www.petrotechsociety.org
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September 2015
CONTENTS OIL, GAS & ENERGY : NEWS & VIEWS
Editorial Note
Editor’s Choice • Carbon Intensity of Global Economy Fell in 2014 • What India should Learn from Angus Deaton
Editor's Pick • It’s time to take that leap of faith • India’s energy transformation gathers momentum • Cyrus Mistry’s Vision 2025: Tata Group prepares to create potential future leaders • In the footsteps of Gandhi: Global pilgrimage for climate change
IndiScan • Petrotech Welcomes the new Industry Leaders • Transport ministry to donate lithium-ion buses to Parliament: Nitin Gadkari • Indian Oil plans $3B petrochemicals project in Iran • Law should take its own course: Pradhan on RIL-ONGC row • ONGC May have lost R 8900 crores worth of Gas to RIL : D& M Report • Balmer Lawrie plans ₹400 cr capex • ONGC may not get much compensation in gas dispute with RIL 2
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• New oil & gas policy shifts risks to developers: Report • NTPC to start production from allocated mines in phases • Natural gas price cut in line with new policy • RIL-ONGC row : D&M to submit report on gas ‘Pilferage’ to petroleum ministry on October 8 • Indian Oil plans $3B petrochemicals project in Iran • ONGC Videsh buys 15% in largest Russian oil company
GlobeScan • Schlumberger acquires synthetic diamond technology company • KBC wins consulting contracts to improve margins at Middle East refineries • Saudi Aramco cuts crude pricing to Asia, U.S. amid weak demand • China’s higher refinery runs may boost diesel exports to record
TrendScan • Like it or not, China's crude oil futures will be a global benchmark • Oil Price Rout Seen as Threat to $1.5 Trillion of New Projects • Production from Big Three shale plays will suffer with $50 oil : TPH Report • IEA sees U.S. oil output collapsing next year on low prices • LNG projects still moving toward oversupply, Wood Mackenzie says • Asian refiners restock African oil as margins swell
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TechScan • Refracking Service Could Create 'Boom of a Boom' in Shale Recovery • Could diesel made from air help tackle climate change? • Microwave potential for bioenergy production
ALTERNATIVE & RENEWABLE ENERGY • Power Ministry wants States to expedite renewableenergy capacity addition
HSE, CLIMATE CHANGE & SUSTAINABILITY • U.S. to curb smog but stops short of toughest limits • U.S. rule to cut toxic emissions at refineries • Efforts on to plug major gas leak at Oil India Ltd (OIL) well in Rajasthan • Duke Energy Corp. to Reduce Emissions from Power Plants in North Carolina, Fund Environmental Projects • Outdoor Pollution killed .65 million people in 2010 • Do we need a change of tack on climate? • Keeping the industry’s environmental promise • Fracking Water Management Market Remains Buoyant • Axion Polymers’ Recycled Plastics for Automotive, Other Applications Offer Carbon Savings up to 70% • Top Carbon Reporting Companies Ranked • Awareness, the first Step to Water Scarcity Solution • Recycling Universal Waste Made Easier with RecyclePak • How a public and private Sectors fared on CSR • Water Management Technology in High Demand • The U.S. Geologic Survey found that hydraulic fracturing in shale gas-rich areas required the most water
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THE BANYAN TREE • The Art of Keeping Employees from Leaving F2F • Cabinet nod for small fields is right step to monetize hydrocarbon resources: Cairn India's Mayank Ashar • Offshore Engg centre for Siemens a strategic move
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Editorial Note Dear Patron of Petrotech, I have the pleasure of presenting the PetroScan September 2015. Scanning and keeping track of events, happening, trends, threats and opportunity before our industry is a 24x7 job, and I may have missed many of events and news, yet I have tried to capture some of them. Along the way, I have flagged some points for us to ponder over and deliberate on them, individually and collectively and share the outcome. After all, one of the objectives and mission of Petrotech is to work for greater realization of the Power of Sharing Knowledge and Experience and Best Practices. PetroScan is one the many other means adopted by Petrotech for realizing this objective. Fuel Subsidy Reforms : A Commendable step taken by the Govt. Reforms in fuel subsidies, especially the freeing of diesel pricing and direct benefit transfer on cooking gas, have certainly been one of the major step towards disburdening the OMCs. The Govt. taking advantage of the low oil prices, has taken these bold steps, and few more points on reform agenda like removing subsidies on Kerosene and rationalization of subsidies need to be addressed. The subsidy on these two products e.g cooking gas and kerosene, together amounted to R 64,000 Crore in 2014-15, which was on the lower side as compared to earlier years due to lower oil price. This year it should be still lower due to increase in direct transfer of subsides to the bank accounts linked to Adhar or Jan Dhan Yojana. A pilot run carried out in Alwar district of Rajasthan in 2011 showed that kerosene demand fell by 67 per cent when the subsidy was directly transferred to the beneficiary. Just as it did in the case of 6
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cooking gas where the subsidy is delivered directly into the bank accounts of the beneficiaries, the Jan Dhan accounts of BPL cardholders can be linked with their ration cards to deliver kerosene subsidy directly. Such action shall not only reduce subsidy burden but also black marketing of kerosene and adulteration of other fuels. Crude Oil in Buyers Market Oil prices started plunging in June 2014, resulting from soaring U.S. shale output, OPEC and Russia hitting and maintaining near-record production, creating a glut of several million barrels per day (bpd). This resulted in a more than 50 percent drop in prices, and the trend continues. Instead of cutting output, OPEC decided to keep pumping in a bid to protect its Asian market share against rising competition. Production in OPEC-leader Saudi Arabia has so far remained high, with September's output of 10.23 million bpd close to June's record of around 10.5 million bpd. The buyers had other cheaper alternatives such as Iraq's Basra crude and soon to be added more from Iran. Buyers never had such a good time in the recent decades. The surplus market has made producers more competitive and customer friendly, and buyers are more than satisfied with prompt deliveries by suppliers. Multiple choice of suppliers, however, has added to the woes of Saudi Arabia, as it failed to attract Asian buyers for its crude , which becomes surplus in October, due to shut down for turnaround of its major oil refinery. Even the November OSPs (Official Selling Prices) are attractive, yet the Asian refiners did not have space as the refineries across Asia have planned maintenance shutdown during this period. The Buyers have great time today and as I wrote in the Jan’15 issue of PetroScan, it’s an opportunity to fill our Strategic Crude oil reserves. I am told that HPCL has started filling its 0.3 million ton
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compartment at ISPRL facilities at Vishakhapatnam, and so is ISPRL also doing . Competition Leads to Innovation: Innovate or Perish The falling oil prices became a challenge for the oil producers and explorers to sustain their business and continue with their projects, particularly for the unconventional and deep water explorers. In the earlier issues of PetroScan I had covered how, in last one year, fast innovations and R&D has helped many of them to continue their activities by improving efficiency, productivity and production by making the whole process cost effective. One such development is Refracturing technology developed by Halliburtron, which they have named “ACTIVATE”. They have already successfully tried it on pilot scale and they are very bullish on refracting potential of North American unconventional oil and gas wells. Earlier refracturing technologies were not effective, as the refracking results were unpredictable and not repeatable. Refracturing seeks to reconnect existing fractures disconnected from the wellbore, and creating new fractures. The combination of the two provides the incremental estimated ultimate recovery (EUR) boost. Halliburton’s ACTIVATE Refracking, unveiled in July this year, reports an 80 percent increase in (estimated ultimate recovery) EUR per well, and up to 66 percent reduced cost per barrel of oil equivalent (BOE) compared to new drills. Halliburton has also reported accelerated recovery in wells treated with the ACTIVATE process, not only from restored connectivity of existing fracs but new stimulation, turning a 4 billion cubic feet per day (Bcf/d) well into a 6 Bcf/d well. In addition to boosting incremental EURs, Halliburton has been able to reduce nonproductive time for wells by 33 percent as fracing is done continuously.
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Well, Innovate, overcome and Sustain is certainly the mantra for overcoming competition, which has been proved time and again. Africa: The New Energy Destination Last year, Africa produced about 8.2 million bpd of crude oil which came largely from the countries of Nigeria, Algeria, Egypt, and Angola located in the northern and eastern part of this continent. Uganda, Kenya, Tanzania, Mozambique and South Africa are the other prospective countries from the east and south of the continent. Land locked Uganda is estimated to have 6.5 billion bbls of crude oil, which is expected to start flowing from beginning and a refinery, is also scheduled to be commissioned by this time. CNOOC of China has successfully received license to produce oil in Uganda. Kenya holds about 600 million bbls and hopes to become regional hub with its plan for setting two new ports on the eastern coast. Last August, Kenya and Uganda had inked an agreement to lay a 1500 km oil pipeline that will send crude oil to the eastern coast for export. Another pipelines proposed from South Sudan to Ethiopia, connected to Uganda Kenya pipeline. Ugandan crude being waxy, it will be worlds’ longest heated pipeline. South Africa is delinking its oil exploration from mining, which shall open up the O&G sector. Though the exploration activities have slow down due to low crude oil prices, yet African countries are doing all they can do to attract investment. Recently Tanzania has adopted very progressive Petroleum Bill, and Kenya Competition authority has been handling its exploration activities very well. In view of these developments, Africa should be the focal point of Indian initiatives for securing its energy sourcing. The Indian interest in Mozambique is certainly one small step in this direction, yet much more to be done and done faster.
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India-Africa Forum Summit is scheduled to be held in New Delhi in the last week Oct 2016, which shall be an opportunity for India to consolidate its position in Africa, which is due to its centuries old relationship, is a natural ally of India. The Govt is seriously involved in this summit, which is expected to be largest of all the earlier summits. Indian industry is looking forward to a new beginning of Indo-Africa relationship. On the way to Paris-2015 : Sustainability & Survival It does not cost Earth to Save the Planet, but asks for sacrifices. We all know the significance of 2째C As the deadline of October 2015 closes, all the member countries of UN are busy finalizing their Goals of Emissions (INDCs), which shall, collectively, limit the global rise in temperature at 2째C. Unfortunately, due to the lack of respective resolutions at the Climate Change Conference 2014 in Lima, it will be difficult to compare the offered goals, as there is virtually no defined process for assessing whether the goals offered are compatible with the 2째C target. On the top of it, the incentives to the countries to plan to drastic change in very little to rely on the others to do it is far too big for the countries to do much which will ensure hitting 2째C target on time. Ideally, it's impossible to achieve this target, and the world in general and the younger generation, in particular, shall wait and watch for the outcome of Paris-2015, which shall affect them in the decades 2050 and beyond. It's also an opportunity for the energy companies to prepare a 50 year perspective Sustainability Plan, which shall make a company with near Zero Carbon and Water footprint. On our part, each one of us can make significant contribution , and the grand festival of Diwali is an opportunity to show our commitment 10
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to making our planet greener, by celebrating a GREEN & CLEAN DIWALI. Wishing great season of blessed festivals filled with joy, and looking forward to your views and suggestions, Sincerely (Anand Kumar) Director, Petrotech
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Editor’s Choice Carbon Intensity of Global Economy Fell in 2014 Carbon intensity fell 2.7 percent last year but a decline of 6.3 percent a year needed for climate goal Reuters, October 13, 2015
Source: Pixabay OSLO, Oct 12 (Reuters) - Governments took a step towards greener economic growth in 2014 but will need to do far more to limit rising temperatures to a United Nations goal of two degrees Celsius (3.6 Fahrenheit), a study by accountancy firm PwC said on Monday. The carbon intensity of the world economy - the amount of greenhouse gases emitted per dollar of gross domestic product (GDP) - fell by 2.7 percent in 2014, the steepest decline since PwC started issuing reports seven years ago, it said. "The 2014 numbers suggest a turning point" towards making growth less dependent on fossil fuels, said PwC, a network of firms in 157 countries in assurance, advisory and tax services. World GDP rose by 3.2 percent in 2014, while carbon emissions rose by just 0.5 percent, it said. Britain was best of the Group of 20 nations with a steep 10.9 percent fall in its carbon intensity last year, a shift PwC linked to strong economic growth, a warmer winter that reduced energy demand and lower use of coal. France, Italy and Germany also had big falls in carbon intensity last year.
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Almost 200 governments will meet in Paris from Nov. 30-Dec. 30 to agree a pact to curb greenhouse gas emissions, mainly from burning fossil fuels, that are blamed by a U.N. panel for causing downpours, heat waves and rising seas. PwC said the rate of decarbonisation needed to more than double, to 6.3 percent a year, to get on track to limit rising temperatures to a U.N. target of 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times. That would be a wrenching pace of change. Even in Germany in the 1990s, when inefficient Soviet-style factories were shut in the east after reunification, decarbonisation rates were only about 3 percent a year, the report said. "You need revolutions in the energy sector in every country, every decade," Jonathan Grant, PwC sustainability and climate change director, told Reuters. Since the year 2000, the report said that global carbon intensity had fallen by an average 1.3 percent a year. At that rate, PwC estimated that the amount of carbon that could be emitted before exceeding 2C would run out in 2036. (Reporting By Alister Doyle, editing by William Hardy)
What India should Learn from Angus Deaton Mint, Oct13, 2015 A day before the Nobel Prize in Economic Sciences was announced, Mint listed three Indian economists—Avinash Dixit, Jagdish Bhagwati and Partha Dasgupta—who have for long been contenders but have not won the prize. Although the decision of the Royal Swedish Academy of Sciences this week will only prolong their wait, the eventual winner, Angus Deaton, has India connections that should not be ignored. Deaton is a familiar name for anybody who has followed the heated debates about poverty, inequality and under-nutrition in contemporary India, especially after the 1991 economic reforms. Deaton has taken an active part in these debates, many of which have been featured on 13
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the pages of the Economic & Political Weekly, and has edited a fine book that collected some of the best academic work on Indian poverty. On a lighter note, Jean Drèze, his co-author in many papers, seems to be a lucky mascot as far as the Nobel Prize in Economic Sciences is concerned. He has also co-authored numerous works with Amartya Sen, the only Indian to have won the prize so far. But on a serious note, what is the message Indian policymaking can take from Deaton’s research? The Nobel Committee has noted Deaton’s contributions in building a bridge between theory and data, and individual and aggregate economic behaviour. His work, according to the committee, has helped economic policy and modern economic research. One of Deaton’s main efforts has been to disabuse the economics fraternity of the belief that there exists a silver bullet to formulate policies or judge their effects. The fallibility, according to Deaton, is not due to lack of sophistication of technique, but due to the diversity—or heterogeneity, as economists would call it—which prevails in human society. Deaton’s research comes at a time when there is a clear attempt to roll out methods such as randomized control trials as the be-all and end-all of policymaking, in place of older methods such as centralized planning or the World Bank/International Monetary Fund-style structural adjustments that seek to fix the big picture. Deaton is also an example of how effective policymaking requires that economists do not become prisoners of their own research. He was an active participant in the poverty estimation debate that erupted after the findings of the 55th Round of National Sample Survey data were released in the early years of the previous decade, and he undertook a sophisticated and detailed empirical analysis of NSSO data and price indices to recalculate poverty headcount ratios in India. These rigorous endeavours, however, have not prevented him from critiquing the non-transparent and complicated poverty 14
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estimation procedure in place currently and calling for delinking of poverty estimates—which in his own words are mere statistical tools for comparison—from all welfare entitlements. In his intellectual pursuits, Deaton has joined issue with economists on both the Right as well as the Left ends of the spectrum. His critique of Arvind Panagariya’s thesis explaining less-than-normal heights of Indian children in comparison with those in much poor countries like Sub-Saharan Africa to genetic factors is an example of the former while the debate between Deaton-Drèze and Utsa Patnaik about the growing wedge between calorie intake and poverty headcount ratios is an example of the latter. As a logical corollary of his arguments, Deaton has been underlining the need for better nutrition-monitoring arrangements in India, and has regularly pointed out the inadequacy of current indicators. The government could pay heed to his advice on this issue and at least release detailed findings of the Rapid Survey of Children, titbits of which have appeared in the media on the basis of leaks. The majority of today’s economists seek refuge in even more complicated modelling and theory to solve the growing conundrum of mismatch between theory and reality in economics. Deaton is unambiguous in a 2009 paper: “Technique is never a substitute for the business of doing economics”. Deaton’s Nobel should be an occasion to bring back the social in economic sciences. Should poverty estimates be delinked from welfare entitlements?
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Editor’s Pick It’s time to take that leap of faith SIDHARTH BIRLA, September 22, 2015, Business Line. The onus is on both, industry and government. Decision-making, risktaking and an attempt at nation-building are key The Prime Minister’s exhortation to Indian business to resume investing, trusting the “risk-taking DNA” of Indian entrepreneurs, was perhaps overdue. A welcome move would be to intensify such direct engagement with business, more so when one can perhaps perceive some hesitation in the face of a political offensive. Any such hesitation which sends mixed signals about the vigour of implementation and reforms would be unfortunate at a time when India needs vikas like never before. For academic interest, from India’s leading industry chamber Ficci, I had voiced our sentiments in late 2014: “…real proof of the pudding lies in re-starting of outlays on brick and mortar assets by domestic business...we (may) need balance between cultivating domestic investment and inviting FDI. It can be of value for government to deepen engagement with established and potential Indian enterprises, to address basic problems and any inhibitions”. Hopefully, a process which shifts engagement to more fundamental issues has begun; it is only through a focused process that we can strategise how to harvest gains even as others slow down. The economic reality Let us reflect on India’s economic reality. Any analyst will see obvious signs that businesses can do well by expanding and investing here. Government spending is under control and qualitatively better due to 16
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controlled revenue spending. Allocation for infrastructure has increased (though it is yet to translate on the ground). Inflation is largely under check. Consecutive poor monsoons did not hurt acutely (though there is still much distress in farming), and aggregate growth is improving. Indirect tax collection (adjusted for additional measures) is higher, in essence signalling increased coverage of economic activity and healthy future revenue streams. The domestic market is, and will remain, the real growth driver for India. This greatly insulates us from weak global scenarios; advantage can also be taken at home of commodity price falls across the board. On the other hand, if our manufacturing is competitive enough we can become part of established global supply chains the way much of Asean did. Why then has private domestic investment not speeded up? Is it just not taking a leap of faith or are the concerns deeper? Is it a case of “spirit being willing but the flesh being weak”? In any event, we owe it to ourselves to seek the right answers. Engaging with the issues The macro economy comprises micro-elements: while the macro rationally inspires investment there are inhibiting micro factors. Without mounting any defence, I feel there are issues both on the side of industry and the administration — but I can see nothing that cannot be resolved through deeper engagement and administrative skill. We cannot ignore the fact that delivery and implementation of policy in India have been creaky for decades. “Control” was the default mode of thinking at policy and executive levels. Similar to a Hindu rate of growth, we acquired a “Hindu speed of decision-making” which is simply out of tune with the time and the needs. One comes across people who even now think of the 1970s type of command-controlpunish raj as the most effective. Such philosophy at nodal points needs to change. 17
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Sector-agnostic competitiveness that the country needs cannot be supported by legacy decision-making systems, including where a decision-maker can be suspected or harassed years later for decisions that are bona fide. Despite firmness at the highest levels about simplifying the business-government interface, one has not witnessed true resonance or speed at operating levels, other than areas with largely digital interactions. Either way, decision-making speed and processes do not yet support investment and expansion needs. Attention must also be focused on various government associates or arms — be they local authorities, professional or regulatory bodies — because the government’s intentions can be frustrated by its actions at cross-purposes. “Ease of doing business” is being pursued aggressively, but this is largely procedural and takes time. It is distinct from reparing decision processes. Risks and realities Let us assume a business investor has crossed the minefield of analysing demand vs capacity, production competitiveness, infrastructure support, taxation, natural resource availability, and so on, and answers are positive in sum. The key dimension of his investment decision is then his risk appetite, which is also somehow regulated by the amount of capital he has access to. Investment decisions are always subject to risk; the deciding factor can be the risk-reward analysis and an assessment of whether the risk could be potentially grave. Let us juxtapose this with financial and systemic realities with the aim of evolving solutions. Brick-and-mortar companies in general have stressed balance sheets due to low profitability and/or debt hangover of capital spending or loss of funding. In raising new capital or debt, returns must be foreseeable to adequately service both — traditional business does not enjoy the luxury of (say) e-commerce where entry valuations are rich and cash burn-rates actually enhance these. Companies additionally open themselves to punitive risks from 18
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shareholders and bankers if they end up making decisions that go bad, even if due to external factors. Perhaps as a society we have not matured enough to take genuine lack of success in our stride. Conversely, industry should also perhaps not confine itself to routine requests and sector-specific indulgences or outcomes on politically contentious issues. Greater participation in nation-building can include (a) offering greater engagement in eliciting support from all quarters for intensive reform; (b) collective generation of equitable solutions for existing or potential industrial NPAs; (c) well-informed and candid debate on building the competitive abilities of Indian industry; and (d) a deeper engagement with the government on finding ways to ensure effective and speedy decision-making systems, going beyond the definition of “ease of doing business”. Investment and growth are the raison d’être for business and central factors in creating livelihoods, particularly in smaller businesses like MSME’s and service outlets. The multiplier effects of growth at this end of the scale are profound, yet it is here that the maximum blow from weak sentiment is felt. In summary, both sides — government and business — need to take leaps of faith reciprocally. This column explores ideas and opinions on Indian enterprise and economy. The writer is an entrepreneur and former president of Ficci. The views are personal
India’s energy transformation gathers momentum 01 September 2015 India’s ‘seven horses of energy’ electricity sector transformation is gathering pace, according to a new report. New report – released today by the Institute for Energy Economics and Financial Analysis (IEEFA) and Indian energy analysis firm, Equatorials. India’s Electricity Sector Transformation – states the Indian Government is on track to achieve its goals of doubling 19
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domestic coal production, modernising the electricity grid and installing 175GW of renewable energy, underpinning sustained economic growth in India of 6-8% pa. “The profound transformation announced in 2014 by the Indian government is gaining momentum,” said Tim Buckley, Director of Energy Finance Studies at IEEFA. “While most financial commentators have questioned India’s capacity to deliver, all sign are pointing towards success.” The installation of 175GW of renewable energy – equivalent to three times the electricity capacity of Australia - is one of a number of key policy initiatives that will enable the rapid transformation. “India has opened the gates to a wave of multi-billion dollar investments in its renewable energy sector,” said Buckley. “There have been eight major deals in July alone with the single biggest international endorsement being SoftBanks’ US$20bn, 20GW solar joint venture.” NTPC also announced a 420MW Invitation for Bids for the Bhadla Phase-II Solar Park in Rajasthan and a second for 500MW at the Gani-Sakunala Solar Park in Andhra Pradesh. NTPC is facilitating 15GW of reverse auction solar tenders by 2019 on behalf of the government, in addition to its own 10GW of solar projects. Facilitated by a US$50 billion grid upgrade, solar electricity is key, with installs of 75GW by 2021/22 capable of delivering 110TWh,or 22% of the required electricity increase. “India is replicating Germany’s and China’s systematic electricity sector transformation, with the added advantage that the cost effectiveness of this is accentuated by the fact that the price of solar electricity has dropped by 80% in 5 years,” said Tim Buckley, Director of Energy Finance Studies at IEEFA.
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According to IEEFA, taking wind installs to 60GW could deliver 19% of the required uplift, with a combined capacity expansion across nuclear, gas, biomass and hydro providing a further 25%. In this context, the Government of India’s ambition to more than double Indian domestic coal production to 1,500Mtpa by 2021/22 would oversupply India with coal by 400Mtpa, with dire consequences for the seaborne thermal coal market. While many commodity forecasters have assumed Indian imports will continue to grow, as a result of the transformation, IEEFA forecasts a peak in Indian thermal coal imports in 2015, with a rapid ~20% pa decline thereafter. Energy Minister Goyal has made it clear that India’s reliance on thermal coal imports is not sustainable for the economy, rate payers nor commercially viable for the coal-fired power plants involved. Goyal in May 2015 said: "We are confident that in the next year or two, we will be able to stop imports of thermal coal
Cyrus Mistry’s Vision 2025: Tata Group prepares to create potential future leaders By Devina Sengupta & Baiju Kalesh, ET Bureau | 21 Sep, 2015, The Tata group has launched an initiative to create a pipeline of future leaders who will be mentored by multiple chief executives. ET SPECIAL:Love visual aspect of news? Enjoy this exclusive slideshows treat! MUMBAI: The Tata group, India's largest diversified conglomerate, has launched an initiative to create a pipeline of future leaders who will be mentored by multiple chief executives for up to two decades compared with one year now. The exercise is aimed at preparing potential leaders to tackle a rapidly evolving business climate as the group looks to more than 21
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double market value to $350 billion in a decade as part of chairman Cyrus Mistry's Vision 2025. "Handholding for one year is not enough. When you are grooming future leaders you need to be involved for longer periods," said NS Rajan, group chief human resources officer at Tata Sons, the holding company of the group that has interests from salt to software. Some of this will involve going back to school and helping to promote innovative thinking. Undergraduate professors will take classes in organisational behavior, behavioural economics and industrial psychology, while painters, musicians, dancers and poets will help bring a new perspective. "If you can start the process it will give you an opportunity to think differently," Rajan said. "We normally look at any problem with a linear analytical lens; there is a need to exercise the right side of the brain. Today the customer is more informed and always has options and if you are not creative you will not put forward the best solutions." Along with the heads of the 100-plus Tata companies, the Tata Sons core human resources team will also be part of the mentoring group. All potential front-runners will have one HR executive and a CEO/CXO assigned to guide them till they take over the reins at a group company. The initiative aligns with chairman Mistry's plan to create 25 companies similar to Tata Consultancy Services, India's largest software exporter by market value. The first executives to be inducted will be from the Tata Administrative Services, one of corporate India's oldest such training 22
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programmes. TAS is a high-profile recruiter at top business schools in India and its alumni include R Mukundan, managing director of Tata Chemicals, and Mukund Rajan, a member of the group executive council, an apex panel that reports to the chairman. There are about 330 TAS managers across the group. The programme won't be confined to TAS executives once it's rolled out, NS Rajan told ET. "We have presented this model to a large number of TAS managers across (the) group and got (an) outstanding response from them. We have also discussed this with key stakeholders in our group companies," Rajan said. It's not known if Mistry will be one of the mentors. The group, which has a market capitalisation of $134 billion, has been reorienting itself from traditional businesses to newer industries such as ecommerce, defence and aerospace. Mistry's Vision 2025, which was announced last year, is aimed at putting it in the same league as the top 25 most valuable companies in the world. The group will invest $35 billion (Rs 2.23 lakh crore) in the next three years across sectors with some of the focus areas being realty and infrastructure, defence and aerospace, consumer and retail, and financial services. Such initiatives will help India's oldest and largest conglomerate, which employs more than 6 lakh people, prepare a roster of potential leaders. "It is unusual for companies to have a long mentorship programme like this but if it works then they will have pipeline of next few tiers ready," said Amit Nandkeolyar, assistant professor of organisational behaviour at the Indian School of Business. "By exposing them to multiple CEOs, you are pushing them to be ready with anything new that comes up." 23
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In the footsteps of Gandhi: Global pilgrimage for climate change 03 September 2015 The People’s Pilgrimage has initiated its India tour to urge for a strong climate change treaty to emerge from of the UN climate change negotiations in Paris this November. Led by Yeb Saño, Philippine Climate Change Commissioner and senior negotiator at the UN talks until his resignation in April this year, the Pilgrimage is a project of Our Voices the global interfaith campaign for climate action. Accompanied by a group of climate change advocates and faith community representatives, he walked this afternoon from Raj Ghat to Jantar Mantar. “The Pilgrimage is our way of reminding the whole world about the reality of climate change and reflecting on the state of our planet”, he told a press conference at the Foreign Correspondents´Association of South Asia premises here late this evening. “For this journey, therefore, every step counts. In our common aspiration to confront the climate crisis, we cannot afford to say that we’ll cross the bridge when we get there. We have to get there now,” he said. “The People’s Pilgrimage is a global expression of sincere concern and calls on our world leaders to find the reciprocal sincerity and generosity – on all sides - and determination to reach a strong climate change agreement. Every step counts. Our aim is to show the world why this climate crisis matters to all of us.” Yeb Saño will lead other groups of pilgrims in subsequent visits to countries in Asia, Africa, and North America. On 30 September he will start a 1,500 kilometer walk from the Vatican City, (an independent enclave in Rome, Italy) to Paris arriving there on 30th November, at the same time as various other pilgrimages from different parts of Europe. Pilgrims from across the world will converge in Paris and state their demands to the world’s governments in time for the opening on 30 November of the 21st Conference of Parties to the UN Framework Convention on Climate Change (COP 21). They will insist that the agreement the conference is tasked to adopt contain a full range of measures relating to reducing greenhouse gas emissions, adaptation to climate impacts, technology and finance and a long-term goal. 24
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IndiScan
Petrotech Welcomes the new Industry Leaders Mr. V.P. Maahawar, Director (Onshore), ONGC Mr. Ved Prakash Mahawar today took over as Director (Onshore) of ONGC; India's largest and the global 3rd ranked E&P company. As Director (Onshore), a board level position, he will be directly looking after all the Onshore operations spread across the country which significantly contribute towards ONGC's overall physical performance. Mr. Mahawar brings with him 33 years of vast experience of managing drilling and operational functions, holding various key positions across vast spectrum of oil field activities. Prior to his joining the present assignment he has been OSD(Onshore) at Delhi for some time before which he was heading Tripura Asset of ONGC as Executive Director-Asset Manager. Under his leadership, Tripura Asset saw increase in gas production by more than two folds. During his tenure ONGC commenced supplying gas for both units of ONGC Tripura Power Company-OTPC. He has also been instrumental in monetization of two discovered fields, putting them on production. Mr. Mahawar also pioneered the critical Well Control expertise for ONGC. A veteran of numerous Blow-out control jobs and proven 25
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experience in handling the complicated well control problems in onshore & offshore fields of ONGC, OVL & other operators in India with utmost safety, he has been major force and face of the Crisis Management Team (CMT) making ONGC self-reliant in dealing with well control situations. He was also instrumental in establishing the Well Control School at Institute of Drilling Technology (IDT), Dehradun, which has been imparting training to ONGC employees and oil personnel from other Indian as well foreign oil companies. A Mechanical graduate from Pandit Ravi Shankar Shukla University, Raipur Mr. Mahawar started career with ONGC as Drilling Engineer in 1982. He is known as the first sub-sea engineer of ONGC. He has to his credit more than 25 papers presented in international conferences. He also developed "Well Control Manual for Offshore Operations" and was part of the team to develop OISD Standard 174 for Well Control Practices. Mr A K Srinivasan, Director (Finance), ONGC Mr A K Srinivasan, an IIM Bangalore alumnus, is an accomplished finance professional with experience of over 31 years in upstream oil and gas finance. Mr Srinivasan started his professional journey with ONGC as a graduate trainee in the year 1983. He has demonstrated his professional capability in diverse facets of financial planning and management with the energy major. With experience in the capital markets, project financing & contracts, corporate budgeting & planning, corporate accounting, corporate taxation and dispute resolution, Mr Srinivasan has a broad array of expertise up his sleeves. As Executive Director (Finance), ONGC, Mr Srinivasan played a pivotal role in international fund raising during the ONGC Videsh bond issue, securing over USD 700 mn worth of credits for the overseas subsidiary of ONGC. 26
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Mr Srinivasan has played major role in the acquisition of various oil and gas development projects, Power, Petro-Chemical and capital assets for ONGC. He has also steered critical productivity enhancement projects like the transition from excel based reporting to SAP based reporting and implementation of Enterprise Resource Planning (ERP) projects across ONGC. In pursuit of excellence, Mr Srinivasan has also undergone various development programs like the Advanced Management Program at IIM Lucknow, Senior Management Program at the Indian School of Business, Hyderabad and Oil and Gas Accounting from University of Texas, Dallas. Shri Prabhat Singh, Managing Director & CEO, Petronet LNG Shri Prabhat Singh has been appointed as Managing Director and CEO (MD & CEO) of the Company and assumed charge as MD & CEO w.e.f. 14th September, 2015. Shri Singh is a Civil Engineer having graduated from the prestigious Indian Institute of Technology, Kanpur, and has around three decades of experience of working in the Hydrocarbon Industry both in MNC and Public Sector Navratna PSUs at prominent positions. Prior to join the Company, Shri Singh was Director (Marketing) in GAIL India Ltd. Shri Singh headed the Upstream Business Development and the Strategy Divisions in British Gas since April 2006. During his earlier stint in GAIL, he headed GAIL’s Exploration and Production Department as General Manager. He made a major contribution in the execution of world's longest exclusive LPG pipeline project from Jamnagar to Loni. The project was recognized by the Asian Development Bank as the "Best Managed Project" of the year. He was also instrumental in ushering in of the "Open Access Common Carrier Principle" in India which brought in a paradigm shift and contributed manifold in transitioning 27
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the pipeline transportation industry of the country into the matured industry that it is today. Shri Prabhat Singh also led "Project Parivartan" in GAIL - a highly human oriented change management initiative which put "people at the heart of corporate purpose" to address the changing business environment. Mr. B. S. Canth, Director (Marketing), IOCL Mr. B. S. Canth has been appointed as the Director (Marketing) of the oil major - Indian Oil Corporation Ltd. (IOCL), with immediate effect. He succeeds Mr. M. Nene, who superannuated in December 2014. Prior to his appointment as Director (Marketing), Mr. Canth was Executive Director (Consumer Sales) at IndianOil’s Marketing Headquarters in Mumbai. A graduate in commerce, Mr. Canth has a master’s degree in Personnel Management & Industrial Relations (PM&IR) from Punjab University and is an LLB from the prestigious Delhi University. With his in-depth knowledge of the Marketing Division and widespread exposure, Mr. Canth has represented the Corporation extensively at several international seminars and HR workshops. Having joined IndianOil in 1983, Mr. Canth has handled a variety of portfolios, including varied assignments in Human Resources, Retail, Operations and Consumer Sales. He brings to the board his expertise as a business head of three geographically and culturally diverse and complex states – viz. Uttar Pradesh, Andhra Pradesh & Telangana. As State-in-Charge of IndianOil’s two largest State Offices, he was responsible for overseeing all POL business, including retail & direct sales, LPG, lube sales, operations, project management, planning, HRD, and Information Technology. He spearheaded the commissioning of India’s first Smart Terminal at Chittoor and the
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restructuring programme of the organisation in close coordination with McKinsey. An avid golfer and a prolific reader, Mr. Canth is widely travelled. He has presented several papers in both domestic and international forums on diverse topics related to downstream business, HR and management. *****************************************
Transport ministry to donate lithium-ion buses to Parliament: Nitin Gadkari PTI Sep 9, 2015, 09.47PM IST NEW DELHI: Riding high on 'green fuel' drive, Road Transport and Highways Minister Nitin Gadkari today said his ministry will donate three lithium ion-powered buses to Parliament while a pilot project inCOLLABORATION with ISRO is on to run 20 such buses on Delhi roads. This would also be in line with Prime Minister Narendra Modi's Make in India drive, he said. "In the next Parliament session, my ministry will donate three buses to the Speaker. These will be run on lithium ion batteries developed by ISRO scientists in collaboration with the department," Gadkari said at an event on 'Green Fuel Vehicles'. Gadkari said the project to develop lithium ion batteries for transport solutions was undertaken by the Indian Space Research Organisation (ISRO), and the indigenously developed batteries are likely to cost "Rs 5-7 lakh compared with Rs 55 lakh" of the imported ones. "We are going to commercialise it. For patents, we have registered it. It would be a game changer," he said. He said a pilot project to run 20 such buses will be implemented soon and its replication will follow. 29
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The minister also spoke of a 'Green Fund' to convert diesel buses into electric ones. He suggested that methane can be extracted from sewage water to produce bio-CNG which can be used for running buses. The green fuel, Gadkari said further, will not only help in enhancing energy security, but contribute to job creation and GDP growth of India. It will also considerably reduce the burden of import bill, the minister added. He is of the view that farmers could switch to ethanol production instead of sugar to tap higher prices.
Indian Oil plans $3B petrochemicals project in Iran By DEBJIT CHAKRABORTY, RAJESH KUMAR SINGH and ABHISHEK SHANKER Bloomberg Indian Oil Corp. is seeking to build a $3 billion petrochemicals plant in Iran, according to people with direct knowledge of the matter. Shares rose. The plan hinges on assurances from Iran that the 1-million tpy project will have access to cheap natural gas as feedstock, said the people, who asked not to be identified because the information isn’t public. A company spokesman didn’t respond to requests for comment by phone, text message and e-mail. Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totaling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Persian Gulf nation may be nearing an end. Economic and financial restrictions on Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries (OPEC), left it in need of outside money and expertise to rejuvenate its flagging hydrocarbon industry. Indian companies will be competing against state-run energy giants of regional rival China, as well as oil majors including Royal Dutch Shell 30
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and Total, if Iran’s breakthrough nuclear deal this year holds and sanctions are lifted. Indian Oil, the biggest oil refiner in India, is betting on petrochemicals to drive growth. The company plans to spend $4.5 billion in the next few years to expand the business, according to its website. The shares of the company rose 2.3% to 414.45 rupees, the highest level since Aug. 11, at the close in Mumbai. The benchmark S&P BSE Sensex fell 0.4%. Tremendous Potential A natural gas-fed petrochemicals plant will allow Indian Oil to diversify from its existing projects that use oil products from its own refineries, the people said. Petrochemicals accounted for 4.4% of the the company’s revenues in the year ended March 31, while accounting for almost 39% of its operating income. Indian Oil sees “tremendous potential” in the industry, chairman B. Ashok said in an interview published in its latest in-house newsletter. Iran and India are planning mutual energy investments, Iranian Foreign Minister Mohammad Javad Zarif said earlier this month in New Delhi. The Iranians won’t forget India’s support during the hard times, he said. US President Barack Obama on Sunday won the support of another Senate Democrat for his Iran nuclear deal, putting the agreement three votes short of becoming veto-proof.
Law should take its own course: Pradhan on RIL-ONGC row The government is expected to take a decision on a penalty on RIL or an agreement between the companies only after a final report from the consultant BS Reporter, Pune, October 10, 2015 Minister of State for petroleum and natural gas, Dharmendra Pradhan said that any decision on the Reliance Industries Ltd and ONGC's 31
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ongoing dispute with regard to gas flow in the Krishna Godavari basin will be taken after consultants DeGolyer and MacNaughton submit the report. "Let me see the report first. I am yet to receive the report. Both the companies had mutually agreed for a report so let it come. All I can say now is law should take its own course," he said while addressing the press while launching clean-green-smart Pune initiatives. ALSO READ: ONGC, RIL stare at long-drawn legal battle over gas row Pradhan, however, did not clarify when he is expected to get the report from DeGolyer and MacNaughton (D&M). The government is expected to take a decision on a penalty on RIL or an agreement between the companies only after a final report from D&M. According to ONGC, RIL's D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary, thus draining gas from the G-4 field, while the D6-B8 well may be draining gas from DWN-D-1 field of KGDWN-98/2 block. RIL has maintained it followed the production sharing contract and drilled all wells within its boundary. The Delhi High Court had last month disposed of an ONGC petition, asking the company to wait for six months for the government to take action on the consultant's report. D&M has hinted at connectivity between G-4 and KG-D6, but has so far not said anything on connectivity with KG-D5. It is alleged that RIL had drawn 58.7 billion cubic metres of gas from the wells up to March 31, 2015, out of which 11.9 bcm may belong to ONGC. Migration of hydrocarbons is natural in connected fields, unless the parameters are monitored in production wells in the entire area.
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ONGC May have lost R 8900 crores worth of Gas to RIL : D& M Report Business Standard. 10.10.2015 The international consultant appointed to give its technical findings in a gas dispute between Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL) submitted an interim report on Friday, stating around nine billion cubic metres (bcm) of natural gas may have flown out from ONGC’s block in the Krishna-Godavari basin to RIL’s adjoining reservoir. Based on an average price of $4.2 per million British thermal unit (mBtu), the value of the nine bcm that might have flown out of ONGC’s reservoir would be $1.4 billion or Rs 8,900 crore at the current exchange rate. According to DeGolyer and MacNaughton (D&M), RIL had drawn 58.67 bcm from the wells up to March 31, 2015, of which around nine bcm, or 15 per cent, might belong to ONGC, sources said. The report by US-based D&M, establishing continuity of ONGC’s Godavari PML or G-4 block with RIL’s KG-DWN-98/3 or KG-D6 block, was given to the Directorate General of Hydrocarbons and to the two companies. “Now, the companies will submit their comments, after which the final report will be prepared and submitted next month for the government to take action,” said a source, who did not wish to be identified. An RIL spokesperson refused to comment, saying he had not seen the technical report. An ONGC spokesperson could not be contacted for a response. The petroleum ministry’s official spokesperson said: “The government will decide its course of action on the basis of the final report when it comes to us.” ONGC had asked, in an appeal last year to the Delhi High Court, for compensation in case reservoir continuity was established. It contended RIL had deliberately drilled wells close to the block boundary. 33
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However, the production sharing contract also provides for joint development in a scenario where the adjoining reservoirs are found to be contiguous. The high court had last month disposed ONGC’s plea by asking it to wait for six months for the government to act after the consultant’s report was given.
₹400 cr capex
Balmer Lawrie plans September 22, 21:27:40
₹220 crore inv Logistics hub at Visakhapatnam to see Balmer Lawrie & Co Ltd has planned around ₹400 expenditure in the next two to three years in its logistics business vertical. Prabal Basu, CMD, told reporters after its AGM here that the proposed multi-modal logistic hub at Visakhapatnam would see an ₹220 c investment of around temperature-controlled warehouses across the country. Construction work for the logistics hub has begun in July and is expected to be ready by next July. The hub, which is being set up through a 60:40 joint venture with the Visakhapatnam Port Trust, will have a container freight station, warehouses including cold storages and railway sidings. VPT has provided 53.02 acres on lease as its equity in the joint venture – Visakhapatnam Port Logistics Park Ltd. Balmer Lawrie will make cash investment and manage the project. The company’s plan to set up temperature-controlled warehouses has been divided into two phases. In the first phase, one cold storage each is being set up in Hyderabad, Mumbai and the National Capital Region. In the second phase, four such cold storages would be set up. Land has also been acquired for the Mumbai and NCR cold chain projects. ₹100 “During 2015-16, we have planned investment worth Basu said.
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Once operational, it would bring in annual revenue worth -40 ₚ30 crore, he explained. Meanwhile, he said that the company has merged its logistics infrastructure and logistic services businesses into one to draw on synergy and saving costs. “This happened in August,� he said. ONGC may not get much compensation in gas dispute with RIL Contract does not provide for retrospective penalty for 'such' acts Press Trust of India, New Delhi, October 11, State-owned ONGC may not get much compensation even if it is established that natural gas from its idlying fields in Bay of Bengal had migrated to adjoining KG-D6 block of Reliance Industries as the contract does not provide for retrospective penalty for such acts. Oil and Natural Gas Corp (ONGC) had in 2013 claimed that RIL had deliberately drilled wells close to the boundary that its Krishna Godavari basin KG-DWN-98/3 (KG-D6) block shares with the stateowned firm's Godavari Block (G-4) and that some of its gas may have been pumped out from the adjoining block. US-based consultant DeGolyer and MacNaughton (D&M) has been appointed by the two firms to study if the two blocks are contiguous and have a common gas reservoir from which gas can be produced from either side. HSBC Global Research in a note said the underlying contract -production sharing contract (PSC), provides for the resolution of such a dispute. A full chapter on resolution of such a dispute through unit development has been devoted in the PSC. "As per the terms of the contract, if a reservoir is situated partly within a contract area belonging to a party and partly in a different contract area, any of the parties could write to the government, and the
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government then will ask the two contractors to collaborate and agree on a joint development of reservoir within a stipulated time period. "If parties fail to agree to do so, the government can force the parties to prepare and execute such a joint plan," it said. RIL began gas production from KG-D6 block in April 2009 while ONGC is yet to begin development work on gas fields in G-4 that were discovered more than 12 years back. "PSC does not provide for an explicit retrospective penalty on any of the parties that produced from its approved contract area (mining lease area) as per an approved field development plan, if the other party to the dispute failed to seek such a unit development," HSBC said. ONGC had sought compensation for the gas belonging to it that RIL had produced. Sources said D&M has in its preliminary comments stated that the reservoir in the two neighbouring blocks are connected and there is no unconnected area in G-4. ONGC claims that 11.9 billion cubic meters (bcm) of its gas may have been produced from RIL's KG-D6 field. This at a gas price of USD 4.2 per mmBtu, will be worth less than USD 180 million. Even this it can get only after field expenses as well as taxes and royalty paid by RIL is deducted, they said. D&M is likely to submit its report on the issue by next month. And as per Supreme Court order the Oil Ministry will have six months from the date the report is submitted to decide if ONGC is entitled to any compensation from RIL.
New oil & gas policy shifts risks to developers: Report By PTI | 7 Sep, 2015, 05.31PM IST Government's decision to auction 69 oil and gas fields with marketlinked prices and a revenue sharing mechanism under its proposed marginal fields policy. 36
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MUMBAI: The government's decision to auction 69 oil and gas fields with market-linked prices and a revenue sharing mechanism under its proposed marginal fields policy (MFP) is a positive for the sector as it shifts the key risks to developers, says a report. The new policy is also likely to result in simplification of calculating government share, which will help developers make bids in a prudent manner as the biddable parameters are likely to be the revenue share of the government, according to a report by rating agency India Ratings. The new methodology, the report said, though simplifies the basis of calculation of the government share, would place a greater risk on developers as they will have to estimate three key variables in advance before placing a bid, exploration, development and production (EDP) costs, quantum of hydrocarbon extractable and market prices. The report said under the new policy, the developers will have to consider an overall EDPcost along with volume and price estimates as these would be the key variables to ensure a reasonable internal rate of return. On pricing, the report expects the market-linked prices to be closer to the lower of the spot or term liquefied natural gas landed prices, which should be 1.5-2 times the current domestic gas price of USD 4.66/mmbtu. Volume offtake at these prices should not pose a challenge and gas is likely to see demand from fertiliser, refinery and city gas sectors, the report noted. Announcing the new oil and gas policy last week, the government decided to calculate its share of profit from hydrocarbons produced from the 69 marginal fields as a percentage share of gross revenue. 37
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This is in contrast to the earlier production sharing contracts (PSC) which comprised two main elements, cost recovery and sharing of profits based on pre-tax investment multiples. Under the existing policy, exploration and development costs are pass-through and first recoverable for developers and under PSC, government's profit share rises gradually till ED costs are recovered. As per the existing PSC, developers like Reliance have been accused of gold-plating of costs (by the CAG and the Oil Ministry), as government's profit share is calculated post-cost recovery by the developer on ED. The MFP is applicable for the development of hydrocarbon discoveries made by national oil companies - ONGC and Oil India. These discoveries could not be monetised earlier due to reasons such as isolated locations, small size of reserves, high development costs, technological constraints, fiscal regime etc.
NTPC to start production from allocated mines in phases September 22, 21:24:38 State-owned NTPC Ltd will start the nine coal mines allocated in a phased manner over the next two-three years. “Of the nine mines, Pakri-Barwadih is in an advanced stage and we have a target to begin production from this mine this year,” said NTPC’s interim Chairman and Managing Director AK Jha. “In the next two years, we will start another three mines and after that another three mines after the next 2-3 years,” he added. NTPC was amongst the companies which had a few coal mines deallocated after the Supreme Court’s ruling last September. However, in March, the company was reallocated five of its cancelled coal mines under the new regime as well as getting four more mines.
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Jha said that the production timelines have been kept over the three years. Further, the company will also start developing these mines as per its requirements. The company has an installed capacity of 45,548 MW and has a further 23,000 MW under construction. A total of 9,500 MW of capacity is under bidding and feasibility reports have been approved for a further 16,600 MW. ₹700 Jha was addressing the media ahead of the public issue of crore tax-free bonds. Asked whether the company’s capacity addition plans will impact its financials in an environment of weak demand, Jha said, “We don’t think we will face any problems. All our plants have power purchase agreements which cover the fixed costs. Thus, there is no risk related to cost recovery.” In the 2014-15 fiscal, NTPC exceeded its capital expenditure target ₹23,239 crore ag and spent On Wednesday, the company will float ₹700 bond -free crore tax issue, the proceeds from which will be utilised to fund the company’s renewable energy projects. ₹ 280 While 40 per cent or investors, rest would be for the non-retail category which would include QIB, corporates and high net worth individuals.
Natural gas price cut in line with new policy TCA Sharad Raghavan, The Hindu, October 1, 2015 NEW DELH The price will come into effect from October 1 In a move that may hurt producers like ONGC and Reliance Industries but benefit the power and fertilizer sectors, the government on Wednesday cut the price of natural gas by 18 per cent to $3.81 per million British thermal unit (mmBtu) on a gross calorific value basis from the current $4.66 per mmBtu. The new price will come into effect from October 1 and will be in place for six months. This is in 39
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line with the policy adopted by the government in October 2014. “In accordance with the New Domestic Natural Gas Pricing Guidelines, 2014, issued by the Ministry of Petroleum and Natural Gas, the price of domestic natural gas for the period from October 1, 2015 to March 31, 2016 is $3.81 per mmBtu on a GCV basis,” said the Petroleum Planning and Analysis Cell of the Ministry. On a net calorific value basis, the price has been cut to $4.24 per mmBtu from $5.5 at present. This takes the price back to the level it was before the new policy came into effect. According to the new policy, the price of natural gas is to be revised every six months on the basis of a weighted average of rates in countries such as the U.S., Mexico, Canada and Russia, all gas-surplus economies. Natural gas price cut in line with new policy : http://www.thehindu.com/news/national/natural-gas-price-cut-inline-with-new-policy/article7708607.ece
RIL-ONGC row : D&M to submit report on gas ‘Pilferage’ to petroleum ministry on October 8 By Ajmer Singh, ET Bureau | 2 Oct, 2015, 01.38AM IST NEW DELHI: A high-profile clash between India's biggest oil companies, sparked by ONGC's allegation that Reliance Industries (RIL) had drained out gas from its idling deepsea gas fields adjoining and possibly connected to RIL's KG-D6 block, is approaching its climax. On October 8, US-based DeGolyer and MacNaughton (D&M) — an independent expert appointed to examine the continuity of reservoirs —is expected to submit its report to the ministry of petroleum and natural gas (MoPNG). The dispute was sparked by ONGC's claims in 2013 that RIL had deliberately drilled wells close to the common boundary of the blocks and that some gas it pumped out was from the state-firm's adjoining block. RIL has maintained it has abided by production sharing 40
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contract (PSC) and done only what was officially authorised "RIL, as a prudent operator, has followed all provision of PSC. Every activity has been undertaken following extensive discussion with and approval of the Management Committee (MC) including MoPNG and the directorate general of hydrocarbons (DGH) officials. Following engagement of an independent expert agency (D&M) under the supervision of DGH, RIL has proactively cooperated in the process and is awaiting its finding," a spokesman for Reliance Industries said in response to a detailed questionnaire from ET. "We have to protect interests of our organisation and report will be finalised on Oct 8. All data is in the knowledge of independent agency, I can't comment on this," ONGC Chairman and Managing Director Dinesh K Sarraf told ET. Industry sources close to RIL say examining the technical aspects of the gas reservoir is only one aspect. They say it is crucial to consider that RIL had drilled wells within its own boundary, spent over Rs 40,000 crore to develop the field and produced gas, a national resource, unlike ONGC which has not developed the field so far. Stakeholders, including ONGC, RIL and DGH, had a meeting in the US with D&M from September 16-18. In this session, they deliberated on reservoir data, connectivity of reservoirs across the block boundaries and estimates of gas volumes in blocks operated by ONGC and RIL, a top source familiar with the case told ET. D&M told them that up to March 31, 2015, RIL had drawn 58.67 billion cubic metres (bcm), out of which ONGC claims 11.95 bcm as its share, the source cited above said. It may not be possible to extract even minimum 75 bcf of gas; it will not be viable, explained one official privy to the communication. 41
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Sources close to RIL contest this. "No one can claim title to gas; RIL has produced this gas and not ONGC. This is all in cognisance of government. How can they claim 12 bcm? No one can predict migration or drainage. This is a geological occurrence surprise, and if connectivity is there, it is not something new, it is happening the world over, where stakeholders jointly develop fields. And why did they not inform RIL in 2006, when fields were being developed?" said one of the sources. Expert Report While the final contours of the D&M report is not known, many sources, whom ET spoke to, suggest that the report might uphold some of ONGC's claims while rejecting others. On September 23, D&M indicated to DGH that so far it has not been able to identify any unconnected or undepleted area in ONGC's block where viable exploration could be carried out, ET has learnt. Also the report may establish the continuity of channels and connectivity of reservoirs across the block boundaries, a top source with direct knowledge of the matter told ET. For its part, ONGC has sought to strengthen its own case with data on how pressure in its field has declined. It has submitted a study conducted by oil services company Schlumberger to DGH, which was further shared with D&M and RIL. On April 19, Schlumberger forwarded its test report to ONGC that suggested reduced pressure. This test was conducted from April 2 to April 7 and the report finalised and shared with DGH and RIL. "The original drilling was done in 2005-06, when gas pressure was found to be around 3900 PSI (pounds per square inches), and now it is around 1200, and gas flow was over 4 lakh cubic metres per day, now there is no gas left, and water is all over the field," claimed a top ONGC source. The industry executives quoted earlier agreed that the reservoir may be depleted, but said that RIL can hardly be blamed for it. "There may 42
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not be any gas left, and pressure has reduced but why blame RIL? The drilling was done in RIL's boundary, and designs were approved by DGH. When vertical drilling is done, 2-3 km below the sea bed, there are technical challenges, then side tracking is done, that too is approved by DGH. We drill to achieve maximised natural drainage to justify the well. And once the gas is produced, voids are filled, RIL knows nothing about migration. If RIL was so intelligent, then why would its initial estimates of 10 tcf of gas go wrong, since gas reserves now revealed are around 3 tcf." It also appears that the final D&M report could also puncture ONGC's claims of gas drainage, worth an estimated Rs 30,000 crore. The state explorer had, in 2014, claimed that from 2009 to 2013, RIL had siphoned off around 18 bcm of gas, and that 50% of the drawn gas belongs to ONGC. "The value of the disputed gas could be between Rs 10,000 crore and Rs 12,000 crore, if it (ONGC's claims) is established," said another top official, who has access to the details of the dispute. In May this year, ONGC had moved Delhi High Court and alleged that RIL had siphoned off natural gas from its fields adjacent to the KG-D6 block in the Krishna Godavari basin. According to ONGC, its Godavari Block (known as G-4) and discovery block KGDWN-98/2 are contiguous to RILowned KG-DWN-98/3 (KG-D6). The Economic Times has reviewed a letter written by ONGC Director (Exploration) NK Verma to the ministry of petroleum. "The position of ONGC is that there is a continuity of discoveries made by ONGC in its Godavari PML DWN98/3 block. Our study suggests that RIL's well D6-A5, D6-A9,D6-B8 are drilled on the extension of G4-2,G4-3 AND D1 pools of ONGC respectively. As these pools are extending across both the blocks, there is possibility that pools of KG-DWN-98/2 and G4 are being drained through wells drilled in D6 block, as these wells are drilled close to/on block boundary," the letter reads. RIL's D6 block in the Krishna-Godavari basin borders ONGC's DWN 98/2 Block and ONGC's G4 gas field is also near RIL's block. ONGC, which has around 11 discoveries in the region, plans to develop G4 and KG-DWN blocks by 2017 and has over 4 trillion cubic feet of gas 43
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reserves in the KGDWN-98/2 block with an estimated output of 6-9 million standard cubic metres per day of gas. On September 10, the Delhi High Court disposed of ONGC's petition and directed government to take a decision after it receives report from an independent panel set up to arbitrate between RIL and ONGC.
Indian Oil plans $3B petrochemicals project in Iran By DEBJIT CHAKRABORTY, RAJESH KUMAR SINGH and ABHISHEK SHANKER Bloomberg Indian Oil Corp. is seeking to build a $3 billion petrochemicals plant in Iran, according to people with direct knowledge of the matter. Shares rose. The plan hinges on assurances from Iran that the 1-million tpy project will have access to cheap natural gas as feedstock, said the people, who asked not to be identified because the information isn’t public. A company spokesman didn’t respond to requests for comment by phone, text message and e-mail. Indian Prime Minister Narendra Modi’s government is eyeing energy and infrastructure investments totaling billions of dollars in Iran, including upstream gas production and port developments. India has sought to secure ties with Iran and ensure access to its abundant hydrocarbons as years of sanctions on the Persian Gulf nation may be nearing an end. Economic and financial restrictions on Iran, once the second-biggest producer in the Organization of Petroleum Exporting Countries (OPEC), left it in need of outside money and expertise to rejuvenate its flagging hydrocarbon industry. Indian companies will be competing against state-run energy giants of regional rival China, as well as oil majors including Royal Dutch Shell and Total, if Iran’s breakthrough nuclear deal this year holds and sanctions are lifted.
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Indian Oil, the biggest oil refiner in India, is betting on petrochemicals to drive growth. The company plans to spend $4.5 billion in the next few years to expand the business, according to its website. The shares of the company rose 2.3% to 414.45 rupees, the highest level since Aug. 11, at the close in Mumbai. The benchmark S&P BSE Sensex fell 0.4%. Tremendous Potential A natural gas-fed petrochemicals plant will allow Indian Oil to diversify from its existing projects that use oil products from its own refineries, the people said. Petrochemicals accounted for 4.4% of the the company’s revenues in the year ended March 31, while accounting for almost 39% of its operating income. Indian Oil sees “tremendous potential” in the industry, chairman B. Ashok said in an interview published in its latest in-house newsletter. Iran and India are planning mutual energy investments, Iranian Foreign Minister Mohammad Javad Zarif said earlier this month in New Delhi. The Iranians won’t forget India’s support during the hard times, he said. US President Barack Obama on Sunday won the support of another Senate Democrat for his Iran nuclear deal, putting the agreement three votes short of becoming veto-proof.
ONGC Videsh buys 15% in largest Russian oil company BSL, Sept8, 2015 The acquisition is subject to relevant board, government and regulatory approvals and is expected to be completed by 2016-mid. ONGC Videsh signed an agreement on Friday to buy a 15 per cent stake in CSJC Vankorneft, a company organised under the law of the Russian Federation, and the owner of the Vankor field and North
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Vankor license. Rosneft Oil Company of Russia wholly-owns Vankorneft. Vankor is Rosnefts (and Russias) second largest field by production and accounts for 4 per cent of Russial production. The daily production from the field is around 442,000 billion barrels per day (bpd) of crude oil on an average with ONGC Videshs share of daily production at about 66,000 bpd, state-owned Oil and Natural Gas Company, the parent company of ONGC Videsh, said in a statement. While the deal value is reportedly $1.3 billion, the company spokesperson told The Hindu that ONGC Videsh had not as yet shared the exact amount. If correct, this will make this deal the fourth-biggest acquisition by ONGC Videsh. It had earlier paid $4.125 billion in 2013 for a 16 per cent stake in Mozambique's offshore Rovuma Area 1. The two largest acquisitions it has made were both in Russia, in 2001 and 2009. ONGC will be able to nominate two directors on Vankornefts board while Rosneft will keep control of the project operations, the companies said in a joint statement. The agreement was signed by Mr. Narendra K. Verma, CEO & Managing Director, ONGC Videsh and Mr. Igor Sechin, Chairman Board of Directors, Rosneft during the Eastern Economic Forum (EEF) held in Vladivostok on Friday in the presence of Mr. Vladimir Putin, the President of the Russian Federation.
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GlobeScan Schlumberger acquires synthetic diamond technology company Sep 2, 2015, Olivia Pulsinelli Senior web editor- Houston Business Journal Schlumberger Ltd. (NYSE: SLB) has acquired Novatek Inc. and Novatek IP LLC, which the oilfield services giant says will help improve drilling performance. Prior to the acquisition, Schlumberger had an existing relationship with Utah-based Novatek, which specializes in synthetic diamond technology primarily for the oil and gas industry. “Novatek’s synthetic diamond manufacturing technology is already a key component of our drillbit offering,”Khaled Al Mogharbel, president of Schlumberger Drilling Group, said in a statement. “With the addition of Novatek, we will enhance our research, engineering and manufacturing capabilities and continue to work with our customers to accelerate field adoption of these innovative drilling technologies.” Core development of synthetic diamond technology and other technologies will continue at Novatek’s lab in Provo, Utah, according to Schlumberger, which has principle offices in Houston, Paris, London and The Hague. The value of the deal was not disclosed. Just last week, Schlumberger announced a multibillion-dollar deal to acquire Houston-based Cameron International Corp. to diversify into the energy equipment supply business.
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KBC wins consulting contracts to improve margins at Middle East refineries 11 September 2015 KBC was awarded a three-year, $8.5-million consulting contract to assist a major Middle Eastern client with margin improvement and workforce capability development across three refineries. KBC Advanced Technologies was awarded a three-year, $8.5-million consulting contract to assist a major Middle Eastern client with margin improvement and workforce capability development across three refineries, officials announced on Friday. The award, which was subject to competitive bidding, includes a provision for a further $2.4 million of optional services. In the late 1990s, KBC conducted profit improvement programs for this client with significant benefits identified and agreed to. KBC says it is pleased to be asked to return, this time with more sophisticated tools and a wider portfolio of capabilities. This award is in addition to KBC's current consulting engagement in the country, which is to assess the feasibility of investing in a new petrochemical complex. “KBC is pleased to be awarded this prestigious contract that will strengthen our excellent relationship with this client and reflects our recent enhanced focus on the region," said Kevin Smith, KBC’s chief commercial officer. "Despite the current uncertainty in the oil markets, many of our clients continue to invest in the downstream oil sector and we look forward to helping them extract the best value from their downstream operations," he added.
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Saudi Aramco cuts crude pricing to Asia, U.S. amid weak demand Posted on October 4, 2015 | By Bloomberg Saudi Arabia cut pricing for November oil sales to Asia and the U.S. as the world’s largest crude exporter seeks to keep its barrels competitive with rival suppliers amid sluggish demand. Saudi Arabian Oil Co. reduced its official selling price for Medium grade crude to Asia next month to a discount of $3.20 a barrel below the regional benchmark, compared with a $1.30 discount for October sales, the company said Sunday in an e-mailed statement. The discount for the Medium grade to Asia, the main market for Saudi crude, widened by the most since the state-owned company made a $2 a barrel cut in February 2012, according to data compiled by Bloomberg. Brent crude, a global benchmark, tumbled almost 50 percent last year as Saudi Arabia and other OPEC members chose to protect market share instead of decreasing output to boost prices. Brent fell from more than $100 a barrel in July 2014 to less than half that amount six months later and traded below $50 a barrel on average in September. “They needed to cut pricing to keep Saudi crude competitive with other grades,” Robin Mills, a Dubai-based analyst at Manaar Energy Consulting, said by phone. “Demand has been a bit weaker, leading to the cuts.” Saudi Arabia will continue investing in oil production even amid the low prices, Ali Al-Naimi, the country’s oil minister said in a speech in Istanbul, in comments reported by state-run Saudi Press Agency Friday. Volatile oil prices affect investments, creating a situation that’s not good for producers or consumers, he said. Saudi Aramco, as the producer is known, widened the discount for Arab Light crude to Asia by $1.70 a barrel to $1.60 a barrel less than the benchmark, according to the statement. The cut was smaller than the median estimate of a $1.90 a-barrel reduction expected by seven 49
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refiners and traders in Asia surveyed by Bloomberg last week. The decrease was the deepest since January. The company trimmed November pricing for its Light, Medium and Heavy grades to the U.S. by 30 cents a barrel each. Medium crude will sell at a discount of 85 cents a barrel to the regional benchmark, the widest since March. The company raised price levels for the same three grades for buyers in Northwest Europe. It trimmed pricing on Light, Medium and Heavy sold to the Mediterranean region. The Organization of Petroleum Exporting Countries, of which Saudi Arabia is the largest producer, decided in December and again in June to keep its production target unchanged at 30 million barrels a day. OPEC has exceeded this official target every month since May 2014. Saudi Arabia boosted output to a record 10.48 million barrels a day in June, according to the International Energy Agency. The kingdom pumped 10.3 million barrels daily last month as it exited its peak summer period for domestic demand, data compiled by Bloomberg show. Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia. Producers in the Persian Gulf region sell mostly under long-term contracts to refiners. Most of the Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia, the benchmark is the average of Oman and Dubai oil grades. China’s higher refinery runs may boost diesel exports to record 14 September 2015 The nation’s diesel shipments might have risen to a record last month, topping the previous high in June of 670,000 tons, and may climb to 1 million tons a month in the fourth-quarter.
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BLOOMBERG NEWS China’s diesel exports may surge to a record in the coming months as refinery output increases while domestic demand growth for the fuel slows. The nation’s diesel shipments might have risen to a record last month, topping the previous high in June of 670,000 tons, and may climb to 1 million tons a month in the fourth-quarter, according to ICIS China, a Shanghai-based commodity researcher. China is scheduled to release August diesel export data next week. Refiners processed 44.34 million metric tons of crude in August, up 6.5% from a year earlier, data from the Beijing-based National Bureau of Statistics showed Sunday. That’s about 10.48 MMbopd and 1.8% higher than July as production increased to satisfy growing demand for gasoline. “Diesel exports will continue to rise amid a supply glut created by high oil processing to meet robust gasoline demand,” Lin Jiaxin, an analyst with ICIS China, said by phone from Guangzhou. “The public holiday breaks early this month and in October will boost traveling and demand for gasoline, while diesel use will remain very weak.” Slowing industrial production and investment growth in the world’s second-largest oil consumer are curbing demand for diesel, which is used in the construction and transportation sectors. Industrial output rose 6.1% in August from a year earlier, missing an estimate of 6.5%. Fixed-asset investment, excluding rural households, climbed 10.9% in the first eight months, the least since 2000. Diesel accounts for more than a third of China’s oil consumption, and the so-called apparent demand for the fuel slumped to about 3.47 MMbopd in July, the least since August 2014, according to data compiled by Bloomberg. Meanwhile, gasoline demand was near a record 2.73 MMbopd in the same month, up 17% from a year earlier. China’s gasoline demand is forecast to grow around 10% this year while diesel use may climb 0.7%, Vienna-based consultant JBC Energy GmbH said in a report Monday. “China faces one of the worst situations in terms of demand mismatch in Asia,” researcher Energy Aspects said in report this month. “Its domestic gasoline demand is soaring, but its refineries cannot produce enough gasoline without spewing out large quantities of unwanted diesel.”
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TrendScan Like it or not, China's crude oil futures will be a global benchmark SINGAPORE | BY HENNING GLOYSTEIN, SEPT 10, 2015. REUTERS China's push to establish a crude derivatives contract has been met with early scepticism, but oil executives say the country's growing economic influence means a third global crude benchmark is inevitable. A derivatives contract would give the Shanghai International Energy Exchange, known as INE, a slice of an oil futures market worth trillions of dollars, offering a rival to London's Brent and U.S. West Texas Intermediate (WTI). And while others have tried and failed, China brings its might as the world's biggest oil buyer, a strong dose of political will and the alignment of its financial and banking system for a yuan-denominated contract. "The energy industry is still manned, literally, by people from the West. But the world moves on, and there's a change of guard," said a senior market executive, speaking on the sidelines of a major industry gathering in Singapore this week, at which delegates spoke on condition of anonymity. "China has become the world's biggest oil trader, and that means that an oil price will be set there, like it or not."
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Shanghai's INE is in the final stages of launching crude oil futures, perhaps as early as October, although sources said delays were likely due to market turmoil. The contract would better represent China's growing importance in setting crude prices, increase the yuan's role as an international currency and offer a measure of national pride. It would also allow traders to arbitrage between major global regions, the Americas, Europe/Middle East/Africa (EMEA) and the Asia/Pacific. Others, like the Dubai Mercantile Exchange (DME), have tried to establish an Asian benchmark, but have so far failed to attract sufficient liquidity to dominate the region. Market participants also have concerns relating to the large size of China's state-owned oil majors, recent moves by regulators to influence the country's share markets, and the use of the yuan. "The market doesn't like the idea of a benchmark dominated by the world's biggest consumer, where the regulator is suspected of having the goal of lowering prices," said an executive with a non-Chinese exchange in Asia, speaking at the same event. GLOBAL CLOUT The current benchmark for pricing oil in Asia in the absence of a derivatives contract is the Dubai crude assessment, run by Platts, part of McGraw Hill Financial, where trading in a specified time-frame is used to assess a daily price. Yet traders have been concerned at heavy trading by China's stateowned Chinaoil and Unipec, which pushed up Middle East grades even as other grades were being pressured lower, and left other companies struggling to take part. China's largest independent refiner, Shandong Dongming Petrochemical Group, said it was one of the first companies to call for Chinese crude futures despite some concerns. "We're concerned that the two big companies could be too strong in terms of financing," said Shandong Dongming director Zhang Liucheng. "They're like aircraft carriers and we're just a small sampan (Chinese wooden boat)."
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Having a yuan-denominated contract could also limit the take-up of Shanghai's derivatives contract. "I think it will initially mainly be used as a forex (foreign exchange) play between the dollar and yuan," said the head of trading with a major oil merchant. China will still face competitors, including incumbent Platts, oil trading hub Singapore which is also keen to introduce a crude oil futures contract, and DME. Additionally, regional animosity will be hard for China to overcome. "We can participate in TOCOM (Tokyo Commodity Exchange). (There's) no reason to go to Shanghai," said Masashi Nakayama, general manager of the crude oil and tanker department at Japan's Cosmo Oil. But many executives see the success of a China contract as a given, even if the take-up is gradual. "One-by-one, the oil-majors will start to participate, then others will follow," said an executive with a Western oil major. "While it might take some time to establish itself due to choppy markets and regulatory hurdles as well as the fact that it would introduce a foreign exchange element to crude futures, it is overdue for a Chinese contract to established." (Additional reporting by Florence Tan; Editing by Richard Pullin) Oil Price Rout Seen as Threat to $1.5 Trillion of New Projects James Paton, September 21, 2015 New investments uneconomic at $50/bbl, Wood Mackenzie says Operators seeking to reduce costs by an average 20-30% About $1.5 trillion of potential investment in new oil projects isn’t viable with crude prices at $50 a barrel, highlighting the need to reduce costs, according to consultant Wood Mackenzie Ltd. The proposed projects, including spending on North American shale, are “now out of the money, or in starker terms, uneconomic at $50 54
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oil,” James Webb, upstream research manager at Wood Mackenzie, said in a statement Monday. “This spend is very much at risk.” While operators want to cut costs by 20 percent to 30 percent on new projects, supply-chain savings will only achieve cuts of 10 percent to 15 percent on average, according to Wood Mackenzie. A drop of about 50 percent in crude prices over the past year has forced oil companies to cut spending and defer new projects. Brent, the benchmark for half the world’s oil, was trading at $47.78 a barrel, up 31 cents, at 1:06 p.m. in Sydney. A glut may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc. Source: http://www.bloomberg.com/news/articles/2015-09-21/oilprice-rout-seen-as-threat-to-1-5-trillion-of-new-projects Production from Big Three shale plays will suffer with $50 oil : TPH Report Oil at $50 means output decline in big shale plays Posted on September 29, 2015 | By Rhiannon Meyer Three major US shale plays in 2016 will see oil production drop about 400,000 barrels per day from 2015, as oil prices settle at around $50 per barrel, according to a Tudor, Pickering, Holt & Co. report. Output will decline 7% in the Permian Basin, about 13% in the Eagle Ford and about 6% in the Bakken Shale, the report said. FuelFix.com(9/29) Slowdown in the Eagle Ford shale JERRY LARA / San Antonio Express-News A worker uses a cart to get around the grounds of the Grand Eagle Ford Lodge of Tilden in Tilden, Texas, Tuesday, February 10, 2015. With the drop in the price of oil that lead to lower gasoline prices, activity across the Eagle Ford Shale play has decreased. According to Zam Ali, an owner, the occupancy rate from last year was around 65 to 75-percent at the 85-unit lodge. With the reduction in activity,
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the lodge is currently running at around 20-percent occupancy. The lodge opened in March of 2013. For the top U.S. shale plays that once seemed immune to the downturn, persistently low oil prices are starting to take their toll. The lingering crude slump is expected to drive down production next year in the nation’s premiere oil patches — West Texas’ Permian Basin, South Texas’ Eagle Ford and North Dakota’s Bakken shale — as operators spend less to stay within cash flow, according to a report by investment banking firm Tudor Pickering Holt & Co. With oil hovering around $50 per barrel, or less than half the price it fetched last year, output from the so-called Big Three basins could fall by about 400,000 barrels per day next year compared to 2015, TPH said. Under that scenario, Permian output will tumble 7 percent, Eagle Ford production could fall about 13 percent and Bakken production would slip by about 6 percent. Any further plunge in oil prices could drive down the rig count even more as oil companies pare back and figure out more efficient ways to drill, allowing them to use fewer rigs to wrangle as much oil and gas from the ground, the analysis found. In the oil-rich Permian, which has been seen as more resilient to crude slump than other more risky plays, the horizontal rig count has fallen more than 50 percent from its 2014 peak. If prices remain below $50 per barrel, operators would likely idle an additional 50 percent of the horizontal rigs in the region, according to the analysis. However, the production declines may not be as steep as analysts predict in the Permian Basin if exploration and production companies outspend their cash flow as they historically have in recent years. Companies operating in the Permian tend to be in the best position to access cash from capital markets and that fundraising ability, coupled with the basin’s strong base of legacy production, could help bolster output while operators throttle back activity in the Bakken, Eagle Ford and elsewhere, the analysis found. Still, the TPH analysis said that for operators to produce as much oil as the did this year from the Permian and Bakken, domestic benchmark crude needs to rise to $60 a barrel or higher. In the Eagle 56
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Ford, operators need a price of $65 to sustain current production levels, the analysis found. Some operators have banked on being able to bolster production numbers by turning on the taps at a vast array of wells that have been drilled but not completed. In the Bakken alone, exploration and production companies have stores of crude locked away in 914 wells that have been drilled but not turned on, TPH said. Although some companies had expected to tackle those wells in the second half this year to offset output declines, they may be reconsidering those decisions amid the persistently weak oil price environment, the analysis said. “Conversations in the last few weeks suggest that activity may be halted to some degree,� the TPH researchers said. Expect US oil output to slump? Better not overlook vertical wells HOUSTON, Sept 16 | By Anna Driver and Swetha Gopinath, Reuter US oil producers have turned to developing vertical wells, as they now focus on capital discipline, instead of growing output, in the face of sustained low prices. "It makes more sense to develop vertical wells in a lower price environment because they are not growth plays but they are a very strong cash flow asset," said Benjamin Shattuck, principal analyst at Wood Mackenzie. Drilling or performing hydraulic fracturing at such wells enables production at a lower cost and shorter period than at horizontal wells.Reuters (9/16) Easy money, super-sized frack jobs, and desperate drillers offering deep discounts to oil producers - all three have been credited for sustaining U.S. crude output during the worst price slump in six years. Now there appears to be a new factor in the mix: old vertical wells that can quickly be drilled, injected with water or fracked for a second time to increase production at low cost. Overshadowed by the fracking boom that delivered record oil and gas volumes, vertical wells are making a comeback as investors and producers shift focus away from production growth to capital discipline in the downturn.
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"It makes more sense to develop vertical wells in a lower price environment because they are not growth plays but they are a very strong cash flow asset," said Benjamin Shattuck, principal analyst at Wood Mackenzie. "They are going to give you that cash flow that you need today." It is too soon to know how big the long-term supply impact of this trend will be, but there are tens of thousands of older U.S. wells and companies say paying more attention to them is already bringing extra barrels. The industry's ability to find some workaround every time prices seem too low to keep pumping explains in part why 15 months into the downturn U.S. output stays near highs of around 9 million barrels a day and the government forecasts only modest declines through mid2016. Squeezing crude from shallow mature fields allows the shale companies to produce more at a lower cost. They can use less powerful rigs that are cheaper to rent and shorter wells can be bored and brought into production in as few as 10 days, whereas a big horizontal well would normally take a month or more to complete. (Graphic:reut.rs/1F0FfMA) A simple vertical well can be drilled or refracked for around $1 million. Wells with about 10,000 feet of horizontal drilling cost from $5 million to $9 million even at discounts available during the downturn, company presentations show. 'LOW-HANGING FRUIT' In meetings with investors last week, Noble Energy Inc , Devon Energy Corp, and Apache Corp all devoted more attention to mature oilfields and vertical wells that had been overlooked when prices were high and companies focused on pumping more and faster. According to Baker Hughes, the North American vertical rig count rose 20 percent to 120 from early June to September 4, while the horizontal rig count slipped 2 percent to 659. John Christmann, Apache's chief executive, last week spoke of one of the company's so-called legacy oilfields in the Permian Basin in Texas that has infrastructure in place and both horizontal and vertical wells. 58
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"We've got a lot of low-hanging fruit in terms of little quick projects you can do and get your money back in six or seven weeks and add significant barrels," Christmann told the Barclays CEO Energy-Power Conference. If prices stay low, Apache will probably invest more in the field, the executive said. That field has produced 77,000 barrels of oil equivalent a day so far this year, or about 27 percent of the company's total North America output. Noble Energy said it would produce more than expected this quarter, helped by output from vertical wells in its fields in Colorado. Devon, a shale drilling pioneer, is reviving older wells in North Texas with refracking, a process that costs far less than blasting water and sand into a horizontal well miles below the ground. "Even in a mature area like this, there's upside our technical teams are looking at," Devon CEO Dave Hager told investors last week. Devon said it has refracked 150 vertical wells and is testing the technology on older horizontal ones, where the process is less predictable. Oil services giant Halliburton, which provides technology and equipment to enhance output from oilfields around the world, sees services for mature fields as way to make money in the downturn. "What's important to remember is that in spite of the low commodity price, mature fields - they are more resilient," Jeff Miller, Halliburton's president told investors last week. (Reporting By Anna Driver and Swetha Gopinath; Editing by Terry Wade and Tomasz Janowski) IEA sees U.S. oil output collapsing next year on low prices LONDON | BY DMITRY ZHDANNIKOV JOHNSON, SPET 11, 2015. REUTER
AND CHRISTOPHER
Lower oil prices will force non-OPEC producers including the United States to cut output by the steepest rate in more than two decades next year, rebalancing an oversupplied oil market, the International Energy Agency said on Friday.
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The IEA, which advises the world's biggest economies on energy policy, said global oil demand was poised to climb to a five-year high this year thanks to lower prices. It steeply revised its outlook for demand for oil from the Organization of the Petroleum Exporting Countries. The report is one of the most bullish for OPEC since the group shocked markets last year by deciding against cutting production, choosing to fight for market share and depress the output of highercost producers such as the United States. "The big story this month is one of tightening supply, with the spotlight firmly fixed on non-OPEC," the IEA said in its monthly report. "Oil’s price collapse is closing down high-cost production from Eagle Ford in Texas to Russia and the North Sea, which may result in the loss next year of half a million barrels a day – the biggest decline in 24 years." The projected drop in output would be the largest since 1992, when non-OPEC supply contracted by 1 million barrels per day (bpd) from the previous year, with the collapse of the former Soviet Union. The IEA said it now expected U.S. light, tight oil production to shrink by 0.4 million bpd next year after expanding by a record 1.7 million bpd in 2014. Meanwhile, global oil demand growth is expected to climb to a fiveyear high of 1.7 million bpd or 1.8 percent in 2015, before moderating to a still-above-trend 1.4 million in 2016 - 0.2 million more than in the previous IEA report. In 2014, growth stood at a five-year low of 0.8 million bpd. As a result, the world would need much more crude from OPEC, the IEA said. It estimated that the group would need to pump around 31.3 million bpd in 2016 - 0.5 million bpd more than the forecast in the previous IEA report - to balance the market. In the second half of 2016, OPEC would need to pump some 32 million bpd - the first time the world would require more oil than the group currently produces.
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OPEC, led by Saudi Arabia, has been pumping much more oil than the market needed over the past year, resulting in global oversupply and a price crash. RISKS The developments predicted by the IEA should help rebalance oil markets next year and potentially lift prices, which in August sank to six-year lows due to a growing glut and as concern deepened over the Chinese economy. The IEA said China's economic health represented one of the biggest bearish risks to its forecast but added that Chinese demand for oil products remained remarkably resilient, with growth in the first half of 2015 at more than 5 percent. "We expect China, the world’s second-largest oil consumer, to keep up its crude purchases despite the recent stock market collapse, currency devaluation and steady stream of negative macroeconomic news. Beijing could also buy extra crude to fill up its strategic reserves," the IEA said. It predicted Chinese oil product demand growth at over 3 percent in 2016. Before the market rebalances in the second half of 2016, global inventories - already at record levels - will continue to grow and put further pressure on oil prices. And by the time markets begin to rebalance, Iranian oil could return in big volumes if sanctions are lifted. Iran’s crude exports have fallen from roughly 2.2 million bpd at the start of 2012 to around 1.0 million bpd in August. "While there is unlikely to be a substantial boost in Iranian production before next year, oil held in floating storage could start to hit world markets before then," the IEA said estimating Iran's floating storage at 44 million barrels of which it said condensate amounted to some 60 percent. (Editing by Dale Hudson) 61
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LNG projects still moving toward oversupply, Wood Mackenzie says By Robert Grattan on September 4, 2015 HOUSTON — Most U.S. liquefied natural gas export projects are still moving forward despite a looming glut of export capacity, according to a new analysis by energy consulting group Wood Mackenzie. U.S. producers have about 60 million tons per year of LNG capacity currently under construction. Internationally, there’s about 140 million tons per year of liquefaction capacity in the works, which is a significant expansion for today’s market of about 250 million tons per year. That capacity currently being built is enough to meet the world’s LNG needs until about 2022 and will likely lead to a short-term glut when it comes online, said Noel Tomnay, Vice President Global Gas & LNG Research for Wood Mackenzie. LNG facilities cool natural gas into a liquid so it can be more efficiently shipped abroad. But despite the flush market, companies are still moving forward with plans to put another 100 million tonnes per year of LNG capacity into construction over the next 18 months. If those plans aren’t shelved, the LNG glut could last until at least 2025, Wood Mackenzie said. “We’re expecting a number of postponements or cancellations,” Tomnay said in a phone interview with Fuel Fix. “The market doesn’t need more LNG until 2022-plus.” Much of the gas is set to head to Asian markets. China has been one of the main drivers of LNG demand thus far, with imports set to rise 17 percent year over year through 2015 and 2020, from about 20 million to 41 million tons per year. But that growth has faltered some recently as China’s industrial output has faltered and cheaper oil has made fuels other than natural gas more competitive. Wood Mackenzie estimated that China’s LNG imports fell by almost 4 percent in the first half of 2015.
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With demand in question and a huge amount of liquefaction supply on the horizon, Wood Mackenzie estimated that the next round of LNG projects will not need to begin construction until 2017 at the earliest. Still, Wood Mackenzie said, it’s unlikely that producers will cancel their LNG plans until they’re forced to. “Postponement could invalidate contracts for the portion of project LNG sold so far, and jeopardize hard-won stakeholder support, including from local communities. Some developers may be worried that a loss of momentum could favor their competitors and that a project postponement may be tantamount to a cancellation,” Tomnay said in a statement. Asian refiners restock African oil as margins swell 10 September 2015 Since July, shipping rates fell 47% after later-than-usual maintenance caused Asian refineries to close and demand to fall. Now rates are poised to reach their highest levels in a final quarter since 2008. By NAOMI CHRISTIE, Bloomberg For operators of very large crude carriers, the tankers that move as much as 2 million bbl of oil across oceans on a single trip, the fourth quarter can’t come fast enough. Since July, shipping rates have dropped by 47% after later-than-usual maintenance caused Asian refineries to close and demand to fall. Now rates are poised to reach their highest levels in a final quarter since 2008, according to analysts who point to growth in the amount of crude scheduled to be loaded from West African countries in October. Nigeria is aiming for a 9.5% rise in the number of bbl shipped compared with last year, while Angola’s programs show a 6.7% increase. The total of Nigeria and Angola’s loadings is set to be the highest for an October since records began in 2008.
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The most likely buyer for the added barrels is Asia, with China building up its crude reserves as it takes advantage of higher refining margins, according to Charles Rupinski, an analyst who follows shipping for Global Hunter Securities in New York. Winners may include Euronav, DHT Holdings and Frontline, all of which saw their shares drop between late July and late August as the hire rate declined. Tight Market As refineries restart, “we think the market will get tight,” said Jonathan Chappell, an analyst with Evercore Partners in New York. Refinery utilization in Asia has risen in seven of the last nine years in the fourth quarter compared with the third, according to data from the International Energy Agency, the Paris-based adviser to 29 nations. While the US used to be the main buyer of West African crude, it’s now Asia, a factor that raises the number of miles each ton of crude travels. More miles means higher rates, Brian Gallagher, Euronav’s head of investor relations, said in a Sept. 4 telephone interview. Daily rates for very large crude carriers on the benchmark Middle East-to-Japan route reached as high as $94,946 on July 20, according to data from the Baltic Exchange. By Aug. 21 rates had fallen 74% to $24,512 when later-than-usual refinery maintenance caused demand and rates to fall. Large Carriers Analysts now forecast that very large crude carriers will earn an average of $55,000/day in the fourth quarter, according to data gathered by Bloomberg. The last time the ships earned more than that in a fourth quarter was 2008, according to data from shipbroker Clarksons Platou.
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"Any good addition of demand from West Africa will add a lot to rates,” said Odysseus Valatsas, the chartering manager of Dynacom Tankers Management, the Greece-based company whose VLCCs were booked most frequently in the past 12 months to load West African cargoes, according to broker data gathered by Bloomberg. While no one is sure how long China will continue to stockpile crude, the relatively low price of oil compared with a year earlier will probably help stimulate demand from refineries in other parts of the world, said Andrian Dacy, the global head of maritime at JPMorgan Asset Management. Floating Storage Another factor may also be at play, according to Frode Moerkedal, an Oslo-based analyst at RS Platou Markets. If the price of oil on the spot market drops well below the price on the futures market, a structure known as contango, it could cause traders to hire ships to store oil at sea with the higher rates in order to make a profit in the future, he said October Brent crude traded at a $2.64/bbl discount to the January contract Wednesday. The spread would need to widen to over $3 over a three-month period for storage to be viable, shipbroker E.A. Gibson in London wrote in an Aug. 25 e-mail. “The contango is now widening,” Moerkedal said. “It’s still not in floating storage territory, but it could happen later this year if they continue to overproduce.” The climb in West Africa loading schedules coincides perfectly “with the decline in refinery outages in Asia and in Europe,” said Erik Stavseth, a shipping analyst at Arctic Securities in Oslo. Now, “those high loading programs will actually have somewhere to go.”
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TechScan Refracking Service Could Create 'Boom of a Boom' in Shale Recovery Rigzone Staff Friday, September 18, 2015 URL: http://www.rigzone.com/news/oil_gas/a/140694/Refracking_Ser vice_Could_Create_Boom_of_a_Boom_in_Shale_Recovery The results of Halliburton’s ACTIVATE refracturing service pilot projects has company officials bullish on refracking’s potential for North American unconventional oil and natural gas wells. Since the U.S. shale revolution began, oil and gas operators have sought to enhance recovery from these wells and address the early steep declines seen in unconventional wells. Despite an increased number of stages, more proppant, longer fracs, closer well spacing and other strategies, operators have only been recovering between four and eight percent of unconventional resources in North American plays. Halliburton’s monitoring of new wells with fiber optics and microseismic technology also found that new well completions had less than 60 percent cluster efficiency and fracs of unequal length and width, meaning not all oil and gas reserves are being recovered. “In the past four years, 75,000 land wells have been drilled in North America,” said Priyesh Ranjan, senior manager of business development with Halliburton, in a media briefing earlier this week in
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Houston. “The industry’s philosophy over the past seven to eight years has been to go after new acreage.” Today, companies are revisiting existing acreage and drilling infill wells to recover bypassed reserves to maintain production rates. However, Ranjan noted that drilling these new wells actually have a higher cost per barrel of oil equivalent than parent wells, and oftentimes, produce less. Return on investment predictability also is lower for new wells, when production from a new well bashes into that from an existing well, negatively impacting production. Refracking has become a hot topic of industry discussion as operators seek ways to cut costs and boost production output. Previous refracturing technologies were not effective, meaning that refracking results were unpredictable and not repeatable, like the odds of gambling in Las Vegas, said Ranjan. Refracturing seeks to reconnect existing fractures disconnected from the wellbore, and creating new fractures. The combination of the two provides the incremental estimated ultimate recovery (EUR) boost, said Ranjan. Given the amount of resources that have been left behind, Halliburton sees great potential for its service. “If a horizontal lateral is landed in good reservoir quality, it most probably has potential for a second life,” said Ranjan. This is irrespective of whether it is a new completion or a completion from prior to 2011. Some wells have so much in bypassed reserves, they can be refractured three times. Through Halliburton’s ACTIVATE Refracking Service, unveiled in July, Halliburton reports seeing up to an 80 percent increase in (estimated ultimate recovery) EUR per well, up to 25 percent increase oil recovery factor of unconventional asset with a balanced portfolio, and up to 66 percent reduced cost per barrel of oil equivalent (BOE) compared to new drills. The company reports seeing a 300 percent improvement in EUR in natural gas wells in the Haynesville and Eagle Ford plays. In the oil window of the Eagle Ford, Halliburton’s technology has increased the average EUR of wells by 121 percent. In terms of production, Halliburton has seen accelerated recovery in wells treated with the ACTIVATE process, not only from restored connectivity of existing fracs but new stimulation, turning a 4 billion 67
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cubic feet per day (Bcf/d) well into a 6 Bcf/d well. In addition to boosting incremental EURs, Halliburton has been able to reduce nonproductive time for wells by 33 percent as fracing is done continuously. Given the fall in oil commodity prices versus natural gas commodity prices, shale gas wells that are economic – but weren’t as economic as unconventional oil wells were at one point – and that have wellbores already in place could be good refracking candidates. This includes wells in the Haynesville and Barnett shale plays, where understimulated wells and bypassed reserves exist. The Barnett play, which has stiff, hard rock, has a higher spacing of wells that present infill opportunities. The Haynesville, a deep soft rock with high pressure and high temperatures, is susceptible to production-related damage. Halliburton believes its technology can refracture wells despite this damage, Ranjan said. During the presentation, Ranjan highlighted ACTIVATE’s four-step process – screening for the best candidate wells, designing the optimal refract treatment, executing the refrac with AccessFrac Stimulation Service, and diagnosing the refrac efficacy and optimizing the refract design for future wells using Integrated Sensor Diagnostics and FiberCoil Tubing. AccesFrac ensures that the refracs can be delivered in a repeatable, predictable, low cost per BOE manner. In the third stage, Halliburton uses the patent-pending Pressure Sink Mitigation (PSM) process with AccessFrac to create a pathway for fluid to move down the lateral where it’s intended to go. The use of PSM is a massive differentiator for Halliburton’s technology and the reason why its refracs are so drastically successful. In the Bakken, a well on which Halliburton performed the PSM experienced a 70 percent additional uplift in comparison to a well without PSM applied. With its ACTIVATE service, the company is focused on the lowest hanging-fruit and lowest cost wells before moving onto more wells that require more sophisticated solutions. While not every well will see a 300 percent improvement, Halliburton has not had a single well negatively affected by a refrac. The company is so confident in the technology, it’s paying for entire refract pilot projects. It’s doing so to help companies understand the potential for refracturing in their larger 68
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portfolios, and also because of the lower oil price environment that have constrained exploration and production company budgets, said Ranjan. With oil at less than $45/barrel, companies have a ‘laser sharp focus’ on reducing the breakeven point of their assets. Halliburton is confident it can help companies achieve this by helping them balance their portfolios. “A truly balanced portfolio needs the right combination of production from refracced wells at a lower cost BOE, infill wells at a higher cost BOE, and new wells with the highest BOE cost,” said Ranjan. Having all three can reduce the average BOE of an asset. “Given that the oil and gas industry has previously boomed with just a six to eight percent recovery factors, an increase of one to two percent could create a boom beyond a boom,” Ranjan said. Could diesel made from air help tackle climate change? By Padraig BeltonBusiness reporter 1 September 2015, From the sectionBusiness
Image captionHow a large-scale carbon dioxide capture plant might look Making diesel out of thin air sounds like something from science fiction. But small companies in Germany and Canada are doing precisely this - capturing carbon dioxide (CO2) and finding ways to sell it.
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German company Sunfire produced its first batches of so-called ediesel in April. Federal Minister of Education and Research, Johanna Wanka, put a few litres in her car, to celebrate. And the Canadian company Carbon Engineering has just built a pilot plant to suck one to two tonnes of carbon dioxide from the air daily, turning it into 500 litres of diesel. The process requires electricity, but if the start-ups use renewable electricity they can produce diesel that is carbon neutral. In other words, burning it in your car only returns to the atmosphere the CO2 removed in the first place.
Image captionCarbon Engineering's pilot plant in Calgary, Canada Fossil fuels, on the other hand, are carbon positive, which means that burning them adds to the total amount of CO2 in the atmosphere. And halting the growth of CO2 and other greenhouse gases has become of paramount importance given the many threats posed by climate change. The concentration of CO2 in the air reached 400 parts per million in 2012-2013 - the highest since scientific measurements began. And the year July 2014-June 2015 was the warmest on record, says the US National Oceanic and Atmospheric Administration. Elemental chemistry The chemistry to make fuel from CO2 isn't especially hard - split water into hydrogen and oxygen through electrolysis, add the
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hydrogen to CO2 to make carbon monoxide and water, then bung in more hydrogen to build up hydrocarbon chains. This last bit's called the Fischer-Tropsch process, and dates back to the 1920s. But it's the technologies capturing the CO2 straight from the air that are new and now becoming cheap enough to be viable. The biggest technological challenges have centred on the hightemperature furnaces, says Adrian Corless, chief executive of Carbon Engineering.
Image captionWestern governments are trying to wean their economies off fossil fuels He says there is still "a month of hard work" to get these to work as the company would like. But these also have been his company's chief innovation, he says precipitating captured CO2 into solid calcium carbonate pellets that can be easily washed and dried. These pellets are then heated to 800-900C, whereupon they release a pure CO2 stream. As a residue, they leave calcium oxide which, handily, can be fed back in to the first air capture stage. Fizzy drinks Besides fuel, there are other options for selling captured CO2.
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Swiss company Climeworks, spun off from a local university, is readying its first commercial-scale plant, selling captured CO2 to a nearby greenhouse.
Image captionClimeworks says its demonstrator machine can extract 8kg of CO2 from the air each day So why bother? "We don't have to purify exhaust gases from a boiler or coal - these have a lot of sulphur and other molecules that might be difficult to purify out," says Mr Kronenberg. 72
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Another attraction of air capture is it that it is easier to extract the CO2 this way than from the exhaust gases of cars and other forms of transport, says Mr Corless. Price at the pump But could e-diesel ever compete with fossil fuels on price? Sunfire estimates its e-diesel will sell for â‚Ź1-â‚Ź1.5 (73p-110p) per litre slightly cheaper than the current UK diesel pump price of 119p per litre.
Image captionE-diesel would be compatible with the hundreds of millions of diesel vehicles already on the road But a lot depends on government policy. The actual price of the fuel can be as low as 30% of what we pay at the pump - the rest of the cost is made up of fuel duty, VAT, and the retailer's profit margin. "So we assume certain taxes might not be applied to these renewable fuels we produce," says Mr Kronenberg, perhaps more in hope than expectation. In the US and the UK there are government initiatives to reduce greenhouse gas emissions through the use of cleaner transport fuels. But it's the cost of electricity that could make or break e-diesel's commercial viability, because the process requires a lot of energy.
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Image captionImperial's Dr Paul Fennell says it's more efficient to use electricity to power electric vehicles ''You can take electricity and convert it to fuel for your vehicle with about 13% efficiency," explains Dr Paul Fennell, reader in clean energy at Imperial College London. "If you compare that to taking electricity and charging up an electric vehicle, then that can be done with about 80% efficiency," he adds. Zero carbon But Mr Corless points out that "in the last two or three years, the cost of renewable electricity has dropped dramatically - especially solar." And another point in e-diesel's favour is that there are hundreds of millions of diesel vehicles already on the road, so at least this cleaner fuel could help ease the transition to zero carbon transport while we wait for an electric or hydrogen charging infrastructure to be built.
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Image captionThe US Navy is interested in using e-diesel to power its ships Climeworks and Carbon Engineering say their modular technology will make it very easy for them to scale up to larger projects. Meanwhile, the US Naval Research Laboratory says it's interested in using e-diesel to fuel its ships. So you never know, your car may be running on fuel made from thin air sooner than you expect. Microwave potential for bioenergy production 07 September 2015, Dr Beatriz Fidalgo Fernandez, inFocus Despite investigations of microwave heating and biomass conversion, large-scale application of microwaves is very limited. Future industrial deployment of microwave technology depends on the understanding of the heating mechanism and the scalability options, as Dr Beatriz Fidalgo Fernandez explains. The design and manufacturing of magnetrons for the generation of microwave radiation goes back to the first half of the 20th century. Although their ability to heat materials was documented, the research 75
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focus was on the application of microwaves in military navigation and communication devices. It was not until the 1980s that the use of household microwave ovens rose massively, contributing to the “culinary revolution� of ready-to-cook meals and safe and rapid defrosting of food. Nowadays, microwave ovens are considered indispensable appliances in many homes due to their convenience and speed compare hob cookers and conventional ovens. Thus, the penetration rate of microwave oven in the UK increased from approximately 74% in 1995 to 91% in 2014. Despite the wide presence of microwave radiation in the everyday life, the understanding of the microwave heating mechanism and the recognition of its huge potential to be applied to diverse industrial processes is very limited. What is Microwave Heating? Microwaves are a non-ionising electromagnetic radiation that lies between infrared and radio waves, in the range of the electromagnetic spectrum limited by the frequencies between 0.3 and 300 GHz. The usual operating frequency for domestic and industrial microwave applications is 2.45 GHz or 915 MHz to avoid interference with radar and telecommunication frequencies. High-frequency radiation such as microwaves causes dielectric heating. The electric field component of the microwave radiation interacts with the charged particles of the irradiated material. Heating up of the material occurs when the particles are not free to move and try to align with the alternating field. This phenomenon is known as dielectric polarisation. A common misconception is to believe that materials need to have significant water content in order to be heated by microwaves. There are in fact two types of polarisation mechanisms involved in microwave heating: dipolar polarisation and space charge polarization. Water and other polar fluids (ethanol for example) heat due to dipolar polarisation, which occurs in dielectrics that have induced or permanent dipoles. Space charge polarisation occurs in dielectric materials with charged particles (electrons, ions, etc.) which are free to move in a delimited region. This mechanism 76
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predominates in dielectric solids such as most carbon materials and some inorganic oxides and sulphides, and it is of great relevance in the case of microwave application to conversion of fuels and biofuels. Microwave heating is the direct conversion of microwave energy into thermal energy within the heated material, rather than a heat transfer as in the case of conventional heating. This volumetric nature of microwave heating is its distinctive feature. A number of advantages of microwave heating over conventional heating are consequence of these core differences in the heating mechanisms. Some of these advantages can be easily identified by any person who has ever used a microwave oven: rapid heating, quick start-up and stoppage or reduced processing time. Other advantages may not be so evident but are extremely important when microwaves are applied to industrial processes: non-contacting heating, higher level of safety and automation, reduction in the size of equipment and higher flexibility or selective heating of materials. Microwave Heating in Industrial Processing and Research The number of applications of microwave processing has significantly increased over the last decades. Nevertheless, these industrial applications are relatively low compared to the enormous potential shown by microwave heating. During the 1980s microwave-assisted organic chemistry attracted great interest as laboratory technique due to the dramatic reduction in reaction times and the improved selectivity towards desired products. After three decades, microwave heating applied to organic synthesis has become a mature technology and is used in academia and more recently in chemical, pharmaceutical and biochemical industries with commercially available microwave chemistry equipment. Due to the potential energy savings and enhanced efficiency, microwaves has also been successfully applied to other industrial processes such as food processing, sterilisation and pasteurisation, wood drying, rubber vulcanization, and processing of ceramics, minerals and metallic materials. Moreover, extensive investigation has been recently carried out on the use of microwave radiation in diverse processes such as ceramic and polymer processing, metallurgy and mineral 77
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processing, contaminated soil remediation, waste management, production, modification and regeneration of activated carbons, upgrading of fractions of petroleum, gas-phase catalytic reactions (dry reforming of CH4, H2S decomposition, NOx and SO2 reduction, or CH4 oxidative coupling), or thermal conversion of biomass and upgrading of biofuels. Microwave Heating and Bioenergy Processes The investigation of microwave-assisted biomass and biofuel processing in order to achieve improvements with respect to conventional approaches has increased significantly over the last decade. Microwave heating has been applied to almost any process involving biomass conversion with varying success. The aim of nearly all the studies has been to improve product quality and quantity, reduce processing time, and ultimately increase the overall efficiency of the process. Driven by the established benefits of the application of microwaves to organic synthesis, studies on the use of microwave heating in bioethanol, biodiesel and biogas production have been carried out. In the case of bioethanol production, research has been focused on microwave pretreatment. Microwave-assisted hydrolysis of different lignocellulosic biomass have been proven to increase bioethanol yields due to enhanced degradation of lignin, cellulose and hemicellulose, and increased enzymatic susceptibility of the materials. Microwaves have also been studied as pretreatment method of various organic wastes and sludge to be processed by anaerobic digestion, enhancing larger production of methane. Moreover, microwave pretreatment favours dewatering, reduces foaming and diminishes the amount of pathogens in the sludge. Microwave-assisted biodiesel production has been widely studied. Microwaves has been successfully applied to biomass transesterification reactions both in batch and continuous set-ups; shorter processing times, higher yields and higher product purities have been obtained compared to those achieved under conventional heating. And the use of microwave radiation prior lipid extraction has 78
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been found to enhance the efficiency of the extraction processes. Despite these advantages, some reports have questioned the actual energy savings when using microwave heating in all these processes, and have highlighted the need to optimise each particular process and to carry out a thorough assessment of energy usage. Microwave-assisted thermochemical conversion of biomass and biofuels has been far more investigated than the biochemical processes. Microwave-assisted pyrolysis of a wide range of biomass feedstocks is the process that has attracted more attention. In general, raw biomass is not good microwave absorber; meaning that it is not easily heated by microwave radiation. Its dielectric properties improve as the pyrolysis proceeds and the carbon content of the remaining residue increases. In fact, the ability of char obtained from biomass pyrolysis to be heated by the microwaves is very good and it can be used as microwave receptor to indirectly heat the biomass up to the temperatures required for thermal decomposition. Other materials such as activated carbon or metal oxides have also been used as microwave receptors. As happens under conventional heating, microwave pyrolysis gives rise to liquid, gas and solid fractions, and the proportion in which the three fractions are produced depends on the operating conditions. Microwave-assisted pyrolysis for biochar production is carried out at low temperatures (i.e. lower input microwave power). The solid residue produced by this process has been observed to exhibit a good potential for gas adsorption and higher energy content than the char produced by conventionally-heated pyrolysis. However, lower energy efficiency has been reported in the case of microwave pyrolysis. It should be noted though that this efficiency depends on the suitability of microwave oven design for the process requirements, which may not be optimum when considering lab-scale rigs. Various studies have established the technical feasibility of microwave pyrolysis for bio-oil (liquid fraction) production, which is carried out at high heating rates and moderates temperatures. Since 79
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the operating conditions, the biomass feedstock and the reactor configuration have an effect on the yield and composition of the biooil produced, it is difficult to establish general conclusions. Nevertheless, most researchers have observed that the quantity and quality of the bio-oils produced under microwave heating are significantly better than those under conventional pyrolysis. Less polycyclic aromatic hydrocarbons, increasing amount of phenolic compounds and a larger degree of deoxygenation have been observed in the bio-oils produced under microwave heating. This improved composition of the bio-oil is actually related to the selective heating provided by the microwaves. The microwave process can be carried out flowing a cold sweep gas (which is barely heated by the microwaves) and so the released volatiles are cooled and condensed rapidly. The secondary reactions of the liquid precursors due to high temperatures are largely avoided and much more compounds are preserved in the final bio-oil. The implications of the enhanced composition of the bio-oil produced from microwave pyrolysis are significant since one of the main issues on the production of pyrolysis bio-oil is its high oxygen content. Moreover, few preliminary results have shown the effectiveness of microwave heating applied to ex-situ upgrading of bio-oil. Microwave-assisted pyrolysis for gas production is carried out at high temperature which favours secondary reactions between vapours and solid residue. The yield of the gas produced from microwave pyrolysis has been found to be larger than that obtained from conventional pyrolysis. Not only more gas is produced but also its composition is higher in valuable synthesis gas (H2 + CO) and lower in undesirable greenhouse gases (CH4 and CO). The change in the gas composition is explained based on the enhancement of CO2 gasification of the char and methane decomposition into H2. Microwave radiation is known to have the potential to increase reaction rate, selectivity and yield of catalytic heterogeneous reactions (as in the case of CO2 gasification and CH4 decomposition) due to the random formation of microplamas 80
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throughout the solid residue, in which temperature is much higher than the average temperature. In addition to the improved composition of the gas, it has been reported that less char and tar are produced under these gasification conditions. The lower amount of tar can potentially simplified subsequent gas cleaning operations, improving the overall process efficiency. Microwave-assisted steam and CO2 gasification of biomass has also been investigated, although to less extent than pyrolysis. Actually, microwave gasfication has been mainly carried out over biochar produced from conventional pyrolysis. High conversions have been observed at lower temperatures and shorter reaction times than those needed under conventional heating. These high conversions are attributed to the formation of microplasmas. In line with the enhanced performance of heterogeneous reactions under microwave radiation, the upgrading of biogas (CH4 + CO2) into syngas has been studied. The conversion of biogas into hydrogen is currently carried out via steam reforming and after the removal of CO2, which is a highly energy demanding operation. Dry reforming of biogas (reaction between methane and carbon dioxide) is carried out without the need for any conditioning stage. High conversions and production of synthesis gas has been achieved by microwaveassisted dry reforming of biogas, even using low-cost carbon materials as catalysts. Low conversions of CH4 and CO2 have been obtained using similar catalysts and conditions under conventional heating. Moreover microwave-assisted dry reforming of biogas over a mixture of carbon and metal-based catalysts has exhibited similar conversions to those obtained under conventional heating using metal-based catalysts alone. Therefore, the application of microwaves has been proven to allow the replacement of part of metal catalyst by low cost carbonaceous catalysts without affecting conversions. What’s next? The enormous potential and applicability of microwave heating in industrial processes is clear. The interest of the bioenergy industry in 81
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the microwave technology may increase because of the need of more and more efficient processes. However, there are reservations on the use of this alternative heating source mainly because of the considerable challenges for scaling-up the technology, which are due to the lack of understanding of the interactions of microwaves with biomass and biofuels and the processes trigged. Further research and a multidisciplinary engineering approach are needed to improve the knowledge, understand the scalability options, and contribute to the deployment of the technology in the bioenergy industry and many other sectors. ABOUT THE AUTHOR Dr Beatriz Fidalgo is Lecturer in Clean Energy Technology at Cranfield University. She holds a MSc in Chemical Engineering from the University of Santiago de Compostela (Spain) and a PhD in Energy Engineering from the University of Oviedo (Spain). She developed her thesis research at the Spanish National Institute of Coal (CSIC) on the Microwave-assisted CO2 reforming of methane. Her expertise is in thermochemical and thermocatalytic conversion of conventional and renewable carbon-based fuels, and microwaveinduced processes involving carbon materials. Her current research interest is in biomass thermochemical conversion, and integrated biorefinery for biofuels, energy and chemicals.
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ALTERNATIVE & RENEWABLE ENERGY
Power Ministry wants States to expedite renewable-energy capacity addition
September 22, 23:23:48 Asks developers to set up projects close to pooling stations State governments have been asked to expedite the renewable energy capacity addition for the 12th Plan (2012-2017) to ensure optimal utilisation of the transmission infrastructure under Green Energy Corridor. This was said at a meeting chaired by the Power Secretary Pradeep Kumar Pujari, and attended by State government officials, in August. The meeting was also attended by officials of private sector companies such as Adani Power, Adani Transmission, Sterlite Grid, and Reliance Power Transmission. The minutes of the meeting were made public on Tuesday. Green Energy Corridors will come up under two categories. Corridor-I includes transmission systems at the intra-State level, which â‚š13,946 cro -State envisages an investment of transmission system, which will have an investment of 074 crore. â‚š15, Corridor-II will be to provide transmission infrastructure for the ultra mega solar power parks. Of these, transmission infrastructure for the 1,500 MW NP Kunta Solar Park in Andhra Pradesh is under implementation, while tendering for the Rewa Solar Park and Karnataka Solar Park is under process. It was also decided at the meeting that State governments will ask renewable energy developers to set up projects close to the six pooling stations under Corridor-I. While expressing worries about the underutilisation of the transmission infrastructure, it was decided at the meeting to keep building the infrastructure to ensure renewable energy integration can happen as and when the projects come up.
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HSE, CLIMATE CHANGE & SUSTAINABILITY
U.S. to curb smog but stops short of toughest limits WASHINGTON | BY PATRICK RUCKER, REFUTER, OCT1, 2015 The Obama administration on Thursday trimmed the amount of ozone allowed in the air, issuing a regulation to fight smog that will prevent hundreds of thousands of asthma attacks but cost businesses and utilities billions of dollars. The Environmental Protection Agency set a new standard of 70 parts per billion (ppb) for the amount of ground-level ozone allowed, from the current level of 75 ppb set under former President George W. Bush in 2008. Ground-level ozone is a main component of smog. The cut will prevent 320,000 childhood asthma attacks a year, the EPA says. But the new limit, envisioned under the Clean Air Act, is the least restrictive that the agency had been considering, and health experts complained it does not go far enough. EPA head Gina McCarthy said she had tried to be guided by science in an effort to protect Americans' health. "I did the best with what I have," she told reporters. It was President Barack Obama's second major initiative in less than two months to protect the environment, after the White House announced a sweeping plan in August to reduce carbon emissions from power plants. Industry will face costs of $3.9 billion under Thursday's rules, the agency has estimated. Business groups say stringent ozone rules will harm the economy by forcing manufacturers and utilities to buy expensive new "scrubbers"
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and other technology to make sure their plants reduce emissions of toxins. States will have years to work with power plants, factories and refineries to limit pollutants like nitrogen oxide and volatile organic compounds, components of smog. The American Chemistry Council, a Washington-based lobbying group, predicted that the rule will increase business uncertainty. "Today's action puts $10 billion in chemical industry investment at risk," it said in a statement. We are very concerned that some projects - new facilities, plant expansions and factory restarts - will remain in limbo until EPA explains how to obtain a permit under the new standards." The EPA says the new standards will cut lung ailments and other respiratory illnesses, as well as cardiovascular problems. LONG CLEAN AIR FIGHT Obama has long struggled to set tighter smog pollution standards in the face of opposition both from Republicans and businesses, as well as some Democrats and labor unions worried about the impact on jobs. In 2011, he withdrew a plan to cut smog, citing a U.S. economy that was recovering too slowly from recession. The EPA had been considering a new range of 65 to 70 ppb before settling on the high number announced on Thursday. The lower cap would have cost industry about $11 billion more than a 70-ppb limit but also prevent 960,000 childhood asthma attacks a year, according to the agency. The American Academy of Pediatrics called for a limit of 60 ppb to protect the health of children, especially those who suffer from asthma. Cleaning the air that America breathes has been a long fight. Washington's power to control air pollution rests in the Clean Air Act of 1963, which has been expanded over the decades to curtail healthdamaging emissions from tailpipes and smokestacks and even limit invisible greenhouse gases blamed for climate change.
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The legislation has been an effective tool for curtailing ground-level ozone, with those levels declining 18 percent between 2000 and 2013. Driving air pollution levels even lower could be more costly and difficult, particularly in areas where forest fires cause spikes in ozone. Senator Barbara Boxer, a California Democrat, called for stricter regulations. "Today's action is a step in the right direction, but I believe following the science is important and I am disappointed that a more protective standard was not set," she said. U.S. rule to cut toxic emissions at refineries Tue Sep 29, 2015 6:38pm GMT WASHINGTON, Sept 29 (Reuters) - U.S. oil refineries will face tighter standards in coming years on toxic emissions that cause lung problems and increase cancer risks, environmental regulators said on Tuesday. The Environmental Protection Agency finalized a rule, to be fully implemented in 2018, that aims to reduce emissions of benzene and other toxic emissions. The EPA said the capital cost to refiners will be about $283 million, with an annualized cost of $63 million, but that the standards will have a "negligible impact on the costs of petroleum products," like gasoline and diesel fuel. Gina McCarthy, the EPA administrator, said the pollution cuts will lower the cancer risk from refineries for more than 1.4 million people and are a "substantial step forward in EPA's work to protect the health of vulnerable communities located near these facilities." The standard will require continuous monitoring of concentrations of benzene and other pollutants at the fence line of refineries. The EPA said it would strengthen emissions controls at flares, storage tanks and delayed coker operations that will cut thousands of tons of hazardous air pollutants.
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The American Petroleum Institute industry group said the EPA had made "substantial improvements" in the rule, but estimated that the regulation could still cost up to $1 billion. "Despite these improvements, regulators need to be thoughtful about the additional impacts of new regulations and added costs to delivering affordable energy to U.S. consumers," said Bob Greco, an API refinery issues official. (Reporting by Timothy Gardner; Editing by Cynthia Osterman) Efforts on to plug major gas leak at Oil India Ltd (OIL) well in Rajasthan By PTI | 14 Oct, 2015, 04.01PM IST Efforts are on to control a major gas leakage at an OIL well in Rajasthan's Dandewala region, from where the highly inflammable gas has been oozing out. JAISALMER: Efforts are on to control a major gas leakage at an Oil India Ltd (OIL) well in Rajasthan's Dandewala region, from where the highly inflammable gas has been oozing out for the last six days. Machines and equipments, brought from Maharashtra and Gujarat, have been deployed by the experts, who will supply chemical into the well to plug the leakage, but the flow wasn't contained yet, an official said here today. District collector VM Sharma said that the situation was under control and it will take a couple of more days to contain the leakage fully. There is no population in the radius of around 35 kms, he said. Several experts from Oil India, ONGC and other companies are present in the area to monitor the situation. BSF IG BR Meghwal said that the BSF men have been alerted on this issue. 87
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The highly inflammable gas started to leak from OIL well Dandewala area of the district near Indo-Pak border more than a week back. OIL produces about 70 lakh cubic meters per day of gas from its field in Jaisalmer. The well in question produces 9,000 cubic meters per day of gas Duke Energy Corp. to Reduce Emissions from Power Plants in North Carolina, Fund Environmental Projects WASHINGTON -- The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) today announced a settlement with Duke Energy Corporation (Duke) to resolve Clean Air Act violations at five coal-fired power plants across North Carolina. The settlement resolves long-standing claims that Duke violated the federal Clean Air Act by unlawfully modifying 13 coal-fired electricity generating units located at the Allen, Buck, Cliffside, Dan River, and Riverbend plants, without obtaining air permits and installing and operating the required air pollution control technologies. Duke recently shut down 11 of the 13 units, and under today's settlement those shutdowns also become a permanent and enforceable obligation under the consent decree. At the remaining two units, Duke must continuously operate pollution controls and meet interim emission limits before permanently retiring them. In addition, the settlement requires that Duke retire another unit at the Allen plant, spend a total of $4.4 million on environmental mitigation projects, and pay a civil penalty of $975,000. The United States is joined in the settlement by co-plaintiffs Environmental Defense, the North Carolina Sierra Club, and Environment North Carolina. EPA estimates that the settlement will reduce emissions by approximately 2,300 tons per year from the three Allen units, as compared to recent emission levels. With these additional 88
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retirements, total emissions from all 13 allegedly modified units – which were in excess of 51,000 tons in 2000 when the suit was filed – will be zero. "This settlement brings five more power plants into compliance under EPA’s national initiative to cut pollution from the country’s largest sources,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “After many years, we’ve secured a strong resolution, one that will help reduce asthma attacks and other serious illnesses for the people of North Carolina." “The settlement announced today marks another milestone in our ongoing efforts to enforce the Clean Air Act and reduce air pollution from coal-fired power plants,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “This settlement is a just and fair resolution to this long-running enforcement action in which we alleged that Duke modified these plants in ways that significantly increased their annual emissions. It is good news for the environment and public health in North Carolina.” The United States initially sued Duke in 2000, and trial was set to begin in October 2015 following years of pre-trial litigation, including a landmark 2007 Supreme Court decision agreeing with EPA’s interpretation of the relevant Clean Air Act regulations modifications that increase the annual amount of pollution from a plant. Under the settlement, Duke must continuously operate existing equipment to control sulfur dioxide (SO2) and nitrogen oxide (NOx) emissions at two electricity-generating units at the Allen facility in Belmont, N.C., and meet enforceable emission limits, prior to permanently retiring both units in 2024. In addition, to help mitigate the harm from the alleged violations, the settlement also requires Duke to retire an additional unit at the Allen plant by 2024. The settlement also requires Duke to spend at least $4.4 million to fund several environmental mitigation projects. These projects include 89
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restoring native wildlife and plants on National Park Service and Forest Service lands in North Carolina, a program to help North Carolina residents replace higher polluting wood stoves and fireplaces with cleaner burning alternatives and a program to increase the use of clean energy and energy efficiency measures in economically distressed communities. Other projects may include efforts towards increasing truck stop electrification and electric vehicle charging stations in North Carolina. SO2 and NOx, two predominant pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts and premature death. This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes coal-fired power plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. The total combined SO2 and NOx emission reductions secured from all these settlements will exceed 2 million tons each year once all the required pollution controls have been installed and implemented. The settlement was lodged with the U.S. District Court for the Middle District of North Carolina and is subject to a 30-day public comment period and final court approval Outdoor Pollution killed .65 million people in 2010 The Hindu, 21/09/2015 Although it is a known fact that ground motion during an earthquake gets amplified in sedimentary terrain, geophysical studies in the Himalayan arc have revealed that such amplification would be five times greater in such sites as compared to hard rock regions. Under an on-going five-year project on Hazard assessment for earthquakes and tsunamis, scientists from the Hyderabad-based 90
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National Geophysical Research Institute (NGRI) are characterising earthquake sources and monitoring seismic activity in the Himalayan region as well as in the sub-continent. Apart from North-east India, particularly Assam and Arunachal Pradesh, the seismological studies are underway in Gujarat, western Maharashtra and parts of Andhra Pradesh and Telangana. With scientists undertaking site-specific ground motion studies as part of the larger project, it was found that though the ground-shaking during the recent Nepal earthquake on April 25 was of high intensity, the acceleration was not of the order normally associated with such large temblors. This was because higher frequencies were not generated at the source of the earthquake. In case of such large earthquakes, we should have had greater ground motion, which didn't happen. Otherwise, it would have been catastrophic as the damage will be more when the ground-shaking is more vigorous, says Dr. D. Srinagesh, Chief Scientist and Head of the Seismology Observatory at NGRI. Over a period of time, scientists have been receiving data from 26 strong motion velocity metres that have been installed at different places. Pointing out that ground motion gets amplified if the site has thick pile of sediments, Dr. Srinagesh said the studies showed that the sedimentary thickness in the Indo-Gangetic plain varied between a few hundred metres to more than five kilometres. The greater the thickness, the greater will be the amplification, he added. Observing that no major earthquake has happened in the last 200 hundred years in Garhwal-Kumaon Himalayan region, a close watch was necessary. Since prediction was not possible, studies were directed towards hazard assessment and mitigation in the GarhwalKumaon region, which could be probably affected by a large earthquake, he said. Uttarakhand, Uttar Pradesh and Haryana, including Chandigarh were being monitored through ground motion studies. Seismic hazard assessment at micro-level was also being done for major cities in Uttar Pradesh including Lucknow, Kanpur and Allahabad. Seismic and tsunami hazard studies have also been taken 91
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up along the East and West Coasts of India for proposed power plants and other projects, including major irrigation schemes. Dr. Srinagesh said that in a bid to create awareness on earthquakes, NGRI was conducting outreach programmes in schools in Seismic Zones V, IV and III and targeting 50,000-100,000 students each year. Do we need a change of tack on climate? PRADEEP S MEHTA, September 22, Business Line Rebalancing may not be a bad idea if it does not compromise on our development goals With the submission deadline for the Intended Nationally Determined Contributions (INDC) for the Paris Climate Summit drawing near, the spotlight is once again on New Delhi. India, which is hosting a meeting of like-minded developing countries on this subject, is the last major player which is yet to announce its INDC. Considering the European Union as one unit, India is the fourth largest emitter of greenhouse gases (GHG) in absolute terms, even though China’s emission is more than three times and the US’s two times than that of India. In per capita GHG emission terms, it’s far behind not only countries from the developed world but even developing countries like China, Mexico, Iran, Brazil and Indonesia. India also happens to be the country where a third of the world’s poorest reside, a third of its population still lacks access to electricity, and the prevalence of underweight children is highest in the world, double that of sub-Saharan Africa. India contains 13 of the world’s 20 most polluted cities, with Delhi topping the list. The Intergovernmental Panel on Climate Change rates India as one of the countries most vulnerable to climate change. Uplifting millions of poor while limiting GHG emission is one of the biggest challenges India faces. Indian strategy The government appears to be sceptical about adhering to the emission intensity targets pledged in the Climate Summit in 2009, hence the delay in submission of INDCs. India had then undertaken 92
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to cut its emission intensity by 20-25 per cent by 2020, compared with 2005 levels. The level achieved is 18.6 per cent thus far, with hardly any scope for further reduction. Hence, India is hesitant to propose 25-30 per cent emissions figure for 2020-30. The Indian proposal is not out, but is expected to lay down two pledges, one involving what India can achieve with its own resources and the other that can be achieved if technology and finance are made available by the West. Further, the country will not commit to a year when its GHG emissions will peak, nor will it provide sectoral commitments, but will give an economy-wide achievement. The measures that India is taking for INDC are: renewable energy capacity addition, increasing coal cess to four times its earlier value, pushing an aggressive energy efficiency programme, and setting up the National Adaptation Fund and National Clean Energy Fund. The perception in the world community as well as domestically is that India is taking a minimalist approach and would continue with its business as usual scenario. Such an approach will be dangerous from the perspective of not only climate change but also human health. The real picture The hard reality is that while India’s growth is non-negotiable, it can’t work in the long term if it’s not environmentally sustainable. India will have to take strong and determined actions for bringing the pollution level to safe limits, for its own sake. However, as the ‘common but differentiated responsibility’ principle is the heart of the climate negotiations, Indian submissions can’t be compared with the developed world or other developing countries with higher per capita emissions. India has ambitious targets for renewable energy. It also has one of largest reserves of coal, which at present fulfils 60 per cent of our energy needs, and will continue to form a substantial portion of energy base for India’s growth. The phasing out of present sub-critical coal power plants and shifting to super-critical and ultrasuper-critical ones — that could reduce coal usage by 15 per cent — simultaneously investing in Clean Coal Technology will be a balancing act.
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Further, laying down stringent emission-related regulations for industries and its strict implementation, shifting the public transportation to CNG in at least all the tier 1 cities, moving to Bharat Stage IV norms for vehicular emission for the entire country and targeting Stage V swiftly, curbing excessive use of artificial fertilisers while turning to sustainable agriculture would make a serious dent in GHG emissions. In fact, GHG emission cuts can help in job growth and improve productivity of the economy, through sustainable disposal and conversion of solid waste, for example. A bottom-up approach of wide-scale stakeholder and public participation in determining the INDC has not been adopted. This would have reflected the level of existing domestic concern on the matter. Hence, while India must push for a fair and equitable climate deal, it must shoulder its responsibility for the sake of the planet and the poorest in the world. The writer is the secretary-general of CUTS International. Sonal Shukla of CUTS contributed to the article Keeping the industry’s environmental promise 10 September 2015 Pia Alina Lange 2013 was a boom year for the industry’s commitment to sustainable lifecycle management. Pia Alina Lange reviews our commitment to sustainable waste management and PV CYCLE. While the European market for new PV installations declined from 17.6 GW in 2012 to approximately 10 GW in 2013, the PV waste market flourished. More than 90% of the European PV market adhered to sustainable waste management; PV CYCLE collected over 3,000 tonnes of damaged or end-of-life PV modules from 18 countries, 50 percent more countries than the previous year. Membership reached an all-time high with one hundred percent more members than the year before. Then 2014 came and WEEE kicked in. WEEE is the European Directive for waste from electronic and electrical equipment and the United Kingdom and Bulgaria covered PV modules in their national 94
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WEEE legislation in 2014 for the very first time. Other markets, especially those relevant to the industry such as Italy, France and the Netherlands, soon followed and included PV modules in the scope of their WEEE. Until then PV take-back and recycling had been a voluntary commitment initiated by Solar Power Europe (former EPIA) and leading PV module manufacturers in 2007. The aim was to set up a collective scheme – PV CYCLE – to allow members to deliver on their commitments to sustainable lifecycle management. Since the start of our operations in June 2010, more than 8,300 tonnes of PV module waste had been collected and recycled by the end of 2013 (approximately 12,000 tonnes including 2014 and 2015) - all free of charge for modules of PV CYCLE members and on a totally voluntary basis. Today, most countries have included PV modules in their national WEEE legislation, with Germany as the only significant market for PV installations to follow only in autumn 2015. With the shift from a voluntary undertaking to a highly regulated framework, many changes hit the European PV market. Unlike in the past, these days local manufacturers and importers have to prove that they are part of a functioning take-back and recycling infrastructure. They have to sign up to national registers before selling their modules on the domestic market and declare their sales figures on a periodic basis. While approximately 75 percent of the French market has sought compliance in less than ten months, it is estimated that only 60 percent (average, EU) of PV module manufacturers and importers in the rest of Europe comply with their mandatory requirements today. In the UK and the Netherlands the situation is even more dramatic: the public authorities have registered about 50% in the UK and 5% in the Netherlands, most of them companies with a long track record of excellence in environmental and waste matters. More than 1,200 MW in the UK and 500 MW in the Netherlands are not covered. Therefore, industry leaders in conjunction with PV CYCLE call for due diligence and a strong commitment to legal compliance and environmental friendliness. Today’s WEEE compliance efforts do not conform to the high commitment to sustainable lifecycle management 95
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that motivated the industry to operate its own voluntary take-back and recycling scheme from 2007 to 2012. While WEEE compliance entails administrative as well as financial burdens, it also assures end-users and customers of the quality of their products, so the companies argue. A high non-compliance rate would jeopardize customer trust in the PV industry and would threaten the marketability of those companies seeking to be compliant. Axel Steuer, Head of Operations at Trina Solar in Europe and President of PV CYCLE Association, confirms that “free-riders are a threat to the PV industry, especially in these difficult times, and a threat to our industry’s promise: an allgreen product”. Measurements from the side of the industry as well as from the authorities are crucial for driving compliance in the PV industry forward and for allowing a level playing field where compliant companies do not have to pay for their free-rider peers. Especially in countries where PV modules are classified as household products, such as France, the United Kingdom, the Netherlands or Germany under its imminent new law, free-riders bring a tremendous disadvantage to compliant companies. “Those who are compliant pay double the bill”, says Jan Clyncke from PV CYCLE. Household – or B2C – products require pre-financing by the local manufacturer or importer but they are also eligible for collection via municipal takeback infrastructures. “Companies pay for their WEEE-compliance and waste operations but they may also end up carrying the burden of poorly pre-financed waste at municipal collection points. If the prefinancing through compliant companies does not match the actual market volumes, non-compliance is a clear game-changer”. PV CYCLE has always stood for a fair and efficient waste management approach. Working towards consistency and fullness of WEEE compliance, ensuring that PV module waste does not become an issue in the future, and creating a level playing field have therefore become a main focus for the organization in recent times. PV CYCLE is working with its partners in business and government to inform responsible companies better and to help them with their legal obligations. *** 96
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Who is responsible for WEEE compliance? Any natural or legal person who is established in a Member State and manufactures and sells PV modules under his own name or trademark within the territory of that Member State (MANUFACTURER) resells PV modules produced by other suppliers (except where the brand of the original Producer appears on the product) (DISTRIBUTOR / RESELLER) within the territory of that Member State under his own name or trademark places PV modules from a third country or from another Member State (IMPORTER) on the market of that Member State sells PV modules by means of distance communication directly to private households or to users other than private households in a Member State, and is established in another Member State or in a third country (INTERNET / DISTANCE SALES) Which obligations do responsible parties carry? Any person falling under WEEE legislation has the legal obligation to ensure the waste management of his discarded products: organize and finance the take-back and treatment of your PV module register the company on the National Producer Register to operate legally in your country periodically report the quantity of products sold in your country to the National Producer Register inform users on correct waste disposal mark the products with a crossed-out wheelie bin ensure a financial guarantee (country-specific) mark the products with the Producer’s identification mark inform treatment facilities of product composition and the potential use of hazardous materials Most obligations are carried out by PV CYCLE on behalf of its members. Can non-compliance lead to criminal prosecution? Yes, non-compliance can lead to criminal prosecution, including fines as well as bans on trade. 97
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ABOUT THE AUTHOR Pia Alina Lange is the Head of Public Affairs at PV CYCLE FURTHER INFORMATION For more information on WEEE and compliance, please visit the information hub www.solarwaste.eu. Fracking Water Management Market Remains Buoyant Frac Water Treatment Market Still Worth $1.9 Billion Even though a dramatic decline in global oil prices has led to a fall in fracking activity, water reuse in areas like the Marcellus Shale is still in demand, says Lux Research. NICK PHILLIPS — AUGUST 17, 2015 The decline in global oil prices has led to a significant drop in hydraulic fracturing activity, but the value of the fracking water management market remains at $1.9 billion, not including water transportation and disposal. That’s according to a report by Lux Research, which says that water reuse in areas like the Marcellus Shale is still in demand. Across the United States, the number of fracs fell from about 2,300 in October 2014 to 1,350 in February 2015 as oil and gas companies shifted strategy to focus on their core regions and most economic resources. But at the same time, operators have turned to new technologies to tighten up their water management strategies and to lower costs. In addition, new regulations in the United States could bring in stricter oversight of water transportation and disposal and lead to more extensive water recycling, Lux Research pointed out. The Rigzone website, reporting on the research, noted that there are two different water management trends in North America. In the western United States, operators primarily dispose of fracking wastewater rather than treat it. As much as 95 percent of water in the Eagle Ford region goes into disposal wells. Lux Research found that operators in Texas have access to nearly 1,000 times as many in-state disposal wells as their counterparts in the Marcellus Shale. Nevertheless, operators are aware that they
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may not always have cheap and available water and are starting to explore treatment technologies and management strategies. In the Marcellus region in the east, disposal is far more costly and about two-thirds of water used in hydraulic fracturing is treated and reused. The research report is titled Surviving the Shakeout in Frac Water Treatment Technologies. “No single technology or water management approach will win in the frac water treatment space. Rather, companies will employ a mixture of water disposal, centralized treatment and onsite treatment using physical, thermal and electrochemical methods,” said Brent Giles, Lux Research Director and one of the authors of the report titled, “Surviving the Shakeout in Frac Water Treatment Technologies.” “Companies like Saltworks Technologies have found ways to incrementally improve established technologies to address pain points in a given geography, while new players like BitPetroClean see an opportunity in niche markets,” he added. Lux Research analysts evaluated water management opportunities in the changed landscape for fraccing, and rated 19 water treatment companies on the Lux Innovation Grid. Among their findings: • Saltworks, Memsys lead in thermal treatment. Saltworks and Memsys placed in the “Dominant” quadrant on the Lux Innovation Grid. Both are exploring combined thermal and membrane systems to alleviate corrosion issues caused by high temperatures and treat wastewater. • WaterTectonics branches out from Halliburton deal. WaterTectonics, which gained notoriety through an exclusive partnership with Halliburton, is the sole “Dominant” company among electrocoagulation providers. The company is actively exploring related markets such as offshore water treatment. • BioPetroClean tops in oil recovery. In the absence of a “Dominant” player, BioPetroClean is the highest-rated company among oil recovery and removal companies. Rated “High potential,” BioPetroClean focuses on degrading the last traces of oil that are not currently economical to recover. 99
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The report, titled “Surviving the Shakeout in Frac Water Treatment Technologies,” is part of the Lux Research Water Intelligence and the Exploration and Production Intelligence services. ABOUT LUX RESEARCH Lux Research provides strategic advice and ongoing intelligence for emerging technologies. Leaders in business, finance and government rely on us to help them make informed strategic decisions. Through our unique research approach focused on primary research and our extensive global network, we deliver insight, connections and competitive advantage to our clients. Visit www.luxresearchinc.com for more information. Axion Polymers’ Recycled Plastics for Automotive, Other Applications Offer Carbon Savings up to 70% Sept 1, 2015, EnvironmentalLeader Axion Polymers has introduced new polymer grades of ABS, polyethylene (PE) and polypropylene (PP), recycled from end-of-life automotive and e-waste resources, following further investment in its plastics refinery plant to increase extrusion capacity and improve melt filtration technology. The UK-based Axion offers post-consumer recycled ABS engineering polymer and says its Axpoly ABS52 1000 offers carbon savings of 70 percent when compared with virgin plastics. Axpoly ABS52 1000 is a tough plastic suitable for molding parts that require durability, longevity, strong puncture strength and good dimensional stability, such as automotive trim components like car wing mirrors and car bumpers, the company says. With good electrical insulation properties, it is suitable for use in enclosures for domestic products like vacuum cleaners and kitchen appliances. Axion also offers variations on the standard grade’s physical properties to suit customers’ specific requirements, such as flame retardant versions. This polymer is currently being used in the development of new applications for customers “who value these tough material properties” and are seeking an “economic solution with high 100
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environmental benefits,” according to Steve Bell, Axion Polymers’ commercial operations manager. Offering carbon savings of 53 percent versus virgin grades, Axpoly PE51 1090 is a new grade of polyethylene with properties similar to HDPE. It is suitable for products such as pallets, boxes and shipping containers or other general purpose molded items where durability and good water resistance is required. The recently developed high flexural modulus polypropylene, Axpoly PP51 1093 has excellent strength to withstand an applied top load without flexing, the company says. It is ideal for construction and civil engineering applications, such as internal support structures for rainwater drainage tanks. Axpoly PP51 1000 standard grade is widely used in a range of versatile applications, including automotive components, packaging, pipes, drainage goods, flowerpots and general purpose items from loudspeakers to hinges. Top Carbon Reporting Companies Ranked BT Group is the best at carbon measuring and reporting, narrowly beating Marks & Spencer, according to Carbon Clear’s annual report ranking carbon measurement and reporting efforts of FTSE 100 companies. In 2014 both companies shared first place. Marks & Spencer placed second this year. The other companies in the top 10 are: Sky, Kingfisher, Unilever, Aviva, Centrica, Coca-Cola, TUI AG and RELX Group. Kingfisher and Unilever shared joint fourth position and Aviva and Centrica shared joint sixth position. The fifth annual report by Carbon Clear ranks each FTSE 100 company on their carbon measurement and reporting, strategy and targets, emissions reduction and how carbon reporting is used to engage stakeholders. For its “rigorous and far reaching carbon strategy,” BT scored a total of 94 percent, beating M&S by just 1 percentage point. BT and M&S were once again clear leaders with almost 10 percentage points 101
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separating them from their nearest rivals: Sky, Kingfisher and Unilever. The report finds that both BT and M&S continue to make plans beyond their stated targets, setting them apart from other FTSE 100 companies. BT was also acknowledged as the only FTSE 100 company disclosing a science-based approach towards setting greenhouse gas reduction targets. The report concludes that while excellent efforts are being made by a handful of FTSE 100 companies to manage their carbon emissions and communicate this effectively, there are still too many lagging behind the leaders, showing little consideration towards the impact their businesses are having on climate change. Read more: http://www.environmentalleader.com/2015/09/24/topcarbon-reporting-companies-ranked/#ixzz3mhlEjFXQ Awareness, the first Step to Water Scarcity Solution September 23, 2015 For more than a century, Americans have treated water like an infinite commodity, as free and abundant as sunlight. On June 1, when Governor Jerry Brown of California mandated statewide water-use restrictions, this house of cards came tumbling down. It became clear that we have overlooked and abused our access to one of the earth’s most precious resources. This problem isn’t a California problem or isolated to the Western United States. Drought and water scarcity affect billions of people globally. How we manage water, and the amount we waste, has long-term ramifications. First, to prevent irreversible damage, we must fundamentally change the way we value and price water. As we factor the strategic impact of water shortages into supply and demand, costs will rise naturally, and American consumers and businesses will have an incentive to conserve water resources. Second, we must use modern technology to make water consumption transparent and minimize our footprint. Consumers, businesses and policy makers must understand their water use and see the impact of investing in conservation. 102
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We can split this strategy into three simple policies: 1. Estimate supply based on the natural cycle and availability of water Estimating our water supply is devilishly complex because water flows change with climate patterns, and groundwater sources are interconnected. State by state and source by source, we need to recalculate water supplies and then renegotiate yearly allocations. We cannot treat rivers, aquifers and reservoirs as one monolithic source. They all have different limits. For instance, the USGS estimates that California accounts for 13 percent of all groundwater use in the US, but the state has overharvested interconnected wells, and the water table has dropped beneath the reach of pumps. California is now using 13 trillion gallons of water a year that is not replaced naturally, and geological shelves and soils are sinking throughout the state. Thus, our supply calculations have to reflect the maximum amount of water we can use without jeopardizing each source. These new calculations should become the basis for revising century-old supply agreements that are detached from reality. 2. Factor the true value of water into pricing Today, regulations keeps water prices artificially low. To encourage conservation, we need to factor the true value of water into pricing. Specifically, we must use tiered pricing to penalize people who jeopardize our water supply and provide a disincentive to waste water. According to the EPA, the national average cost of water is $2 per 1,000 gallons, or one fifth of a penny per gallon. The environmental data firm Trucost estimates that the actual cost of water should be as high as 5 cents per gallon in areas facing extreme water scarcity. A tiered approach would factor water scarcity into pricing and set thresholds for consumers and industries. In California, for example, ranchers and farmers account for 80 percent of state water use, and different products have drastically different water footprints. By basing agricultural water thresholds on acreage (x gallons per acre), regulators could encourage farmers to optimize their land and stay within supply. Municipalities could adjust 103
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this threshold depending on the local crops or livestock and their water needs. 3. Invest in smart water systems At a government level, we need to invest in smart water infrastructure. At a business and consumer level, we must make water use transparent so that people choose to invest in smart irrigation technologies. It pains me to see a mainline break in Los Angeles and spill millions of gallons of water into the streets. It’s even more painful to learn that it was an 80-year-old clay pipe that broke. There are flow sensors and systems available today that can detect and shut down those spills in seconds. It’s time to modernize our infrastructure and implement these technologies now. Today, most water waste is invisible. Ask some friends what they pay for water, how much they use and how often they are charged. I guarantee no one will have answers. Here’s why: my water bill says I pay “$4.50 per unit,” which is meaningless to an average consumer. Calculated out, I really pay 6/10 of a penny for one gallon of water, so it costs me $6 to waste one thousand gallons of water in droughtstricken California. With tiered pricing and smart meters that track water use, no one would waste 1,000 gallons of water. Moreover, Americans would see the value of sustainability technology. Modern systems can calculate precisely how much water a property needs. They know the difference between how much water an oak tree uses versus a fescue or grass. These controllers are plugged in to large weather databases, so they can automatically adjust watering to forecasts and actual rainfall. At scale, sustainability technology can make the difference between preserving and depleting the freshwater we need to thrive. A New Cultural Norm In dry climates, outdoor water use accounts for as much as 60 percent of total freshwater consumption, and as much as 50 percent of that water is wasted. If we combine market dynamics with modern technology, we can create the awareness, incentives and means to end this unsustainable pattern. 104
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You will know we are winning the war for a sustainable future when your neighbors, family members and colleagues can tell you how much water they use and what it costs. We’ll know we’ve made a cultural shift when conservation technologies are embraced as tenants of responsibility and symbols that we care about the sustainability and the future generations that depend upon it. Pat McIntyre is the chairman and CEO of ETwater, a position he has held since 2009. He leads the company’s market expansion through release of innovative new commercial irrigation products and services, along with its growth from regional to national sales and distribution. Previously, he was president and COO of Lauridsen Group, a privately owned holding company where he was involved in the acquisitions, capitalization and operating transitions of more than 15 companies in North America, Asia, Australia and Europe. Recycling Universal Waste Made Easier with RecyclePak Environmental Leader, Sept24, 2015 To increase recycling of universal wastes such as lamps, ballasts, batteries and other products that contain hazardous substances, Covanta and Veolia have partnered to make Veolia’s RecyclePak program available to businesses, consumers and cities. Universal waste is material designated as hazardous waste but containing materials that are very common. While the majority of a mercury-containing lamp can be recycled, according to the Association of Lighting and Mercury Recyclers, only 24 percent of the some 600 million mercury-containing lamps that are discarded each year are properly recycled in accordance with applicable state and federal regulations. By separating products into their components and reusing the components and by-products, businesses and consumers are reducing waste, diverting waste from landfills, saving energy and conserving resources. The RecyclePak program ensures compliance while making recycling easy for consumers and businesses. Covanta’s customers can purchase a container from covanta.veoliaes.com, place their
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universal waste into it and then ship it to one of Veolia’s recycling centers using a prepaid shipping label Read more: http://www.environmentalleader.com/2015/09/24/recyclinguniversal-waste-made-easier-with-recyclepak/#ixzz3mhnnp3cq How a public and private Sectors fared on CSR Arundhati Ramnathan, Mint, Sept15. 2015 Even though state-run companies had a five-year head start with respect to setting aside funds for corporate social responsibility (CSR) initiatives, they lagged behind their private sector peers in terms of the efficiency of spending on such efforts. Public sector companies spent only 66.7% of what they had to spend in the year ended 31 March while private companies spent 82% of the prescribed spend in the first year of mandatory CSR spending, according to showed data compiled by NextGen, a CSR management firm. Under Companies Act of 2013, both public and private companies had to set aside 2% of their net profits. Earlier, public companies needed to set aside anywhere between 0.5% to 5% of net profits based on the profits of the company, according to the 2010 CSR guidelines issued by department of public enterprises. NextGen’s data from 85 NSE-listed companies from top 100 companies by market capitalisation on the National Stock Exchange of India (NSE) shows that the 19 public sector unit (PSU) companies spent `1,686 crore FY15, while 66 private companies spent `3,307 crore. The data was collected until 14 September. “PSUs have taken time to evolve and they have been a bit complacent about CSR,” said Vijay Ganapathy, a partner at Thinkthrough Consulting Pvt Ltd, a CSR consulting firm. Also, they are in industries where customer perception of the company does not matter as much as it does for a private company and this has led to a degree of complacency in meeting the CSR spending target, added Ganapathy. 106
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Graphic by Ahmed Raza Khan/Mint Public companies, however, outspent private companies in one area: environment. Public companies spent `391.3 crore on environment, which is 23% of their total spending, while private companies spent `291.7 crore or 8.8%. This is because many PSUs are natural resource companies and since they have a direct impact on environment, they have taken it up as a cause. “But even here, they have spent on initiatives like planting trees and water conservation, which is very basic,” said Ganapathy. The data also shows that women-led companies had a better rate of meeting the 2% spending target. Six women-led companies—State Bank of India, Axis Bank Ltd, ICICI Bank Ltd, Hindustan Petroleum Corporation Ltd, LIC Housing Finance, Apollo Hospitals Ltd—of the 85 surveyed saw their CSR spending amounting to 90.5% of what they had to spend, while the total average of the 85 companies was 76.1%. This could be because women leaders are more mindful of corporate governance and compliance matters, points out Ganapathy. NextGen’s data also showed that only 33 of the 85 companies spent the entire 2% of their profits or more on CSR while 52 did not meet the target in the first year after the new CSR rules were implemented. The most common reason that companies cited for not meeting the target is that they had undertaken long-term projects. This means that the amount was earmarked for a long-term initiative and the company is carrying forward the spend. Many companies also said that they lacked prior expertise and delay in project identification as reasons for not spending. To be sure, companies have to mandatorily disclose the reasons why they failed to meet the 2% target. About 65% of the 85 firms surveyed used their own foundations to carry out CSR. “Companies prefer this route as you can have better control over your funds. This way you can better monitor your initiatives,” said Ganapathy.
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Water Management Technology in High Demand In efforts to improve water management, businesses are increasingly using — and spending money on — sensors and data analytics software to conserve water, the Guardian reports. Banyan Water and Apana are two companies marketing their water technology products to businesses. Earlier this month Banyan Water said its smart water management products saved commercial and institutional clients 1.75 billion gallons of water since 2011. And Apana, which sells its sensors, telemetry equipment and data analytics software to retailers and other commercial and industrial building managers, has helped its primary customer Costco realize water savings of about 20 percent, the Guardian says. Areas of drought in the western US is driving the water technology market. In California, for example, Gov. Jerry Brown earlier this year issued a mandatory 25 percent consumption cut from the 2013 levels for businesses and residences. Global spending on water technology including smart meters, sensors and software that track and analyze water consumption is expected to grow from $15 billion in 2010 to $25 billion by 2018, according to Global Water Intelligence, a UK research firm. Read more: http://www.environmentalleader.com/2015/09/24/watermanagement-technology-in-high-demand/#ixzz3mhkjm1RC The U.S. Geologic Survey found that hydraulic fracturing in shale gas-rich areas required the most water Source: Schlumberger Seneca, an exploration and production company that operates primarily in the Marcellus and Utica shales, is a net recycler of water. Some years, the company has managed to drill 100 percent of their wells with recycled water, Kepler told Rigzone. Based on geology and
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geography, that hasn’t been feasible every year, but it’s certainly a goal. What’s more, Kepler said, by the end of this decade, all fracking – 100 percent of it – could be accomplished with some form of nonfreshwater solution. Millions of Gallons of Water Between 2000 and 2014, the median annual water volume estimates for the fracking of horizontal wells increased from 177,000 gallons per oil and gas well to more than 4 million gallons per oil well and 5.1 million gallons per gas well. With each passing year that shale became a hotter commodity, more wells were drilled that required water. In fact, researchers the U.S. Geological Survey (USGS) reported in a January study that within this period more than 263,859 wells were hydraulically fractured. At the end of June, the USGS released its findings that the amount of water required to hydraulically fracture a well can differ dramatically in different parts of the country. Shale gas and horizontal drilling required the most water. Geographically, several Texas basins made the top of the water-use list, including the Eagle Ford, HaynesvilleBossier and Barnett. Characteristics of the reservoir, including pressure, depth, temperature and saturation all impact water needed for a successful well, Tanya Gallegos, the study’s lead author, told Rigzone. Water volumes for hydraulic fracturing averaged within watersheds across the United States from 2,600 gallons of water to as much as 9.7 million gallons per well. Oil and gas companies are investing time and technology to reduce the need for freshwater use in hydraulically-fractured wells. Schlumberger Ltd., Apache Corp. and Halliburton Co. have made strides toward diminishing the use of freshwater, a key issue with environmentalists. “We support a ban on use of freshwater in fracking, and think that, if fracking is taking place, operators should certainly use brackish or 109
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recycled water or other alternatives,” Luke Metzger, director of Environment Texas, an Austin-based advocacy organization, told Rigzone. WAYS WITH WATER Schlumberger has been in the hydraulic fracturing business for more than 50 years, but applying it to shale formations increases process’ water needs, and the company has developed solutions to replace freshwater with produced water. “To fracture the rock, we have to pump some type of fluid into the wellbore, and of the fluids used in large quantities is water because it is readily available and cost effective and it does the job,” Moin Muhammad, chemistry and materials portfolio manager for Schlumberger Well Services, told Rigzone. Consequently, the international company has invested in technology to differentiate themselves before the shale boom. In 2003, Schlumberger started development of the first generation of the HiWAY flow-channel fracturing technique, which was introduced commercially for vertical wells in 2010. The following year, Schlumberger applied the technology to horizontal wells and in 2012, it was enhanced for use in shale formations. “Since introducing the flow-channel fracturing technique in 2010, Schlumberger has pumped more than 40,000 stages [of hydraulic fracturing], collected a large amount of data and compiled multiple case studies,” Muhammad explained. “We have a proven, established record showing HiWAY reduces water consumption by about 25 percent, which is significant in this environment and sets us apart from the rest of the industry.” Apache Corp. and Halliburton are other industry leaders that have invested in water management solutions to the water requirements of hydraulic fracturing, but representatives from those companies were unavailable to comment.
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The industry’s traditional reliance on freshwater for hydraulic fracturing presented a big challenge to the company as it sought to minimize use of the resource and replace it with something costeffective and efficient, Muhammad said. Suitable alternatives were found in produced water, which is abundant in the United States, brackish water and flowback water. And after five years of research and development, in late 2014, Schlumberger rolled out a solution that enables hydraulic fracturing using 100 percent produced water – with results that met or exceeded what freshwater could provide, he said. “With this new service, xWATER integrated water-flexible fracturing fluid delivery service, we can tailor any type of water into a fracturing fluid, which gives us tremendous flexibility in terms of hydraulic fracturing fluid design,” Muhammad said. The service has tremendous potential in emerging shale markets, such as the Middle East, where there is a shortage of freshwater, but readily available seawater.
Schlumberger is working on technology that removes freshwater from the hydraulic fracturing process. Source: Schlumberger
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RUNNING THE NUMBERS One factor that may play into the process’ widespread acceptance is pure economics, said David Stuart, vice president for fluids conditioning at Rockwater Energy Solutions in Houston. “The cost of freshwater is very low today, and the cost of disposal is very low today,” Stuart told Rigzone. “So when operators are making the choice of whether to re-use or use the traditional freshwater and disposal method, economics comes into play.” Muhammad said that when operators consider well recovery rates and the total water cycle cost – such as transportation and disposal – the economics work in favor of the alternatives to freshwater. While their services are still in the early stages, Muhammad expects an increase in adoption of the technology during the next two years. There are many reasons for companies to make the effort to cut down on freshwater use. “We take ownership of environmental stewardship. Using produced water is beneficial from an environmental, economic and regulatory point of view,” he said. “The business that we are in touches every one of those issues.” See more at: http://www.rigzone.com/news/oil_gas/a/140625/Oil_Gas_Works_on_ Solution_to_Reduce_Freshwater_in_Fracking/?all=HG2#sthash.s9Kx 8f5F.dpuf TOP
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THE BANYAN TREE The Art of Keeping Employees from Leaving Henrich Greve, INSEAD Professor of Entrepreneurship and Family Enterprise | Retaining workers is becoming a balancing act between hard data research and a human touch. It’s more important than ever to complement intuition with statistical analysis. Firms are increasingly using statistical analysis to find out which employees are more likely to leave, and using this information to improve personnel management and target employees for interventions to make staying more worthwhile. Firms do this because replacing employees who leave can be very expensive, making the analysis and the responses cheap in comparison. It says a lot that Wal-Mart, a firm known to be careful about its expenses, is investing in such analysis. It is probably less surprising that Credit Suisse does so, given the importance of keeping staff in banking, or that some human-resource analytics firms do, given that they can use these results to keep their own staff and sell the methods to client firms. What have they discovered by analysing their employees? Well, they are more likely to leave if they have problematic managers or little contact with co-workers, less likely to leave when they are given opportunities to change jobs internally (especially promotions), plus a variety of other smaller discoveries. Is this surprising? Actually we have known this for a long time. Job mobility is an established field of sociology and management research, and as far as we know, the statistical analysis done by the firms re-discovers what is already known. So, I would probably not go to a firm statistician expecting to learn much new about job mobility, though I would still find it interesting to see what they are doing.
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Analyse this‌employee Does that mean it is worthless? It does not. There are two really significant pieces of progress in the news that firms are doing this analysis. The first is that the whole point of studying job mobility is to understand what happens to the lives of people and the fates of organisations, and it is wasteful to have this understanding without also using it to improve the lives of people and the fates of organisations. Job mobility is often valuable, but there are also many cases of job mobility that is wasteful for the employee and the firm. It is better to reduce them. The second piece of progress is that firms are now gaining knowledge that lets them address the situation of each employee, and they can often intervene in positive ways such as improving job content or making openings for promotions when they see a risk of that employee leaving. There is, of course, some potential that this gets intrusive or used in troublesome ways, so it is worth watching. Firms are, after all, able to track health coverage decisions and healthcare use with enough detail that they can start linking them to job mobility, something that would be new to academic researchers and potentially worrying. They could also track emails, which academic researchers have already done but always anonymously. There are good reasons to limit such data collection and analysis. Even with these potential problems, it is nice to see business catching on to the value of research. Of course, it has only done so to a limited extent. The number of statistical analysts involved in this work is far fewer than the number of human resource managers (and other managers) who think that such management is an art that calls for their unique experience and cannot be understood by others. Maybe some of these managers are right, but on average I would place my bets on the statistician. Read more at http://knowledge.insead.edu/blog/insead-blog/the-artof-keeping-employees-from-leaving-3896#WHFGQkhIUujrglzt.99
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F2F Cabinet nod for small fields is right step to monetise hydrocarbon resources: Cairn India's Mayank Ashar By Himangshu Watts, ET Bureau | 21 Sep, 2015, 04.25AM IST Post a Comment 'The International Energy Agency says India needs to invest $16 billion a year in the energy space but the actual investment is $6 billion.' Cairn India MD & CEO Mayank Ashar, a key player in the private oil and gas industry, gives a thumbs up to the oil ministry for engaging with the industry, auctioning small fields with complete price freedom and other steps, although quick decisions on other issues were needed. The positive steps in the oil sector along with the government's decision on MAT on FIIs is creating an investor-friendly environment, he said. In an interview with ET's Himangshu Watts, Ashar also spoke about the company's rising gas production, the impact of low oil prices, high taxes and its effort to get a higher price for its crude by exporting it. Edited excerpts: How is the oil price impacting Cairn India? Lower oil prices have prompted companies across the world to relook at capital expenditure and operational plan to maximise growth. Though Cairn India wasn't untouched by the global downturn in oil prices, it has remained focused to continuously improve efficiencies, minimise operating costs and maintaining production levels. In spite of the global uncertainties, Cairn India continues to cross many milestones. Its prolific Rajasthan block recently clocked in a production of 300 million barrels of crude that has helped reduce India's oil import bill by $25 billion. During the last year, the gross contribution to the government exchequer was $3.1 billion.
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Why is Cairn keen to export oil when India is a huge importer? What about national interest? Cairn's objective is to realise fair value for the crude oil for all stakeholders while maximising production at optimal levels which is in line with the objective and mandate under the PSC. The Barmer crude is unique in nature. Operationally, GoI and its nominees are under obligation to purchase all domestically produced crude oil. As a result of this dispensation, Rajasthan crude fails to realise its true value and results in significant economic leakages to the GoI, the government of Rajasthan and the contractors. Given the nature and composition of the crude, it has the potential to be valued higher by refineries in other markets. Therefore, Rajasthan crude has the potential to create incremental value for all stakeholders which can be achieved if exports are allowed. How much investment does Cairn India plan to make? How critical is the extension of the contract? Our investment plan is subject to how things progress on the PSC front. We are working closely with the government and are very hopeful. Rajasthan field has contributed immensely towards meeting India's domestic crude requirement for years. It is a world-class resource base. We believe the full potential of the field is yet to be realised. PSC extension will be a key trigger to enhance investments, bring in world-class technologies and allocate best global talent in order to continue contributing to our country's domestic needs. How much gas is Cairn India producing right now, and what's the outlook? Gas production from our Rajasthan block has grown 20 per cent on a quarter-on-quarter basis; averaging 19 mmscfd in the first quarter of the current fiscal. Towards the end of June, we were producing close to 25 mmscfd, and are very much on track to meet the guidance we set out — of producing an average of 25 mmscfd of gas from existing Raageshwari Deep Gas (RDG) infrastructure in FY16.
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What are the best things this government has done in oil and gas, and what are the things it needs to do? Energy policy is complex. The International Energy Agency says India needs to invest $16 billion a year in the energy space but the actual investment is $6 billion (Rs 40,000 crore). Good news is the government is engaging with the industry. Besides, the recent clearance for the marginal fields by the cabinet is directionally a right step to monetise hydrocarbon resources in the country. Also, the recommendation on access to all forms of hydrocarbons and market pricing for gas are positive developments for the industry. It is fair to give time to the government in order to understand and analyze issues faced by the sector, before things can be changed at the ground level. However, it is equally important to note that quick encouraging decisions on the current issues facing the sector will send a positive signal to attract investments. Are you encouraged by the government's moves like changes in MAT on FIIs? Government's move towards MAT on FIIs was a welcome step. This establishes that the government is working towards creating an investor-friendly environment in India. We are confident that the government understands the core issues and will progress on resolving them as soon as possible. Is the cess on crude oil a concern? In the current low price oil regime, imposition of cess is a significant economic burden on producers. Given the low price environment, numerous governments across world have improvised fiscal systems to increase production and promote investments. However, in India levies like cess is placing domestic produce at a significant disadvantage vis-a-vis imported crude oil, which does not attract similar duties.
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Offshore Engg centre for Siemens a strategic move: Engineering Technologies will today inaugurate new engineering offshore development centre for Siemens, Sudhakar Gande.Group VC, Talking about their newly inaugurated engineering offshore development centre for Siemens Wind Power, in Hyderabad, Sudhakar Gande, Group VC, AXISCADES Engineering Technologies said it is a very strategic initiative for both the companies. Initially they would start with 50 people/engineers but sees scalability of 300-500 people/engineers in next 3-5 years. The potential of scalability should itself give an idea of revenues to come, said Gande. The wind power business for Siemens is around USD 5 billion, as of now said Gande. He is hopeful for such strategic tie-ups with Siemens for other divisions going forward. Commenting on the newly acquired AXISCADES Aerospace and Technologies in August, he said it would be EPS accretive. AXISCADES is a an engineering service provider that caters to aerospace, defence and heavy engineering. Below is the transcript of Sudhakar Gande’s interview with Reema Tendulkar and Nigel D’souza on CNBC-TV18. Reema: Could you tell us what would be the bench strength, what is the expected revenue from this particular offshore development centre and how are you planning to scale it up? A: This offshore developments centre with Siemens in the area of wind power is being set up in Hyderabad. This offshore development centre (ODC) will be in compliance with Siemens’ all internal requirements, the processors or software, etc. So, it is extremely strategic initiative both from Axiscades as well as Siemens point of view. We will start off with about 50 people initially and over a period of three to five years, we should easily scale up to 300-500 people.
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Nigel: Give us some numbers in terms of revenue. Can we look at a revenue of around USD two million approximately? And in the next three to four years, I have got a report with me that states that it can be scaled up to around USD 12 million. Do you think that is possible? A: I would not like to guess about revenues being a listed entity, but I am sure at the end of the day, in the next three to five years, if I have 300-500 people, you can compute the revenue yourself. Historically, we have done a similar exercise with Caterpillar as well as Airbus. Both the ODCs scaled up to same levels in the last couple of years. So, from that point of view, whatever experience and expertise we have learned from this experience, we will put into use for Siemens. And personally, I am very confident that we will be able to reach these numbers. Reema: What is the revenue that you get from Siemens that you have decided to set up a special and a dedicated offshore development centre for this particular client? And what would be the expected revenues that you will expect from Siemens? A: Revenue, as I said, being a listed entity, I do not want to guess at this point of time, but at the end of the day, the scalability is highly possible here and that is the reason we are setting up this. As I mentioned, we are expecting to scale up between 300-500 full time engineers in this ODC over the next three to five years which will make it economically viable for them as well as for us. And as you know, the cost structure in India relative to the European operations is far less and as long as we ensure the same quality and timelines. Siemens being a global organisation and we are dealing with only wind power at this point in time, which is only a USD five billion business in Siemens scheme of things. So, this can go to other divisions at some point of time later. Therefore, it is an extremely strategic initiative, both for Siemens AG, Germany, Denmark and as well as Axiscades.
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Nigel: So, then let us talk about something else besides this. In mid of August, you had announced, it had acquired Axiscades Aerospace and Techonologies Private Limited. Could you tell us what was your holding in this particular company prior to that because it was a fresh issue of shares as well. And could you tell us what was your holding in that company prior to that? Will it be earnings per share (EPS) accretive? And also what does the promoter holding go to post this particular deal? A: As you know, we have announced this acquisition of Axiscades Aerospace and Technologies by Axiscades Engineering Technologies and these were already filed after the necessary approvals we have filed with the stock exchanges. And this will definitely an EPS accretive – point number one. Point number two, the share holding will increase from current level about 59 percent to about 71 percent in the combined entity which is the holding post the acquisition. Nigel: What was the holding prior to this particular acquisition because if there was a fresh issue, then it should be expanding the equity share base. So, what was holding in the company Axiscades Aerospace and Technologies prior to this particular deal? A: Axiscades Aerospace and Technolgies was 100 percent owned by the strategic investor, while listed entity, Axiscades Engineering Technologies was owned by about 59 percent. When you put them together, the combined entity, the number of shares will go approximately from 2.7 crore to about 3.7 crore and the holding will go from 59 to 71 percent and it will be EPS accretive. Read more at: http://www.moneycontrol.com/news/business/offshoreengg-centre-for-siemensstrategicmoveaxiscades_3233721.html?utm_source=investor-briefing
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