Natural gas here to stay beyond energy transition, Big Oil says
Energy companies are betting demand for natural gas will rise at break-neck pace for decades, undermining warnings that tackling climate change would require a rapid switch to renewable energy. Top oil companies including Royal Dutch Shell, BP and Total are adapting with growing urgency to the need to develop cleaner energy sources, investing more and more in solar and wind power, electric vehicle technology and even forestation. Still, they see oil, and specially natural gas, the least polluting fossil fuel, playing a major role throughout the decades of transition and beyond as demand for electricity and plastics grows. “Shell’s core business is, and will be for the foreseeable future, very much in oil and gas and particularly in natural gas,” Shell Chief Executive Officer Ben van Beurden said in a speech at the Oil & Money conference. By 2035, Shell expects global gas demand to grow annualy by 2 percent, twice the pace of worldwide energy demand, van Beurden said. The United Nations said in a report earlier this week that limiting Earth’s temperature rise to 1.5 degrees Celsius means making rapid, unprecedented changes in the way people use energy to eat. That will include the tripling of renweables energy to supply 70-85 percent of electricity by 2050. Technology to capture and store carbon emissions would further reduce the share of gas-fired power to 8 percent, the report said, while making no mention of oil in this context. It is unclear how the global economy will reach such goals. Natural gas is today around 22 percent in the global energy mix. But many energy company executives prefer to see it as part of the shift to low-carbon economies. Qatar, one of the world’s largest gas suppliers, is set to grow its liquefied natural gas (LNG) capacity by over 40 percent by the next decade to around 110 million tonnes per year, as demand for the super-chilled fuel is set to soar, particularly in fast-growing economies such as China and India. “We believe that natural gas will continue to play a key role, not as a so-called transition fuel but rather as a destination fuel,” Qatar Petroleum CEO Saad Al Kaabi said. Shell is investing more than any other of its peers in clean energy, spending $1 billion to $2 billion a year on renewables and low-carbon energy. That compares with a total annual spending budget of $25 billion-$30 billion. The investments “might even make people think we have gone soft on the future of oil and gas. If they did think that they would be wrong,” van Beurden said.
Canada pipeline blast risks Washington natural gas shortage
A pipeline explosion in British Columbia risks cutting off the flow of Canadian natural gas to Washington State, and companies are urging customers to conserve. The blast Tuesday evening shut down the Enbridge natural gas pipeline about 600 miles northeast of Vancouver. Doug Stout of Fortis BC said Wednesday that 85 percent of the gas his company feeds to homes and businesses is carried by the twinned pipeline that runs from northern British Columbia to the United States border south of Vancouver. “There is a potential impact on Seattle and north of Seattle,” Stout said. The damaged Enbridge pipeline connects to the Northwest Pipeline system, which feeds Puget Sound Energy in Washington State and Northwest Natural Gas in Portland. Washington State-based Puget Sound Energy is urging its 750,000 customers to lower their thermostats and limit hot water use at least through Wednesday. No one was hurt when the fireball lit up the sky near the community of Shelley, British Columbia and forced about 100 members of the nearby Lheidli T’enneh First Nation from their homes. Witness Terry Teegee said the blast shook the area at about 5:30 p.m. “We thought it might have been a train crash or a low-flying jet,” he said. Zachary Semotiuk said he saw a “huge flash,” followed by a “raging fire,” that was easily visible above the tree line from several kilometers away. Chief Dominic Frederick with the Lheidli T’enneh First Nation said Enbridge contacted him shortly after the blast. “They had told me there was gas building up in the underground. For some reason or another the gas had stopped flowing and it built up and it just exploded,” Frederick said. As many as 700,000 customers in northern British Columbia, the Lower Mainland and Vancouver Island could be directly affected by a shortage, Stout said. Stout urged another 300,000 customers in the Okanagan and southeastern British Columbia, to conserve even though their natural gas comes from Alberta. Currently Fortis has reserves still in the pipeline south of Prince George, in its liquefied natural gas storage tanks in the Lower Mainland and on Vancouver Island, and there is some gas flowing from Alberta through a pipeline in southern British Columbia, Stout said. Fortis expected to receive updates on the situation as Transportation Safety Board investigators and National Energy Board inspectors arrived to assess the damage and attempt to determine a cause. The company will update its customers as soon as it is in a position to offer something new, Stout said.
BPCL refinery to make India less reliant on other countries for crude oil: Pradhan
Union Petroleum Minister Dharmendra Pradhan on Wednesday said that refinery plant under Bharat Petroleum Corporation Limited (BPCL) will make the country less reliant on other for crude oil and will also fulfill Prime Minister Narendra Modi’s promise of doubling farmers’ income. Earlier on Wednesday, Odisha Governor Ganeshi Lal laid the foundation of the BPCL ethanol bio-fuel refinery plant in Bargarh. “The refinery will be completed in upcoming two years. We are coming up with different strategies to fulfill the promise of Prime Minister Modi’s for doubling the farmer’s income,” he said. “Two things will happen because of the refinery plant is that nation’s self-sufficiency will increase and secondly farmers’ income will be doubled,” he added.
Tokyo Gas not considering to raise US LNG purchase
Tokyo Gas Co is not considering raising U.S. liquefied natural gas (LNG) purchase volumes as it seeks to diversify procurement portfolio, its President Takashi Uchida told reporters on Thursday. * The company has started receiving long-term U.S. LNG from Dominion Energy Inc’s Cove Point export plant in Maryland earlier this year, and it also has signed agreements to buy LNG from Cameron project in the United States. * Following the recent agreements to buy LNG from Mozambique and Canada, the company is beginning to fill up the room for required gas volumes in the 2020s, and that it would look to diversify procurement conditions further by seeking non-U.S. LNG supplies, he added.
Oil India finds gas in two wells in Assam in Q2
Oil India Limited (OIL) said it found hydrocarbons in two exploratory wells in Assam in the July-September quarter. The first one, in Dibrugarh, produced natural gas at the rate of 0.115 million cubic meters per day, while the second one, in Tinsukia, produced gas at 0.1 milion scmd. These numbers are at the higher end of production for gas wells. In fact, many new-generation, shale-gas wells produce as little as 5,000 cubic meters per day, though they can also go up to 50,000 cubic meters. “These discoveries are envisaged to open up new areas for further exploration in Assam and would help in enhancing the gas production with future appraisal & development activities,” the Eastern-India focused oil and gas producer said. The first well, West Lohali -1, encountered gas in 13 meters of Barail sand at a depth of 2,357 m. The second well, Dhakuwal-l, encountered oil and gas at 15 meters of “LK+TH sand” at a depth of 3,875 meters, it added. The second well also produced condensate (or liquids) at the rate of 22 cubic meters per day
India may receive 4 billion barrels of extra crude oil from Saudi Arabia in Nov
Saudi Arabia, the world’s biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday. The extra cargoes indicate a willingness by Saudi Arabia to increase crude supply to make up the shortfall once sanctions by the United States on oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), start up on Nov. 4. India is Iran’s top oil client after China, though several refiners have indicated they will stop taking Iranian barrels because of the sanctions. Reliance Industries Ltd, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemicals Ltd are seeking an additional 1 million barrels each in November from Saudi Arabia, the sources said. Three of the companies did not immediately reply to an email from Reuters seeking comment. MRPL replied “no comments” when contacted by email. State-owned oil producer Saudi Aramco was not immediately available for comment. Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions. Refiners in the country have placed orders to buy 9 million barrels from Iran in November. One of the reasons for the additional demand for Saudi oil is that the crude arbitrage from the United States is shut so the Indian buyers have to turn to Middle Eastern barrels, said one of the sources. India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency, which makes imports of dollar-denominated oil more expensive. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers. Indian Oil Minister Dharmendra Pradhan said on Monday that he spoke with Saudi Energy Minister Khalid al-Falih last week and reminded him that OPEC and other major oil producers had promised to raise their output at a meeting in June. India imports an average of 25 million barrels per month from Saudi Arabia. Reuters last week reported that Russia and Saudi Arabia, the world’s two biggest oil producers, struck a private deal in September to raise output to cool rising prices and had informed the United States about the decision.
Undue enrichment to Reliance Industries in KG D-6 field at $3 billion, say govt sources
The value of Reliance Industries’ (RIL) alleged “undue enrichment”, owing to migration of gas from state-run ONGC block to its KG D-6 field off the Andhra coast, has doubled to $3 billion from $1.5 billion estimated in March 2015, according to government sources. With much at stake, the government has asked attorney general K K Venugopal to personally monitor its challenge to an arbitration award in favour of RIL. India’s largest private sector oil company had initiated the arbitration proceedings after the government had slapped a recovery notice for $1.5 billion. The government is set to move the court, seeking refund of the undue benefit seen to have been derived by RIL. RIL declined to comment on the issue. “The order by the arbitration tribunal in favour of RIL has negated Indian laws, which will be the main focus of the A-G’s contention in the appeal,” a source said. The government is also relying on the fact that RIL-led consortium of RIL-Niko-BP was aware that extraction of gas from its KG D-6 will lead to migration of gas from ONGC’s block and that it failed to bring this to the notice of the authorities. This was also highlighted by the Justice A P Shah Commission, which was set up by the government in December 2015 after ONGC moved the Delhi High Court in 2014 on the gas migration issue. RIL’s partner in the venture Niko had obtained a report from the US-based oilfield consultancy firm DeGolyer MacNaughton (D&M) in 2003, where the latter had said that if they extract gas from KG-D6 field, gas from ONGC’s block will migrate as well, the source said. ONGC had in 2014 dragged RIL and the government to the Delhi high court, seeking appointment of an independent agency to verify its claims as RIL wells were too close to ONGC’s block and that migration of its gas had taken place. D&M again gave its report in 2015, confirming what it had said earlier.
GAIL’s Chief B C Tripathi seeks review of merit order dispatch
State gas utility GAIL India Ltd chief B C Tripathi on Monday called for a review of the merit order purchases made of electricity saying the practice promotes pollution as it just looks at cheapest power and not the source of generation. Speaking at The Energy Forum, he said there is a need to define what constitute “merit” as cost of power alone is not a sufficient factor. Under merit order rating (MOR) or merit order dispatch (MOD), sources of energy, especially electrical generation, are ranked based on ascending order of price with the cheapest getting priority. Usually, power generated by polluting coal gets the highest priority as the cost of generation is the cheapest. Tripathi said merit order should be calculated in wholesome by considering the pollution caused by the source, efficiency, and availability of power. “There is a need to review the merit order dispatches,” he said. “We need to define what constitutes merit.” The effort currently, he said, is to curb pollution at the consuming end and not at the source. “We tend to look at only tail of the pipe but not the origin,” he said. Tripathi emphasised that power generated from renewable sources like solar and wind as well as biomass and natural gas should get merit order priority as they are less polluting to the environment.
Petrol, diesel prices: No going back on fuel price deregulation, says Dharmendra Pradhan
In Delhi, petrol today is retailing at Rs 82.03 per litre and diesel at Rs 73.82. Even though public oil firms have been asked to subsidise prices of petrol and diesel by Rs 1 per litre, Oil Minister Dharmendra Pradhan on Monday said the government doesn’t plan to go back to deregulation of fuel prices. “This is not going back on deregulation. Fuel prices continue to be decided on a daily basis based on factors like benchmark international rate and foreign exchange rate,” PTI reported citing him. The fuel prices are surging parallel to the global crude oil rates that touched four-year high of $85 per barrel, he said at The Energy Forum. The government has also talked to Saudi Oil Minister Khalid A Al-Falih and “reminded him of the June commitment of Opec to increase production by 1 million barrels per day” to help stabilise prices, he added. It seems OPEC is not following its June decision, he said. The price of petrol on Monday was raised by 21 paise a litre and diesel by 28 paise. In Delhi, petrol today is retailing at Rs 82.03 per litre and diesel at Rs 73.82. The oil minister further said that the decision by the government to reduce excise duty on petrol and diesel by Rs 1.50 per litre each and ask oil PSUs to absorb another Re 1 per litre was aimed at “giving relief to consumers”. The latest decision by the government related to cutting fuel prices was taken in interest of the customers, he added. On being asked about the oil PSUs being asked to subsidise fuel, the oil minister said the companies have taken the decision to “shield” consumers from high prices.
We should look at alternative fuels as petrol import becomes difficult: Nitin Gadkari
Union road transport minister Nitin Gadkari on Monday stressed on the use of alternative sources of energy including bio-ethanol amid rise in petroleum prices. “Import of petrol is becoming difficult for the country and so we should look at the alternative sources of energy …we should make full use of biofuel, methanol, and ethanol among others,” he said while addressing the closing function of the Indian International Science Festival (IISF) here. Gadkari said that under the supervision of ministry of Science and Technology, cheap and eco-friendly alternatives have been successfully tried adding that his ministry has earned a lot of revenue through alternative fuel. He added that in the forest areas of the country, there are such natural products through which different alternatives of fuel including ethanol can be prepared. The union government has prepared a policy to purchase to such natural products from tribals, he said . “We can remove our country’s poverty with the help of science and technology … the manner in which our scientists are working, India will definitely become economic super power, he said. The minister said that we can now assure the Prime Minister who has given the concept of “New India ” that we have people ready for making it a reality by 2022.