in this region.

ONGC exits Kakinada, GMR enters

June 24, 2008. Private infrastructure company GMR will replace ONGC in the proposed Rs 31,000-crore ($7.2 bn) refinery and petrochemical plant at Kakinada in Andhra Pradesh. The exit follows the country's largest oil and gas producer's claims over the past year that the project was unviable. GMR will hold 51% in the Kakinada Refinery and Petrochemical Ltd (KRPL), the company implementing the project. As per ONGC, which had a 46 per cent stake in the project through its subsidiary MRPL, with an existing Hindustan Petroleum refinery in Visakhapatnam and another planned, the market for the Kakinada refinery would be narrowed. ONGC had also asked the Andhra Pradesh government, with which it had signed an agreement in September 2006, for tax incentives of Rs 16,000 crore ($3.7 bn) over eight years to make the project viable. The state government, however, declined.

GMR had not yet received any official communication from ONGC. The Andhra Pradesh government is not expected to extend tax sops to GMR either. Finance company IL&FS and the Kakinada Seaports Ltd will hold 46 per cent while the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) will have the remaining 3 per cent. The Andhra Pradesh government was keen that the refinery be set up in Kakinada because it wanted to build up infrastructure in the port town. The refinery is being planned in a SEZ land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR), which is like a giant SEZ in which the government provides all basic infrastructure for industries, that runs over 150 km from Visakhapatnam to Kakinada. 

L&T wins orders from KNPC, others

June 20, 2008. The Heavy Engineering Division of Larsen & Toubro Limited (L&T) wins orders that include several orders for refinery and petrochemical plant equipment. L&T will supply of coke drums for Kuwait National Petroleum Company, Kuwait (KNPC); high pressure heat exchangers from Petroleo Brasileiro, Brazil; ammonia converters from UHDE, Germany; and reactors from PTT Asahi Chem Co. Ltd, Thailand. The orders have been won against stiff international competition from Italian, Japanese and Chinese manufacturers. They will be executed by L&T's Heavy Engineering Division (HED). The KNPC contract is for four coke drums required for KNPC's prestigious, Clean Fuel Project 2020. Each coke drum weighs 240 MT and is made up of special grade steel, viz., Cr-Mo steel with stainless steel (SS410) overlay. L&T is presently manufacturing 22 hydrocracker and atmospheric residue desulfurization (ARDS) Reactors using advanced technology steels containing chromium, molybdenum and vanadium, with thickness up to 300 mm and weight up to 1450 MT for the same clean fuel project. The equipment will be manufactured at L&T's state-of-the-art manufacturing facilities at Powai & Hazira. L&T has supplied several critical reactors and high pressure heat exchangers to refinery and petrochemical majors in US, Canada, Europe and China, and has developed capabilities to design and manufacture the new generation Cr-Mo-V equipment for global markets.

MRPL to launch branded fuel at its outlets

June 18, 2008. Mangalore Refinery and Petrochemicals Ltd will be launching the branded petrol and diesel in the OVaL retail outlet of Oil and Natural Gas Corporation and HiQ retail outlets of MRPL in the next seven to 10 days. The branded petrol and diesel products will be named as ‘HiQ Value’ and ‘Oval-XL’. The ‘HiQ Value’ and ‘Oval-XL’ petrol will have lower sulphur, benzene and aromatic contents, resulting in lower emissions. This will lead to better engine performance due to less cylinder deposit and higher lubricity and lower maintenance costs.

The ‘HiQ Value’ and ‘Oval-XL’ diesel will have higher cetane index, resulting in quick start. These products will be competitively priced. The company, which has launched a retail outlet at Maddur on Bangalore-Mysore highways, will launch the outlets at Mangalore and Hubli in the next two months. Though the company has licences to open 500 outlets, it is going slow on this front in the present oil market conditions. ONGC has its retail outlet at Kuthethur in Mangalore.

India, Pak, Iran to discuss pipeline in July

June 23, 2008. Officials from India, Pakistan and Iran will meet next month to discuss construction of the much-delayed US$7.6 bn pipeline to transport natural gas from Iran to the sub-continent. Iran and India are yet to agree on the delivery point of the natural gas. India wants Iran to deliver gas at the border it shares with Pakistan as Pakistan has no problem with India's stand. The three countries want to build 2,100-kilometer long natural gas pipeline by December 2012 after a decade of delays. The IPI project was first proposed by India and Iran in 1989. The talks began in 1994, but were delayed by tensions between India and Pakistan and later disagreements over the cost of gas.

Cairn to begin pipeline laying to ferry Rajasthan crude

June 22, 2008. Cairn India will soon begin laying a $800-million pipeline to evacuate crude oil from its Rajasthan fields, peak output from where is now seen at 175,000 barrels per day - 17 per cent more than the previous estimate. Physical laying of the 585-km long pipeline will begin on June 24 at a place on the Gujarat-Rajasthan border. The company has awarded the pipeline laying contract to Larsen and Toubro, who is to complete the job in 6 to 9 months time, in sink with the company's oil production plans. The heated pipeline for transporting crude oil from the Rajasthan fields will begin at Mangala terminal, located at Barmer, to Salaya oil export terminal near Jamnagar in Gujarat. Crude oil production from the Rajasthan fields is to begin in second half of 2009 even as estimates for peak output have been raised by about 17 per cent. The largest field in the RJ-ON-90/1 block, was previously envisaged to produce 100,000 bpd (5 mtpa) but discovery of additional reserves has raised the output to 125,000 bpd. Bhagyam, the second biggest field, will produce 40,000 bpd and Aishwariya 10,000 bpd, totalling to 175,000 bpd (8.75 mtpa). The government has already approved inclusion of the pipeline investment in field development plan and recovering the cost through sale of crude oil. The government has approved shifting of the crude oil delivery point from the Rajasthan field flange to Salaya in Gujarat and including the cost of laying the 585-km pipeline from Barmer to the new sale point in the field development cost that would be recovered by Cairn from sale of oil. MRPL would be denominated as the government nominee for buying crude from the Rajasthan fields and Cairn would be given freedom to market the oil in India. 

IOC restricts diesel supply, goes for premium

June 20, 2008.Transporters and diesel vehicle-owners may now have to pay more for their fuel as Indian Oil Corp. Ltd (IOC), the country’s largest oil refiner and marketer, has suggested dealers that it is going to supply them diesel at last year’s levels, asking them to instead sell the premium variety if demand exceeds supply. The move comes on the back of the Centre’s decision on 4 June to raise the price of transport fuels by about 10%. Demand for diesel increased by more than 11% between 2006-07 and 2007-08. IOC has told its dealers that any increase in diesel consumption will have to be met by selling the premium variety, which costs around Rs3 more. It has also instructed pumping stations that the premium variety has to account for at least a third of their total diesel sales, which the company says will discourage sale to non-transportation segments. There is an excellent response for premium fuel from the users, due to the many advantages offered in terms of mileage and vehicle performance. Diesel is a transportation fuel and should not be diverted to the non-transportation sector. Premium fuel accounts for 20% of IOC’s total diesel sales. The company has 17,600 outlets, of which 11,000 sell premium diesel. IOC, Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd have already stopped supply of subsidized diesel to commercial establishments. BPCL has partially capped sales by linking it to what fuel vends received last year. IOC posted a net loss of Rs 414.27 crore ($96.4 mn) for the fourth quarter of 2007-08, against a net profit of Rs 1,502.69 crore ($350 mn) in the same period the previous year, because of what oil firms call under-recoveries, or retailing fuel below cost. India has a refining capacity of 149 million tonnes a year of crude oil, and IOC has a 40.4% share of the business. The company says it loses Rs 300 crore ($69.8 mn) a day because it sells petrol, diesel, kerosene and liquified petroleum gas at a loss of Rs 9.70 per litre, Rs 18.70 per litre, Rs 36 per litre and Rs 303 per cylinder, respectively. Before the latest price increase, it pegged it losses at Rs 16.33 per litre, Rs 23.49 per litre, Rs 28.72 per litre and Rs 305.90 per cylinder, respectively. IOC sold 59 million tonnes of transport and cooking fuels in the year to March, half of which was petrol and diesel.

Srilanka asked LIOC to supply diesel at lower price

June 20, 2008. The Sri Lankan government has asked LIOC, the Lankan subsidiary of India's oil major Indian Oil Corporation, to reduce diesel prices on par with the country's state-run oil company, unless the government will take action against it. Surging global oil prices has forced oil retail Companies in Sri Lanka to sell diesel at a loss despite increase in retail prices. To mitigate its losses, LIOC has increased its prices higher than those offered by the Ceylon Petroleum Corporation (CPC) forcing consumers to buy the fuel from the state company instead of LIOC. Lankan Indian Oil Corporation (LIOC) sells around 20 million litres of diesel every month and its sales have come down to a trickle after they increased the price even higher than CPC to minimise losses.

‘Fuel prices may need to be hiked again’: BPCL

June 19, 2008. As per BPCL, in order to help refiners cut losses from selling fuels below cost, the country may have to raise fuel prices again if crude oil prices continue to rise. The Indian government caps fuel prices to control inflation and has raised prices twice in as many years, while international crude oil prices have almost doubled over the same period. The last increase was on 5 June.

The government issues bonds to state-run oil refiners to compensate for losses from selling fuels below cost. BPCL’s fourth quarter net income dropped 91% to Rs 58.4 crore ($13.5 mn) because of the high costs of buying crude oil and lower compensation from the government. The refiner had a loss of Rs 3,420 crore ($796 mn) from selling fuels below cost in the year ended 31 March. BPCL received bonds worth Rs 8,590 crore ($2 bn) as compensation during the year. Oil refiners will lose about Rs 29,000 crore ($6.7 bn) in the year to March 2009 after accounting for recent price increases and issuance of oil bonds to subsidize fuel sales.

Indian firms keen to buy stake in Petronet LNG

June 19, 2008. Indian Oil Corp, Oil and Natural Gas Corp and GAIL India have expressed interest in buying out the Asian Development Bank's 5.2 percent stake in Petronet LNG. In response to ADB's offer to exit the nation's largest liquefied natural gas importing company, three out of the four state-run promoters of Petronet expressed interest in buying ADB's entire equity. Bharat Petroleum, which like IOC, ONGC and GAIL also holds 12.5 percent stake in Petronet, has, however, not responded. The three firms in separate letters to ADB suggested that the multilateral lending institution sells 1.3 percent equity shares each to IOC, ONGC, GAIL and BPCL who have the first right of refusal in the event of the multinational firm exiting from Petronet. However, if the state-run promoters are not allowed to raise stake in the company for fear of it becoming a public sector unit, IOC suggested selling ADB's shareholding to the public. The state-run firms were against giving a backdoor entry to someone like steel czar Lakshmi N Mittal, who is keen on getting a foothold in the LNG business. IOC, GAIL, ONGC and BPCL together hold 50 percent stake in Petronet, while Gaz de France holds 10 percent. These firms have the first right of refusal over ADB's stake. ADB is likely to exit Petronet by year end as its internal regulations prohibit it from being a debt financier as well as equity holder in the same company.

RIL denies signing gas sale pacts

June 19, 2008. RIL has reportedly denied signing formal gas sale contracts with prospective customers in defiance of a Bombay High Court order. RIL said that the court had dismissed the notice of motion filed by RNRL, who had sought the dismissal of the Mukesh Ambani-owned company's plea to allow it to sign MoUs with fertiliser and power companies. Last year, the High Court had ordered RIL not to sign formal contracts till the dispute with RNRL is settled. The case is now before a division bench. RIL may sign agreements for the sale of gas to third parties only after the court rules in RIL's favour. The case will come up for hearing on July 22.

India calls for oil price band

June 23, 2008. Battling oil-induced runaway inflation, India mooted a price band mechanism to calm soaring crude prices as the world's top oil producer Saudi Arabia joined it in blasting oil speculators for the surge. Saudi King Abdullah launched an offensive against oil speculators saying the abhorrent acts by a group of elements were responsible for the quick and unjustified increase in petroleum prices in the recent times. Finance Minister, P Chidambaram, urged the oil producing and consuming nations to wrest control over oil trading from the hands of the speculators. Chidambaram, accompanying Petroleum Minister Murli Deora as part of the Indian delegation to an emergency meeting of the world's energy ministers, said the only way forward for both the producers and consumers is to find a common ground.

Liquidity position of oil marketing companies improves

June 23, 2008. The Reserve Bank of India’s decision to allow the oil marketing companies to trade in oil bonds via special market operations and offer much needed foreign exchange has reportedly brought a reasonable change in the liquidity position of public sector oil marketing trio viz., IndianOil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd. All three companies have made a beeline to clear the stock of bonds- considered as a near-illiquid asset till the RBI directive came on May 31- within July. The deal appears to be doubly sweet to the companies as they are now selling bonds at 2-3 per cent discount, compared to as high as 8-9 per cent discount till May this year. As a net impact, the three companies have stopped raising fresh loan finances and are expected to bring down the total borrowings during this quarter and bring a marginal improvement in the debt-equity ratio, which was hovering between 1:1 and 1:1.5 in April. The three companies witnessed 40-60 per cent increase in total borrowings in 2007-08 to meet the cash requirements. Soon after the RBI notification, IndianOil, the biggest of the three companies, offloaded Rs 7,250 crore ($1.6 bn) worth of bonds in a gap of just 10 days this month. This was over and above the Rs 4,300-crore ($1 bn) worth of bonds sold in April at heavy discounts. IndianOil has not made any fresh borrowing in June and is expected to bring down total borrowings by nearly Rs 2,000 crore ($466.7 mn) from approximately Rs 37,000 crore ($8.6 bn) in June-end.

Power, petroleum hit core sector growth

June 19, 2008. Core sector growth for April 2008 declined to 3.6 per cent from 5.9 per cent in the same month last year on account of a huge fall in production of petroleum refinery products and electricity. The index comprises production data of six sectors. The index, having a weight of 26.7 per cent in the Index of Industrial Production (IIP), stood at 232.3 (provisional) in April 2008, a growth of 3.6 per cent, compared with a growth of 5.9 per cent in the year-ago month. During April-March 2007-08, the index grew 5.6 per cent (provisional), against 9.2 per cent in the corresponding period of the previous year. Production of crude oil, which has a weight of 4.17 per cent in the IIP, registered an increase of 0.9 per cent (provisional) in April 2008, compared with 1.4 per cent in April 2007. The crude oil production registered a rise of 0.4 per cent (provisional) in April-March 2007-08, compared with 5.6 per cent during the same period of 2006-07. Petroleum refinery production (which has a weight of 2 per cent in the IIP) grew 4.3 per cent (provisional) in April 2008, compared with 15.1 per cent in the year-ago month. It grew of 6.5 per cent (provisional) during April-March 2007-08, compared with 12.9 per cent in the same period of 2006-07. Coal production (weight of 3.2 per cent in the IIP) registered an increase of 10.3 per cent (provisional) in April 2008, compared with 0.6 per cent in April 2007.

Karnataka govt reduce sales tax on petrol, diesel

June 19, 2008. Karnataka government reduced sales tax on petrol by 3%, that of diesel by 2%, while VAT on LPG was brought down from 4% to 1%. The new prices will come into effect from June 20. According to report, prices of petrol will come down by Rs 1.35 from the existing rate of Rs 58.50 per litre. Diesel prices will be down by 65 paise from Rs 39.80 per litre. LPG will see a reduction by Rs 10.34 per cylinder from Rs 358.42. The new prices will mean a revenue loss of Rs 2.75 bn ($64 mn) annually to the government exchequer.

Govt sets safety rule for oil & gas sector

June 18, 2008. The Ministry of Petroleum & Natural Gas has decided to notify Petroleum & Natural Gas (Safety in Offshore Operations) Rules, 2008, for regulation of safety in offshore oil & gas exploration and production. These rules will be applicable to all public sector undertakings, private/joint venture companies operating in territorial waters, contiguous zone, continental shelf and exclusive economic zone of India in offshore upstream oil & gas sector. They would benefit the industry to enhance safety levels, bring uniformity in safety standards across all companies, minimize production loss/ accidents and optimise use of precious oil & gas resources of the country. Oil Industry Safety Directorate (OISD), a premier technical arm of Ministry of Petroleum & Natural Gas, has been designated as competent authority to exercise the powers under the rules. OISD will develop HSE standards, conduct safety audits, carry out investigations to meet the requirements of these rules.

NCR spends $326 mn p.a. on diesel

June 18, 2008. A whopping amount of nearly Rs 14 bn ($326.4 mn)) per annum is spent on diesel for running Gen sets by about 40,000 industrial units located in and around NCR belt to meet their production targets, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM). Roughly, a yearly consumption of 350 mn litre of diesel is estimated by these industrial units. Failure to abstain from making use of Gen Sets in NCR belt by these industrial units would cause them fall short of supplies commitments to vendors by over 40% as power situation in it remain extremely erratic and disruptive. The NCR belt during peak and lean production hours on an average suffer power scarcity for 8-10 hours a day, which has forced them to install on an average between 4-6 generator sets in each industrial location. It not only cause environmental and sound pollution but also is a sheer wastage of diesel consumption which otherwise should have been used for running road transport. The assessment of the ASSOCHAM compressed in a brief study, however, points out that over 38,260 small medium and large industrial units, including BPOs, ITeS companies etc. are operating in Ghaziabad, Gurgaon, Noida, Faridabad, Meerut, Loni, Ballabgarh, Bahadurgarh etc. These units roughly consume Rs 1.17 bn ($27.2 mn) per month of diesel to get over disrupted and erratic power supplies to meet and honour their production and supplies commitments. The maximum diesel spending, i.e. of Rs 6.75 bn ($157.3 mn) per annum has been witnessed in NCR's small units in view of their highest number (31,286 units) followed by medium and large industrial units spend Rs 3.86 bn ($89.9 mn) and Rs 3.4 bn ($79.2 mn), respectively of diesel per annum. The NCR has about 4600 and 2374 medium and large industrial units. According to the ASSOCHAM study, excess consumption of diesel for running Gen Sets by thousands of industrial units in the region, makes the industry incompatible as their margins suffer shrinkages because of high cost of diesel. 

Diesel spending by NCR's industrial units

Unit Size	Per Month Expenses (on average)	Industrial units (category-wise)
Each Small unit spend	Rs. 18,000/-	Smaller units 31,286
Each medium unit spend	Rs. 60,000-80,000 (average Rs.70,000)	Medium units 4600
Each large unit spend	Rs. 1 -1.35 lakh (average Rs.1.20 lakh)	Large units 2374
		Total Units 38260
Unit Size	Total Expenses Per Month	Total Expenses Per Annum
Each Small unit spend	31,286 x Rs.18,000 =Rs.56.32 cr.	Rs.675.84 cr.
Each medium unit spend	4600 X Rs.70,000 Rs. 32.20 cr.	Rs.386.4 cr.
Each large unit spend	2374x Rs. 1.20 lakh Rs. 28.48 cr.	Rs. 341.75 cr.
	Per Month Rs.  117 cr. Per Annum	Rs. 1404 cr.

One can imagine the same huge diesel expenses by approx. 160 shopping malls, over 3400 shops in small markets,  260 hospitals and 460 medium and large institutions  in the NCR and keeping in view 24 hours power, they are solely depended on generators. In a bid to complete their production targets, while each small industrial unit spent Rs 16,000-20,000 per month of diesel, medium and large industrial units in the region are spending Rs 60,000-80,000 and Rs 1 lakh to 1.35 lakh of diesel per month respectively on their industrial Gen Sets of large capacities. On an average, each small, medium and large units spending Rs 18,000, Rs 70,000 and Rs 1.20 lakh of diesel per month respectively. The maximum diesel spending has been witnessed in the NCR's BPOs units (upto Rs 1.35 lakh) in view of their 24x7 working nature.

POWER

Tata Power plans $6 bn capex

June 24, 2008. Tata Power Company (TPC), the country's largest private power generation company, plans to invest Rs 25,000 crore ($5.8 bn) to boost its capacity by six-fold to 12,800 MW by 2013. At present, the company is implementing new power projects to the tune of 5,500 MW. Tata Power, which produces about 2,400 MW currently, will set up a 1,000 MW coal-fired thermal power project at Naraj Marthapur, Orissa, through a public-private partnership (PPP). A 1,270 MW captive power project for Tata Steel will also come up at the same location. The power major will use coal from the Mandakini coal blocks in Orissa, which allotted the blocks jointly to Tata Power, the Jindal Group and Monnet Ispat, to boost power generation capacity in the state. About 1,500 acres are required for the project and the company has begun the process of land acquisition.

Tata Power is also planning a 500 MW tubed coal power project at Jharkhand with captive coal mines. It has already formed a joint venture with Hindalco and Tubed Coal Mining for coal mining. The company will also set up a 500 MW capacity captive power plant for Tata Steel in Jharkhand. Another 2,400 MW project will come up at Shahpur in Maharashtra, which will have 1,400 MW installed capacity in the first phase. About 540 acres of land has been acquired and the company expects the first phase to take off by 2012. Tata Power is in talks with the state government for further acquisition of land.

At present, Tata Power is implementing projects with collective generation capacity of over 5,500 MW, including the 4,000 MW UMPP at Mundra in Gujarat, a 1,050 MW project at Maithon in a joint venture with Damodar Valley Corporation, a 250 MW expansion project at its Trombay unit that is expected to be commissioned by October. Another 120 MW new unit at the firm's Jojobera power plant will be commissioned next year and it also has a 120 MW captive power plant for Tata Steel.

Currently, the firm has 50.4 MW capacity at Khandke and two additional wind power projects of 50.4 MW each are being developed in Jamnagar and Gadag at Karnataka. Tata Power, which currently has 447 MW of power generated from hydro electric projects, is also looking to add another 1,000 MW from projects in Nepal, Bhutan and across India.

Safety vault installed in Kalpakkam N-plant

June 24, 2008. With the successful installation of a safety vault in the 500 MW prototype fast breeder reactor at Kalpakkam, India today achieved a significant milestone in the area of commercial production of nuclear power, which is scheduled to go critical by 2010 and start producing power a year later. The near 200 tonne safety vessel has been erected to prevent any possible leakage of sodium which is a coolent in the reactor using uranium oxide and plutonium oxide as fuel. The installation of the safety vessel was the first process in attaining criticality by 2010. The main vessel will be installed inside the safety vault after three months. Nitrogen will be used in between the vessel and the vault to prevent any unlikely leakage. 

OTPC places letter of award on BHEL-GE consortium

June 23, 2008. ONGC Tripura Power Company Ltd. (OTPC) has placed a Letter of Award (LoA) on consortium of Bharat Heavy Electricals Ltd. (BHEL) and General Electric (GE) for the generation of 720 MW of power from Natural Gas produced by ONGC in the north-eastern state of Tripura. This 360X2 MW combined cycle gas turbine power plant is being developed by OTPC at Palatana in south Tripura. ONGC has 50% equity stake in OTPC, the balance being held by IL&FS and the Government of Tripura. This Letter of Award follows a bidding process where two bidders, viz. Alstom and BHEL-GE combine had participated. The total value of this contract for the generation project is Rs 22.07 bn. The first unit of 360 MW will be installed in 42 months, followed by the 2^nd unit within three more months. In addition to generation, the project includes transmission of the power, for which an independent Special Purpose Vehicle (SPV), a joint venture between Power Grid Corporation of India Ltd. (PGCIL), OTPC and North-Eastern Region (NER) beneficiaries, will develop a transmission system, to hook Palatana with the national grid at Bongaigaon. The likely cost of this transmission system is around Rs 18 bn.

NTPC’s Sipat Project goes commercial

June 20, 2008. The first 500 MW unit of NTPC at Sipat Super Thermal Power Project, Stage -II, in Chhatisgarh started commercial operations. NTPC’s 500 MW Unit-I at Sipat Super Thermal Power Project, Stage-II has commenced commercial operation. The unit touched its full load on May 30 and the second unit is expected to start commercial operations by October this year. These two 500 MW units form Stage-II of the project, while the three supercritical 660 MW units form Stage-I. The boilers for these three units would be supplied by a South Korean company, Doosan and turbines by Russian firm Power Machines.

1 GW FBRs to become mainstay of nuclear power

June 22, 2008. After the prototype of 500 MW(e) Fast Breeder Reactor (PFBR), now under advanced stage of construction, India plans to build 1000 MW (e) Fast Breeder Reactor (FBR). Once the 500 MW prototype is completed by September 2010 at Kalpakkam in Tamil Nadu, the atomic energy department will go for 1,000 MW FBRs, which would become a mainstay of nuclear power from 2020. India would also construct four 500 MW FBRs before going in for 1000 MW by 2020. The fast reactors from 2020 onwards will use metallic fuel instead of oxide fuel in order to reduce the doubling time. The unit cost of electricity with PFBR will be Rs 3.22 but this will be reduced drastically through economy of scale. Research and development on the fast breeders using metallic fuel are on full swing. The growth of nuclear power generation capacity with fast reactors will be significantly determined by the doubling time.

CIL and Tatas for electricity from washery rejects

June 21, 2008. Coal India Ltd and Tata Power plan to form a 40:60 joint venture to produce 12 MW power by using washery rejects and mine air (containing methane). The Rs 50 crore ($11.6 mn) project will be taken up under clean development mechanism and is projected to earn approximately Rs 6 crore ($1.3 mn) annually through trading of certified emission reduction, popularly known as carbon credit. The CIL board has approved the proposal approximately two months back. Tata Power is currently on the lookout for a technology partner. CIL has roped in Central Institute of Mine and Fuel Research, Dhanbad, as its technology partner in the project. According to him, though CIL would hold 40 per cent equity in the project through its wholly-owned subsidiary Bharat Coking Coal Ltd, the revenues from carbon credit would be distributed equally between the joint partners (CIL and Tata Power). According to the project proposal, Rs 35 crore ($8.1 mn) will be funded through loan finance. Of the Rs 15 crore ($3.4 mn) equity, Tata Power will contribute Rs 9 crore ($2 mn) and the rest will be contributed by BCCL. Rejects from the Moonidih washery, a coking coal mine under Bharat Coking Coal, would be used as the primary feedstock along with mine air containing 0.4-0.5 per cent of methane to generate thermal power. Considering that washery rejects are an environmental hazard and are generally used for landfill purposes, globally coal companies are looking for a gainful use of the same through power generation. On the other hand discharge of methane, a greenhouse gas, in the air is also considered harmful for the environment, due to its impact on the ozone layer.

BHEL bags order worth $429 mn

June 20, 2008. Bharat Heavy Electricals Limited (BHEL) has bagged an order for Rs 18.4 bn ($428.6 mn) Turnkey contract for setting up a 500 MW Power Project in Jharkhand. Valued at Rs 8.4 bn, the order has been placed on BHEL by Damodar Valley Corporation DVC, which has once again reposed confidence in BHEL’s proven technological excellence and capability in executing projects on turnkey basis. The order envisages setting up of one unit of 500 MW at Bokaro, a thermal power project. Three BHEL built units of 210 MW each are already in operation at DVCs Bokaro Thermal Power Station and with this order all the units at the power station will be of BHEL make. Significantly, DVC has earlier placed orders for 6 Units of 500 MW each on BHEL in the last two years and this order is a testimony to the customers confidence in BHEL. Slated for synchronisation during the 11th Plan, the project will add 12 Million Units (MU) every day to the grid on commissioning. BHELs scope of work in the contract includes design, engineering, manufacture, supply, erection and commissioning of Steam Turbines, Generators, Boilers, associated Auxiliaries, Balance of Plant and Electricals, besides state of the art Controls and Instrumentation, Electrostatic Precipitators ESPs and civil works.

PFC sanctions $2.3 bn credit line to NTPC

June 19, 2008. Power Finance Corporation (PFC) has sanctioned a loan of Rs 100 bn ($2327.7 mn) to NTPC for various projects to be completed in the current 11^th Five Year Plan. MoU towards this is likely to be signed in the next one week between two PSUs and the money would be disbursed in instalments. NTPC seeks to generate 50,000 MW by 2012. It has lined up over Rs 132 bn ($3072.6 mn) capital expenditure in the current financial year and the loans from PFC would be partly utilised for the projects being undertaken in 2008-09. The power producer would double coal imports during the current fiscal to 5 million tonnes, while its overall consumption of the fuel during 2008-09 is expected to surge to 140 mt.

Punjab thermal plants face crisis

June 22, 2008. Punjab may be in for a power crisis with the coal stock in state's thermal plants reaching critical stage due to a transporters' strike. While Lehra Mohabbat thermal plant has the coal stock left only for six days, the coal stock at Guru Nanak Dev Thermal plant and Ropar Thermal plant would last for 12 and nine days respectively. According to norms, the thermal plants should have coal for at least 30 days. The strike by transporters of the Central Coalfields Ltd (CCL) has affected coal supplies at a time when Punjab needs additional power supply for paddy sowing. The supply has reduced by 32 per cent. 

M’shtra power situation may improve with RGPPL gas supply

June 21, 2008. Power supply in Maharashtra has improved and it is expected to get even get better with the additional 500 MW being supplied from Ratnagiri Gas and Power Pvt Ltd, Dabhol, by September. Since restarting operations in May 2006, the plant has never reached its full capacity of 2,150 MW due to inadequate supply of natural gas and technical problems with its turbines. In the last two years, the plant has only been able to scale its power from 100 MW to 900 MW. It sells power to the State utility at Rs 3.10 a unit. Out of 30,000 villages in the State, 16,000 are covered under feeder separation program. Under the village feeder separation program, power is supplied through separate feeders to agriculture pumps and for domestic supply. The programme helps manage consumption by shifting the agriculture load to non-peak hours. In many areas, load shedding hours has reduced by 50 per cent due to better load management. Additional 500 MW from Paras and Parli thermal power plant and adherence to grid discipline by northern States has also reduced blackouts and load shedding.

Fitch affirms BBB- ratings to NTPC

June 19, 2008. Fitch Ratings has affirmed the Long-term foreign currency Issuer Default Rating (IDR) of India-based NTPC Limited (NTPC) at 'BBB-' (BBB minus). The agency has also affirmed the 'BBB-' (BBB minus) rating on NTPC's $200 mn Eurobond issue and its $1 bn Medium-Term Note programme. The rating Outlook remains Stable.

NTPC's ratings are based on its strong business and financial position as the leading Indian electricity producer supported by its consistent growth in profitability and large cash balances. The company has ambitious organic growth plans over the next few years and will play an important part in developing India's much-needed additional electricity generation capacity. The company has 19.1% of India's aggregate generating capacity, which accounted for 28.5% of the country's electricity generation during FY08; this reflects efficient operations and better plant utilisation compared with its Indian peers. All its 22 plants, located across the country, operate under long-term power-purchase agreements with diverse state power utilities (SPUs), and cost-plus tariffs for power are fixed by the central regulator through an established mechanism resulting in low off-take and tariff risks. The company's large size, favourable operating conditions because of a demand-supply mismatch and an incentive scheme for timely payment from its creditors have helped NTPC to manage credit risk emanating from its financially weak counterparties, the SPUs. During the past five years, NTPC has been able to recover 100% of billing from its customers, which constitute a weak link in the electricity value chain due to their high transmission and distribution losses and other operational inefficiencies.

CIL and SCCL fall short of production target in May

June 24, 2008. Coal India and Singareni Collieires Company Ltd marginally fell short of their production targets in May this year. During the month of May 2008, the actual coal produced by Coal India Ltd and SCCL was 33.33 million tonnes (mt) as against the annual action plan (AAP) target of 34.41 mt. The actual coal production by CIL and SCCL during May 2007 was 31.02 mt. Therefore, there was a growth of about 7.44 per cent in the month of May 2008 over the corresponding period of previous year and dispatches to the power sector during the month stood at 26.66 mt.

The provisional results indicated that Coal India's companies cumulatively allocated 52.26 lakh tonne of coal in May as against the notified quantity of about 122.91 lakh tonne. Percentage increase over notified price was 69.3 per cent. Going by the monthly and progressive plan expenditure of CIL, SCCL and Neyveli Lignite Corporation Ltd (NLCL) for and up to May 2008, the cumulative expenditure by the three stood at 7.45 per cent of the Rs 6,597 crore plan outlay for 2007-08 (revised). Of the Rs 3,214.70 crore total plan outlay of CIL, the cumulative expenditure was 5.47 per cent, while that of SCCL stood at 6.06 per cent against the total outlay of Rs 665.30 crore. NLCL's cumulative expenditure stood at 10.13 per cent of the Rs 2,717 crore plan outlay.

‘India, China N-construction plans to ramp up uranium prices’: Goldman Sachs

June 24, 2008. The uranium industry’s worst year is about to collide with a nuclear construction programme in India and China that rivals the ones undertaken during the oil crisis of the 1970s. The result is likely to be a 58% rebound in uranium to $90 (Rs 3,870) a pound from $57 now, according to Goldman Sachs JBWere Pty. Ltd and the Rio Tinto group, the third biggest mining company. Uranium plunged 57% in the past year as an earthquake damaged a Japanese plant that is the world’s largest and faults shut down reactors in the UK and Germany. Plans for India and China to end electricity shortages will ripple from Canada to the Australian outback and the flatlands of Kazakhstan, the primary sources of uranium.

India will start three reactors this year, with another six due next year in India, China, Russia, Canada and Japan. Uranium demand worldwide will rise as fast as oil this year, or 0.8%, Deutsche Bank AG forecasts. The year long decline in uranium contrasts with record prices for oil and coal as Asian energy demand expands and concern mounts that emissions will cause global warming to worsen. The world needs to build 32 new nuclear plants each year as part of measures to cut emissions in half by 2050. Because malfunctions shut reactors in Japan, the UK and Germany, nuclear power production and uranium use dropped 2% in 2007, only the third time consumption has fallen since the 1970s, according to data compiled by BP Plc.

In India, Nuclear Power Corp. of India Ltd’s 220 MW Kaiga plant in Karnataka and another at Rawatbhata in Rajasthan are due to come online this year. China started two units in 2007 and will bring on three more through 2011. Iran plans to begin generation this year at its 950 MW Bushehr reactor, which is at the centre of the nation’s conflict with the West. China is just on the verge of a second rapid phase of expansion. Uranium demand was 66,500 metric tonnes last year, according to data from Denver-based consultant TradeTech Llp. Consumption may jump 55% to 102,000 tonnes by 2020, forecasts Macquarie Group Ltd, Australia’s biggest securities firm.

India uses power diplomacy to engage Myanmar, win project

June 24, 2008. The roadblocks that have delayed a key hydropower project in Myanmar by more than three years may finally be cleared during minister of state for power Jairam Ramesh’s visit to Myanmar. The Export-Import Bank of India, or Exim Bank, is to extend two lines of credit amounting to $84 mn (Rs361.2 crore) to Myanmar during the four-day trip by Jairam Ramesh, who is also minister of state for power & commerce and industry. Myanmar had redesigned the Tamanti project, doubling its capacity to 2,400 MW. NHPC Ltd, previously known as National Hydroelectric Power Corp. Ltd, an Indian government enterprise, had prepared a feasibility report for the original 1,200 MW project. The lines of credit are for developing the power transmission and distribution networks in Myanmar. Tamanti is in the north of Myanmar. Once completed, the project would help control floods and provide water for irrigation in the region. India would receive the bulk of the power generated.

Myanmar has hydroelectric power potential of 39,720 MW and an installed capacity of around 747 MW. India has been trying to utilize its infrastructure development efforts in Myanmar to sign long-term contracts for supply of natural gas. The successful completion of the project could help India develop more hydropower projects in Myanmar and tap its energy resources. Myanmar has natural gas reserves of 89.722 tcf, of which 18.012 tcf are proven recoverable reserves or gas that can be easily extracted and tapped.

Sasan UMPP’s mining plan gets government approval

June 23, 2008. Government has approved the mining plan for the coal block that Reliance Power plans to use for setting up 4,000MW Ultra Mega Power Project (UMPP) at Sasan in Madhya Pradesh. Mining plan for Moher and Moher-Amlori Extension coal block relating to Sasan Power for Sasan UMPP was approved by the Ministry of Coal earlier this month. Sasan Power is a Special Purpose Vehicle (SPV) set up by Power Finance Corporation for Reliance Power’s 4,000 MW Sasan UMPP in MP.

CIL may extend deadline for fuel supply agreements

June 21, 2008. Lukewarm response from the power sector may force Coal India Ltd (CIL) to extend the June 30 deadline for signing the fuel supply agreements (FSA) with its customers. According to the New Coal Distribution Policy (NCDP), FSAs will replace the existing linkage system for coal supplies. The power sector has recently started entering into FSAs. Karnataka Power Corporation Ltd was the first to sign the agreement.

Approximately 75 per cent of CIL's existing annual production of 380 million tonnes goes to the power sector. Out of 75 major coal-based thermal power stations in the country having a combined capacity of 66,000 MW, CIL caters to 72, having a generation capacity of 64,000 MW. The new distribution policy makes it mandatory for the company to meet the entire requirement of the sector at a notified price.

According to CIL, the process was getting delayed, as the utilities were yet to come to terms with the minimum assured offtake or supply level (described as trigger) included in the proposed agreement, the violation of which may invite penalty on either the supplier or the buyer. For existing customers, the assured supply/offtake level is set at 60 per cent of the agreed quantity under the FSA. For new customers, the trigger is set at 50 per cent of FSA quantity. The Government was moving ahead on the proposal of appointing a coal regulator. The Ministry has already forwarded a proposal in this regard to the Planning Commission.

Protests hold up uranium mining projects in Andhra, Meghalaya

June 20, 2008. Public resistance over uranium mining is likely to hobble India’s efforts to boost domestic production of the mineral, even as half the installed capacity at nuclear plants lies unutilized due to a fuel shortage. The country is facing a shortage of uranium because it has been slow in opening up new mines. The state-run miner Uranium Corporation of India Ltd, or Ucil, will soon be building a Rs1,129 crore ($262.9 mn) mine and mill at Tummalapalle village in Kadapa district of Andhra Pradesh that would have a capacity to produce 1,50,000 tonnes of uranium a year.

The government is, however, facing protests by residents and activists, who oppose uranium mining on health and environmental grounds. The Atomic Minerals Directorate, or AMD, the national agency that explores and identifies radioactive mineral deposits in the country before Ucil starts mining activities, has located uranium ore deposits in the two villages. Indian laws mandate that Ucil conduct public hearing before setting up mining and processing plants. At various such public hearings, a majority of the participants opposed the projects. Ucil plans to invest more than Rs1,000 crore ($232.9 mn) to set up a mine and ore processing plant in Domiasiat in West Khasi Hills district in Meghalaya, where local organizations protested its project at a public hearing in June last year.

India’s environment and forests ministry, however, gave a clearance to Ucil to go ahead with its project in August 2006, when the Movement Against Uranium Project (MAUP) filed a public interest litigation at the Andhra Pradesh high court. The DAE has received flak in the recent past for the serious demand and supply mismatch and Ucil has been under increasing pressure to increase domestic production. The department targets producing 20,000MW through nuclear power by 2020. With uncertainty regarding the nuclear agreement with the US, uranium availability is a major constraining factor in the nuclear power sector in India. According to the power ministry the uranium fuel for the 2 x 1000 MW units at Koodankulam in Tirunelveli district have arrived from Russia and both Russian-supplied reactors are likely to come into commercial operation by end-2009.

92.2 MW power project commissioned at Tamil Nadu

June 18, 2008. The first stage of the 92.2 MW Valuthur gas-based combined cycle power project was commissioned at Valuthur in Tamil Nadu. The capacity of the first stage is 60 MW and the balance 32.2 MW capacity will be commissioned in a month’s time. The project is supplied with gas from a nearby gas field of ONGC  (Ramnad zone) and the turbines have been procured from the energy company, Ansaldo.

OIL & GAS

Suncor's production ramps up at oil sands operation

June 24, 2008. Suncor Energy Inc. reported that production at its oil sands operation is expected to ramp up over the next several days as the planned maintenance shutdown of one of its two oil sands upgraders is completed. Planned shutdowns, which are part of the normal course of operations at the company’s oil sands facilities, are scheduled to provide both preventative maintenance and capital replacement to improve operational efficiency.

Franklin Mining to provide rigs with Cherokee and GTS

June 24, 2008. Franklin Mining, Inc. has entered into a joint-venture agreement with Cherokee Oil & Gas, Inc., Tulsa, OK and General Turbine Systems, Inc., Houston, TX to provide oil rigs in Bolivia, Colombia and Franklin Oil & Gas, Bolivia S.A. has offered four rigs to YPFB (Yacimientos Petroliferos Fiscales Bolivianos). Another three rigs have been offered in Colombia and two in Brazil. In addition to providing rigs, Franklin Oil & Gas, Bolivia has submitted an application to YPFB for exploration and workover permits in four Bolivian oil fields.

CNOOC starts up Xijiang oil field in South China Sea

June 24, 2008. CNOOC Limited’s new oil field Xijiang (XJ) 23-1 in the South China Sea has successfully started production. XJ23-1 is located in Block XJ04 in the Pearl River Mouth Basin, about 19 kilometers east of the XJ23-4 oil field. Its development facilities contain one platform, one FPSO and 15 producing wells. Currently, the field is producing approximately 31,000 barrels of oil per day via 10 wells. The other wells will start production in succession. The peak daily production of XJ23-1 is expected to hit 40,000 barrels. It is also the third field of the Company which has commenced production in 2008. XJ23-1 was discovered in 2003. CNOOC Ltd. holds 100% interest of the field and acts as the operator.

Firstdrill JV strikes oil and gas in Caspian Sea

June 24, 2008. Firstdrill Ltd has successfully completed the full project management of the exploration well, Centralaya-1, which has yielded a major new oil and gas discovery in the Caspian Sea. The well, which is in water depths of approximately 456 meters, produced a commercial open flow of sweet crude during testing. Firstdrill is contracted by the operator TsentrKaspneftagas (a joint venture between OAO Lukoil and OAO Gazprom), to provide full project management services for the well. The Firstdrill project managed well, Centralaya-1, is located in the Russian sector of the Caspian Sea and was drilled to a total vertical depth of 4227 meters using the Maersk Explorer Semisubmersible Drilling Rig. The well is on the Tsentrainaya structure and is the first exploration well drilled on the license area. Firstdrill's services for the successful exploration well included pre-planning, contracting of drilling services, material purchases, and the development of the drilling program, including the establishment of the logistics functions and the execution of the well with rig site supervisors and geologists offshore. The operations also included the successful tests on the newly discovered reservoir.

Eni makes major gas discovery in Pakistan

June 23, 2008. Eni has made a new onshore gas discovery in Pakistan with the Saqib 1A well, located in the Mubarak exploration block, in the South Eastern province of Sindh. Eni holds a 38% stake in the Mubarak block. The other partners are Petronas Carigali Pakistan Ltd. (PCPL, operator with a 57% stake) and Government Holding Private Limited (GHPL, with a 5% stake). The well was successfully tested and flowed at 25 million standard cubic feet of gas per day with 60 barrels of condensate per day. Eni and its partners are now evaluating the potential of the discovery in order to identify the most suitable development plan. Eni has been present in Pakistan since 2000. It currently holds interests in 14 exploration licenses and, among them, operates 4 onshore and 3 offshore blocks. The company also holds 7 production licenses and operates the gas fields of Bhit (Eni equity 40%), Badhra (Eni equity 40%) and Kadanwari (Eni equity 18.42%).

AWE announces reserves growth at Tui fields

June 23, 2008. Australia's Tui fields' reserves review has been finalized and AWE announces an increase in the initial proven and probable (2P) reserves to 50.1 million barrels, an increase from the previous estimate of 47 million barrels. This increase is consistent with the strong field performance since commencement of production on July 31, 2007. Total field production from that date until end of the financial year on June 30 is now forecast to be 14.2 million barrels. Production for the 2008/9 financial year is forecast to be 9 million barrels. Production since June 1 has averaged 42,500 barrels per day. An additional development well and several near field exploration wells are planned for early 2010. Participants are operator AWE with 42.5%, Mitsui E & P Australia Pty Ltd with 35.0%, Stewart Petroleum Company Ltd (New Zealand Oil & Gas) with 12.5% and WM Petroleum Ltd (Pan Pacific Petroleum NL) with 10.0%.

PTTEP's Arthit Project out producing expectations

June 23, 2008. PTT Exploration and Production Public Company Limited’s (PTTEP) Arthit Project currently produces natural gas at 370 MMSCFD and condensate at approximately 19,800 barrel per day (BPD), rates which are higher than our expectation of 330 MMSCFD and 11,000 BPD respectively. It is the Operator with 80% participation interest. The other joint venture partners are Chevron Thailand Exploration and Production, Ltd. (Chevron) and Mitsui Oil Exploration Co., Ltd. (MOECO) with 16% and 4% participation interests respectively. The Arthit field has delivered natural gas to PTT Public Company Limited since March 26, 2008. PTTEP considers this a success in attempting to supply energy for the increasing domestic demand.

Oxy signs 30-year agreement with Libya

June 23, 2008. Occidental Petroleum Corporation signed the full 30-year agreements with the Libyan National Oil Company (NOC) to upgrade its existing petroleum contracts. The new agreements, which cover fields with approximately 2.5 bn barrels of recoverable high-quality oil reserves, allow NOC and Occidental to design and implement major field redevelopment and exploration programs in the prolific Sirte Basin. After capital investment over the next five years of approximately $5 bn, gross production is expected to triple from current production to 300,000 barrels per day. Oxy began operations in Libya in 1965 and continued operating until U.S. sanctions were imposed in 1986. Oxy was the first U.S. company to resume oil operations in Libya after the U.S. sanctions were lifted in 2004.

MOL discovered oil and gas in Kazakhstan

June 23, 2008. MOL Plc has made a new discovery of oil and gas in Fedorovskoye Block located in northwestern Kazakhstan. This block has been explored for hydrocarbons since 2000 by a consortium of companies now including Exploration Venture Limited, First International Oil Company Ltd, and MOL Caspian Oil and Gas Ltd, an affiliate of MOL Plc. MOL Plc. has participated in the project since 2004 with 27.5% current interest. The result of the test carried out between 4344 - 4365 m was 8.24 MMscf/day gas and 1503 bbl/day oil/condensate production at 2415 psi flowing wellhead pressure, through 28/64 inch choke. Following the ongoing testing the consortium will be conducting further extended tests to evaluate the scale and potential economic viability of the reserves.

PGNiG gives $789 mn contract to Technip

June 20, 2008. Polish natural gas monopoly Polskie Gornictwo Naftowe i Gazownictwo, or PGNiG, awarded a 1.7 billion zloty ($788.9 million) contract to launch oil and gas output from its field in Poland to a consortium led by Italian unit of Technip SA (13170.FR) and local company PBG SA. Under the contract, the consortium, which also includes Thermo Design Engineering from Canada, will allow PGNiG to start mining oil and gas from its LMG field in Western Poland. The consortium has 56 months to finalize the project which includes 14 oil and gas wells, several oil and gas pipelines and other infrastructure. Proven reserves of oil in LMG field are 53.5 million barrels, while proven reserves of natural gas in the field total 5 bcm. After the mine is in operation in 2013, PGNiG's oil output will increase by about 50% to 6.6 million barrels a year from the current 4.4 million barrels.

Cirrus Energy picks up Netherlands' K10-Bravo oil field

June 19, 2008. Cirrus Energy Corporation’s wholly owned subsidiary, Cirrus Energy Nederland B.V., has entered into an agreement with Wintershall Noordzee B.V. and Petro-Canada Netherlands B.V. to acquire their respective 66.9% and 33.1% interests in that part of the K10a license which contains the undeveloped K10-Bravo oilfield. The consideration for the acquisition is an over-riding royalty payable out of any future production revenues. Assuming government approval of the license transfer, Cirrus will become operator of the K10-Bravo oilfield with 100% working interest. The K10-Bravo oil field is located under the existing K10-B production platform in 28 meters of water. The K10-B platform was installed in 1980 to process and export gas from a Permian Rotliegend reservoir. Cirrus expects to initially drill one or more step-out exploration and/or appraisal wells on the K10-Bravo oil field to assist in establishing the potential recoverable reserves from both reservoirs which is required to optimize any potential development scheme. It is currently expected that such drilling would be undertaken in the first half of 2009 using the already contracted Noble Lynda Bossler drilling rig.

ViaLogy and Atascosa unite to analyze onshore oil fields

June 18, 2008. ViaLogy PLC has entered into an agreement with a Texas-based oil and gas exploration and production company, Atascosa Exploration LLC. Atascosa is going to use ViaLogy's unique technology, the QuantumRD in order to analyze seismic data for more accurate definition of the extent and density of underground oil reservoirs prior to the commencement of drilling. The problems of predicting oil traps from coarse seismic data analysis have plagued the oil and gas industry for decades. Pinpoint accuracy is essential. Predictions that are just a few feet out can waste millions of dollars. QuantumRD applies ViaLogy's patented and proven Quantum Resonance Interferometry technology to analyze coarse 2D and 3D seismic signals and extract more detailed and accurate information than has ever been possible. For the first three pilot wells ViaLogy and Atascosa have reached a non-operating interest participation arrangement, which is based on production in excess of their oil trap estimates prior to the QuantumRD analysis. If the analysis proves successful the two companies have agreed to form a joint venture company or other business arrangement for the commercialisation of Quantum RD within the United States. According to Energy Information Administration’s 2006 Annual Report, the US had over 21 billion barrels of proven oil reserves. Most of the newer discoveries are in smaller fields. However, the number of newer oilfield discoveries has declined from 1400 in 2001 to 30 by 2006. Just over 40 new reservoirs were discovered in known US fields in 2006 based on EIA released numbers.

Lukoil acquires stake in Italian refinery

June 24, 2008. OAO Lukoil, and ERG S.p.A. signed an agreement in Rome to establish a joint venture. The joint venture will operate the ISAB refinery complex in Priolo, Sicily. As part of the transaction, Lukoil will acquire a 49% stake in the joint venture for a cash consideration of EUR 1.347 bn excluding inventory. ERG will retain 51%. The transaction structure provides Lukoil with a possibility to increase its stake in future. The ISAB refinery complex with Nelson complexity index of 9.3 is one of the largest refineries in the region and is well positioned to meet the growing middle distillate demand in Europe (mainly kerosene and diesel fuel). The refinery includes two sites which are united by a pipeline system and integrated in a single refining unit with total annual refining capacity of 16 mt. The refining unit comprises a wide range of sophisticated refining processes such as catalytic cracking, hydrocracking and others. The unit also includes three jetties, storage tanks of 3,700 thousand cubic meters, 99 MW power generation plant and other related infrastructure. Each partner will be responsible for procuring its share of crude and marketing its share of products in accordance with its equity stake in the joint venture. The ISAB refinery has the flexibility to process crudes such as Urals, and Lukoil intends to fully integrate its share of the refinery into its supply chain. Establishment of a refining joint venture in Italy is a cornerstone of Lukoil's growth strategy in the area of developing its downstream operations in Western Europe. Lukoil's overall refining capacities will increase by 13% and overseas refining capacities will increase by 60%. The refinery's advantegeous location and an opportunity to process Russian crude make this project very attractive. In ERG, Lukoil acquires an experienced and reliable partner in one of the world's energy centers.

Shell announces LOI for China refinery and Petchem complex

June 24, 2008. Qatar Petroleum International (QPI) signed with PetroChina Co. Limited, and Shell (China) Limited, a letter of intent (LOI) to commence joint preliminary studies to assess the viability of building a refinery and petrochemical manufacturing complex and marketing its products in China. The integrated refinery and petrochemical complex will have world-class production capabilities to produce refined fuels and petrochemical products. PetroChina will have a 51% shareholding, QPI 24.5% and Shell 24.5%. By building the integrated refinery and petrochemical complex jointly with QPI and Shell, the cooperation in the petrochemical sector between CNPC, and Qatar (QPI) and international oil companies will be further strengthened and promoted.

Shaw to lead Hyundai Oilbank refinery expansion

June 23, 2008. The Shaw Group Inc.’s Energy & Chemicals Group has been selected by Hyundai Oilbank Co. Ltd. to lead a consortium that will provide professional services and procurement of critical equipment for a major grassroots expansion of Hyundai Oilbank's refinery complex in Daesan, South Korea. Shaw, along with consortium partner Hyundai Engineering Co. Ltd., will provide front-end engineering design for the integration of 15 refinery process units, including a 52,000 barrels per day residue fluidized catalytic cracking unit and a 66,000 barrels per day atmospheric residue desulfurization unit. The consortium will also provide front end engineering design for associated utilities and infrastructure, procurement of critical equipment, as well as project management services. The expansion project will allow for conversion of high-sulfur fuel oil to higher value refining products while also upgrading the refinery to meet future fuel specifications in Korea. Shaw recently completed the integration of 14 process units and related services for the addition of a 60,000 barrels per day fluid catalytic cracking unit at a refinery in Ulsan, South Korea, for SK Corporation. The Shaw Group Inc. is a leading global provider of technology, engineering, procurement, construction, maintenance, fabrication, manufacturing, consulting, remediation and facilities management services for government and private sector clients in the energy, chemicals, environmental, infrastructure and emergency response markets. A Fortune 500 company with fiscal 2008 revenues expected to exceed $7 bn, Shaw has its offices and operations in North America, South America, Europe, the Middle East and the Asia-Pacific region.

Aramco, Total to build full-conversion refinery

June 23, 2008. The Saudi Arabian Oil Co. (Saudi Aramco) and Total signed the Shareholders Agreement and other core agreements for the establishment of their joint venture, the Jubail Refining and Petrochemical Co. The signing of these agreements in Jiddah marks an important step for the planned construction of this 400,000 barrel per day world-class, full-conversion refinery in Jubail, Saudi Arabia. The Jubail refinery reflects the leadership of Saudi Aramco and Total in their strategic alliance to address the existing mismatch between refinery infrastructure and types of crude oil on the market, and the resulting tightness in the refining sector. The refinery will process Arabian Heavy crude to high-quality refined products that will meet the most stringent global product specifications and is expected to begin operations at the end of 2012. As a full-conversion refinery, Jubail will maximize the production of diesel and jet fuels. In addition, the project will produce 700,000 tons per year (t/y) of paraxylene, 140,000 t/y of benzene and 200,000 t/y of polymer-grade propylene. The refinery will benefit from its proximity to the Arabian Heavy crude supply system and from the excellent facilities of the Jubail Industrial City such as King Fahad Industrial Port, power and water grids, and residential areas. Following the signing of the agreements, the Jubail Refining and Petrochemical Company will be formed during the third quarter of 2008. Saudi Aramco will initially own 62.5 percent of the company and Total will own the remaining 37.5 percent. Subject to required regulatory approvals, the parties are planning to offer 25 percent of the company to the Saudi public while the two founding shareholders each intend to retain a 37.5 percent ownership interest. Saudi Aramco and Total will share the marketing of the refinery's products. Saudi Aramco and Total have just released invitations-to-bid for the project's construction, with a view to awarding all packages during the first quarter of 2009. The first orders for long-lead items will be placed in July 2008 and the project will be introduced to the lending community in the second part of 2008, with a targeted financial close in early 2009. Total is one of the world's major oil and gas groups, with activities in more than 130 countries. Its 96,000 employees put their expertise to work in every part of the industry exploration and production of oil and natural gas, refining and marketing, gas and power and trading.

Sinopec starts expansion of Zhenhai refinery

June 20, 2008. China Petroleum & Chemical Corp (Sinopec) has started the expansion of its Zhenhai refinery in eastern China's Zhejiang province. After the expansion, the refinery's capacity will rise to 23 mtpa. Completion is expected by September 2009. The expansion will help provide feedstock for a 1 mtpa ethylene facility now under construction, which is also due to be completed in September 2009. Sinopec Group has set a target of 19.5 mt of crude oil to be processed by the Zhenhai refinery this year, up from 18.61 mt in 2007. Sinopec Zhenhai will remain the company's largest refinery after the expansion.

Saipem signs pipelaying contract for Nord Stream

June 24, 2008. Saipem and Nord Stream AG have signed the contract for laying the Nord Stream gas pipeline, worth more than 1 billion Euro. Nord Stream is a twin natural gas pipeline that will link Vyborg, Russia and Greifswald, Germany across the Baltic Sea. Each line is approximately 1,220 kilometers long, with a transport capacity of some 27.5 bcm per annum. Overall capacity of about 55 bcm a year will be reached when both the lines are operational. Saipem will start the laying activities in the first months of 2010 by using two pipe laying vessels, in order to complete the laying of the first line in the first half of 2011. This is a prerequisite for first gas deliveries through the Nord Stream pipeline in 2011. The laying of the second line is scheduled in 2011 and 2012. The present contract relates only to the sole pipelaying job. Nord Stream AG is an international joint venture whose partners are: Gazprom (51%), BASF/Wintershall (20%), E.ON Ruhrgas (20%) and N.V. Nederlandse Gasunie (9%). Saipem (43% owned by Eni) is a leader in the provision of engineering, procurement, project management and construction services for the oil & gas Industry, with unique capabilities in executing large scale offshore and onshore projects. Saipem has a strong expertise in operating in deepwater and remote areas.

Egypt to transport gas to Syria before end of ’08

June 23, 2008. Egypt is expected to transport gas to Syria before the end of 2008. Egypt's petroleum ministry, made the remarks to MENA, noting that the Egyptian gas was scheduled to start flowing through the Arab gas pipeline from Egypt's el-Arish via Jordan to Syria on March 21, 2008. The process was delayed due to technical preparations. Egypt will pump nine bcm of gas to Syria in the first year, 2.5 to 6 mcm per day. Egypt, Syria and Jordan is currently working to complete the project, which is a part of the Arab gas pipeline project that was estimated to cost US$1 billion.

New route planned for Offshore Fla. Gas pipeline

June 20, 2008. According to Port Dolphin, it is rerouting a proposed natural gas pipeline off Anna Maria Island in North America that had threatened a sand source used for beach renourishment. Opposition came because the pipeline could have added $55 mn to the cost of future dredging for suitable sand in deeper waters to renourish local beaches. The original route of the $1 billion project was planned to start 28 miles off Anna Maria's coast and run inland to Port Manatee. The Port Dolphin project would allow ships filled with liquefied natural gas to unload their product through discharging buoys in 100 feet of water off the coast. The ships can convert their liquefied cargoes into gas before unloading into the pipeline. From there, the gas would travel 42 miles to Port Manatee, where the pipeline would link with pipelines feeding the Gulfstream Natural Gas System and the Tampa Electric Company.

Mitsubishi joins Alaska Gasline effort

June 20, 2008. The Alaska Gasline Port Authority (AGPA) announced a new major participant in its consortium to advance the development of the All-Alaska Gasline / LNG Project. Japan's largest general trading company, Mitsubishi Corp. (MC), has joined AGPA in its efforts to assure the delivery of Prudhoe Bay gas to Valdez where it would be liquefied and shipped on tankers to the Asian market, the West Coast and Hawaii. A Fortune Global 500 company, Mitsubishi Corp. has over 500 subsidiaries and affiliates and more than 200 bases of operations in eighty countries worldwide. Mitsubishi enjoys a significant presence in various industries worldwide, including energy. Mitsubishi is also engaged in the production, liquefaction, sale, and logistics of natural gas through a number of LNG projects, handling approximately one-half of Japan's LNG imports.

Striker starts operations on Catfish Creek gas pipeline

June 19, 2008. Striker Oil & Gas, Inc. has begun operations to install a 4 mile gas pipeline to connect its gas production from its Catfish Creek Prospect in East Texas. The initial phase which includes obtaining the right-of-ways from the surface owners being crossed is nearing completion and the process of surveying in the gas pipeline has begun. It is anticipated that the construction process should be complete in early August, 2008. Striker has gas production that is shut-in from its existing wells and is expected to have significant additional production from its three wells that will be drilled in the third fiscal quarter of 2008. Striker will own a 25% interest in the pipeline.

‘Market needs more products, not more crude’: UAE

June 23, 2008. According to the United Arab Emirates' oil minister, Mohamed Al Hamli, industrial countries should invest more in building refineries as one of the ways to fight the current record high oil prices, The fact that industrial countries are not investing into expanding their refining capacities, and are issuing legislation limiting the construction of new refineries is the reason behind increasing oil prices. The market needs more products, and not more crude oil. A background paper, prepared by Saudi Arabia, the International Energy Agency, The International Energy Forum and the Organization of Petroleum Exporting Countries, says that index funds and other investors have unrealistic assessments of the future value of oil. The paper also calls for action to improve the transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange interactions in the crude market.

OPEC opposes output hike in crude

June 22, 2008. OPEC opposed increased production to counter record oil costs saying the price is disconnected from fundamentals of supply and demand. Western consumer nations at the Jeddah summit want increased production to ease supply concerns which they say have forced prices up to almost $140 a barrel. OPEC countries are of the view that market speculators have played a key role in pushing up global prices.

NEB To launch online application system

June 19, 2008. To all companies under its jurisdiction, Canada's National Energy Board (NEB) announced that it will launch a new online application system (OAS) on June 23, 2008. The initiative, which follows a successful pilot program, is designed to provide more regulatory transparency and efficiency. Companies submitting applications to the NEB under section 58 of the National Energy Board Act (NEB Act), will now be able to use the board's online risk criteria to build and file the application. The criteria used to determine if a project is considered low or higher risk are in the areas of consultation, engineering, environment, lands, socio-economics and economics. If a company cannot meet one or more of the online criteria, the system guides it to the appropriate section of the Board's Filing Manual to show the filing requirements necessary for a particular application. Less complex projects will require less information to be filed, and more complex projects will result in larger and more complex applications. The NEB will maintain the same level of diligence and care for its reviews of all applications. According to the NEB, the system will benefit all those involved.

POWER

GE Energy inks turbine contracts worth $240 mn

June 24, 2008. GE Energy has received six contracts to build 11 aeroderivative gas turbines for Texas customers. Together the contracts are worth about $240 mn.  Four of the turbines are for CPS Energy for the V.H. Braunig Power Plant in San Antonio, two are for Austin's Sand Hill Energy Center, and one each are for the University of Texas at Austin, Topaz Power Group's Laredo Power Station, Bryan Texas Utilities, and Thermal Energy Corp. These six contracts, with four different models of aeroderivative engines, underscore the importance of GE's fleet in meeting the nation's growing energy needs.

Coal-fired plant in Arkansas to be operational in ’10

Jun 23, 2008. A $1.3 bn coal-fired power plant in eastern Arkansas is expected to be completed two years from now, providing much needed electricity at affordable costs. Houston-based Dynegy Inc. and LS Power Development LLC, based in New Jersey, broke ground on Plum Point Energy Station at Osceola in May 2006. They expect to begin operating in 2010. The 665 MW unit would generate power for utilities in eight states from Texas to Illinois.

A proposed second unit would boost the output to 1,330 MW. As per environmentalists the plant will be a major new source of pollution. If they build all 1,300 MW, it will be one of the biggest new sources of global-warming pollution in the U.S. in the last 30 years. The plant site is north of Crittenden County and Memphis, Tenn., in Shelby County. The two counties already violate federal standards for ozone pollution. The plant will be outfitted with state-of-the-art pollution controls, including equipment to minimize nitrogen-oxides, scrubbers for sulfur-dioxide and filters to trap toxic mercury emissions.

The plant will burn low-sulfur coal from the Powder River Basin of Wyoming and Montana. However, none of the controls will deal with carbon emissions. Supporters of coal point to emerging technology that could capture and store carbon, and the industry supports proposed legislation to fund research into the technology. The use of capture-and-storage technology likely would greatly increase the cost of coal-fired plants.

Despite savings, electricity price set to power up in Namibia

June 23, 2008. Both households and industrial customers have reduced their electricity consumption by 10 MW on average over the past few months. Nonetheless, Windhoek (capital of Namibia) residents will still have to face a considerable hike in electricity tariffs from next month, the City Council is expected to decide on price increases when the municipal budget is announced, after NamPower raised its tariffs by 18 per cent to bulk customers in April, which includes local authorities. Energy saving light bulbs distributed by the power utility to households have further reduced electricity demand. These light bulbs contributed about 10.2 MW to electricity savings. A further drop in MW has resulted from the introduction of the time of use tariff structure to large power consumers like mining companies, which are charged higher tariffs during peak periods like the early morning or between 17h00 and 21h00. Large power consumers continue to contribute significantly to the savings by heeding NamPower's call to reduce consumption. Namibia has installed power capacity of 384 MW, but demand peaked at over 450 MW a year ago. About half of the electricity demand is imported from mainly South Africa, where local consumption has soared, leaving fewer MW for exports to Namibia, Zimbabwe and Botswana. Namibia also receives 80 MW from Zimbabwe's Hwange power station, after NamPower made US$40 mn available in February 2007 to refurbish Hwange.

$870 mn electricity deal in Brazil

June 18, 2008. On the heels of a super payoff in Brazil, Ontario Teachers' Pension Plan (OTPP) is betting once again on the Latin American market. The pension plan has put up half the $870-mn price to purchase Chile's second-largest electricity distribution system, the SAESA Group. OTTP and its partner Morgan Stanley Infrastructure have also agreed to assume SAESA Group's $400-mn debt from its owner, New Jersey-based Public Service Enterprise Group Inc., which has been systematically divesting itself of its international assets in Chile and Peru. The purchase of SAESA, which serves 2.6 mn people, is expected to close in the third quarter. Chile has got an open environment, and the regulation system is well established, clear and predictable. In addition to $2.5-bn in investment in Brazil, OTPP has a stake in power plants in Mexico. OTTP is not alone in its hunt for infrastructure investments in the emerging Latin American market. In 2006, Brookfield Asset Management Inc., the Canada Pension Plan Investment Board and the British Columbia Investment Management Corporation acquired HQI Transelec Chile SA. (Transelec), the largest electricity transmission company in Chile, from Hydro-Quebec International Inc., for US$1.55-billion.

Australia no to India on uranium

June 20, 2008. Australia ruled out any change in its stand of not selling uranium to India but sought to placate New Delhi by saying ties with it go far beyond this single issue and voiced strong backing for its claim to a permanent seat in UN Security Council.

China hikes electricity prices

June 19, 2008. According to the National Development and Reform Commission (NDRC), China's top planning body, China will raise average electricity tariffs by 0.025 yuan/kwh or about 4.7 per cent on average, a rise that will primarily affect industrial and commercial users. The rise, which will be effective from July 1, is its first broad increase in years and will bolster power companies struggling with the soaring cost of coal, which generates some three quarters of China's electricity.

Solar energy on rooftops to power homes

June 24, 2008. West Bengal Green Energy Development Corporation (WBGEDC) has made it possible with a technology that will help to generate own personal power and also give the surplus to the grid. WBGEDC has developed solar photovoltaic systems, through which people can generate electricity on their rooftops. While they can utilise the energy generated in their home, the excess can be sent to the state grid. The facility includes installation of a solar module, a grid interactive inverter to push off surplus energy to grid and a net meter to calculate the bill. According to WBGEDC, a house can generate solar energy up to 90% of its own utility and can also supply up to 10% to the grid. The corporation has already allotted 25 such houses in Kolkata and is also in talks with builders to develop more such houses. The cost is estimated at about Rs 45 lakh per house. As per WBGEDC, while the cost would work out to around Rs 12 per unit initially, it is expected that with further development of technology it would fall to around Rs 6 in next five years. Consumers in cities like Gurgaon, Ghaziabad, Noida around NCR pay up to Rs 10 a unit on diesel-fuel captive power sets. The corporation has also recently signed a deal with DLF to build 800 such houses in Kolkata. As per the deal, DLF will invest Rs 700 crore ($163.3 mn) while the technology will come from WBGEDC.

Bengal to get 2 MW solar plant

June 24, 2008. West Bengal Ministry for Power, laid the foundation stone of a 2-MW solar power plant. West Bengal Green Energy Development Corporation Ltd, along with DPSC Ltd, is setting up the country’s first grid connected solar power plant at Asansol in Burdwan district. The project is expected to be completed by December 2008. The power from the 2-MW plant, to be generated to the extent of 3 million units annually, will be fed into the DPSC grid directly. This will be the first large size solar power plant in the country, the estimated cost of which is about Rs 40 crore ($9.3 mn). WBGEDCL will execute the project and the entire power will be purchased by DPSC. It is estimated that India can generate 6,00,000 MW of electricity from the sun, which is enough to supply the entire need of the country in 2030. However, use of solar energy in India is still insignificant. Only recently the Government of India has decided to install 50 MW solar power plants in the country by 2010.

High molasses cost may cast shadow at ethanol meet

June 22, 2008. The sharp rise in cost of molasses, currently the raw material for ethanol production in Maharashtra, is likely to cast a shadow on a meeting of representatives of oil companies and ethanol manufacturers in Pune on June 26, with the latter privately maintaining that it is ‘unviable’ to supply ethanol at the price fixed. The objective of the conclave is to bridge the gap between demand and supply of ethanol for oil companies to produce 5% ethanol blended fuel (E5). The meet also aims at mapping the locations of ethanol manufacturing units with the 11 oil depots in the State to improve logistics.

Though the major driver for the meet is escalating price of petrol (higher percentage of ethanol blending can lower petrol cost by a few rupees per litre), the rising price of molasses, and consequent higher cost of ethanol production, may prove to be a dampener. According to the sugar lobby, the rise in price of molasses, which is also used as animal feed, is mainly on account of growing exports. While 90,000 tonnes of them were exported during 06-07, the figure the following year was 3.1 lakh tonnes, a substantial rise of nearly 250 per cent. As a result, the cost of molasses that ranged between Rs 680 and Rs 1,500 a tonne during 07-08, has shot up to Rs 2,500-3,500 during the first quarter of 08-09.

With sugar production in Maharashtra next year pegged to fall by around 30 per cent and the fact that molasses production is four per cent of sugarcane crushed, it seems unlikely that prices of the commodity will head south any time soon. Every tonne of molasses yields around 260 litres of rectified spirit (RS) that is used to make potable alcohol and industrial alcohol. The RS needs to be further dehydrated to produce ethanol, and that involves an added cost which renders the price of Rs 21.50 fixed for ethanol production unviable.

Maharashtra is second only to Uttar Pradesh in sugar production. With 32 co-operative and 48 private manufacturers in the fray, the State has the installed capacity to produce around 90-95 crore litres of ethanol every season. At full capacity utilisation, this can enable 10 per cent blending in petrol.

ICMS-Power plans wind turbine generator plant in TN

June 20, 2008. ICMS-Power, the wind mill technology division of International Consultancy and Management Services (ICMS), is looking at the scope of starting a wind turbine generator manufacturing plant for domestic and industrial application in Tamil Nadu. The WTG production plans would be the next priority once ICMS puts its marketing networking for its range of domestic wind turbines in the State in place. ICMS-Power formally launched marketing of ‘Unitron-UE’ series of domestic wind turbine in Tamil Nadu that comes in four variants of 600 watt, 1500 watt, 3300 watt and 4200 watt capacity generators. A member of the Indian Wind Energy Association, ICMS is already producing these domestic wind turbines indigenously at its Pune plant and is in the process of extending marketing across the country. Considering the high wind potential in Tamil Nadu, the low-breeze technology-driven wind turbines produced by the company will be highly suitable to meet the power requirements of domestic and small-scale industries. The 600-watt capacity wind turbines, for example, which can generate a maximum 150 units of electricity (sufficient enough for a four-member family) at an optimum wind velocity of 1.8 metre a second, have the potential to generate 280 units with Tamil Nadu (whose year round average wind speed is put at 2.5-4.5 metre per second) recording an average peak wind velocity up to 15.5 metre a second, especially during the peak April-November season.

TF Solar Power applies for incentives

June 19, 2008. TF Solar Power, which is planning to set up a solar PV unit in the country, has approached the Government for incentives under the policy on semiconductor fabs and other micro and nano technology manufacturing industries. The latest application takes the tally of proposals received under the Special Incentive Package Scheme (SIPS), the norms for which were announced in September last year to 11, and the combined proposed investments to almost Rs 80,000 crore ($18.6 bn). The total investment proposed by TF Solar Power for the Thin Film based PV modules is estimated at about Rs 2,350 crore ($547 mn). So far, the Government has received SIPS applications from Videocon Industries, Moser Baer PV Technologies (total capacity 1.3 GW), Titan Energy System (500 MW of cell modules and wafers, and 250 MW for polysilicon), KSK Energy Ventures Pvt Ltd (50 MW proposed to be increased to 700 MW over 10 years), and Signet Solar Inc (1 GW per year output). The largest investment plan under SIPS has come from Mukesh Ambani-promoted Reliance Industries Ltd which recently submitted two proposals worth over Rs 30,000 crore ($6.9 bn) for establishing a semiconductor wafer fab along with an Assembly Test Mark and Pack (ATMP) unit, and a solar PV module unit (with PV capacity of 1GW), in the country. Other proposals include Phoenix Solar India’s plans for setting-up about Rs 1,200-crore ($279.3 mn) solar PV cell and module project; Tata BP Solar plans to invest close to Rs 1,700 crore ($395.7 mn); and Solar Semiconductors proposed investment of Rs 11,000 crore ($2.5 bn). All the proposals are currently being examined by the Government. The proposals under SIPS cover manufacture of a wide variety of items like polysilicon, single/multi-crystalline ingots, wafers, solar cells, solar photovoltaic modules (SPV) liquid crystal display (LCD), integrated circuits-advanced logic, memory, embedded system on chip including assembly, test, mark and packaging facility for semiconductor devices. Under SIPS, the Centre would provide incentive of 20 per cent capital expenditure during the first 10 years for the units in SEZs and 25 per cent of the capital expenditure in non-SEZ units. Any unit can claim incentives in the form of capital subsidy or equity participation.

Brazil's Cosan sees pipeline starting in 4 years

June 24, 2008. Brazil's largest sugar and ethanol group, Cosan SA’s ethanol pipeline network should be operating in four years. The pipeline is expected to transport 14 billion liters of ethanol a year. Cosan, top sugarcane cooperative Copersucar and local sugar and ethanol trading company Crystalsev will invest 1.6 billion Brazilian reals ($996 million) to build the pipeline. The ethanol pipeline network will link the port terminal on the coast of Sao Paulo state and the city of Paulinia, with branches to the cities of Conchas and Ribeirao Preto, both located in Sao Paulo state.

Westar breaking ground on wind energy

June 24, 2008. Westar Energy broke ground on the first of three new wind farms in a project worth at least $500 mn. Kansas is one of the very best states for wind power. The investments will eventually double the number of wind generators in Kansas, with farms planned in Barber, Cloud and Wichita counties. The plants will generate 300 mega watts of energy which is enough to supply up to 88,000 homes; five percent of Westar's customer base. When the wind turbines go up they will be 262 feet high and the diameter of each rotor will be larger than a football field. That's the largest built in the U.S.

SAS greenlights 1 MW solar power farm

Jun 24, 2008. SAS, the leader in business intelligence and analytics software, working with Progress Energy Carolinas and SunPower Corp., will develop a solar electric power farm on the company's Cary, NC, headquarters campus. Scheduled to go online in late 2008, the project is the latest in the company's continuing sustainability efforts to conserve environmental resources. This solar farm is one small gesture among many green initiatives within SAS to diminish the impact on the environment. Covering five acres, the 1-megawatt photovoltaic (PV) solar array will feature SunPower(R) Tracker solar tracking systems. The Tracker tilts toward the sun as it moves across the sky, increasing energy capture by up to 25 percent over fixed systems while reducing land-use requirements. SAS' solar farm is estimated to generate 1.7 million kilowatt-hours (kWh) per year, reducing carbon dioxide emissions by over 1,600 tons annually. This is equivalent to the carbon dioxide emissions from the consumption of more than 167,000 gallons of gasoline. Under North Carolina's Renewable Energy and Energy Efficiency Portfolio Standard (REPS) utility companies must obtain up to 12.5 percent of their energy through renewable resources or energy efficiency measures by 2021. They must also begin including solar-generated energy by 2010. SAS' solar array, which will be one of the largest of its kind in the southeastern US, is the largest PV project announced in Progress Energy's service area since North Carolina's energy law took effect in 2007. SunPower will build the solar array; Progress Energy will purchase the Renewable Energy Certificates (RECs) and electricity generated by the solar farm for use on the public energy grid.

‘EU must review new biofuels policy’: A Group

June 19, 2008. Lobby group BusinessEurope has called for a review of the European Commission's biofuels policy. The current high food prices give additional weight to the group’s call for the EU to reconsider the 10 percent target for biofuels in transport. The commission has set a target that biofuels will account for ten percent of all vehicle fuel by 2020. The first generation of biofuels has been criticized for using up crop land needed to grow food for humans and animals, and for deforestation. The commission has defended its policy, however, reiterating that it will not change the target. The commission's ambitious but so far unilateral climate change strategy risks increasing competitive disadvantages in Europe.

La. Synfuels project wins nod for tax-exempt Bonds

June 19, 2008. Syntroleum Corp. announced that Dynamic Fuels LLC has received final approval from the Louisiana State Bond Commission for $100 million in tax exempt Gulf Opportunity Zone (GO Zone) Bonds to fund the building of the company's first renewable synthetic fuels facility in Geismar, La. The $100 million allocation is the maximum amount that can be granted for a project under policy guidelines adopted by the State Bond Commission earlier this year. Dynamic Fuels LLC is a 50:50 venture between Syntroleum Corp. and Tyson Foods, Inc. to convert low-grade inedible fats and greases into renewable synthetic diesel, jet and military fuel. Syntroleum Corp. owns the Syntroleum Process for Fischer-Tropsch (FT) conversion of synthesis gas derived from biomass, coal, natural gas and other carbon-based feedstocks into liquid hydrocarbons, the Synfining Process for upgrading FT liquid hydrocarbons into middle distillate products such as synthetic diesel and jet fuels, and the Bio-Synfining technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuel.

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