Showing posts with label Energy. Show all posts
Showing posts with label Energy. Show all posts

23 May 2017

*** Winds of change? Why offshore wind might be the next big thing


Falling costs and rising acceptance are promising signs, but the industry needs to keep improving.

The landscapes of Rembrandt glow with the great painter’s rendering of light. And they are distinctive for another reason: windmills are everywhere. As far back as the 13th century, the Dutch used windmills to drain their land and power their economy. And now, 800 years later, the Netherlands is again in the vanguard of what could be the next big thing, not only in wind power but also in the global energy system as a whole: offshore wind.

In December, the Netherlands approved a bid for its cheapest offshore project yet—€54.50 per megawatt-hour, for a site about 15 miles off the coast. Just five months before, the winning bid for the same site was €72.70. Denmark has gone even further, with an auction in November 2016 seeing a then record-winning bid of €49.90 per megawatt-hour, half the level of 2014.

Europe, which has provided considerable economic and regulatory support, accounts for more than 90 percent of global capacity. As a result, Europe now has a maturing supply chain, a high level of expertise, and strong competition; it is possible that offshore wind could be competitive with other sources within a decade. By 2026, the Dutch government expects that its offshore auctions will feature no subsidies at all. But it might be even sooner: in the April 2017 German auction, the average winning bid for the projects was far below expectations, and even less than the Danish record set only six months before. Some of the bids were won at the wholesale electricity price, meaning no subsidy is required.
Prices and costs

20 May 2017

Reform of the Global Energy Architecture

David Goldwyn, Phillip Cornell 

This report focuses on the current state of international energy governance and whether the overarching global energy regime should be reformed. After exploring these topics in detail, the text’s authors conclude that 1) there is no consensus on the direction of transnational energy policy and governance; 2) the governance structures that do exist don’t always reflect contemporary realities and have obvious capability gaps; and 3) for several reasons, the sheer number of initiatives now competing to shape the world’s energy architecture aren’t necessarily a bad thing. Finally, the authors close their analysis by providing policy options for those in the US government who work in the international energy governance field.

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13 May 2017

China's Big Play for Middle East Oil

Robin M. Mills 

China's Middle East energy footprint has been expanding. In February, it made a deal for a stake in Abu Dhabi’s onshore oil. In March, Saudi Arabia’s King Salman bin Abdulaziz travelled to China to strengthen trade ties, and now a Chinese consortium is lining up for a stake in the Aramco IPO.

Geopolitical trends favor deeper engagement, but Chinese companies need to show they can deliver.

The Chinese need new upstream opportunities. Domestic production from the country's highly mature fields has slumped: down 6.9 percent last year and 8 percent year-on-year so far in 2017. But, encouraged by the government to guarantee energy security, companies' capital budgets are set to soar again this year. Sinopec will spend as much as BP, and even at the low end of estimates, PetroChina, the listed unit of China National Petroleum Corp., or CNPC, will be the highest-spending listed oil company in the world.

7 May 2017

In China Become the World’s Clean Energy Leader?


By 2015, China held a third of the global market share [PDF] for hydropower, wind power, and solar energy. The country’s private sector invested $32 billion in 2016 toward international clean energy projects, adding to the $102.9 billion invested a year prior by the government into domestic renewable energy. Many of these investments were made in major developing countries, including Brazil, Egypt, Vietnam, and Kenya. 

Investing in clean energy at home also creates opportunities for China to expand its marketing of products such as solar panels abroad, says Jennifer L. Turner, the director of the Wilson Center’s China Environment Forum. China seems poised to surpass the United States in leading clean energy innovation and efforts to mitigate the effects of climate change, but Beijing faces internal challenges to energy reform, she says. 

Why are China’s clean energy investments surging? 

The surge has been driven by two primary factors. The first is air pollution. This has become more salient lately, but China was trying to develop more alternatives to coal even before it signed the Paris Agreement. Since then, there’s also been a growing awareness that investing in clean energy development domestically is going to open up more opportunities for China to expand marketing for these products globally. It’s not surprising that China has already captured the global market on solar panels. 

6 May 2017

From Standard To Smarter Oil

DEBORAH GORDON

Summary: The days of simply sticking a pipe in the ground and tapping a pool of easy-to-handle and profitable crude oil are fading. Changing resources require people challenge conventional thinking on oil.

Today’s crude oils can be as light as paint thinner or as heavy as peanut butter. They can be trapped tightly in fissures of buried rocks. Or their wells running low with each depleted barrel containing more water or gas than oil. Whether ultra-light, extra-heavy, or depleted, these oils are more difficult to extract, harder to refine, more challenging to transport, and yield a different array of products than yesterday’s oils.

For example, blending the heaviest and lightest oils may make them flow more readily but this creates dumbbell crudes that are difficult to refine into the typical slate of highly-profitable petroleum products. These oddball mixtures that do not contain essential hydrocarbon molecules have thrown the oil industry and policymakers a serious curve ball.

Transforming challenges into opportunities calls for significant innovation. As long as we continue to consume petroleum, we need to make smarter oil choices that satisfy both private interests and the public good.

26 April 2017

The world’s energy is getting cleaner (and cheaper)—but not quickly enough

David Victor


A growing array of evidence suggests that twists and turns at the federal level won’t automatically change how U.S. firms behave. The Trump administration may roll back U.S. regulations on clean power and on methane leaks from oil and gas operations, for example, but many states already have their rules in place, and the courts will likely halt some of Trump’s most ambitious rollbacks.

Indeed, the states such as California and New York that account for most of the nation’s economic growth—and thus most of the innovation and technology and policy—are the bluest politically and poised to do even more to cut emissions.

Nuclear Power Is Set To Get A Lot Safer And Cheaper - Here's Why

by Michael Fitzpatrick

High-profile disasters such as Chernobyl and Fukushima have given nuclear power a bad name. Despite 60 years of nuclear generation without major accidents in many countries including Britain and France, many people have serious concerns about the safety of nuclear energy and the impact of the radioactive waste it generates. The very high capital cost of building a plant is also seen as a significant barrier, particularly given recent low oil prices. Plans to build a new British plant at Hinkley Point in Somerset are facing fresh opposition after it emerged the estimated lifetime costs had risen to £37 billion.

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Yet the high priority of reducing carbon emissions thanks to climate change means nuclear power looks more important than ever. Luckily, the next generation of reactors could hold the answer. With more in-built safety systems and a way to reuse old fuel, they are set to make nuclear power safer and, potentially, cheaper.

Human error and a natural disaster played major roles in the Chernobyl and Fukushima incidents, respectively. But in both cases, the failures occurred when the plants could no longer keep the reactors cool enough. At Chernobyl this was because of deliberate action and human error, and at Fukushima because the backup generators to drive the cooling pumps had been destroyed as a result of the tsunami.

Pathways and obstacles to a low-carbon economy


The energy transition is happening. But the pace of change depends on a range of technical, business, and societal factors. 

Technological advances and falling prices are driving the momentum toward low-carbon energy production across the globe. In this episode of the McKinsey Podcast, McKinsey partner Arnout de Pee and Lord Adair Turner, chair of the Energy Transitions Commission and the Institute for New Economic Thinking, speak with McKinsey Publishing’s Cait Murphy about the shift toward renewable resources and the future of sustainable development. 

Podcast transcript 

Cait Murphy: How can the world produce the energy it needs to broaden prosperity without damaging the environment beyond repair? The Energy Transitions Commission, whose members comprise leaders from the public, private, and social sectors, is dedicated to answering that question. 

Speaking with us today is Lord Adair Turner, head of the Energy Transitions Commission, and Arnout de Pee, a partner at McKinsey’s Sustainability and Resource Productivity group. I’m Cait Murphy of McKinsey Publishing. 

Let’s start with the broad question. Lord Turner, what is meant by the term “the energy transition,” and why is such a transition necessary? 

Lord Adair Turner: The term “energy transition” describes the fact that over the next several decades, we are going to have to achieve a really dramatic transition in the world away from reliance on fossil fuels. Fossil fuels have been absolutely essential to the original industrial revolution, to the growth of prosperity that we’ve achieved in an increasing number of countries over the last 200 years. 

In order to limit global warming to below two degrees centigrade above preindustrial levels, we will have to really very significantly move away from fossil fuels, while still delivering in many countries even more energy use than there is today. 

25 April 2017

OPEC’s Misleading Narrative About World Oil Supply

Leonardo Maugeri

At a time when energy market headlines focus mainly on OPEC cuts, observers may be forgiven for concluding that a supply crunch and higher prices are imminent. On the contrary, there is still too much oil in global markets. In this context, OPEC production cuts (which notably fall short of the original target envisaged by the organization) appear to serve mainly as a psychological support to oil prices.

Analyzing trends from my proprietary database of more than 1,200 global oilfields helped me to make a bold prediction in 2012 regarding a coming oil supply boom. In January, my similar field-by-field analysis indicated that world oil production capacity and actual production were still growing—while prospects for demand growth were not sufficiently high to absorb the excess supply. In particular, actual oil production (which includes crude oil and other liquids such as condensates, NGLs, and more according to the standard definition used by most statistics) was almost 99.5 million barrels per day (mbd)—leaving a voluntary and involuntary spare capacity (the result of local civil wars and other geopolitical factors) of more than 4 mbd.

NYC, SF, and LA Outages Surface Concerns About Power Grid Attack The Department of Energy needs to step its game up.

Peter Hess

On Friday morning, a series of power outages struck New York City, San Francisco, and Los Angeles. Officials tracked down the root causes of each issue, none of which seemed to be related to cyber attacks, but the incidents got a lot of people thinking about how vulnerable the United States’ power grid is to terrorist attacks — not to mention weather and squirrels.

The outage in New York City disrupted public transit, but not much else since it was limited to a single subway station. In Los Angeles, things were a bit more serious, with passengers experiencing difficulties and delays at Los Angeles International Airport, as well as power losses in some other areas around the city. San Francisco got it worst, with outages causing gridlock and taking some companies’ websites offline. The city was pretty much out of commission until power came back on.

So while these concurrent power grid failures appear to be unrelated accidents, they gave the U.S. a snapshot of what a power grid attack might look like. They also raise the question: What is being done now to protect the grid?

Earlier this year, the U.S. Department of Energy published a report saying that the nation’s electrical grid “faces imminent danger” from cyber-attacks. Given growing fears over cyber-attacks, whether DDos attacks affecting the internet of things or international efforts to undermine U.S. democracy, even the most absurd concerns that the U.S. power grid could be targeted by cyber-attacks are not totally out of line.

19 April 2017

Energy Fact & Opinion: India Joins International Energy Agency as an Association Country


In March 2017, India activated the association status with the International Energy Agency (IEA), an organization comprising 29 member countries and 6 association countries. 

Membership in the IEA, which is restricted to advanced economy members of the Organization for Economic Co-operation and Development (OECD), requires them to demonstrate their net oil importer status, have reserves equivalent to 90 days’ average of crude oil and/or oil products imports in the prior years, and have a demand restraint program for reducing national oil consumption by up to 10 percent. 

In an effort to reflect the rising role of non-OECD economies with major impact on the global energy market, the IEA introduced the “association” status in 2015. Since its inception, China, Indonesia, Thailand, Singapore, Morocco, and now India have become associated with the IEA. 

The association status allows these countries to participate in meetings of IEA standing groups, committees, and working parties, without prior invitation. Association countries can work with the IEA on matters of energy security, energy data and statistics, energy policy analysis, and benefit from priority access to IEA training and capacity-building activities. 
With India’s inclusion, the IEA accounts for about 70 percent of the world’s energy consumption. 

14 April 2017

** Energy Fact & Opinion: China's Net Oil Import Problem


Crude oil shipments to China from the Americas hit an all-time high in March, with the region’s share of the Chinese market reaching 14 percent. China was the largest foreign purchaser of U.S. crude in February and also made its first-ever U.S. strategic petroleum reserve (SPR) purchase in March. 

U.S., Canadian, and Brazilian oil has made up for a large part of the growth in exports to China, which continue to climb as net oil imports in the largest oil demand growth market in the world continue to grow. 

Driven by the combination of sustained oil demand growth and declining levels of production, Chinese net imports of crude oil grew by a staggering 0.7 million barrels per day (mb/d) in 2016 and are estimated to grow by a further 0.5 mb/d in 2017 and 0.4 mb/d in 2018. 

In 2016, Chinese oil and other liquid fuel production stood at 4.9 mb/d, falling by 0.3 mb/d from output levels in 2015, while demand grew by 0.3 mb/d. This trend of slowing production is expected to continue with a further 0.2 mb/d decline in 2017 and 0.1 mb/d drop in 2018. 
Domestic Chinese oil production has been hit particularly hard by the oil price collapse. Even with government supports, capital expenditure and production levels have been curbed because of the relatively high break-even costs of its maturing fields. 

* Clean energy can continue to grow

Richard Somerville

The biggest unknown about future climate is human behavior. Everything depends on what humanity does. Those of us who are alive today have our hands on the thermostat that controls the climate of our children and grandchildren. Carbon dioxide is the most serious of the heat-trapping gases that human activities emit into the atmosphere. A considerable portion of the carbon dioxide we emit can remain in the atmosphere for many centuries. It accumulates.

Deciding how much global warming is tolerable is a political decision. It depends on priorities, values, risk tolerance, economics, and so forth. That’s how we got the 2-degree Celsius target of the 2015 Paris Agreement. This target is an international commitment to take actions that will limit global warming to 2 degrees Celsius (3.6 degrees Fahrenheit) above the average pre-industrial temperature of the Earth. We’ve already experienced about half that much warming.

Now that the nations of the world have agreed in Paris on how much warming is to be allowed, climate science can tell us approximately how much more carbon dioxide and other heat-trapping gases and particles can be emitted. To have a reasonable chance of meeting the 2-degree Celsius target, the science shows clearly that emissions need to be reduced drastically and quickly. Science is based on facts and evidence. Politics sets the target, but the urgency of reducing emissions arises directly from the physics and chemistry of the climate system. It has nothing to do with politics.

12 April 2017

*** Three game changers for energy

By Nikhil Patel, Thomas Seitz, and Kassia Yanosek

Change is afoot in the energy system. Soaring demand in emerging markets, new energy sources, and the likely growth of electric vehicles (EVs) are just some of the elements disrupting the status quo. It is hard to discern how the aftershocks will affect the extraordinarily complex network of sectors and stakeholders. New research by McKinsey and the World Economic Forum has identified the game changers for companies and policy makers, as well as their implications. 

A proliferation of new energy sources 

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An array of energy technologies seems poised for a breakthrough. Within two decades, as many as 20 new energy sources could be powering the global economy, including fuel cells; small, modular nuclear-fission reactors; and even nuclear fusion. Fossil fuels will still be part of the mix, but renewables’ share is likely to grow owing to environmental concerns, further cost reductions that make renewable energy more competitive, and demand for electricity. Electricity demand is expected nearly to double by the middle of the century, propelled primarily by economic development in China and India (Exhibit 1). By 2050, electric power, which can be generated by low-carbon energy sources such as wind and solar, could account for a quarter of global energy demand. 

1 April 2017

Why Saudi Arabia Must Push OPEC To Extend Production Cuts


When news broke on Nov. 30, 2016, that OPEC had finally agreed on a deal to cut oil production, its first since 2008, traders sent Brent crude prices leaping 9 percent to break the $50 per barrel threshold. But after the deal was implemented, and despite reduced output among OPEC and non-OPEC producers of 1.4 million to 1.5 million barrels per day, the price of Brent fell back below $50 per barrel on Wednesday.

There are a number of factors driving continuing soft prices, but OPEC members' compliance with the deal does not appear to be a significant one. This weekend in Kuwait, an OPEC committee charged with monitoring production output will meet to discuss compliance. The same meeting will also bring a key question into focus: Will OPEC members be willing to extend the deal beyond its June expiration?

Total production cuts among OPEC members rest at more than 90 percent of agreed-upon levels, with a compliance rate of about 40 percent among non-OPEC countries. Compared with previous deals, compliance levels are high. Saudi Arabia has driven the OPEC percentage up by trimming considerably more production than it had pledged. For instance, Saudi output for February averaged about 770,000 bpd less than it produced in October 2016, a 58 percent deeper cut than it had agreed to in November.

28 March 2017

*** Nuclear power promise fades


Brahma Chellaney

It is often said that China could become the first country in the world to age before it gets rich. India faces no such spectre. However, India has already become the first important economy in the world to take on onerous climate-related obligations before it has provided electricity to all its citizens.

This reality has greatly accentuated India’s energy challenge, which is unique in some respects. Consider the scale of its challenge: Before its population stabilizes, India will add at least as many people as the U.S. currently has. Even if India provided electricity to its projected 1.6 billion population in 2050 at today’s abysmally low per capita energy consumption level, it will have to increase its electricity production by about 40% of the total global output at present.

India’s domestic energy resources are exceptionally modest in comparison to population size and the demands of a fast-growing economy, with energy demand projected to rise 90% just over the next 13 years. And, unlike China, India does not share common borders with any energy-exporting country and thus must rely on imports from beyond its neighbourhood, making it vulnerable to unforeseen supply disruptions.

24 March 2017

The Southern Gas Corridor: Challenges to a Geopolitical Approach in the EU´s External Energy Policy

By Marco Siddi

Natural gas is considered an important component of the EU energy mix, both as a replacement for more polluting fossil fuels and as a back-up for intermittent renewable energy production. However, declining domestic production has led to an increase in EU import dependency on gas. 

After the Ukraine crisis, the EU has become wary of energy interdependence with Russia, its main external supplier. This led the Union to accelerate the integration of its internal gas market and to support new pipeline projects, most notably the Southern Gas Corridor (SGC). 

The SGC will transport Azeri gas to South Eastern Europe, but faces numerous challenges related to its geopolitical nature. These include the lack of access to significant gas resources, security related risks along its route and geopolitical competition from Russia and China. 

The EU can reduce its exposure to external supply shocks by pursuing market integration and a more ambitious agenda focusing on renewable energy and energy efficiency, which will decrease its reliance on fossil fuels. 

18 March 2017

OPEC and US shale drillers seem back at the brink of war



In December, the world’s petro-states congratulated themselves for what they called a historic achievement—24 of them agreed to cut their collective production by 1.8 million barrels a day, all in the service of bringing order to a chaotic oil market in which prices had plunged to about $27 a barrel. Among the most surprising things was the involvement of Russia, traditionally an outsider that refused to cooperate with OPEC.

Today, all of that seems to be in shambles. Since March 7, oil has again been in free fall. Internationally traded Brent crude is down 9% in March, and, as of this writing, by 1.7% today, to $50.48 a barrel. US-traded West Texas Intermediate (WTI) is being pummeled even worse—it is down by 2% this morning, to $47.41 a barrel.

Russia, for one, is not amused. In an exchange of messages with Reuters, Rosneft, Russia’s top oil company, said that the longer-term trend is for a balanced oil market, but that meanwhile “the risk of a price war resuming remains.” Saudi Arabia appears to feel the same: After reducing its production to 9.8 million barrels a day in January, it said today that it tacked back on over 10 million in February—which was the news that pushed down prices this morning.

Hackers drawn to energy sector’s lack of sensors, controls


by Houston Chronicle 

HOUSTON (AP) — Oil and gas companies, including some of the most celebrated industry names in the Houston area, are facing increasingly sophisticated hackers seeking to steal trade secrets and disrupt operations, according to a newspaper investigation.

A stretch of the Gulf Coast near Houston features one of the largest concentrations of refineries, pipelines and chemical plants in the country, and cybersecurity experts say it’s an alluring target for espionage and other cyberattacks.

“There are actors that are scanning for these vulnerable systems and taking advantage of those weaknesses when they find them,” said Marty Edwards, director of U.S. Homeland Security’s Cyber Emergency Response Team for industrial systems.

Homeland Security, which is responsible for protecting the nation from cybercrime, received reports of some 350 incidents at energy companies from 2011 to 2015, an investigation by the Houston Chronicle has found. Over that period, the agency found nearly 900 security flaws within U.S. energy companies, more than any other industry.

17 March 2017

An Excellent Year For Energy

by Robert Rapier, Investing Daily

A year ago, a barrel of oil was worth something in the low $30s and natural gas prices stood below $2/MMBtu. This was the lowest natural gas price in nearly two decades, and some energy analysts seemed to be vying to make the most outrageously low prediction on future oil prices.

It was obviously a dumb time to invest in energy, right? Wrong! It was exactly the right time to invest in energy companies. It seems to be a well-kept secret, but energy was the top-performing S&P 500 sector in 2016: