World Health Organisation to report that air pollution is a public health emergency
The World Health Organisation is to release new data from 2,000 cities next month that demonstrates that the severity of air pollution related health issues around the world has been underestimated, and that the situation now constitutes a “public health emergency.” WHO has stated that not only does air pollution contribute to asthma and pneumonia, as has long been known, but to bloodstream, heart and cardiovascular diseases, as well as dementia. The air pollution in cities comes from a mix of transport, power generation, and domestic wood burning emissions, as well as construction dust and fumes from open dumps, and results in around 3.3 million premature deaths per year, higher than malaria and HIV/AIDS combined. Most of those deaths occur in China, India (which has four of the five most air-polluted cities in the world) and Pakistan, although Western countries are also effected, air pollution being cited as the leading environmental risk factor in Europe. According to the WHO’s public health chief, María Neira, around 70% of people living in cities are exposed to unsafe levels of air pollution, which will have “horrible future costs to society”.
Arch Coal bankruptcy filing more a sign of restructuring of industry rather than its death
US mining company Arch Coal has filed for bankruptcy in the latest in a string of such moves to hit the industry, after bankruptcy filings by Walter Energy, Alpha Natural Resources and Patriot Coal Corp last year. In covering Arch Coal’s bankruptcy, the Wall Street Journal has offered some interesting insights, pointing out that as the United States is forecast to still source 30% of its electricity from coal by 2030 (down from the present 34%), coal mining itself will not go away; rather, restructuring of businesses will take place until successful organisational structures and operating modes are found. In support of this, it offers examples of profitable coal mining in northeast Wyoming and in rich coal seams in Illinois (where coal mining actually increased last year). It is expected that certain mines belonging to Arch Coal will be bought by new owners unburdened by the large debts taken on by the larger coal companies, and that the new owners will be able to make a profit. Part of this is falling wages – thousands of coal mine workers have been made redundant over the past few years, and the scarcity of work has resulted in wages that have fallen by up to 50%. However, other operational factors are involved, such as cost of coal transportation; the Appalachian mines have particularly high transportation costs and have therefore been struggling harder. Thus some of the rhetoric about the decline of US coal mining, also published in the Wall Street Journal, is somewhat misleading, even though the turmoil has been great.
Oil sector set for “brutal” year as oil price continues to fall
A flurry of articles in the Financial Times has documented the continuing fall of the oil price and the accompanying ramifications. Each edition of the Combustion Industry News seems to have an ever-lower oil price; for this edition Brent crude has fallen below $US 30 per barrel. Short-medium term supply does not appear to be falling; the end of trade sanctions on Iran in fact increases supply, while the Saudi strategy remains to force higher-cost producers out of the market. With much reduced revenue expectations, BHP wrote down $US 7.2 billion (€6.6 billion) of its oil shale assets this month, while BP announced that it would lay off 4,000 workers in its exploration and production arms. Worldwide over the past year, around $US 380 billion (€348 billion) of planned projects have been cancelled, including a recent 25% reduction in capital expenditure by Petrobras. This has led some analysts to argue that lower future supply will mean much higher prices at some point, while other analysts have said that demand for oil will gradually fall off, for example as electric cars become more common, and that the oil price will not rise tremendously. Whatever the future, the oil price is currently falling faster than companies can reduce costs, according to the Financial Times, suggesting increasing financial turmoil for the oil sector. Energy consultants Wood Mackenzie have said “It’s going to be a brutal year. Most companies are going to be focused on short-term survival and cutting costs.”
Libyan conflict ensnares power sector assets
The continued conflict in Libya has engulfed a major power plant in the eastern city of Benghazi. The 910 MW plant services much of the population in the east of the country, though electricity is rationed due to a dearth of supply. According to Military Commander Fadhal al-Hassi, of the internationally-recognised government forces, the plant was attacked by fighters from Islamic State, though Reuters was not able to verify the claim. However, Islamic State had earlier attacked two oil terminals further to the west, causing fires which were later put out. The attacks are another unfortunate symbol of the chaos that has riven the country since the fall of Muammar Gaddafi in 2011, and also underline the strategic importance of power generation assets.
TransCanada files lawsuit against US government following Keystone XL rejection
Following last year’s decision by the Obama administration to deny permission for the Keystone XL project to go ahead, the developers, TransCanada, filed a lawsuit against the US government at the start of this year seeking to prove that President Obama did not have power under the US constitution to prohibit construction of the pipeline. In addition, TransCanada is seeking damages for the decision as the company believes it is a contravention of the North American Free Trade Agreement. Another pillar of its argument is that the decision was influenced by political pressure rather than factual grounds and established criteria; TransCanada points out that two similar pipelines were approved in 2008 and 2009, and that a major oil pipeline had never been denied permission to go ahead in the history of the United States. It appears there are indeed some grounds for the lawsuit, though it will of course be the decision of the US justice system.
Orascom Construction to upgrade two Egyptian power plants shortly after completing them
In a somewhat unusual piece of news, Orascom Construction, Egypt’s leading construction company with activities across the Middle East and Europe, has been awarded a contract to convert two single-cycle power stations into combined-cycle plants. The curiosity is that Orascom completed construction of the two plants for the Egyptian government only in the third quarter of last year, which raises the question of just what the government believed it was getting, though of course the decision was likely a strategic one. The Assiut power plant’s capacity will be increased from 1,000 MW to 1,500 MW, while the West Damietta plant will go from 500 MW to 750 MW. The client is the Egyptian military. Orascom is also currently constructing two enormous 4,800 MW combined-cycle power plants in conjunction with Siemens.
RWE sells Lynemouth power station to EPH
Early this month saw the sale of RWE’s Lynemouth power station in Northumberland, England, to Czech-Slovak company EPH, which invests in the power sector. Though the price tag on the 420 MW coal-fired plant is unknown, the sale is in line with RWE’s current push to reduce its level of debt; EPH, on the other hand, adds Lynenouth to the recent purchases of Slovenia and Italian power generation assets. Lynemouth won approval in 2012 for a conversion to fire wood-pellets, though the conversion has not yet been made.
Wärtsilä secures long-term operations and maintenance contract in Mexico
Finnish firm Wärtsilä has been awarded a 10-year operations and maintenance contract for Central Generadora Electrica Huinala’s 139 MW ‘Flexicycle’ power plant in Monterrey, Mexico. Wärtsilä is currently supplying seven of its 50SG gas engines for the construction of the plant, which is to be completed in April this year, meaning the operations and maintenance contract will follow smoothly after commissioning. The Monterrey plant will be fired by gas imported from the United States, and the electricity will be exported to Guatemala.