• Combustion Industry News

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    • Post Author

      Patrick Lavery

      Combustion Industry News Editor

Business Trends

Supply and demand have been having their effect on the prices of US gas and coal prices, as The Wall Street Journey has reported. The increasing production of shale gas over recent years led to a decade-low price in September of this year, but prices rose 25% over the last month. Demand peaked at a record of 1.1 million cubic feet (31,000 cubic metres) in July of this year, up 15% on July 2011 demand. Coal prices, meanwhile, have been falling as demand has fallen, to the point that utilities are now reconsidering the choice between coal and gas, though the choice depends on more than price alone. The report suggests that gas prices will not rise significantly further, as the switch to coal which might then occur would once again dampen gas prices.

Meanwhile, in Europe, coal has been in ascendency over gas, the Financial Times reports. Unlike the US, Europe has not yet experienced a shale gas boom, meaning coal prices have steadily been lower than gas prices, which remain linked to oil. The low price of carbon under the EU Emissions Trading Scheme (ETS), brought about by the economic downturn in Europe, has also meant that utilities have not been discouraged from using coal. In the UK, coal consumption increased 28 per cent in the first half of 2012 in comparison to the first half of 2011; gas capacity use was at 37 per cent between July and September this year, while coal capacity was at 80-90 per cent. The most telling statistic (again, for the UK) was that utilities have been making £1/MWh ($US 0.62/MWh; €0.81/MWh) from gas, but £13/MWh from coal. The ascendency of coal is expected to continue, though new ETS rules may affect the scenario.

State Bank of India and ICICI Bank are leading a consortium that has agreed to lend Tata Steel $US 6.6 billion/€5.09 billion for a new steelmaking plant to be built in the east of India, according to Deal Journal India. The deal indicates that banks are once again looking favourably upon large infrastructure projects in the country, after a sharp drop in such investment over the last year. While Tata Steel Europe’s financial performance has been sluggish in recent years, growth in India has been healthy. It also shows that the regulative barriers that have been hampering industrial growth in India are not insurmountable.

In Italy, two industrial factories have been the subject of court intervention over toxicity concerns. In the southern town of Taranto, the Ilva steel plant, which accounts for one third of Italy’s steel output, was closed in early October at the order of a court after evidence showed the pollution was causing above average rates of cancer in the region. The Environment Ministry has ordered that the blast furnace at the plant (Europe’s largest) must be upgraded before the plant receives an environmental license, and that its annual output will be limited to 8 million tonnes (the plant produced 8.5 million tonnes in 2011). Meanwhile, the Italian court has also given Italcementi ten days to finish updating its facilities at its Colleferro plant to bring them into compliance with EU regulations, amidst concerns its emissions have been illegally polluting the environment.   The factories together employ over 12,000 people, making the court actions a major headache for the Italian government, given the current European economic gloom.

Legislation and Regulation

Fifty companies with operations in the UK have written to the UK Chancellor urging the government to set targets for carbon emissions from power generation for the year 2030. The group, which includes EdF amongst a range of retail, engineering, consultancy and technology companies, argued that the UK’s economic growth would benefit from a shift to being low-carbon and more resource efficient, and that targets would give businesses some stability to which they could plan. The letter also referred to the Committee on Climate Change’s advice that “extensive use of unabated gas-fired capacity in 2030 and beyond is incompatible with meeting legislated carbon budgets”.


The Global CCS Institute has released its 2012 report into the global state of carbon capture and storage (CCS), in which it says that to be on track to limit global temperature rises to 2 oC, 130 CCS plants need to be online by 2020. However, it says that there are only 16 currently in the works, and identifies only an additional 51 that are scheduled to be completed by 2020, with some of these unlikely to go ahead because of economic and political factors. Encouraging policy environments are in place in the UK and China and at the UN, but the report suggests such policy needs to be adopted on a wider scale to help limit global average temperature rises, with more funding and better economic incentives. The US leads the number of projects active and planned with 24, while Europe has 21 and China 11.  Eight CCS projects have been cancelled in 2012, but nine have been born.

Research, Development and Technology

Reuters has carried a report into the use of miniaturised gas-to-liquids (GTL) technology being developed for application to oil wells to reduce the need for flaring. CompactGTL, a UK based firm with offices in the US and Brazil, and originally part of the UK Atomic Energy Authority, has been trialling a prototype module in conjunction with Petrobras, in Brazil, for the last 20 months. This month, it made an agreement with SBM Offshore to install a unit on a working drillship. Its main competitor is Toyo Engineering Corp, of Japan, which has also been trialling technology with Petrobras. According to the report, CompactGTL’s strategy is to sell their technology as a means of achieving compliance with increasingly strict environmental regulations, with the liquid fuel produced a bonus; Toyo aims to make liquid production itself economically attractive. The technology is seen as particularly important for application in Africa, a new reserve ‘hotspot’, as the World Bank, which is concerned by such flaring, has some control over who can operate in the continent.

Company News

Metso has announced the winning of a contract to convert the Haapaniemi 2 power plant in Kuopio, Finland, from pulverised peat-fired combustion technology to fluidized bed technology. The plant, run by Kuopion Energia, is to be rebuilt over the summer and autumn of 2013, and the work will involve modifications to pressure vessels and the ash, fuel and air systems, as well as new superheaters and an economiser. The conversion aims to reduce emissions from the plant to fall into line with the EU’s Industrial Emissions Directive, by making it run solely on peat and wood, cutting out the heavy oil the plant currently sometimes utilises.

ArcelorMittal, citing economic reasons, has announced it is planning for the permanent closure of the last two operational blast furnaces in Lorraine, France, those at its Florange plant, marking a sad occasion for the French steelmaking industry, the crucible of which was Lorraine. The furnaces had been idling since July and October 2011, in what the company had described as a temporary closure. ArcelorMittal says that the focus at the plant will now be on “high-quality value-added” products – the coking facility is to remain operational, taking slab from the company’s Dunkerque (Dunkirk) plant, which produces slab more economically. The announcement drew an emotional reaction from workers at the plant, with some weeping and hugging and others welding the entrance gate shut. The French government had been trying to get the plant, which had become something of an industrial metaphor for the country, restarted, and has a deal in place with ArcelorMittal to try to find a buyer for the furnaces and the coking plant together, though there are no plans to sell the plant as a whole. European demand for steel is 25% down on 2007 levels, and ArcelorMittal has now closed or idled seven of its 25 blast furnaces in Europe.

The UK Department of Energy and Climate Change has given consent to E.ON Energy from Waste (EEW) and Tata Chemicals Europe (formerly Brunner Mond) to build a 60 MW waste to energy plant in Lostock, Cheshire, UK. The steam generated will be used in Tata Chemical’s Lostock factory, with the company seeing it as means to achieve power price stability in the face of rising gas prices. It will be the twentieth waste-to-energy plant in the UK for EEW. The consent comes after a public inquiry held in 2011.

Hyundai Heavy Industries has won a $US 3.2 billion/€2.47 billion contract to build a 2,640 MW power plant south of Jeddah, Saudi Arabia, The Wall Street Journal has reported. Other bidders included Daelim Industrial, Samsung C&T, Doosan Heavy Industries & Construction, and a consortium led by Alstom. The win is the biggest order of the year for Hyundai Heavy Industries, which has been trying to diversify its business to cope with low demand, brought about by the European debt crisis, for ships, traditionally the largest part of its business. No other details on the power plant were reported.

And Finally…

Beekeepers in Alsace, France have been alarmed at the production of blue and green hues of honey, with some attributing the phenomenon to the bees eating sugary waste from confectionary packaging at a nearby biogas plant, which processes waste from a Mars chocolate factory. The operator of the plant has declared its regret at the situation, and has put in place a procedure to stop it recurring. In what might be an opportunity lost, the beekeepers have declared the honey unsalable.