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Combustion Industry News
Date posted: 13th Oct 2017
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  Patrick Lavery
  
  Combustion Industry News Editor

Trump administration looking to compensate baseload power

The Hill website has covered the Trump administration’s plans to give a greater incentive to power plants providing baseload electricity. Though no policies have yet been formulated, the administration is considering measures that will financially reward coal-fired, nuclear and hydropower stations which are currently not rewarded for being more reliable than wind and solar power. The plans are widely being interpreted as a move to help the coal and nuclear industries, which have both been suffering in the US, although there are also those, such as the Federal Energy Regulatory Commission, stating that they feel such moves are justified. Others still, such as Professor David Victor at the University of California San Diego, say that renewables do not yet have enough of a share of overall electricity supply to threaten reliability of the grid, though that point might be reached in the future. In August, the Department of Energy reported back to Energy Secretary Rick Perry that the grid is operating reliably at present, and that the decline of coal in recent years has had more to do with the rise of gas than renewables. (The report might also have pointed to the greater age of the US’s coal fleet also forcing closures). Nevertheless, greater financial incentive for baseload capacity would be likely to boost coal-firing in the US.

Turkey is looking to diversify its energy supply, but faces difficulties each way it looks, as the Financial Times has reported. With limited domestic resources, the country currently imports three quarters of its energy needs, mostly in the form of Russian gas. By diversifying supplies, Turkey hopes to gain more strategic independence, and is looking to supply from the eastern Mediterranean (Israel, Egypt and Cyprus) as well as Iraq. Turkey’s position on Kurdish autonomy presents a potential problem (heightened by the recent independence poll) with Iraqi supplies, further complicated by the fact that Rosneft (the Russian oil and gas company) is looking to build a potential supply pipeline through northern Iraq. Meanwhile, Turkey’s relationships with each of its eastern Mediterranean neighbours are also complicated (and in Egypt, Russia is also investing), meaning there is no easy diversification option. What might aid Turkey is its growing economy, and the desire of its neighbours to supply it with energy, which the country could potentially leverage.

The vast majority of Puerto Rico is still without power, three weeks after being battered by Hurricane Maria, the most powerful to make landfall on the island in 90 years. Only 16% of residents have electricity, the hurricane having wiped out a huge amount of transmission infrastructure, which has mainly above-ground and therefore more prone to the high winds of the hurricane. The outages have threatened essential medical services, to the extent that the US has sent its floating navy hospital, the USNS Comfort, to assist with the recovery from the disaster.

An article in the Calgary Herald has looked back on “the largest industrial boom in modern Canadian history” – the explosion of oil production from the oilsands of the province of Alberta. On 3 June, 1996, the Canadian government released its Declaration of Opportunity for the exploitation of oilsands, and 1400 oil sector workers and executives pledged to realize the opportunity for “the benefit of all Canadians”. Leaving aside greenhouse gas and other environmental considerations, the opportunity has certainly been delivered upon, even more so than hoped. The region, home to the world’s third-largest oil reserves, now produces 2.4 million barrels per day of oil, twice the projection made in 1996 for 2020. Close to half a million people have been employed (more than ten times original estimates), the population of Alberta growing from 2.6 million in 1996 to 4.3 million today, as Canada became the world’s fifth-largest oil producer. Factors assisting the meteoric rise of the Canadian industry were the high oil price for much of the period, government support, the size of the reserves, legal stability, and technological innovation, particularly steam-assisted gravity drainage to heat bitumen so that oil could be recovered from wells. Perhaps the most remarkable aspect of the explosion, with the benefit of hindsight, is that in the early 1990s, the industry was considered a fringe one.

The UK government is preparing to launch a new program to support the development of carbon capture and storage, according to The Telegraph. Speaking at the recent Conservative Party conference, Claire Perry MP described CCS as a vital technology, and revealed that plans for the new program would begin to emerge in the next few weeks. The Telegraph speculates that the plans could be included in the government’s upcoming Clean Growth Plan, which will include a range of energy-related projects. The combustion community will certainly welcome revived government support for CCS.

A promising carbon dioxide capture technology for the steel and iron industry developed by the Netherlands energy research centre (ECN) is to be demonstrated at the research organisation Swerea MEFOS’s test facility in northern Sweden in conjunction with SSAB, Scandinavia’s largest steel producer. Sorption-enhanced water-gas shift (SEWGS) technology uses reactor vessels packed with a clay-like material to capture CO₂ from flue gases, and according to the ECN press release, it can do so using 50% less energy and at 25% lower cost than current other available technologies. The demonstration facility, known as STEPWISE, is the latest step in a 13-year development process, and includes a 640 metre gas pipeline coming from a furnace owned by SSAB.

South African company Sasol, a leader in the field, has said that new investments in gas-to-liquids or coal-to-liquids plants are not economic under current market conditions. Interest and investment in the technology was considerable 5-10 years ago, but since then the oil price has dropped to around half of what it was, turning away investment. An additional factor against coal-to-liquids conversion for Statol is its high carbon emissions. The company is therefore looking to move away from fuel conversion to chemicals production, with an US$11 billion (€9.4 billion) project in the US state of Louisiana to go ahead to leverage the cheap petrochemical feedstocks made available by the shale gas boom. Sasol’s change of direction will mean that China will be the only country in the world to continue to pursue coal-to-liquids technology for the time being.

Finnish power company Fortnum is seeking to buy Uniper, the conventional power company that was spun off from E.ON in 2016. While Uniper’s board is against the move, E.ON, which has retained a 46.7% stake in Uniper, has agreed to a sale, meaning that Uniper’s board may have little power to stop the takeover that would be required by German law, Fortnum owning more than 30% of the company. Shares in Uniper have risen to around €23, above the €22 per share being offered by Fortnum, and well above the original share price of €10 at the launch of Uniper. Many of Uniper’s assets are fossil fuel-based, but it also owns significant nuclear and hydropower assets which are of particular interest to Fortnum, and there is some speculation that Fortnum might sell off parts of Uniper. However, Pekka Lundmark, the chief executive of Fortnum, has said that Fortnum is interested in Uniper’s large power plants which are seen as essential in balancing electricity grids with high proportions of renewable energy.

ThyssenKrupp and Tata Steel have signed a memorandum of understanding to merge in a 50-50 joint venture to become Europe’s second largest steelmaker (behind ArcelorMittal), and what they hope will be a quality and technology leader. By merging, the companies hope to save €400-600 million (US$470-705 million) per year, with estimates that as many as 4000 jobs are under threat, half in administration and half in production – immediate savings are expected to be found in sales, administration, research and development, procurement, logistics, and service centres. Messages about production have been mixed. After signing the memorandum, Hans Fischer, chief executive of Tata Steel Europe, said “We see opportunities to keep volume, and increase volume. There is a huge market for high-quality steel . . . We need the capacities we have.” However, the wording of the press release announcing the memorandum said that the production network is to be reviewed beginning in 2020 to “optimize” the production strategy. With so much steelmaking capacity excess around the world, and European steelmakers having endured a difficult decade since the financial crisis began, a major merger and a push for savings does not come as a surprise, but many employees will be anxious in the months to come. By one estimate, the merger may be complete by the end of 2018.

BP has begun production at its US$16 billion (€13.6 billion) Khazzan gas field in Oman, where fracking technology from the US is being employed, a sign of the spread of the use of the technology internationally. Bob Dudley, chief executive of BP, said that the field has “the potential to produce gas for Oman for decades to come”. For BP, it is one of the larger projects it has been pursuing to grow its production business after a long focus on the aftermath of the 2010 Deepwater Horizon oil spill. If fracking becomes widespread on the Eurasian continent, it will have a profound effect on the industrial combustion industry.

Exxon’s shale oil and gas subsidiary, XTO Energy, is to act to reduce its fugitive methane emissions from its production operations by replacing equipment, researching new technologies, and training staff. Exxon is the largest natural gas producer in the world, and has in the past been criticised for its approach to methane emissions, a far more potent greenhouse gas than carbon dioxide. The Environmental Defense Fund has welcomed Exxon’s decision, and encouraged other oil and gas companies to follow suit.

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