Reuters/27 October 2017

CALGARY, Alberta (Reuters) – Canada’s energy regulator has ordered Kinder Morgan Canada Ltd to stop some work on its Trans Mountain pipeline expansion, after a public company blog post showed it had been conducting activities that had “not yet been approved.”

In a letter sent on Friday, the National Energy Board (NEB) said Kinder Morgan has started work along the pipeline portion of the project, which the company is not yet allowed to do, and that it has to stop. The letter was filed to the NEB’s website. (bit.ly/2wUAXD3)

“We will be responding to the NEB’s correspondence and are finding the best path forward,” Kinder Morgan spokeswoman Ali Hounsell said.

The C$7.4 billion ($5.9 billion) project, which would twin the current Trans Mountain pipeline, faces opposition from environmental and aboriginal groups and the provincial government of British Columbia, through which the pipeline passes.

While the project has federal approval, work on the pipeline itself cannot begin until the NEB determines its precise route, a process that has no firm conclusion date. The regulator has so far granted permission only for work on a coastal marine terminal, whose capacity needs to be increased to handle the extra crude from the expansion.

Kinder Morgan Canada, a unit of Houston-based Kinder Morgan Inc, has blogged frequently about its efforts to engage communities along the pipeline route and actions for the environment.

In a post this month, it wrote about installing devices to deter fish from spawning around construction areas for the project. The post included plans to install similar devices at another 21 sites. (bit.ly/2wUvvzR)

The regulator became aware of the issue through multiple sources, including Trans Mountain’s website, NEB spokesman James Stevenson said.

When asked whether there will be any penalties for Kinder Morgan, he said: “We are continuing to gather more information about this matter, and it could result in further enforcement activity.”

The Trans Mountain expansion would nearly triple the capacity of the existing pipeline from Canada’s oil heartland of Alberta to the west coast.

Canadian crude producers say their landlocked product needs more pipeline capacity to fetch better prices. Those opposing the project say they are concerned about its potential impact on climate change and increased possibility of spills.

The Federal Court of Appeal will hear next week in Vancouver a legal challenge that could overturn Trans Mountain’s approval.

 

News Source: Reuters

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Rigzone/27 September 2017

AMSTERDAM, Sept 27 (Reuters) – A large gas discovery in the Dutch North Sea could be even bigger after an exploration drill beat expectations, one of the companies involved said, a shot in the arm to the traditionally gas-rich Netherlands whose output has deen declining.

The Ruby well, the first drilled in the area around 20 kms (12 miles) off the northern Dutch coast since the early 1990s, produced gas at a higher rate than expected thanks to “excellent” geological quality, said John Martin, chief executive of Hansa Hydrocarbons, the operator of the field.

The wider licence within which the Ruby well is located is estimated to contain around 2 trillion cubic feet of gas, more than the Netherlands’ annual gas production.

Martin told Reuters he was “optimistic” this figure could be upgraded following expectation-beating results from Ruby.

“Not only have we proved up a substantial volume but it also confirms the extent of the hitherto poorly understood basal Rotliegend sands in the offshore basin,” he said.

Hansa Hydrocarbons, a London-based exploration company backed by U.S. private equity firm Avista Capital Partners, is partnering on the project with Dutch oil and gas explorer Oranje-Nassau Energie, which has a 40 percent stake, and state entity Energie Beheer Nederland, with a 20 percent stake.

Dutch gas production has been steadily declining, partly due to a lack of new developments and partly to a government-mandated cap on output from the country’s largest field at Groningen after it was established that it triggered earth tremors.

 

News Source: Rigzone

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The Guardian/26 September 2017

The Queensland Liberal-National party (LNP) are promising that if they are elected to government they’ll build a new coal power station in northern Queensland. And just this week the prime minister, Malcolm Turnbull, announced that if Queenslanders elected the LNP at the next state election, all Australian taxpayers would help fund it.

It’s important to note that this would involve a serious amount of taxpayers’ money, because banks and power companies have made it clear they aren’t remotely interested in funding such a plant. The coal plants the government seems to fancy (known as ultra-supercritical) tend to come in just one size – extra big. The last coal plant built in Queensland was a single supercritical pressure 750MW unit – the biggest in Australia. According to analysis for the Australian Energy Market Operator such a plant would cost taxpayers $2.5bn. That’s half a billion more than the 2000MW Snowy 2.0.

Such a move by state and federal governments to build a major power station represents an extraordinary break from two decades of policy consensus that government should leave electricity generation to the private sector. The Queensland LNP just one government term ago, was actually planning on divesting itself completely out of the power business. At the time it argued the private sector would be far more efficient at running such assets. At a federal level the Liberal-National government just a few years ago was handing out bonus payments to the states to encourage them to sell out of power and other infrastructure assets.

So you’d think such a radical break from a long-standing and strongly held policy position would be backed by some very hefty justification. Especially when it involves $2.5bn.

Well we’ve heard a lot of teeth gnashing from the Coalition about the need for more “baseload” power in order to keep the lights on. But the Liberal-National Coalition needs to address some very simple maths that suggest such an argument just doesn’t apply in Queensland:

• Queensland’s overall electricity demand over the year averages out at less than 6,000MW and according to the Energy Market Operator it isn’t likely to grow much;
• Meanwhile it has 8,186MW of coal power plant capacity, not to mention another 3,297MW of gas.

Over the past four years Queensland’s biggest coal power station – Gladstone – has been operating at less than half its capacity. Several other Queensland coal power stations are running at about two-thirds of their capacity. As a yardstick comparison Victorian coal generators run close to 90% utilisation on average. Given we’re barely making effective use of the existing Queensland coal power stations, you have to ask why would we want to tip $2.5bn in to build another one?

The LNP might respond: but Liddell is closing down in NSW, and that comes on top of Hazelwood in Victoria, so Queensland can export the power south. But if that’s the case then why do you want to build a new coal power station near Townsville, which would suffer huge losses transporting the power over 1,000km to NSW?

Another possible justification the government might suggest is that we need a new Queensland coal generator to increase competition and push down wholesale power prices from record-high levels. Turnbull pointed out that two power companies – CS Energy and Stanwell – who dominate ownership of generating capacity in Queensland, have been using “that market power to bid up electricity prices and basically line their own pockets at the expense of consumers.”

One problem though – Stanwell and CS Energy are owned by the Queensland government that will be building the new coal generator. So it will just make their market power even worse.

So why do the Liberal-National party want to throw $2.5bn into a power station we clearly don’t need and one which is completely incompatible with Australia’s emission reduction commitments?

You guessed it: good old electoral pork barrelling.

The area around Townsville is home to several marginal parliamentary seats both at a state and federal government level. Winning these seats is vital to the Coalition’s electoral prospects.

It’s also a region where coal mining is an important part of the local economy and one that has been hit hard by the collapse in mining investment. Coal is not a dirty word here.

The beauty for the LNP of a promise to build a coal-fired power station in northern Queensland is that they know Labor can’t match it. While a promise to build a coal power station might work well in Townsville, it is electoral poison in the inner city seats where Labor ministers are threatened by the Greens.

That’s why the LNP think spending $2.5bn of our money on a power station that doesn’t make environmental or economic sense, still makes perfect political sense.

 

News Source: The Guardian

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Singapore Business Review/26 September 2017

The extension will last for a year.

A joint venture between Mermaid Maritime Public Company Limited (Mermaid) and a Middle East offshore services firm has secured a contract extension with an upstream oil and gas company.

According to a press release, the initial five-year contract period will be extended so Mermaid can continue to provide diving services with its DP2 saturation dive support vessel.

The total contract value for the one-year extension is around $129.6m (US$96m).

According to Mermaid chief executive officer Chalermchai Mahagitsiri, “For Mermaid, this contract extension represents a stream of stable revenue over the next financial year, and is a clear and positive step towards the steady growth of our company.”

Performance of the extension is set to begin in Q4.

 

News Source: Singapore Business Review

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Reuters/26 September 2017

WASHINGTON (Reuters) – The chairman of the U.S. Securities and Exchange Commission (SEC) told a congressional committee on Tuesday he did not believe his predecessor Mary Jo White knew of a 2016 cyber breach to the regulator’s corporate disclosure system, the exact timing of which could not be known “for sure.”

Jay Clayton, who was formally appointed to his role in May, also said listed companies should disclose more detailed information on cyber breaches “sooner,” and that the U.S. regulator was working on new guidelines to ensure this.

The Senate Banking Committee grilled Clayton on Tuesday over a 2016 hack of EDGAR, the agency’s online corporate financial disclosure system, only disclosed last Wednesday, which has shaken confidence in the SEC’s cyber defenses.

Clayton said he had decided last weekend to disclose the breach once he had enough information to establish it was “serious,” but he would not be drawn on who at the agency had known about it and whether there was an attempt to cover it up.

“I have no belief sitting here that Chair White knew,” Clayton said when asked whether his predecessor had been aware of the hack, adding: “I don’t think we can know for sure” on the exact timing of the breach.

Clayton fielded several questions from senators on the recent Equifax Inc data breach in which hackers stole personal data of about 143 million customers of the credit reporting firm, including on the timing of the company’s disclosure.

Although the former Wall Street lawyer declined to comment on whether the SEC was investigating stock sales made by Equifax executives prior to the disclosure, he said he was “not ignoring” the issue.

The hearing, which had been scheduled prior to the disclosure of the SEC’s breach, offered lawmakers, companies and investors the first opportunity to hear from the SEC chief on the incident.

Clayton originally had been scheduled to discuss capital market reform at his first hearing before the committee since being formally appointed in May, but his pro-growth agenda was largely eclipsed by the SEC breach and the Equifax scandal.

Wall Street’s top regulator came under fire last week after disclosing that hackers might have used information stolen from EDGAR, which houses millions of market-sensitive corporate disclosures such as earnings releases, for insider trading.

“When we learn a year after the fact that the SEC had its own breach and that it likely led to illegal stock trades, it raises questions about why the SEC seems to have swept this under the rug,” Senator Sherrod Brown, the ranking Democratic member of the committee, asked Clayton during opening remarks.

“What else are we not being told, what other information is at risk, and what are the consequences?” Brown asked. “How can you expect companies to do the right thing when your agency has not?”

CYBER DEFENSES EYED

Reuters reported on Monday that the Federal Bureau of Investigation and the U.S. Secret Service have launched investigations into the breach, which occurred in October 2016 and appeared to have been routed through servers in Eastern Europe. The breach appeared to have been one of several cyber incidents documented by the SEC in recent months, Reuters reported.

Clayton said he only learned about the 2016 hack in August and that the SEC’s enforcement staff and inspector general’s office have launched internal probes.

The regulator reported the breach to the Department of Homeland Security’s Computer Emergency Readiness Team when it was first discovered, Clayton said in the testimony, adding the regulator plans to hire more cyber security experts.

Clayton said the hack was possibly the result of a defect in the EDGAR software and said that personally identifiable information did not appear to have been put at risk, but he declined to provide further detail.

He said the SEC was still determining the extent and impact of the breach and that it could take “substantial time” to complete due to the amount of data that needed to be analyzed.

The committee also quizzed Clayton about other potential breaches at the agency and the regulator’s general cyber defenses.

Clayton said he could not say with “100 percent certainty” that the EDGAR breach was the only one suffered by the agency, and added that he planned to ask Congress for more funds to tackle the rising cyber threat.

“We’re going to need more money for cyber security, and I intend to ask for it.”

 

News Source: Reuters

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HR In Asia/26 September 2017

A new national skills framework aiming to develop Singapore’s logistics sector was launched on Friday (Sept 22). Various features are offered by the framework, which can help the sector grow by identifying job roles, career pathways, and currently emerging skills required in logistics.

Among the career pathways identified in the framework include warehouse management and operations, freight forwarding and operations, sales and customer service, as well as transport management and operations. Additionally, data and statistical analysis, automation design and cloud computing application have also been identified as most on-demand skills.

The national skills framework plans to target those who want to join logistics or move further in the industry. It also aims to reach employers within the sector who wish to invest in employee training. Furthermore, the framework is also designed to help education and training providers create programmes that can address current needs and trends in logistics, while equipping talents with on-demand skills.

The initiative builds upon the industry transformation map for logistics sector launched in November last year. The transformation map plays role as guide that charts the path for raising productivity and generating innovation in the industry as the economic climate changes, Channel News Asia reports.

Prime Minister Lee Hsien Loong during official opening of logistics firm YCH Group’s Supply Chain City facility in Jurong said that if the map is successful, the logistics industry is expected to contribute S$8.3 billion to the nation’s economy. It is also projected to create 2,000 new jobs for professionals, managers, engineers and technicians (PMETs) by 2020, he added on Friday.

“Some of these jobs will demand different and deeper skills from today, as new technologies and new ways of working become mainstream. Hence, our companies must also invest in people, to develop talent, retrain their staff and nurture deep knowledge and soft skills. The Government will play its part to attract, nurture and retain a strong Singaporean core of talent for the logistics industry,” he said.

 

News Source: Forbes

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Forbes/26 September 2017

Following the 17-month bear market that ended in March 2009, one of the longest-running bull markets in U.S. history began. The current bull market is the second longest streak on record without a 20% drop in the S&P 500.

But the performance across the S&P 500 sectors has been uneven. When oil prices collapsed in the second half of 2014, the energy markets entered a bear market even as the broader markets continued to prosper.

Although the energy sector rebounded in 2016, the fundamental reasons that led to the energy bear market hadn’t changed substantially. The global oil market remained oversupplied. So, the gains in 2016 were mostly given back in the first half of 2017.

But the International Energy Agency’s (IEA) most recent Oil Market Report gives some reasons to believe that the bear market in the energy sector may finally be coming to an end.

The report notes that global oil demand grew by 2.3 million barrels per day (BPD) year-over-year (YOY) in Q2, which was a stronger-than-expected pace. The IEA revised the 2017 growth estimate for 2017 upward to 1.6 million BPD. Demand growth has been unexpectedly high in Europe and the U.S., driven by low oil prices.

Yet crude oil demand grew strongly throughout the current energy bear market, so that alone isn’t enough to signal that better times are ahead for the energy sector. Where things get interesting is in the global supply picture.

In August, oil production fell in both OPEC and non-OPEC countries. Global oil supplies in August dropped by 720,000 BPD, with most of the decline coming from non-OPEC countries. OPEC also experienced a production decline for the first time in five months, as supply fell by 210,000 BPD.

Strong demand growth and declining supplies are finally having the desired impact on high global crude oil inventories — which have been the single biggest factor behind the bear market in the energy sector. The huge surplus has been falling steadily for months and is on a trajectory to soon reach the five-year average inventory level.

The IEA notes that “OECD product stocks were only 35 million barrels above the five-year average at end-July and could soon fall below it because of the impact of Hurricane Harvey.”

On that same theme, a story last week from Bloombergreported:

“Oil traders are emptying one of the world’s largest crude storage facilities, located near the southernmost tip of Africa, as the physical market tightens amid booming demand and OPEC production cuts.”

The energy sector has already begun to respond to the shift in the fundamentals, as the price of West Texas Intermediate has moved back above $50 a barrel. Energy stocks have begun a broad-based rally as well.

Since mid-August, the Energy Select Sector SPDR ETF, which contains the largest energy companies in the S&P 500, has risen 10%. The S&P Oil & Gas Exploration & Production SPDR ETF, a better representative of the small-cap drillers, has rallied 16.2%.

For the first time since mid-2014, both the energy market fundamentals and sentiment are improving in earnest. As a result, this may mark the true end of the energy bear market, in contrast to what turned out to be a false start in 2016.

 

News Source: Forbes

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Forbes/26 September 2017

Maybe not, but certainly for a long time – according to the new published U.S. Renewable Energy Brief.

The Brief, published by CohnReznick Renewable Energy Industry and CohnReznick Capital, concludes that the renewable energy tax equity market is in an extremely healthy state, and is growing yearly. $11 billion was raised or committed in 2016, up significantly from the $6.5 billion in 2013, according to J.P. Morgan.

New investors continue to enter the market. There are now over 45 active providers of tax equity for renewable systems. Older providers are becoming more comfortable and confident that the market will continue to grow for some years, especially since Red States get more renewable subsidies than Blue States.

The five states that get the largest percentage of their power from wind – Iowa, Kansas, South Dakota, Oklahoma and North Dakota — all voted for Mr. Trump. So did Texas, which produces the most wind power in absolute terms. In fact, over two-thirds of the wind power produced in America comes from states that Mr. Trump carried in 2016.

So don’t expect Congress to cut these tax credits anytime soon.

In addition, one has only to look at the states and their renewable portfolio standards to see the continued drive for more renewable development.

‘This is a good time to be a developer,’ says Anton Cohen, Partner & National Director of the Renewable Energy Industry practice at CohnReznick. ‘The prospects for project sponsors in the renewable energy market is at all time high both near and long term. The tax equity market is expanding and becoming more fluid with the influx of regional banks and insurance companies. In addition, there is so much capital out there just waiting to invest in developer platforms or acquire projects at various stages of development.’

And it’s not just government and electric utilities. The number of projects with corporate Purchase Power Agreements (PPAs), where a corporation such as Amazon or Apple is buying the power rather than a traditional utility, is increasing significantly, further establishing a firmer foundation for this particular equity market.

In 2016, about 1,560 MW of renewable power was contracted under corporate PPAs.Enel Green Power’s 400 MW Cimarron Bend wind project secured $500 million of tax equity in September 2016, with Google contracting for half of that power. The 253 MW Amazon Wind Farm secured tax equity from Bank of America Merrill Lynch and GE Energy Financial Services, largely because Amazon is purchasing 90% of its power output.

The financiers of the renewable energy market have proven to be resilient through the constant challenges and evolution of the market over the last ten years, and they will evolve as necessary to support the continued expansion of renewable energy.

CohnReznick Managing Director Nick Knapp, a specialist in structuring utility scale wind and solar equity, declared, ‘Renewable Energy has passed its inflection point in the United States. Its status as a reliable and long-term power generation solution is no longer in question.’

Continued cost reductions, technology efficiency improvements, and storage solutions to address renewable’s intermittency problems, will maintain long term sustainable growth in renewables well past the current Federal tax incentives.

But tax credits are still critical in maintaining renewable energy’s expansion (see figure below). Whenever they expire, the industry stops and waits for them to be re-authorized.

Then there’s distributed generation, like the solar array on my own roof, which was made affordable only with tax equity provided by the State of Washington as well as the Feds.

Although large residential developers, such as SolarCity, Vivint Solar, and Sunnova, have secured hundreds of millions of tax equity finance dollars during the last several years, distributed generation projects struggle to get tax equity because most are so small, even if they have strong sponsors and buyers of their electricity. The shortage is most acute for projects needing less than $25 million.

‘While the utility scale renewable market is at a more mature stage, on-site generation is just scratching the surface,’ says Cohen. ‘There is a very bright future for the development of distributed generation projects and once storage really takes off, it might be hard to compete with cost of energy driven by solar and storage.’

Even in traditionally challenging merchant markets like the Texas panhandle that are notoriously difficult to finance, renewable investors have succeeded with hedge agreements in place that provides investors with some certainty on the cash flow for that specific renewable project.

So, with the help of tax incentives, renewables are here to stay. The real issue is how much they will penetrate the overall power market before the inherent problems with intermittency runs into our demand for a reliable grid.

Another question is – how long will taxpayers support these tax credits?

 

News Source: Forbes

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Forbes/26 September 2017

Sanctions have not had any real impact on Russian oil and gas giant Gazprom. It toppled Exxon’s 12-year reign as the world’s leading energy company, according to S&P Global Platts rankings released on Sunday.

Platts’ annual Top 250 energy companies ranks companies based on asset worth, revenues, profits, and return on invested capital. All companies on the list have assets greater than $5.5 billion. That Gazprom is No. 1 is a testament to its management’s ability to weather low oil and gas prices, bans from low interest rate credit in Europe, and its secured position as the EUs leading foreign supplier of natural gas, a market the United States is desperate to tap.

Gazprom is majority owned by the Russian state, and while it is known as a natural gas company, its subsidiary Gazprom Neft is one of the largest oil firms in the country, too.

Gazprom become has infamous over the years, most notably due to its legal battles with Ukraine. In fact, a Gazprom deal in exchange for a European trade deal ultimately toppled Ukrainian leader Viktor Yanukovych in 2014, pulling Kiev out of its historic orbit with Moscow.

Sanctions followed that summer when Russia annexed Crimea, home to its historic Black Sea fleet, and aided a separatist movement in East Ukraine. Gazprom is one of the companies sanctioned. Congress banned U.S. companies from providing it with oil and gas drilling equipment and technological exchanges that would help Gazprom learn how to drill through shale deposits.

None of this has had any meaningful impact on the company. Instead, it rose from the number three spot to number one, unseating Exxon, a company now banned from its own joint venture with Rosneft, another sanctioned Russian energy firm. Rosneft is ranked No. 22.

Among this year’s biggest movers: Germany’s E.ON rose meteorically to No. 2 from No. 114. British utility company Centrica is now No. 15, up from No. 156th on the Platts list. Brazil’s Eletrobras rose to No. 47 from the bottom of the barrel at 193rd. And Houston-based CenterPoint Energy surged to No. 105 from the prior year’s rank of 220.

The top 10 companies posted combined profits of $63.7 billion last year, 14% lower than the $74.3 billion posted the year before.

The Top Five

 

News Source: Forbes

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Forbes/26 September 2017

Hurricane Harvey, and especially the flooding along the Gulf Coast that accompanied the storm, offered a litmus test for the safety of the nation’s petrochemical and refining industry. With a few notable exceptions, the plants passed.

Investments in plant and equipment safety appear to be paying off. Storage, transportation and other supply chain issues need similar attention. The substantial economic and environmental impact Harvey imposed on the industry is a stark illustration of that.

The Federal Reserve Bank has noted that the hurricane and flooding affected about 30% of refining and petrochemical production in the U.S. That followed similar disruptions to petrochemical production from recent hurricanes and weather events, including hurricanes Katrina (2005) and Ike (2008).

During Harvey, production facilities, including refineries and chemical plants, and the raw material supply chain – from tankers at ports, offshore and onshore production wells – were systematically shut down and process safety barriers implemented. No significant production mishaps were reported.

Impressively, no significant safety-related issues were reported when many of these systems came back online, either.

The soft underbelly of the chemical and petrochemical industry along the Gulf Coast turned out to be the storage of raw materials, intermediates and refined products, not the process of refining or chemical manufacturing or their startup or shutdown processes.

 

News Source: Forbes

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