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Combustion Industry News

From the IFRF's correspondent in Australia
From the Sydney office
Contributed by Patrick Lavery
Australia, Sunday 30th September 2018

DNV GL predicts worldwide energy demand to peak in early 2030s

Norwegian risk assessment company DNV GL has released its 2018 Energy Transition Outlook, a comprehensive 324-page document. DNV’s forecasting predicts a peak in worldwide energy demand around 2030-35, with energy efficiency improvements reducing demand afterwards. Natural gas is the only fossil fuel predicted to have an increased demand in future years (even up to 2050), becoming the largest share of energy supply by 2026, with demand for coal falling gradually until 2030 and then somewhat faster, and oil demand being steady until 2030 before falling. Wind, solar photovoltaics and hydropower supply will grow, with biomass holding approximately steady, such that by 2050 the renewables/fossil fuel mix will be approximately 50/50%. New oil fields will be required through to 2040 because exiting fields will deplete faster than demand falls. Electrification of energy supply will increase such that 45% of total energy consumption will be in the form of electricity by mid-century. Despite the reduction in energy consumption worldwide and the overall fall in the use of fossil fuels, the Paris Agreement objective of limiting the global average temperature rise to 2oC will not be met, the report finds, without deployment of CCS and/or even higher use of renewables (or perhaps nuclear power or capture of carbon dioxide from air). Interestingly, the report does not see a significant role for hydrogen in the future energy mix, being the final energy carrier for less than one percent of energy use, though it also discounts other ‘wild cards’ such as nuclear fusion, super-conductivity, or radical new solar or battery technologies as being too difficult to predict.

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US oil majors join Oil & Gas Climate Initiative, which announces methane emissions reduction target

ExxonMobil, Chevron and Occidental Petroleum Corp have joined the Oil & Gas Climate Initiative set up in 2014 by BP, Royal Dutch Shell, Total, Saudi Aramco, Petrobras and a number of other oil and gas companies. As part of joining, the three new companies have pledged US$300 million (€259 million) for research  intolow-carbon technologies to add to the Initiative’s existing research funding. The news comes after greater public pressure on oil and gas companies to take climate change action but also in the wake of the Trump administration’s decision to withdraw the US from the Paris Agreement. Exxon Chief Executive Officer Darren Woods said in a statement that it “will take the collective efforts of many in the energy industry and society to develop scalable, affordable solutions that will be needed to address the risks of climate change”, and noted the risk of climate change to his company’s business prospects. Shortly after the expansion of its membership, the OGCI announced a target to “reduce by 2025 the collective average methane intensity of its aggregated upstream gas and oil operations by one fifth to below 0.25%, with the ambition to achieve 0.20%, corresponding to a reduction by one third.”

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Coal firing falls to 35 year low in USA

Coal firing for electricity generation has fallen to a 35 year low in the USA, as a report by John Kemp at Reuters has described, using data from the Energy Information Administration. The first half of 2018 saw 270 million metric tonnes of coal burned for electricity, the lowest amount since 1983 (when coal far outweighed any other means of power generation, but total demand for electricity was lower than today). At the expense of coal has come gas firing, wind and solar, with coal falling over the last year by almost 6% while total electricity generation rose by close to 5%. Gas-fired generation rose by a sizeable 17% over the last year. As another 9 GW of coal-fired capacity is due to close by the end of 2020, the short-term outlook for power generation using the fuel is for continued decline. Much of the coal-fired fleet across the US is between 35-50 years old, having been built in the aftermath the oil crisis of 1973, and to continue to use these plants is generally unappealing to utilities, meaning that in the medium term, too, a revival is looking unlikely for coal.

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Gang violence deters exploitation of Mexican shale oil and gas reserves

Mexico’s push to develop of shale oil and gas industry is facing an all too familiar problem – drug gang violence. The Burgos Basin in the country’s north, part of the same basin which is present in southern Texas (in an area called Eagle Ford) is also the region in which a war between the Gulf and Zeta gangs has raged since 2010, making potential bidders for extraction rights shy. Although Mexico has large shale oil and gas reserves, and its conventional reserves are being depleted, only the state-owned Pemex has made a foray into fracking in the country, and even that was only experimentally. In the state of Tamaulipas, a Pemex worked was killed in April this year, after previous killings and kidnappings of other domestic and foreign oil and gas workers in previous years. Spanish oil and gas company Repsol is indicative of the hesitancy of international firms in entering the Mexican market – it operated in the Burgos Basin between 2044 and 2014, when it pulled out because of the violence, and an executive told Reuters that “very big changes” would have to happen before the company would consider returning, as the situation is worse now than it was in 2014. It seems that until the Mexican government can assure companies of security, the opportunity that the country's reserves offer will not be exploited.

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US carbon emissions now lower than 1993 level

Carbon emissions in the US continue to fall, as new data from the country’s Energy Information Administration shows. Emissions in 2017 decreased by 0.9% after a fall of around 2% in 2016 and 3% in 2015. (This followed rises in 2013 and 2014 and falls in 2011 and 2012.) The 0.9% fall is equivalent to 47 million metric tonnes, with total US emissions being 5,142 million tonnes in 2017, the lowest output since 1993. If emissions fell by a further 2% next year, the US would be producing less CO2 than in 1990. The 2017 fall came despite “real” GDP increasing by 2.3%, and the EIA states that CO2 emissions per unit of GDP (the carbon intensity of the economy) decreased 3.1%, probably mostly attributable to energy efficiency measures and gas firing replacing coal firing. In fact, total emissions from natural gas were higher than those from coal for the second year in a row. Over the last 12 years, as the data shows, switching to natural gas firing from other fossil fuels has resulted in 58% more emissions reductions than those from “non-carbon power generation”, but last year the difference was narrower, at 7%, which may indicate that renewables will in the future be the primary power generation sector factor in US carbon emissions reductions. Since 2005, total US emissions have fallen 14%, which would be a good step towards the 26-28% that the US had pledged to cut by 2025 under the Paris Agreement, but from which the country has subsequently withdrawn. Whether the country will meet the target regardless of being part of the Agreement as it did with its Kyoto Protocol target remains to be seen.

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Psychologists studying Europeans’ perception of carbon storage

A research project is underway across Europe to understand the perception of citizens towards the geological storage of captured carbon. The European Commission is funding the project, which is being led by psychologists Emma Ter Mors and Christine Boomsma, splitting the question of perception into three parts – what people currently think of the storing carbon, what objections they have to it, and what are the psychological mechanisms behind those objections. Gathering answers to these questions will allow communications materials to be designed that are more persuasive in garnering public acceptance. As Ms Ter Mors points out, “if society doesn’t want the technology, it will be difficult to implement”. Questionnaires, interviews and media analysis are being conducted as part of the research project, with media analysis having commenced in August 2017, initial findings being around doubts about carbon storage taking away funding from other potential energy related technologies. The team is also to look at possible financial compensation mechanisms for people living near CCUS facilities.

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General Electric’s HA turbines experiencing blade oxidation issues

General Electric has announced that four of its new turbines have experienced oxidation issues during operation, and that it expects more of the 51 turbines it has shipped to date will experience similar problems. A natural-gas fired plant run by Exelon Corp in Texas, USA, was the first to report the problem, which affects the turbine blades, in early September. The four turbines affected so far have had to be shut down, making the entire units inoperable - bad news both for the owners of the power stations using the new turbines and for GE, as affected companies may claim damages from the turbine manufacturer, and other companies considering purchasing the HA turbines may think twice. At this stage the issue does not appear a deeply difficult one to resolve, with GE expecting to have Exelon’s turbine operating again “soon”, though the company’s share price has dropped 3% since the news surfaced, and analysts say that after declining sales and profits recently, GE has little space for “wriggle room”. GE Power chief executive Russell Stokes has said the “minor adjustments that we need to make do not make the HA any less of a record setting turbine – they are meeting – and in many cases exceeding – their performance goals at every customer site today.”

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Siemens wins operations and maintenance contract for enormous Egyptian gas plants

Siemens AG and Siemens Technologie have been engaged by the government of Egypt to manage, operate and maintain the three 4.8 GW combined cycled gas-fired power plants Siemens completed building in the country in July. The three plants - at the new administrative capital east of Cairo, at Burullus in the northern Nile Delta and at Beni Suef south of Cairo – are claimed by Siemens to be the world’s largest plants of their type, and were built in world record time (being built over 27.5 months). The huge 14.4 GW injection of power generation capacity into the country has put an end to the rolling blackouts and long periods of industrial closures the country was experiencing, giving a boost to President and former Commander in Chief of the Armed Forces, Abdel Fattah al-Sisi. The contract to manage, operate and maintain the plants is worth US$352 million/€300 million (though the period is unclear) after the capital costs of the plants of US$7 billion (€6 billion).

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