Sunday, December 30, 2012

SINGAPORE: ExxonMobil starts up new ethylene cracker, power plant at petrochemicals complex

(EnergyAsia, December 31 2012, Monday) — After more than a year of delay, ExxonMobil said it has started up operations at one of the world's largest ethylene steam crackers, the centrepiece of the company's multi-billion dollar expansion project at its Singapore petrochemical complex.

The US major has added a new 220-megawatt cogeneration power plant, and a petrochemicals complex with an annual capacity to produce a total 2.6 million tonnes of ethylene, polyethylene, polypropylene, metallocene elastomers, an oxo-alcohol unit and aromatics. Ethylene production is expected to start in the next few months, well behind the original target of early 2011.

Shaw Group, the US-based contractor for the ethylene cracker, suffered a huge loss from the project as a result of rising sub-contractor cost increases and schedule delays since construction began in November 2007.

ExxonMobil has an existing 140-MW cogeneration facility to supply electricity to its world-scale operations on Jurong Island. Cogeneration allows for the efficient generation of electricity to run pumps, compressors and other equipment, while at the same time producing additional steam for use in the production processes. Cogeneration is significantly more efficient than traditional methods of producing steam and power separately, resulting in lower operating costs and reduced greenhouse gas emissions.

Estimated to cost more than US$5 billion, the expansion project has made the Singapore facility ExxonMobil's largest refining and petrochemical complex. It also marks the first production by ExxonMobil of its proprietary specialty elastomers and metallocene-based polyethylene in the Asia Pacific region.

Steve Pryor, President of ExxonMobil Chemical Company, said:

"We have doubled the size of our finished product capacity at Singapore, making this the largest chemical expansion project in ExxonMobil history. This is among the most technically advanced and competitive manufacturing sites in the Asia Pacific region."

The expansion will increase the company's chemical plant workforce by 50%, bringing total employment at ExxonMobil's Singapore integrated refining and chemical complex to 1,800. During peak construction, the project employed on site 22,000 workers who achieved more than 80 million work hours with no lost-time injuries in construction activities.

ExxonMobil has operated in Singapore for more than 100 years and is one of Singapore's largest foreign manufacturing investors.


Tuesday, December 25, 2012

National self-sufficiency for natural gas seen, not crude oil, professionals tell Deloitte

(EnergyAsia, December 24 2012, Monday) — America can bank on plentiful domestic natural gas, but will have to continue relying on foreign oil, according to 250 oil and gas decision-makers who participated in a recent Deloitte survey.

Three-quarters of the respondents think the US is already natural gas self-sufficient, or will be within 10 years.

When it comes to oil, however, survey respondents are far less optimistic about the nation's ability to meet American demand with domestic supplies: 54% say the US will never be completely oil self-sufficient – and only 26% say oil self-sufficiency is achievable in the next 10 years.

Deloitte believes that the answers would have been different if the question of oil self-sufficiency had been expanded to include all of North America.

"Given North America's remarkable success with unconventional oil – both tight oil in places like North Dakota and oil sands in Canada – something closely resembling self-sufficiency is arguably within reach," said Peter Robertson, a senior advisor to Deloitte and former vice chairman of Chevron Corporation.

"When you combine unconventional oil supplies with the recently established increase in shale gas reserves, you could have the makings of a true energy renaissance."

Deloitte conducted the survey in late October and canvassed 250 oil and gas professionals from a decision-making demographic: Respondents were 48 years old on average and had an average of 20 years' experience in the industry. All had college or graduate degrees and earned over US$100,000 per year.

"It's not surprising that oil and gas decision-makers are enthusiastic about the role of natural gas in our national energy future, given burgeoning supplies, America's comparatively low cost of extraction, and its relative cleanliness," said John England, Deloitte LLP's vice chairman, and leader of the company's oil and gas practice.

"What is surprising is that natural gas is a fuel source that we were aggressively preparing to import at high world prices just a few years ago."

Looking at 2013, the respondents see natural gas prices remaining quite low – with 40% predicting prices less than US$3 per MMBtu, and a large majority (86%) predicting Henry Hub prices under $4 per MMBtu.

Crude oil prices, on the other hand, are expected to remain relatively strong next year. About 57% of respondents expect think the average cost West Texas Intermediate crude oil to range between US$80 and US$99 a barrel.

Regarding natural gas regulations, 49% think regulations related to hydraulic fracturing are "just right" or "evolving, but on the right track" – but a minority (39%) still believe there is "too much regulation." Just 5% say there is "too little regulation" and 7% say they are "unsure."

A clear majority of 63% of the respondents supports regulations requiring producers to disclose the contents of their hydraulic fracturing fluids, with only 24% in opposition and 13% "unsure".

Looking at the issue of shale gas resource estimates,

A majority (51%) believes that current industry estimates of recoverable shale gas reserves are on target, with 23% saying they are "somewhat overestimated" and the exact same amount saying they are "somewhat underestimated."

Only a few think shale resources are "very overestimated" or "very underestimated" – 1% and 2% respectively.

"It seems clear that oil and gas professionals believe America has a veritable bounty of shale gas resources," said Roger Ihne, principal, Deloitte Consulting LLP, serving the oil and gas sector.

"In simple terms, over 95% think the current industry estimates are accurate or not far off."

With the large gas resource base, industry professionals foresee continued low prices and new market opportunities abroad.

Most survey respondents think that the abundance of shale gas will lead to liquefied natural gas (LNG) exports.

A large majority (72%) expect that LNG export terminals will eventually receive government approval – with 36% believing this approval will occur before 2014 and the exact same percent expecting approval after 2014.

Similarly, the survey found that even with exports of LNG, most oil and gas decision-makers don't see a meaningful increase in domestic natural gas prices. A strong majority (93%) sees either no price increase or a slight change in price. In contrast, only 7% expect a significant price increase.

"Given the reserve estimates and current supplies, it only makes sense that natural gas producers are keen to develop new uses for their gas. One possible option that stood out among survey respondents was use as a transportation fuel," said Mr Ihne.

When asked to identify the best alternative transportation fuels to gasoline and diesel, survey respondents clearly preferred natural gas – with 67% seeing products like compressed natural gas (CNG) as the most promising option to refined oil products, far ahead of other top choices like electricity (11%) and biofuels (8%).

The survey also looked at a host of other pressing issues facing oil and gas companies today.

A large majority (78%) of respondents expect that the Keystone XL pipeline will eventually receive government approval – with 42% expecting approval in 2013 and 36% expecting approval in 2014 or later.

About 59% predict increased capital spending in 2013 with 35% expecting it to remain the same, and only 6% think it will decrease.


Sunday, December 16, 2012

MARKETS: ExxonMobil expects natural gas to surpass coal as second most popular fuel by 2025

(EnergyAsia, December 17 2012, Monday) — Natural gas will surpass coal as the world's second most popular fuel after oil by 2025, predicts ExxonMobil in its latest long-term forecast to 2040.

Coal demand will start declining after peaking around 2025 while natural gas will continue to surge as more countries consume cleaner-burning fuels to curb greenhouse gas emissions.

New technologies will help develop new sources of reliable and affordable energy as well as new uses to support economic growth, with North America leading the way.

Natural gas will be key, its global demand seen rising by about 65% through 2040 while coal use will slide by 10% between 2025 and 2040, said ExxonMobil.

"Demand for coal, on the other hand, will peak around 2025 and then decline, as improved efficiency couples with a shift to less carbon-intensive energies, particularly in the electricity generation sector.

"This shift will be led by the OECD, but even China, which today accounts for close to 50% of global coal demand, will see its coal usage fall by more than 10% through 2040. This would mark the first long-term decline in global coal usage since the start of the Industrial Revolution," said the US major.

North America will account for 20% of global natural gas production through its application of new technology to exploit its vast shale and other unconventional sources. The abundance of shale-based oil and gas will become help revitalise old world energy-intensive industries such as energy, chemicals, steel and manufacturing.

"These resources will also create new opportunities for global trade with countries in Europe and the Asia Pacific region, which are reliant on international markets to meet domestic energy requirements. The changing landscape and resulting trade opportunities will continue to provide consumers with more choices, value, wealth and good jobs," said ExxonMobil.

In its annual forecast, the US major said global energy demand will expand by about 35% between 2010 and 2040.

Future energy needs will be supported by more efficient energy-saving practices and technologies, increased use of less-carbon-intensive fuels such as natural gas, nuclear and renewables, and the development of unconventional energy sources that were previously inaccessible without technology advances.