FERC Sees High LNG Prices This Winter
All regions in the United States have adequate energy resources for a “normal” winter, but that doesn’t mean all regions will coast through winter without disruption, the Federal Energy Regulatory Commission said on Thursday in its new annual winter assessment report. Calls for unseasonably warm temperatures across some parts of the United States should allow all regions of the United States to escape the winter heating season unscathed, but any extreme weather events this winter could lead to temporary surges in fuel demand, threatening the stability of power grids. In the six New England states, for example, power generation is “adequate”, but fuel constraints could be a headache. FERC sees Texas as having “robust” capacity, but is limited by its inability to import power from neighboring states. The FERC sees natural gas prices for this coming winter higher than last winter due to rising nat gas demand via exports and lower nat gas storage levels. For New England, which relies in part on LNG imports, the prices could be particularly high. The FERC sees the price of LNG as a cause worthy of attention and is ready to “address market manipulation.” “The impacts of rising natural gas prices on consumers are top of mind. Although FERC does not regulate natural gas prices, we do have authority to address market manipulation and we intend to remain particularly watchful during this period of inflation and high price sensitivity,” FERC Chairman Rich Glick said in a Thursday press release. The North American Energy Standards Board will meet on Friday to identify solutions to reliability challenges with natural gas and bulk electric systems.
The EU Fails To Agree On A Natural Gas Price Cap
The leaders of the European Union once again failed to reach an agreement on a cap on gas prices, ending the latest round of discussions in the small hours of Friday with a decision to keep exploring options, Reuters has reported. The idea of a price cap on gas imports was floated earlier this year and supported by 15 EU members, including Italy, Spain, and Eastern European countries. Others, however, are strongly opposing it, notably Germany and the Netherlands. The concerns of those opposing the bill center on the possibility that a price cap will interfere with market signals and lead to higher consumption, which is the last thing the EU wants right now. Last night, however, Germany’s Chancellor withdrew his government’s opposition to a cap, potentially opening the way to an agreement, the FT reported. Hungary, meanwhile, has once again played the spoke in the wheels, saying Thursday it would not agree to a price cap on gas and will demand an exemption. “It will simply not work. The outcome will be that we will have less gas in Europe, at a higher price, contradicting the original purpose,” a senior Hungarian government official told Reuters. “For Hungary this is not acceptable because the Russians already said very clearly that if it happens they will not send any more gas to Hungary, which from an energy security perspective would be unacceptable to us,” Balazs Orban political director for Hungary’s PM also said. EU officials have signaled they were happy with how the discussion ended but they have also admitted the real work was ahead: hammering out the details of any measures to tackle excessive gas prices will take time and a lot more effort, their statements suggest. The challenge would be to respond to different demands made by different EU members, including Germany, whose support of the caps is far from unconditional. As Chancellor Scholz put it, “There is still a lot of concrete work to do there.”
Synergia Reports Effective Gas Well Refracking in India, to Underpin Field
Synergia Energy Ltd. said Wednesday that the consistent rise in gas production at its C-77H gas well at the Cambay project onshore India confirms its belief that a fracking methodology has been established that will underpin a full field development. The oil-and-gas company–formerly known as Oilex Ltd.–said it has analyzed and optimized the well’s gas-production rates and that flow rates have increased to 276,000 standard cubic feet a day from 150,000 standard cubic feet a day at the end of September. “The company is currently designing a revised completion string incorporating a downhole pump to lift fluids from the wellbore and to enhance production rates,” the company said. Shares at 1517 GMT were up 5% at 0.11 pence.
Analysis: Where is India spending more, fossil fuels or renewables?
Is India embracing renewables or fossil fuels? On the one hand, there are the commitments India has made to decarbonise its economy in the face of climate change that is already impacting the country grievously. Then there are the planners who are convinced that fossil fuels are imperative to provide the electricity needed for India’s development. With this, we have seen announcements of huge investments in solar and wind energy, but also in coal, oil and gas. In the last two years alone, the union government has announced forthcoming public and private investment in coal of 4000 billion Indian rupees (around USD 50 billion). The Ministry of Petroleum and Natural Gas has said that in 2021-22 the country will invest 4800 billion rupees (USD 60 billion) in setting up gas infrastructure. The country is also hiking its investments in overseas oilfields – like Russia’s Sakhalin 1 and Sakhalin 2 and Brazil’s BM-Seal-11 – apart from stepping up domestic exploration for gas and oil. These announcements coincide with reports about the 1160 billion rupees (USD 14.5 billion) India invested in renewables in the last fiscal year; the 2020 billion rupees (USD 25.3 billion) of capital expenditure (or capex, money spent on building fresh assets like factories or power plants) which is expected to flow into the country’s EV market by 2030; Reliance’s mammoth 5950 billion rupee (USD 74.6 billion) investment in renewable energy and technology; an investment of 4800 billion rupees (USD 60 billion) in renewables from the Adani Group; and India’s push for indigenous manufacturing of solar panels and storage batteries. So, is India putting more money into renewables or fossil fuels? The question comes at a time when India is facing serious impacts from climate change. This year saw sustained heatwaves over northern India even as the northeast faced heavy rains, floods and landslides: experts say these unusual monsoon patterns are a sign of climate change. India is the world’s the third largest emitter of carbon dioxide (or fourth if the EU is considered as one). The country has committed to aggressive decarbonisation. The union cabinet of ministers has approved a suite of decisions to get about 50% of the country’s electricity from non-fossil fuel-based energy sources by 2030, and to reduce the emissions intensity of its GDP by 45% by 2030 (compared to a 2005 baseline). Where is India putting its money? Is India on track to meet these commitments? Comparing the country’s investments in new fossil fuel projects with those in renewables is an obvious place to start exploring this question. This, however, is easier said than done. India’s energy sector comprises scores of public and private companies which straddle value chains in both fossil fuels and renewables. Most companies do not report capex numbers separately. Nor is there is a consolidated database of all investments by all energy firms. Take gas, for example. Even as India pushes piped natural gas and sets up compressed natural gas (CNG) stations, quantifying total investment to date is very difficult. “Annual reports and earnings call statements by companies don’t tell you enough about the ongoing investments going into city gas distribution,” Swati D’Souza, energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), a think tank, told The Third Pole. “[For example] you don’t know how much of the planned capex on CGD [city gas distribution] has been utilised and how much is remaining.” An alternative approach – to look only at assets that have been commissioned – does not work either. India is currently building new projects in oil, gas, coal and renewables. Skip these, and the sense of the energy infrastructure taking shape will be outdated. You have to include projects that are in the planning stage to get the whole picture. In response, The Third Pole tried a different tack. We started with a simple map of India’s energy sector, spanning exploration, extraction and generation, and looked at capex announcements by both the government and the largest firms in each form of energy. Apart from these, there is the planned Rs 2200 billion (USD 2.7 billion) investment in electric vehicles by 2030. Needless to say, these numbers have to be taken with a pinch of salt. Capex plans are vulnerable to exaggeration. The Indian government has repeatedly made large infrastructure promises but subsequently under-delivered. India is about to miss its target of adding 175 GW of renewable capacity by 2022, for instance. With private companies too, memorandums of understanding do not always translate into investment.
Govt in talks for long-term Namibian crude contracts
India, the world’s third biggest oil importer, is looking to secure a long-term crude oil supply deal from Namibia, which is being hailed for one of the world’s largest oil finds in recent years, said two people aware of the development. This is part of India’s aggressive energy-sourcing diversification playbook. India’s plan of charting new geography to meet its energy needs comes against the backdrop of French energy majors TotalEnergies and Shell Plc making “giant” oil discoveries. India has been trying to diversify its energy supplies with Indian Oil Corp. recently signing a long-term contract to procure crude oil from Colombia’s state-run Ecopetrol SA and Brazil’s state-run Petroleo Brasileiro SA (Petrobras). “There has been a huge find in Namibia in February this year. We get some oil from Namibia but not in a large quantity. This is a long-term contract that we are looking for as it sequesters us from the vagaries of the global energy markets,” said a senior Indian government official, one of the two people mentioned above, requesting anonymity. TotalEnergies is the operator with a 40% working interest in Block 2913B that covers around 8,215 sq km in Namibia’s deep offshore. The other partners are QatarEnergy (30%), Impact Oil and Gas (20%), and state-run National Petroleum Corporation of Namibia or NAMCOR (10%). With 45% working interest, Shell is the operator of PEL 0039 that covers around 12,000 sq km in Namibian deep offshore and has QatarEnergy (45%) and NAMCOR (10%) as partners. The Namibian discoveries may contain recoverable reserves of around 6.5 billion barrels of oil equivalent, according to the research firm Wood Mackenzie. “The shareholding as quoted by you is correct. However, there are contracts in place as the commercial appraisals of the wells are yet to take place. The project is still at exploratory stage,” said a National Petroleum Corporation of Namibia spokesperson in an emailed response. This comes against the backdrop of a sharp output cut by the Organization of the Petroleum Exporting Countries (Opec) Plus of 2 million barrels per day amid record high prices of petroleum products in India and plans of a US-led global coalition to impose a price cap on Russian oil that has sparked a Russian threat to cut oil supplies to any country that becomes a party to the price cap plan.
GAIL India issues swap tender for four cargoes
GAIL (India) Ltd GAIL.NS has issued a swap tender offering two liquefied natural gas (LNG) cargoes for loading in the United States in exchange for two other cargoes for delivery into India, two industry sources said on Thursday. India’s largest gas distributor is offering two cargoes for loading from the Sabine Pass terminal from Dec. 27 to Jan. 11-20. It is seeking two cargoes for delivery into India’s Dabhol terminal, the first between Nov. 25 and Dec. 15, and the second from Jan 1-10. The tender closes on Thursday, Oct. 20. The firm has 20-year deals to buy 5.8 million tonnes a year of U.S. LNG split between Dominion Energy’s D.N Cove Point plant and Cheniere Energy’s LNG.AS Sabine Pass site in Louisiana.