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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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- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- White Energy Company Limited
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Posco Energy - South Korea
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Siam City Cement PLC, Thailand
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Gujarat Mineral Development Corp Ltd - India
- Vizag Seaport Private Limited - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- Barasentosa Lestari - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Sree Jayajothi Cements Limited - India
- Energy Link Ltd, New Zealand
- Energy Development Corp, Philippines
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Edison Trading Spa - Italy
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Australian Coal Association
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Commonwealth Bank - Australia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Kepco SPC Power Corporation, Philippines
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Metalloyd Limited - United Kingdom
- Dalmia Cement Bharat India
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Videocon Industries ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Bhatia International Limited - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- GVK Power & Infra Limited - India
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Sindya Power Generating Company Private Ltd
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Anglo American - United Kingdom
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Globalindo Alam Lestari - Indonesia
- Australian Commodity Traders Exchange
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Mercator Lines Limited - India
- San Jose City I Power Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Marubeni Corporation - India
- PNOC Exploration Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
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