Spread of COVID-19 Delta variant knocks oil demand outlook – IEA
Rising demand for oil abruptly reversed course in July and is set to proceed more slowly for the rest of the year due to the spread of the COVID-19 Delta variant, the International Energy Agency said on Thursday. “Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil consuming countries, particularly in Asia, look set to reduce mobility and oil use,” the Paris-based IEA said. “We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia,” it said in its monthly oil report. The IEA put the demand slump last month at 120,000 barrels per day (bpd) and predicted growth would be half a million bpd lower in the second half of the year compared to its estimate last month, noting some changes were due to revisions in data. An output deal reached by the OPEC+ alliance – consisting of the Organization of the Petroleum Exporting Countries and others such as Russia – last month would restore market balance in the near term, the IEA added. “But the scale could tilt back to surplus in 2022 if OPEC+ continues to undo its cuts and producers not taking part in the deal ramp up in response to higher prices,” it said. OPEC+, which had introduced output curbs to support prices and ease oversupply, agreed in July to boost output by 400,000 bpd a month starting in August until the rest of a 5.8 million bpd cut is phased out. The United States on Wednesday called on OPEC+ to boost oil output to tackle rising gasoline prices and aid the global economic recovery. OPEC+ is scheduled to hold a meeting on Sept. 1 to review the situation. Citing a United Nations report this week saying climate change was spiralling out of control, the IEA said the world needed to urgently move to a carbon neutral world. “The world oil industry is struggling to find new business models to navigate the energy transition … while still meeting sustained oil demand.”
Exxon, Chevron look to make renewable fuels without costly refinery upgrades: Sources
U.S. oil major Exxon Mobil Corp, along with Chevron Corp, is seeking to bulk up in the burgeoning renewable fuels space by finding ways to make such products at existing facilities, sources familiar with the efforts said. The two largest U.S. oil companies want to produce sustainable fuels without ponying up billions of dollars that some refineries are spending to reconfigure operations to make such products. Renewable fuels account for 5% of U.S. fuel consumption, but are poised to grow as various sectors adapt to cut overall carbon emissions to combat global climate change. Both Chevron and Exxon have massive refining divisions that contribute heavily to their overall carbon emissions. The companies have been criticized for a less urgent approach to renewable investments than European rivals Royal Dutch Shell Plc and TotalEnergies, and have generally spent a lower percentage of their capital than those companies on “green” technologies. The companies are looking into how to process bio-based feedstocks like vegetable oils and partially-processed biofuels with petroleum distillates to make renewable diesel, sustainable aviation fuel (SAF) and renewable gasoline, without meaningfully increasing capital spending. Commercial production of renewable fuels is costlier than making conventional motor gasoline unless coupled with tax credits. A task force was created at Exxon’s request within international standards and testing organization ASTM International to determine the capability of refiners to co-process up to 50% of certain types of bio-feedstocks to produce SAF, according to the sources. Exxon did not respond to a request for comment. Chevron is looking into how to run those feedstocks through their fluid catalytic crackers (FCC), gasoline-producing units that are generally the largest component of refining facilities. “Our goal is to co-process biofeedstocks in the FCC by the end of 2021,” a Chevron spokesperson told Reuters, to supply renewable products to consumers in Southern California. The company is partnering with the U.S. Environmental Protection Agency (EPA) and California Air Resources Board (CARB) to develop a path to produce fuel that would qualify for emissions credits. A source familiar with the matter said if approved by the EPA and CARB, Chevron would be able to produce and generate credits for renewable gasoline. That product is not yet commercially available, but can reduce carbon dioxide emissions by 61% to 83%, depending which feedstock is used, according to the California Energy Commission. Chevron said on its earnings call earlier this month that in the second phase of its process, it would be the first U.S. refiner to use the cat cracker to produce renewable fuels. “We did it this way, in part, because it’s very capital-efficient … It’s literally just a tank and some pipes,” Chevron Chief Finance Officer Pierre Breber said on the call. Congress is considering legislation for tax credits that would further spur refiners to process sustainable aviation fuel commercially. Some refiners, like San Antonio-based Valero Energy Corp and Finland-based Neste, have ramped up production of renewable fuels from waste oils and vegetable oils to cash in on lucrative federal and state financial incentives. Several U.S. refiners are in the midst of partially or totally converting plants to produce certain renewable fuels, particularly diesel. If approved, new methods of producing renewable fuels at refineries could allow refiners to avoid lengthy environmental permitting processes. Many of these processes are still undergoing further testing to see which can make renewable fuels commercially, but without damaging refining units.
Toronto to produce renewable natural gas from Green Bin waste
Mayor John Tory announced Tuesday that Toronto will start producing renewable gas (RNG) from Green Bin organic waste and injecting it into the natural gas grid in the coming weeks. A biogas upgrading facility set up in collaboration with Enbridge Gas Inc. at the Dufferin Solid Waste Management Services will turn Green Bin organics into RNG and inject it into the natural gas grid. It will be used to power vehicles and heat City-owned facilities. “This project represents a path to low-carbon fuel for the City and will play an important role in helping us reach our TransformTO goal of becoming net zero by 2050 or sooner,” said Mayor John Tory. “Climate action remains a top priority for Toronto, with climate change and resilience identified as one of the focuses of the City’s COVID-19 recovery and rebuild work.” The Dufferin RNG facility is expected to produce 3.3 million cubic metres of RNG each year. This will result in a fuel blend that is approximately 7 per cent RNG, according to a statement from the City. By capturing the biogas instead of flaring/burning it off, the facility will also avoid more than 9,000 tonnes of carbon being released into the atmosphere annually. Toronto will not start using the gas until the beginning of 2022, to ensure production capacity has stabilized. Until then, the gas will be stored in the grid, the statement read. Cynthia Hansen, Executive Vice President & President, Gas Distribution & Storage, Enbridge said: “RNG presents a tremendous opportunity to decarbonize our economy more affordably by leveraging existing energy infrastructure, while at the same time stimulating regional economic development. This initiative is a practical example of the many ways that natural gas, working as part of an integrated system, can collaborate in a net-zero carbon future.” Toronto has also identified potential biogas/landfill gas upgrading opportunities at several other City waste facilities including the Disco Road Solid Waste Management Facility, Green Lane Landfill and Keele Valley Landfill. All of the sites combined have the potential to produce enough gas to fuel the City’s entire natural gas needs annually (excluding City Agency, Boards and Commissions). The next facility to receive RNG infrastructure will be the Disco Road Solid Waste Management Facility, with plans to have the site up and running by the end of 2023. The project, which is said to be one of the first of its kind in North America, supports Toronto’s goal of becoming Ontario’s first city with a circular economy.
Reduce VAT on natural gas from 12.5 per cent to 3 per cent, says GCCI
Goa Chamber of Commerce and Industry (GCCI) has written to chief minister Pramod Sawant asking for value-added tax (VAT) on piped natural gas (PNG) for industrial use to be reduced from 12.5% to 3%. GCCI president Ralph De Sousa said the rate of VAT on natural gas in Goa is more than four times that levied in Maharashtra, and double the rate of other states such as Gujarat and Haryana. The sharp difference between the VAT levied in Goa and in the neighbouring states will put Goa’s industrial units at a disadvantage, said GCCI. It has also called for the inclusion of natural gas under the goods and services tax (GST) regime. On June 30, the Goa State Pollution Control Board (GSPCB) said the use of petcoke and furnace oil would be discontinued from December 31. GSPCB has recommended compressed natural gas (CNG) and liquefied natural gas (LNG) as alternatives, but unlike furnace oil and petcoke, which are taxed under the GST regime, natural gas and CNG are taxed under VAT. “The industry, particularly the manufacturing sector using PNG as a fuel, is primarily affected by this transition. Due to the inclusion under GST, the industry was able to claim the benefit of the amount of GST paid as input tax credit, and thus the GST was cost neutral,” said Sousa. Since there is no VAT credit available on PNG, it would have a cascading effect on the final cost to consumers as well as make the products less competitive against those from other states. Gujarat and Haryana charge 6% VAT on natural gas while Maharashtra levies a rate of 3% on natural gas for industrial use. “The pandemic and the slowdown in the economy have dramatically affected the cost of raw materials in the state. Moreover, the significant VAT component on PNG in Goa will severely impair competitiveness,” said the GCCI president.
Centre taking necessary steps to promote CNG services across India: Petroleum Ministry
Minister of State for Petroleum and Natural Gas Rameswar Teli further told the Upper House that the authorised entities will set up 8,181 CNG stations across the country over a period of 8-10 years. Government is taking necessary steps to promote the usage of Compressed Natural Gas (CNG) services all over India, Minister of State for Petroleum and Natural Gas Rameswar Teli told the Rajya Sabha. Teli further told the Upper House that the authorised entities will set up 8,181 CNG stations across the country over a period of 8-10 years, as per Minimum Work Program assigned by the Petroleum and Natural Gas Regulatory Board (PNGRB) through competitive bidding. States like Gujarat (779), Maharashtra (488), Uttar Pradesh (485), Delhi (436), Haryana (186), Madhya Pradesh (102) and Punjab (101) have the highest number of CNG stations across India as on March 31. PNGRB is the authority that grants authorisation to concerned entities to develop City Gas Distribution network including CNG stations in geographical areas as per the PNGRB Act, 2006. PNGRB classifies geographical areas for authorising the development of CGD network in synchronisation with developing natural gas pipeline connectivity and natural gas availability. Besides this, Teli also apprised the Rajya Sabha of the steps taken by the Centre to promote use and distributorship of Liquefied Natural Gas (LNG). Steps taken by the government include promotion of CGD network for enhanced supply of natural gas including LNG to industrial and commercial customers, pooling of gas in fertiliser (urea) sector, establishment/capacity enhancement of LNG terminals, re-gasification, promoting setting up LNG stations on national highways, golden quadrilateral, etc and amendments in Central Motor Vehicle Rules (CMVR), Static and Mobile Pressure Vessel Rules (SMPV), LNG Vehicle type testing standards, Diesel-LNG Dual Fuel Vehicle policy, etc.