Oil & Gas News, Late November 2016

Oil & Gas News, Late November 2016

National Grid investment means Swindon plasma recycling plant will go ahead by early 2018. 

National Grid’s Gas Distribution company has signed a £6.3 million deal to help fund the “world’s first” commercially operating bio-substitute natural gas plant in Swindon, which will make gas from household waste.

The deal completes financing for the project, which is being run by Go Green Gas and enables construction of the £25 million plant to start.

In the plant, waste and biomass is shredded and dried and “recyclates” such as metals or dense plastics are removed. The prepared feedstock is then heated to convert it to a synthesis gas, or ‘syngas’, which contains tar. This is also converted to syngas using a close coupled gasifier and plasma converter, a carbon-lean process that uses very high temperatures of around 1200°C in the presence of controlled amounts of steam, air and oxygen.

The syngas is then cooled and heavy metals, ash and other contaminants are removed. It is then passed through a series of catalysed reactions to convert it into methane and CO2. The CO2 is removed leaving a green ‘drop in’ gas that can be injected into the grid. Once operational the plant will provide fuel for a fleet of trucks belonging to a local logistics company. According to the haulier, this will cut its greenhouse gas emissions by 80%.

Go Green Gas plans to supply gas for residential and business use during the first half of 2018. According to the firm, when fully operational it will be able to reduce greenhouse gas emissions by more than 5000 tonnes per year.

National Grid said the technology has the potential to provide 100TWh of green gas a year – enough to fuel all of Britain’s heavy good vehicles or meet one third of its domestic heating demand.

 

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Oil giant BP has acquired interests in two North Sea exploration projects.  The firm said it has acquired a 25% interest in two Statoil-operated licenses east of Shetland, which include the Jock Scott prospect.  To the west of Shetland, BP has acquired a 40% interest in a Nexen-operated licence, which includes the Craster prospect.

Exploration wells are expected to be drilled in both Jock Scott and Craster in mld-2017. Mark Thomas, BP North Sea regional president said: “Working together with companies such as Statoil and Nexen to access the North Sea’s remaining resource is an important part of our strategy to remain a material North Sea producer, investor and employer for decades to come”.

Over the next 18 months, BP plans to participate in up to five exploration wells in addition to drilling about 50 development wells over the next 3-4 years. The company is also expecting important new oil production from its major projects Quad204 and Clair Ridge In early 2017 and 2018.

 

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Revenue from oil and gas tax is expected to rise over the next four years, according to the Office for Budget Responsibility.

Documents published with the Autumn Statement forecast a rise in the price of both oil and gas of 1015%, generating bigger taxable profits for offshore operators. The independent body predicts nearly £6bn revenue over the next four years. In March, it forecast a tax allowance giveaway by the Treasury of £4bn.

The main factor in its revised forecast has been a faster than expected rise in dollar oil prices. At the end of October oil prices averaged $50.8 a barrel, 32% higher than the assumption it made in drawing up its March forecasts.  The OBR now expects prices to make a slow recovery to $44 a barrel next year, and to about $60 a barrel in 2022.

The OBR has also revised up its estimates of production, reflecting recent Investment in the sector. We now assume that oil production will be flat until 2019 (rather than until 2018) partly reflecting returns on high levels of capital expenditure over the past few years,” it said.

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ExxonMobil and Chevron are among the oil majors least prepared for a shift to a greener global economy, according to a report that shows the two US groups lag well behind their European rivals.

The pair sit near the bottom of a ranking of 11 large oil and gas companies compiled for big investors, including Norway’s oil fund and BlackRock, the world’s largest asset manager. Only the Canadian oil sands company, Suncor, scores worse in the study of how ready big energy companies are for a transition to a low carbon economy and a future in which natural resources such as water become increasingly scarce.

Norway’s Statoil was ranked first, in part because it had the highest share of gas in its stock of proven reserves.  Gas is seen as a potential “bridging fuel” for countries replacing dirtier coal-fired power generation, say the authors of the report by GDP, a non-profit group that collects company environmental data on behalf of more than 800 institutional investors with assets of$100tn.

Italy’s Eni scores second, because it has big gas projects in the pipeline, such as the Zohr field off the coast of Egypt, and plans to spend €1bn over the next three years on fossil fuel alternatives such as solar projects in Italy, Algeria and Pakistan.

Total’s purchases of US solar panel producer SunPower and the Saft battery maker helped the French oil major achieve a third-place ranking in GDP’s scorecard, followed by Royal Dutch Shell and BP. In contrast, Exxon earns 10th place and is described as “the company most obstructive to carbon regulation”.   Chevron comes in ninth because makes up less than a third of its relatively oil-heavy portfolio, though this is expected to change as its liquefied natural gas projects come online in Australia.

 

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A new oil Industry boom-and-bust cycle is likely if the current reduction in new investment is not reversed, says the International Energy Agency.  The lEA says unless more money is spent exploring for, and developing, new oil fields, then demand may outstrip supply in the early years of the next decade.  That could see oil prices surging again, says the lEA, which represents 29 energy-producing countries.

Investment in new oil supplies last year was at its lowest since the 1950s. “We estimate that, if new project approvals remain low for a third year in a row in 2017, then it becomes increasingly unlikely that demand… and supply can be matched in the early 2020s without the start of a new boom/bust cycle for the Industry,” says the lEA’s World Energy Outlook report.  Investment in new oil fields has also fallen from $780bn in 2014, to $580bn in 2015, and then to $440bn this year.

The lEA says world-wide investment must now rise to at least $700bn a year because it takes between three and six years for a new oil field to start producing. The OPEC oil producers’ cartel made a similar point last week.

 

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EnQuest has announced it has started producing oil from its Scolty-Crathes development in the North Sea.  Scolty and Crathes are light oil fields located about 160km (100 miles) north east of Aberdeen. They are estimated to contain up to 15 million barrels of gross oil technical reserves.

The company also confirmed that its Kraken development project remained on course to deliver first oil in the first half of next year. Kraken, which is located about 125km (77 miles) east of the Shetland Islands, is one of the biggest new projects in UK waters.

The announcements came as EnQuest confirmed that it had finished a major financial restructuring move to help it complete the Kraken and Scolty-Crathes developments.

 

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