Sunday, 18 December 2011

The World Is Not Desperate For Energy in 2012!

Current forecasts suggest that global energy consumption will only increase by 3% in 2012, not much different from 2011. This is not surprising given the state of the world economy. Current market figures suggest that like in 2011, the world will enjoy a net surplus of energy capacity.

Take oil, production is likely to again to outpace global demand; such a prospect will once more disappoint peak oil Cassandras. There are several reasons for this; the first is the coming on stream world wide of a number of new offshore projects in Nigerian, Angolan, Brazilian and Gulf of Mexican waters. In addition, increased Libyan and Iraqi oil production coming on stream in 2012 will add significantly to global oil supplies. However, will this be sufficient to reduce current oil prices from around $90 a barrel today to what they were in 2009 when it was $60 a barrel, is anyone’s guess. Yet, such a drop in price would give a welcome boost to the world economy.

Nevertheless, despite investment by many countries in renewables, decision makers are still investing in new cleaner coal based power, which is pushing up coal’s share in the global energy mix. Already, both China and India have placed their faith in increased coal use, this is not surprising given its strategic, economic and energy security advantages. After all coal provides a cheap source of fuel to power all those new laptops, televisions and air-conditioning units that increasing numbers of their fortunate citizens can afford to use.

Yet, the big winner in 2012 is forecast to be gas. During 2012, new commercially significant natural gas supplies are due to come on line in Qatar and Australia. Already, it is fortunate for Japan due to its on-going nuclear outages that such additional LNG supplies are available during its current power shortages, which are likely to last for several years. In addition, unconventional gas will increasingly play its part; already Australia and the United States have well advanced plans to export unconventional gas as LNG to markets in North Asia and Europe. In fact some market makers in Europe are complaining that Europe from too much gas and competition being available in the market. As for elsewhere in the world, there are less advanced plans to exploit unconventional gas for regional markets in Argentina, Poland, South Africa and China. Such developments are likely to change the shape of energy geopolitics in the near future.

Though the future progress of unconventional gas is likely to be affected by the results of reports, due out in early 2012, by the Environmental Agencies of the EU and US into the impact that fracking has on the water table.

As for nuclear, after events at Japan’s Fukushima Daiichi nuclear plant, one would have thought we had seen the end of nuclear power. Certainly, Germany thought so when it pulled the plug on its nuclear power programme. Well, in fact forecasters are suggesting the future looks bright in many countries, whilst in America and Japan these countries have dithered about a nuclear future. Other countries like Britain, France, China, Russia and South Korea have improved their designs and moved ahead with their programs. In fact, it is likely that half the world’s new nuclear power plants will be completed in such countries as China, Taiwan, Thailand, Indonesia, Vietnam and South Korea by 2050. It is forecasted that by 2020, China is expected to increase its nuclear generating capacity seven fold and South Korea to double its nuclear power capacity.

Over all the future looks bright especially for gas; however, the world will continue to experience at regional level problems providing sufficient capacity to turn raw energy into a useful power source.
Nicholas

Wednesday, 7 December 2011

GARRIGILL NAMED BRITAIN’S SOLAR PANEL CAPITAL


A tiny village in Cumbria is laying claim to be Britain’s solar panel capital.
At least half a dozen residents out of just 200 in Garrigill have had panels installed – beating by days the Government’s controversial reduction in Feed-in-Tariff subsidies.
And other residents and potentially even the village hall are expected to go ahead with installations next year. All of the installations have been carried out by leading renewable energy company Eco Environments.
One villager, Fiona Gifford, who has had a 12-panel Sanyo system fitted, said: “A few of us had been talking about having solar panels installed for a while.
“As soon as the Government announced it was cutting the Feed-in-Tariff subsidies available, we decided we had better get a move on.
“By getting in ahead of December 12, when the reduction is due to come into force, the financial returns are extremely attractive. I expect my system to have paid for itself in about eight years. With electricity prices only set to go up, installing solar panels made total sense.
“Although we have been able to get our panels installed before the deadline, we believe the Government should have allowed a longer consultation period. The villagers felt so angry we wrote to our local MP Rory Stewart to protest.”
Other villagers who have gone ahead with installations are Tim Haldon and Jules Cadie, who have had 18-panel Sungrid systems installed, Paul Lincoln, an 18-panel Hyundai system, Laurie MacDonald, a 10-panel Hyundai array and Janette Thorley a 14-panel Sungrid system.
David Hunt, a director with Eco Environments, said: “For a village as small as Garrigill, the interest and uptake has been phenomenal. The village may even be Britain’s solar panel capital!
“We have worked round-the-clock to ensure that all of the current installations are up and running before December 12, but we are hopeful that as the word spreads, more of the villagers will want to install their own arrays next year.
“While the current subsidies are incredibly attractive, the post-December 12 tariff levels are still excellent especially when allied to the anticipated reduction in the cost of the panels.”
Eco Environments, which has its head office in Liverpool and regional offices across the UK, took three months’ orders in just two weeks following the news that the cuts would kick-in from December 12.
As of next week, the tariff for Solar PV schemes up to 4kW will be cut from 43.3/kWh to 21p/kWh.
Eco Environments is led by its three directors, Mike Clarke, David Hunt and Mark Buchanan, and employs 46 people compared to 11 at the same time last year. It is on course to increase turnover from £1.4million to £5million during the current financial year.
Eco Environments designs, installs and commissions renewable energy solutions for the domestic, commercial and construction sectors. It offers a comprehensive range of technologies including Solar Photovoltaic (PV), wind turbines, solar thermal and air source heat pumps. It is one of only a small number of companies to have successfully secured Microgeneration Certification Scheme (MCS) accreditations for all four of its specialist areas.
Apart from its new head office in Liverpool, Eco Environments has regional offices in Carlisle, Newcastle, Manchester, Leeds, Birmingham and North Wales. During the next few months, further offices will open in the south of England. Staff numbers will also rise to approximately 60 during the current financial year.

 

WiseEnergy Africa awarded 500MW facilities management deal


WiseEnergy Africa awarded 500MW facilities management deal by ix:Africa fund
WiseEnergy Group now managing €2bn renewable energy assets worldwide
London – 7th December 2011: WiseEnergy Group, a leader in the complete management of renewable energy generation assets, with €2 billion under control, will manage up to 500MW of solar and wind power projects in South Africa on behalf of ix:Africa, a new impact investment fund seeking to raise €400m to dedicate to renewable energy projects in Africa.
Already present in the UK and Italy, the world’s largest market for solar energy, WiseEnergy will operate in Africa as WiseEnergy Africa. Its local team is already working with the ix:Africa fund and the South African Government to review the potential for major solar and wind projects in the country, ahead of the next round of government project auctions in March 2012.
WiseEnergy Africa offers investors seeking to enter the South African market a full suite of services, from project design and consent, to management of construction and operation of the plant.
"Africa is one of the most promising markets for the development of renewable energy projects and South Africa acts as a true gateway”’said Aldo Beolchini, Director at WiseEnergy. “Having expanded into the UK and South Africa, two attractive markets for renewable energy, we seek to replicate our success in the Italian market where we are the largest operator in the sector.”
“In emerging nations such as South Africa, there is an enormous appetite for energy and a requirement to double generation capacity in a very short space of time. Only renewable energy projects can meet this demand. Last year, Italy and Germany alone installed solar power equivalent to ten new nuclear power plants. Combined with high solar radiation and a willing Government, South Africa’s hunger for the swift development of new generation capacity makes it an attractive, low risk market for renewable energy investment.”
Earlier this year, WiseEnergy passed the milestone of managing €2bn of renewable energy assets worldwide, having taken on the management of its first solar energy development in the UK – a 2MW facility in Trevemper, Cornwall, owned by NextEnergy Capital and with an expansion capacity of up to 5MW.
WiseEnergy UK is now in talks to take on comprehensive management and operation responsibilities for a string of other utility-scale UK solar developments owned by third parties. Aldo Beolchini explains: “There are over twenty professional solar project owners in the City that have been impacted by changes to UK solar subsidy and policy. Similar to NextEnergy Capital, these investors had no choice but to complete the construction of their most advanced developments and shelve plans for a much bigger portfolio of UK assets.
“It no longer makes sense for these owners to invest in their own in-house asset management teams. The solution is outsourcing. We have brought WiseEnergy to the UK to fill this gap in the market. Asset management is a fundamental requirement in the solar sector, where people underestimate the potential for performance optimisation and the need to ensure professional technical management.
“There is a common misconception that PV stands for “Plain Vanilla” and that these assets can be left to operate on their own following grid connection; this is far from true and our experience demonstrates that with active management these plants can perform better than expected, with exponential impact on their financial returns. With over fifty years’ combined solar management experience, our team is well placed to offer the UK market the independent asset management it now clearly needs.”

About WiseEnergy:
WiseEnergy is a subsidiary of NextEnergy Capital, a London-based merchant bank focused on the renewable energy sector in Europe and South Africa.
In the field of private equity, NextEnergy Capital promotes, co-finances and manages funds whose objectives are to identify, acquire, realise and manage investment platforms in the renewable energy sector. These include power plants implementing different technologies (mainly photovoltaic, thermodynamic, biomass from algae and biofuel for aircrafts) in Europe, with the brand name NextPower.
NextEnergy Capital launched NextPower development, the largest development company in Italy, and WiseEnergy, the firstEuropean company specialised in solar asset management. In the field of Financial Advisory, NextEnergy Capital undertakes mandates involving M&A and capital market transactions for clients wishing to expand their presence in the renewable energy market. Over the past 18 months, NextEnergy Capital has arranged investments for €100m in the renewable market. www.nextenergycapital.com

Sunday, 4 December 2011

Striking it lucky

2 December 2011            

Covering every corner of the globe, we profile the most promising offshore oil discoveries. Nicholas Newman charts a course, covering finds in the Beaufort Sea off Alaska's North shore, The Levant Basin, The Sea of Okhotsk, a treacherous find offshore of Angola and news of a massive find in Brazil's Santos Basin. http://www.offshore-technology.com/features/featurestriking-it-lucky---most-promising-new-offshore-oil-discoveries/

East Asia a nuclear hotspot?


By Nicholas Newman

Over the next few decades, at least half the world’s new nuclear power plants are likely to be built in in East Asia. Most of these new plants will be built in China, Taiwan and South Korea. However, there are tentative proposals  planned for the region, including Vietnam and Indonesia. However, one thing for certain, Australia will be supplying the uranium to these countries. It funny that Australia is happy to mine uranium sell it for export, but not use it itself.



Elsewhere in the region, the events at Japan's Fukushima Daiichi nuclear plant have caused countries to pause and reflect about their nuclear power programs. As a result, new design and regulatory standards have been put in place. However, it has stopped China, Taiwan and South Korea from continuing with its plans to expand its nuclear sector. Already, South Korean has announced plans to increase the number of nuclear power plants it operates from 21 today to 40 units by 2030. This will mean nuclear contribution to Korea’s electricity market will increase from 31% to 56% by 2020. Because of its lengthy experience of operating foreign technology, mainly Westinghouse for some time, Korea itself has now developed its own commercial design the OPR-1000. Korea plans to export at least 80 units by 2080, supplying perhaps 20% of the world market, bring new competition to suppliers in the US, France and Russia. Already, Korea has won an order to build four large reactors in UAE.  In addition, it is seeking orders in Jordan, Turkey, Rumania, Vietnam, Indonesia and the Ukraine.

China has similar on-going plans to expand its nuclear power capacity from 10 GW today to 70 GW by 2020. It is currently building six new nuclear plants each year which could mean that by 2050 nuclear power will supply 400 GW of China’s needs. Again, like South Korea, China has evolved its own independent designs the CAP1000 AND CAP1400 based mainly on earlier imported Westinghouse designs. However, Western designs such as from the US and Europe are being built, including two 1650 MW European Pressurised Reactors on the coast near Shanghai at Sanmen. 

Taiwan currently operates 5 nuclear power plants using the latest in Westinghouse and General Electric technology, at present two new plants are being constructed, with the first one due for completion in 2013. At present nuclear capacity provides 11% of total national generating capacity, which will increase once the new plants are in operation.

However, one thing is certain the future is bright for nuclear power in the East Asian region. Because of the entrants of new designs from this region, being developed should help make investment in nuclear power a more attractive commercial proposition than before.

For further information:









Tuesday, 29 November 2011

International Power Chile Plants Inaugurated

29 November 2011

Inauguration of two 150MW power plants in Chile

29 November 2011 ‐ GDF SUEZ and International Power (70% owned by GDF SUEZ) are pleased to announce that the 150MW Andina Thermal Power Plant (CTA) and the 150MW Hornitos Thermal Power Plant (CTH), located in the north of Chile, were officially inaugurated today.
Together the two thermal power plants will supply 300MW to Chile's Norte Grande Interconnected Power System (SING), which mainly supplies power to the Esperanza and Gaby mines located in the north of the country. Chile is an attractive market with demand for power forecast to grow at an annual rate of around 6%. CTA and CTH represent a total investment of around US$900 million, including the cost of building a new 144km transmission line and substation.
The CTA and CTH plants feature state of the art technology, known as "circulating fluidized bed", which allows them to use a range of solid fuels, including up to 10% biomass. This technology helps both to improve the efficiency of the combustion process and reduces emissions.
The two power plants are operated by E-CL, a Chilean power generation company, which is 52.77% owned by International Power. E-CL owns 100% of CTA and 60% of CTH.
Gérard Mestrallet, Chairman and CEO of GDF SUEZ, said: "Our Group is constantly investing in the research and development of new, highly efficient and innovative technologies. Combined with our broad geographic reach and a diversified energy portfolio, this allows us to offer a variety of solutions depending on the conditions of the country where we operate. Chile is an important country for GDF SUEZ in Latin America and this new development shows the Group's commitment to this growing region."
Philip Cox, CEO of International Power, commented: "CTA and CTH are modern, efficient facilities that will help to meet Chile's fast growing demand for power. Both projects are supported by long-term offtake contracts."
Activities in Chile
In Chile, in addition to CTA and CTH, IPR–GDF SUEZ Latin America also has a 63% stake in the LNG receiving and regasification terminal GNL Mejillones and Monte Redondo, a 48MW wind farm which is part of the country's central grid. It is also constructing the 34MW hydroelectric plant Laja I.
About International Power
International Power plc is a leading independent electricity generating company operating across 30 countries with 72,360MW (gross) (42,225MW net) in operation and a significant programme of 15,503MW (gross) (6,561MW net) projects under construction as at 30 June 2011. International Power is listed on the London Stock Exchange with ticker symbol IPR. GDF SUEZ holds a 70% interest in International Power plc.
About GDF SUEZ
GDF SUEZ develops its businesses around a model based on responsible growth to take up today's major energy and environmental challenges: meeting energy needs, ensuring the security of supply, fighting against climate change and maximizing the use of resources. The Group provides highly efficient and innovative solutions to individuals, cities and businesses by relying on diversified gassupply sources, flexible and low‐emission power generation as well as unique expertise in four key sectors: liquefied natural gas, energy efficiency services, independent power production and environmental services. GDF SUEZ employs 218,350 people worldwide and achieved revenues of €84.5 billion in 2010. The Group is listed on the Brussels, Luxembourg and Paris stock exchanges and is represented in the main international indices: CAC 40, BEL 20, DJ Stoxx 50, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe, ASPI Eurozone and ECPI Ethical Index EMU.

Thursday, 24 November 2011

A look at the impact that LNG and unconventional gas could affect the future of the EU gas market.

Nicholas Newman 24 November 2012

In recent years, Europe has experienced a gas glut caused by the US becoming self-sufficient in gas (mainly due to unconventional gas production), which has also caused traditional US suppliers to divert exports to the European Market. However, there have been acts of god, banana skins and black swan events that have affected in recent times the EU gas market. These have included Japan’s massive emergency imports of gas and the Libyan war that halted gas exports to Europe, although Libyan gas exports are beginning to recover.



We are in the midst of on-going changes in the European gas market framework, in part due to European Commission intervention, but also due to the development of alternative gas import sources both domestic and foreign. We have seen the rise in the use of hub pricing, as there has been a decline in the dominance of oil indexed long-term gas contracts and a greater range of contracts made available. The trouble is the market is asking will the new trading environment depress prices or maintain Gazprom’s ability to influence the market. It is also being asked is too much world gas production capacity coming on stream too soon.



As for shale, America is not the only source for shale gas E&P so is UK, Poland, China, India, Australia and Argentina. Nevertheless, for the EU shale E&P is at a much earlier stage of development than in the US. There are fears that US shale gas could flood the EU gas market, thus delaying development of EU domestic production for years. In addition, there are fears that Europe is still not ready to fully exploit shale gas production on a large scale.



Factors affecting the EU gas market include developments in Asian pipeline gas and LNG demand. The black swan in the market could be China, Beijing could insist that the Central Asian gas resources it has been developing should be paid for at below market prices or even in kind. Or even that it will replace gas imports with its own massive reserves of unexploited unconventional gas, which it could switch too, instead of importing from Central Asia, Gulf States, South East Asia and Australia.



In addition, the timing and slippage of North American shale gas projects. Also the future pricing and production policies of gas producers together with market developments, including how soon will Europe’s economy recover and the impact of rival fuel sources on gas demand. However, forecasting about the future depends on how many acts of god, banana skins and black swans will occur to affect the European gas market.

Loosely based on notes of a seminar  given by Howard V. Rogers Senior Research Fellow OIES on

16 November 2011

Discovery of good quality oil in south Santos Basin


November 23, 2011
 
Discovery of good quality oil in south Santos Basin
Petrobras has confirmed the presence of good quality oil in well 4-SPS-91 (4-BRSA-1002-SPS),
 in south Santos Basin, in an area known as Tiro and Sidon.

The new well, informally known as Patola, is located at a water depth of 299 meters,
some 200 km off the coast of São Paulo State and 3.8 km from discovery well
1-SPS-57 (1-BRSA-658-SPS), in the Evaluation Plan area containing wells 1-SPS-56
and 1-SPS-57 (1-BRSA-607 / 1-BRSA-658), former block BM-S-40.

Preliminary analyses indicate that this oil is of the same quality as the oil found in  
wild cat wells, around 36o API. The discovery confirms the potential for good quality
oil in the shallow waters of south Santos Basin.

The discovery was confirmed by cable test oil samples taken from the post-salt sandstone.
The reservoir is approximately 2,160 meters deep.

Petrobras will now go ahead with the activities and investments set forth in the  
Evaluation Plan, including drilling other wells in the area, and will proceed with
an Extended Well Test (EWT). EWTs are currently in progress on wells 1-SPS-56
 and 1-SPS-57.
 

Monday, 21 November 2011

Dragons’ Deborah and Theo commit to solar industry


Tomorrow afternoon there is going to be a big solar rally and lobbying of Parliament by the solar industry to demonstrate the sector's anger over the government's proposal to cut the all important Feed-in-Tariff by 50%. On 31 October the coalition announced that they plan to bring in this drastic cut which could damage the solar industry and discourage British homeowners from investing in solar panels on their home.

Deborah Meaden and Theo Paphitis from the Dragons’ Den have just signed the deal today to invest in a solar company. I know this in itself isn't necessarily worthy of an interview, but given the fact that the Dragons have decided to invest in the solar industry despite the current troubles shows that they believe there is a strong future for the solar sector. Chris Hopkins, the founder and MD of Ploughcroft Solar who appeared on the Dragons' Den is available for interviews tomorrow if you would be interested in getting a local solar firm's point of view on what is happening in London.

Chris Hopkins, the founder and MD of Ploughcroft Solar who appeared on the Dragons' Den is available for interviews tomorrow if you would be interested in getting a solar firm's point of view on what is happening in London. And we can also offer Deborah Meaden to give her views as to why solar remains a strong investment opportunity for the British consumer.

Dragons’ Deborah and Theo commit to solar industry

Dragons’ Den investors Deborah Meaden and Theo Paphitis have today shown their commitment to the distressed British solar sector by signing a deal with Yorkshire-based Ploughcroft Solar, one of the UK’s leading solar PV panel installers.

With a solar rally and lobby of Parliament planned for tomorrow afternoon (Tuesday 22 November), the solar industry and green organisations are up in arms over the government’s plans to halve the all important Feed-in-Tariff (FIT) which has encouraged tens of thousands of British homeowners to turn to solar.

Demonstrating that they believe there is still a bright future for solar in this country, Deborah and Theo have invested in Ploughcroft Solar as a result of MD Chris Hopkins’ pitch on the Dragons’ Den programme this summer.

Said Deborah: “In our lifetime, a switch towards renewable energy is not an option – it has to happen. Consumers need help to make the right choices as there are many conflicting messages being issued to the public. A review of the FIT is the right thing to do, although the scope, timing and conflicting messages have not been helpful.

“Although the government’s proposals to reduce the FIT from 43p/KWh to 21p/KWh are drastic, we believe that even if this new tariff is introduced solar is still an attractive option to homeowners. As energy bills continue to rise consumers will be looking for ways of lowering their energy costs and going green. With the 21p/KWh FIT solar photovoltaic (PV) panel homeowners will get a sensible return on their investment, as well as seeing lower electricity bills and helping the environment.

“Theo and I are both 100% committed to the growth and stability of Ploughcroft, which is leading by example within the solar industry. The government’s proposals haven’t scared us off and should not discourage the British public from investing in solar and other renewable energies. Our job is to make sure people still understand there is a good reason to commit to renewable energy, both financially and ethically. Once the government’s final decision on the new FIT has been made the solid, forward thinking renewable industry can continue to grow.”

Chris Hopkins, who has been at the forefront of the solar industry for six years and is also a member of the newly formed Green Construction Board for the Department of Business, Innovation & Skills added: “Since the government made its FIT reduction announcement on 31 October we have seen a 50% increase in enquiries compared with the previous month. We have already secured sales on systems that we will be installing in January and February 2012 on the new tariff. This indicates that homeowners remain keen to reduce their electricity bills whilst doing their bit to help the environment.”

The expertise of Deborah Meaden and Theo Paphitis will help Ploughcroft Solar expand into new areas of renewable energy throughout 2012, and support the company’s mission to become the name for renewable energy for homeowners across Britain.

Members of the public and businesses can email fits@decc.gsi.gov.uk or telephone 0300 068 5733 to register their comment on the proposed policies.

For further information visit www.ploughcroft.co.uk

Friday, 18 November 2011

The World is Desperate for Energy Engineers


By Nicholas Newman 18 November 2011

It’s not a scarcity of oil the world should be worried about but more importantly a desperate skills shortage of engineers. This is especially so for the global energy industry. For many jobs, the number of vacancies exceeds the number of skilled experienced engineers that are available. Already, such shortages are causing significant delays and costs for major projects including development of offshore oil fields off Angola.  Whilst in Brazil, the home of samba, tropical rainforests and traffic jams, this developed county is in a desperate search for engineers to construct 12 super tanker sized FPSO’s over the next decade. Such skills deficiencies are harming energy security, harming economic recovery and the ability of the world to meet its ambitious CO2 targets.


The only solution the energy industry has is to pay higher salaries and offer better conditions. Already, in Australia many engineers with energy related expertise are starting on salaries of AUS$20,000 a month. Even in the remotest desert locations of Australia or Iraq, the camps offer the best in accommodation and food. Ironically, subsea engineers are the amongst those in greatest demand. As to why there is a shortage of energy engineers, in part, it is due to lack of sufficient support governments, universities and industry to ensure adequate levels of people are trained every year. It is also due demographics, as the workforce ages and to the cyclical nature of the industry. Today, it is not helped that the sheer number of new projects worldwide that are being developed and coming on stream. In Australia, for instance the boom in mining of coal, iron ore and uranium is taking place at the same time there is also a boom in oil, gas, solar, power and unconventional gas projects. Because of poaching between the different energy sectors, pay and conditions have had to be drastically improved, in a desperate attempt to overcome such work force shortages.
Due to it being a sellers’ market for engineers, energy companies are having to becoming more sophisticated in recruitment practices. Increasingly they are relying on experts talent scouts to find, identify and select as well as maintain the loyalty of the engineers in this very competitive global market.  In addition, many such recruitment agencies such as Hays, NES Global are working on behalf of their clients Total, Shell, ENI to co-ordinate the development of the skilled candidates in their studies at universities around the world. In many new energy producers, governments are encouraging local content polices to ensure that the energy industry makes sufficient investment in overcoming the global energy sectors current labour shortages.
http://www.oxfordprospect.co.uk/Energy-Features.html

Wednesday, 2 November 2011

World Energy Market Prospects 2012


Nicholas Newman 24 Oct 2011

powerA quick look at various aspects that make up the global power generation sector, including wind, solar, nuclear, hydro and coal power station prospects.

Despite the popularity of renewable technology, development of conventional power plants continues to grow a pace.

This year is likely to see the end of the feather bedding of renewables in many countries, due to budgetary constraints in numerous countries. Given these new market conditions both investors and operators are being faced with harder often politically unpopular choices to make in their investment strategies. This article gives an overview of the picture facing investors in various parts of the world.


Tough times ahead for renewables?


Renewables have been doing well in recent years. However, due to budgetary constraints in many countries, governments are cutting back on subsidies for the renewables' sector. Which means there are tough times ahead for wind, solar, geothermal and wave power schemes.


From my experience, renewables need to make greater strides before they no longer have to depend on government subsidises and other policies to distort the market in its favour. At present, more money is to be made in the companies servicing renewable installations than investing in them, so have a look at consultancies.


Why hydro has a future?



I think the hydro sector has great possibilities, which in Europe will mean upgrading generating capacity at hydro station dams along major rivers, such as the Danube. Similar potential exists in the United States to upgrade existing facilities in an environmentally friendly manner. However, the main obstacle is the anti-hydro ideology among some environmentalists in North America. In addition, new hydro power schemes both large and small are likely to be constructed in Russia, South-East Asia and South America in the next few years.


Wind prospects look good in the Arctic!



As for wind, I think the proposed North African Desertec scheme has its financial, market and political problems. I think a better bet for investors will be the so-called Arctec scheme proposed for the Northern Scandinavian coast, because of its more favourable business climate and ease of access to Northern European markets such as the Germany.


Why pulling the plug on nuclear means more coal and gas power stations?



However, just because Germany and Italy have said no to a new phase of nuclear does not mean, this is the end for atomic power in Europe, there are too many national, strategic, environmental and economic reasons for building new atomic plants.


In fact, both countries will continue to enjoy the benefits of nuclear power. They will be importing it from neighbouring countries, such as France, which have nuclear-power programs. In fact, many of the investors in such plants will include German and Italian power generating companies as partners.


Already, both the United Kingdom and France have announced a new phase of nuclear power station building. In addition, the pulling of the plug on atomic in those countries has seen power companies reactivate coal power stations, and Europe’s orders for coal have increased as a result. This will mean europe will find it harder to meet its carbon emmission targets.


However, various power generation companies have annouced plans for speeding up proposals to extend the life of existing plants and schemes for new gas and coal power plants. As the new gas plants come on stream, it has been estimated that by 2014, Europe will be seeking additional gas imports. One potential source is the Nordstream gas pipeline project linking Siberian gas fields with Germany via the Baltic Sea. It should be operational by 2012, just in time to give a boost to EU gas supplies as Europe's economy begins to recover.


A possible golden future for Australian renewables.



For investors in the energy sector, current trends are suggesting Australia is a great investment given its proximity to North Asian markets for its coal and gas exports. However, there has also been a recent change of fortune for the county’s renewables sector, due to the latest announcements made by Australia’s Prime Minister Julia Eileen Gillard to rig in favour of renewable power generators the country’s power market. See also Australian PM faces stiff opposition against her radical carbon polices!



As an energy expert, I expect to find the next few years very interesting!

Tuesday, 25 October 2011

Energy Risk Management


Energy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market [Hardcover]
ByDavis Edwards, McGraw-Hill Professional 2010.
A book review by Nicholas Newman http://www.oxfordprospect.co.uk/Freelance-Journalist.html
This book by Davis Edwards should really be called Energy Trading and Investing in North America, since it is heavily focused on the United States. Even so, it is a useful book for those seeking an introduction to this complex subject. It is written not to frighten off the aspiring trainee market analyst, energy lawyer or energy journalist. Energy Trading and Investing is written in plain jargon free English and without the use of complex mathematics one usually associates with such books.

The books author is MD of Australia’s Macquarie Group, and has been responsible for many years for managing the credit risks of its North American investments. It is designed for those readers who need a clear basic understanding of the principles of energy trading and investment.

This book is divided into several sections. In the first, it provides an overview of the energy markets, detailing the main elements, players and structures. For instance explaining the reasons why power station operators will switch on or off their power plant in response to changes in market prices. This section provided a useful explanation about how traders can buy cheap surplus electricity in the Pacific Northwest and export it to energy hungry consumers in southern California at a higher price.
In the second section, there is an in-depth descriptions of all the major energy commodities such as coal, including an explanation about the merits of different types of coal together with its operating constraints, costs and pollution implications. It is clear despite this book being published in 2010, many of its assumptions appear dated and focused on the United States. Since the author is very pessimistic about increases in new oil output and oil refinery capacity. although construction in new oil refinery capacity has remained static in the United States, elsewhere in the world including the Middle East, South Asia and Far East the been a building boom in new refineries. In addition, energy companies all over the world are launching new rigs able to explore and produce oil and gas from more distant from the shore in deeper water like off Shell's new Perdido Spar which is 200 miles off the Texas coast.

However, the third section provides a financially orientated discussion about how chemistry, physics, accounting, and option trading affect current and future pricing. The explanation about statistics I found interesting as it explained how traders use statistics to understand trends in the market.

In the fourth section, there are primers on load forecasting, tolling agreements, natural gas storage. It was interesting to understand how the market price for power can change due to seasonal and hourly variations in temperature. For example, when a jump in temperatures, causes a jump in demand for electricity to power air-conditioning, which results in market prices for electricity to jump, resulting in more power stations, offering to sell power at higher prices.

In the last section, the book provides a clear practical introduction to risk management. For the first time I found a clear explanation of what such traders like Nick Leeson who brought down Barrings Bank were up to in his market dealings.

Overall, a useful training manual and guidebook, for those who need to quickly understand and comprehend the complexities of Energy Trading and Investing.
For more energy book reviews see http://www.oxfordprospect.co.uk/Oxford-Books.html
To buyEnergy Trading and Investing: Trading, Risk Management and Structuring Deals in the Energy Market

Monday, 24 October 2011

Could Britain scrap offshore wind power?


Rising energy bills or putting increasing pressure on operators and government s to cut power prices. there is increasing talk that socalled eco friendly offshore power is too expensive for both both customers and taxpayers. Could we see many planned offshore wind projects never built as european governmenst switch to gas and more coal power stations as the politically and economically expediant thing to do.

Offshore wind is one of the most talked-about forms of renewable energy. No doubt when the European Commission will publish its Energy Roadmap 2050 in December, it will be crucial in reaching the EU's renewable energy and climate targets. Yet in practice not too many offshore wind parks have been built as yet. At the end of 2010, barely 3,000 MW of offshore wind capacity had been installed in Europe, mostly in the UK and Denmark, according to figures from the European Wind Energy Association (EWEA).

 Countries like Spain (number two in onshore wind power), Portugal, France, Greece and Italy have not built a single offshore wind turbine yet. Germany (number one in onshore wind) has built just 92 MW. This picture, however, is set to change drastically. Many European countries have highly ambitious expansion plans in offshore wind. Germany wants to scale up its capacity to 8,000 MW, France to 4,000 MW, the UK to 13,000 or maybe even 20,000 or 25,000 MW. Countries like Denmark, Ireland, Sweden and Belgium also have ambitious plans.

In all, according to EWEA, by 2020 some 40,000 MW of offshore wind power capacity will have been built in Europe. That's the equivalent in capacity of some 40 coal-fired power stations.

That is, of course, if all plans go through, which is still an "if". The first country to have scrapped its offshore wind power plans is, a bit ironically, Holland, the country of windmills. The reason: the high costs. So far the Dutch are the exception, but in the UK too a political discussion has started. The UK government has now set up a panel that will investigate how the costs of offshore wind farms can be brought down. To read more http://www.europeanenergyreview.eu/site/pagina.php?id=3299

Friday, 21 October 2011

Eni announces a giant gas discovery offshore Mozambique

Comment on below press release:This announcement by Eni S.p.A. should turn Mozambique into a major energy exporter for Southern Africa. This will be good news for investors in various new power station schemes being constructed to export power from Mozambique to South Africa and other members of the South African Power Pool. Currently, many of the countries in the region are suffering from power cuts due to insufficient investment by operators to keep pace with demand.

Eni announces a giant gas discovery offshore Mozambique
San Donato Milanese (Milan), 20 October 2011 - Eni announces a giant discovery at the Mamba South 1 prospect, in the Area 4 Offshore Mozambique. The discovery well encountered a total of 212 meters of continuous gas pay in high-quality Oligocene sands.

The Mamba South 1 discovery well is located in water depths of 1585 meters approximately 40 km off Cabo Delgado coast, in the Northern offshore of Mozambique. This is the first exploration well in Area 4. Results exceed pre-drill expectations and confirm the Rovuma Basin as a world-class natural gas province.

The well will be drilled to reach an expected total depth of around 5000 meters. After completion of drilling and testing activities, the rig will move to drill the second commitment well, Mamba North 1.


Eni considers that this impressive discovery can lead to at least 15 tcf of gas in place in the Mamba South Area where the potential of the Tertiary Play that exists in Area 4 will be further assessed under the present drilling.
The outstanding volume of natural gas discovered will lead to a large scale gas development with a combination of both export to regional and international markets through LNG and supply to the domestic market. This will support the industrial and economic growth of the Country.

The Mamba South discovery marks a new milestone for Eni since the resource potential assessed with the first exploration well makes it the largest operated discovery in the company's exploration history. The exploration success in Mozambique expands the leadership of Eni in Africa by opening a new eastern front of activities.

Eni is the operator of Offshore Area 4 with a 70-percent participating interest. Co-owners in the area are Galp Energia (10 percent), KOGAS (10 percent) and ENH (10 percent, carried through the exploration phase).
Company Contacts:
Press Office: Tel. +39.0252031875 begin_of_the_skype_highlighting +39.0252031875 end_of_the_skype_highlighting+39.0659822030 begin_of_the_skype_highlighting +39.0659822030 end_of_the_skype_highlighting
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +39.800 11 22 34 56
Switchboard: +39-0659821 begin_of_the_skype_highlighting +39-0659821 end_of_the_skype_highlighting

ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
Web site:www.eni.com

Could shale gas discoveries herald a revolution in Europe?


I feel that many in the media are caught up in gold rush fever when they debate the future of shale/unconventional gas in Europe.

Unfortunately, the media hype about shale gas is not backed by the facts. Here are a number of reasons:

1.       The amount of shale/coal seam gas reserves in Europe is questionable despite the over optimistic forecasts provided by the US Geological Survey. The real problem is not how much CSG there is but how much of it can be extracted commercially, given the technological, geological and environmental challenges involved. Already, despite the hype about shale gas from Polish Prime Minister Tusk, news of recent test results have been disappointing to say the least. Prime Minister Tusk has not cancelled plans to construct Poland's first LNG import terminal project, with a capacity of 7.5 billion cubic metres per annum, which is due for completion in June 2014. Which will supply nearly half of the country' gas needs.

2.       To suggest that European produced shale gas prices will be similar to that of the US is unlikely for a number of reasons:

a.       The geology of Europe is much more complex, which makes it more difficult to extract shale gas than in North America.

b.      There is a worldwide shortage of land based drill teams and equipment, especially in Europe. This is likely to get worse as demand increases for such experienced and skilled teams from other oil and gas provinces and from the geothermal power sector.

c.       Unlike the US the European legal, environmental and regulatory landscape is much more complex and needs to be updated to meet the needs of E&P.

d.      If European shale gas production is to make a significant impact on reducing gas imports, then European gas prices must be considerably increased.

e.      At present, the development of shale gas on the US market has turned it into a net gas exporter, forcing Henry Hub prices down. Already several European industrial consumers such as power stations are using American gas.

That is why I think it is unlikely that shale gas discoveries herald a revolution in Europe.
For more info on this see page 14 http://content.yudu.com/A1rsht/EWApril2011/resources/3.htm

Thursday, 20 October 2011

Sub-Saharan Africa hungers for power



Nicholas Newman http://www.oxfordprospect.co.uk/Freelance-Journalist.html
In terms of its per-capita endowment of primary energy, sub-Saharan Africa (SSA) is close to the global average. Its 800 million people make up about 9 per cent of the world's population and they are estimated to share 8 per cent of global gas reserves, 10 per cent of the world's oil, and 13 per cent of hydropower resources – as well as much more than their fair share of solar radiation. http://www.powerengineeringint.com/articles/print/volume-19/issue-9/power-report/sub-saharan-africa-hungers-for-power.html