• Combustion Industry News

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      Patrick Lavery

      Combustion Industry News Editor

Chinese shale gas industry showing potential but facing hurdles

The Financial Times has carried an interesting piece on the future of the shale gas industry in China. Reserves in the country are large (some estimates put them 68% higher than US reserves), but geological conditions are more challenging, and supporting infrastructure, such as pipelines, is not as well developed. The structure of the Chinese economy is also believed to be a hurdle – many oil services companies are allied to the large state oil companies, meaning that support services (including research through universities) can be difficult to obtain for small and medium size extraction companies, and open competition, which can drive efficiencies, is not well established. Legal issues (such as private ownership and law enforcement) are also a cited factor. Some believe that until the Chinese government prioritises shale gas development, the industry will struggle to take off. However, international oil and gas companies, such as Shell, ExxonMobil and Total see strong potential in Chinese shale gas and have been investing (with mixed results), as have services companies such as Schlumberger, Haliburton and Weir. Keith Cochrane, the head of Weir, said “It’s going to be a long time before China reaches the US level, but there’s no question they’re serious.”

South Korean heavy industry shifting away from Middle East focus

After making losses from a decade of cut-price bidding for major industrial projects in the Middle East, the Financial Times has reported how South Korean industry is shifting away from the region and focusing on projects in Asia, Latin America and Africa. While South Korean firms were highly successful in establishing market share in the Middle East, winning around two-thirds of contracts for power plants and oil and gas projects, the results were often negative for the firms, as their low prices relied on high project delivery efficiencies which were not always realised. Now, having made losses (which are not expected to be recovered until 2015 in some cases), and with investment in the region also being uncertain, other markets have been becoming more appealing. South Korean firms are in some cases teaming with Japanese firms to deliver projects; Japanese firms are considered to be better at project financing, planning and designing, while South Korean firms provide “cost competitiveness”, which appears to mean cheaper labour for construction. The shift away from the Middle East will not be total, however, as it remains relatively affluent, and there is increased competition from Chinese firms globally.

Offshore underground coal gasification potential in UK appears overstated

The Carbon Brief has carried a blog-post giving some analysis of the potential of offshore underground coal gasification (UCG), following an article in the UK’s Telegraph newspaper which suggested it had the ability to power the UK for 200 years. UCG involves piping oxygen into coal seams and performing a partial combustion underground, producing a gas composed of CO2, H2, CO and CH4 (as well as contaminants), which is drawn off via a borehole and can then be used as a fuel for an above-ground power plant (or as a feedstock for other processes). It has typically been implemented onshore, but with new drilling technologies the possibility of offshore UCG is opening, triggering the UK government to set up a working group to investigate it. The Telegraph’s 200 year figure was calculated using estimated offshore coal reserves (known to be rough), but The Carbon Brief points out many of these may be uneconomic or impermissible for social or environmental reasons. In addition, with the UK legislated to reduce carbon output by 80% by 2050, any offshore UCG would have to include carbon capture and storage, which may make more reserves uneconomic in comparison to other power generation options. The Telegraph figure therefore seems rather optimistic, though some potential appears a possibility. Interestingly, UCG was pioneered in the UK, where its potential was noticed by the exiled Vladimir Lenin in 1913; the technology was employed and developed largely in the Soviet Union until the 1960s, spreading then to other parts of the world.

Research into use of carbon dioxide streams by geothermal power generation projects adds nitrogen

Researchers at the Lawrence Livermore National Laboratory, Ohio State University and the University of Minnesota in the USA have been modelling the use of both nitrogen and CO2 as a thermal carrier for geothermal power projects, with promising results that suggest that such projects could be sited close to conventional power plants, which would provide the source of CO2. The idea of using captured carbon dioxide from conventional power plants as a heat transfer mechanism (in place of water) has been studied for a number of years, and is known as ‘CO2 plume geothermal’ but the introduction of nitrogen is novel. Nitrogen is advantageous in being inert and widely available, meaning it could be used selectively at relatively low cost in times where other renewable energy sources are not producing at high capacity.  The underlying idea of CO2 plume geothermal is that CO2 is pumped a few miles deep into a salty aquifer, heated and pressurised (using geothermal heat) into a supercritical state, and then allowed to rise, expand, and heat further. Being less dense than water, it would pass more easily through the geological formations, and upon reaching the surface would be channelled into turbines. The gas would then be recycled, pumped back down using some of the power generated. Construction of a pilot plant is due to begin this year.

New Duke Energy CEO sees no new coal plants in medium term strategy

The new CEO of Duke Energy, Lynn Good, has given an interview to the Financial Times in which she sets out the company’s medium term strategy. Stating “We don’t believe carbon capture is a proven scalable commercially available technology,” Ms Good went on to say that Duke did not see the possibility of any new coal-fired power plants in the medium term; rather, with nuclear plants expensive, the company would focus on gas and renewable energies. Accordingly, Duke, with its core territory in the US states of North and South Carolina, is monitoring the deployment of renewable power generation in other parts of the world, notably California, Arizona and Germany. Duke is also pushing regulators to introduce a means for utilities to be rewarded for reliability of supply, much as other utilities in other countries are doing.

UK government awards design and planning funds to White Rose CCS Project

December saw an announcement by the UK government that it has selected the White Rose CCS Project in Yorkshire to receive multi-million pound funding for a two-year programme of detailed design and planning. The project, a collaboration between Alstom, Drax, BOC and the National Grid (collectively forming an entity called Capture Power), involves the building of a 426 MWe coal-fired power plant with 90% carbon capture, the Yorkshire-Humber CCS Trunkline, and storage infrastructure, the latter two being sized so that other industry in the area might feed into them in the future. The design and planning will take the project to the stage where it will be able to compete for commercialisation funding from the government.

Indian steel consortium revises Afghan steel project plans downwards after failing to secure financing

A consortium of Indian companies including the state-owned Steel Authority of India, JSW Steel and Jindal Steel and Power Co has had to drastically reduce its plans for an iron ore mining and steel making project in Afghanistan, after the Indian finance ministry refused to finance its $US 10.8 billion (€7.95 billion) proposal.  The terms of the deal had been agreed with the Afghan government in 2011, and included 3 iron ore blocks and a 6 million tonne per annum steel plant; the revised $US 2 billion plan, with a 1.2 million tonne per annum steel plant will have to gain the Afghan government’s approval as well as secure finance. The US government estimates that Afghanistan has $US 1 trillion (€737 billion) of untapped natural resources, but because of the country’s instability, few projects are going forward.

Fire at Petrobras coking unit comes after complaints of over-capacity operation

A fire at a coking unit of one of Petrobras’s oil refineries near Rio de Janeiro, Brazil, in early January led to it being shut down for around a week. Workers at the plant have complained that the company was running the unit above capacity, the union claiming that instead of 5,000 cubic metres per day, it was running at 6,000 cubic metres (union officials had made a formal complaint about the over-capacity use of the unit in October of last year). According to Reuters, it is the latest in a string of accidents at Petrobras refineries, as the company struggles to supply enough fuel to satisfy domestic demand. Petrobras has declined to comment on the accident.