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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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Monday, 09 December 13
SOUTH AFRICA'S RICHARDS BAY COAL EXPORTS IN NOVEMBER DECLINED 14.43% M-M
COALspot.com: South Africa's Richards Bay coal terminal exported 6.224 million tonnes of coal in November, declining by 1.05 million tons from the ...
Monday, 09 December 13
SUB-BIT INDONESIA COAL SWAP FOR Q3' 14 DELIVERY CLOSED $ 0.57 LESSER THAN Q1 CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.49 pmt month on month on Friday 6 Decembe ...
Sunday, 08 December 13
SOUTH CHINA COAL SWAPS SHOW A DECLINE TREND IN Q2 & Q3' 14
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 6.76 percept month on month as on Friday 6 December 2013. T ...
Sunday, 08 December 13
RBCT SHIPPED 63.446 MMT OF COALS YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 63,446,232 mt of coals YTD, according to por ...
Saturday, 07 December 13
SUPRAMAX SHIPS FOR EC INDIA TO CHINA ROUTE BEING FIXED AT AROUND US$ 13K - SOLYM
COALspot.com: The freight market continued to be firm due to high Iron ore demand. The cape index was up by almost 25 pct this week. The grain seaso ...
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- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Larsen & Toubro Limited - India
- Baramulti Group, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Siam City Cement PLC, Thailand
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Sarangani Energy Corporation, Philippines
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Ministry of Mines - Canada
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Indian Energy Exchange, India
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- White Energy Company Limited
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Manunggal Multi Energi - Indonesia
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Africa Commodities Group - South Africa
- Jaiprakash Power Ventures ltd
- Wood Mackenzie - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- IEA Clean Coal Centre - UK
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- PTC India Limited - India
- Mintek Dendrill Indonesia
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Attock Cement Pakistan Limited
- Global Business Power Corporation, Philippines
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Uttam Galva Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- MS Steel International - UAE
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Jindal Steel & Power Ltd - India
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Grasim Industreis Ltd - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- Mercuria Energy - Indonesia
- Petron Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Goldman Sachs - Singapore
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Planning Commission, India
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Bhatia International Limited - India
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
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