Geothermal Energy in India (Dr P Dhamija, Dr S K Bharadwaj and Dr BMS Bist Ministry of New and Renewable Energy)

Background

eothermal energy is heat stored in the deep interior of the earth. This thermal energy can be used for producing electricity and also for direct heat applications. In the last few decades, there has been an increasing use of geothermal energy all over the world.

Geothermal energy is found to be are liable and flexible renewable energy resource, which is economically competitive with other forms of energy. Geothermal power plants are modular and can be installed in incremental units as needed. Very small-scale kilowatt level geothermal power plants are also feasible. Geothermal energy has a large net positive impact on the environment and power from these plants is available continuously.

Besides, low heat geothermal sources can be used directly for green house, space heating, refrigeration, and for other industrial uses. The use of geothermal energy, however, has certain limitations as it may cause some pollution of land and air due to certain dissolved gases.

Technology

Geothermal resources can be of different types viz. Hydrothermal, Geo-pressured, Hot-dry rock and Magma. At present, the technology for economic recovery of energy is available only for hydrothermal resources and is being developed for other types of geothermal resources.

The technology to tap geothermal energy for power generation is based on the temperature of the hydrothermal reservoir/resource. High temperature geothermal reservoirs containing water and/or steam can provide steam to directly drive steam turbines and electricity generation plants. The power plants based on these high temperature resources are of two types: single flash steam power plant and binary cycle power plant.

Medium temperature resources are normally hot water with temperature ranging from 100–200°C. The most common technology for utilizing such resources for power generation is the binary cycle technology. A combination of conventional steam turbine technology and binary cycle technology can be used for moderate to low temperature resources.

Direct use applications are where geothermal heat is used directly rather than for power generation and the technology is built around the extraction of heat from relatively low temperature i.e. less than 150°C geothermal resources, using the heat exchanger, which extracts the heat from hot geothermal fluids. Geothermal heat can also be used for air conditioning and refrigeration applications through a geothermal heat pump.

The basic technologies for using hydrothermal resources are described in Table 1.

Table 1 - Basic Technologies for using Hydrothermal Resources

Reservoir Temperature	Reservoir Fluid	Common Use	Technology commonly chosen
High Temperature >220°C	Water or Steam	Power Generation Direct Use	Flash Steam; Combined (Flash and Binary) Cycle Direct Fluid Use: Heat Exchangers Heat Pumps
Intermediate Temperature 100–220°C	Water	Power Generation Direct Use	Binary Cycle Direct Fluid Use: Heat Exchangers Heat Pumps
Low Temperature 50–150°C	Water	Direct Use	Direct Fluid Use; Heat Exchangers; Heat Pumps

 

International Status

The worldwide use of geothermal energy as an alternative source of energy is increasing, due to reduced levels of environmental pollution as compared to fossil fuels. Today, many countries are using geothermal energy to generate electricity and for direct heat applications (Table 2).

The total global installed geothermal capacity for power generation in 2005 was over 8900 MWe and 27825 MWt for non-electrical purposes. The most common non-electric uses worldwide (in terms of installed capacity) are heat pumps (33%), followed by bathing (29%), space heating (20%), greenhouses (7.5%), aquaculture (4%), and industrial processes (4%).

The largest users of geothermal energy resources (both direct and indirect) are USA, Philippines, Italy, Mexico, Iceland, Indonesia, Japan and New Zealand.

 

Table 2- World Geothermal Power Scenario

Country	Installed capacity (MW) (2005)
USA	2544
Philippines	1931
Mexico	953
Indonesia	797
Italy	790
Japan	535
New Zealand	435
Iceland	202
Costa Rica	163
El Salvador	151
Kenya	127
Russia	79
Nicaragua	77
Guatemala	33
China	28
Others (9 countries)	67

 

Indian Status

Potential

As a result of various resource assessment studies/surveys, 340 hot springs have been identified throughout the country. These springs are perennial and their surface temperatures range from37 to 90°C. Most of them are low temperature hot water resources and can be best utilized for direct thermal applications. Only some are suited for electrical power generation. The potential for power generation at these sites is about 10,000 MW.

The hot springs present in the country are grouped into seven provinces: Himalayan-Puga Chhumthang Province (ii) SohanaValley (iii) Cambay Basin (iv) SonNarmada lineament belt (v) West Coast (vi) Godavari basin and(vii) Mahanadi basin.

 

Utilisation

Geothermal exploration carried out in India, so far, has generated valuable data through extensive scientific studies backed-up by drilling down at selected geothermal locations such as Puga, Manikaran, Tatapani, Tapovan, Cambay, etc. concerning the structural, geological, geochemical, hydrological and thermal parameters of these geothermal systems. The Ministry has been supporting a research, development and demonstration programme in Geothermal Energy through different organizations like Indian Institute of Technology, Delhi, National Aeronautical Laboratory, Bangalore, Geological Survey of India, National Geophysical Research Institute (NGRI), Hyderabad and National Hydropower Corporation, Faridabad.

Table 3 Potential Geothermal Provinces of India

Provinces	Surface T° C	Reservoir T° C	Heat flow (mW/m2)	Thermal Gradient (°C/km)
Himalayan	>90	260	468	100
Cambay	40-90	150-175	80-93	70
West Coast	46-72	102-137	75-129	47-59
SONATA	60-95	105-217	120-290	60-90
Godavari	50-60	175-215	93-104	60

Source: D. Chandrasekharam, Feb.2000 IBC Conference ‘Geothermal Power Asia 2000’Manila, Phillippines.

Projects

The Programme of Geothermal Energy was transferred to the Ministry of New and Renewable Energy from the Ministry of Power in1988. Since then, the Ministry has been promoting development and utilization of geothermal energy for power generation and direct heat applications. The main achievements are as follows:

An experimental geothermal power plant of 5 kW capacity was set up at Manikaran in Himachal Pradesh. A cold storage plant was also constructed in Manikaran area to utilize geothermal energy at 90°C for preserving vegetables and fruit grown in that area.

An R&D project was undertaken by Regional Research Laboratory (RRL), Jammu for utilizing geothermal energy for mushroom cultivation and poultry farming in Puga, Ladakh region of Jammu &Kashmir. One 30 × 20 feet insulated hut was constructed and temperature of the hut was maintained at 20–25°C using heat from nearby geothermal wells in Puga.

§ A Pre-feasibility Report on Development of Geothermal Fields in Puga for power generation was prepared by NHPC.

§ MT studies were assigned to NGRI, Hyderabad to assess the deep reservoir temperature of potential sites at Puga geothermal field located in the north-west Himalayan range in Ladakh district of Jammu and Kashmir and Tatapani geothermal field in the Surguja district of Chhattisgarh. The following details were reported for Puga and Tatapani:

I Puga Geothermal Field

a) Presence of a geothermal reservoir at a depth of about 1.5 to2 km.

b) The estimated depth of geothermal reservoir is about 4 to 5 km.

c) From the correlation of the anomalous conductivity of the reservoir and the measured temperature of the boreholes and based on regional heat flow values, the estimated temperature of the deep geothermal reservoir is 200–250°C

II Tatapani Geothermal Field

a) The Tatapani hot spring area is underlain by a highly conductive sub-surface section related to a major geothermal reservoir.

b) The estimated temperature at deeper levels (3 km) is about 260°C.

c) The thickness of high resistive crust in the region is about 6 to8 km towards southern side of the study area and is about 10 km towards north. Regionally, the conductive Tatapani hot spring zone falls between these two upper crustal blocks of varying thickness.

§ Magneto-telluric investigations in the geothermal field of Surajkund in Jharkhand, Badrinath-Tapovan in Uttarakhand and Satluj-Beas and Parvati Valleys in Himachal Pradesh by NGRI, Hyderabad are in progress.

The MNRE is giving greater thrust on exploration and harnessing of India’s geothermal energy resources.

 

Concluded

 

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

 

Continued from Volume V, Issue No. 8…

 

Next Generation Biofuels

he USA; China; and Japan are investing in the development of biofuels based on lignocellulosic resources such as wood and straw. These materials are structural plant components, rather than being an energy storage medium such as a seed. As can be seen in Figure 13 (please refer to Energy News Monitor Volume V, Issue 7), the commodity price index for agricultural raw materials, which includes timber have not seen the same type of increase in cost.  

Second generation (Gen-2) biofuels are something of a misnomer, in that the term is applied indiscriminately to both resources and end use fuels. From the resource side, the Gen-2 potential is in non-food crops - in the immediate future from non-edible oils for diesel replacement and lignocellulosics (wood and straw) for both gasoline and diesel replacement. However, up to date the suggested biofuel products are distinctly Gen-1 with large R&D programs in new oil crops such as Jatropha for biodiesel, and ethanol from the carbohydrate portion of lignocellulosics for gasoline replacement. Gen-2 biofuels would more likely be much more fungible with the hydrocarbon economy. For example renewable diesel a hydrogenated lipid or fatty acid has much better temperature compatibility and miscibility criteria with regular diesel. Fischer Tropsch Liquids (FTL) produced from renewable resources would be indistinguishable from their fossil counterparts in end use applications. Other suggested Gen-2 biofuels include butanol, and various oxygenates derived from aldehydes and acids that can be produced from biomass carbohydrates or aromatics from the lignin component of lignocellulosics.   

There are as yet no Gen-2 demonstration plants operating with lignocellulosic feedstocks. Several are either in the late planning or construction stage. The needed investment in Gen-2 is projected to be far higher per annual unit of production than sugarcane ethanol or starch based ethanol with energy efficiencies that will likely be a lower EROI against sugarcane ethanol, but with equal or better GHG offsets.   

Conclusions 

Biofuels received extensive attention in the APEC economies during the past few years, and their production and consumption has increased remarkably in response to major concerns about energy security, urban air quality, rural economic development, and most recently greenhouse gas offsets. The continuing growth of biofuels in the APEC economies is subject to a number of risk factors. For example, increasing biofuels production at a time of generally increasing commodity prices since 2000 has brought biofuels in general into controversy, illustrated by newspaper headlines on “fuel vs. food”. Especially in the early part of 2008 when food prices started to rise rapidly and some equated the climate change policy as being in opposition to food security if it is based on the first generation biofuels derived from food and feed commodities. The increase in the price of food commodities has already caused delays in the implementation of previously announced RFS programs in for example Malaysia. In the EU and UK the already announced RFS programs have undertaken public consultation on the sustainability criteria that they will mandate for both domestic biofuels production and biotrade.    

All of these factors collected together show that the biofuels future has to address several risks. For Gen-1 biofuels there are few technology risks related to their production. While there is little risk with the accepted levels of fossil fuel substitution by biofuels, the current levels of 5% for biodiesel and generally 10% for ethanol in gasoline are insufficient to make a major contribution to offsetting GHG. Moving beyond these levels of fuel substitution without vehicle and engine modification cannot be undertaken without extensive evaluation according to the economy specific climate and fuel distribution systems. Of course the FFV for ethanol up to 85% substitution is accepted as proven, though only for a limited number of light duty models that have been modified to accept variable ethanol to gasoline ratios.  

The non-technical biofuels risks that have emerged in this study are cost of production for Gen-1 biofuels, indirect biomass supply risks from other commodity markets using the same feedstocks, social impacts, environmental impacts of land use change, and biodiversity. Each one of these may also be felt through changes of policy and regulation in the renewable fuel standards for each economy. One, which will have an effect in the short term, will be sustainability criteria that will implicitly address food security, and may well dictate the rate of expansion of biofuels even if the current high prices of oil and food commodities are not maintained.  Indeed the biomass supply risk may be exacerbated by more than one aspect of policy and regulation in the food sector, if for example export controls and tariffs (export or import) overlap with the biofuels sector.   

Gen-2 biofuels still have considerable technology risks. Few have been proven even at the demonstration scale. Considerable technology and cost risks are associated with the candidate technologies that will use lignocellulosics as feedstock, though the forest and straw based feedstocks will mostly avoid indirect biomass supply risk from commodity competition, except perhaps with forest products in some economies. Even then there will still be a range of social and environmental impacts in land use change and biodiversity which will have to be accommodated.    

Some of the end use biofuels in Gen-2 are much more fungible with the existing hydrocarbon fuels and will have less risk in being used in variable fractions of the fuel supplied to the vehicle which may be a benefit in their introduction. These newer fuels, however, will have significant risk with respect to policy and regulation.  

The analysis we have undertaken has also demonstrated that expansion of biofuels in the APEC region will also involve biotrade between resource rich economies and the highly urbanized, with limited arable land economies. Biotrade is already significant for the US as an importer, mainly from non-APEC economies even though its internal production capacity is increasing rapidly. In addition to the risk factors identified above, there are also challenges with respect to standards and regulations for biofuels. Trade will require that the harmonization of the standards between exporters and importers be undertaken, especially for Gen-2 fuels other than ethanol.  

Ultimately it may be that region wide collaboration on biofuels standards and regulations including sustainability criteria will be the best means of ensuring a balance of opportunity between biofuel producers and consumers while meeting climate, food, and economic development goals. There are also technology collaboration opportunities that could do much to address technology risk especially for Gen-2 fuels, and cooperatively accelerate their implementation.  

 

Concluded

 

 

NEWS BRIEF

OIL & GAS

ONGC picks up 30 pc in HOEC block

August 18, 2008. Hindustan Oil Exploration Co. Ltd. (HOEC) announced that ONGC has exercised its back in rights of buying a 30% interest in the South Pramoda Development Area in Block CB-ON-7. This has been done under the provisions of the Production Sharing Contract (PSC). Subsequent to the same, the revised Participating Interest (PI) of HOEC in the South Pramoda Development Area is 35%.

Essar Oil's foreign assets show promise

August 17, 2008. Ruias-promoted Essar Oil’s exploration blocks in Vietnam and Madagascar have shown an initial indication of gas reserves of 2-3 tcf and around a billion barrels of oil, respectively. Early this year, Essar Exploration and Production, a subsidiary of Essar Oil, bagged an offshore oil and gas block in Vietnam’s Song Hong basin and unveiled plans to invest $60 mn to explore it. The block was offered to Essar by the Vietnam government under its seventh round of offshore licensing. About 30 per cent of the gas is recoverable from the basins in Vietnam, while from Madagascar the company could recover 20-25 per cent of the reserves. The company has to develop the basins after completing the surveys. The development time and cost are important factors for the company's future course of action. The gas finds of Essar could provide a major boost to its bottom line as Vietnam’s gas market is established. However, the market for gas in Madagascar will not be as exciting as Vietnam as it is not an economically - advanced country.

Essar Oil is also in the race to acquire two oil and gas blocks in Australia. The company has emerged as the preferred bidder to develop the blocks amid international competition. The Ruias will hold 100 per cent stake in the blocks. Apart from the Vietnam block, Essar has seven oil and gas blocks viz., one each in Nigeria and Madagascar; and five in India. Essar Oil is consolidating its upstream exploration and production activities under Essar Exploration and Production. At present, Essar has only one oil-producing block in Mehsana (Gujarat). Last year, Essar produced 17,000 barrels of oil from this block.

RIL to develop 8 more gas finds in KG basin

August 14, 2008. Reliance Industries Ltd. has submitted development plans for eight more gas discoveries in the KG-D6 block, in the Krishna Godavari basin, off the east cost. The discoveries are adjacent to the Dhirubhai 1 and 3 gas fields that are currently under development. The Calgary-based company has a 10% stake in the KG-D6 block. RIL holds the balance 90% and is the operator.

The Dhirubhai 1 and 3 discoveries are expected to start producing gas during the third quarter of 2008. Additionally, oil production from the MA discovery in the same block is also expected to start in the same period. RIL is investing $5.2 bn in bringing to production Dhirubhai 1 and 3 fields, with initial output pegged at 40 million standard cubic metres per day (mmscmd) that would double in a year’s time. Of this, $3.28 bn has already been invested by June 30. RIL would also start pumping out from the MA oil field in the same block within a months time. The field is estimated to have a peak oil production rate of 40,000 barrels per day. The company is investing $2.23 bn in developing the MA oil fields in the predominantly gas-rich block. The KG-D6 block was awarded to RIL-Niko in India's first international bid round in 1999. Development of the Dhirubhai 1 and 3 natural gas fields and the MA oil field is substantially complete and exploration is ongoing on this block.

Indian Oil JV eyes Mumbai, Delhi airports for fuel deals

August 19, 2008. IndianOil Skytanking (IOSL), a consortium of Indian Oil Corporation, Indian Oiltanking and Germany’s Skytanking, is eyeing Delhi, Mumbai airport modernisation projects for expansion of aviation fuel storage systems. The company, which has successfully commissioned the ‘open access’ fuel storage system for the first time in the country at Bangalore International Airport, has submitted its expression of interest (EoI) for the projects. Currently, IOC, HPCL and BPCL are providing fuel storage services at Mumbai and Delhi airports.

The company is the first fuel farm operator in the country to carry out single-man refuelling at any airport. IOSL has set up its fuel farm project spread over 11 acres at a cost of Rs 105 crore ($24 mn) at Bangalore International Airport. It has set up three oil tanks with a combined capacity of 10,000 kilo litres in the first phase. The fuel farm is a common fuel storage shared by all the oil companies. At present, state-owned oil companies such as Bharat Petroleum Corporation, Hindustan Petroleum Corporation and Indian Oil Corporation are using the fuel storage and IOSL is refuelling on their behalf. While, the oil companies store their fuel here, IOSL and Bharat Star Services, a joint venture between BPCL and Star Services of Singapore, are carrying out the refuelling and defuelling operations. Single-man refuelling system helps the company save around Rs 2-3 crore ($0.4 – 0.6 mn) per year compared to the traditional method.

IOSL is targeting to clock a revenue of Rs 35-40 crore ($8 – 9 mn) in the current financial year. The company also plans to erect additional fuel tanks at Bangalore airport to coincide with the expansion of the airport. It is also working out details of the expansion plan for the Bangalore airport.

Input costs stall oil PSUs’ expansion

August 19, 2008. Expansion projects undertaken by public sector oil companies, already reeling under the burden of selling petroleum products at below market prices, have been hit by project delays and increase in prices of key inputs that will make these state-owned entities spend 38 per cent extra in the current Five-Year Plan period (2007-12). An increase in project cost will lead to corresponding increase in borrowing needs of these companies, particularly the oil marketing firms that have already borrowed nearly 50 per cent more this year compared to last year because of rising crude oil prices.

Companies now fear this would make borrowing tougher in terms of higher interest rate and per client exposure norms of commercial banks. Credit rating agency Moody’s and Crisil recently downgraded IOC, Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corporation (HPCL) that will make it all the more difficult for these companies to raise funds from banks. Banks can lend 25 per cent of their corpus to an individual borrower. According to nine state-owned oil companies it would cost them around Rs 1,20,000 crore ($27.4 bn) to complete 51 projects they have undertaken in the current Plan period, as against a previous estimate of Rs 86,500 crore ($19.7 bn).

However, three of the nine reporting firms viz., BPCL, Oil India Ltd and Mangalore Refinery and Petrochemicals Ltd (MRPL), which have been implementing five projects, have said there would be no escalation in project cost. For IOC, which is implementing 16 projects in the current Plan period, borrowings are expected to go up because of ongoing projects and loss on sale of petroleum products. Its debt level had risen to Rs 43,500 crore ($9.9 bn) as of July-end, as against total debt of Rs 35,000 crore ($8 bn) at the end of March 2008. This is expected to go up to Rs 58,000 crore ($13.2 bn) by next month. A third of these loans are long-term borrowings.

On the other hand, ONGC, is comfortable with the higher costs of its 17 projects scheduled to be completed in this Plan period. ONGC will have to spend around Rs 31,701.6 crore ($7.2 bn), or 15.4 per cent more for its projects than the original approved costs. IOC, the country’s largest crude oil refiner and marketer of oil products, has seen its cost of projects scheduled to be completed by 2012 almost double to Rs 55,867 crore ($12.7 bn), while HPCL’s project costs have risen 31.7 per cent to around Rs 6,151.9 crore ($ 1.4 bn).

CRISIL revises BORL outlook to negative

August 16, 2008. CRISIL has revised its rating outlook on the term loan facility of Bharat Oman Refineries Ltd (BORL) to ‘Negative’ from ‘Stable’, while the rating itself has been reaffirmed at ‘AA-’. The outlook reflects CRISIL’s expectation that BORL will receive need-based support from its parent, Bharat Petroleum Corporation Ltd (BPCL, rated ‘AAA/Negative/FAAA/P1+’ by CRISIL). The downward revision in outlook is driven by a similar change in CRISIL’s outlook on the credit profiles of oil marketing companies (OMCs), including BPCL.

CRISIL believes that the credit profiles of OMCs are becoming far more sensitive to the timeliness of support from the Government of India (GoI) than they have been in the recent past. In an environment of high crude prices, OMCs are being forced to absorb large under-recoveries because of the delay in the support they are to receive from GoI under the under-recovery sharing mechanism. Further delays could severely strain the liquidity profiles of these entities. The rating continues to be driven by the OMCs’ strategic importance, and the key role that they play in implementing GoI’s socio-economic policies. The rating centrally factors in the expectation of continued support from GoI towards absorbing a large portion of the under-recoveries that result from the government-controlled pricing of products: OMCs maintain the prices of sensitive products at the level indicated by GoI.

Losses on fuel sales down by one-fourth

August 18, 2008. Decline in international crude oil prices has led to a reduction in revenue losses of OMC PSUs on fuel sales by one-fourth. Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have seen revenue losses on sale of petrol, diesel, LPG and kerosene coming down to Rs 450 crore ($103 mn) per day from Rs 600 crore ($137.3 mn) per day. The basket of crude that India buys has averaged $114.37 a barrel this month as against the July average of $132.47 per barrel. The fall in international prices is a relief but the companies are still losing money.

Based on the average price of the first fortnight of August, retailers were losing Rs 7.07 per litre on petrol, Rs 16.22 on diesel, Rs 39.55 on kerosene and Rs 348.89 per 14.2 kg LPG cylinder. These are lower than Rs 11.60 per litre on petrol and Rs 23.23 on diesel based on the average price on second fortnight of July. While petrol and diesel prices are calculated every fortnight, LPG and kerosene prices are calculated once a month. The three companies are now projected to lose Rs 1,84,801 crore ($42.3 bn) during the full fiscal. A fortnight back they were projected to lose Rs 2,05,740 crore ($47.1 bn) in 2008-09. IOC, the company that controls about 54 per cent of the market, is projected to lose Rs 1,01,549 crore ($23.2 bn) on fuel sales this fiscal.

IOC to finalize funding options for Paradip refinery

August 14, 2008. IndianOil mulls finalising the funding options, including loan and equity component, for the proposed Rs300bn Paradip refinery and secure final board approval for the project in September. The financial closure of the project, however, is unlikely to be achieved before October. IOC has appointed SBI Caps for tying-up finances for the proposed grassroots refinery. IOC aims to commission the refinery by 2012.

GAIL may take over gas marketing from ONGC

August 19, 2008. GAIL India, the country’s largest gas marketing and distribution company, may take over natural gas marketing from Oil and Natural Gas Corporation (ONGC). The state-run ONGC currently supplies gas directly to isolated pockets in Gujarat and Assam and thereby earns around Rs 100 crore ($22.8 mn) in marketing revenues. In May 1992, ONGC handed over gas pipelines and marketing functions connected with natural gas to GAIL.

However, it continues to be the marketing agency in certain isolated pockets. The proposal is pending at the ministry level. Gujarat’s share in the marketing of ONGC gas is about Rs 75-80 crore ($17.1 – 18.3 mn), while the Assam region contributes about Rs 20 crore ($4.5 mn). The recent rise in gas prices is believed to have drawn GAIL’s attention to these regions and it has proposed to take over direct marketing of gas from ONGC. ONGC directly markets gas to the Ankleshwar and Bharuch industrial areas in Gujarat and the tea gardens in Assam.

Earlier this year, GAIL India had signed contracts for taking over the marketing of natural gas produced from Panna-Mukta and Tapti fields. The company had proposed to buy the entire 17 million standard cubic meters per day of gas produced from the fields. It signed contracts for selling gas to the consumers, including RIL, at the government-approved price of $5.7 per mBtu.

PSU city gas companies counter RIL entry

August 18, 2008. Public sector city gas distribution companies like Indraprastha Gas (IGL), Aavantika Gas (AGL) and Maharashtra Natural Gas (MNGL) have asked oil regulator, PNGRB, to reject Reliance Industries EOI for six cities, namely, Gurgaon, Faridabad, Noida, Gwalior, Indore and Pune. RIL, through its subsidiary Reliance Gas Corp, has submitted EoIs for 54 cities. So far, RIL is the sole entity for submitting EoIs for 52 cities for undertaking city gas distribution business. The other entity to submit EoI is public sector gas major Gail India.

ONGC to set up facility at Rajahmundry

August 15, 2008. State-run oil exploration giant ONGC will set up an integrated offshore supply base-cum-processing unit in Kona. The company recorded a net profit of Rs 6,036 crore ($1.4 bn) in the first quarter ended June 30, up from Rs 4,611 crore ($1 bn) in the corresponding period last year. The turnover during the first quarter of 2008-2009 was Rs 20,123 crores ($4.7 bn). Crude oil production was 6.41 MMT, while gas production stood at 5.63 BCM during the first quarter of 2008.

Spot LNG prices to soar

August 13, 2008. Shell, the primary supplier of spot LNG in India through its Hazira terminal, has indicated as high a price as $25 (ex-ship) a mmBtu (million metric British thermal unit) for October cargo to the prospective customers. This is an increase of 25 per cent from the already agreed $20/mmBtu for the September cargo. Prices were as low as $15 in June. Upon re-gassification and payment of taxes and duties, the landed cost of LNG in Gujarat, India’s largest market for natural gas as well as spot LNG would be higher by approximately $2/mmBtu.

Gujarat’s dependence on spot LNG has increased manifold since the beginning of 2008. Accordingly, Shell’s throughput at Hazira terminal has gone up by nearly 50 per cent to 19 cargoes in the first half of 2008. The company is currently expanding the terminal capacities from 2.5 million tonne through a de-bottlenecking exercise. As all the city gas distributors in Gujarat, except Gujarat Gas Company, use spot LNG in different proportions, the spiralling of prices is leaving a telling impact on the margins of the CGD players catering to the retail as well as industrial customers.

GSPC, the largest gas supplier in Gujarat, has reportedly increased its retail prices by 15 per cent in August in the face of 40 per cent increase in costs and most affected is the CNG (compressed natural gas) business. CNG is used as greener auto-fuel and operators could hardly pass on the increase in costs of procurement. Analysts are of the view that Adani Energy, GSPC Gas and Sabarmati Gas (a JV of GSPC and BPCL) supplying CNG to the larger part of Gujarat could hardly generate profit margins in CNG segment.

PetroMin to review working of oil PSUs

August 18, 2008. The Minister of Petroleum & Natural Gas Murli Deora will meet Chief Executive Officers (CEOs) of Oil PSUs to review PSU working and to discuss various issues, challenges and problems faced by them. The Minister would review the availability of fuel stocks with the oil companies. Another point on the agenda is the review of the financial position of Oil Marketing Companies (OMCs) in the back drop of under-recoveries incurred by them on sensitive fuels like petrol, diesel, domestic LPG and PDS kerosene. Implications of the recommendations of high powered B.K. Chaturvedi Committee will also be discussed.

‘Fall in oil likely to be moderate’: ICRA

August 15, 2008. World oil prices may have softened but a further fall in rates is expected to be only moderate because of higher demand from Brazil, Mexico and countries from Asia and the Middle-East. Global demand in the latter half of 2009 is expected to touch 89 million barrels per day, compared to 85 million barrels per day at the end of 2007. Global oil prices have fallen from the peaks of $147 a barrel touched last month to $113 per barrel.

As per ICRA, the annual demand for oil is likely to be met, if additional OPEC supplies until the end of 2009 are maintained at 37 million barrels per day the level first forecasted for quarter one of fiscal 2008. It is unlikely that crude prices would move below the 2006 levels of $67 per barrel in the next one year, given the supply constraints and past record of slippages in new project development. There are also contingencies to be provided for short-term supplies disruptions and demand spikes.

The current hike in crude oil prices has been attributed partly to the increased demand from India and China whose combined consumption accounts for 50 per cent of the total US consumption and about 13 per cent of total global consumption. India, which imports 78 per cent of its crude oil requirement, had a consumption growth in 2007 pegged at 6.5 per cent. In terms of growth, Indian imports have increased by an average of 7 per cent during the five years to 2007.

HC dismisses Malaysian firm's petition against ONGC

August 14, 2008. The Delhi High Court has upheld ONGC's decision not to award contract to Malaysia-based Ramunia Fabricators Sdn Bhd for development of B-22 oil field in Mumbai offshore. Dismissing the petition of the company, High Court said that Oil and Natural Gas Corporation was right in rejecting its bid for the project. The court passed the order on a petition filed by the Malaysian company seeking court's direction to award the contract to it which was earlier given to L&T but was later cancelled paving the way for fresh bidding.

ONGC had invited bids in May 2007 for its B-22 field development project in which L&T and the Malaysian firm had participated. The Oil exploration major, while awarding contract to L&T, had dismissed the bid of Ramunia on the ground that the tender documents had been purchased by one company while the bid was submitted by the other. The contract given to the Indian construction giant was, however, cancelled after the High Court directed the ONGC to consider Ramunia's bid.

‘No plan to cut fuel prices’: Deora

August 13, 2008. According to the Petroleum Minister, Murli Deora, the Government has no plans to cut retail fuel prices despite the 20% fall in crude oil prices from its all-time high, as state-run oil marketing companies are still losing money at current prices. He said that the Government would also consider the report by a panel, headed by the former cabinet secretary B.K. Chaturvedi, which has suggested higher fuel prices and lower subsidies. Diesel demand in the country is growing at an unexpectedly high rate of 23-24%, which is causing shortages in some regions. Sales of diesel in the April-June quarter rose by nearly 18%, largely due to the use of diesel for power generation.

ONGC draws up plan to combat insurgency

August 13, 2008. ONGC, the biggest Exploration & Production (E&P) player in India, has drawn up a comprehensive action plan to thwart subversive activities in the country, especially those related to oil-field operations. In the wake of recent subversive activities in the country, ONGC reviewed its Offshore Security at a high level meeting.

The deliberations centered towards taking a holistic view of security and a comprehensive action plan was drawn up with enhanced security at various embarkation points. The meeting took note of vulnerable areas and decided on specific measures to counter any ill designs to disrupt the operational activities. The meeting assumes high significance from National Security perspective as ONGC has it's major Oil producing assets in Western Offshore along the extensive coastline of Maharashtra and Gujarat having investment of around $24 bn with daily contribution of 335, 000 barrels of Oil and 56 mcm of Gas.

POWER

PVP Ventures plans big investments in power

August 18, 2008. PVP Ventures Ltd is set for major investments in the power sector with the proposed merger of Malaxmi Energy Ventures with itself. PVP Ventures will emerge a large player in the independent power projects arena. For PVP Ventures, power project development and generation will emerge as a major investment area other than real estate development where it has large projects.

Malaxmi Energy has a significant stake in two major power projects viz., 50 per cent in Navabharat Power Pvt Ltd and 26 per cent in Simhapuri Energy Pvt Ltd, which are in advanced stages of implementation with confirmed coal linkages. With the merger of Malaxmi Energy with PVP Ventures, the power projects would come under a subsidiary PVP Malaxmi Energy Ventures. Navabharat Power is a special purpose vehicle promoted by Malaxmi and Navabharat Ventures which is setting up a 2,250 MW coal-based power project in Dhenkanal dstrict, Orissa.

It has been allotted coal linkages and coal blocks. The clearances and approvals for the power project are also in place. Simhapuri Energy is a joint venture between Malaxmi and Madhucon Projects for a 540 MW (270 MW x 2) power project at Krishnapatnam, Nellore dstrict, Andhra Pradesh. The financial closure for the first phase has been achieved. Over the next 12-18 months, PVP Malaxmi Energy would look at setting up power projects of capacity of 8,000 MW, which would be implemented in the next 5-7 years. The company’s investments in these projects would be around Rs 4,000 crore ($0.9 bn).

Over Rs 2,000 crore ($457.8 mn) revenue from realty projects over the next five years would be utilised for investments in the power project.

NHPC projects running behind schedule

August 17, 2008. As many as three of the seven hydro electric projects, which are proposed to be funded from the proceeds of the initial public issue by the state-owned NHPC Limited, are running behind schedule. The hydro electric prower generation projects, which will miss the deadline include 2000 MW Subansiri Lower project in Arunachal Pradesh, 240 MW Uri-II project in Jammu and Kashmir and 160 MW Teesta Low Dam-IV in West Bengal, says the draft offer document filed with the market regulator Securities and Exchange Board of India (SEBI).

NHPC is proposing to come out with a public issue of about 111.82 crore ($26.1 mn) fresh shares and 55.91 crore ($13 mn) existing shares of Rs10 each at a premium that is expected to fetch the company about Rs5,500 crore ($1.2 bn) and government about Rs2,800 crore ($654 mn). The public sector company is propsing to utilize the proceeds of the issue for part financing seven hydro electric projects which also include 231 MW Chamera-III and 52 MW Parbati-III in Himachal Pradesh and 45 MW Nimmo Bazgo and 44 MW Chutak in Jammu and Kashmir.

As regards the projects running behind schedule, the company has already spend Rs2,229 crore ($520.6 mn) towards the mega Subansiri Lower proejct, which was originally scheduled to be completed by September 2010. The completiton date for the 2000 MW Subansiri hydel project, according to the draft offer document, has been shifted to January 2012.

NTPC starts new thermal power unit at Chhattisgarh

August 14, 2008. NTPC has announced that a 500 MW unit of Sipat Super Thermal Power Project-Stage II, located in Chhattisgarh has been successfully synchronized on August 13. This is the second unit that has been commissioned in respect of Sipat Super Thermal Power Project slated to have an ultimate capacity of 2980 MW. With the commissioning of this unit, the total installed capacity of the company has become 29,894 MW.

GMDC’s 1 GW Morgha project yet to take off

August 13, 2008. State-run Gujarat Mineral Development Corporation’s (GMDC) 1,000 MW pit-head power project in Chattisgarh is hanging fire almost a year after Torrent Power emerged as the lowest bidder. GMDC, which was alloted Morgha coal block by the Centre had invited bids for the pit-head power project last year where Torrent Power had emerged as the lowest bidder. A year later, no company has been formally awarded the project.

For Morgha block, GMDC has already entered into an agreement with KSK Energy for setting up 1800 MW power project. Morgha block has huge reserves of coal so GMDC decided to rope in more than one developer and decided to set up two separate power projects. KSK Energy Ventures has also entered into an agreement with GMDC for the Morgha block wherein the company will supply power at Rs 1.92 per unit.

Taking price quoted by KSK as a benchmark, Torrent agreed to sign an agreement with GMDC for Rs 2 per unit for the 1,000 MW power project. GMDC will supply 4 mmtpa of coal from the Morgha block to the developer and about 120 mt for 30 years. GMDC will buy power as per the agreed price and further sell it to Gujarat Urja Vikas Nigam Ltd (GUVNL) with a margin of 10 paise per unit. The state-owned PSU also has the option of holding 26% equity in the two power projects.

ONGC Tripura Power Company signs contract with BHEL

August 13, 2008. ONGC Tripura Power Co, has reportedly signed a contract with Bharat Heavy Electricals Ltd for setting up 726.6 MW capacity gas-based power project at Palatana in Tripura. ONGC Tripura Power had placed a Rs 22 bn order with BHEL for the combined cycle gas turbine (CCGT) based power project.

The 363.3x2 MW combined cycle gas turbine power plant is being developed by OTPC at Palatana in south Tripura and this initiative of ONGC is expected to transform the power scenario of entire North-Eastern region of the country and catalyse rapid economic development of the region. The generation project combined with linked transmission project and upstream gas supply project is slated to bring in investments of around Rs 90 bn.

BHEL lost order to Chinese firms

August 18, 2008. BHEL recently lost an order for supplying 800 MW super critical technology to Andhra Pradesh Generation Company (APGENCO) to domestic company L&T-Mitsubishi Heavy Industries. In India, International Competitive Bidding (ICB) route is strictly adhered to by the companies who bid for supplying equipments to the power projects. Whereas, there is no such system in China.

But, in the process, BHEL lost orders worth 18,000 MW from private players. BHEL, which has joined hands with French equipment maker Alstom for manufacturing 800 MW in the super-critical technology, is bidding aggressively and is hoping to get orders in this in the near future. BHEL would invest Rs 10,000 crore ($2.2 bn) in the next four years to ramp up capacity to meet the growing electricity needs.

 

Mumbai malls, offices buy captive power concept

August 16, 2008. Malls, commercial spaces and residential buildings coming up in Mumbai have found a novel way to save themselves from the power cuts under which the city is reeling. Property developers are setting up their own mini-power plants to meet captive requirements of the malls or residential complexes they are building. Electricity generated from these power plants, which will use compressed natural gas (CNG) as fuel, will be 40 per cent cheaper than state electricity board supplies, making it an attractive investment option rather than a perceived additional cost.

Companies that are looking at this arrangement in Mumbai include DLF’s Mall in Lower Parel, Royal Palms’ IT SEZ in Goregaon and DB Realty’s mall in Dahisar. Although the power shortage in Mumbai has dropped from 5,000 MW a fortnight ago to 3,000 MW, the suburbs (central Mumbai and Navi Mumbai) continue to face between three and seven hours of power cuts a day. Malls and software firms have been asked to lower consumption by at least 20 per cent. Unlike back-up plants, which are known as large UPS, these mini-power plants will be the main source of electricity for the malls or residential complexes; energy drawn from state electricity boards will be the back-up option.

Players like Royal Palms are in talks with Mahanagar Gas in Mumbai for gas supply to their captive power generation unit. Royal Palms, which is developing a 5 million square feet IT SEZ in Goregaon, will have a 40 MW power-generation unit on the premises. The company is setting up the unit at the cost of Rs 50 crore ($11.6 mn), scheduled for commissioning in 2009. Landlords are thinking of reducing the outgoing costs of the retailers in the malls.

Even if the retailers can save Rs 2 per day on consumption of 5,000 units of electricity, they can save Rs 10,000 per day and Rs 3 lakh per month. Thus, more and more malls are looking at having a captive power unit on the premises. This concept is relevant for the shopping malls and commercial spaces in the city. Malls are considered to be indulging in unwarranted commercial electricity consumption, and commercial establishments can save themselves from power cuts.

Malls and commercial establishments in Mumbai pay between Rs 6 and Rs 9 per unit to the state and private electricity boards. Diesel costs Rs 38.93 per litre in Mumbai, but CNG costs only 21.70 per kg, so it is almost 45 per cent cheaper for companies to generate power from gas than diesel. Mahanagar Gas will supply gas to these players through its existing network of CNG pipelines. Captive power plants also do not require sanction under the Electricity Act 2003.

Cut in floor prices fails to boost sales of Coal e-auction

August 16, 2008. Reduction of floor prices fails to boost sales of coal through e-auction of Coal India Ltd during June and July. In an effort to increase the availability of coal and counter the inflationary pressure on the economy, CIL decided to offer 40 mt of coal through e-auction between May and July 2008.

This was higher than the projected offering for the entire 2008-09. The offer was doubly sweetened in June this year by reducing the floor price of e-auction from 30 per cent above the notified price to a mere 5 per cent. None of the efforts, however, succeeded in lifting the demand for coal in the auction. As against an offering of 11.5 mt, 5.3 mt were sold in May.

In June, 15 mt were offered on a reduced floor price for participation. However, sales dropped to approximately 4 mt. The demand situation worsened in July when only 3.9 mt out of a total offering of 13 mt found bidders. The actual sales, however, were less than 3.9 mt as the successful bidders did not lift the allocated quantities.

Tatas, REL and DLF eye Dishergarh power stake

August 15, 2008. Several players from the power sector have responded to the expression of interest (EoI) for a controlling stake in Dishergarh Power Supply Co (DPSCL). Public sector heavy engineering firm Andrew Yule & Co plans to divest stake in Dishergarh Power as part of its revival strategy. Reliance Energy, CESC, DLF and Tata Power, among others, have shown interest. The last date for submission of EoI is September 9.

The sale of controlling stake in Tide Water Oil (TWOL), another subsidiary of Andrew Yule, which got delayed due to some legal problems, has resumed now. The stakes will be disinvested through competitive bidding and valuation of shares would be done by Deloitte & Touche Consulting. Andrew Yule holds 15 per cent stake in Dishergarh Power and 26 per cent in Tide Water Oil. The stake sale in DPSCL and TWOL would take place through an open tender.

NTPC’s Dadri unit to commission by Sept’ 09

August 18, 2008. According to Jairam Ramesh, Minister of State for Commerce and Power, NTPC’s 2x490 MW coal-based power generating units at Dadri in Uttar Pradesh being established as part of the infrastructure for the Commonwealth Games will be commissioned on schedule by September 2009 and January 2010 respectively. 90% of the power generated will be destined for Delhi and the balance 10% for Uttar Pradesh.

BHEL is the supplier of boilers and turbine generators. Dadri already has 4x210 MW coal-based units operating for a number of years and in 2007-08 these units achieved the highest PLF of 98.02% in the country. Dadri is one of the few power plants in the country where the PLF is higher the availability factor demonstrating the extraordinary efficiency of management at the plant. Dadri has also 829 MW of gas-based capacity which is now running at around 72% PLF largely because of the shortfall in the supply of gas.

Dadri’s greatest accomplishment has been in environmental management which should serve as an example to all other power plants in the country. The establishment of the Ash Utilisation Technology Park as also the creation of the eco-friendly 550-acre ash mound which has led to the emergence of a first-rate nature park in the power plant complex.

‘No power crisis in state’: Minister

August 17, 2008. According to Karnataka Minister for Energy K S Eshwarappa, there is no acute shortage of power in the state owing to the sufficient rainfall and abundance of coal supply. Talks are on with Chatthisgarh government concerning the price of the power as against their demand of Rs 10 per unit. The plans have been chalked out to set up two 4000 MW ultra mega power project each in Tadadi in Uttara Kannada and Kodagi in Raichur.

A Central Government team will arrive at Kodagi for inspection and the State has the required amount of land and water which will make possible for the approval from the Centre. According to him, sufficient amount of thermal power, hydel power, and other renewable energy resources has solved the power crisis in the State. Coal has been amassed from all parts of the State along with import from abroad. Arrangements have been made to accumulate 12 lakh tones of coal to overcome the shortage.

Linganamakki is producing 1035 MW and Mahatma Gandhi hydel power plant is generating 122 MW power, which has helped in solving the power crisis. Precautions have been taken to counter the environment evils in Chamalapur and Tadadi by introducing new technology. Flying ashes are passed through closed pipes  to a tanker which is later supplied to cement factories and cooling and filtering process for the hot water prior to its merging  with sea water.

Nuclear Power short-lists 4 suppliers for reactors

August 17, 2008. With the prospects of India’s access to global nuclear reactor technology brightening, Westinghouse Electric Company (AP1000 series of reactors), GE-Hitachi (ABWR reactor series), Areva (1,000 MW European pressurised reactors) and the Russia’s atomic energy agency Rosatom (VVER 1,000 reactors) are among the frontrunners for new projects planned across the country.

State-owned Nuclear Power Corporation of India Ltd (NPCIL), the monopoly nuclear power generator, has tentatively short-listed these four major reactor manufacturers based on suitability of technical parameters for placement of orders that will form the first phase of the Centre’s plan to build 40,000 MW of nuclear capacity by 2020.

Once nuclear trade commences, NPCIL hopes to set up Nuclear Parks or reactor clusters, for which four coastal sites have been identified across Gujarat, Andhra Pradesh, Orissa and West Bengal. These parks are being envisaged with a capacity of housing up to eight reactors of 1,000 MW each at a single location.

The model would be on the lines of the Koodankulam project, where two 1,000 MW reactors were initially set up and subsequently the site is being expanded to accommodate more reactors. Cost specifications and safety parameters would form the two foremost parameters for the selection of the foreign equipment suppliers for future projects. Foreign reactor suppliers are, however, unlikely to be allowed to own equity in the projects in the first phase.

India has 17 nuclear power plants with a total installed capacity of 4,120 MW in operation. Six additional units, with a capacity of 3,160 MW, are under various stages of construction. If nuclear trade with global players opens up, the Centre, which was originally targeting 20,000 MW of nuclear power by 2020, hopes to double nuclear capacity addition to achieve an installed capacity of 40,000 MW over the next 12 years. According to US-India Business Council estimates, at least $100 bn (about Rs 400,000 crore) worth of investment will be needed to develop nuclear energy in India over the next 20 years.

New tariff regime for hydel power

August 17, 2008. India’s electricity regulator, the Central Electricity Regulatory Commission (CERC), has proposed a new tariff scheme for power generated from hydroelectric stations, whereby the risks associated with changes in water flow would now be borne by producers. This is a move that is likely to bring down the price being paid by users, usually the state electricity boards.

At present, hydrological risks (risks associated with changes in the water flow pattern) is borne by buyers, and power producers like NHPC, the largest hydroelectricity generator, take only risks associated with the failure of equipment. CERC is proposing the new regime for five years starting April 2009. The entire process of inviting comments and final notification is expected to take at least five months.

Hydroelectric power constitutes nearly a fourth of India’s total installed capacity of 1,43,000 MW at the end of March 2008. The government has estimated an ideal thermal and hydro mix at 60: 40, meaning hydro projects should constitute 40 per cent of total installed capacity. In this context, the new tariff regime is also seeking to make hydro power investments attractive for the private investors. In the current regulation, the installed capacity of a hydroelectric plant is determined first and thereafter, any shortfall in generation of electricity because of changes in water flow pattern is borne by the buyers.

Thus, if a plant actually produced only 60 per cent of its installed capacity because of hydrological factors, the state electricity boards pay for the entire 100 per cent. With the proposed regulation, it would change and buyers will pay only for the power they actually get. The story began in November 2007, when the amendment proposal was circulated in response to complaints by buyers, the first being Assam State Electricity Board (ASEB) against North Eastern Electric Power Corporation.

Power purchase becoming burden on TNEB’s finances

August 16, 2008. Power purchase is fast becoming the principal burden on finances of the Tamil Nadu Electricity Board (TNEB). Faced with the growing demand, the TNEB is forced to buy at a high cost to meet the requirements of the State even if this does not satisfy all segments of subscribers. At present, the TNEB purchases power essentially from three sources viz., Central generating stations, independent power producers (IPPs) and traders.

Growing power purchase
Year	Gross Energy (in mn. Units)	Energy Purchased (in mn. Units)	Cost of power (Rs. in cr.)
2003-04	47,192	25,384	6,663.82
2004-05	50,244	25,894	7,083.02
2005-06	54,380	29,811	8,040.88
2006-07	61,170	34,082	9,964.96
2007-08	65,085	38,180	12,493.80
2008-09*	68,685	40,692	14,690.62
*Indicates projections Source: Tamil Nadu Electricity Board

It relies on private wind mills and co-generation plants for meeting a portion of the demand. It is purchasing power at rates considered high until a few years ago. The average unit cost of power from these plants come to Rs 7.91, Rs 7.70, Rs 7.62 and Rs 7.65 respectively. Except the Kayamkulam plant, which is run by the NTPC, the others are operated by IPPs.

Since naphtha is used as the main fuel in Kayamkulam and Pillaiperumalnallur, the unit cost comes to about Rs 12. With regard to wind mills, the Board works out the weighted average cost as Rs 3.25 per unit. In respect of cogeneration, it estimates the cost at Rs 3.09 a unit. Power from captive generation sets is calculated at Rs 3.01 per unit. Cogeneration plant and captive sets are also permitted to adjust the quantum of power sold to the TNEB against their energy consumption on the basis of high tension tariff. The average cost of power purchased from all the sources comes to Rs 3.61 per unit. The cost of power generated by the TNEB’s stations is Rs 1.95 per unit.

After taking into account various factors including line losses, the weighted average cost of power supplied by the Board is Rs 4.25 per unit. With nearly 80 per cent of the revenue through sale being consumed by the cost of power purchase, the Board has to meet the costs of fuel, operation and maintenance, establishment with the remaining revenue. One saving grace is that the increase in fuel cost is not as high as in the case of power purchase, despite rising prices of various inputs. In 2003-04, the fuel cost was Rs2,869.96 crore ($669.9 mn). This year, it is estimated at Rs 4,123.88 crore ($0.9 bn).

Rolta sees $2 bn sales from nuke projects deals

August 15, 2008. Rolta India and its joint venture partner Stone & Webster expect to bag $2 bn (Rs 8,500 crore) engineering and design orders for nuclear energy in seven years after India signs the civil nuclear accord with the US. Rolta’s exclusive tie-up with Stone & Webster brings to the fore its capability for setting up nuclear power plants. Rolta’s focus will be the engineering and design aspect of the projects.

Almost $70-80 bn investments will be made to generate 40,000 MW of power through nuclear plants. Of this engineering will be 5-7 per cent (including safety design), which means a market of $5 bn. Besides Shaw Group the parent of Stone&Webster, has 25 per cent stake in Westinghouse Electric, supplier of fuel, technology and equipment to the commercial nuclear electric power industry. Being one of the three major nuclear reactor manufacturer in the world (the other two are GE and Areva).

Chhattisgarh to get $43 bn investment in power

August 15, 2008. Energy companies will invest Rs 1.7 trillion ($42.5 bn) in Chhattisgarh to set up coal-fired power plants having a total power generation capacity of 42,000 MW. In a bid to become the power hub of the country, the state has signed separate agreements with a total of 51 companies that will pump in Rs 1.7 trillion to generate 42,000 MW electricity.

R-Adag gains as government changes rules

August 15, 2008. In a controversial move, the United Progressive Alliance, or UPA, government effectively amended the norms for so-called ultra mega power projects, or UMPPs, making it possible for a developer to use surplus coal from captive mines allocated for this project for other projects being developed by it or its affiliates. The immediate beneficiary will be the Reliance-Anil Dhirubhai Ambani Group, or R-Adag, which had asked the government for this concession.

Decision was taken by an empowered group of ministers, or eGoM, on UMPPs, comprising power minister Sushil Kumar Shinde, finance minister P. Chidambaram, law and justice minister H.R. Bhardwaj, science minister Kapil Sibal and deputy chairman of the Planning Commission Montek Singh Ahluwalia. Decisions taken by such ministerial groups do not need to be ratified by the cabinet. According to the government such surplus coal would be that available after the UMPP in question reached its peak capacity of around 4,000 MW.

Earlier coal from blocks meant for a UMPP could not be used by the developer for its other power projects. Apart from developing the 4,000 MW power plant at Sasan in Madhya Pradesh, Reliance Power is also developing the 4,000 MW plant at Chitrangi, also in the state. The company has agreed to sell power generated at Sasan at Rs 1.19 a unit, while it plans to sell the power generated at Chitrangi at Rs 2.45 a unit. The ministerial group’s decision means that new UMPPs with captive coal blocks, such as the one at Tilaiya in Jharkhand, will also be free to use surplus coal from captive blocks meant for these projects, in others.

Tata Power eyeing $3 bn nuclear power foray

August 15, 2008. With India's nuclear isolation likely to end soon, energy major Tata Power is busy planning and studying a minimum $3 bn (Rs 120 bn) foray into nuclear power. Tata Power will initially venture into nuclear power either on its own or through a joint venture once the sector is opened up to private utilities. In the long-term, Tata Power would also like to go into the business of front-end and back-end fuel cycle technology business.

At present, four major technologies are available for nuclear power using enriched uranium. India also has an indigenous technology using natural uranium, as it does not have the sanction to import enriched uranium. The $62.5 billion Tata group, which has interests in sectors spanning consumer durables and software to energy, steel and automobiles, has 27 listed companies in its fold, employing some 350,000 people worldwide.  

Power developers worried as States go back on contracts

August 13, 2008. A spate of incidents involving State Governments annulling big-ticket power project pacts and changing parameters midway is raising concerns among project promoters and lenders. While the Meghalaya and the Arunachal Pradesh Governments have rescinded pacts signed with private and PSU firms, the Orissa Government has chosen to amend key norms after having already signed MoUs with 13 private developers for setting up projects.

Sanctity of contracts is absolutely critical from any investor’s point of view, be it the project developer or the lending institution. The signing of a contract must reflect the finalisation of negotiations and not the beginning. Unfortunately, the Dabhol experience is still to fade and State Governments are already turning their backs on contracts inked with potential investors.

A decision by the Meghalaya Cabinet to scrap power deals inked by the previous administration with private companies Jai Prakash Power Ventures Ltd and Athena Projects Private Ltd, which were supposed to develop the Umngot and the two-stage Kynshi project, is the latest in the series of such moves by States. The agreements signed with the former Congress Government in the State were recently abrogated by the new Meghalaya Progressive Alliance (MPA) administration on the ground that the deals were in violation of the State’s policy.

The proposed investment in these two projects was around Rs 6,600 crore ($1.5 bn), with combined capacity of 1,100 MW. The Meghalaya Government has decided to invite fresh expression of interests (EoIs) for the projects. The Arunachal Pradesh Government had earlier cancelled NTPC Ltd’s contract to build two hydroelectric power projects the Etalin (4,000 MW) and Attunli (500 MW) projects in the State at an estimated cost of Rs 22,500 crore ($5.2 bn).

This is amid feelers that the State Government has received from private players on taking up these projects and NTPC’s refusal to pay an upfront advance payment sought by the Arunachal Government. The Orissa Government, earlier, announced that MoUs signed with 13 independent power producers (IPPs) for a total capacity of 14,990 MW would be amended in line with a change in policy announced by the State.

The State Government made sweeping changes and has done away with the policy that power generated in excess of 80 per cent plant load factor from the power plants will be made available to the State at a variable cost along with incentives. Instead, the IPPs will be now be required to make 5-7 per cent of the power available to the State at a variable cost determined by the State regulator.

OIL & GAS

Iran to up Forouzan oil production capacity

August 19, 2008. According Oil Ministry, Iran's Forouzan Oilfield production capacity will be raised by 4,000 barrels a day. The oil field's rate of production was already increased during the last two months by 5,000 barrels a day to reach 46,000 barrels per day. The development of the Forouzan field, which is shared by both Iran and Saudi Arabia, is considered to be a major oil project in the region. Saudi Aramco has been developing the oil field, which Saudi Arabia calls Marjan, with the American firm McDermott International Inc.

TransGlobe raises interest in West Gharib

August 18, 2008. TransGlobe Energy Corporation has completed the acquisition of an additional 25 percent in certain leases on its West Gharib (Arab Republic of Egypt) properties from its partner, a private company registered in Cyprus, for consideration of $18.0 million adjusted to June 1, 2008. This acquisition brings TransGlobe's holdings to a 100 percent working interest on all nine West Gharib leases. The acquisition was funded from TransGlobe's expanded credit facility and working capital.

TransGlobe's average daily production increases by approximately 400 barrels of oil per day ("Bopd"), effective today. The purchase price paid by TransGlobe translates into approximately $16.20 per barrel of Proved Plus Probable reserves or approximately $45,000 per flowing Bopd, in line with recent similar transactions in the area. Depending upon the size of future reserve additions in the East Hoshia and South Rahmi fields, TransGlobe has agreed to pay the partner a success fee up to $5.0 million and $2.0 million, respectively.

Dana Gas eyes first gas from Northern Iraq

August 14, 2008. Dana Gas, the United Arab Emirates-based oil and gas company, will start natural gas production from a gas field in northern Iraq in September and is preparing to drill appraisal wells at a second field next year. The Abu Dhabi stock market-listed firm will start production of 75 million-cubic-feet-a-day of gas from the Khoomor field in the Kurdish region under an early production facility next month.

As part of the plans, Dana Gas is also building a liquefied petroleum gas, or LPG, plant, which will be completed by year-end and raise gas production to as much as 300 million cubic feet a day. The gas from Khoomor will be transported via pipeline to feed power plants in the Kurdish region. Dana Gas will also spend as much as $50 million on seismic surveys and appraisal wells, to be drilled next year, at the Chamchamal field in the Kurdish region. Start-up of the Iraqi operations will help boost the company's finances. Dana Gas was listed on the Abu Dhabi bourse in December 2005 on the basis of the estimated $1-billion project with Iran, under which the Islamic Republic agreed to pipe gas to Sharjah. The deal has yet to materialize.

PGNiG opens new 0.45 bcm gas field in Poland

August 14, 2008. Poland's gas monoply PGNiG began operations at a new natural gas field with estimated resources of 450 million cubic meters (mcm). This year PGNiG plans to extract about 40 million cubic meters from the field located in southeastern Poland. The company last year extracted 4.3 billion cubic meters (bcm) from its domestic gas fields.

DNO inks agreement for Froy field development

August 14, 2008. Det Norske Oljeselskap ASA (DNO) has entered into a Heads of Agreement with a Contractor regarding lease of a jackup production unit for the Froy Field. Det norske has entered into this Agreement for the purpose of supporting the progress of field development and operation of the Froy Field in Production License (PL) 364. The Froy Field is expected to produce 56 million barrels of oil, with an initial production amounting to 28,000 barrels of oil per day. The Contractor shall build and operate the production unit, which is estimated to start producing on the Frøy Field during Q3 2012. The duration of the Lease and Operation Contract will be 10 years, with an optional extension for another five years (five times one year).

The Froy Field was awarded to Det norske as operator (50 percent interest) and Premier Norge AS (50 percent interest) in APA 2006. In January 2008, the license partners decided to prepare a Plan for Development and Operation (PDO) for the field, and Det norske and Premier have since cooperated on the final PDO. The Froy Field is a small oil field located on the Norwegian Continental Shelf (NCS). The Heads of Agreement now entered into constitutes part of the decision-making basis to secure sound economy in the project. With today's oil prices, the project is estimated to generate a net present value of NOK 4 billion.

Gran Tierra makes gas-condensate discovery at Rio Magdalena

August 14, 2008. Gran Tierra Energy Inc. has successfully tested the Popa-2 exploration well in the Rio Magdalena Block in central Colombia at a combined rate of 8.5 million cubic feet of gas per day and 236 barrels of oil and condensate per day. The well is being suspended for additional testing and evaluation prior to production completion. Popa-2 was drilled to the same reservoirs at a shallower depth and 2,035 meters away from a non-commercial oil discovery made by Gran Tierra Energy in 2006 at Popa-1, which tested approximately 160 barrels of oil per day.

Gran Tierra Energy acquired a new 89 kilometer 2-D seismic program after the initial discovery, and used it to pick the location of Popa-2. Gran Tierra Energy, with a 100 per cent working interest, is the operator of the 144,670 acre Rio Magdalena Block. Under the terms of a recently completed farm-in agreement, Omega Energy Colombia will earn a 60 per cent share of the company's interest by paying 100 per cent of the costs associated with drilling, testing and completing the Popa-2 well. In the event of a commercial discovery, Ecopetrol S.A. has a right to back in for a 30 per cent working interest, to be split proportionally between Gran Tierra Energy and Omega Energy Colombia.

Canadian superior discovers gas at Bounty well

August 13, 2008. Canadian Superior Energy Inc. as Operator of the Intrepid Block 5(c) offshore Trinidad has made a significant natural gas discovery with the drilling and production testing of its Bounty exploration well. The Bounty exploration well was drilled to a total depth of approximately 17,360 feet and encountered gas bearing horizons with the main targeted zone in the well encountering approximately 200 feet of pay.

Initial test results indicate that the Bounty well is capable of producing at a rate of approximately 200 mmcf/d from this high pressure zone. The results from the Bounty well and interpretations of extensive 3-D seismic data and other data indicate a natural gas resource potential of up to 2.6 TCF of natural gas from the tested structure. The Bounty natural gas discovery is the second natural gas discovery Canadian Superior and its partners have made in 2008 on their Intrepid Block 5(c) located approximately 60 miles off the east coast of Trinidad.

The company now plans to move forward expeditiously with appraisal and development drilling and production. Canadian Superior is paying 26-2/3 per cent of the Block 5(c) exploration program cost to maintain a 45 per cent working interest in Block 5(c), with its partners, BG International Limited, a wholly owned subsidiary of the BG Group plc, paying 40 per cent for a 30 per cent working interest and Challenger Energy Corp. paying 33-1/3 per cent for a 25 per cent working interest through Canadian Superior.

Chiyoda to bid for Saudi export refinery projects

August 19, 2008. Japanese oil and gas engineering group Chiyoda Corp and South Korea's Samsung Engineering Co are preparing to bid for two huge export refinery projects planned by Saudi Aramco jointly with Houston-based ConocoPhillips and France's Total SA. The orders are estimated to be worth 200 billion yen ($1.8 billion).

Chiyoda, which saw its profit squeezed last year due to its heavy concentration of contracts in Qatar, is pursuing new contracts in areas such as refineries, development of oil fields and construction of petrochemical production facilities in Asia and Latin America as it aims to diversify income sources and markets. The company last year also sought 60 billion yen in funds from Japan's biggest trading house Mitsubishi Corp by issuing new shares to fund its growth strategy, planned mergers and acquisitions, and to pursue energy-related projects jointly with Mitsubishi, which now owns 33.4 percent of Chiyoda.

Chiyoda, which dominates the global LNG project market with a 50 percent share, saw its net profit plunge 59 percent to 9.6 billion yen in the year ended in March hit by cost overruns and delays in six multi-billion liquefied natural gas projects, the world's biggest, in Qatar. The result of the bids for Saudi's Yanbu and Jubail refinery projects, designed to process Arabian heavy crude, will be announced early next year.

SES wins approvals for gasification plant expansion

August 19, 2008. Synthesis Energy Systems, Inc. (SES)’s 95%-owned joint venture project with Shandong Hai Hua Coal & Chemical Company Ltd. (SHHCCC) has obtained key government approvals for the expansion ("Phase II") of its existing Hai Hua project in Zaozhuang City, Shandong Province, China. The Phase II expansion will result in additional production capacity of approximately 17,000 standard cubic meters per hour (scm/hr) (a 15 MW equivalent) of high grade syngas at this site. After completion of the expansion, the plant will have a design capacity of approximately 45,000 scm/hr (a 40 MW equivalent). The project approvals were issued by divisions of the State Environmental Protection Administration and the National Development and Reform Commission.

The Hai Hua Plant is utilizing SES' global, exclusively licensed U-GAS(R) technology to convert local low-rank coal, with approximately 40% ash content, into high grade syngas. The additional capacity from the Phase II expansion is expected to support approximately 100,000 tonnes/year of methanol production as well as other gas demands in the Xuecheng Industrial Park. SES is currently negotiating agreements, including ownership in the methanol facility, with SHHCCC as well as other customers for the additional syngas capacity.

SES expects to finalize project terms and begin work on the Phase II expansion later this year. SES is an energy and technology company that builds, owns and operates coal gasification plants that utilize its proprietary U-GAS(R) fluidized bed gasification technology to convert low rank coal and coal wastes into higher value energy products, such as transportation fuel and ammonia. The U-GAS(R) technology, which SES licenses from the Gas Technology Institute, gasifies coal without many of the harmful emissions normally associated with coal combustion plants.

PetroChina starts building oil shale refinery in Heilongjiang

August 14, 2008.  PetroChina Co Ltd, the country's top oil and gas producer, has started construction of an oil shale refinery in northeastern China's Heilongjiang province. The refinery, located in Mudanjiang city, involves a total investment of one billion yuan. The plant is designed to process 1.2 million tons of oil shale per year and produce 100,000 tons of oil products. Total oil shale reserves in Mudanjiang are estimated at 46.2 million tons. The company plans to invest 10 billion yuan by 2020 to develop alternative energy sources, including oil shale, bio-fuels, wind power, coal-bed methane and geothermal energy.

Technip wins contract for Valero Port Arthur expansion

August 13, 2008. Technip has been awarded by Premcor Refining Group, Inc. (a Valero subsidiary) an engineering, procurement, construction and management (EPCM) contract for part of the $2.4 billion major expansion of its Valero Port Arthur Refinery located in Texas, USA. The expansion is expected to boost overall refinery throughput capacity to 415,000 barrels per day making it one of the largest refineries and giving Valero more capacity to process heavy sour feedstocks. The Group's main operating centers and business units are located in France, Italy, Germany, the UK, Norway, Finland, the Netherlands, the USA, Brazil, Abu-Dhabi, China, India, Malaysia and Australia.

Sinopec suspends gasoline, diesel imports

August 19, 2008. China Petroleum & Chemical Corp (SNP) has indefinitely suspended gasoline and diesel imports in the latest indication that China's domestic fuel shortage has eased. The move is expected to weigh down Asian fuel prices and aggravate an oversupply in the Singapore market, where Sinopec has been a major buyer. In recent months, Sinopec and rival PetroChina Co. (PTR) engaged in heavy buying of foreign diesel and gasoline in the hope of preventing fuel shortages during the Olympic Games in Beijing.

Moreover, with new refineries about to come on stream, demand for imported gasoline and diesel is expected to weaken in coming months. Analysts expect China to add around 1.1 million-1.2 million barrels a day of capacity by year-end, up 15% from around 8 million barrels a day of refining capacity at the end of 2007. Due to start are three greenfield refineries with a combined capacity of 640,000 barrels a day: Sinopec's 200,000-barrel-a-day Qingdao refinery; PetroChina's 200,000-barrel-a-day Qinzhou refinery; and China National Offshore Oil Corp.'s 240,000-barrel-a-day Huizhou refinery. Last month, Sinopec accounted for more than half of China's overall imports of 970,000 metric tons of diesel and 606,123 tons of gasoline.

Nabucco consortium reports 'huge' demand for capacities

August 18, 2008. The consortium behind the planned Nabucco gas pipeline said a market survey has established the demand for capacities are "huge." According to the consortium, pipeline capacities are more than 100 per cent overbooked by potential shippers on a non-binding basis from day one on a long-term basis. The survey was carried out in preparation for the open season process, where binding bids for gas supply are made.

The 3,300 kilometer pipeline, which is scheduled for construction start in 2009, is to transport 31 billion cubic meters of gas a year from the Caspian region, the Middle East and Egypt to Europe, through Turkey, Bulgaria, Hungary, Romania and Austria. It will bypass, and reduce Europe's reliance on gas from, Russia. Production start is planned for 2013. Before an open season process can be initiated, however the consortium needs the formal approval of the countries through which the pipeline will pass, as well as an exemption from European antitrust regulations allowing the project partners to occupy 50% of the pipeline's capacity, the consortium said. The members of the consortium are Austria's OMV AG, Hungary's MOL Nyrt., Romania's Transgaz, Bulgaria's Bulgargas, Turkey's Botas and Germany's RWE AG.

Williams wins FERC nod for Transco expansion

August 18, 2008. The Federal Energy Regulatory Commission (FERC) has approved a proposal to expand Williams' Transco natural gas pipeline to serve markets in the northeastern United States. The Sentinel expansion project is designed to increase Transco's firm transportation capacity by 142,000 dekatherms per day. Phase 1 of the expansion will provide 40,000 dekatherms per day as early as Nov. 1, 2008, while Phase 2 will provide 102,000 dekatherms per day by Nov. 1, 2009.

The proposal requires adding or replacing approximately 18 miles of pipe at various locations in Pennsylvania and New Jersey, in addition to compressor facility modifications at Transco Station 195 in Delta, Pa. The Transco pipeline is a 10,500-mile pipeline system which transports natural gas to markets throughout the northeastern and southeastern United States. This expansion increases the total system capacity of the Transco pipeline to approximately 8.3 billion cubic feet per day.

Enbridge still in talks for Denali stake

August 15, 2008. Enbridge Inc. (ENB) is still in talks with ConocoPhillips (COP) and BP PLC (BP) about taking part in their Denali Alaska Gas Pipeline from Alaska. Canada's second-biggest pipeline firm added that it wouldn't rule out participation in a broader consortium involving Alaska's major gas producers and Calgary-based rival TransCanada Corp. (TRP), which recently won the approval of Alaska's senate.

The Denali proponents are pushing ahead with their proposal, even though TransCanada won a state license and financial support earlier this month for its own $26 billion pipeline. This could lead to competing open seasons next year as both projects try to drum up the necessary commercial backing from Alaska's gas producers. ExxonMobil Corp. (XOM), which controls the most gas in Alaska, it has said it wants to participate in a project that would ship gas from the Point Thomson natural gas field on Alaska's North Slope to the lower 48 states.

Japan to subsidize Australian oil, gas exploration

August 19, 2008. Japan Oil, Gas and Metals National Corp. will invest about Y682 million in Australia-East Timor offshore oil and natural gas exploration work over the years through March 2014. The investment is part of the Japanese government's policy of subsidizing overseas energy exploration projects involving Japanese companies, using the government-backed body, better known as Jogmec, as a vehicle. Cosmo Oil Co.'s affiliate Cosmo Oil Ashmore Ltd. and OMV AG's unit OMV Timor Sea Pty. each have a 35% stake in the exploration project, while Nippon Oil Corp.'s unit Nippon Oil Exploration (Australia) Pty. holds the remainder.

The operator is OMV Timor Sea. The Y682 million investment is equivalent to more than half of the estimated exploration costs of Cosmo Oil Ashmore. Cosmo Oil Ashmore and OMV Timor Sea have already confirmed two oil reserves in the Australia's northwestern AC/P17, AC/RL5 and AC/RL6 blocks. Together with Nippon Oil Exploration (Australia), the three partners will explore for additional reserves. Upon any discovery of new reserves, the three partners would work for commercial production of crude oil from all reserves starting as early as 2012.

Grant to fuel Kentucky CTL study

August 18, 2008. A $1.426 million federal grant will enable the University of Kentucky to step up research on refining coal into liquid fuels and advance the development of a synthetic fuels industry in the state. UK will use part of the federal money to begin building a $12-million "mini-refinery" at the UK Center for Applied Energy Research in UK's research park off Iron Works Pike in northern Fayette County.

The Kentucky Energy and Environment Cabinet has pledged an additional $350,000 for the project. The mini-refinery will enhance UK's research into the Fischer-Tropsch process, a series of chemical reactions create synthetic oil and fuel from coal, natural gas or animal and plant matter. The mini-refinery is expected to reduce costs and create a more environment-friendly liquid fuel by reducing carbon dioxide emissions.

China's prospective oil resources 108.6 bn tons

August 18, 2008. China's prospective resources of oil is estimated at 108.6 billion tons, and its oil reserves and production have entered a stage of steady growth, according the latest evaluation result made by a national office for oil and natural gas resource evaluation. According to the Ministry of Land and Resources, after four years of work, the evaluation shows that China's prospective oil resources reach 108.6 billion tons, geological reserves are 76.5 billion tons, and recoverable resources are 21.2 billion tons.

The exploration has come to a medium term. The prospective resources of natural gas reach 56 trillion cubic meters, geological resources, 35 trillion cubic meters, and recoverable resources, 22 trillion cubic meters. The prospecting and exploration has entered an early term. The geological resources of coalbed methane are 37 trillion cubic meters, and recoverable resource, 11 trillion cubic meters. The geological resources of shell shale oil are 47.6 billion tons, and recoverable shell shale oil, 12.0 billion tons. The geological resources of oil sand are 6.0 billion tons, and the recoverable resources, 2.3 billion tons.

China's oil production is expected to maintain at 200 million tons by 2030, and natural gas production to keep at 250 billion cubic meters. The national evaluation of oil and natural gas resources, started in 2003, is jointly organized by the Ministry of Land and Resources, the National Development and Reform Commission and the Ministry of Finance.

The evaluation of oil and natural gas resources covered the country's 115 basins, that of the coalbed methane covered 42 coal- bearing basins, that of oil sand resources covered 106 mineral belts in 24 basins, and that of shell shale oil resources, 80 mining areas in 47 basins. China is one of the world's biggest producer and consumer of oil. Last year, it produced 186.66 million tonnes of oil and consumed more than 300 million tonnes. The nation also produced 69.3 billion cubic meters of natural gas in 2007. The figure was expected to rise to 76 billion cubic meters this year.

US faces new obstacles to tap Central Asian oil

August 15, 2008. When the main pipeline that carries oil through Georgia was completed in 2005, it was hailed as a major success in the U.S. policy to diversify its energy supply. Not only did the pipeline transport oil produced in Central Asia, helping move the West off its dependence on the Middle East, but it also accomplished another American goal- it bypassed Russia.

U.S. policy makers hoped that diverting oil around Russia would keep it from reasserting control over Central Asia and its enormous wealth of oil and natural gas, and would provide a safer alternative to Moscow's control over export routes that it had inherited from Soviet days. Now energy experts say that the hostilities between Russia and Georgia could threaten U.S. plans to gain access to more of Central Asia's energy resources in a year when booming demand in Asia and tight supplies helped push the price of oil to records. At the very least, they warn, Russia may figure even more prominently in shaping the region's energy future.

The latest struggle over Caspian oil started in the 1990s under Clinton, after the breakup of the Soviet Union. The building of the pipeline that passes through Georgia, the Baku-Tbilisi-Ceyhan line, or BTC, remains one of the signature successes of the U.S. strategy to put a wedge between Russia and the Central Asian countries that had been Soviet republics. Attempts to get oil out of Kazakhstan through a non-Russia route failed.

Most of the oil production from the giant field of Tengiz, for example, in which Chevron is the largest investor, now travels through a pipeline known as the Caspian Pipeline Consortium, which runs along the northern Caspian coastline to the Russian Black Sea port of Novorossiysk. And proposals for new oil and natural gas pipelines in the region have stalled, in part, because of Moscow's opposition. Some analysts say they believe that the armed conflict between Russia and Georgia is not only rooted in historical enmity but also is an outgrowth of Russia's fears that Georgia, with its pro- Western bent, could prove to be a lasting competitor for energy exports.

A big concern for the future is what will happen to oil from Kashagan, the giant oil field in the Caspian Sea that holds more than 10 billion barrels of reserves. Located off Kazakhstan, Kashagan is the most ambitious attempt to date by Western companies to develop new supplies in the Caspian. It will be at least five years before oil starts flowing from there, but the operating consortium, which includes Exxon Mobil and ConocoPhillips, plans to transport Kashagan's oil through the BTC pipeline. That would involve building a new pipeline under the Caspian, which might run against opposition from Russia.

The Baku-Tbilisi-Ceyhan pipeline, 1,100 miles long, or about 1,800 kilometers, transports 850,000 barrels a day of oil, or 1 percent of global supplies, from Azerbaijan through Georgia and Turkey, ending at the port of Ceyhan on the Mediterranean. Much of the oil is bound for Europe and the United States. The oil comes from several fields in Azerbaijan, offshore in the Caspian. The line, which cost $4 billion to build, also carries some oil from Tengiz that is barged across the Caspian.

‘Gazprom may have to share export pipelines’: Watchdog

August 14, 2008. Russia's anti-monopoly agency, Federal Anti-Monopoly Service (FAS), has prepared amendments to legislation on gas exports to force gas monopoly Gazprom to share export pipelines with independent producers. The proposal suggested independents would get a share of Gazprom's pipeline capacity proportionate to their share in Russia's total gas production.

In reality this could mean that independent gas producers and Russian oil companies selling gas to Gazprom could demand export netback price for 35 percent of their sales volumes. The amendments had been supported by influential Deputy Prime Minister Igor Sechin, the Economy Ministry and the customs service, while the Energy Ministry was against them. Under the proposal, Gazprom would retain its export monopoly status but would have to buy gas for exports from independent producers on a pro-rata basis to their production.

Independent gas producers such as Novatek and oil firms producing gas such as LUKOIL have long been fighting to get access to lucrative export markets, where gas often sells at prices five times higher than at home. Russia has promised to free domestic gas prices by 2011, which would boost the attractiveness of domestic sales. If the bill were to be passed, Gazprom would force independent producers to fund maintenance and expansion of its pipelines to recoup losses on exports.

POWER

Hydro-Québec to invest $1.9 bn in nuclear plant

August 19, 2008. Hydro-Québec will spend $1.9 billion to refurbish the province's lone nuclear generating station, extending the life of Gentilly 2 until 2040. Construction work on the project, which has been approved by the Liberal cabinet, will begin in 2011, though some engineering and procurement work has already begun. The refurbished Gentilly 2 will "meet or exceed" federal standards for nuclear plants, is "environmentally acceptable," and will provide Quebec with enough electricity to serve a city the size of Laval.

The project has been widely denounced by environmental groups whose concerns include the lack of a long-term storage facility for radioactive waste. The electricity produced by the refitted plant will cost 7.2 cents kw/hr, in 2012 dollars. The project has two components: refurbishment of the station and construction of a solid radioactive waste management system. About three per cent of Quebec's power comes from nuclear generation, while Ontario relies on nuclear plants to generate about 50 per cent of its power. The plant, which came on stream in 1983, was nearing the end of its productive cycle.

AEHI submits request for IEC nuclear plant

August 14, 2008. Alternate Energy Holdings, Inc. has submitted an application to Elmore County to rezone 1,400 acres of land from agricultural to industrial, a crucial first step to developing the Idaho Energy Complex (IEC). The IEC is a proposed 1,600-megawatt (MW) third-generation advanced nuclear reactor to be located about 65 miles southwest of Boise. After the rezone is granted, the company's next step will be to submit a Conditional Use Permit application to the county and a Combined Construction and Operating License Application (COLA) to the Nuclear Regulatory Commission. AEHI is currently in due diligence with Powered Corp. of Houston, TX, to form a new operating company to build and operate the Idaho reactor. Alternate Energy Holdings actively acquires private green energy companies, as well as develops and markets innovative clean energy sources.

Manufacturers seek improved electricity supply

August 19, 2008. The Power Holding Company of Nigeria (PCHN) has been urged to provide the 12-hour electricity supply it pledged to the consumers. Small-scale industries in Lagos, according to Nigeria Association of Small Scale Industrialists (NASSI), were receiving an average of four hours of electricity supply daily. According to the Association irregular power supply was adversely affecting the operators in the sector. The Association called on government to ensure regular power supply to the industrial sector.

Generators to power Boracay for next two months

August 17, 2008. Resorts and hotels on Boracay Island will be depending on generator sets for most of the next two months because power supply will be cut off due to an ongoing construction of a power sub-station on the island-resort. The power interruption is to last until the construction of a 30-mva sub-station of the Aklan Electric Cooperative (Akelco) shall have been completed.

At least 70 electric posts on the island will be changed from the present 60-foot-tall poles to 70-foot ones. The construction of the 30-mva substation is being undertaken at Sitio Tambisaan in Barangay Manoc-Manoc at the southern end of the 1,000-hectare island. The project is intended to stabilize the power supply of the island, which has grown significantly because of the tourism boom. The world-famous tourist destination currently gets electricity from a power sub-station in Caticlan on the mainland.

The power is transmitted through submarine cables. The 10-mva Caticlan sub-station is also overloaded because it supplies the municipalities of Buruanga and Malay. Boracay is a barangay or village of Malay. Boracay Island alone consumes around 9.55 mw daily and this increases during the peak season from November to May.

Provider problems hit pre-paid electricity

August 15 2008. Blaauwberg and Tygerberg residents will have to plan their pre-paid electricity purchases more carefully as they will no longer, because of service provider problems, be able to buy it from certain Pick n Pay, Spar and Shoprite supermarkets. Blaauwberg and Tygerberg are not Eskom-supplied areas, and their service provider is Actaris, which is contracted by the City of Cape Town. Actaris sub-contracted Easy-pay to set up paypoints at outlets but had experienced problems with the company, which did not comply with the service level agreement as stipulated by the City of Cape Town.

China increases electricity prices for 2^nd straight month

August 19, 2008. China raised electricity prices for the second time in two months, an unexpectedly quick move that underscores the problems the nation is facing in keeping its booming economy supplied with energy. The National Development and Reform Commission, which oversees electricity and other commodities with state-controlled prices, said wholesale prices will rise by an average of 0.02 yuan per kilowatt-hour, or roughly 5%. The commission didn't raise retail prices, keeping the higher costs from hitting consumers and business but pressuring grid operators in the middle.

Malaysia looking at nuclear energy use

August 19, 2008.  Malaysia's cabinet will deliberate next month on whether to adopt nuclear energy to combat high global oil prices. Last month, state utility Tenaga said it could construct the country's first 1,000 MW nuclear power plant at a cost of $3.1 billion after being asked by the government to look at the option. Deputy Prime Minister Najib Razak said in June that Malaysia may consider adopting nuclear power to meet its long-term energy needs amid surging global oil prices.

Currently, half of Malaysia's power plants run on gas. Other sources include coal and hydropower. Last year, the government said it would build Southeast Asia's first nuclear monitoring laboratory to allow scientists to check the safety of atomic energy programmes in the region.

China to hike export tax on coke, coking coal

August 18, 2008. According to the government, China will raise export taxes on coking coal and coke from August 20, in the latest attempt to address growing domestic energy shortages. According to the finance ministry, export taxes on coking coal will be doubled to 10 percent while taxes on coke will be raised to 40 percent from 25 percent. China relies on coal for about two-thirds of its overall energy demand, a proportion that has changed little over the past decade. 

Ministers launch electricity plan

August 17, 2008. Scottish government ministers have launched a tender to supply electricity on a national basis to all public bodies, replacing hundreds of separate contracts. The centrally-negotiated deal would get power for the public sector at the "best possible price". The annual public sector electricity bill is around £200m. The new contract, which will come into force next autumn, will be used to supply electricity to councils, health boards, police and fire services, universities and colleges, Scottish Government agencies and non-departmental public bodies.

The new bulk-buying strategy should allow the government to negotiate a lower price and streamline the management of many different contracts. The national procurement of electricity will be important in minimising the impact of spiralling prices on the public sector. The contract is due to be awarded around the turn of the year, with purchases from the wholesale market being made from early 2009 onwards.

The initial supply period of three years will run from October 2009 to September 2012, with options to extend it by a further year. The move would also support efforts to reduce Scotland's greenhouse gas emissions.

S.Africa's Eskom to seek bids to help power push

August 17, 2008. South Africa's power utility Eskom will seek bids from national and international companies to help develop an independent power producer programme to boost output. Eskom intends to invest billions to boost electricity supply as demand outstrips supply in Africa's biggest economy. A wave of blackouts has cost the government billions of rand in lost productivity and raised concerns among businesses over their investments. Eskom will issue pre-qualification notices on Sept. 19. Final bids close on May 11, 2009.

The programme will be developed on a Build-Own-Operate basis and the envisaged term of the contract is 25 years. Under this Programme, Eskom's total requirement ranges from 2 100 MW to approximately 4 500 MW, with a minimum plant capacity of 200 MW. Eskom produces about 95 percent of South Africa's electricity and has rationed power since January when the national grid virtually collapsed and millions were plunged into darkness.

For UniStar Maryland is top pick for nuclear plant

August 15, 2008. UniStar Nuclear Energy LLC, a joint venture between Baltimore-based Constellation Energy Group and the EDF Group, a French power giant, hasn't yet reached an official decision to build a new 1,600-megawatt reactor at Calvert Cliffs in Southern Maryland. But it is of the view that Maryland is its top pick for a new reactor. Maryland's state energy plan, passed earlier this year outlining energy reduction and renewable energy goals for 2015 and 2020, makes the state more attractive to builders and investors in power plants. It states, like New York, and even the federal government, lag Maryland in defining their energy policies.

World's 1^st law to allow companies to capture carbon dioxide emissions

August 15, 2008. A FEDERAL parliamentary committee has given the green light to burying carbon pollution under the ground - and suggested taxpayers pay any clean-up bills. The world's first laws to allow companies to capture carbon dioxide emissions from power stations and bury them under the seabed are under consideration in Canberra.

Called Carbon Capture and Storage (CCS) - or "clean coal" - the technology is held by some to be central to Australia's efforts to tackle climate change. A House of Representatives Committee has endorsed the draft laws, with a key change - it wants the government to assume legal liability if something goes wrong in the long-term. The proposal appears to be a win for oil, coal and power companies who want to use CCS technology.

Regulator seeks lower emissions from coal plant

August 14, 2008. Oregon regulators want to cut haze-causing pollutants from Portland General Electric's Boardman coal plant by 65 percent by 2014, which would require $400 million worth of added controls. The proposal also would cut emissions of sulfur dioxide and oxides of nitrogen by 81 percent within 10 years. The plant 150 miles east of Portland is the largest stationary source of the pollutants in Oregon. Environmental groups have threatened to sue for more stringent controls at Oregon's only coal plant.

Kenya to seek Iran help for electricity boost

August 13, 2008. According to the Prime Minister Raila Odinga, Kenya may seek help from Iran to boost its electricity production. He said Kenya was seeking development partners to boost its inefficient 10,000-megawatt electricity production to 40,000 megawatts in the next ten years. Iran, which had already initiated five Joint Commissions with African countries in agriculture, transportation and health, has already initiated motor production in Venezuela and Senegal. Iran's electricity production is estimated at over 140,000 MG and is produced in different power plants, among them thermal and chemical.

Nedcap efforts bear fruit in Srikakulam district

August 19, 2008. As per the Non-conventional Energy Development Corporation (Nedcap), in Srikakulam district, bio-gas plants, smokeless chullahs and bio-mass plants were in operation. In the current financial year, Nedcap district unit had been given a target of establishing 800 bio-gas plants. Last year, 750 bio-gas plants had been set up in rural areas. As per the Corporation, for setting up a 2 cubic metre bio-gas plant it would cost Rs 11,000. While Nedcap would extend a subsidy of Rs 3,500, the beneficiary would have to contribute Rs 7,500 towards his share.

By setting up a single such plant, 208 kg of firewood, 96 kg of coal, 37 litres of kerosene, 26 kg LPG and 282 units of electric power would be saved. The smokeless chullahs would help conserving firewood and indirectly contributes to reducing radiation levels in the climate. Besides, it would prevent eye-related diseases caused by smoke and helps keep the kitchen clean. It would cost Rs 217 of which Nedcap would extend a subsidy of Rs 162. In the current year, it was targeted to promote 2,000 smokeless chullahs in the district.

Indowind may add windmills with 100MW

August 18, 2008. Having used up the Rs 81 crore ($18.5 mn) it raised from an IPO last September and with more capital projects on hand, Indowind Energy Ltd (IEL) is planning to come out with a follow-on issue. The Chennai-based company, an independent power producer in renewable energy, is looking at adding windmills with a cumulative capacity of up to 100 MW in two years.

Some of the installations will happen outside India. The expansion would be primarily outside Tamil Nadu as wind power is becoming a non-viable business in the State, with the State electricity board’s tariff of Rs 2.95 a unit not being remunerative. It is looking at few States, including Karnataka, Gujarat and Rajasthan. The proposed expansion calls for an investment of about Rs 650 crore ($148.8 mn).

Govt initiates GBI scheme to tap wind energy

August 17, 2008. Government has initiated a new scheme for wind power generation in a bid to tap the 45,000 MW power potential of the non-conventional resource. The present wind power production stands at 8,760 MW and the Ministry of New and Renewable Energy has set a target of 10,500 MW for the 11^th Five Year Plan. The ministry has initiated new scheme of Generation Based Incentive (GBI) scheme for wind power generation.

The objective of the scheme is to attract new and large independent power producers to wind sector. The GBI would be paid only to grid interactive plants with a capacity of 5 MW or more. The rate of GBI be 50 paise per unit of electricity and would be paid for a period of 10 years.

XL Telecom ties up with Chinese firm LDK Solar

August 13, 2008. XL Telecom & Energy Ltd and Chinese firm LDK Solar Co Ltd have signed a five-year contract for supply of multi-crystalline solar wafers for consumption in the 120-MW per annum solar cell and panel manufacturing plant being set up by the former. This follows a similar agreement with Mola Solaire, a German supplier last month, for solar wafers, an input item for manufacture of solar cells and panels to be supplied to firms in Europe.

Under the terms of agreement, LDK Solar will deliver approximately 300 MW of multi-crystalline silicon solar wafers to XL Telecom commencing from the first quarter of 2009 up to 2013. XL Telecom is in the process of establishing the facility in Rajiv Gandhi Nano Technology Park Special Economic Zone. The Rs 350-crore ($82.2 mn) project is scheduled to commence operations by September/October.

Google invests $10 mn in geothermal energy technology

August 19, 2008. Google Inc.’s philanthropic arm has invested $10.25 million in a "breakthrough energy technology" called Enhanced Geothermal Systems (EGS). Google.org's investment will include funding for research on next-generation geothermal resource mapping, EGS information tools and a policy agenda for geothermal energy.

EGS expands the potential of geothermal energy by orders of magnitude. The traditional geothermal approach relies on finding naturally occurring pockets of steam and hot water; the EGS process, by comparison, replicates these conditions by fracturing hot rock, circulating water through the system and using the resulting steam to produce electricity in a conventional turbine.

Google.org announced funding for two individual companies and a university- Seattle-based AltaRock Energy Inc. ($6.25 million investment); Redwood City-based Potter Drilling Inc. ($4 million investment); Southern Methodist University Geothermal Lab ($489,521 grant).

Lighting up with cow-power

August 18, 2008. Power generated from cow dung has been identified as one way New Zealand could make billions from an emissions trading scheme. The work of a Christchurch company in using biomass for electricity generation is offered as an example of a business opportunity in a report. The says many New Zealand firms are behind those in other countries in measuring the potential effects of pricing carbon and preparing plans to reduce it.

It also says, opportunities are available for businesses and the economy which actively embrace emissions trading and make efforts to cut emissions, improve products and reduce emissions costs. The report says businesses could make billions from new technology investments stimulated by the proposed emissions trading scheme. Some of the main opportunities are included in biomass-like opportunities for some farmers to generate electricity from cow manure methane.

Houses with solar energy systems to get green certificates

August 17, 2008. The Economy, Trade and Industry Ministry in Japan plans to issue to houses that have solar energy generation systems trial-run "green electricity certificates" in an effort to promote solar energy use. The certificate will show how much a house, by using natural energy, such as solar and wind power, is cutting carbon dioxide emissions. The ministry plans to start the trial run as early as next month and complete the issuance system by fiscal 2009.

Though similar certificates have already been issued for wind and biomass electricity generation for businesses, the system has yet to be fully issued for solar energy due to the relatively high costs of issuing certificates for individual households. In the experiment, housing construction firms and solar energy generator makers will purchase from households the amount of CO2 emissions deemed reduced by use of the generators.

The makers will compile on the Internet reduction data based off meters installed at each house that measure the amount of energy produced by the generators. Certificates will be issued by a company that is to be established by the manufacturers and others concerned.

Conergy to extend solar power plant in South Korea

August 16, 2008. German firm Conergy has signed a deal to extend a South Korean solar energy plant and has reached a framework agreement on a EUR 20 million project to expand the plant at Sinan. The extension is expected to be completed by 2008 end and will add 4.35 MW to the existing 19.6 MW capacity of the plant, which became fully operational in June 2008 at a cost of EUR 90 million. When the extension is completed the plant will will provide enough energy to supply 7,200 households. It includes a solar tracking system developed by Conergy, which is claimed to increase the energy yield by up to 20 percent.

Demand for reusable energy is high in South Korea. Last month the government announced plans to spend KRW 194.4 billion this year on developing solar and wind energy and hydrogen fuel cells, following sharp price increases for imported oil and coal.

LADWP approves 72-MW wind power agreement

August 15, 2008. The Los Angeles Department of Water and Power (LADWP) Board of Commissioners approved a new long-term power purchase agreement (PPA) for 72-MW of renewable wind power. This PPA will bring Los Angeles another step closer to achieving its goal of 20% renewable power by 2010 and 35% by 2020.

The 15-year agreement with Willow Creek Energy LLC, a subsidiary of Chicago-based Invenergy Wind LLC, will represent 0.8% of the Renewable Portfolio Standard (RPS) goals. The wind power will come from a new wind farm being constructed in Gilliam and Morrow counties, Oregon, and has an expected completion date of Dec. 31, 2008. Under the agreement, LADWP will receive approximately 200,000 megawatt-hours of renewable energy per year from the Willow Creek wind project.

Electricity from sunshine on a massive scale in California

August 15, 2008. The amount of solar photovoltaics harnessing electricity from sunshine in the U.S. will more than double by 2013. The plan is to build 800 megawatts (MW) worth in California. The two vast solar farms—covering more than 12 square miles—will be among the largest ever built in the world and dwarf the current U.S. record holder: Nellis Air Force Base in Nevada with 14 MW.

In fact, the total amount of solar photovoltaics connected to the grid in the entire U.S. is just 473 MW at present. Once fully operational in 2013, the two farms would provide 1.65 billion kilowatt-hours of electricity per year, enough to power 239,000 California homes or 800 Wal-Marts. Scientists at the U.S. National Renewable Energy Laboratory recently boosted the efficiency record of such photovoltaics to a full 40.8 percent, by using three layers of special photovoltaic material and the equivalent of the amount of light put out by 326 suns.

 

 

 

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