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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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Friday, 15 November 13
US COAL PRODUCTION UP 2.59% WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.8 million short tons (mmst) of coal in ...
Friday, 15 November 13
TAIWAN'S PLASTICS GROUP FORMOSA TO IMPORT 1.37 MILLION TONS OF COAL FOR Q1' 14
COALspot.com: Taiwan's Formosa Plastics Group is inviting bids for total 1.37 million mt of coal for 1Q’ 14 for its various plants in Taiwan, ...
Thursday, 14 November 13
KOMIPO TO BUY 270K MT OF SUB-BITUMINOUS COAL FOR Q2' 14
COALspot.com : Korea Midland Power Co., Ltd. has invited bids through International Open Bidding for 140,000 Metric Tons (MT) of sub-bituminous coal ...
Thursday, 14 November 13
PANAMAX : MARKET SHOULD BE AROUND USD 11500 FOR 1 YEAR - FEARNLEYS AS
Handy
The Atlantic market has picked up this week with prompt ships able USG for November dates coming off and chrts need to pay up in order to cov ...
Wednesday, 13 November 13
Y'14 SUB-BIT INDO COAL SWAP MOVING AT SNAIL-SPEED
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’2014 delivery gained 2.95 percept month on month on Friday ...
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- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Globalindo Alam Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- Bulk Trading Sa - Switzerland
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Bangladesh Power Developement Board
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Economic Council, Georgia
- The University of Queensland
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Parry Sugars Refinery, India
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Ceylon Electricity Board - Sri Lanka
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- PTC India Limited - India
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vedanta Resources Plc - India
- Aboitiz Power Corporation - Philippines
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Georgia Ports Authority, United States
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Indika Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- ICICI Bank Limited - India
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- Planning Commission, India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- India Bulls Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Deloitte Consulting - India
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Wood Mackenzie - Singapore
- McConnell Dowell - Australia
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
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