Energy News Monitor |Volume V, Issue 5

How Essential is the Nuclear Power Option for India?

Shankar Sharma, Consultant to Electricity Industry

he debate as to whether nuclear power is a safe & suitable option for India has been going on for many decades. While the proponents of the nuclear power have been offering many arguments in favour of the option, there have been any numbers of issues raised by those who think it is not the best solution to meet the legitimate energy requirements of our society. While more and more complex safety systems are being designed and built for the nuclear power stations, it should be noted that they are only increasing the number of sub-systems and the complexity.  Such complex systems can result in increasing the risk of failure of individual sub-systems, and hence in increase in the number of automatic shutdowns.  The rapidity at which a minor problem in the complex system of safety can escalate into a major disaster is great in a nuclear power station, as experienced at Chernobyl.  So much has been said about the capability of India nuclear establishments, especially Atomic Energy Regulatory Board (AERB), to ensure complete safety of nuclear power projects.  The common belief amongst the public is that the people manning AERB are generally deputed from Nuclear Power Corporation Ltd., which is the operator of the nuclear power plants in the country. In such a situation can we be assured of the complete operational independence from AERB?

As far as Chernobyl disaster is concerned Indian nuclear authorities keep saying that that "… secrecy was part of the Soviet culture..". How transparent are the issues with our own nuclear establishments?

There have been suggestions from Indian nuclear authorities that the safe storage of nuclear waste is technically feasible during its active life time. But what about the huge costs involved? Are the efforts to keep nuclear waste safe for thousands of years worthy of all the risks involved? In this regard there are credible concerns that whereas the present generation may get the benefit of electricity from nuclear power, the future generations have to deal with all the risks and costs associated with the spent fuel. Is this fair or responsible?

What about the security of supply of nuclear fuel required for the large no. of reactors (as many as 40 additional reactors as per one estimation) proposed?  While the difficulties encountered in getting reliable fuel supply to nuclear reactors supplied by Canada are still in our memory, how can we be certain that the same situation will not be repeated in the future?  The main reason provided for lower Plant Load Factor of the existing nuclear power station in the country is the shortage of nuclear fuel. If our society decides to spend horrendous amounts of our natural resources in establishing 40 additional reactors, how can we be assured that all these reactors will have adequate quantities of fuel available throughout their economic life time? The enormous difficulties being encountered in arriving at a political consensus regarding the 1-2-3 agreement with USA, which is supposed to provide adequate fuel supply, indicates that there is a clear lack of public credibility for the nuclear power option. In this regard the issues, which have been raised in a number of papers released within the country on the safety and economics of nuclear industry, need be fully addressed.  One such paper, by Dr. M V Ramana of ISEC, Bangalore has indicated that the real cost of a modern nuclear power station is clearly higher than that of a comparable size coal based power station.  If we also take into objective account the long term storage costs and all the associated environmental and health costs, the nuclear power projects will be much costlier than the coal based power projects. Although a massive amount of money is reported to have been spent on various activities associated with nuclear power research since independence, the contribution of the nuclear power to the total installed power capacity in India as of now is only about 3.5%.  As per Planning Commission's Integrated Energy Policy document, the projected share of nuclear power in the country's total installed power capacity by 2032 can only about 5%. For such a small share of the installed capacity, should the society adapt an option, which has failed to win public's confidence even after 60 years from independence? Efficiency increase in the end use of electricity, whether in lighting, heating or motive power etc. alone is estimated to provide more than 10% of virtual additional power capacity at probably 10% of the cost of new nuclear power plant without any of the attendant risks. In the background of all these issues, and having accepted the existence of high degree of public health risks associated with nuclear power the question to be asked of ourselves is whether nuclear power stations are critical for the development of all sections of our society, and whether we can do without them. The primary objective of a nuclear power station is the production of electricity. There are many benign ways of producing the electricity. Has our society harnessed all the alternatives available for us to the maximum extent?  What is the efficiency of the usage of the existing electricity generating capacity in the country?  Is there a scope for meeting all the legitimate demand for electricity of our society by other benign options?  Can an objective analysis of Costs V/S Benefits of a nuclear power project as compared to a coal or hydro power project prove beyond reasonable doubt that it is in the best interest of our society?  The electricity industry experts say that there are enough non-nuclear power options, including measures such as efficiency improvement, Demand Side Management, energy conservation and renewable energy sources etc., to meet our legitimate electricity demands on a sustainable basis.

Our society must seek satisfactory answer to all these relevant questions before embracing the nuclear power option for the future.  It is not without solid basis that many countries are saying 'no' to them, while some countries are actively considering the decommissioning of many of the existing nuclear power stations.

Concluded                                     Views are those of the author

Beyond the Climate Crisis: A Critique of Climate Change Discourse (part – III)

Eileen Crist

 

Continued from Volume V, Issue No. 4…

 

Excursus into the Climate-Change-Independent Unraveling of Biodiversity

he diminishment of life’s richness began with the exodus of hunters and gatherers from Africa thousands of years ago, and deepened with the invention of agriculture and cities, the development of warfare, and the advent of the European voyages.²⁴ But biodepletion accelerated enormously after the emergence of industrial civilization, and particularly since the mid-twentieth century, with billions of people not only doubling every few decades, but inclining—by force, choice, or delusion—toward a consumer culture founded on overproduction and global trade. Overproduction and global trade, in turn, require the ceaseless conversion of living beings and natural systems into dead objects, “resources,” and humanized landscapes and seascapes.²⁵

The significance of human-driven extinction can never be overstated, because it means not only the death of species but the end of their evolutionary destinies as well—of the life-forms they would or might have eventually originated. Present-day extinction is not about species blinking out sporadically; it is a global and escalating spasm of en masse losses that, the geological record reveals, is an infrequent event in Earth’s natural history. Notwithstanding circulating shallow sophistry that proclaims extinction to be “natural” or “normal,” anthropogenic extinction is neither natural (for countless species are disappearing from targeted onslaught or pressures far exceeding their capacity to adapt) nor normal (for this level of losses occurs rarely as a consequence of a catastrophic event).

Yet, as tragic as extinction is, species are also being devastated without being annihilated: losses of distinct populations and plunges in population numbers are a blow to the vigor, ecological contributions and connectedness, and evolutionary potential of species. Today, drops of 70, 80, 90 percent, or more, of wild plants and animals, on land and in oceans, are common. Such declines mean that species hang on as relics, with shortened lifespans or committed to extinction, no longer able to play significant ecological and evolutionary roles.

The nosedive of wild-animal and plant abundance foregrounds yet another facet of biodepletion: the simplification of ecosystems. From a landscape perspective, the decline of numbers and geographic races of wild organisms signifies constrictions of their former ranges. As populations blink out from diverse places, their place-bound contributions are lost; the losses cascade through the communities of organisms to which the extinguished populations belonged, leaving behind degraded ecosystems. While the simplification of ecosystems is often dramatically visible, it can also unfold as an incremental, barely noticeable process. And it is not that ecosystems, here and there, are occasionally suffering simplification by losing constituent locals. The biosphere is experiencing gross decline or elimination of areas that are, in certain cases, centers of diversification—most notably, tropical forests, wetlands, mangrove forests, and coral reefs everywhere.

The whittling down of ecological complexity has been a global trend proceeding from the conversion of ecosystems for intensive human uses, the aforementioned population depletions, and the invasion of nonnative species. Nonnative species are the generalists hitching rides in the bustle of globalization—from the climate-change favored fungus that is killing frogs, to millions of domestic cats preying on birds, to innumerable more.²⁶ Human-facilitated invasions, coupled with the disappearance of natives, lead to places losing the constellation of life-forms that once uniquely constituted them. The inevitable outcome of extinction, plummeting populations, lost and simplified ecosystems, and a bio-homogenized world is not only the global demolition of wild nature, but also the halting of speciation of much complex life. The conditions for the birth of new species within a wide band of life, especially of large-bodied species that reproduce slowly, are being suspended.²⁷

All these interconnected dimensions constitute what conservation biologists call the biodiversity crisis—a term that to the postmodernist rings of rhetoric, while to the broad public (insofar as it has heard anything about it) involves a largely illiterate and vague understanding of “extinction.”²⁸ Academic frivolity and public ignorance aside, the biodiversity crisis heralds a biospheric impoverishment that will be the condition and experience of all future human generations: it requires 5 to 10 million years for biodiversity to recover after a mass extinction of the current scope. In light of this fact, I submit that unless global warming unleashes appalling penalties—in which case, the climate crisis and biodepletion will merge into one devastating event for virtually all life²⁹—the implications of humanity’s impact on biodiversity are so far-reaching that they may, in reality, dwarf the repercussions of climate change.

And yet, the current framing of climate change as the urgent issue encourages regarding the unwinding of biodiversity as a less critical matter than the forthcoming repercussions of global warming. Attention to the long-standing ruination of biodiversity underway is subverted in two ways in climate-change discourse: either it gets elided through a focus on anthropocentric anxieties about how climate change will specifically affect people and nations; or biodepletion is presented as a corollary of climate change in writings that closely consider how global warming will cause biodiversity losses. Climate change is undoubtedly speeding up the unraveling of life’s interconnectedness and variety. But if global warming has such potential to afflict the natural world, it is because the latter’s “immunity” has been severely compromised. It is on an already profoundly wounded natural world that global warming is delivering its blow. Focusing on the added blow of climate change is important, but this focus should not come at the expense of erasing from view the prior, ongoing, and climate-change-independent wounding of life on Earth.

Through the Looking-Glass of Climate Change

Rather than focusing on global warming as a driver of more biodiversity losses, climate change can be considered as a mirror that reflects how wild nature’s ability to adapt to climate change has been seriously under-mined. In other words, beyond escalating the destruction of nature, climate change is bringing into high relief the violence that has already been perpetrated. There is a point to looking through climate change rather than at it: the point is that climate change is not “the problem.” The problem is a sprawling civilization that is destroying the biosphere, and will continue to do so even after it (somehow or other) deals with a major glitch in the machine—the consequences of accumulating greenhouse gases.

The biosphere has been hemorrhaging from habitat conversion and destruction, ecosystem simplification, landscape fragmentation, the massive killing of wild animals, industrial fishing, invasion of nonnative species, and chemical pollution. Climate change, as the most recent factor, is about to deliver a whole new level of consequences.³⁰ For most species and ecosystems that are being and will be affected, climate change is less an additional factor than it is a synergistic driver of biodepletion. Scientist Camilo Mora and his colleagues, for example, studied the adverse impact of synergistic stresses on life. They argue that habitat fragmentation, har-vesting, and warming, taken separately, cause “deleterious effects,” but that synergies between these causes put species “under higher risks of extinction than those anticipated from single threat analyses.”³¹

Notes:

24 See David Burney and Tim Flannery, “Fifty millennia of catastrophic extinctions after human contact,” Trends in Ecology and Evolution 20, no. 7 (July 2005): 395–401; Dave Foreman, Rewilding North America: A Vision for Conservation in the 21st Century (Washington DC: Island, 2004); E. O. Wilson, The Creation: An Appeal to Save life on Earth (New York: Norton, 2006); Wilson, The Future of life (New York: Knopf, 2002); and Wilson, The Diversity of life.

25 See Derrick Jensen, Endgame, vol. 1, The Problem of Civilization (New York: Seven Stories, 2006); Joel Kovel, The Enemy of Nature: The End of Capitalism or the End of the World? (Nova Scotia: Fernwood, 2002); and Andy Fisher, Radical Ecopsychology: Psychology in the Service of life (Albany: State Univ. of New York Press, 2002).

26. The global proliferation of nonnatives moved David Quammen to write a seminal essay aptly titled “The Weeds Shall Inherit the Earth,” The Independent, November 22, 1998.

27. Recent writings on the state of biodiversity include: Wilson, The Future of life; Sharon Guynup, ed., 2006 State of the Wild: A Global Portrait of Wildlife, Wildlands, and oceans (Washington, DC: Island, 2005); Burney and Flannery, “Fifty millennia of catastrophic extinctions”; Foreman, Rewilding North America; Michael J. Novacek, ed., The Biodiversity Crisis: losing What Counts (New York: The New Press, 2001); Norman Myers and Andrew Knoll, “The Biotic Crisis and the Future of Evolution,” PNAS 98, no. 10 (May 8, 2001): 5389–92; Norman Myers “Conservation of Biodiversity: How are We Doing?” The Environmentalist 23, no. 1 (March 2003): 9–15; Paul Ehrlich, “Intervening in Evolution: Ethics and Actions,” PNAS 98, no. 10 (May 8, 2001): 5477–80; David Quammen, The Song of the Dodo: Island Biogeography in an Age of Extinctions (New York: Scribner, 1996).

28 For a critique of the postmodern approach to environmental issues, see Eileen Crist, “Against the Social Construction of Nature and Wilderness,” Environmental Ethics 26, no. 1 (2004): 5–24.

29 All life, with the likely exception of the toughest of generalists (which may well include humans) and much of the microbial kingdom.

30. In his latest plea for the conservation of life, The Creation: An Appeal to Save life on Earth, E. O. Wilson classifies the impact of climate change on biodiversity as a form of “habitat destruction” (p. 81). Flannery highlights the same idea when he notes of the golden toad’s departure (the first documented climate-change extinction) that we destroyed the species with coal-fired power plants and SUVs as surely as if we had bulldozed its habitat. Flannery, The Weather Makers, p. 119.

31. Camilo Mora, Rebekka Metzger, Audrey Rollo, and Ransom Myers, “Experi-mental simulations about the effects of overexploitation and habitat fragmentation on populations facing environmental warming,” Proceedings of the Royal Society B 274 (2007): 1023–28; here, p. 1027.

 

 

to be continued…

 

 

The Future of Liquid Biofuels for APEC Economies (part – IV)

 

Continued from Volume V, Issue No. 4…

 

he National Renewable Energy Laboratory (NREL) estimates that the cost of producing ethanol from lignocellulosic biomass is currently 0.53 - 0.66 USD L^-1 and could be reduced further with appropriate technical progress as shown in Figure 11. NREL’s estimates for biodiesel production from algae, at current algae productivities, are prohibitively high: 1.50-2.00 USD L^-1. An aggressive and perhaps long - term research effort will be necessary to make it economically feasible.

Figure 11 Historical and Projected Cellulosic Ethanol Costs

Historical and Projected Cellulosic Ethanol Costs

Source: NREL Modeled Cost, 2008 

Biofuels in Use

Ethanol and biodiesel in the APEC region are used in various blends with gasoline and petro-diesel (Table 5). Low- level blends (below E10 and B5) don’t require modifications to the existing vehicle engines and refueling infrastructure, thus they are most commonly used. The United States and Australia have been testing the use of E20 in regular vehicles. In March 2008, the U.S. State of Minnesota, after a yearlong research effort, announced that increasing the amount of ethanol blended into gasoline from 10% (E10) to 20% (E20) does not present problems for current vehicles or fuel-dispensing equipment and provides similar power and performance. Minnesota and its partners will soon apply to the Environmental Protection Agency (EPA) for a waiver to federal rules that will allow E20 to be used in all of the state's gasoline. In January 2008, Thailand began sales of E20 for use in E20-compatible vehicles.

Table 5 Biofuels Currently Used in the APEC Region

Information current as of April 2008; N/A - Information not available  

Higher-level blends (such as E85 and B100) are used in special vehicles (FFVs or dedicated biofuels vehicles), thus their market is relatively small. In the APEC region, E85 is offered nationwide only in the United States and in limited volume in Canada. Thailand and Australia plan to introduce E85 in the next few years. B100 is offered in the United States and Australia to serve professional fleets.

Refueling Infrastructure

Service stations in many economies are offering low-level ethanol and biodiesel blends. However, only the United States in the APEC region has an established E85 refueling infrastructure. The number of stations offering E85 increased from around 100 in 2000 to 1,200 in 2007 (Figure 11). In Canada, two E85 stations were open in 2007, and two refueling stations are to come online in Australia.

Figure 12 United States E85 Refueling Stations

Source: NREL, 2008  

A recent NREL survey found that adding E85 equipment to existing gasoline stations cost an average $71,700 USD for a new tank and $21,000 USD for converting an existing tank (Table 6).  

Table 6 Cost of Adding E85 Equipment to Existing Gasoline Stations

Costs of Adding E85 Equipment to Existing Gasoline Stations
Scenario	Cost	Source*	Description	Major Variables Affecting Cost
New tank, new or retrofit dispenser(s)	Mean: $71,735 Median: $59,153	NREL Survey	Includes new storage tank, pump, dispenser(s), piping, wiring, excavation, and concrete work	Dispenser needs, excavation, concrete work, sell backs, canopy, tank size, location, labor price, regulations
	$50,000-$200,000	NACS
	$50,000-$70,000	DOT, EPA, DOE
	>$50,000	NEVC
	<$62,407	DAI
Convert existing tank, new or retrofit dispenser(s)	Mean: $21,031 Median: $11,237	NREL Survey	Tank cleaning, replace non-compatible components in piping and dispensers	Dispenser needs, number of non-compatible components, location, labor price, regulations
	$19,000-$30,000	DAI
	$5,000-$30,000	DOT, EPA, DOE
	$2,500-25,000	NEVC

Source: NREL, 2008  

The survey noted that the stations with the lowest costs ($3,000 USD) took conversion shortcuts that are not recommended because of concerns about safety and materials. These shortcuts included failing to clean the tank before filling it with E85, declining to replace equipment components that may not be compatible with E85, and excluding signage costs. The U.S Energy Information Administration (EIA) estimates that the investment in an E85 pump that dispenses one-half the volume of an average unleaded gasoline pump (about 160,000 gallons per year) would require an increase in retail prices of 2 to 7 cents per gallon if the costs were to be recouped over a 15-year period. The costs would vary, depending on annual pump volumes and the extent of the station retrofit. The installation cost of E85-compatible equipment for a new station is nearly identical to the cost of standard gasoline-only equipment (EIA 2007).     

With respect to biodiesel, NREL assesses the cost of adding biodiesel tanks and dispensers in three scenarios:

Scenario 1:  A station replaces petroleum diesel with a B2 to B20 blend. This generally requires only signage and new nozzles to alert customers.  

Signage: Average $1,650 USD (Range $444-3,250 USD.  Sample size 6)

Two nozzles (most stations need two).  Average: $290 USD (Range $240-340 USD. Sample size 4) 

Labor: minimal

Total: $1,940 USD

Scenario 2:  A station replaces petroleum diesel with B100 or uses an old, dirty diesel tank that needs cleaning. Cost is the same as above, but add tank cleaning to it.

Tank Cleaning: Average: $1,960 USD (Range: $1,500-4,355 USD, sample size 12)

Total: $3,900 USD for a tank cleaning, signs, and nozzles.  

Scenario 3:  Add a new tank and new dispenser.  This includes excavation, piping, wiring, and other labor.  The cost varies: $20,000 USD, $30,000 USD, and $45,000 USD based on three stations in the US state of Indiana where biodiesel tanks and dispensers were installed.   

 

to be continued…

 

 

 

NEWS BRIEF

OIL & GAS

OVL to bid for Ecuador blocks

July 22, 2008. ONGC Videsh (OVL), the overseas arm of the state-owned ONGC, is gearing up to bid for oil blocks in Ecuador jointly with PetroEcuador, its counterpart in the foreign country. Ecuador will shortly put up seven blocks on auction. An ONGC team is likely to visit Ecuador soon as a precursor of putting in bids. The seven blocks comprise of two offshore oil and gas blocks and five on shore blocks. ONGC has recently signed an MoU with PetroEcuador under which PetroEcuador will participate with OVL in the bidding of oil & gas blocks in Ecuador and other countries while OVL will assist PetroEcuador in areas of contract negotiation related to the exploration and hydrocarbon production and constitution of joint ventures companies.

The blocks being offered are scattered along Ecuador’s coastline, ranging from bordering Peru to the Gulf of Guayaquil on the Venezuela border. OVL is expected to face intense competition from Chinese firms in Ecuador. OVL was outbid by PetroChina when it tried to buy a part of Canadian firm EnCana’s cluster of oil fields in Ecuador. In addition to Brazil, ONGC has significant presence in Latin American countries like Colombia, Cuba, Trinidad and Tobago.

Essar Oil leads race for Aussie gas blocks

July 20, 2008. Ruias-controlled Essar Oil is close to acquiring two oil and gas blocks in Australia. The company has emerged as the preferred bidder for developing the blocks amidst international competition. The Essar will hold 100 per cent equity in the blocks. The acquisition will help strengthen the company's oil and gas production capacity. At present, Essar has only one oil producing block in Mehsana, Gujarat. Last year, Essar produced 17,000 barrels of oil from this block. Essar is scouting for more opportunities in exploration and production through the acquisition of oil rich assets overseas. It plans to take its refining capacity from 210,000 barrels of oil per day (bpd) to 1 million bpd in the next three years. With the expansion at Vadinar, its capacity will go up to 700,000 bpd. The rest it plans to achieve through acquisition of assets overseas. The company will raise $9 bn, of which it will utilise $6 bn towards expansion of the Vadinar refinery. The remaining amount will be utilised towards funding its expansion in exploration and production activities across the globe. Last year, the company spent $75 mn on exploration and production.

GSPC to spend $1 bn in KG basin

July 18, 2008. Gujarat State Petroleum Corporation (GSPC), fully owned by the Gujarat government, is planning to spend Rs 4,000 crore ($0.9 bn) over the next three to four years to produce oil and gas from the block it discovered in the Krishna-Godavari (K-G) basin off the Andhra Pradesh coast. The company will raise the money through a combination of loans from banks, a possible public offer and through internal accruals. GSPC was aiming to start producing gas from the block in 2010.

The company has already spent around Rs 3,000 crore ($704.5 mn) for developing the K-G basin block. GSPC is in talks with Adani Group and Essar Oil to jointly set up a five-million-tonne-a-year LNG import terminal at Mundra port. GSPC will hold 50 per cent stake while Adani may take 20-25 per cent. Talks are also on with Essar for the remaining equity but no agreement has been reached. Essar is looking at setting up its own terminal at Pipavav. For the remaining equity, state-run Hindustan Petroleum Corp has also shown interest.

GSPC's move is being considered bold given the fact that Petronet LNG, India's largest liquefied natural gas importer, is doubling capacity of its Dahej terminal, also in Gujarat, to 10 mt by 2010 and Shell-Total's Hazira terminal, also in the same state, will see its capacity being raised from 2.5 mt to 3.6 mt a year in the next few months. India, Asia's third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in inflation but there is not enough supply to satisfy rising demand.

Gas demand in India, at around 179 mmscmd, is far short of the supply of about 95 mmscmd (including LNG). Supplies are expected to double by 2010 when KG-D6 reaches peak of 80 mmscmd and flow of additional LNG. The reserves from the latest well alone was estimated at around 3 tcf. The reserves in the entire block are well over 20 tcf. The Directorate General of Hydrocarbons, the oil and gas regulator, had earlier said gas reserves in the block amount to 1.38 tcf.

Reliance Industries' block, one of the largest discoveries in the country, in the same basin has reserves of 11.3 tcf. GSPC had booked a capacity of 10 mmscmd in the gas pipeline that Reliance Industries is laying to transport its oil from Andhra Pradesh to Gujarat. GSPC will explore possibilities of laying a new pipeline.

ONGC plans to surrender Barmer-Sanchor CBM

July 17, 2008. ONGC is planning to surrender the Barmer-Sanchor CBM (coal bed methane) block it now jointly holds with Gujarat State Petroleum Corporation (GSPC). According to a report, ONGC's CBM exploration asset portfolio will drop to six blocks. It also has recently surrendered two CBM blocks in Maharashtra and Madhya Pradesh.

Artson receives $8 mn order from HPCL

July 21, 2008. Artson Engineering, a subsidiary of Tata projects, has bagged a Rs 36.27 crore ($8.4 mn) order from HPCL-Mittal Energy to manufacture and erect four crude oil storage tanks at Bhatinda. The order would be executed within a period of 18 months. Artson has been in the oil, gas and hydrocarbon tankage business for more than two decades.

Petronet mulls revised deal for LNG from Exxon

July 21, 2008. The board of Petronet LNG Ltd is likely to consider the revised deal for LNG from Exxon Mobil’s interest in Australia’s Gorgon project. The company has been in talks to secure Exxon’s entire stake of 3.75 mtpa from the project. Exxon’s share in the project has increased to 3.75 mtpa from 2.5 mtpa after project operator Chevron Corp announced increasing the project size to 15 mtpa. Petronet plans to bring this LNG through its upcoming terminal at Kochi or the existing one at Dahej.

Petronet close to striking LNG deal

July 21, 2008. Petronet LNG Ltd is close to striking a long term deal to import 3.5 mt of liquefied natural gas a year even as the company board decided to lease its expanded Dahej terminal capacity to firms like GSPC on tolling basis. PLL Board gave its go ahead for a 10-year deal to import LNG for the Bawana power plant near Delhi.

If the deal goes through, Petronet will import 1.8 mt in the first year beginning August 2008 and 3.5 mt from 2009 onwards. Bawana power plant, being built to cater to electricity demand of 2010 Commonwealth Games, will need the gas from November 2009 and till then the company will retail it to different customers.

The Petronet board has also decided to lease excess capacity at Dahej terminal to the four promoter firms viz., IOC, GAIL, BPCL and ONGC and Gujarat State Petroleum Corp (GSPC) on tolling basis from December 2008 when the capacity rises to 10 mt. Dahej terminal in Gujarat currently has a capacity of 6.5 mt. Petronet imports 5 mtpa of LNG from RasGas of Qatar under a long term deal and another 1.5 mt from the same company on a short-term contract to meet the fuel requirement of Dabhol power plant. Petronet is committed to supply 1.5 mtpa of gas to Dabhol power plant till September 2009.

GAIL commence gas supply to Trombay

July 16, 2008. GAIL commenced natural gas supply to BPCL, Trombay through the 40 km long 24" diameter Hazimalangwadi Trombay pipeline at Mumbai. GAIL has signed heads of Agreement with BPCL for supply of 0.9 MMSCMD of RLNG. This is one of the several branch lines to be commissioned by GAIL to provide connectivity from its Dahej-Uran (DUPL) and Dabhol - Panvel pipelines (DPPL). Already branch lines to Deepak Fertiliser and Patalganga and MSEB Uran have been commissioned.

GAIL is in the process of connecting a number of other consumers in the Trombay region, namely, RCF Trombay by August 2008 end and Tata Power and HPCL by February 2009. Pipeline laying work for Tata Power and HPCL is in advanced stage of award. GAIL will also be shortly connecting other consumers in and around the Mumbai region namely NRC, Herdillia, VVF, Owens Corning, Bombay Dyeing, Hsnil Era, Uttam Steel, Bhushan Steel, Supreme Petro, IIL, NITCO, etc. The Dahej-Uran pipeline has linked the two important gas markets of Gujarat and Maharashtra.

The pipeline will also enable supply of natural gas to various cities and towns and industries in areas falling enroute to the pipeline such as Vapi, Valsad, Navsari in Gujarat and Bhiwandi, Kalyan, Thane, Patalganga, Thapoli and Mahad in Maharastra. The DUPL project has branch lines to connect Deepak Fertilizers in Taloja industrial area in Navi Mumbai, MSEB Uran and RCF Trombay. GAIL had commissioned 18" pipeline to DFPCL (for supplying 1.1 MMSCMD) in November 2007, 24" pipeline to MSEB Uran (for supplying 2.5 MMSCMD) in March 2008 against all odds.

IGL’s legality issue to be resolved soon

July 20, 2008. CNG retailer Indraprastha Gas Ltd (IGL) may soon overcome a regulatory hitch on its operations front. Petroleum Ministry had spoken to the oil regulator to allow IGL to expand its network to meet the targets for the 2010 Commonwealth Games. Oil regulator, Petroleum and Natural Gas Regulatory Board (PNGRB), had asked IGL to stop all incremental work in the absence of authorisation letter from the Government for commencement of operations in the National Capital Region (NCR) in 1998. PNGRB considers IGL as an illegal entity due to the absence of specific Government consent.

According to Union Petroleum Minister, Mr. Murli Deora, the issue would be resolved in a week’s time and that there was no standoff with the regulator. IGL was formed prior to PNGRB coming into being and had Government consent to begin selling CNG to automobiles and piped natural gas to households. The State Government would provide land for building 50 new CNG dispensing stations to ease the load on the existing ones. IGL had seen daily sales jump to 13.6 lakh kilograms (kg) from 11.5 lakh kg a month ago due to private cars converting to CNG on account of rise in petrol and diesel prices. The Oil Ministry had directed IGL to work on a war footing, in coordination with concerned agencies to ensure adequate CNG supply to vehicles.

Fuel-efficiency norms coming for four-wheelers

July 19 2008. The Indian government is poised to issue new, voluntary fuel-efficiency norms for four-wheeler passenger vehicles that will be made mandatory and more stringent starting 2010. It is estimated by the government that three in four passenger vehicles in India are so-called three stars, or having a fuel efficiency equivalent to 12.6-16.8 km per litre of petrol. Under the norms, regardless of engine size, car buyers will have to be provided comparative information on fuel economy about passenger vehicles in the market.

At the same time, the new norms could help boost sales of hybrid vehicles, which allow the use of petrol and an alternative fuel source, in India. The proposal, says that the initial set of fuel economy standards can be phased in from model year 2010 to 2012, with the next set of more restrictive standards to follow after that. Also, as in the case of energy efficiency labelling for appliances such as air conditioners and refrigerators, it will begin with a voluntary code that will be made mandatory with further revisions of the codes.

The Road Transport and Highways Ministry estimates there were about 100 million vehicles on Indian roads at the end of 2007, of which about 17% are passenger vehicles. Between February and June, Bureau of Energy Efficiency (BEE) conducted a review of fuel economy characteristics of motor vehicles in India, considered possible regulatory structures and their benefits, and developed draft fuel economy standards and labelling requirements.

Its technical committee recommended that separate fuel economy standards be followed for petrol and diesel vehicles. The BEE proposal says that the standards will be established using a front-runner approach for each of the nine vehicle weight classes presently used for setting emissions standards. In order to develop the standards, the BEE has developed a comprehensive database of fuel economy for individual Indian vehicle models, combined with vehicle sales data.

Front-runner vehicles, which are defined as the vehicles leading their respective weight-class in terms of fuel economy, have been identified from the database. BEE anticipates that three-fourths of vehicle models in the market will receive a three- or four-star rating at present and the combination of fuel economy standards and labelling programme will provide the necessary impetus for development of several five-star rated vehicles by the end of first phase of labelling programme. Preliminary estimates show that the labelling programme will result in up to 20% reduction in oil use in year 2030 (5 mt, of oil in the low-growth scenario and 15 mt of oil in the high-growth scenario for the sector) just from passenger vehicles.

‘Futures trading took oil prices beyond $60’: FM

July 19, 2008. Finance Minister P Chidambaram has blamed speculators for the spurt in international crude oil prices saying any price above $60 per barrel was because of speculation. Chidambaram, who had last month asked the oil cartel to regulate crude prices within a specified band, said there was conclusive evidence that futures trading and speculators were driving the prices.

India had to raise petrol, diesel and domestic LPG prices due to spike in global oil prices that had put a Rs 246,000 crore ($57.5 bn) burden on state-run firms. But the hike of Rs 5 a litre in petrol, Rs 3 per litre in diesel and Rs 50 per 14.2-kg LPG cylinder was one-fifth of the desired price increase.

The gap will be met through oil bonds. Even after the price increase and duty cuts, Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 222,785 crore ($52.1 bn) in revenues this fiscal. Finance Ministry had at the time of June 4 price hike made a commitment to provide Rs 94,000 crore ($21.9 bn) worth of oil bonds to state-run oil companies.

Upstream firms like ONGC and OIL were to contribute Rs 48,000 crore ($11.2 bn). State-run retailers currently lose Rs 16.70 per litre on petrol, Rs 27.61 on diesel, Rs 38.09 on kerosene and Rs 338.53 per LPG cylinder. Finance Minister said he was not surprised that OPEC rejected India's call for fixing a price band.

eGoM sets norms for sale of gas from RIL, GSPC fields

July 18, 2008. In a move that will impact the freedom of companies like Reliance and GSPC to sell natural gas they have discovered, the Government has decided to set up priority sectors to which the fuel can be sold. An Empowered Group of Minister (eGoM) headed by External Affairs Minister Pranab Mukherjee, has decided that companies would sell gas to consumers in accordance with the marketing priorities determined by the Government.

The sale would be on the basis of formula for determining the price as approved by the government. Consumers belonging to any of the priority sector should be in a position to actually consume gas as and when it becomes available. Marketing priority does not entail any reservation of gas.

So in case consumers in a particular sector, which is higher in priority, are not in a position to take gas when it becomes available, it will go to the sector which is next in order of priority. The priority would not impact the process of price discovery that would involve participation by all customers.

For Reliance, which is to produce gas from its eastern offshore KG-D6 field from September, the eGoM decided that the gas will first go to fertiliser units, LPG plants, existing power plants and city gas distribution in that order. Reliance is to produce 25 mmscmd of gas from September that would scale up to 40 mmscmd by March 2009. GSPC would produce about 6 mmscmd from 2011, for which priority sectors would be decided later.

Oil ministry brass has less than two years’ experience

July 18, 2008. The top five decision makers in the oil ministry collectively have around 20 months of experience in the sector even as India, the third largest consumer of oil in Asia, struggles to keep pace with oil prices, which have doubled in the last one year. The five administrative officers, with backgrounds ranging from steel to personnel and administration, will now have to take crucial decisions on pricing petroleum products that will have a cascading effect on inflation, which has touched a 13-year high.

The $132-billion oil and gas sector in India, like in China and other Asian countries, is regulated, with government-owned companies controlling over 85 per cent of oil and gas production, over 70 per cent of refining capacity and almost all of fuel marketing. Outgoing Petroleum Secretary MS Srinivasan had experience of 80 months, nearly four times the collective experience of the new officers in charge of the oil ministry.

The joint secretary (refineries and pricing), LN Gupta, has been in charge for just over a month. Joint Secretary (international co-operation) Sunil Jain has been in the oil ministry for around four months. Additional Secretary S Sundareshan, who was the commodities regulator earlier, has 16 months of experience of the oil sector.

POWER

R-Power’s bid for plants in UP rejected

July 21, 2008. The curtain has finally come down on Reliance Power's (R-Power) bid to set up two power plants with a collective capacity of 3,300 MW in Uttar Pradesh with the Energy Task Force (ETF) concurred with the evaluation committee's report, which said the tariffs were high. The ETF recommended invitation of fresh bids for setting up the power plants at Bara and Karchhna in the Allahabad district. However, this has to be ratified by the state Cabinet first to take effect. This would be the third time that the state government would invite bids for the two power plants, which have failed to take off in spite of much fanfare with which they were initially announced. Reliance had quoted Rs 2.64 and Rs 2.60 per unit for the 1,980 MW Bara and 1,320 MW Karchchna plants, respectively.

The bids were only a paisa lower than the previous winner Lanco Infratech's bids. The state government was of the view that the price quoted should be around Rs 2 for supplying per unit of power. However, re-bidding is a time consuming process and it will take at least six months to invite fresh expression of interests (EoIs) from private parties and seriously jeopardise the state government's plan to ramp up its power generation capacity by 10,000 MW in the current five-year plan. Lanco had quoted the lowest tariff in the first bidding. However, the UP Power Corporation Limited (UPPCL) called for fresh bids from the bidding companies to bring down tariff. In the revised financial bids last month, Anil Ambani-controlled Reliance Power had emerged as the lowest tariff bidder vis-a-vis Lanco, National Thermal Power Corporation (NTPC), Jindal Steel and Power Limited (JSPL) and Calcutta Electric Supply Company. The proposed Bara and Karchhna projects are based on the super critical technology, and the required coal would be ferried from Singrauli, which is situated at a distance of about 600 km.

Units to generate 1450 MW power at Sharavathi and Kali

 July 21, 2008. The Karnataka Power Corporation Limited (KPCL) will invite tenders in a few months for setting up of a 1450 MW capacity Pumped Storage power generating units across Sharavathi and Kali rivers. The project, which involves pumping back of water used for generating power into reservoirs, aims at setting up a 800 MW unit at Varahi and 650 MW unit at Sharavathi hydro-stations.

The technology will be obtained from Japan the total project cost is estimated to be around Rs 4500 crores ($1.05 bn). The project will be completed in three to four years. KPCL, which was the first agency to set up a wind power station at Kappat Gudda in Gadag district, has also decided to harness solar energy in a big way to meet State’s power needs.

Three grid connected solar power generating units would be set up in next eight-nine months. These units, each with 3-MW capacity, would be set up at Alnawar near Dharwad, Yapaladinni near Raichur and a village near Kolar. The total project cost is around Rs 180 crores ($42.1 mn).

During the last 39 years the company have added 5,500 MW to the grid, but in the next five years it is required to add 7500 MWs to the grid. Over the years KPCL’s share in State’s power generation had come down. The KPCL and the Chattisgarh government will sign a MoU on July 25 for setting up of a 2,000 MW capacity pit head coal based thermal power plant in Chattisgarh.

Tuticorin power project cleared

July 21, 2008. The Rs 4900 crore ($1.1 bn) 1,000 megawatt (MW) coal-based Tuticorin power plant in Tamil Nadu has been cleared. Funds for the project, being jointly promoted by the centre-owned Neyveli Lignite Corp Ltd (NLC) and the Tamil Nadu Electricity Board (TNEB), are currently being tied up. The project will be funded by a mix of 70 per cent debt and 30 per cent equity.

Discussions are on with the state government's Power Finance Corp and a consortium of banks. Sixty percent of the project cost would be accounted for by the boiler, turbine and generator (BTG), and the balance by other equipment and activities - technically called the balance of plant (BOP). Tenders for BOP are being processed, while two companies, India's Bharat Heavy Electricals Ltd (BHEL) and Italy's Ansaldo are vying for the BTG order. The project will start generating within 42 months from the date of awarding the BTG order. Apart from building the power plant, the project involves building of port handling facilities to receive the coal. The port is expected to involve an outlay of Rs 600 mn. 

Tata Power to build power plant in Bhutan

July 21, 2008. Tata Power Company had entered into a partnership with The Royal Government of Bhutan to develop the 114 MW run-of-the-river Hydro Electric Power Project over river Dagachhu through Druk Green Power Corporation Ltd. (DGPC). The project will be executed by the Special Purpose Vehicle-Dagachhu Hydro Power Corporation Ltd. (DHPC).

As part of this strategic partnership, Tata Power has acquired a 26% stake in the project while Tata Power Trading will purchase all the power generated from the project. Tata Power Trading will off-take power from the project for 25 years and the power will be delivered at India-Bhutan Border. The power is expected to be evacuated through the Tala Transmission Link into India Eastern Region Grid.

City to get 50 MW power from garbage

July 20 2008. The Greater Hyderabad Municipal Corporation hopes to get 50 MW power through power generation from garbage from next year. With the additional power that will be generated, it will be possible to reduce at least half an hour of the scheduled power cuts in the city and meet the power requirements to light all the street lamps. Twenty two firms have shown interest in generating power from garbage in the city after the GHMC called for expression of interest from the national and international firms last month.

The corporation has called for quotations from the national and international firms for power generation with new technology apart from collection of garbage from houses, transportation, power generation and maintenance of dump yards. The bidder will be selected in two months. Though the GHMC officials have initially decided to select a bidder for entire city, they later decided to allow consortia if the companies decided to do so.

GHMC’s plan is to generate 50 MW power from 3500 MT garbage that is generated everyday in the city. The companies will begin power generation in 2009. Apart from the prospective bidder, two companies-RDF Power Projects and Venkateshwara Hydro Power Projects-were permitted by the state government to generate power from garbage a year ago. The companies entered into a power purchase agreement with Tata Power Trading Company Ltd which agreed to purchase power at a cost of Rs 3.60 from the companies. Both the power plants are under construction now. Once the plant is ready, RDF is expected to generate 11 MW and Venkateshwara Hydro Power Projects is expected to generate 12 MW power with 700 MT garbage each. Another company Selco is generating 6 MW power from garbage since 2000 by using 400 MT of garbage every day. The prospective bidder now will generate power through Hydrogen gas or Ethanol. The ash from the wastes can be used for making bricks. The technology is being used in the USA and other countries.

River power for Mumbai

July 19, 2008. A plan to generate hydropower from Vaitarna river is in the making and it will be more than three years before the reservoir lights up the city or its satellite towns. Mumbai's six famous water supplying lakes viz., Tansa, Vihar, Tulsi, Modak Sagar or Lower Vaitarna, Bhatsa and Upper Vaitarana, supply water to the city, but not electricity. Post-2011, the Middle Vaitarna will do both in a first-of-its-kind project. Under the Middle Vaitarna Water Supply Project, the Municipal Corporation of Greater Mumbai is building a dam on Vaitarna river at Kochale village in Mokhada taluka of Thane district to meet the city's growing requirement of water. The dam will have a length of 500 metres and a height of 105 metres—the tallest in Maharashtra.

The project, which falls under the Jawaharlal Nehru National Urban Renewal Mission, is due to complete in 2011. Middle Vaitarna is likely to hold 450 million litres of water and will have a hydropower capacity of 30-35 MW. This will be the first time that power will be generated from a reservoir supplying water to Mumbai. But work on the Rs 1,500-crore ($351 mn) dam project, slated to commence in December, may be delayed as a PIL filed in the Bombay High Court has challenged MCGM's decision to award the contract to a Chinese firm, in joint venture with Hyderabad-based Soma Enterprise Ltd, on grounds of threat to national security.

Work on the project is yet to start. The dam is scheduled to be completed by 2011. So The cost of power project will be around Rs 100 crore ($23.4 mn). According to MCGM, the task of preparing the detailed project report on hydropower generation from the Middle Vaitarna Dam has been given to Mott Macdonald, the international management, engineering and development consultancy firm. The civic body has allocated Rs 1 crore ($0.23 mn) towards this aim. Mott Macdonald had already submitted the feasibility report for the power project.

GMR Energy seeks 5 mt coal annually for Orissa project

July 19, 2008. GMR Energy, which has already launched the capacity- addition of 3,130 MW with an estimated investment close to Rs 14,000 crore ($3.2 bn), has called upon the coal ministry for allocation of 5 mt of ‘F’ grade coal annually from the Mahanadi Coalfields Limited (MCL) coal mines to meet the fuel requirement of its 1,050 MW thermal power project in Orissa. The project is expected to go on steam by the end of 2010. Financial closure is expected by end of July or August. The EPC contract was finalised on SEPCO Electric Power Corporation, China in March 2008 and letter of intent (LoI) has been issued, advance paid and signing of contract is expected shortly.

Delhi-Mumbai corridor to have 4 GW power plant

July 17, 2008. Delhi-Mumbai dedicated rail freight corridor is set to be ready by 2013, according to a report. The 1,483-km corridor would cover six states Delhi and NCR, Haryana, Uttar Pradesh, Rajasthan, Gujarat and Maharashtra. The corridor, for which a company has been incorporated, would have a 4,000-MW power plant, three greenfield ports and six airports. It would also link 10 cities with over 10 lakh population including Faridabad, Surat, Delhi, Greater Mumbai, Meerut, Jaipur, Ahmedabad, Pune and Nashik.   

BGR Energy bags EPC contract for power plant

July 17, 2008. BGR Energy won a contract worth Rs 4,900 crore ($1.1 bn) for engineering, procurement and construction of a thermal power project in Rajasthan. The contract for the 1,200 megawatt power project was awarded by the Rajasthan Vidyut Utpadan Nigam and is scheduled to be completed in 42 months.

NTPC eyes investment in Oman power sector

July 16, 2008. NTPC Limited, India's largest power generation company, is keen on exploring opportunities to invest in Oman's rapidly expanding power sector, particularly in the area of clean power generation and carbon capture technologies. A high-level delegation from the Indian public sector unit visited Oman for talks with senior officials of Public Authority for Electricity and Water (PAEW) and Oman Power and Water Procurement Company (OPWP).

Jindal, Tata to supply power

July 22, 2008. Bangalore State, which is experiencing a power crisis got a breather, following the decision by private producers to supply power to the State. The State has started getting 50 MW of power from the Jindal Company. Moreover, the Tata Power has also come forward to supply 100 to 200 MW of power during day time. The State will get power for about two hours daily from the company.

In total the state will be getting an additional 2 million units of power per day to bridge the gap. While states such as Tamil Nadu, Andhra Pradesh and Gujarat have made progress in setting up the UMPP, Karnataka is lagging far behind. With unscheduled power cuts in the city in recent days, the Karnataka government is now weighing options to buy power from other states and private utilities. While the energy consumption in the state currently stood at 120 to 130 million units (MUs) a day, the Karnataka Power Transmission Corporation Ltd (KPTCL) could supply only 100 MUs with the state drawing around only 48 million units of power from the hydel resources every day.

Currently the state is receiving 1,546 MW from the central power generating stations. The state has asked the Centre to provide 3,000 MW. The state’s peak hour requirement stood at 6,583 MW in 2007 against the supply of 5,506 MW, leading to 16% deficit at 1,077 MW. In fact, annual energy requirement has increased to 40,787 MUs in 2007 from 32, 173 MU in 2002-03.

Maharashtra extends power cuts for industry

July 22, 2008. Industry in Maharashtra will have to face power cut for 24 hours in a week, instead of 16 hours earlier, in the wake of drought-like situation in the state. Below-normal rainfall has resulted in an increase in demand from domestic, commercial and agricultural sectors. The state-owned power distribution utility, Mahavitaran, warned that if this (outage) doesn’t help improve the situation, then hours of power cuts will be increased substantially.

The decision was taken at a meeting between Mahavitaran and state Energy Minister Dilip Walse-Patil. At present, the gap between demand and availability of power has reached to 4,900 MW to 5,000 MW. With weekly power cut for industry increased by eight hours, an additional 250 MW of power will be made available.

According to the Maharashtra Electricity Regulatory Commission (MERC) order Mahavitaran can’t increase the daily power cut in the rural areas beyond 12 hours. If required, outages in the industrial parks have to be increased to ensure that rural areas don’t face power cut in excess of 12 hours a day.

Industries in Gujarat asked to have 2 day off

July 19, 2008. Due to power shortage in the Gujarat state, over two lakh non continuous processing industries across the state have been asked to observe weekly off on two consecutive days. Non availability of gas to gas based power stations located across the state, has reduced power generation by 500 MW and the gap in demand and supply has increased to 1,000 MW. The demand of power from the farm sector has been going up due to erratic monsoon and for diverting more power to the farmers.

Adani Power to supply 1.3 GW power to HPGCL

July 18, 2008. Adani Power Limited (APL) is set to supply power to the Haryana Power Generation Corporation Limited (HPGCL) soon. APL has received a Letter of Intent (LoI) for supplying 1,311 MW of power to HPGCL, which will be supplied from the company's under-construction power generation facility in Mundra, Kutch, at the rate of Rs 2.94 per unit. With this LoI, the APL now has successful tie up for supply of 3,311 MW of power from its Mundra facility. At present, APL has six coal-fired thermal power projects under various stages of development which have a combined power generation capacity of 9,900 MW at a cost of Rs 43,139 crore ($10.1 bn).

The company has also made a bid to supply 1,420 MW of power from its proposed Tiroda power project to Maharashtra State Electricity Distribution Company Limited. APL intends to sell power under a combination of long-term power purchase agreements to industrial and state-owned consumers as well as on merchant basis. APL had already signed two power purchase agreements with Gujarat Urja Vikas Nigam Limited for the supply of 1,000 MW of power produced from its Mundra I and II power project, and 1,000 MW from the Mundra III power project.

IEX crosses 30 th units power trade

July 17, 2008. The Indian Energy Exchange (IEX), the country's first power exchange which was formally launched by Sushil Kumar Shinde, Union minister for power, since its inception, the exchange has already carried out trading of over 30,000 MW hour (mwh or units). The Financial Technologies (FTIL) and PTC India-promoted platform for online power trading started its operations on June 27.

These transactions have taken place in a price range of Rs 6,466 - 13,700 per mwh. The concept of the energy exchange in India was initiated in March last year when the Central Electricity Regulatory Commission (CERC) received the first application to set up the trading platform. CERC however gave its final approval to the formation of the exchange in August. The key stakeholders in the exchange include Adani Enterprises, IDFC, Lanco Infratech and Reliance Energy.

Gammon eyes majority stake in Italian Company

July 16, 2008. Construction firm Gammon India is learnt to have initiated talks with the Italy-based power firm, Sofinter, to pick up a majority stake in the foreign firm. The deal, if clinched, will be Gammon's third acquisition in the Italian market. Last month, Gammon had acquired a majority stake in Italian turbine maker Franco Tosi Meccanica for E40 mn and a 50% equity stake in power sector services firm Sadelmi for E7.5 mn. Gammon is learnt to be negotiating with Sofinter for over 50% equity stake.

The deal, if it materialises, will be over $70 mn. Sofinter is a highly specialised company operating in the sector of steam and power generation using various fuels, biomass and municipal and industrial waste. Gammon India has plans to bid for contracts to build large power projects in India on the strength of its overseas acquisitions. GMR Infrastructure recently acquired 50% stake in US-based power firm Intragen for over $1 bn.

India, which faces a peak power shortage of 14%, has announced plans to boost generating capacity by more than half by 2012. This has led to a number of investments in power projects, fuelling demand for capital goods firms. Gammon currently gets almost half of its revenues from the power segment, most of these for constructing parts of power projects. It will now be able to bring in design and engineering for entire projects.   

Uttarakhand invites private players to take over old hydel projects

July 22, 2008. In a major policy decision, the Uttarakhand government decided to invite private players to renovate the state's ageing hydel projects. In the first step, three to five projects will be handed over to the private sector. There are 12 projects in the state that are more than 35 years old and four are lying closed.

The total capacity of these projects is 500 MW. The move comes close on the heels of the government's decision last month to suspend the construction of two major hydel projects viz., 480 MW Pala Maneri and 400 MW Bharion Ghati, in the wake of protests. All the 23 hydel projects would be handed over to private companies on private-public partnership (PPP) mode on a lease of 30 years.

The government would shortly invite Expression of Interests (EoIs) in this regard. All these projects were being run by the Uttarakhand Jal Vidyut Nigam Ltd (UJVNL). This indicates that UJVNL will be asked to focus on new projects instead of the old ones. The government took the decision because it was not able to generate enough financial resources for the renovation and modernisation of these projects.

Nuclear deal could benefit over 400 companies

July 21, 2008. India has plans to set up 15 plants over the next 20 years and so the pursuance with US to import more advanced nuclear power technology may better the standards of manufacturing for smaller players in future. India has a total installed power generation capacity of 1, 44, 564.97 MW. Out of this, 64.6% capacity is achieved through thermal fuel, and hydroelectric power contributes 10.5% while nuclear energy makes up for a mere 2.9%.

It is estimated that over 400 companies could get a chance to participate in building power plants directly or indirectly. Among them is Bangalore-based Avasarla Technologies Ltd that's gearing up to increase its production capacity multi-fold, and also readying for a possible JV with a US-based technology group.

The Rs 160-crore ($37.4 mn) company has supplied coolant channel assembly, fuel transfer equipment, reactivity mechanisms and calandria, a vessel that holds the uranium in the reactor core to some of the nuclear power plants in the past. Further, the company is also adding few more products like fuel missions, radiation shielding windows, plugs to meet future requirements. This will boost the indigenisation of technology for players. Nuclear Power Corporation of India Ltd (NCPIL), too, supports the growth of small manufacturing players in this area.

Construction of mega hydroelectric project opposed

July 21, 2008. All Assam Students’ Union (AASU) and All Idu-Mishimi Student’s Union (AIMSU) of Arunachal Pradesh have decided to jointly protest construction of the mega hydro-electric project which will erect a 28 metre dam to block the waters of river Dibang, one of main tributaries of the Brahmaputra which slows down through Lower Dibang Assam valley.

The Memorandum of Understanding (MOU) between, Arunachal Pradesh government and NHPC for the project had already been singed. The dam would be erected to set up a multi-purpose project production of 3000 MW is envisaged. The project and dam will be biggest and highest in Asia. But the Government of Arunachal Pradesh, according to the people living in the downstream areas of the project that would be constructed at Munli at a distance of about 40 km from the district headquarter of Lower Dibang Valley district of Arunachal Pradesh, did not elicit public opinion before signing the MoU. Not only would the people of downstream areas in Arunachal Pradesh but construction of the dam of 288-metre height threaten life and property of four districts: Tinsukia, Dibrugarh, Sivasagar and Jorhat.

As per the Environmental Management Plan of this mega project, water that would amassed in the reservoir of 43 km with a breadth of minimum 300 metre between two mountains would take only 26 minutes to reach Chapakhowa with 4.2 metre height and if it thus happens, water would wash away these four districts of Assam within 30 minutes.

‘India has no alternative to nuclear energy’: Mukherjee

July 21 2008. As the Indian economy continues to grow at an enviable pace, there is no other choice in addressing the mounting energy needs than nuclear power. Participating in the debate following a confidence motion moved by Prime Minister Manmohan Singh in the Lok Sabha, External Affairs Minister Pranab Mukherjee said only nuclear energy had the potential to bridge the energy deficit in the country expected to touch a staggering 150,000 MW by 2030 and 412,000 MW by 2050.

India, which has been growing at over nine percent in the past three years has a current electricity capacity of 144,560 MW, with some 78,000 megawatt more targeted to be added during the 11th Five Year Plan till March 2012. According to Mukherjee, India should follow the example set by the French, who started building their nuclear energy capabilities after the oil crisis of the early 1970s. Thirty-four years later, 79 percent of the energy in France comes from nuclear power. There was a valid reason why some countries like the US - with whom India is negotiating a pact to recommence nuclear commerce after it was halted following the nuclear tests of 1998 - were not opting for this clean energy source.

Hydroelectric power projects, which some experts have been recommending, could come only at a cost. There will be massive deforestation and displacement. They will be strongly resisted over environmental issues. Even if one were to look at coal - which is not considered an environmentally clean source, the quality and the quantity of the commodity was not sufficient to address future demand.

Power deficit up in June

July 21, 2008. The growth in demand for power coupled with the lag in capacity addition has led to a worsening power deficit in June, according the Central Electricity Authority (CEA), an apex power planning and advisory of the central government. Peak power deficit, a measure of the shortfall in electricity when the demand was at the highest level, for the month went up to 12.9 per cent as against 11.1 per cent in the corresponding month last year. Average deficit, the mean of deficit for the entire month, was up to 8.4 per cent as compared with 6.3 per cent in April 2007.

POWER DEFICIT
	June		May
	peak deficit	average deficit	peak deficit	average deficit
2008	12.9	8.4	12.9	8.7
2007	11.1	6.3	12.3	8.0
(Source: CEA)

The yearly increasing power deficit is mainly attributed to the increasing demand in power.

TRENDS IN IIP (% YoY) VIS-A-VIS POWER
	Dec 07	Jan 08	Feb 08	Mar 08	April 08	May 08	May 07
Power	3.8	3.7	9.8	3.7	1.4	2.0	9.4
General	8.0	6.2	9.5	3.9	6.2	3.8	10.6
(Source: Citigroup global markets report)

Total peak power demand for the month was recorded at 103,636 MW, which was 4,259 MW higher than the power demand of 99,377 MW in the corresponding month last year.  However, experts believe the worsening power deficit is also an indicator of the declining performance of the infrastructure sector over the past few months. The growth of the energy sector has dropped due to rise in the cost of raw materials, borrowings and increased interest rates and a slowdown in infrastructure always produces adverse affect on the industrial growth. Power, along with five other major sectors viz., cement, steel, coal, crude oil and petroleum products contributes to the country's infrastructure. Growth of these six sectors account for more than a quarter in the index of industrial production (IIP). The latest data of the IIP, of which power carries a weight of about 10.17 per cent, suggests that the power sector has grown at a rate of 1.7 per cent in the past two months as compared with about 9 per cent in the same period last year. The worsening power deficit has come at a time when the government has set a capacity addition target of 78,577 MW in the eleventh plan period (2007-2012), out of which 11,061 MW is to be added in the current year. 

MP to sign mega deal with IL&FS

July 17, 2008. Navaratna company Bharat Heavy Electricals Ltd will receive challenge from this month with the signing of a Rs 20,000 crore ($4.6 bn) deal between the MP government and Infrastructure Leasing and Financial Services on making the state a heavy power equipment manufacturing hub. A number of private companies are in the process of setting up thermal power units in the state.

However, no private heavy electrical equipment manufacturing company has a presence in MP. The state will rope in IL&FS as consultant to gauge the potential in the sector so that private manufacturers of power equipment like turbines and generators may set up shop. As many as 23 private power companies like the Anil Dhirubhai Ambani Group, Essar, Lanco Infratech, Sanghi, and BLA Power signed deals with the state government last year to proposed a combined thermal power generation of more than 11,000 MW capacity by 2012 in Khajuraho. Almost all the companies are in process of acquiring land, environment clearances or identifying land.

OIL & GAS

Eni makes significant gas discovery in Sicilian Strait

July 22, 2008. Eni has made a new, significant gas discovery in the Sicilian Strait, with the Cassiopea 1 well at a water depth of some 560 meters, about 22 kilometers off the coast of Agrigentos. The Cassiopea field extends across G.R14.AG and G.R13.AG exploration licenses, which Eni operates with a 60% stake. Edison holds the remaining 40%. Gas reserves associated with the discovery are estimated at approximately 16 bcm. Preliminary tests show production of around 190,000 cubic meters of gas per day. In 2007 Eni's oil and natural gas production in the country reached 212,000 boe per day. Eni is involved in projects in the Adriatic Sea, in the center-southern Apennines, onshore and offshore Sicily and in the Po Valley, for an overall area of 25,991 square kilometers, with Eni's equity at 20,664 square kilometers.

Petrovietnam surveying oil block eyed by China

July 22, 2008. State oil group Petrovietnam has resumed exploration activity in an area off Vietnam's coast which is the subject of a territorial dispute between Hanoi and China, Petrovietnam's partner. Petrovietnam is currently executing contracts for offshore survey activities on blocks 5.2 and 5.3. Last year, BP suspended planned seismic surveys of Block 5.2 pending a resolution of the dispute. The block is about 370 km (230 mi) offshore, between Vietnam and the Spratly Islands, a string of rocky outcrops in the South China Sea, suspected of containing large oil and gas deposits and which are claimed by Vietnam, China and Taiwan.

Interoil discovers new reservoir potential in Colombia

July 22, 2008. InterOil's first well in Colombia's Mana South field is completed with a very encouraging production of 410 bopd. Additional three consecutive wells are scheduled over the next months, in order to further determine the potential of this area. The cost of the first well is approximately $1.8 mn. InterOil is the Operator with a 70% working interest, and the Company's partner, state-owned Ecopetrol, has 30%. The extension of the Mana Field to the South could add significant production volume and reserves.

Gulfsands starts up production at Khurbet East field

July 22, 2008. According to the Gulfsands Petroleum plc, the production of oil commenced at the Khurbet East Early Production Facility in Block 26, Syria. This early commencement of oil production follows the fast tracking of construction of an EPF for the Massive Reservoir in the Khurbet East Field. The discovery well for the Khurbet East field, KHE-1, completed operations in June 2007. Gulfsands, the Operator of Syria Block 26 and Dijla Petroleum Company, the jointly owned company established with Syria Petroleum Company to act as the 'joint operating company' under the terms of the Production Sharing Contract for Block 26, completed the EPF less than six months after the receipt of approval from the Syrian Petroleum Company and the Government of Syria for the development of the Khurbet East Field. The first well brought into production is KHE-4, one of the three vertical wells to be tied into the EPF.

Taiwan's oil company to mine oil sands in Canada

July 17, 2008. Taiwan's state-run Chinese Petroleum Corp (CPC) signed a deal with a Canadian firm to jointly mine oil sands in Canada. CPC signed a memorandum of understanding (MOU) in Taipei with Canada's Indian Oilsands, which is based in Canada's Saskatchewan Province. Under the deal, CPC and Indian Oilsands will explore the feasibility of jointly mining oils sand in Saskatchewan. Canada has the world's largest reserves of oil sands, a form of extremely heavy crude or oil-rich bitumen. Although most of Canada's oil sands are in Alberta Province, some companies are also exploring for oils sand in nearby Saskatchewan.

Kupe JV discovers gas offshore New Zealand

July 17, 2008. Origin Energy Resources (Kupe) Limited, on behalf of the Kupe Joint Venture, reported that the Momoho 1 exploration well has discovered a small gas condensate pool within thin, good quality sandstones of the Palaeocene Farewell Formation, the third indication of hydrocarbons along this structural trend.

Preliminary Interpretation indicates that the well has intersected a gross gas condensate column over the interval 2,896 to 2,921 meters RT. Given the presence of gas condensate at Momoho 1, gas nearby at Kupe South 4 (2.5 kilometers to the northeast) and oil at Kupe South 5 (1.2 kilometers to the south), potential remains for hydrocarbons to be trapped within a large closure on the northeastern, downthrown side of this fault.

Partners in the Kupe permit PML38146 are Origin Energy Resources (Kupe) Limited (Operator) 50%, wholly owned subsidiaries of Genesis Energy 31%, New Zealand Oil & Gas Limited (through its subsidiaries viz., National Petroleum Ltd. 12.75%, Petroleum Equities Ltd. and Nephrite Enterprises Ltd. 1.00%) 15%; and Mitsui E&P Australia Pty Ltd 4%.

Norway's production rides high for May ’08

July 17, 2008. The Norwegian Petroleum Directorate released the production levels for the month of May 2008. The average daily production was about 2,177,000 barrels of oil, about 304 000 barrels of NGL and about 70,000 barrels of condensate, a total of 2,550,000 barrels of liquid.

In May, 20.2 million standard cubic meters of oil equivalents were produced, which is 1.3 million standard cubic meters of oil equivalents higher than in May 2007. So far this year the average daily production has been just above 2.1 million barrels of oil and the total production is approximately 104.4 million Sm3 o.e, this is 2.1 million Sm3 o.e., higher than last year. Preliminary production figures for June 2008 show an average daily production of about 1.930 million barrels of oil and 0.272 million barrels of NGL and condensate.

Shell to invest $300 mn in search for oil, gas in Peru

July 17, 2008. Royal Dutch Shell plc is ready to invest as much as $300 million in exploring for oil and natural gas in Peruvian waters as part of a agreement with BPZ Energy. The venture marks Shell's return to Peru after an absence of 11 years. Acording to BPZ, the two firms plan to jointly explore three offshore blocks about 1,300 kilometers (800 miles) north of Lima. In March, U.S.- and Peruvian-owned BPZ found an estimated 60 million barrels' worth of crude oil and 40 mcf of natural gas in the same region off Peru's northern Pacific coast. The accord calls for Shell to spend up to $300 million on exploration and if reserves are found exploitation of natural gas, while BPZ will put the same amount into searching for crude oil along with an additional $150 mn to build an electric plant in the area. Under the deal, BPZ will get 51.75 percent of any oil or gas produced and Shell will claim the rest. The agreement also contemplates the creation of a 50/50 joint venture to liquefy and export natural gas if such a move is warranted by the volume of gas discovered.

Trafalgar makes significant gas discovery in Alberta

July 16, 2008. Trafalgar Energy Ltd. has announced a significant gas discovery at Stowe, Alberta. Trafalgar's 100% working interest 4-25-91-24W5 well tested at rates in excess of 2.3 mmcf per day of natural gas and 40 barrels per day of associated condensate (approximately 423 Boe per day) over a 3 day period. The Company expects to complete tie-in of the 4-25 well to the existing nearby infrastructure by August 15, 2008. The Company currently anticipates drilling additional wells at Stowe in early 2009.

Hellenic awards Foster Wheeler refinery upgrade contracts

July 22, 2008. Italian and Greek subsidiaries of its Continental Europe operating unit, part of its Global Engineering and Construction Group, have been awarded engineering, procurement and construction management contracts by Hellenic Petroleum S.A. for a refinery upgrading project at one of the company's refineries, at Thessaloniki in Northern Greece.

The scope of the project is the production of low sulfur fuels, which also results in significant environmental improvements. Hellenic, an energy company, primarily engages in refining and marketing of petroleum products, petrochemicals, power production and natural gas, as well as other sectors, in southeastern Europe.

Foster Wheeler's scope comprises a new 15,000 barrels per stream day (BPSD) continuous catalytic reformer, modification of the existing atmospheric distillation unit in order to switch the operation from high to low sulfur crudes and revamp of the existing naphtha hydrofiner and crude light ends processing unit to increase to 26,000 BPSD the refinery's processing capacity for the light products. The refinery upgrading project, which will increase gasoline and diesel oil production, is expected to be completed by the end of 2010.

Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the upstream oil and gas, LNG and gas-to-liquids, refining, petrochemicals, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. The company is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, N.J.

Alter NRG plans Canada's first plant to turn coal into car fuel

July 22, 2008. Alter NRG Corp. plans to build Canada's first plant to convert coal into transportation fuels for $4.5-bn. The plant, located about 241 kilometres northwest of Edmonton, may produce as much as 40,000 barrels a day of fuels including diesel. The project will likely be developed in stages, with the first phase producing about 20,000 barrels a day. The technology has been around for decades and the project is based on oil selling for $80 a barrel. Record oil prices are encouraging companies worldwide to consider projects that convert coal or natural gas into transportation fuels. Royal Dutch Shell PLC's multibillion dollar gas-to-liquids refinery in Qatar will start in 2010. Alter NRG owns four leases near the town of Fox Creek that contain an estimated 468 mmt of proven and probable coal reserves. A processing unit will convert the coal into diesel and naphtha. The company is looking for partners, particularly those with refining and marketing expertise and is unlikely to own a majority stake in the project. The project's environment and engineering studies will be conducted in 2008 and 2009, and a regulatory application will likely be filed late next year. If approval is obtained in 18 months, mining operations may start in 2013 and the refinery-like plant may begin processing fuels in early 2014. About 85% to 90% of the plant's carbon dioxide, a gas linked to global warming, will be captured and stored. The company may sell some carbon dioxide to oil producers for injection underground to boost pressure and production at ageing fields in the area.

Sinopec's Maoming refinery to expand capacity

July 22, 2008. Maoming refinery, operated by China Petroleum & Chemical Corp (Sinopec), plans to expand annual capacity to 20 mt, up 48 percent. The expansion project includes a 12 mt capacity crude distillation unit and a 2.4 mt capacity hydrocracking facility, which would enable the refinery to process imported high-sulfur crude. Maoming refinery, located in southern China's Guangdong province, also plans to double its ethylene annual capacity to two million tons.

Foster Wheeler to design Vietnam refinery complex

July 22, 2008. UK-based Foster Wheeler Energy Limited has signed a contract to design the Nghi Son refinery and petrochemical (RP) project for the Nghi Son RP Company. Under the contract, the UK partner will finish the design within 16 months. Foster Wheeler Energy Limited was also one of the designers for Dung Quat, the country's first oil refinery. The first stage of the Nghi Son Refinery & Petrochemical Complex project will cost around $6 billion.

It will be built in the Nghi Son Economic Zone, around 200 km south of Hanoi. Once operational in 2013, the plant will be able to produce 10 mt of crude oil per year or 200,000 barrels per day. This is 1.5 time the capacity of Dung Quat refinery. It will then be doubled in the second stage of the project.

Nghi Son project will import crude oil from Kuwait to produce petroleum like A92, A95, A98 and even fuel for jet planes. It is expected to meet 60 percent of the national demand for oil and gas. It is one of the country's key projects aimed at satisfying the estimated domestic market demand for oil and petroleum-about 18 mt in 2010, 25 mt in 2015, 37 mt in 2020 and 48 mt in 2025. Total investment capital for the projects is nearly $10.3 bn.

Vietnamese firm to build refinery in central region

July 21, 2008. State-owned Vietnam National Petroleum Corp. (Petrolimex) plans to build an oil refinery with annual processing capacity of 10 mt of crude oil in the country's central Khanh Hoa province with investment of $4.5 billion. The corporation and its foreign partner, China Petroleum and Chemical Corp. (Sinopec), are planning to survey the project's site to make an initial report to relevant agencies. Crude oil is scheduled to be imported from either Singapore or the Middle East to feed the oil refinery. Petrolimex has 43 affiliates and 34 branches nationwide apart from three joint ventures with foreign countries and one branch in Singapore. Vietnam exported 6.7 million tons of crude oil worth $5.6 billion in the first half of this year, down 12.1 percent in volume but up 49 percent in value, according to the country's General Statistics Office. Meanwhile, it spend $6.8 billion importing 5.9 million tons of petroleum products, posting respective year-on-year rises of 68.9 percent and 4.4 percent.

PetroChina, Sinopec post heavy refining losses in first half

July 21, 2008. PetroChina and Sinopec, China's two largest oil companies, suffered a combined refining loss of 5.71 bn yuan (US$837.24 mn) in the first half of 2008 as soaring world crude prices added to their production costs. The loss was 47.9 percent higher than the same period last year. The country's oil companies have been losing money for each barrel of foreign oil they refined and sold to domestic consumers as they could not pass along the increase under the government-set refined oil prices. World crude prices had surged more than 50 percent since November. The government raised the benchmark gasoline and diesel oil retail prices to 6,980 yuan and 6,520 yuan per tonne in June, up more than 16 percent and 18 percent, respectively. According to the Sinopec, the price increase was helpful but far from eliminating losses.

Oxford Catalysts, PTT may deploy natural gas upgrading technology

July 21, 2008. Oxford Catalysts has entered into a memorandum of understanding ('MOU') with the Thai state controlled oil and gas company, PTT Public Company Limited, Thailand's largest listed company that accounts for 20% of the country's GDP. The two Companies are collaborating on the evaluation and commercialization of a technology for upgrading natural gas. Because the importance of compressed natural gas (CNG) as a transportation fuel is rapidly rising in Thailand and other parts of Asia, this technology will help support the region's drive towards cleaner, sulfur-free fuels. The technology has been tested against competitive materials in the laboratory, and will now be tested in two commercial side-stream units with results expected by the year end.

If the testing is successful, the next stage will consist of an industrial scale field trial by PTT. Upon success, the project will ultimately lead to the supply of materials for future commercial deployment, through a third party contract manufacturer, with expected revenue to Oxford Catalysts in the form of license and royalty payments. Oxford Catalysts has identified, and is already working with, a major catalyst company as their partner for scaling-up manufacture of the materials for commercial deployment.

Gastar announces Aussie gas transmission deal

July 22, 2008. Gastar Exploration Ltd. and joint venture partner Eastern Star Gas Limited have entered into a Heads of Agreement (HoA) with the APA Group (APA), owner of the Central West and Moomba Sydney Gas Pipelines. Under the HoA, options for early delivery of coal seam gas from PEL 238 into the New South Wales (NSW) gas market are to be investigated. Under the HoA, it is anticipated that coal seam gas would be initially delivered to New South Wales gas markets via APA's Central West Pipeline, with APA's NSW pipeline system to subsequently be expanded as gas production and markets grow.

Gastar Exploration Ltd. is an exploration and production company focused on finding and developing natural gas assets in North America and Australia. Gastar pursues a strategy combining select higher risk, deep natural gas exploration prospects with lower risk coal bed methane (CBM) development. Gastar owns and operates exploration and development acreage in the deep Bossier gas play of East Texas. Gastar's CBM activities are conducted within the Powder River Basin of Wyoming and on approximately 6 million gross acres controlled by Gastar and its joint development partners in Australia's Gunnedah Basin (PEL 238, PAL 2, PEL 433 and PEL 434) located in New South Wales.

Sinopec completes Caofeidian-Tianjin oil pipeline

July 22, 2008. Sinopec Group, parent of Sinopec Corp., has completed construction of a 190-km long oil pipeline spanning from Caofeidian port to Tianjin oil tank. Planned to annually transport 20 million tons of oil imported through the 300,000 dwt Caofeidian crude terminal, the pipeline is expected to cut refining cost for refineries in north China including Yanshan Petrochemical, Tianjin Petrochemical and Shijiangzhuang Refinery. Total investment of the Caofeidian project amounted to 2.937 bn yuan, in which Sinopec alone invested 1.028 bn yuan.

Holly Co. to ship on Centurion Pipeline

July 22, 2008. Holly Corp.’s wholly-owned refining subsidiary, Holly Refining & Marketing Co. (HRM) has completed negotiations and entered into a definitive agreement to ship crude oil on the Centurion Pipeline, a pipeline owned and operated by Centurion Pipeline L.P, a subsidiary of Occidental Petroleum Corp.

 The Centurion Pipeline will deliver crude oil from Cushing, Okla., to Slaughter, Texas, which is near the Texas New Mexico border. HRM has previously entered into shipping commitments on both the Keystone and the Spearhead pipelines, which will transport Canadian crude oil from Canada to Cushing, Okla. Holly and Holly Energy Partners (HEP) are presently evaluating the best pipeline plan to deliver crude from the terminus point of the Centurion pipeline at Slaughter, Texas, to the Navajo Refinery complex in New Mexico, which will include approximately 70 miles of additional pipeline. These pipeline commitments will complement Holly's Navajo refinery capital improvement projects to increase feedstock flexibility by providing the option for the delivery of heavy Canadian and/or other crudes to the Navajo refinery.

The feedstock flexibility projects are expected to allow the Navajo refinery to process 40,000 barrels per stream day (bpsd) of heavy Canadian type crudes and are expected to be mechanically completed in the fourth quarter of 2009. Holly is also expanding the crude capacity at the Navajo refinery from 85,000 to 100,000 bpsd which is expected to be mechanically complete in the first quarter of 2009. Holly Corp., is an independent petroleum refiner and marketer that produces high value light products such as gasoline, diesel fuel and jet fuel. Holly operates through its subsidiaries an 85,000 barrels per day (bpd) refinery located in Artesia, New Mexico and a 26,000 bpd refinery in Woods Cross, Utah. Holly also owns a 46% interest (including the general partner interest) in Holly Energy Partners, L.P. Holly Energy Partners, L.P., headquartered in Dallas, Texas, provides transportation and terminal services to the petroleum industry, including Holly Corp., which currently owns a 46% interest in the Partnership. The Partnership owns and operates crude and product pipelines and terminals located in Texas, New Mexico, Oklahoma, Arizona, Washington, Idaho and Utah. In addition, the Partnership owns a 70% interest in Rio Grande Pipeline Co., a transporter of LPGs from West Texas to Northern Mexico. 

Gazprom to buy stake in far East pipeline owner

July 21, 2008. Gazprom will buy a 25 percent stake in Daltransgaz, a part owner of a natural gas pipeline in Russia's Far East. Gazprom will buy the Daltransgaz stake from Rosneft, the largest Russian government-owned crude producer. Gazprom and Rosneft recently signed a cooperation agreement. The acquisition will give Gazprom some access to the Daltransgaz pipeline from the island of Sakhalin to the port of Vladivostok via Khabarovsk. In addition to Daltransgaz owning a share of the pipeline, the Russian Federal Property Management Agency holds a 27.39 percent stake, while the Khabarovsk Territory controls the remaining 47.59 percent.

TransCanada, ConocoPhillips to expand keystone pipeline for $7 bn

July 16, 2008. TransCanada Corporation, on behalf of the Keystone Pipeline partnerships between TransCanada and ConocoPhillips, has announced plans to expand the Keystone crude oil pipeline system and provide additional capacity of 500,000 barrels per day from Western Canada to the U.S. Gulf Coast in 2012.

The expansion is expected to cost approximately US$7.0 bn. When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to approximately 1.1 mn barrels per day and result in a total capital investment of approximately $12.2 bn.

Plans to expand to the U.S. Gulf Coast follow successful negotiations with several prospective shippers who have agreed, subject to regulatory approvals, to make shipping commitments of approximately 300,000 barrels per day to the U.S. Gulf Coast for an average term of 18 years.

In addition, prospective shippers have also agreed to commit another 35,000 barrels per day to Wood River and Patoka. With these commitments Keystone has now secured long-term commitments for approximately 830,000 barrels per day for an average term of 18 years. These commitments represent approximately 75 per cent of the commercial design of the system.

Oil refinery fuels Al Anbar forward

July 22, 2008. Members of the Al Anbar government gathered to celebrate the Haditha oil refinery's resumption of production for the first time in three years. The opening of the Haditha oil refinery is a huge step towards self reliance for the people of the Al Anbar province. Operating at maximum efficiency, the refinery will be able to process 160,00 barrels of oil per day. The refinery will also employ more than 15,000 workers.

The products the refinery will generate will range from benzine, to heavy fuel oil, which is used to run factories for cement, gypsum, asphalt and eventually the Tahadi power station. The power station is a future product that will alleviate all the electricity problems within the Al Anbar province. The refinery has eliminated the issues people were having with lack of kerosene, which is essential for them because they use it for cooking. After overseeing the rebuilding of the refinery, Coalition forces are stepping back to let the provincial government run things.

CNG for transport talks underway in Philippines

July 21, 2008. The government, Pilipinas Shell Petroleum Corp. and the Lopez Group have initiated talks on the possibility of converting an existing oil pipeline that will make compressed natural gas (CNG) available to the transport sector.

The three parties plan to rehabilitate or retrofit the pipeline run by Shell and the Lopezes that is used to move petroleum products from Batangas province in Southern Tagalog region to Metro Manila to instead ferry natural gas from Malampaya off Palawan province in western Philippines. Malampaya is the country's largest natural-gas field. But because of lack of infrastructure that would allow the transport sector access to the field's relatively cheaper and cleaner CNG, Malampaya is mainly used to fire up three power plants with a combined capacity of 2,700 MW.

The Lopez Group owns a 60-percent stake in First Philippine Industrial Corp., which owns the largest commercial petroleum pipeline in the country and transports fuel products from Batangas to Metro Manila.

Shell controls the remaining 40-percent interest in First Philippine. The three parties aim to come up with a win-win situation in financing the retrofitting of the pipeline. The government wants to make the plan a reality to allow the transport and power sectors to benefit from Malampaya under soaring crude prices in the world market.

The government had planned to put up the pipeline, which would have cost over $100 million to build two years ago, but the absence of a natural-gas receiving facility in Metro Manila and assurance of supply from Malampaya's operators have largely put the project in the backburner.

A current concern of the government is CNG for the transport sector. The government recently allocated P500 million for the transport sector's conversion of vehicles to alternative-fuel use such as CNG. Bus operators are asking the government to allow open access to the Malampaya gas field and make natural gas from there more available particularly to the public-transport sector. At the same time, they also called on the government to provide monetary assistance to operators of public-utility buses who want to convert their units from diesel to CNG.

Nigeria to supply Ghana gas for power generation

July 18, 2008. According to the Nigeria's ambassador to Ghana, plans are underway for Nigeria to supply Ghana with 30 million cubic meters of gas for power generation. He said that the West African Gas Pipeline Project is essential to improve power supply in the sub region, adding that the government of Nigeria has set up a committee to fast track the process.

POWER

PG&E wants to develop Tesla power plant

July 22, 2008. Pacific Gas & Electric Co. wants to develop and construct a 560-MW natural-gas fired power plant in Eastern Alameda County near the border of San Joaquin County, on the site of the proposed Tesla Generating Station. Tesla was approved by the California Energy Commission in June 2004 as a project of Midway Power LLC, a subsidiary of the big Florida utility FPL Energy.

PG&E, a subsidiary of San Francisco PG&E Corp., recently agreed to acquire Midway Power to obtain the rights to develop the plant. PG&E expects to spend $850 mn to acquire, develop and construct the plant. Tesla is the fourth power plant project PG&E is undertaking, all of which sharply increase the utility's owned and operated power generation assets.

In total, the three new projects will increase PG&E's owned and operated power generation assets by 28 percent, to 8,021 MW, up from 6,271 at year-end. Tesla was approved as a 1,120-MW plant in 2004. At the time, Midway estimated total capital costs for the plant would be $600 mn and $700 mn. The project has a deadline to begin construction by June 2009, which now looms over PG&E.

Malaysia looking to build first nuclear plant

July 22, 2008. Malaysian utility Tenaga may construct the country's first nuclear power plant at a cost of $3.1 bn but is braced for objections from the public. The government has asked Tenaga to look at nuclear power. Malaysia will reveal a national energy blueprint next month.

Malaysia may consider nuclear power to meet its long-term energy needs amid surging global oil prices. The taskforce was discussing the plant's location and how to source uranium. Currently, half of Malaysia's power plants run on gas. Other sources include coal and hydropower.

Lake weeds will burn to make electricity

July 20, 2008. A group working to protect Lake Champlain is testing whether nuisance weeds and algae take from the lake can be used to help make electricity. The Lake Champlain Restoration Association is planning to haul tons of the unwanted lake vegetation inland to a farm that uses methane from manure to make electricity. The group uses a harvester to clear the weeds and give boaters access to deeper water. The Central Vermont Public Service Corp. recently awarded $10,000 to the association to haul greens generator at the Blue Spruce Farm in Bridport and monitor its viability as a power source. Experts will study if the costs of transportation and other factors are met by the amount of power generated by burning the vegetation.

Global collaborations get Nepal hydel power project rolling

July 20, 2008. A $1.25-bn hydroelectric project is coming up in Nepal, which is being promoted by an Australian engineering firm, with design and building work to be carried out by a Chinese state-owned firm, while primary power evacuation will be taken up by an Indian state-owned company.

The 750-MW West Seti power project coming up in Nepal is being touted as a major international co-operation success story. Over 90 per cent of 3,251 million units of electricity expected to be generated from the project, post-commissioning, is set to flow into India. The power purchase agreement (PPA) for the project, which would be the largest single foreign investment so far in Nepal and marks a debut of sorts for Indian firms in Nepal’s power sector, was initialled by SMEC, the Australian project sponsor, and PTC India Ltd.

While West Seti Hydro Ltd, a special purpose vehicle, will develop the project, the Manila-based Asian Development Bank (ADB) is among those subscribing to the equity capital for the project. China National Machinery and Equipment Import and Export Corporation (CMEC) is the Chinese contractor that has bagged the PDB (Plan, Design, Build) contract for the project.

Besides PTC India Ltd, Infrastructure Leasing & Financial Services of India (IL&FS) has also taken an equity position in the project. Power would be supplied to India via a 230-km transmission line from the project to the Bareilly distribution centre in Uttar Pradesh. Funding is expected to be provided by a group of banks, including the Export-Import Bank of China, Industrial and Commercial Bank of China and the Bank of China. In addition, IL&FS has offered to provide debt financing.

ArcelorMittal buys second US coal operation

July 22, 2008. Steelmaker ArcelorMittal is buying a second West Virginia coal mine operator. Luxembourg-based ArcelorMittal has a deal to acquire Concept Group, owner of 57 million tons of metallurgical-grade coal in West Virginia. A month ago, ArcelorMittal purchased Mid Vol Coal Group, which has 85 mt of reserves in Virginia and West Virginia. ArcelorMittal and others are buying up met coal operations to control soaring raw materials costs. Met coal is used to make coke, which fires blast furnaces at steel factories. Recently, iron ore miner Cleveland-Cliffs agreed to buy coal mine operator Alpha Natural Resources for nearly $10 bn.

Coal-fired power stations will lock UK into a high-emissions future

July 22, 2008. The UK government will come under increased pressure to ban new coal-fired power stations such as the one planned for Kingsnorth in Kent unless they are equipped to trap and store carbon pollution underground, as a committee of MPs publishes a critical report. The environmental audit committee urges ministers to make it clear that coal power plants that do not fit carbon capture and storage (CCS) equipment will be closed down. It says the government must set a deadline, after which the operation of unabated coal-fired power stations should not be permitted. A failure to set such a deadline would make it difficult for the UK to meet carbon-reduction targets. The government is debating whether to allow the German-owned utility E.ON to press ahead with a new coal-fired power station at Kingsnorth in Kent. The company wants to proceed with the scheme, promising to fit CCS later if it can be proved to be technically and financially viable. Environmentalists see the Kent project as a vital test of the government's green credentials and want Kingsnorth given the go-ahead only if CCS is installed. Greenpeace believes the environmental audit committee's conclusions support its case and leaves the government with its back against the wall. Even with the promise of CCS, the committee warned that coal should be seen as a last resort in the UK. The committee said the government could be considering a new era of coal-fired power stations because it was the easy option, and warned that such an approach was extremely dangerous.

Nuclear power plants could be built in protected areas

July 22, 2008. A new generation of nuclear power stations could be built in flood-risk or environmentally protected areas, under proposed rules set out by the UK Government. Green safeguards are listed among discretionary criteria ministers intend to use to decide where to put the controversial reactors, not those that would instantly rule out a site. Under the Strategic Siting Assessment System, nominations for credible sites backed by nuclear firms will be invited early next year. They would then be judged against a list of criteria before being put forward for planning permission possibly using a controversial planned fast-track approach for major projects.

Sites at risk of earthquake or near heavily populated areas would be instantly ruled out according to the planned rules due to be finalised in the coming months after consultation. But concerns of flood risk, coastal conditions and environmentally-protected status would be considered less absolute and could be overridden. They would be used to form a balanced view of the site's suitability for inclusion on a list of strategically suitable venues due to be published in 2010. The Government hopes building work could start as early as 2013, with the first electricity being produced four years later.

Coal carves a place in the future of global energy

July 20, 2008. As the global price of oil and natural gas soars, some customers are taking a new look at other fuels including coal. Countries such as China and India, whose demand is contributing to the price of petroleum, need even more energy. Besides petroleum products, they are buying vast amounts of coal, as well. The worldwide demand for oil has its own set of environmental consequences drilling in pristine areas where it previously was uneconomical and continued emission of greenhouse gases. But environmentalists warn that renewed reliance on coal takes the threat to another level. Low in acid-rain-causing sulfur and cheap to produce, Colombia's coal has always been coveted. The value of Colombia's coal exports in 2008 will surpass $5 bn, up 40% from last year and 10 times what it was six years ago, a reflection of the increased price. Coal has more than doubled in price to $100 a ton in a year. China added more coal-burning power plants in 2007 than Britain has built in its history. A few years ago, China was exporting the equivalent of Colombia's current annual exports. But by next year, the U.S. Department of Energy forecasts, it will become a net importer. Similarly, Russia and Poland are keeping much of the coal they once exported. Prices have also been driven up by flooded mines in Australia and a hike in global shipping rates. Still, generating energy from coal costs a third as much as from natural gas in Japan, and half to two-thirds as much in Britain. According to Global Insight, a research firm in Frederick, those favorable economics have persuaded several U.S. utilities to build new or expand coal-fired power plants. By 2030, about 54% of all U.S. electric power will be coal-fired, up from the current 48%, according to the National Mining Assn., a Washington-based trade group.

Gujarat takes a big biofuel leap

July 22, 2008. At a time when there is growing global concern over greenhouse gas emissions and climate change, Gujarat’s tryst with biofuel as an alternative to petrol and diesel has proved a promising starter. It was the first state that started growing ratanjyot (jatropha curcus), from which biofuel could be produced. States like Rajasthan, Maharashtra and Madhya Pradesh followed suit. The state’s tryst with biofuel began in 2005, when Aaditya Aromedic & Bio-energies, signed a memorandum of understanding (MoU) with the state government in a small village of Tarsad in Navsari district.  The Bio-energies’s biofuel unit, which was set up at a cost of Rs 4.5 crore ($1.05 bn), produces 1,000 litres of oil per day and sells it at Rs 39 per litre. Currently, 85 BPL (below poverty line) families are cultivating ratanjyot vanaspati in 2,000 hectares in south Gujarat alone. Use of biofuel saves foreign exchange needed for oil purchase. Regular diesel comes from a non-renewable source, while biofuel is a renewable energy and the Planning Commission has approved projects to boost biofuel production. The first ever research in this area was undertaken by the National Bank for Agriculture and Rural Development (Nabard). Top agricultural scientists in the world, including those from the Science and Technology Department of China, have conducted research on this plant. Biofuel production can also help India increase its leverage in the international alternative fuel market. Besides ratanjyot, there are other plants in India like pongamia, sal, mahua, kokum, pilu, phulwara, dhupa, neem, mango, kusum, karanja, jatropha, tumba, jojoba, simarouba, from which alternative fuel could be produced. All this has a potential of generating 20 million tonnes of biofuel annually. 

Small hydro power projects trip

July 22, 2008. The 5,200 sites identified for the development of small hydro power (SHP) projects have failed to attract private investments due to state bureaucracy and infrastructure bottleneck. The government has been able to implement less than 12% projects so far. Out of total 618 SHP projects being set up, only 143 plants are developed through private investments. According to experts, delay in getting clearance from respective state government, forest and other departments is posing a serious threat to investments in SHP projects. While the state governments are responsible for allotment of sites for SHP projects, the procedure is too long in most states and needs to be streamlined. SHP developers have to take several clearances related to land, environment, forest and irrigation before starting their project.

In a concerted bid to charge that scenario, the MNRE is currently in talks with several state governments to develop agreements, drafts regulatory tariffs and other modalities in order to speed up the clearance process required for setting up SHP plants. That exercise is expected to address industry worries over the government merely identifying sites, instead of also providing adequate data on priority regarding the location, available resources and tariffs. Developers also face lack of clarity in tariff which is decided by the state electricity regulatory commission due to which they are often unable to work out the economic viability of their projects before starting them. Large number of sites have been identified in states like Andhra Pradesh, Arunachal Pradesh, Himachal Pradesh, Jammu and Kashmir and Uttrakhand. However, there is lack of resources and required infrastructure to develop such projects. Small hydro-power projects generating up to 25 MW power are categorised as renewable sources of energy. The country has an estimated potential of about 15,000 MW power generation through small hydro-power projects, but the cumulative power generation from these projects have been only 2,045.61 MW. 

Solar lanterns to replace kerosene lamps

July 19, 2008. The kerosene lanterns in the rural areas will be replaced on large scale soon. A solar lantern, which is commonly used for lighting purposes, can save about 50 liters of kerosene in a year by replacing kerosene lanterns.

 According to Mr Vilas Muttemwar, Minister of State for New and Renewable Energy, discussed the expansion plans for large scale introduction of solar lanterns for replacing kerosene in the rural areas. He explained that the better quality of light of a solar lantern would also help the children in their education and encourage productive works apart from avoiding health hazards associated with the poor quality light and the pollution due to burning of kerosene. The Government can save kerosene subsidy by providing solar lanterns. The representatives of the Indian photovoltaic industry assured that the industry can supply up to 4 million solar lanterns in a year and is totally committed to support the initiatives taken by the Ministry in this regard.

Panel okays mixing of hydrogen with CNG

July 16, 2008. The Standing Committee on Emission Regulation under the Ministry of Shipping, Road Transport & Highways approved addition of hydrogen to CNG (compressed natural gas) for use in vehicles. The proposal is to use CNG with 20 per cent hydrogen content. When this gets notified, India will become the first country to use this mix on a commercial basis and take a definitive step towards enhancing the use of renewable energy in automobiles.

Hydrogen is freely available in the atmosphere, though tapping it entails some cost. The project, involving Ashok Leyland, Bajaj Auto, Eicher Motors, Mahindra & Mahindra and Tata Motors, began as an attempt to control the emission of NOx (nitrogen oxide) from poorly-maintained CNG vehicles. At 20 per cent, hydrogen mixes well with CNG and does not reduce the power output of engines significantly.

 The new fuel will now have to be made part of the Central Motor Vehicle Rules, which govern the automotive industry in the country. While attempts are on to increase the hydrogen content in this mixture, the automotive industry will have to develop engines that can run on this new mix. CNG, as a clean fuel (compared with diesel and petrol), has been gaining ground in India, though only a handful of cities in the country like Delhi, Mumbai and Ahmedabad have CNG retail outlets.

Solar Semiconductor bags contract from AS Solar

July 16, 2008. Solar Semiconductor, a producer of solar photovoltaic (PV) modules has struck a multi-year partnership with AS Solar of Germany, with a potential business opportunity of $695 mn (about Rs 3,000 crore). Under the agreement, Solar Semiconductor will supply its high quality PV modules to AS Solar for the European market.

AS Solar is a premium re-seller of solar PV products in the world. This is the largest among several overseas orders bagged by the company in the past one year. It will meet nearly 25 per cent of the backlog production to be delivered to customers in the next three-seven years. In 2008, the company has shipped PV modules worth Rs 160 crore ($37.1 mn) and will end the year with another Rs 700-crore ($162.5 mn) delivery. The company has investment plans of up to Rs 12,000 crore ($2.7 bn). Most of the clients for the company are currently in Europe, which underscores the quality of the product. In the next phase, the company would focus on customers in the US.

TN cogeneration units demand hike in power tariff

July 16, 2008. Representatives from the renewable energy sector in Tamil Nadu wanted the electricity regulator to fix a tariff that stimulates investment in the sector, especially in the case of the nascent solar energy, and a higher tariff in the case of others biomass, cogeneration and wind. They also wanted the regulator to provide for exit options in the power purchase agreements the companies sign with the Tamil Nadu Electricity Board, so that they are free to sell power from the projects to a power trader at a higher tariff rather than be tied down to a lower tariff with the power utility. West Bengal, Rajasthan and Haryana had come with tariffs in the range of Rs 10 to Rs 16 a unit, provided they met certain conditions.

Scottish site for Europe's largest windfarm

July 22, 2008. Europe's largest windfarm is to be built alongside the M74 in south-west Scotland after Scottish government approved plans to erect more than 150 turbines. The £600m project is likely to produce enough electricity to power more than 250,000 homes by 2011, and is well over twice the size of Europe's largest existing windfarm, at Guadalajara in Spain. The windfarm would have a 548 MW capacity, capable of supplying electricity for 320,000 homes.

‘US electricity grid to run on renewable energy by ’18’: Al Gore

July 17, 2008. According to the former Vice President Al Gore, Americans must abandon fossil fuels within a decade and rely on the sun, the winds and other environmentally friendly sources of electric power, or risk losing their national security as well as their creature comforts. The goal of producing all of the nation's electricity from renewable energy and truly clean, carbon-free sources within 10 years is not some farfetched vision, although he said it would require fundamental changes in political thinking and personal expectations.

According to him, it represents a challenge to all Americans, in every walk of life to our political leaders, entrepreneurs, innovators, engineers, and to every citizen. He stressed, the most important policy change in the transformation would be taxes on carbon dioxide production, with an accompanying reduction in payroll taxes. He said that a shift away from fossil fuels would make the United States a leader instead of a sometime rebel on energy and conservation issues worldwide.

Dear Reader,   You may have received complimentary copies of the ORF Energy News Monitor. Our objective in bringing out the newsletter is to provide a platform for focused debate on India’s energy future. You could be a partner in this effort by becoming a subscriber. You could also contribute recommendations for India’s energy future in the form of brief insightful articles.   We look forward to receiving your patronage and support.   ORF Centre for Resources Management

 

ORF ENERGY NEWS MONITOR   Subscription Form Please fill in BLOCK LETTERS

Subscription rate slabs for Commercial entries, Research Institutes, Academics and Individuals will be provided on request. The subscription can be made for soft copy or for hard copy or for both. Selected ORF publications as well as advertising space in one issue of the ORF Energy News Monitor are offered as introductory free gifts for Commercial Sector only.

Yes! I/we would like to receive copies of the weekly ORF Energy News Monitor for a period of ______year(s).  I/we shall be entitled to one hard copy along with the option of soft copies to a list of e-mail addresses provided by me/us for the period of subscription.  I/we also note that I/we shall get select ORF publications brought out during the period of subscription free.    Name……………………………Address…………….………………………Telephone……………………Fax………………….E-mail………………… Please find enclosed cheque/Bank Draft No.........................dated …………………drawn at New Delhi for Rs.........……….favouring ‘Observer Research Foundation’   Please fill in this form and mail it with your remittance to   ORF Centre for Resources Management OBSERVER RESEARCH FOUNDATION 20 Rouse Avenue New Delhi - 110 002 Phone +91.11.4352 0020 extn 2120 (Vinod Tomar) Fax: +91.11.4352 0003 E-mail: [email protected]

 

 

 

• Energy
• China
• India
• ENERGY AND RESOURCES

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.