Thursday, November 29, 2012

Politics and LNG exports: What is the future of shale gas?

(EnergyAsia, November 29 2012, Thursday) — The following is an edited version of an article written by Susan L. Sakmar, Visiting Assistant Professor, and Andrews Kurth Energy Law Scholar, University of Houston Law Centre. It was first published by CWC News.

The vast shale gas reserves that have been unlocked in the US have been a "game changer" with shale gas expected to constitute almost 50% of US natural gas production by 2035.

What is less clear is whether the abundance of shale gas will result in the US becoming a major LNG exporter with a growing number of companies seeking approval from the US Department of Energy (DOE) to export LNG to countries around the world.

US law generally requires automatic approval of natural gas exports to most countries that have a free trade agreement (FTA) with the US, including Australia, Bahrain, Canada, Chile, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras, Jordan, Mexico, Morocco, Nicaragua, Oman, Peru, Republic of Korea, Singapore and Panama which has not yet taken effect. Notably, the US currently does not have an FTA with Japan – the world's largest LNG importer.

For non-FTA countries, the DOE reviews proposed exports on a case-by-case basis to ensure they are consistent with the "public interest" in light of a number of factors including the domestic need for the natural gas proposed to be exported, whether there is a threat to the domestic security of supply, and other factors deemed to be relevant to a public interest determination.

While the US DOE claims "it takes its statutory responsibility to make public interest determinations on natural gas export applications very seriously and is committed to taking the time necessary to get the decisions right," a number of lawmakers have been putting pressure on the Obama administration to speed up the approval process for the pending LNG export applications.

In an August 2012 letter to Energy Secretary Steven Chu, a group of US lawmakers pointed out that the DOE "does not seem to have a set timeline for decisions or a sense of urgency," which has left a growing number of companies and projects waiting in limbo, with Cheniere's Sabine Pass Liquefaction project being the only project granted an export license for non-FTA countries.

Prior to the US Presidential election on November 6, the prospect of the US becoming a major natural gas exporter became a political hot button that no one wanted to push in an election year. Some US policy makers have expressed concern that LNG exports will increase domestic prices for natural gas, which would harm consumers as well as industrial users of natural gas such as the steel, plastics and fertiliser industries.

While most business leaders seem reluctant to argue that a free trade nation like the US should restrict exports, some have urged that America should exploit her competitive advantage with lower natural gas prices to create jobs by using its cheap natural gas to convert to products for export, as opposed to exporting the natural resource itself. Still others have claimed that with far fewer emissions than any other fossil fuel, America should use more natural gas at home, particularly in transportation and heating.

In addition to political and industry opposition, there is also risk that environmental opposition to shale gas development will spill over into opposition to US LNG exports. The Sierra Club has argued that LNG exports could increase the domestic price of natural gas and inflict negative environmental impacts in the production stage.

Some reports have acknowledged that since the case for US LNG exports depends on the continued development of shale gas, the public's concerns over the environmental impacts of shale gas development must be resolved.


The bottom line

With the re-election of President Obama, many are wondering whether the long wait for export approval will soon be over. The DOE has retained an independent third-party contractor to conduct a review of the economic impacts of proposed LNG exports with the report expected by end-2012.

However, the DOE has also indicated that once complete, the report will be subject to public comment before it continues with the process required by statute to make public interest determinations on the pending applications. How long the public comment period will be open is anyone's guess.

This topic and many more will be discussed in more detail at CWC's World LNG Summit in Barcelona on November 27-30, and at CWC's World Shale Oil & Gas: Latin America Summit in Buenos Aires on November 28-30.


Tuesday, November 27, 2012

Shell expanding Pulau Bukom ethylene cracker

Sunday, Nov 18, 2012

SINGAPORE - More investments are coming to Jurong Island.

Shell is expanding its upstream ethylene cracker - core to its US$3 billion (S$3.7 billion) Shell Eastern Petrochemicals Complex (SEPC) here - to ramp up production of olefins and aromatics by over 20 per cent to meet in-house needs as well as the needs of customers.

No investment sum was cited, but the debottlenecking of the cracker - boosting its production of petrochemicals like ethylene, propylene and benzene to one million tonnes per annum (tpa) from the current 800,000 tpa - should easily run into hundreds of millions of dollars.

Capacity-wise, this will bring it on a par with ExxonMobil's new US$1 billion-plus, one million tpa second cracker here, which will start up any time now. The cracker is part of the US oil giant's second US$5-6 billion petrochemical complex here.

Separately, Mitsui Chemicals has also just announced that it is setting up another US$115 million plant here to produce specialised polymers used in the manufacture of various packaging materials. The plant, its sixth here, effectively cements Singapore's position as the Japanese group's key external manufacturing base.

Shell said on Thursday that it had made a final investment decision to "debottleneck" its ethylene cracker on Pulau Bukom, with engineering taking place during the next plant maintenance turnaround. "We plan to supply the additional production to a combination of our own derivatives plants and third-party consuming facilities in Singapore," a spokesman told BT.

The expansion comes just over two years after the cracker first started up in the first quarter of 2010. It is a major component of the SEPC project - the Anglo-Dutch group's largest- ever petrochemicals investment - which is integrated with its largest refinery here on Bukom, as well as its world-scale mono-ethylene glycol plant on nearby Jurong Island.

Ben van Beurden, Shell Chemicals' executive vice- president, said: "Our Singapore ethylene cracker was designed with potential capacity expansion in mind and I am delighted to confirm this debottlenecking.

"The investment will generate additional volumes to help us meet growing demand from our customers in the region. It will also further unlock value from integration with our refinery and our derivatives activities on Jurong Island. This integration is key to our strategy."

Underlining the project's significance, Dr Huck Poh, Shell Singapore's manufacturing director, added: "This project reinforces Shell's commitment to Singapore, which is already our largest petrochemicals production and export centre in the Asia Pacific."

Shell's recent expansions here include the ramping up of its high-purity ethylene oxide (HPEO) production here, ahead of plans to eventually build a new HPEO plant to feed a new "chemicals corridor" for the HPEO feedstock needed by downstream soap and detergent makers. It has also built a pilot plant for chemical intermediate diphenyl carbonate that could be a precursor to a full-scale commercial investment.

It is the increased availability of feedstock from Shell's petrochemical complex, as well as that of ExxonMobil and Petrochemical Corporation of Singapore, which has drawn downstream players like Mitsui Chemicals.

Mitsui's latest plant investment here (through wholly-owned subsidiary Prime Polymer) will produce metallocene linear low-density polyethylene used in the manufacture of various packaging materials. The 300,000 tpa Singapore plant will help it augment production from a similar-sized plant in Ichihara to supply to the rapidly growing Asian market.

Mitsui Chemicals has so far invested over S$1 billion in five other plants here, including one to produce elastomers used for making moulded products like car bumpers.


Monday, November 26, 2012

SINGAPORE: Rig builder Keppel O&M celebrates 10th anniversary with total orders exceeding S$12 billion


(EnergyAsia, November 27 2012, Tuesday) — Singapore's Keppel Corporation Limited said its wholly-owned subsidiary, Keppel Offshore & Marine Ltd, has secured S$12.2 billion worth of business since its start-up in 2002. (US$1=S$1.22).

Remarkably, the company, which was created from the merger of three offshore and marine companies, Keppel FELS, Keppel Shipyard and Keppel Singmarine, secured more than 70% or S$9 billion of its orders this year.

Revenue tripled from S$1.9 billion in 2002 to over S$5.7 billion in 2011, and is on course to reach a record this year after topping S$6.2 billion in the first nine months.

As one of the world's leading offshore rig builders, Keppel O&M has a global workforce of over 30,000 today, more than double 14,000 when it started.

Choo Chiau Beng, Keppel Corp's CEO, and Keppel O&M's chairman, said:

"The past 10 years have proven that this integration strategy is right for us. By eliminating duplication and internal competition, streamlining our operations as well as harnessing synergies and combined strengths, we have maximised value for not only ourselves, but also our customers and business partners. In the process, we have grown from strength to strength."

Tong Chong Heong, Keppel O&M's CEO, said:

"Our robust track record over the past decade reflects our strong capabilities. Today, our network of 20 yards globally enables us to meet increasing demand for local content.

"In the Gulf of Mexico, our yard in Brownville, Texas, is working on several projects for Mexican customers, while in Kazakhstan, we are building the country's first jackup rig.

"In Brazil, we are constructing six DSSTM38E semisubmersible (semi) drilling rigs for Sete Brasil, as well as undertaking the fabrication and integration works for four floating production storage and offloading (FPSO) units."

Keppel O&M has laid claim to having built half the world's jackup rigs and one-third of its semisubmersible rigs since 2000.

For 2013, Keppel FELS expects to deliver a record 20 rigs, exceeding its previous all-time high of 13 rigs in 2009.

In the marine sector, Keppel Shipyard has so far delivered 105 offshore conversion and upgrading projects, while Keppel Singmarine has completed some 400 specialised newbuild ships including offshore support vessels and specialised units.

Mr Tong said: "Our proprietary designs are gaining wide market acceptance. Since 2002, Keppel O&M has delivered 35 KFELS B Class jackups, 3 KFELS N Class jackups and 16 semis built to our proprietary designs. Since 4Q2010, Keppel O&M has secured a total of 39 newbuild rig orders, and out of these, 34 are for Keppel designed jackups and semis. We will continue to leverage our execution and design capabilities built up over the years to sustain our market leadership."


Tuesday, November 13, 2012

INDONESIA: India’s Tata Power, Japan’s Idemitsu acquire stakes in coal miner

(EnergyAsia, November 14 2012, Tuesday) — India's Tata Power Company and Japan's Idemitsu Kosan Co have acquired stakes in an Indonesian coal miner in separate deals

Tata Power bought a 26% stake in Jakarta-listed PT Baramulti Sukses Sarana Tbk (BSSR) for an undisclosed sum while Idemitsu Kosan said it paid more than one billion yen for a 3% stake.

India's largest private power company said the acquisition would improve its security of coal supply as BSSR and its subsidiary PT Antang Gunung Meratus (AGM) hold a combined one billion tonne of coal reserves in Kalimantan province.

In July, Tata Power signed a long-term agreement to import coal from AGM.

"We recognise fuel security as a key to support Tata Power's growth agenda. Thus, besides entering into coal off-take pact, we have acquired 26% stake in this coal mine as its reserves and outlook are very promising," said Tata Power's managing director, Anil Sardana.

The latest acquisition adds to Tata Power's 30% stake in two other Indonesian miners, PT Kaltim Prima Coal and PT Arutmin.

Separately, Idemitsu Kosan said it bought into BSS to access the miner's low-calorie sub-bituminous coal reserves and its growing exports to Vietnam, China, India and Japan.

According to Idemitsu, the miner expects to raise the annual production from its Antang Gunung Meratus mine from around three million tonnes to seven million tonnes by end-2014.


Sunday, November 4, 2012

SINGAPORE: Solar, renewable energy companies make major announcements at recent SIEW event

(EnergyAsia, November 5 2012, Monday) — At least seven companies involved in the solar and renewable energy sector made major announcements at the Singapore International Energy Week (SIEW) which took place on October 22 to 25.

Trina Solar, MEMC, Juwi, ReneSola, Saint-Gobain, GL Hassan and Yingli Solar issued statements related to their plans and operations in Singapore and the region during the 2012 Photovoltaic Asia Pacific Conference and Expo that was part of SIEW.

Trina Solar, an NYSE-listed integrated manufacturer of solar photovoltaic (PV) products, German renewable energy developer Juwi, ReneSola, Sait-Gobain and GL Hassan all announced the official opening of their regional head offices in Singapore.

Trina Solar and ReneSola said their Singapore offices oversee not only the Asia Pacific region, but also the Middle East and Africa.

Trina, which established its Singapore regional head office last year, said it provides management functions covering administration, sales, project development, R&D, logistics and purchasing operations.

ReneSola Ltd, a leading global manufacturer of solar photovoltaic (PV) modules and wafers, said the new office will also drive sales and business development for the company in Asia, the Middle East and Africa.

Europe's Saint-Gobain Solar, which designs, manufactures, distributes and markets building materials and solutions for housing, said it has started a Singapore office to drive sales in the region.

Nicolaj Dahl, the company's commercial director for Southeast Asia and the Pacific, said:

"Our entry into South East Asia & Pacific is a natural move for our business. Solar energy has an increasingly important role to play in energy generation. Our presence in the region will allow access to a premium PV module that is reliable and highly efficient. Our product and ambitions have already sparkled a substantial positive interest from major stakeholders in the region.'

At its new Singapore office, GL Garrad Hassan has appointed senior investment and strategy adviser Ragna Schmidt-Haupt to market its renewable energy services, with a strategic focus on solar investment.

The company said it is targeting Singapore for further expansion due to its status as a regional hub for investors, banks, manufacturers and project developers. Its strategic location and favourable tax and administrative regime are cementing its role as a platform for renewable energy investment in Southeast Asia.

Comprising Germanischer Lloyd, GL Noble Denton and GL Garrad Hassan, the GL Group in Singapore offers a full range of classification, engineering, oil & gas, renewables (wind, solar, wave & tidal) and software services from a single location.

NYSE-listed MEMC Electronic Materials Inc and its solar energy subsidiary, SunEdison, said they will establish an energy research centre in Singapore with the support and cooperation of the Singapore Economic Development Board (EDB). The centre, which will be located within MEMC's existing Singapore facility, will focus on solar energy research and development to improve energy yield and grid integration.

"This research will enable us to retrofit older systems to make them more efficient, and design the most efficient systems of the future," said Nagendra Cherukupalli, SunEdison's vice president and chief technology officer of Systems R&D.

MEMC, a global leader in semiconductor and solar technology, established its regional office in Singapore in 2006. Through SunEdison, MEMC is also a developer of solar power projects and a worldwide leader in solar energy services.

From its new regional head office in Singapore, Juwi, a leading German renewable energy project developer, is targeting to expand into Japan, Taiwan and India.

In September, Juwi and a local partner developed a one-MW solar power plant in southern Japan to produce electricity for 300 households. The plant will be connected to the grid by mid-December. In Jyn Lin province, Taiwan, the company is installing photovoltaic systems on eight rooftops.

The German firm has been most successful in India where it has completed five solar projects with a combined capacity of 22MW since October 2010.

Yingli Solar, another Chinese-owned NYSE listed company, said its has secured a deal with Keppel Corp to instal Singapore's largest solar system project.

The company said wholly owned subsidiary Yingli Green Energy Singapore Company Pte Limited will supply one MW of multicrystalline PV modules to SolarGy Pte Ltd, a Singapore-based PV system integrator, to install the plant at the Ulu Pandan NEWater Plant.

The project is owned by K-Green Trust and will be managed by Keppel Seghers NEWater Development Co Pte Ltd (KSND), both companies owned by Keppel Corp. SolarGy is responsible for the project's engineering, procurement and construction.

When completed in February 2013, it will be the largest solar PV installation at one location in Singapore, generating 1.2 million kWh of clean energy a year to meet the electricity consumption of 250 four-room residential apartments in Singapore.

The project will utilise around 4,000 pieces of Yingli 245 Wp high efficiency multicrystalline modules over the roofs of the plantrooms spanning an area of approximately 10,000 square metres.



Thursday, November 1, 2012

Reclaim land at islands for a second petrochemicals hub

Friday, Nov 02, 2012

SINGAPORE - With the recent plans to build a fourth storage facility at the liquefied natural gas (LNG) terminal on Jurong Island ("$500m plan to grow LNG terminal"; last Thursday), Singapore's energy sector is once again in the spotlight.

With the ever-tightening space constraints on Jurong Island, it may be time to explore additional areas for reclamation so as to maximise the potential of our energy sector.

Singapore is the third-largest global oil refining and trading centre, and the petroleum and petrochemicals industry is a key pillar of our economy.

However, with most of the land on Jurong Island already in use, the Government should launch a feasibility study into reclamation on the islands further south, namely Pulau Bukom, Pulau Busing and Pulau Sebarok.

These islands already contain crucial facilities, such as the Shell Refinery on Pulau Bukom, which churns out 500,000 barrels per day.

Joining these islands through reclamation would create much needed land for a further expansion of the petrol and petrochemicals industry, and fuel its continued growth.

The presence of another significant petrochemical hub is a potentially lucrative prospect, especially because of its close proximity to Jurong Island, which provides for the easy integration of operations between the two.

Furthermore, the scarcity of industrial land on Jurong Island has forced some global companies to search for alternative sites in the region.

Malaysia and Indonesia have already started developing their own respective downstream oil sectors. This is a cause for worry as both countries already have extensive upstream oil sector operations and the construction of a petrochemicals hub would be a logical and convenient step to take.

Furthermore, the Fukushima nuclear disaster has caused many countries to re-evaluate their reliance on nuclear energy.

If Singapore does not rapidly expand its energy sector to tap this huge potential in the global oil market, it stands to lose out on the potentially lucrative returns, and may also see a decline in its status as a key global oil hub.

The Government has launched numerous initiatives to tap the potential of the energy sector, such as the Jurong Rock Caverns, an underground oil storage facility.

However, it is unwise to put all our eggs in one basket.

It may be prudent to reclaim land and subsequently develop a second petroleum and petrochemicals hub to complement Jurong Island for the long-term benefit of Singapore's energy sector.