Japan-backed AG&P says gets approval to develop Philippines LNG terminal
Atlantic Gulf & Pacific Company (AG&P) said on Monday its Philippines subsidiary has received the green light to develop a liquefied natural gas (LNG) import and regasification terminal in Batangas Bay, south of Manila. The firm, part owned by Osaka Gas and the Japan Bank for International Cooperation, said the Philippines’ energy department has issued it a notice to proceed to develop the terminal, known as Philippines LNG, which will provide the fuel to power plant, industrial and commercial customers and other consumers. Philippines LNG will be the fifth planned LNG import terminal in the Southeast Asian nation, which is seeking the fuel as the Malampaya gas field in western Philippine waters is expected to run dry this decade. Four other terminals worth about 65 billion pesos ($1.34 billion) are at various stages of approval or financial closure. Philippines LNG will have an initial capacity to deliver up to three million tonnes per annum (mtpa) of regasified LNG, with additional capacity for liquid distribution, AG&P said in a statement. It will also have scalable onshore regasification capacity of 420 million standard cubic feet per day (mmscfd) and almost 200,000 cubic metres (cbm) of storage, AG&P said. The statement did not disclose financial details of the project.
Cairn Energy shifts to onshore Egypt from N. Sea in deal flurry
Oil and gas producer Cairn Energy is shifting its focus to a growth portfolio onshore Egypt from declining offshore fields in the British North Sea in a flurry of deals worth around $1.5 billion which it announced on Tuesday. Cairn, in partnership with Ceiron, agreed to buy onshore fields in Egypt’s Western Desert from Royal Dutch Shell for up to $926 million and sell its stakes in British fields Catcher and Kraken to private firm Waldorf Production for $460 million. “We’re transitioning from that portfolio in decline into one where we see that we can build greater cashflow generation into the future,” Cairn Chief Simon Thomson told a conference call. Cairn, which produced around 21,000 barrels per day (bpd) last year, can boost its net share from the Shell assets to 50,000 bpd from 35,000 bpd within a couple of years, Thomson added. The deal would triple Cairn’s reserves. Cairn is also in talks with no set deadline with the Indian government about an arbitration award worth around $1.7 billion, but Cairn is actively pursuing alternatives, such as selling the consideration or enforcement, Thomson said.
Oil giants prepare to put carbon back in the ground
During more than three decades in the oil and gas business, Andy Lane has managed the construction of enormous facilities for extracting and transporting natural gas, in places like Trinidad and Indonesia. Now he is working in his native England, taking on a complex and expensive venture that essentially aims to reverse what he has spent much of his career doing. Lane’s newest assignment is designed to collect carbon pollution from a group of chemical plants in northeast England and send it to a reservoir deep under the North Sea. The multibillion-dollar project could be a breakthrough for a technology known as carbon capture and storage, a concept that has been around for at least a quarter-century to reduce the climate-damaging emissions from factories. The idea sounds deceptively simple: Divert pollutants before they can escape into the air, and bury them deep in the ground where they can do no harm. But the technology has proved to be hugely expensive, and it has not caught on as rapidly as some advocates hoped. Still, lots of attention is being paid to carbon capture as a way to meet the targets in the 2016 Paris climate agreement. As a candidate, President Joe Biden promoted carbon capture’s promise; last month, Exxon Mobil announced a $3 billion investment in low-carbon efforts, including carbon capture; and a week later, Elon Musk promised to put up $100 million for a contest seeking the best carbon-capture technology. The project in England, in an area called Teesside along the River Tees, is led by the oil giant BP and expects to have size on its side: The area is home to one of the country’s largest clusters of polluting factories and refineries. By linking them together — collecting all their emissions by pipeline, and charging them a fee — BP hopes to achieve sufficient scale to make a profitable business of tackling their pollution. Teesside “has quite a lot of the big industrial emissions sources in the U.K., and that is why this project makes sense,” Lane said. It is also fast becoming a focal point of attention in Prime Minister Boris Johnson’s government, which is eager to cement support in the onetime Labour stronghold. The area’s turn toward Johnson’s Conservative Party helped it win big in the 2019 national election. On Wednesday, Teesside was designated one of eight “freeports” in England, an economic zone with lower taxes and other business incentives. Rishi Sunak, the chancellor of the Exchequer, also gave it an extended shout-out in his budget presentation in Parliament that day, citing the carbon capture effort as he called Teesside “the future economy of this country.” Lane and the area’s influential Conservative mayor, Ben Houchen — described by Sunak as “an inspiring local leader” — portray carbon capture as the means to rejuvenating run-down industrial regions like Teesside. “It puts the region on the map and attracts additional investment,” Houchen said. Their plans would certainly turn Teesside into a vast construction site, potentially employing 2,000 workers. BP and its partners propose to build a very large electric power station fueled by natural gas near a shuttered steel mill at the mouth of the river. The plant would help replace Britain’s aging fossil-fuel-burning power stations and provide essential backup electricity when the country’s growing fleet of offshore wind farms are becalmed. Equipment would remove the carbon dioxide from the power station’s exhaust. Pipes would run through the area rounding up more carbon dioxide from a fertilizer plant and a factory that makes hydrogen, which is winning favor as a low-carbon fuel. BP also expects to connect other plants in the area. Pipes would take the carbon dioxide 90 miles out under the North Sea, where it would be pumped below the seabed into porous rocks. Four other oil giants — Royal Dutch Shell, Norway’s Equinor, France’s Total and Italy’s Eni — are also investors in the plan, although the final go-ahead awaits a financial commitment from the British government. The price for the initial stage could approach $5 billion. About two dozen carbon capture projects are operating globally, but the technology has struggled to overcome high costs and worries about liability if the carbon dioxide somehow escaped. Some also see it as a lifeline — albeit an expensive one — for polluters. “Carbon capture is being used as a Trojan horse by the fossil fuels industry to keep demand for fossil fuels alive,” said Mike Childs, head of science, policy and research at Friends of the Earth in Britain. He added that it would be better to create processes that didn’t “create pollution in the first place.” Carbon capture has had its share of false starts in Britain. David Hopkins, managing director for Britain of CF Fertilisers, a major emitter and a likely customer for BP, said he had been discussing versions of the Teesside project “for at least 10 years.” But increasingly ambitious climate change goals help make the case for technologies like carbon capture. While Britain and other countries have made strides reducing emissions from electric power generation, carbon capture will be needed to deal with large-scale polluters like steel, cement and chemical plants, experts say. Many governments and corporations increasingly appreciate that carbon capture “will be needed as part of the portfolio of technologies to reach net zero” for carbon emissions, said Samantha McCulloch, an analyst at the International Energy Agency in Paris. She said investment in the technology was accelerating. Oil companies are also under growing pressure to reduce the carbon content of the energy products they sell. They are investing in wind and solar power, which have proved to work, as well as in technologies, like carbon capture, that fit with their expertise and may not pay off until well into the next decade, if ever. What’s distinctive about the Teesside scheme is that it tries to make a virtue of emissions. Lane and Houchen, the mayor of the Tees Valley, said it could help preserve 5,500 jobs at chemical plants
Deadly smoke set to return as India cuts outlays on cooking gas program
Five years ago, Prime Minister Narendra Modi’s government offered Indian women a chance to dramatically improve their lives with cooking fuel subsidies in what became one of his administration’s most celebrated campaigns. Now, hamstrung by a widening fiscal deficit, New Delhi has been slowly reducing the size of those handouts — a shift that risks upsetting women voters and potentially exposing millions to heavier levels of pollution. In Allauddinnagar, a village in Uttar Pradesh, Laxmi Kishore, a 35-year-old homemaker, is worried. Cooking food for her family used to be an ordeal that involved using cheap fuels like cow dung, crops and wood, which burn with a sooty flame and left her teary eyed and choking. When Modi’s program made liquefied petroleum gas cylinders affordable to her some years ago, she breathed more easily. Now Kishore is preparing to return to her earthen stove and the smoggier fuels her ancestors used because the subsidy that landed in her account each time she refilled a cylinder has stopped arriving. Her husband lost his job as a cashier in a highway restaurant during last year’s Covid-19 lockdown, making a cooking cylinder unaffordable to them without the handout. “I’m dreading a return to my earlier pain,” she said. “It will mean less sleep and suffering in the smoke again.” Provisions for the LPG cooking fuel subsidies were halved in the budget for the fiscal year ending March 2022 to Rs 12,480 crore from Rs 25,500 crore a year earlier. A spokesperson at India’s oil ministry didn’t respond to a request for comment. The program launched in 2016 by the Modi government offered cash rebates for purchasing an LPG connection and a loan for the first canister of the fuel and stove. More than 8 crore women from extremely poor households had received such LPG connections by January 1 this year. The government announced plans in the latest budget to extend the benefit to another 1 crore households, mostly located in the remote forests and hilly areas. To help the poor struggling with lockdowns, the government last year also offered free LPG refills of three cylinders. India’s LPG consumption in 2020 surpassed petrol for the first time ever over a calendar year, government data show. But the free supplies were a one-off move and the finance director of Indian Oil Corp., the largest retailer of the cylinders, said last month that the government had last year stopped subsidizing the fuel for consumers except in the most remote areas. Meanwhile, prices of LPG have surged across the country. Cost of a typical LPG cylinder sold by Indian Oil in Delhi has increased by 40% since November to Rs 819. Providing cooking gas has been one of the biggest successes of Modi’s flagship welfare programs which also included building toilets and houses for the poor. “The elephant in the room is the price rise,” said Arati Jerath, a New Delhi-based author and political analyst. “The LPG program started as a very popular scheme, but has been petering out because of the price increase. Modi will have to come up with a new emotive issue as the government is running out of money to indulge in populism measures.” LPG is crucial for reducing domestic pollution in India. The country has the highest instances of premature deaths in the world due to emissions from burning fossil fuels, including coal and oil products, according to research done by Harvard University in collaboration with other academic institutions. “Withdrawal of subsidy and increase in prices is likely to affect LPG consumption, particularly in rural areas where alternatives such as firewood, agricultural residue, dung cakes are readily available,” according to Ashok Sreenivas, a senior fellow at Prayas, an Indian advocacy group that works in energy policy. An increase in the use of alternative solid fuels will “definitely impact the health” of rural women and children as these release particulate matters that can cause illnesses including lung cancer, heart ailments and even stroke, he said. India faces issues other than price in getting poorer populations to adopt cleaner fuel. Availability is also a problem in far flung areas that are hard to reach, Prayas said in a December report. India’s oil ministry has said beneficiaries of the program availed of less than two refills of the three free ones offered over nine months last year. Air pollution inside houses, primarily due to burning solid fuels like wood, dried dung and biomass, contributed to more than 10 lakh deaths in 2010, making it the second-biggest health risk factor in India, according to a 2015 report by Steering Committee on Air Pollution and Health Related Issues. The International Energy Agency in a special report last month said that despite the recent success in expanding coverage of LPG in rural areas, 66 crore Indians haven’t fully switched to modern, clean cooking fuels. Higher costs and fewer subsidies might only make it harder to draw new users. Vehicular exhaust, industrial emissions and other factors have already made India home to 14 of the 20 most polluted cities in the world. The task of encouraging the poor to use the cleaner fuel becomes even more challenging with millions losing their jobs during the pandemic. Poor households are more sensitive to higher fuel prices as they can easily shift to cheaper alternatives for which they need to pay just a few rupees every day, rather than spending as much as Rs 800 per cylinder upfront. “Prices are rising and the government has stopped compensating us,” said Kaushal Kishore, Laxmi’s husband. “I can’t afford LPG any further and this is my last cylinder till I find myself a job.”