Gas to Power Journal - Weekly News - 61 - 2014 June 27 by Gas to Power Journal

Weekly News

27 June 2014

Australia backs gas plant sales to boost power sector investment An Australian tribunal has overturned an earlier decision by the country’s competition regulator that would have blocked power supplier AGL Energy from buying gas-fired power plants in New South Wales. his latest ruling aims to reinvigorate investment for the gas-fired power sector in Australia which has faced increasing economic challenges as gas producers have focused on exporting LNG to Asia. AGL had previously been banned from buying two power stations from the New South Wales government. The company had offered $1.41 billion for the Bayswater (2,600 MW) and Liddell (2,000 MW) power stations.

Ruling to help raise $94 billion for vital capital works Despite concerns that AGL will be gaining a dominant position that may unduly influence the country’s electricity markets the government is keen to bolster investment to drive vital upgrade work to gas infrastructure. Australia's state governments are under pressure to privatise gas-fired power plants in order to raise around $94 billion needed for capital works but have struggled to find investors. Power providers in the coun-

Australia's Gorgon project has diverted gas away from power production, driving up electricity prices

try have shied away from investing following difficult operating conditions that have resulted in multi-billion dollar losses. Earlier this year gas power producer EnergyAustralia announced writedowns of $133 million on its Australian gas assets, making it the latest energy provider to be hit by rising domestic prices following a dash to export Australian gas to Asia as LNG.

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India: Gas power economics hinge on peak production as energy imports rise Despite India’s surging electricity demand, the economics of gas generation hinge on peak production, said Rajeev Mathur, executive director marketing at Gas Authority of India Ltd (GAIL). “If anyone wants reliable power [during hours of peak demand] he can pay more. That's where the economics of imported gas for power generation will work,” he told Gas to Power Journal. o meet peaking power requirements, when demand suddenly surges, gas-fired power is the best mode as operators can increase generation capacity in peak hours in the evenings and mornings," Mathur said.

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Economic growth to drive $110bn rise in energy imports by 2023 If India's economy continues to grow at an average rate of 8% in the coming decade, power demand will

India's gas peaker plants will increasingly run on LNG

soar from the current 120 GW to up to 335 GW by 2017 – about 100 GW higher than most current estimates, a McKinsey study shows. As a result energy imports to India could almost double, rising from $120 billion currently to $230 billion by 2023, Goldman Sachs analysts warned, although reforms may reduce India's annual energy import bill by $40 billion in the forecast period. Narendra Modi, India’s newly elected president, has pledged to bring about sweeping power sector reform in an effort to help tackle chronic blackouts.As the first test of the new government’s resolve soaring temperatures at the start of the month saw public unrest turn violent as mobs attacked electricity sub-stations in response to power shortages and temperatures of 47°C. India currently has the fifth largest population in the world but produces only one-thirtieth of global continued on page 2

AGENDA POLICY & REGULATION Texas town considers fracking ban

EU urged to fast-track cogen policies

MARKETS Global gas markets depend 4 on European recovery Kuwaits edges toward Iran gas imports

Mexico energy reforms risk delays - OIES

Europe's mini gas engine capacity to double

PROJECTS & FINANCE CPV to proceed with Maryland plant

Siemens wins Malaysian cogen plant order

Moxie proposes 900 MW Michigan gas plant

FirstRand to fund Ghana gas power project

GTP Journal

MARKETS

27 June 2014

Top story, continued from page 1

Australia gas power profits hit by surge in LNG demand Soaring demand for Australian LNG has resulted in mega developments such as the massive Gorgon gas project swallowing a vast proportion of the country’s available resources. The Gorgon project alone aims to produce 15 million tonnes of LNG per year and as a result domestic gas prices are steadily rising. EnergyAustralia is not alone in seeing losses as nearly every major power provider has cut back or mothballed gas-fired capacity due to economic conditions. EnergyAustralia has reportedly written down $94 million on its 435MW Tallawarra baseload plant which opened in 2009 and calculated a loss of $13 million on its 203MW Hallett site, a 12-year-

old peaking plant in South Australia. There are some signs this trend is abating however as high construction costs are starting to dissuade LNG project developers as well, potentially freeing up gas supply for domestic power. The $4.6 billion Santos project was the latest casuality with project partner GDF Suez announcing this week that rising costs meant the projects was not viable.

Australian power market faces 29% rise in electricity prices in the next year Despite the positive signal for investors given by the overturn of the anti-competition ruling this week the market outlook for gas power in Australia remains weak as rising prices throttle

commercial growth. The Queensland Competition Authority has forecast that electricity costs will rise in the next year "by around 29%”. "It is a practical reality the price of gas has gone up, and it would have gone up with or without the LNG projects. We've been lucky to have relatively low cost of gas but that's a paradigm shift," Catherine Tanna, chairwoman of BG Group Australia commented, adding that: "manufacturers and producers should work together to work out how the volumes of available gas can increase.” AGL, the largest gas retailer in New South Wales, has announced that it will hike household prices by 20.3% in July driven by a squeeze on supplies and strong industrial growth.

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power output. The Indian Central Electrical Authority (CEA) forecasts net demand of 147 GW for 2014-2015 as opposed to net capacity of 144 GW, indicating a 3 GW shortfall. In a reform scenario, energy imports could come down to about 4% of GDP, from 6.3% of GDP currently, analysts suggest but caution ongoing reform face numerous challenges and a functioning power market is still a long way off.

Balancing shortfalls in KG gas with LNG India’s vast gas reserves in the KG-D6 field are seen as one key way to avoid excessive import costs but have to date failed to produce at economic rates. There are only two options to make up for the shortfall in gas production from the Gas to Power Journal Publisher Stuart Fryer Editor Anja Karl Tel: +44 (0)207 0173417 anja@gastopowerjournal.com Senior Reporter Malcolm Ramsay Tel: +44 (0) 207 0173 413 malcolm@gastopowerjournal.com Reporter Ramadas Rao Tel: +91 80 4219 0096 raoramadas1@gmail.com Advertising Narges Jodeyri Tel: +44 (0)207 2533406 narges@gastopowerjournal.com Events Barbara Canals Tel: +44 (0)207 173410 barbara@gastopowerjournal.com Subscriptions Stephan M. Venter Tel: +44 (0)207 0173407 venter@gastopowerjournal.com Production Vivian Chee Tel: +44 (0) 20 8995 5540 chee@btconnect.com

KG block, according to Mathur. One is to increase production from other blocks and he forecast "a lot of new blocks are promising and will come on stream soon." The other option is to import gas at 'reasonable prices', he said, suggesting LNG im- Much of India’s gas power fleet sits idle over a gas ports can help to "offset whatever downfall pricing dispute is there from the KG basin and other fields". Asia to come down from current heights as the GAIL, the largest gas transmission and martightness is bound to vanish once the new wave keting company in India, is investigating options of supplies from East Africa, East Mediterto import LNG and considers suppliers across the ranean, North America and shale will hit the world from US to Far East, even buying some market. cargoes from as far as Trinidad and Tobago. Mathur, however, cautioned that Asian LNG importers will still have to pay more than their counterparts elsewhere. In Asia, the use of gas Bringing down the delivered LNG as a fuel for power plants is on the rise at the price expense of oil, but not at the expense of coal. "The final test is delivered price; whether it is "You want buyers to have more robust busiacceptable to the end-customers or not. If the nesses," he said, suggesting "More robust busiprice is attractive enough, we buy," Mathur emness means more natural gas will be used." phasised but he was quick to add that the effort will be to try and get the best price possible for the Indian market, which is very price sensitive. Gas price hikes expected on 1 July Asian gas importers are moving away from As the first step in reform India is set to announce benchmarks such as the oil linked index tolong awaited gas price hikes on July 1 in a bid to wards shorter and medium term contracts, he kickstart its stalling power sector. The increase said, revealing several short-term contracts was originally planned for April 1 and would have been sealed and LNG spot trades are have seen gas prices for power producers double. going up almost double. "Gas price revision is an issue which needs Hybrids is the buzz words for negotiated attention. A decision needs to be taken before gas import contracts, whereby gas pricing is July 1," an oil ministry spokesperson said. not based on a prevailing indexations but offers Many believe he will back price hikes to changes to contract duration to provide buyers help support upstream investment and get India with more flexibility and value. producing more gas from its plentiful KG-D6 reserves. India’s state-owned upstream developer Reliance Industries has extracted only a Spot price elements may rise to fraction of the estimated 44 trillion cubic feet 15% - Wood Mackenzie of gas reserves available in India. More spot pricing elements may rise to 10% or Gas prices continues to be a major sticking event 15% within contract structure for longpoint as power producers insist on the continuterm gas imports over in the coming years, ation of discount and have halted their gas offforecasts Gavin Thompson, Head of Asiatake, breaching long-term supply and purchase Pacific, Gas & Power Research at consultants agreements. Wood Mackenzie. He expects gas prices in

27 June 2014

GTP Journal

REGULATION & POLICY

Texas: Shale gas town considers fracking ban After relying on shale gas for over a decade, public opinion in the Texan town of Denton has shifted and the city council is considering imposing a ban on fracking as inhabitants want to preserve the livability of their surroundings. hough fracking has given the city council over $30 million in royalties and taxes, as well as a cheap source for energy, citizen for the Dallas' former farming centre are increasingly viewing the practise of as "pretty obtrusive". As the city expanded, drilling sites are now closer to suburbs and sparked demonstrations over concerns of cancer-causing fracking chemicals and the risk of small earthquakes. Petitions were signed to ban the contested practise.

Replacing gas rigs with renewables Instead of gas drills, some Denton's 120,000 residents rather want their city to become known for environmentally friendly commerce, renewable energy sources and community g ardens. Should this trend spread further throughout Texas, gas producers in the U.S. might struggle to uphold currently production levels which

would herald further gas price increases.

HH spot price rebounds amid drop in shale gas production

Administration (EIA). An increase of 3 gas-directed rigs in the Marcellus Shale was only partially offset a decrease of 3 rigs in the Granite Wash Shale in Texas and Oklahoma and a decrease of 10 rigs in the rest of the United States.

Amid a continuous drop in domestic gas production, the spot gas price at the Henry Hub reached $4.70/MMBtu last week, its highest level since early May, and ways above the $2.50/MMBtu seen in July 2012. The Baker Hughes rotary rig count dropped by 6 for the second week in a row to 1,854, while the number of active gasdirected rigs fell by 10, according to figures released by the U.S. Energy Information Public opinion is shifting in parts of Texas to oppose lucrative fracking

Policy makers urged to fast-track EU heating strategy Almost half of Europe’s energy consumption is used for industrial processes and to heat and cool building, but policy makers at the European Commission are dragging their feet to assess how heat-related policies could help meet Europe’s energy efficiency objectives and climate goals, criticised industry group COGEN Europe. ports of Hungary, according to COGEN eat is the central component Europe calculations. of most industrial processes and decision-makers need to continue to increase their Further potential seen for CHP focus on heat," stressed Dr. Tim Rotheray, in Europe managing director of the UK Combined Heat But even though decarbonising heat supplies and Power Association (CHPA). already enhances industrial competitiveness, Thermal energy demand represents 46%, or about 550 Mtoe, of final energy use in the EU-28, according to Eurostat figures. Combined heat and power generation can help achieve energy savings: In the EU-28, CHP in industry already avoids around 15 Mtoe of fuel consumption every year – equivalent to over €8.4 billion, or more than the total net energy imA cogeneration thermal power plant in Ferrera Erbognone, Italy

“H

CHP is believed to have "not yet achieve its full potential in Europe". Mixed policy messages and regulatory uncertainty over the role of energy efficiency in the 2030 framework, has led to "unacceptably high financial risks for CHPs." Fluctuating electricity prices combined with overcapacity in the market are reducing the number of operating hours of industrial CHPs – similar as for large-scale gas-fired plants. "This is hampering investment decision-making and casting a shadow over future operation," COGEN Europe warned.

New focus on heat in the UK A silver lining is on the horizon in the UK, where a "new focus on heat" is starting to ask some very new policy questions, and Rotheray said "this process is a prerequisite for putting in place fair burden-sharing mechanisms that reward individual installations for taking action that benefits society as a whole". As part of the Sustainable Energy Week, COGEN Europe and Euroheat & Power will host a session in Brussels on June 24, entitled A Heating and Cooling Strategy for Europe.

GTP Journal

MARKETS

27 June 2014

Global gas markets tighten if and when Europe recovers Though economic recovery has been slow and unsteady in many countries of the EU-28 bloc, Lafayette Herring, commercial LNG advisor at Poten & Partners estimates global LNG demand will reach 450 million tons per year by 2025, provided European demand comes back to pre-crisis levels. ith the exception of the UK market, gas demand recovery is gradual but Spain's 2010 demand level will only be reached by 2025," he forecast.

“W

Global ripple effects of US shale gas As the impact of the shale gas revolution in North America is rippling across international energy markets, surplus coal in the U.S. is being exported to Europe, depressing coal prices and putting further strain on gas-fired power plants. While pipeline gas buyers are scraping the bottom of their minimum offtake obligations, LNG imports to Europe have declined sharply.

Europe's CCGT operators hope for drop US coal exports Embattled gas utilities and combined cycle gas turbine plant operators in Europe are hoping US coal production will fall off in response to

price signals. And there are signs that this is happening, according to Poten analysis. Over 80 million tons of US coal production has been cut, leaving a total of 815 million tons. Of this total the 28-nation EU imported 47.2 million tons of U.S. coal last year, a steep rise compared with 13.6 million tons in 2003. Goldman Sachs analysts suggested that profits at coalGas trade flows in Europe have been hit by recent recession fired plants could double by 2015, hence new coal-fired plants are under placement for scheduled closures of coal and construction in Continental Europe while modnuclear capacity. ern gas-fired plants are being mothballed. Liquidity at the NBP, Europe's largest trading hub, allows a more flexible and market-responsive gas market. But Poten analysts More gas power capacity on the caution that "Still, NBP prompt prices are tradcards in the UK ing at a multiple to US gas benchmark Henry The UK is slightly out of step with developments on the continent: A forthcoming capacity Hub and coal prices, curbing operating margins at the UK's CCGT plants." market supports new gas power projects in re

Kuwait edges closer to importing gas from Iran Stepping up efforts to source much-needed natural gas for power generation, Kuwait is close to reaching an agreement with Tehran on pricing terms for imports from its resource-rich neighbour. If an accord can be reached, Kuwait would be the second Gulf state following Oman to turn to Iranian gas. uwait still needs to respond to an Iranian proposal and the emirate's oil minister Ali Al-Omar said: "We have not yet agreed on the price, quantity or the supplying method."

Curbing reliance on LNG during peak summer demand

crease to 21,600 MW in 18 years, according to the Kuwait Ministry of Electricity & Water, underlining the need for more investment in the sector, especially as more oil is exported.

Boosting crude exports while using associated gas at home Higher export prices achievable from crude oil has led the country to back large-scale gas power projects in recent years such as the Al Zour project, which will deliver a total of 4,800 MW of capacity, and is meant to partly run on associated gas. To make new gas power projects economi-

To avert the risk of gas shortages in peak summer month, Kuwait signed three agreements guaranteeing its import of about 2.5 mtpa of LNG from Shell, Qatar Gas and BP. Over the past years, the emirate had to import around 5 mtpa of LNG between April and October of each year. Pipeline gas from neighbouring Iran is hoped to come at a significantly cheaper price and might form the backbone of Kuwait's future supply. To tackle frequent blackouts and brownouts each summer, the Kuwaiti government has outlined plans to raise total power generation capacity to 25,000 MW by 2020 from its current level of 14,200 MW. Peak electricity demand in Kuwait Kuwait is close to agreeing pricing terms for gas imports is currently 11,850 MW and will in- from Iran

cally viable, the government would need to liberalise the current artificially low utility prices and guarantee stable gas supplies.

Prospective gas deal addressed at state visit to Tehran The quest for gas is backed by the Kuwaiti Emir: The prospective gas deal was also addressed at an historic state visit of Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah to Iran last week – the first state visit since the Iranian Islamic Revolution in 1979. "It was agreed upon during the meeting that an Iranian delegation would visit Kuwait soon to meet with the concerned officials to discuss all the details on importing the Iranian gas by Kuwait," the oil ministry said after the presidential visit to Tehran. Iranian pipeline gas supply has come back in focus as Kuwait's other options – Iraq and Syria – are a long way off due to the current insurgency by the militant group ISIS. Iran has the largest reserves of natural gas in the world, 18% more than Russia and Qatar. It produced 10 million tonnes of LNG in 2013 and plans to produce up to 75 million tonnes in 2015.

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GTP Journal

MARKETS

NEWS NUDGES CNOOC starts-up China's largest CHP plant The first 460-MW expansion at CNOCC's gas combined-cycle cogeneration Zhongshan Jiaming Hengmen Power Plant is in commercial operations since June 6. Before start-up, the plant passed a 168hour continuous full-load trial, construction contractor Power Construction Corporation said.

GE supplies TM2500+ turbines to Port Harcourt Refinery GE has supplied three 25 MW trailermounted TM2500+ aero-derivative gas turbines to the Port Harcourt Refinery (PHRC) in Nigeria. The turbines were installed by GEL Utility Limited as the country’s largest oil refinery has faced chronic grid outages that have reduced PHRC’s output to 30 percent of its total maximum capacity

BBHEL-GE joint venture revamps Pragati gas turbine generator A joint venture between Indian state-owned BHEL and U.S. manufacturer GE has revamped the 104 MW Gas Turbine Generator at the Pragati Power plant near Delhi. The plant has been under pressure following blackouts and soaring demand in the capital. Work was completed by BHEL-GE Gas Turbine Services Pvt Limited (BGGTS).

CB&I wins EPC contract for 671 MW Indiana gas plant U.S. power provider CB&I has won an engineering, procurement and construction (EPC) to build a 671 MW combined-cycle gas turbine power station near Martinsville, Indiana. The contract was awarded by AES Corporation subsidiary Indianapolis Power & Light Company and valued at more than $500 million. The new plant will be built adjacent to the existing Eagle Valley station.

Mexico’s energy reforms risk delays amid financial challenges – OIES Mexican energy sector reforms, enacted at the beginning of this year, are at risk of encountering “substantial financial and political difficulties” that could hold back development. Amrita Sen, researcher at the Oxford Institute of Energy Studies (OIES) warned that “some of the intended objectives of the energy reform may not materialise, at least not as fast as the government and some market analysts are predicting.” hough promising to open the previously state-controlled market to competition, the reforms have been contentious from the onset. Despite all controversy, the reform has so far garnered strong support from Spanish and French energy companies which seem eager to invest in Mexico.

Pemex deemed unable to finance exploration efforts The OIES report highlights the dire financial position of Mexico’s state-run energy company Pemex and the impact this is likely to have on the government’s schedule for change. It estimates that Pemex will need $830 billion in capital expenditures to meet hydrocarbon exploration and development targets outlined by the reforms and states that this is “impossible” for a company reporting revenues of just $120 billion in 2013. The structure of Pemex is also identified as a “potential weakness” as all its operating profits are transferred to the government via taxation which reduces the company’s ability to invest in new growth. Over the past six years, Pemex has reported losses of $30 billion and has a net equity of -$14 billion. “Perhaps the biggest issue with Pemex’s forecasts is its assumptions on foreign investment,” Sen commented. “Whilst Pemex’s CAPEX will rise to 2% of GDP by 2017, it expects that private investment will come in

at a higher rate and reach 3% of GDP. This is unrealistic, as the reforms are yet to pave the way in gaining the interest of the investor community, let alone boosting production so early.”

Political uncertainty clouds picture Prospects of the Mexican energy sector are further obscured as the main opposition party PRD has exited the ‘Pact for Mexico’ – one of the original motivations for the energy reforms. To make matters worse, PRD has also raised a public campaign against the energy reforms and is now pushing for a referendum during the mid-term elections in July 2015. This has the potential to obstruct any progress made and prevent the energy reforms going forward. “Uncertainty remains as to how far the government will go to safeguard Pemex from foreign competition, while some political uncertainty also remains, which could deter foreign investment,” Sen said. Despite these concerns, foreign firms have been quick to pledge billions of dollars in investment. Spain’s second-largest utility Iberdrola signed an agreement with the Mexican Federal Electricity Commission (CFE) earlier this month to invest $5 billion in the country’s energy sector up to 2018 while French utilities GDF Suez and Total both signed memoranda with Pemex to develop gas-fired power projects in Mexico.

Alstom helps modernise Russia's power grid France's Alstom has entered a 51/49 joint venture with Soyuz Holding to manufacture and commercialise high voltage switchgear as part of on-going efforts to modernise the Russian electrical grid. The deal includes the continued manufacture of 110-220 kV circuit breakers and the world's first 500 kV circuit breakers, which can operate at severe temperatures down to -60 °C, according to Alstom.

27 June 2014

Nuevo gas complex is one project that may face challenges due to lack of funding

27 June 2014

GTP Journal

MARKETS

Europe’s 10-400kWe gas engine capacity to double by 2020

"Based on a market screening of mini-gas engine developments (looking specifically at the 10 - 400kWe size range) in 15 leading European countries, we expect the continent overall to increase its current annual installed capacity at an average annualised growth rate of 10% through to 2020." The above forms the narrative behind Deltaee's multi-client study, where we assess exactly where most potential lies, segmenting our sales forecast by gas engine size bands, fuel type (natural gas, biogas, and LPG), applications (CHP or power-only) and end-use segments. We examined historic sales orders, key policy drivers, market barriers, spark spreads, project payback levels as well as the competitive landscape and main players. Below, we share some research highlights.

Top 5 markets Our analysis suggests that the five countries with the strongest market potential – Germany, UK, Italy, Poland and Turkey - will likely account for over 75% of annual gas engine sales in Europe by 2020. We have highest confidence in the first three of these. The latter two are more of a 'wild card' - barely emerging today, and we expect little activity before 2015 - but we believe that the balance of probability is that Poland and Turkey will become major markets for small gas engine deployment by 2020. With Poland specifically, this possible sharp increase in uptake is now more likely given the recent incentive changes.

Combined heat and power versus power-only applications Mini-gas engines in Europe are predominantly sold as CHP installations. This is based on its high energy efficiency and the existence of

“

Annual installed capacity (MWe)

The European market for mini gas engines has been one of the fastest growing distributed power markets in recent years driven by helpful policy initiatives both at a national and EU level as well as improving spark spreads despite increasingly volatile electricity prices. An array of new engine technologies and strengthening energy efficiency efforts trends, as well as a gradual recovery from the economic downturn add further support to the market, writes Delta Energy & Environment’s Dina Darshini. e believe many of the signs 1200 look promising for further growth leading out to 1000 2020," she said, suggesting 800 600 400 200 0 2013

2015

10-100kWe

2020

100-400kWe

Consultancy Delta Energy & Environment expects Europe's mini gas engine capacity to double by 2020

strong incentives in some countries. This is in contrast to what we expect in some global markets where we see a likely rise in the share of stationary, power-only applications in regions of weaker electricity grid stability.

Germany will likely still retain its leading position Germany's gas engine market has been far ahead of the rest of Europe. However, we are now more cautious about its future prospects not least because it is already a mature minigas engine market, but also due to Germany's current Renewable Energy Policy (EEG) reforms which will likely have a significant impact on Germany's future CHP and gas engine sales towards 2020. The proposals, to be decided in July, aims to introduce a 40% EEG surcharge for onsite consumption of CHP electricity from 1st August 2014 – hence, we expect a significant drop in activity from 2015. Delta-ee anticipates a gradual market recovery towards the end of the decade with a modestly improved CHP Law from 2016 in a bid to help meet the country's target of 25% of electricity generation coming from CHP by 2020.

More so even than natural gas, the biogas sector is heavily reliant on a supportive regulatory framework to bring projects costs down.

”

Non-natural gas opportunities Finally, the majority of biogas opportunities exist with the over 100kWe size range due to better economics. More so even than natural gas, the biogas sector is heavily reliant on a supportive regulatory framework to bring projects costs down. That is why past trends and future projections can be so clearly linked to changes in policy. Biogas systems account for more than half of annual installed capacity in 2013. But by 2020, this will fall to just over one third of the market as increasing numbers of natural gasfuelled engines come online (spurred by healthy spark spreads), and generous incentives for renewables level off or decline. We anticipate very little development of the market for LPG-fuelled systems.

Conclusion Different countries will provide conducive environments for propelled deployment in varying ways – but we are confident (given the information we have today) that this will lead to the same thing a doubling of Europe's current annual installed capacity by 2020. Delta Energy & Environment is a consultancy specialising in global heat and distributed energy markets. For more information about the scope, contents, example slides and pricing of the mini-gas engine study, please contact: dina.darshini@delta-ee.com

GTP Journal

PROJECTS & FINANCE

27 June 2014

CPV to realise 725-MW Maryland project on merchant basis U.S. power producer Competitive Power Ventures (CPV) said it will proceed with plans to build a 725 MW gas-fired plant in Maryland. The project will be carried out on a partly-contracted merchant basis, with CPV seeking approval from the US Federal Energy Regulatory Commission (FERC) to sell 75% of the project to two Japanese companies – Toyota Tsusho Power and Marubeni. PV aims to have the plant operational by 2016/2017. The Maryland Public Service Commission in 2012 selected the proposed plant to supply state utilities with power under a 20-year power purchase agreement (PPA) which was meant to finance construction of the

Site of the proposed gas power plant

plant. Under the terms of this agreement, CPV would have received payments linked to PJM Interconnection’s capacity market to support its costs, however, a federal court earlier this month upheld claims that such payments would be unconstitutional. As a result, CPV has looked at other means of finance and turned to Japanese investors. A newly proposed deal foresees Toyota Tsusho Power to acquire 25% of the plant, while Marubeni would buy a further 50%. "We're moving ahead based on partially contracted merchant financing," said Braith Kelly, senior vice president at CPV, said without disclosing any details. Under the U.S. Federal Power Act, the deal requires regulatory approval before transfer of ownership can take place. CPV is seeking to get the green light for the

deal no later than July 22 in order to allow construction to proceed.

Maryland needs to replace 16 GW of capacity by 2021 Authorities in Maryland are under pressure to ensure new capacity is built rapidly. Two-thirds of the power generated in the state comes from power plants that are at least 30 years old and approaching retirement. To compound bottlenecks created by the predicted supply shortfall, peak demand is also expected to increase steadily. Maryland utility Old Dominion Electric Cooperative (ODEC) estimates that the regional electric grid provider, PJM Interconnection, will lose a total of 16,170MW of power capacity by 2021. "Maryland's fleet of power generation facilities faces challenges,” a spokesman for ODEC said, pointing out that the state needs to import 42% of its power which makes it the fifth largest energy importer in the United States.

Siemens, MMCES win turnkey order for cogen plant in Malaysia Petronas, Malaysia's state-owned petroleum corporation, has awarded an order for the turnkey construction of the Pengerang Co-generation Plant (PCP) to a consortium of Siemens and MMC Engineering Services (MMCES). he contract foresees Siemens to undertake turnkey construction of the PCP, which will comprise of four co-generation units, and service it under a longterm maintenance contract. Each of the four units comes with an Hclass gas turbine, a waste-heat recovery steam generator, a steam turbine, associated mechanical and electrical systems and the instrumentation and control system.

The first co-generation unit is scheduled to go online by mid-2017, with steam earmarked for industrial use while parts of the power will be fed into Malaysia's National Grid for public consumption.

Producing close to 1,500 tonnes of steam per hour PCP is set to become the first cogeneration plant to serve the Pengerang Integrated Complex, a Petronas development in Pengerang, southern Malaysia. Once operational, the mega CHP will generate about 1,220 megawatts of electricity and produce up to 1,480 tonnes per hour of steam

Pengerang Integrated Petroleum Complex

Serving heat to petchem industry, power to the grid "With the PCP, Petronas will not only be supplying reliable steam and power to petrochemicals plant and other facilities in PIC, but we will also be able to supply to the Malaysian Grid in an environmentally-friendly manner," said Petronas VP Infrastructure & Utilities, Pramod Kumar Karunakaran. Roland Fischer, CEO of Siemens Energy's Power Generation Division said the order would allow the company to demonstrate its "technology leadership and expertise in building turnkey power plants".

27 June 2014

GTP Journal

PROJECTS & FINANCE

Moxie proposes 900 MW gas power plant in Michigan U.S. power provider Moxie Energy has put forward plans to build a new 900 MW gas-fired plant in Salem Township, Michigan. Named ‘Moxie Freedom Project’, the plant will draw on comparatively low cost gas supply from the nearby Marcellus Shale. he project brings Moxie’s strategic focus back to gas power, after it sold its Liberty and Patriot gas-fired power plants to Panda Power at the end of last year.

Cheap gas drives growth of new planning applications

could not be reached for comment.

Moxie project close to existing PPL nuclear reactor The proposed plant will be located near to the existing PPL nuclear plant on Route 11 and will connect to the Transco pipeline. The pipeline transports the ample natural gas production from the Marcellus Shale to power plant operators on the east coast and has expanded rapidly in recent years to deliver over 3.4 million dekatherms of natural gas per day. As natural gas production from the Marcellus Shale field has soared. the price for gas at

Plentiful supply of shale gas throughout much of the U.S. have created added incentives for operators to build new plants and Moxie Energy is planning for similar facilities to the Salem Township project also in Lycoming and Bradford, Pennsylvania. Although there is precedence for gas plants in the region the Department of Environmental Protection was cautious about the project at this stage. “We are in the pre-application stages with the company right now and will have more meetings with them at a later date,” said Colleen Connolly, spokeswoman for the state Department of Environmental Protection. “This will be considered a major source for emissions” and requires an The proposed plant will be located near the existing PPL air quality plan approval. Moxie nuclear facility

the nearby TCO Appalachia trading point has dropped below that of Henry Hub and is forecast to become $0.3 per mmbtu cheaper by 2015, according to the Energy Information Administration (EIA).

Marcellus to reach 40% of total U.S. shale gas reserves The Marcellus Shale field drove the largest volume of new finds in the U.S. in 2012, according to EIA figures, with Pennsylvania and West Virginia reporting net increases of 9.8 trillion cubic feet (Tcf) and 4.3 Tcf, respectively. Seismic study of gas fields across the country have identified significant new unconventional resources elsewhere but the cost of extraction still remains a major impediment. The role of shale fields in the U.S. gas sector grew with shale gas rising to account for 40% or 129.4 Tcf of total U.S. wet natural gas proved reserves in 2012. Although new reserves were developed across the country, operators revised their proved reserves downward in response to lower natural gas spot prices at Henry Hub.

FirstRand to partly fund Ghana gas power project South African investment bank FirstRand has agreed to finance up to $120 million of Ghana’s proposed $820 million Kpone gas-fired power plant (340 MW). onstruction is expected to start in the second half of 2014, with the plant scheduled to start commercial operations in early 2016. Once complete the plant will be one of the main off-takers of gas from the West African Gas Pipeline.

Government supports gas power with long term payments Authorities in Ghana have strongly supported new gas-fired capacity and state-run Electricity Company of Ghana (ECG) has already entered long term power off-take agreements with the proposed Takoradi I & II developments to guarantee payments for investors. “The Ghana government will facilitate and fast track all approvals and permits and provide adequate credit enhancement in a transparent manner,” John Janakfpor, deputy minister of energy said. The Kpone project will be located in the Tema industrial zone in the south of the country and will connect to the national grid at the VRA’s planned 161 kV Connector sub-station.

Gas power sector supported by LNG imports

will include a dedicated floating storage and regasification unit (FRSU) to receive, store and regas imported LNG. Once complete Takoradi II plant will be the largest power plant in Ghana. The project will be constructed in phases, with the first stage involving construction of a 540 MW combined cycle unit to be operational by early 2018 followed by a further 540 MW unit in 2019.

Investors are currently in discussion with international gas suppliers and Ghanaian trading companies to handle the management and logistics of LNG imports. Though LNG may come with a high price tag, it is increasingly sought after in Ghana as the government aims to increase its installed generation capacity from the current 2,412 MW to 5,000 MW by 2016. A number of new gas power plants are under development in Ghana including the new 1,080 MW Takoradi II plant and a 110 MW expansion of the existing Takoradi I combined cycle plant by Abu Dhabibased power producer TAQA. Both developments are part of the Ghana 1000 project near Aboadze that Site of the 340 MW Kpone plant

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