Business Trends

Japan has achieved a world first in extracting natural gas from offshore methane hydrate deposits, the ‘flammable ice’ crystals formed under high pressures in deep oceans. The test extraction was carried out by state-run Japan Oil, Gas and Metals National Corp (JOGMEC), using a depressurisation technology which turned the crystals into methane gas. Since 2001, a decade before the 2011 Fukushima nuclear disaster, Japan has been investing in the development of extraction technology for the resource, which it sees as a potential domestic fossil fuel – it is estimated that there is something in the order of 100 years worth of gas under Japanese waters. However, post-Fukushima, there has been a heightened level of intensity. “When you meet scientists in Japan who are working on this, it strikes you that there is a sense of national urgency in developing a domestic hydrocarbon fuel source,” the head of the United States Geological Survey Gas Hydrates Project was quoted by the MIT Technology Review as saying. JOGMEC had tested a less efficient water circulation technology in 2002, and had demonstrated the current depressurisation technology on methane hydrates under Canadian permafrost in 2008. Japan hopes to harvest methane hydrates commercially by 2019; the practice has the potential to shape not only Japanese energy strategy, but that of other nations as well. Barriers to commercialisation include environmental concerns and economics/logistics (most deposits are located in areas where there are no existing pipelines).

Xinhua has covered a recent Exxon Mobil report on the future of US oil and gas production, in which the company forecasts a rise in production of 45% from 2010 levels by 2040. Extraction of the fossil fuels from shale-rock formations accounts for the bulk of the rise. At the same time, Exxon Mobil expects energy consumption in the US to drop by 5% from 2010 levels by 2040 due to improved efficiency in the transportation sector. A result of the rise in production and fall in consumption is that the US is expected to become a net exporter of energy by 2025. More widely, the report projected that the Asia Pacific region would import about 40% of its energy needs by 2040.

China is to expand a program granting subsidies to coal-fired power plants which have installed denitrifying equipment, according to a circular issued jointly by the country’s Ministry of Environmental Protection and the National Development and Reform Commission. As is often the practice in China, the program was trialled in a number of provinces before the decision to expand it nationally. Under it, power generated by coal-fired power plants with denitrifying equipment receives a 0.008 Yuan ($US 0.00127/€0.00099) subsidy per kilowatt-hour. China has a policy to reduce NO_x emissions by 10% by 2015; in 2011, emissions increased by 5.73%, while in the first half of 2012, when the trial program was underway, there was a drop of 0.24%. It is estimated that the subsidy could cost 10 billion Yuan ($US 1.61 billion/€1.25 billion) annually.

The UK government’s budget was announced in mid-March, and contained some news for the combustion industry. The first was that the government’s £1 billion ($US 1.52 billion/€1.17 billion) carbon capture and storage competition will not receive a final investment decision until 2015.  Shell, with its gas-fired project at Peterhead, Scotland, and Drax, with its new coal-fired plant in Yorkshire, England, are to remain in the competition, it was also revealed. There was news also for the steelmaking and ceramics sectors – energy used in “metallurgical and mineralogical processes” is to be exempted from the government’s climate change levy, which has been running for the past 13 years. The chancellor, George Osborne, announced the move was because “creating a low carbon economy should be done in a way that creates jobs rather than costing them.”

Environment

In an ambitious step, the Minerals Products Association, which represents the UK’s cement manufacturers, has published its plans for the industry to reduce greenhouse gas emissions by 81% of 1990 levels by 2050. The actions it outlines in making the reductions are greater use of waste-derived fuels and biomass, producing cements that embody lower amounts of CO₂, reducing levels of clinker in finished cements by emplying lower carbon substitutes, using carbon capture and storage technologies, and improving plant efficiency. It also relies on outside factors – the decarbonisation of the power generation sector and reduced transport emissions. These outside factors would constitute 19% of the reductions, meaning that without them the cement industry would still aim for a 62% reduction in emissions from 1990 levels by 2050. Dr Pal Chana, the executive director of the association, said “These are ambitious but achievable targets. The industry will look to use every means possible, within strict environmental controls and technical standards requirements, to meet their goals”.

Update: in the last edition of the Combustion Industry News was a story about EDF having begun a lawsuit against protestors that had climbed the chimney of its West Burton, UK gas-fired power plant last year. Last week, EDF dropped the lawsuit as part of a settlement with the protestors, after it received a petition with 64,000 signatures and several hundreds of customers switched energy providers. While EDF’s civil action has been dropped, the protestors still face criminal cases.

Research, Development and Technology

The US Department of Energy has announced that the 2013 version of its program to sponsor carbon capture and storage experience for graduate students and early career professionals is now open for applications. The Research Experience in CCS 2013 (RECS 2013) program runs from 2-12 June in Alabama, USA, and is supported by the Office of Fossil Energy and the National Energy Technology Laboratory. The program covers modelling and monitoring of CO₂ and capture technologies, as well as a field visit. Accommodation, meal and (most, if not all) travel costs are covered by the program, while there are no tuition fees. Thirty places are available, with five being assigned to international students. Applications close on April 20.

Company News

The last month has seen Foster Wheeler awarded two significant contracts for circulating fluidized bed steam generators. At the end of February, the company announced it was to design and supply a 100 MW_e unit plus auxiliary equipment to Daelim Industrial Co for a coal-fired power plant in the Philippines, which is to commence operation in 2015. Daelim is building the plant for Sarangani Energy Corporation, which is a joint venture between Alsons Consolidated Resources and Toyota Group. In mid-March, Foster Wheeler announced that it would design and supply a 105 MW_e unit and auxiliary equipment (including a baghouse for flue gas cleanup) to GS EPS, a South Korean firm, for its biomass-fired Dangjin 4 Biomass Power Plant, located in the city of Dangjin, South Korea. It is also to commence operation in 2015.

Babcock & Wilcox has announced that it has signed an engineering and design work agreement with the FutureGen Industrial Alliance, which is coordinating the $US 1.65 billion (€1.27 billion) FutureGen project, part financed by the US Department of Energy. The project aims to convert an obsolete oil-fired power plant in Illinois, USA, into a 167 MW coal-fired power plant that captures 90% of produced CO₂. Babcock & Wilcox will design the oxy-coal combustion system, air-quality control systems, boiler, and control systems for the plant.

Norwegian firm Statkraft has announced that it is to shut down its 510 MW gas-fired Robert Frank unit in Landesbergen, Lower Saxony, Germany, as weak demand and generating losses take their toll. Reuters quoted Statkraft’s executive vice-president as saying “The current market situation does not allow us to run older gas-fired power plants economically, let alone invest in new capacity”. While Robert Frank is 40 years old, its shut down is just one example in a trend of gas-fired plants closing in Germany, as subsidised renewable energy is more economically attractive. Statkraft is worried that a 430 MW gas-fired plant it plans to bring online mid-year will also be uneconomic. Utilities across Germany continue to call on regulators to devise a method to make such plants economical, as they are required when renewable energy is not operating to capacity.