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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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Sunday, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
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- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- New Zealand Coal & Carbon
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Interocean Group of Companies - India
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Independent Power Producers Association of India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Wilmar Investment Holdings
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Agrawal Coal Company - India
- IEA Clean Coal Centre - UK
- Therma Luzon, Inc, Philippines
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Uttam Galva Steels Limited - India
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Australian Coal Association
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Altura Mining Limited, Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Mercator Lines Limited - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TeaM Sual Corporation - Philippines
- Coastal Gujarat Power Limited - India
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Electricity Authority, New Zealand
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Grasim Industreis Ltd - India
- Malabar Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Trasteel International SA, Italy
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Indonesian Coal Mining Association
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Alfred C Toepfer International GmbH - Germany
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