Major oil producers agree on production cuts, but move will also benefit shale oil

OPEC members have agreed to a cut of 1.2 million barrels per day in oil production, while other major oil producers have, in conjunction, agreed to cut production by 600,000 barrels per day, the first agreement between Opec and other major oil producers for 15 years. Saudi Arabia is to cut production by around 500,000 barrels per day, with Russia purportedly being ready to contribute 300,000 barrels per day to the total cut. Iran has been allowed a minor increase in production. The cuts, if carried through, will reduce total OPEC production by 2% (compared to growth of around 30% per year recently), but the immediate market reaction was an increase in prices of 10%, Brent crude rising to US$51.94 (€49.04) per barrel. The move has been interpreted as an acknowledgement by Saudi Arabia that its attempt to suffocate the North American shale oil industry through low prices has failed. While the deal is good news for conventional oil producers, it is also good news for the North American shale oil producers – having managed to survive the very low prices, they will now look to boost production to take advantage of higher prices. But such increased unconventional production will also mean that prices are unlikely to rise dramatically.

Scores of workers die on cooling tower construction site in China

Seventy-four workers have been killed during the construction of a cooling tower for the coal-fired Fengcheng Power Plant in the city of Yichun, Jiangxi province, in the south-east of China. The plant was being constructed by Hebei Yineng Tower Engineering Co. Ltd for the plant owner, Jiangxi Ganneng Co. Ltd. According to Xinhua news, a crane fell from a platform from which the tower was being built at around 7 am on 24 November, triggering the entire platform to collapse. More than 60 people were working on the platform at the time, while more than a dozen others were waiting below for their shift to start. Xinhua has several compelling photos of the accident site.  Thirteen people have been arrested over the collapse, with Chinese authorities, after pledging to do whatever was necessary to aid the victims and their families, promising to prosecute those responsible for the accident. It has also resulted in the head of the State Administration of Work Safety, Yang Huanning, calling for a national increase in industrial safety. “We must focus on the problems exposed by this incident, take a further step to strengthen and perfect the law, standards and regulations, plug any holes, constantly strengthen and safeguard the foundations of production safety, and raise standards of safe production,” he was quoted as saying. The cooling tower at Fengcheng has a double-curved design, making it a difficult and complicated project, according to one of the construction engineers, who also said that “time was very pressing”.

Chancellor Merkel targets steelmaking overproduction action during German G20 presidency

In the lead-up to Germany taking the G20 presidency in December, German Chancellor Angela Merkel has said that the group must find a solution to the global gut of steelmaking capacity, as overproduction in some countries forces job losses in others. China – widely seen as ‘dumping’ cheap steel in foreign markets – said earlier in the year it would cut steel output by 45 million tonnes per annum before the end of the year, but has so far failed to meet that target. In response, the EU last month imposed temporary tariffs on Chinese steel, which Beijing has criticized. With the OECD predicting that global steelmaking capacity will in fact increase in the coming year (China’s production having increased 4% over the last year, and India’s by 12%), and the worldwide capacity usage ratio at around 70%, the G20 has a great deal of work on its hands.

Nigerian government struggling to deliver more power

The Nigerian government is struggling to deliver on its promise of more power generation, with a variety of factors at work. Power output has in fact dropped from 4.5 GW nationally in February this year (to a population of around 180 million) to as little 1.5 GW in mid-June, though there has been improvement since and generation appears to now be more like 3.5 GW on a regular basis. The chief cause of the very low outputs had been militant attacks that have cut off gas supplies around the Delta region. Other problems, however, include a failure to staff the power generation regulator adequately, high levels of government debt, and a reluctance to increase tariffs to incentivize private investment in the sector. With the government so far being unable to deliver on its promise to boost generation, investors are seeing increased investment risk in the sector, compounding the existing problems. Nigeria has long had power generation problems and the current government inherited something of a mess from the previous one, with the money raised from partial privatization of the sector not used to invest in more generation capacity. While the overall picture is fairly bleak, a range of foreign and local businesses are planning more than 1,000 MW of solar generation capacity for the country’s north, and a 450 MW gas-fired plant has recently had a positive investment decision.

Art protest groups focussing attacks on fossil fuel companies

The Financial Times has looked at the rising movements in London and New York of art groups protesting against sponsorship from fossil-fuel companies. The report centres on the Art Not Oil alliance of protest groups, one of which is the “BP or Not BP” group (a clear reference to the “To be or not to be…” line in Shakespeare’s Hamlet), which stages ‘creative interventions’ in formal art spaces which are sponsored by fossil fuel companies. Although there have long been concerns at corporate sponsorship (for example by mining and arms companies), fossil-fuel companies are the current focus of activist art groups’ ire. The latest intervention by BP or Not BP was a five-hour “ritualistic performance” involving forty participants. Art Not Oil appears to be having some success – BP this year has ended its sponsorships of both the Tate Modern Gallery in London (after 27 years) and of the Edinburgh International Festival (after 34 years) – though BP says the challenging business market, with low oil prices, was the cause. Several art institutions will continue to receive sponsorship from the company, including the National Portrait Gallery, the British Museum, the Royal Opera House and the Royal Shakespeare Company. It seems the fossil-fuel industry will continue to receive such protest until it becomes recognised for spearheading carbon emissions reductions and until incidents such as the BP Horizon oilspill are distant memories.

Kemper County Energy Facility now producing electricity from coal gasifiers

The carbon capture and storage-equipped Kemper County Energy Facility began generating electricity from its second gasifier in late November, as reported in GHG Daily Monitor. The first gasifier began operating in October, producing syngas fuel from low-rank Mississippi lignite, as the second gasifier also does. With the two gasifiers now operational, the Mississippi Power-owned integrated gasification combined cycle plant is now scheduled to be fully operational by 31 December this year, when the carbon capture and storage system will be integrated with the rest of the power plant. The plant has been firing natural gas for the past two years.

Arctic temperatures shock meteorologists and climatologists

Temperatures in the Arctic have this year failed to drop as normal from their summer peaks of around 1 ^oC, as the Financial Times has reported. Where mid-November temperatures on average between 1957 and 2002 have been around -25 ^oC, they have fallen only to around -10 ^oC this year. Meteorologists and climatologists have expressed their shock at the data (not even seen in recent years), which comes as the World Meteorological Organization has said it is 95% certain that this year will be the record hottest since records began in the late 19th century.

Siemens bullish about business prospects in the USA

Siemens CEO Joe Kaeser has given an interview to German newspaper Frankfurter Allgemeine Zeitung (re-reported by Reuters) talking about the company’s prospects for work in the USA following the election of Donald Trump. The US is Siemen’s largest market, producing US$22 billion (€20.7 billion) in revenue, and with the president-elect wanting to increase domestic manufacturing, there is understandable concern that Siemens, like other foreign industrial firms, will see its US-related business decline. Additionally, there is a concern that renewables technologies, which Siemens manufactures, will see a downturn in the US. Mr Kaeser is upbeat, however. Pointing out that Siemens has 50,000 employees in the US, and that the company does much manufacturing there, he said “The good thing is that we can offer everything. Steam power plants that are powered by coal, state-of-the-art gas-fired power plants, wind energy, we can build solar parks and the necessary link to the power grid.” Accordingly, any upturn in US infrastructure spending (as promised by Mr Trump) looks likely to benefit Siemens in some way.

AVL List acquires Dacolt to enhance combustion modelling offerings

Catching up on some news from the summer, Austrian high technology firm AVL List GmbH acquired Dutch software firm Dacolt in late June, with the intention of using the purchase to move into new simulation applications in the field of industrial combustion. Gotthard Rainer, the vice president of AVL Advanced Simulation Technologies, said of the deal that “Dacolt’s software guarantees engineers a highly accurate prediction of the combustion process in an unbeatably short time.” In particular, Dacolt had developed Tabkin, a state-of-the-art chemistry simulation software, which presumably AVL will incorporate into their combustion modelling software, bringing new options for modelling to the combustion industry.