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Thursday, 07 November 13
THE ENERGY INDUSTRY'S RISING WATER CHALLENGE - WOOD MACKENZIE
 Water poses a variety of business risks for the energy industry, and could play an influential role in shaping the future energy supply mix, according to Wood Mackenzie's latest research report "Troubled waters ahead? Rising water risks on the global energy industry", which utilizes data and maps from the World Resources Institute (WRI).
Working with WRI’s Aqueduct Water Risk Atlas, Wood Mackenzie identified that water risks could have the greatest impact on (1) shale gas in the US and with global expansion, (2) the upside for Middle East oil, and (3) China’s future coal mining and coal-fired power plants. Aqueduct mapped key energy production centers over baseline water stress levels (measuring the ratio of total water withdrawals to available supply). The analysis identified areas more likely to see high competition amongst local water users, increased depletion of the resource over time, and growing concerns over contamination of dwindling water supplies.
"The key water-driven business risks to the global energy industry include limited accessibility to new sources of supply, delays on project developments, increasing costs and asset downtime," said Tara Schmidt, Manager of Wood Mackenzie's Global Trends Service.
Almost all forms of energy production and power generation are dependent on water, and risks vary greatly by fuel type and asset location.
"Water is a risk to the energy industry. By progressing with innovative technologies, advanced water management practices and public policy engagement, the industry can rise to the challenge of reducing shared water risks," explained Paul Reig, Associate with WRI’s Aqueduct project.
Overall, the energy sector is the world’s largest industrial water user, at more than 15 percent of global supply and growing. The industry is under increasing scrutiny from the government and public on how it uses freshwater supplies.
"Some of the solutions to reduce water-driven risks include new technology implementation to improve operational environmental performance, and most importantly, early stakeholder engagement in the river basins, particularly with governments, to identify opportunities to collectively reduce water risks," added Reig.
Around the globe, access to water varies greatly depending on where assets are located, and thus on the local climate and socio-political conditions. The largest production locations for unconventional gas, oil and coal are in the US, Middle East and China, in areas of those countries that also happen to be some of the most water stressed.
Shale Gas in the US and with Global Expansion
If shale gas production is really to take off globally, government and public concerns over water use and contamination need to be addressed.
"The research shows that more than half of shale and tight gas reserves in the U.S. - as well as the top 10 countries by reserves volumes outside the US - are located in medium to extremely high baseline water stress areas, where competition is high with other local water users and concerns over water quality exist," explained Reig.
As a result, energy companies operating in these areas face risks of limited access to new sources of supply, and potential well cost increases of up to 15 percent, or sometimes substantially more.
However, across the global energy supply mix, unconventional gas holds some of the most promising opportunities to halve or altogether eliminate its water use with saline water sourcing, recycling and 'green completions’ – and potentially offset well cost increases as a result.
Likewise, some companies are beginning to address public concerns over water contamination with water impact assessment reporting and via collaborative public policy consortiums to more openly engage on shale gas production standards.
"Wood Mackenzie expects this trend in increasing transparency and public engagement to continue, as companies move into international markets with more pressing water concerns," added Schmidt.
Upside for Middle East oil
Middle East oil production is already facing constraints from inadequate water infrastructure for asset developments, and growing oil demand for local desalination needs will only exacerbate the situation.
"Inadequate water infrastructure contributes to significant project delays, and constrains opportunities to maximise production in the longer-term with more water-intensive enhanced recovery, completion techniques and recent shale gas exploration (such as in Saudi Arabia)," added Schmidt.
Lack of water injection for some of Iraq's biggest oil fields in the south is costing the region’s largest growing oil producer hundreds of thousands of barrels of oil per day.
With the central issue being the region's lack of water, both governments and energy companies are working to improve water management in the region by improving water infrastructure, conserving resources, and leveraging more efficient desalination technologies.
China's future coal mining and power plants
China’s coal mining and coal-fired power plants could face increasing water risks in the future, due to expanding operations in the water-stressed north and western provinces. According to Aqueduct, over 70 percent of China’s coal-fired power generation capacity is already located in areas of medium to extremely high baseline water stress.
Exacerbating the water challenge, coal production in these water-stressed areas is expected to increase 50 percent by 2030 while power output is expected to more than double.
"With the vast majority of China's water resources in the south, and the vast majority of new coal production coming on-stream in the north, the country is likely to face significant water constraints and conflicting water interests between population and industry," concluded Reig.
"Consequently, coal mining and power companies are likely to face future cost pressures in responding to government aspirations to minimize water use – be that from addressing regulatory changes, accessing water supplies and/or mitigating potential operational disruptions," said Schmidt.
In response to the challenge, coal companies are starting to mitigate their exposure by investing in water recycling and more water-efficient technologies – as well as working with other water users in search of collective solutions. For instance, some power companies are installing air cooling systems which could reduce up to two-thirds of their overall water use, while some coal producers are investing in waste water recycling.
Technology, Transparency & Engagement
Water risks could be leveled out in the future with technology, transparency and engagement offering opportunities to minimise risks for all fuel types. Companies can successfully deliver on these opportunities by:
1. Better understanding their operational water requirements,
2. Identifying their own water-driven business risks, and
3. Developing a clear and publicly available water strategy.
The big questions for energy companies are what future regulatory uncertainty they could face, where assets are located in water-stressed areas, and how they respond to rising water-driven business risks. If companies fail to rise to the challenge, there could be troubled waters ahead – posing risks to companies’ growth and the future energy supply mix.
About Wood Mackenzie
Wood Mackenzie is the most comprehensive source of knowledge about the world’s energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com
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Wednesday, 08 January 14
SHIPPING: THE ABSOLUTE BOTTOM OF THE CYCLE WAS REACHED AND PASSED - GEORGE LAZARIDIS
COALspot.com: To many in the industry 2013 has been the turning point in the market where the absolute bottom of the cycle was reached and passed.
...
Tuesday, 07 January 14
INDONESIA RAISES COAL PRICE THIS MONTH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.59 / MT ...
Tuesday, 07 January 14
NEWCASTLE COAL TERMINAL'S COAL EXPORTS SLIDE TO 3.54 MMT W/E 30 DECEMBER 13
COALspot.com: In the week ended December 30, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.54 ...
Tuesday, 07 January 14
US COAL OUTPUT SLIDES 9 PCT WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 17.8 million short tons (mmst) of coal in ...
Monday, 06 January 14
ARGUS LAUNCHES SPOT CFR EAST COAST INDIA COAL ASSESSMENTS
COALspot.com: Global energy and commodity news and price reporting agency Argus has announced today that, the company has launched CFR coal assessme ...
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- Edison Trading Spa - Italy
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Billiton Holdings Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Bhatia International Limited - India
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
- Wilmar Investment Holdings
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Economic Council, Georgia
- Iligan Light & Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GAC Shipping (India) Pvt Ltd
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Siam City Cement - Thailand
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Planning Commission, India
- VISA Power Limited - India
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Kartika Selabumi Mining - Indonesia
- Barasentosa Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- Electricity Authority, New Zealand
- Bukit Makmur.PT - Indonesia
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- PTC India Limited - India
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Maharashtra Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- Power Finance Corporation Ltd., India
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- Energy Link Ltd, New Zealand
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- PetroVietnam Power Coal Import and Supply Company
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Wood Mackenzie - Singapore
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- Australian Coal Association
- Borneo Indobara - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Eastern Energy - Thailand
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Medco Energi Mining Internasional
- Mjunction Services Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
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