Tag Archive for: energy

Fundamental factors to strengthen Pemex

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The Government of Mexico has repeatedly mentioned that one of its main goals in the National Hydrocarbons Plan is the production of 2.6 million barrels of crude oil per day at the end of 2024.

The production profile brings components such as the base production already in place of oil fields operating in the country, the plan proposes operations of drilling and development of more than 20 new fields of which PEMEX has already been hiring and asking for authorizations for the development, contains projects related to secondary and improved recovery of the deposits that already exist and production that is associating future discoveries.

PEMEX has 22 fields for new development, of which 18 are in shallow waters.

Thanks to the investment that is planned for drilling and infrastructure, there is the possibility that in these 18 fields we might find more extension and thickness in their deposits to be found, since this has happened before.

The energy policy is being modified by the nature of the political change in the Country, the strengthening of PEMEX could be increased with support of the process of migration of Oil Assignments (Farmouts).

Fracking is a technique that is required to obtain physical resources, in the United States the increase in production is known derived from the use of this technique. Thanks to it, a high production of liquids and gas is obtained which are offered at a low price to countries like Mexico. Fracking in Mexico is a prospective resource since, whether or not it can be used as a production technique depends of a previous exploration in order to know if it can be extracted profitably since the operation in Mexico might be more expensive.

Using all the tools provided by the current legal framework in Mexico regarding energy is essential for PEMEX to increase its technical execution and financial capacity in such a way that it shares the risk.

Successful decisions will give more opportunities for the development not only of the sector, but also of the human component that makes it possible, such as engineers, people who have service companies, investors, among others.

If you want to know more information about experts from the Energy Sector in Mexico, click on the video to see the interview of Gaspar Franco Former Commissioner of the CNH and Graciela Álvarez Hoth, General Director of NRGI Broker.

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USMCA: Who are the winners and losers of the ‘new NAFTA’?

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Washington Post / Heather Long / October 1

Trump and Trudeau can tout this as a major victory ahead of key elections in their countries. It’s a lot less clear whether ‘NAFTA 2.0’ is good for Mexico and U.S. automakers.

The United States, Canada and Mexico finalized a sweeping new trade deal late Sunday, just hours before their Oct. 1 deadline. President Trump was up early Monday tweeting that the agreement is “a great deal for all three countries,” and Prime Minister Justin Trudeau said Sunday night that it was a “good day for Canada.”

The deal is expected to take effect around Jan. 1, 2020. Congress has to approve it, a process that will take months, but confirmation looks likely, given that Republicans are pleased Canada got on board and some Democrats are pleased with the stronger labor provisions.

Here’s a look at who’s smiling — and who’s not — as the world sees this news.

Winners:

President Trump. He got a major trade deal done and will be able to say it’s another “promise kept” to his voters right before the midterm elections. And he won the messaging game — he persuaded Canada and Mexico to ditch the name “NAFTA,” for North American Free Trade Agreement, which he hated, and to instead call the new agreement “USMCA,” for United States-Mexico-Canada Agreement. It’s not a total trade revolution, as Trump promised, but USMCA does make substantial changes to modernize trade rules in effect from 1994 to 2020, and it give some wins to U.S. farmers and blue-collar workers in the auto sector. Trump beat his doubters, and his team can now turn to the No. 1 trade target: China.

Prime Minister Justin Trudeau. There might not be a lot of love lost between Trump and Trudeau, but in the end, Trudeau didn’t cave much on his key issues: dairy and Chapter 19, the treaty’s dispute resolution mechanism. Trudeau held out and got what he wanted: Canada’s dairy supply management system stays mostly intact, and Chapter 19 remains in place, a win for the Canadian lumber sector. On dairy, Canada is mainly giving U.S. farmers more ability to sell milk protein concentrate, skim milk powder and infant formula. On top of the substantive issues, Trump went out of his way to criticize the Canadian negotiating team in the final days of deliberations, which Trudeau can play up as a sign of just how hard his staff fought on this deal.

Labor unions. This agreement stipulates that at least 30 percent of cars (rising to 40 percent by 2023) must be made by workers earning $16 an hour, about three times the typical manufacturing wage in Mexico now. USMCA also stipulates that Mexico must make it easier for workers to form unions. The AFL-CIO is cautiously optimistic that this truly is a better deal for U.S. and Canadian workers in terms of keeping jobs from going to lower-paying Mexico or to Asia, although labor is looking carefully at how the new rules will be enforced. It’s possible this could accelerate automation, but that would take time.

U.S. dairy farmers. They regain some access to the Canadian market, especially for what is known as “Class 7” milk products such as milk powder and milk proteins. The United States used to sell a lot of Class 7 products to Canada, but that changed in recent years when Canada started heavily regulating this new class. USMCA also imposes some restrictions on how much dairy Canada can export, a potential win for U.S. dairy farmers if they are able to capitalize on foreign markets.

Stock market investors. A major worry is over, and the U.S. stock market rallied Monday with the Dow gaining nearly 200 points.

Robert E. Lighthizer. Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin couldn’t get major trade deals done for the president, but U.S. Trade Representative Lighthizer did. He led negotiations with South Korea on the revamped U.S.-South Korea trade deal (KORUS) that the president just signed, as well as on the “new NAFTA.” Lighthizer is proving to be the trade expert closest to Trump’s ear.

Losers:

China. Trump is emboldened on trade. A senior administration official said Sunday that the U.S.-Canada-Mexico deal “has become a playbook for future trade deals.” The president believes his strategy is working, and he’s now likely to go harder after China because his attention won’t be diverted elsewhere (at least on trade matters).

U.S. car buyers. Economists and auto experts think USMCA is going to cause car prices in the United States to rise and the selection to go down, especially on small cars that used to be produced in Mexico but may not be able to be brought across the border duty-free anymore. It’s unclear how much prices could rise (estimates vary), but automakers can’t rely as heavily on cheap Mexican labor now and there will probably be higher compliance costs.

Canadian steel. Trump’s tariffs on Canadian steel and aluminum remain in place for now, something Trudeau has called “insulting” since the two countries are longtime allies with similar labor standards.

Unclear:

Mexico. America’s southern neighbor kept a trade deal in place, but it had to make a lot of concessions to Trump. It’s possible this could stall some of Mexico’s manufacturing growth, and it’s unclear whether wages really will rise in Mexico because of this agreement. Big energy companies can also still challenge Mexico via Chapter 11, something that could constrain Mexico’s new government as it aims to reform energy policies.

Ford, GM, Chrysler and other big auto companies. There’s relief among auto industry executives that the deal is done, but costs will be high for big car companies: The steel tariffs are still in place on Canada; more car parts have to come from North America (not cheaper Asia); and more car components have to be made at wages of $16 an hour. It remains to be seen how car companies are able to adjust and whether this has long-term ramifications for their bottom lines.

Big business. Many business groups are relieved that Trump got a trilateral deal and didn’t end up tearing up NAFTA entirely, as he had threatened to do. And they like a lot of the trademark and patent provisions. But the details of USMCA include some losses for big business. Some regulatory compliance costs will probably rise, especially for automakers, and big business lost Chapter 11, the investor dispute settlement mechanism that companies have used to sue Canadian and Mexican governments (the one exception is that energy and telecommunications firms still get a modified Chapter 11 with Mexico).

Washington Post / Heather Long / October 1

Jefferson Energy Companies Originates the First ExxonMobil Unit Trains of Refined Products to Mexico

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From: GlobeNewswire / 11 de Diciembre de 2017

NEW YORK, Dec. 11, 2017 (GLOBE NEWSWIRE) — Jefferson Energy Companies (“Jefferson”), a subsidiary of Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI), is playing an important role in ExxonMobil’s recent Mexico market entry.  With logistics support from Jefferson, ExxonMobil is the first company to provide an integrated product offering along the entire fuels value chain in Mexico.  Unit trains of gasoline and diesel delivered to Central Mexican markets originated at Jefferson’s terminal in Beaumont, Texas.  The unit train loading was done under an agreement with ExxonMobil. These volumes originated at Jefferson were safely delivered through a destination terminal in San Luis Potosi to retail gasoline stations in the Bajio region. ExxonMobil previously announced its intent to spend $300 million in fuel logistics, product inventories and marketing in support of Mobil-branded stations and Synergy-branded fuels, and these unit train shipments are part of that program.

About the Jefferson Energy Terminal

Jefferson Energy CEO and President Greg Binion said, “We are excited to be an integral part of the transformation of the Mexican energy sector. Further, we are very pleased that ExxonMobil recognized the operational flexibility and advantages that our terminal provides. As this opportunity in Mexico expands, we plan to continue to enter into other contracts to provide logistics for refined products export to Mexico. We also plan to continue to invest in associated tanks as well as rail and loading infrastructure in order to meet the rapidly growing demands of this market.”

The terminal is owned and operated by Jefferson Energy Companies, a midstream oil and terminal company that serves the Gulf Coast. The terminal is located on 243 acres in Beaumont, Texas, positioned in one of the largest refinery markets in the U.S., located in the center of the 9.2 million bbdGulf Coast refining market (PAD III). The terminal is a public-private partnership between the Port of Beaumont Navigation District of Jefferson County, Texas and Jefferson Energy Companies. The Port of Beaumont is the fourth busiest port in the United States, according to the U. S. Army Corp of Engineers tonnage statistics, and the busiest military port in the U.S. The terminal is currently served by three Class I railroad carriers, allowing delivery from most origination terminals and plants in North America.

About Fortress Transportation and Infrastructure Investors LLC

Fortress Transportation and Infrastructure Investors LLC (NYSE:FTAI) owns and acquires high quality infrastructure and equipment that is essential for the transportation of goods and people globally. FTAI targets assets that, on a combined basis, generate strong and stable cash flows with the potential for earnings growth and asset appreciation. FTAI is externally managed by an affiliate of Fortress Investment Group LLC, a leading, diversified global investment firm. For more information about FTAI, visit www.ftandi.com.

Transporte de combustible con ferrocarril

Ferrocarril

From: GlobeNewswire / 11 de Diciembre de 2017

Oil prices are poised for a pullback after OPEC announces its output cut decision

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From CNBC / Tom DiChristopher / 28 de noviembre de 2017

 

Market watchers see few opportunities for oil prices to rally — but plenty of room for them to fall — after a critical meeting of energy ministers later this week.

About two dozen oil exporters, including top producers Saudi Arabiaand Russia, meet on Thursday in Vienna to discuss extending a deal to keep 1.8 million barrels a day off the market. The historic agreement has helped to reverse a three-year oil price downturn that wiped out hundreds of thousands of energy jobs and piled financial pressure on both free market American drillers and countries dependent on oil revenue.

The market largely expects the 14-member OPEC cartel and a group of other producers led by Russia to extend the deal, which began in January and expires in March, through the end of 2018.

But just days before meeting, Russia has not committed to the nine-month extension, raising concerns that OPEC could settle for a shorter extension or push off a decision altogether. Either of those scenarios would spark a sell-off, analysts say, but oil prices will probably struggle to grind higher from recent 2½-year highs even if OPEC lives up to expectations.

Here’s how analysts expect markets to move under three scenarios.
OPEC extends by nine months
Andy Lipow, president of Lipow Oil Associates, expects OPEC to lock down the nine-month extension. But he also expects a pullback on the news.

The reason: Hedge funds have recently increased their long positions in oil futures, or bets that prices will keep rising. That makes prices vulnerable to a slide because traders often book profits by selling high. At the same time, the number of oil rigs operating in U.S. oil fields crept up in November, a trend that tends to weigh on prices.

“The market has gotten very, very long and as a result you can have some profit-taking triggered by the increase in the rig count on Friday,” Lipow said.

Tom Kloza, global head of energy analysis at Oil Price Information Service, also thinks a nine-month extension has been baked into prices, making it hard for U.S. West Texas Intermediate crude to rally beyond Friday’s 2017 intraday high of $59.05.

“We may look back at Black Friday as the as-good-as-it-gets number for U.S. producers,” he said.

U.S. crude could take another run at the $59 per barrel level, but OPEC would have to get the messaging just right, said John Kilduff, founding partner at energy hedge fund Again Capital. That includes a show of unity among regional geopolitical rivals Saudi Arabia and Iran and a clear signal that OPEC will force member countries Libya and Nigeria to cap their output after giving them a pass this year.
OPEC settles for six months
However, Kilduff thinks OPEC will only be able to commit Russia to a six-month extension.

He said the country’s energy companies have pushed back on Russian Energy Minister Alexander Novak and President Vladimir Putin as U.S. producers pick up market share in Asia, an important oil growth market. Russian energy giants are concerned that extending the cuts prematurely could leave the market undersupplied, causing a spike in prices that leads to another crash.

“If they do go six months I would expect them to spin it and say they’re going to review it next year,” Kilduff said. “That’s going to be seen as a disappointment.”

In that scenario, Kilduff sees oil prices falling back to the mid-$50 range.
Barclays expects either a six- or nine-month extension but says the market is asking the wrong question. Michael Cohen, the investment bank’s head of energy markets research, says traders should be asking whether exporters will be held to the same production caps they agreed to last year.

“It would be a misguided assumption in our view to expect the group’s production quotas to remain set in stone in 2018,” Cohen said in a research note Monday. “The sustainability of the deal depends on how much longer Saudi Arabia, Russia, Iran and Kuwait are willing to sacrifice market share in the pursuit of revenue and market stability.”

 

From CNBC / Tom DiChristopher / 28 de noviembre de 2017

China’s promised energy revolution

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From: Financial Times / Nick Butler / 19 de noviembre

 

Can China transform its energy economy? For the last 30 years rapid economic growth – based on heavy industry, manufacturing and construction – has been sustained by hydrocarbons. Coal remains dominant; what has changed is the volumes involved. In 1990, China used some 446m tonnes of coal. This year the figure will be around 2.8bn tonnes. In parallel, oil demand has grown with the dramatic expansion of car numbers. Oil consumption was 2m barrels a day in 1980. Now it is almost 12m b/d, making China the largest oil importer. But growth has come at a cost. China, as last week’s announcement from the Global Carbon Project reminded us, is the largest single source of emissions and suffering badly from the low level pollution that covers many cities in smog. President Xi Jinping has promised dramatic change – an energy revolution “to make the skies blue again”.

The rhetoric is great but are the promises deliverable? A comprehensive study of the Chinese energy market published last week as part of the International Energy Agency’s new World Energy Outlook is a great place to start for anyone wanting to understand what is happening and what might happen next. The facts are remarkable: China consumes 25 per cent of energy used globally each day. Coal continues to dominate Chinese energy use – in industry, power generation and heating – providing almost two-thirds of total demand. The country produces and uses over 50 per cent of all the coal burnt globally. Power generation has grown dramatically to meet electricity demand that has quadrupled since 2000. Gas use is relatively small but growing – mostly relying, for now, on imported LNG. China is the leading producer of wind and solar power. Advances in technology and production efficiency have cut costs and made the country the dominant supplier of solar panels to the rest of the world. China is building dozens of new nuclear plants – more than a third of the global total. Its nuclear industry is developing its own reactor technology, aiming to create a world-class export industry. The country leads the global electric vehicle industry. Of the estimated 2m electric vehicles on the world’s roads by the end of this year, at least 40 per cent will be in China. Remarkable advances in energy efficiency have been made, and the amount of energy used for each unit of China’s gross domestic product has fallen 30 per cent since 2000 but emissions remain a challenge. After three years when reported emissions were flat, renewed industrial growth has pushed them up again.

Each of these facts reflects a dramatic change in the last 10 to 15 years. But they do not represent an end point. The party Congress in Beijing endorsed the latest plan – a sweeping statement of intent entitled “Energy Production and Consumption Revolution Strategy”. The plan describes a transformation of the whole energy sector over the next decade and a half. The share of non-fossil fuels will rise to 15 per cent by 2020, and to 20 per cent by 2030, meeting most if not all incremental demand. By 2030, 80 per cent of all remaining coal-fired power stations will have ultra low emissions as old capacity is retired. GDP energy intensity will fall by 15 per cent and the amount of carbon required will fall by 15 per cent. Further improvements will come over the following decade to 2030 The target is to ensure that emissions peak by 2030. The long-term goal for 2050 is to reduce the share of fossil fuels to less than half the total, to rebase the whole system on leading-edge energy technologies and equipment and make China an important player in global energy governance. History suggests it is unwise to underestimate China’s ability to deliver on its plans but in this case there are good reasons for doubt. Infrastructure and market structures are needed to support the changing energy mix.

As the IEA analysis makes clear, the absence of infrastructure and a supportive regulatory regime already limit the potential of natural gas. The same problems could constrain wind and solar. Electric vehicle numbers are growing but the odds are still that the bulk of the electricity they use will be produced from coal for a long time to come. An excellent post by Simon Goess for the Energy Collective website spells out the reality. In addition, industrial changes have to be managed. In coal and the major manufacturing sectors many workers and whole communities remain dependent on activity that is likely to be transformed or eliminated by technology. The Chinese coal industry, for instance, employs 4m. Trade dependence also poses risks. The target of 80 per cent net self-sufficiency is probably achievable with the combination of coal, new nuclear and renewables, including hydro. But the remaining 20 per cent involves the critical supply of oil where import dependence has doubled in the last five years. On the IEA’s estimate, China will need to invest $6.1tn – $250bn a year on energy supply between now and 2040, two-thirds of which will go into the power sector. Another $2.1tn ($90bn a year) will be needed to deliver the required gains in energy efficiency. China is a dominant force in the global energy market. Next week I will look at the international implications of what is happening. But energy also matters for the survival of the regime in Beijing. The political process has not been ended by Mr Xi’s triumphant re-election. A sustained improvement in living standards over the last three decades has helped to keep the Communist party in power. That would not have been possible if the energy system had not been adapted to meet growing demand in what is now a consumer society. The “iron rice bowl” now extends beyond employment and food to mobility and increasingly to the demand for a cleaner environment. As ever, energy and power are inseparable.

 

 

From: Financial Times / Nick Butler / 19 de noviembre

Mexico, NAFTA and energy on the same side

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When it comes to NAFTA and energy, there is no doubt that Mexico gets the better end of the deal with a series of special carve outs for its national industry. The result has been an unbalanced, incongruous relationship between the United States, Mexico and Canada. In other words, when it comes to energy, NAFTA is anything but free trade .

Take the following examples from chapter six of NAFTA, addressing energy trade:

An American company is permitted to open a power plant in Mexico to generate power for Texas, but, according to the provisions carved out for Mexico’s nationalized energy industry, the power plant would have to sell all of its excess power to Mexico’s Federal Electricity Commission (CFE) at the rate negotiated by CFE. ( Annex 602.3(5) ) If a cogeneration plant is built in Mexico with the express purpose of providing power for a Canadian company’s factory in Mexico, then, according to NAFTA, it must sell any excess power to CFE. ( Annex 602.3(5)(b) ) In both cases, the American and Canadian operations face a disadvantage in price negotiations because they are required to sell excess power to CFE only.

When it comes to oil and gas exploration, NAFTA includes a provision requiring the three countries to maintain incentives to encourage companies to find new energy reserves. ( Article 608.1 ) However, in the special provisions, Mexico is exempted from incentivizing – or even permitting – private exploration and development. This special provision makes clear that “the Mexican State reserves to itself” all E&P, nuclear power, foreign trade, transportation, storage, distribution and electrical supply within its own borders. ( Annex 602.3(1) ). In the U.S. and Canada, free trade in energy exploration must be promoted. In Mexico, the government can do what it chooses .

Mexico is allowed to “restrict the granting of import and export licenses for the sole purpose of reserving foreign trade” in a variety of energy goods including (but not limited to): aviation fuel, gasoline, shale and tar sands, diesel oil, most forms of commercial gasses and kerosene. ( Annex 603.6 ). The U.S. and Canada must keep import and export licenses open.

These carve outs meant to favor Mexico’s national energy industries have not been kind to Mexico’s economy, energy supply or business development. Mexico has insisted one form or another of nationalized energy for almost a century . Basic tenants of capitalism explain that a closed, national energy regime prohibits competition, leading to misalignment of resources and prices. Absent a truly robust and well-managed system in Mexico, this is what happened.

In 2014, historically low levels of oil production, higher energy consumption and depleted oil reserves led Mexico amend its constitution to open Mexico’s state energy industries to foreign investment. These changes permitted the Mexican government to auction off certain oil and gas leases to foreign, private companies for development and to allow foreign companies to participate in owning pipelines, refineries, petrochemical plants and even electricity generation. Mexico also committed to bringing gasoline and natural gas prices in line with market prices rather than setting them artificially.

Although the process has not always been smooth – Mexico is experiencing gasoline shortages and spikes in gasoline prices, in part, as a result of these efforts – the overall trend towards liberalization in Mexico’s energy industry is promising. Many companies have bid for offshore leases to produce oil and gas in the Gulf of Mexico and the opportunities to invest in Mexican energy businesses are growing.

Since the Mexican state is no longer the only legal investor, owner, producer, buyer and seller of energy and energy products in Mexico, there is now a potential to renegotiate chapter six of NAFTA and eliminate the special provisions and carve outs for Mexico. This would not only help improve Mexico’s energy situation, but improve trade relations amongst the three North American trade partners.

Grupo México proyecta invertir en energía

Grupo México proyecta invertir en energía

Story by Ellen R. Wald, Ph.D. is a historian and scholar of the energy industry / Petroleumworld

02 17 2017

More Company Climate Votes Ahead, As Trump May Loosen Energy Rules

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Activist shareholders plan a record number of resolutions focused on climate change at U.S. company annual meetings in 2017, even as President-elect Donald Trump looks set to loosen environmental regulations.

Based on filings so far, U.S. companies are on track to face roughly 200 resolutions on climate matters at their shareholder meetings next year, according to Rob Berridge, who follows the subject for Ceres, a sustainability advocacy group.

There were 174 such resolutions this year, Berridge said, compared with 167 in 2015 and 148 in 2014. Many have been directed at big oil and gas companies, though other sectors have also been targeted, including technology and retail.

Activist shareholders broadly aim to curb companies’ carbon emissions and make energy usage more efficient, or at the very least, to draw the attention of companies and investors to climate change as an urgent problem.

They have had some limited success. Investors at Exxon Mobil Corp the world’s largest publicly traded oil producer, passed a measure this year that could lead to an environmental activist joining its board. “Our position is that the risk of climate change is clear and warrants action,” said Exxon spokesman Alan Jeffers.

The rising number of shareholder votes reflects a growing concern among big investors about the environment, encouraged by steps by some boards to embrace reforms.

Deadlines are fast approaching to get resolutions on the ballot for shareholder meetings to be held in the spring.

The election victory of Trump, who is set to take over as U.S. president on Jan. 20, only seems to have added impetus.

On the campaign trail, Trump dismissed human-caused climate change as a “hoax” and pledged to dismantle the Environmental Protection Agency. He also threatened to withdraw the United States from the landmark 2015 Paris Agreement to combat climate change, although he appeared to step back from that position on Tuesday.

He vowed instead to revive the U.S. coal industry, encourage oil drilling and to scale back regulation of the energy sector.

“Despite what the administration may or may not do, I really believe that corporations understand the risks posed by climate change,” said Danielle Fugere, president of As You Sow, a California nonprofit campaign group. It sponsored 18 climate-related shareholder resolutions in 2016 and expects to file a bigger number next year.

One resolution for 2017 calls on Anadarko Petroleum Corp to report on how it would address the risk of so-called stranded assets, such as high-cost deepwater project investments, that might be caused by a drop in demand for oil and gas. The idea won support from 42 percent of shares voted at the company’s 2016 meeting, up from 29 percent in 2015.

Anadarko’s board last year called the idea “unnecessary and unproductive.” Spokesman John Christiansen said it is reviewing the proposal.

To be sure, among S&P 500 companies, investor support for climate resolutions has been relatively weak, holding steady around 22 percent since 2014, according to research firm Fund Votes.

But activists often won more backing for ideas such as urging companies to report on their strategy for dealing with climate change, according to the Sustainable Investments Institute, a research firm specializing in shareholder votes, supported by universities, pension funds and other institutional investors.

Anne Simpson, director of sustainability for the California Public Employees’ Retirement System (Calpers), which manages about $300 billion, said it plans to file or back resolutions at U.S. oil and gas companies for 2017, though she declined to discuss specifics.

Last year the boards of mining companies including Rio Tinto Plc and Glencore Plc endorsed resolutions Calpers submitted calling for reports on climate risk, and the measures passed by wide margins.

More companies will likely embrace shareholder proposals to head off disruption caused by climate change, Simpson said.

“Economics is driving this, not politics,” she said.

Copyright: Rigzone

What Works for Wind Power Could Also Work Under the Sea

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Jim Dehlsen, a 79-year-old wind-energy pioneer who sold one turbine company to Enron and took another public, has spent his life thinking about the best way to make blades turn in the sky. For his latest effort, he’s flipping a turbine upside down and plunging it dozens of meters into the ocean, in waters that are up to 300 meters deep. There, marine currents rotate the 13.5-meter long blades to pull power from the sea.

Aquantis, Dehlsen’s Santa Barbara, Calif., company, will start deploying turbines in 2018 in waters near Wales and the Isle of Wight. Its most ambitious project is a 200-megawatt field of marine turbines in the strong Gulf Stream off the coast of Florida, due to come online in 2019 or 2020. The world’s oceans remain relatively untapped as an energy source, compared with wind and solar. By 2030, Dehlsen says, marine energy could serve 8 percent or 9 percent of U.S. power needs. “The oceans are the major remaining potential for renewable energy,” he says. “Getting on that now is really urgent.”

It took wind at least 15 years to become a viable, cost-effective resource. In the late 1970s, when scientists first started experimenting with wind turbines, “people laughed at you and said, ‘Wind will never work,’ ” says Robert Thresher, a research fellow at the National Renewable Energy Laboratory in Golden, Colo. In the ’80s and ’90s, the industry settled on the three-blade turbine design considered the standard today. Many aspects of turbine design can be applied to the oceans, adjusted to handle the slower, heftier fluid dynamics of seawater.

Aquantis is developing systems to capture energy from waves, from tidal currents, which switch direction twice a day, and from gyre, or steady, currents. Much of Dehlsen’s obsession these days is with the Gulf Stream. Its constant current can rotate turbines day and night, allowing Aquantis to squeeze more power out of each turbine. That will cut the price per kilowatt-hour. “Because the stream flows all the time, it’s probably the one that can become cost-effective most easily,” Thresher says.

Aquantis, which isn’t the first company to design underwater turbines, wants to lower the cost of marine energy. Dehlsen says deploying an Aquantis device—towing it out to sea, filling it with seawater ballast, then anchoring it—runs about $347,000 per turbine. The rotor’s two blades can withstand huge volumes of water moving as fast as 4 knots. The topmost part floats just above the surface, and the rest of the equipment is held in place with mooring lines to the ocean floor, making it quicker to deploy and cheaper to maintain. Repair crews take an elevator down the shaft. Rival turbine makers dig deep into the ocean floor to anchor the machinery so that it can withstand the strength of the currents; their repairs require raising the structure to the surface. That pushes up the cost significantly, Dehlsen says, to about five to seven times more than Aquantis’s.

Dehlsen plans to install his turbines in a few test sites and sell power to the grid. He sees a second revenue stream in marine turbines housing data centers for the world’s tech giants, using the turbine’s shaft as a storage area for racks of servers. That can save companies money on air conditioning by using cold ocean water to cool the equipment. Aquantis designed and built a pilot test chamber for Microsoft that housed a data center underwater for 105 days off California’s San Luis Obispo pier last year. The test was a success, Microsoft said, with minimal ocean heating and no leaks or hardware failures. Dehlsen is reaching out to Apple, Facebook, and Google about similar efforts.

Dehlsen is courting tech companies and investors while trying to lock down test sites from the north coast of Brazil to Cape Agulhas, on the southern tip of Africa. Little testing has taken place in the U.S. Aquantis has won Department of Energy grants and received some venture capital from Mistubishi Heavy Industries. Dehlsen has self-funded a lot of the work; additional income comes from projects like the data center program. His track record in renewable energy reassures potential partners, says Charles Vinick, Aquantis’s chief executive officer. “Jim is seen as the father of American wind—that opens the door.”

Marine turbines face some challenges, such as concerns over unknown environmental effects. Their blades could strike whales or create noise that confuses sea life. Dehlsen says studies conducted in the U.K. show turbines are safe for fish and marine life. The bigger challenge, he says, is creating marine energy that is cost-competitive. He expects to get to less than 10¢ a kilowatt-hour in three to five years. (Wind energy hovers from 3¢ to 8¢ a kilowatt-hour, solar from 4¢ to 7¢, and conventional gas from 5¢ to 8¢.) “In renewable energy, people get enthusiastic about an idea, and yes, maybe you can make electricity. But if it’s 8¢ a kilowatt-hour, so what?” he says. “Don’t even bother.”

Dehlsen’s best argument may be a slide in his presentation about the urgency of global warming. “The time that’s left in which we can make a change is relatively short,” he says. “Five to 10 years, and you’re beyond being able to stem it.”

Copyright: Bloomberg

Byron Energy encounters further hydrocarbons in the SM71-1 well in Gulf of Mexico

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Byron Energy is pleased to provide an update on the Byron Energy SM71 #1 oil and gas discovery well located in the Gulf of Mexico in South Marsh Island Block 71 (‘SM71’).

Since the last report, on 27 April 2016, the well has been deepened, to the predrill planned total depth of 7,477 feet measured depth/6,915 feet true vertical depth and wireline logs have been run over the deeper portion of the well.

The processed open hole porosity logs from this deepened section of the well indicate the presence of a very high porosity gas or gas condensate reservoir from 7,212 feet to 7,226 feet measured depth.  A 5” liner will now be run and cemented in place over the deeper portion of the SM71 #1 well.

As previously reported, the SM71 #1 well encountered 132 feet of TVT net oil pay in the I3 Sand, J Sand and D5 Sands. The final, processed version of the logs run over these three sands has now been received and confirm the previously reported net TVT pay count. Additionally, Isotube sample analysis indicates the likely presence of light, sweet crude oil from all three sand intervals.

Current operations are preparing to run 5″ liner over the deeper portion of the well before suspending the well for future production. It is expected that the rig will be demobilised within 10 days after mud line suspension operations are completed.

Byron’s CEO, Maynard Smith said:

‘We are very pleased to encounter our fourth hydrocarbon interval in this wellbore. This is the first time in my career I have seen four sands trap hydrocarbons stratigraphically in one well bore. Every pre-drill target sand, both primary and secondary, has been found to have hydrocarbons. These stratigraphic traps were found using a high resolution second generation Reverse Time Seismic Migration (RTM) and in conjunction with a very advanced  seismic inversion model. To further enhance and fine tune our inversion model, we acquired acoustic shear wave data overall objective sands in this wellbore. This data will be key to understanding the seismic responses in both hydrocarbon and wet sands in the area. The shear log in our well is the first shear wave data collected in over 320 wells drilled thus far on the SM71 dome where 117 million barrels and 377 BCF of gas has been produced. We believe this information will give Byron a significant advantage in exploring for and exploiting other stratigraphic traps on our blocks and other blocks on the dome. We are immediately commencing plans for future production facilities and pipelines in order to shorten the time to production as much as possible.’

The SM71 #1 well is the second well to be drilled as part of Byron’s farm-out to Otto Energy, announced on 11 December 2015.

Byron, through its wholly owned subsidiary Byron Energy Inc. (the operator), currently has a 100% working interest and an 81.25% net revenue interest in SM71, located offshore Louisiana, 250 km southwest of New Orleans, Louisiana, USA, in water depth of approx. 131 feet (40 metres). Because the SMI71 #1 well has been drilled to the earning depth Otto has now earned the right to elect to earn a 50% working interest in the SM70 and SM71 blocks and has confirmed it will exercise its right. Consequently, Byron’s working and net revenue interests will be reduced by 50%, to 50% and 40.625% respectively.

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Copyright: Your Oil an Gas News

Iran, India Sign MoU to Develop Oil, Gas Projects

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OPEC member Iran and India – one of Asia’s fastest growing source of energy demand – signed a memorandum of understanding (MoU) to develop oil and gas projects, including the Farzad B gas field, Iranian Petroleum Minister Bijan Zangeneh told the Iran-India business conference held at Teheran Chamber of Commerce Saturday, Shana – a media linked to Iran’s Ministry of Petroleum – reported Sunday. “We had thorough conversations today and signed an MoU for development of Farzad B gas field, refinery cooperation, export of crude oil and petroleum products and mutual cooperation in petrochemical industry,” Zangeneh said.

The MoU was signed during a visit to Teheran by Indian Petroleum and Natural Gas Minister Dharmendra Pradhan, who, the Ministry said on its website April 7, hoped to engage “with the Iranian political leadership to work with them, particularly in the hydrocarbon, petrochemicals and fertilizers sectors for mutual benefits, including strengthening of India’s energy security.” According to Zangeneh, Indian investors should consider the development of the Farzad B project as a top priority, adding that “we hope decisions regarding the project’s development will be made before 2017.”

He said the Farzad B gas field can produce 3 billion cubic feet per day (Bcf/d) of natural gas, but Iran has signed an MoU with Indian developers for the production of 1 Bcf/d of natural gas from the field. A consortium comprising three Indian companies, including ONGC Videsh Ltd. and Oil India Ltd., made a gas discovery at the offshore Farzad B field in 2008.

Meanwhile, Zangeneh said both nations have agreed to set up major joint ventures and enhance their strategic relations, adding that “we hope Iranian and Indian companies reach out to each other and, under the new circumstances, the two countries boost their investments.” Indian companies have indicated to Zangeneh their interests to purchase natural gas from Iran to feed their petrochemical and other energy-consuming industries, Shana reported. On its part, Iran could deliver gas to Indian customers in Chabahar or any other ports where the Indians are willing to invest to feed methanol, steel and aluminium plants.

Separately, shareholders of Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Company Limited signed an agreement in Ashgabat, Turkmenistan Thursday to invest $200 million in the TAPI natural gas pipeline. According to the Asian Development Bank (ADB), the investment includes funds for detailed engineering and route surveys, environmental and social safeguard studies, and procurement and financing activities, to enable a final investment decision, after which construction can begin. Construction is estimated to take up to 3 years.

According to Pakistan’s Minister of State for Petroleum and Natural Resources Jam Kamal Khan, TAPI would supply 487.3 billion cubic feet (Bcf) or 13.8 billion cubic meters (Bcm) of gas from Turkmenistan to meet the South Asian country’s growing energy demand, Indian daily The Economic Times reported Friday. Sean O’ Sullivan, ADB’s Director General of Central and West Asia Department, said the gas pipeline will unlock economic opportunities and diversify the energy market for Turkmenistan and enhance energy security for the region.

Ground breaking of the 1,127 mile (1,814 kilometer) -long TAPI pipeline, a project seeking to ease energy shortages in South Asia, was carried out in December 2015 year in Turkmenistan. The pipeline will be equipped to transport 3.2 billion cubic feet per day (Bcf/d) or 90 million standard cubic meters a day (MMscm/d) gas for 30 years, with India and Pakistan originally expected to receive 1.3 Bscf/d (38 MMscm/d) each, while the remaining 494.4 million standard cubic feet per day (MMscf/d) or 14 MMscm/d was to be supplied to Afghanistan.

So far, Turkmenistan is the only country that has started work to build its section of the TAPI pipeline. The pipeline will travel 480 miles (773 kilometers) through Afghanistan and 514 miles (827 kilometers) in Pakistan before ending at Fazilka in Punjab, India, The Economic Times said.

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