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Monthly Archives: October 2011
Nuclear Promotion dropped in Japan Energy Policy
Japan’s government abandoned its policy of promoting atomic power, saying it will reduce reliance on the sector in its first annual review of energy since the Fukushima nuclear disaster.
The energy white paper, approved by the Cabinet today, calls for a reduction in the nation’s reliance on atomic power in what was the third-biggest user of the fuel before the March 11 earthquake and tsunami. It also omits a section on nuclear power expansion that was in last year’s policy review.
The earthquake and tsunami disabled power and cooling systems at Tokyo Electric Power Co.’s Fukushima Dai-Ichi nuclear station, leading to the worst atomic disaster since Chernobyl in 1986. Prime Minister Yoshihiko Noda is planning to reduce the country’s dependency on nuclear energy while seeking to restart idled nuclear reactors once their safety is secured and local governments approve.
“Public confidence in safety of nuclear power was greatly damaged by the Great East Japan Earthquake and the accident at Tepco’s Fukushima atomic station,” the paper said. The government “regrets its past energy policy and will review it with no sacred cows.”
Japan, which was the third-most reliant on nuclear power after the U.S. and France, only has 10 of its 54 reactors operating now, either because they were shut down by the quake and tsunami or because of scheduled maintenance. None have been restarted because of safety concerns.
The white paper makes no mention of the government’s plan to separate the Nuclear and Industrial Safety Agency from the Ministry of Economy, Trade and Industry. NISA’s lack of independence hampered a quick response to the disaster, the government said in a report to the International Atomic Energy Agency in June.
A government panel confirmed on Sept. 30 that NISA was involved in attempts by utilities to influence public opinion in favor of nuclear energy, further damaging public confidence in the industry. The government is aiming to form a new nuclear agency under the environment ministry by April, by merging NISA and the Nuclear Safety Commission.
The government delayed the publication of the white paper, usually issued in May or June, after the Fukushima disaster, which led to the evacuation of 160,000 people. The trade and industrial ministry, which promotes nuclear power, draws up the white paper for approval by the cabinet.
–Editors: Aaron Sheldrick, Andrew Hobbs
To contact the reporters on this story: Tsuyoshi Inajima in Tokyo at tinajima@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net
To contact the editors responsible for this story: Aaron Sheldrick at asheldrick@bloomberg.net; Amit Prakash at aprakash1@bloomberg.net
Rising Oil and Gas prices help profits grow at Shell
ROYAL Dutch Shell, Europe’s largest oil company, reported a big jump in profits, driven by higher oil and gas prices.
Strong demand for gas after the Fukushima nuclear disaster helped Shell to double its profits in the three months between July and September.
The Japanese earthquake earlier this year and subsequent shutdown of nuclear plants has boosted demand for natural gas, especially liquefied natural gas, where Shell is a market leader.
Shell reported profits of £4.5bn in the third quarter of 2011, up from £2.2bn last year.
The much improved results will prove controversial as they come at a time when motorists are struggling to pay rocketing petrol prices.
Shell has benefited from a 48 per cent rise in oil prices, partly caused by unrest in the Middle East and North Africa, as well as a two per cent increase in production, excluding asset sales.
Natural gas prices have risen nearly a third after the Fukushima nuclear disaster boosted demand as Japan sought alternative sources of power.
The results, which were in line with City expectations, came two days after rival BP reported a three-fold increase in profits to £3.2bn for the three months to September.
Shell said its investments in big new projects in Canada and Qatar are paying off, while its results were also boosted by stronger refining margins.
It plans 20 new investments between 2011 and 2014.
Earnings at its downstream business, which includes petrol stations, increased by 24 per cent to £1.1bn. Shell’s chief executive Peter Voser said that although the company had already met its target of £3.1bn of disposals this year, including the £750m sale of Stanlow refinery in Cheshire, sales of ‘non-core’ assets will continue.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said the results were a reminder of why some investors adhere to the adage “never sell Shell”.
“The update may be the cause of some admiring glances from arch rival BP, which is currently in the midst of its own transformation,” he said.
Shell’s production fell two per cent to 3.01 million barrels of oil equivalent. Once field sales were stripped out, output rose.
Analysts agreed that Shell is entering a ‘sweet spot’ of strong cash flow thanks to its Athabasca oil sands project in Canada and its Pearl gas-to-liquids and Qatargas liquefied natural gas plants in Qatar.
Jon Rigby, oil analyst at UBS, said: “The ‘big 3’ projects are delivering less than 50 per cent plateau production and Qatar less than 50 per cent of plateau cashflows, hence significant momentum remains.”
Shell said liquefied natural gas sales rose 12 per cent.
Shell’s chief financial officer Simon Henry said that the industry is beginning to see some signs of input cost inflation creeping back in after a period of falling oil services costs.
Analyst Tony Shepard, at Charles Stanley, said: “The third quarter results were ahead of expectations.
“An important part of Shell’s growth strategy is the delivery of new projects and this is moving ahead as planned.
“The main driver of the underlying increase in third quarter production was the start-up of projects in Qatar and Canada and these are part of the 20 new investments planned over 2011- 2014.”
Analyst Andrew Whittock, at Liberum Capital, put out a buy recommendation on Shell’s stock and said: “Overall, the third quarter results are better than expected.
“Delivery of medium term growth looks on track and we expect only small upward revisions to our forecasts for 2011.”
“We still believe that Shell, with higher volume growth, a higher yield and less US political risk, remains attractive relative to BP,” he added.
US refines plans for western solar energy zones
U.S. Interior Secretary Ken Salazar on Thursday outlined new proposed guidelines for siting solar energy developments on public lands, reducing the number of acres deemed best suited for such projects but offering companies incentives to place their power plants there.
The plan’s aim is to concentrate development of solar projects in sunny, flat areas near transmission lines but with minimal threats to wildlife and cultural resources.
The revised plan reduces the number of so-called solar energy zones in six western states to 17 from the 24 proposed in the first version of the roadmap released in December of last year.
The proposal affects public land in Arizona, California, Colorado, Nevada, New Mexico and Utah.
The zones’ total acreage, however, was slashed to 285,000 acres from 677,000. The government believes only about 214,000 acres will eventually be developed by solar companies.
“These 445 square miles of zones are where the sweet spots are, so that’s where development will be driven,” Salazar said on a conference call with reporters.
The changes were made after the Interior and Energy departments received more than 80,000 comments on their original plan from solar energy developers, conservationists and others.
Solar developers will be encouraged to site their projects within the zones because the work of identifying potential threats to wildlife and other resources has already been done, Interior officials said.
“It’s a clearer, easier path for developers to proceed inside zones,” David Hayes, deputy secretary of the interior, said on the call. “Why? They have essentially been somewhat test-driven in terms of identifying potential conflicts.”
Solar energy and transmission projects sited in solar energy zones will also enjoy faster and easier permitting, officials said.
Developers will be able to site their projects outside the zones, but will likely face a longer permitting process, Salazar said.
Conservationists applauded the move.
“This is going to make a difference in terms of reducing the energy sprawl, and it will really put solar in places where the infrastructure is there and where the conflicts with the environmental and cultural resources are minimized,” said Barb Boyle, a senior representative with the Sierra Club in California.
The public will have another opportunity to comment on the plan before a final draft is issued, the Department said. The 90-day comment period will begin October 28.
Source: http://www.reuters.com/article/2011/10/27/us-solar-idUSTRE79Q6IP20111027
Europa Oil and Gas see unlocked potential across Europe
Europa Oil & Gas (LON:EOG) said there is unlocked potential across its assets in Europe, as it released its annual financial report.
The firm said there was a “conveyor belt” of exploration work for it to undertake in coming years and highlighted oil exploration in the UK and Romania as well as the potential for large gas developments in the Aquitaine area of France and the Romanian Carpathians.
The company also said today that managing director Paul Barrett has resigned from the board with effect from today, having notified the company of his resignation in April this year.
For the 12 months to July 31 this year, the company posted revenue of £3.8 million compared to £3.1 million last year.
Pre-tax profit from continuing operations came in at £0.3 million – an improvement on a loss of £1.7 million last year.
Meanwhile, net cash and equivalents at year-end stood at £1.9 million compared to a debt of £0.5 mln in 2010.
Running through the post-period highlights, the firm said that Hugh Mackay had been hired as chief executive on October 10.
The firm spudded the Horodnic-1 well the next day (October 11) to evaluate the Voitinel gas discovery in Romania, looking to prove up the minimum gas volume for commercial development. The well followed up the Voitinel-1 discovery well, which flowed 3 million cubic feet per day in 2009.
Most recently, Europa was awarded two new exploration licensing options over prospective acreage in the porcupine basin, off the west coast of Ireland.
These licence options each comprise two four-block parcels. In total the area covers 2,000 square kilometres. The exploration area is situated on the margins of the Porcupine Basin, in water depths between 700 and 2,000 metres.
Previous drilling in the basin led to the discovery of the Connemara, Spanish Point and Burren oil and gas fields, thus proving a viable petroleum system.
“The focus is now on the potential for large stratigraphic traps similar to those that have been highly successful elsewhere along the Atlantic Margins. Consequently, we are excited by this award and are looking forward to developing drillable prospects in these areas.” the firm said today.
The firm also highlighted today that the firm’s portfolio had been built up over many years on the basis of conventional oil and gas potential, although it was clear that areas prone to conventional hydrocarbons generally have potential for unconventionals too.
“Europa’s solid portfolio has much to offer – continued production, undeveloped discoveries, quality exploration prospects and the prospect of unconventional hydrocarbons,” it added.
China may lower 2020 Nuclear target by 10%
China, the world’s biggest energy user, may cut its 2020 nuclear power capacity goal by about 10 percent under a revised development plan to be announced this year, said a group tasked to help implement atomic policies.
“The government wants to address public concern over the safety of nuclear development,” Li Yongjiang, vice president of the China Nuclear Energy Association, said in an interview in Hong Kong, where he is attending an industry conference. “Capacity will fall somewhere between 60 and 70 gigawatts, as some planned projects have to be scaled back or canceled.”
China aims to install 70 gigawatts of nuclear capacity by the end of the decade, the National Energy Administration said last year. The government halted approvals of new atomic stations after the March 11 earthquake and tsunami in Japan crippled the Fukushima Dai-Ichi plant and the disaster spurred a global review of nuclear energy development.
The government has completed safety checks on the country’s nuclear plants, and inspectors will submit their findings to the State Council, or Cabinet, Li said in a speech. China’s long- term plan to develop atomic energy is unlikely to change significantly, he said.
Growth in China’s nuclear power industry will slow over the next five years, compared with the last five years, Zhang Guobao, the former head of the energy administration, said in a speech posted on the website of the China Nuclear Energy Association in August. Zhang, replaced by Liu Tienan in January as head of the administration, is currently serving on the Chinese People’s Political Consultative Conference. The CPPCC is a political advisory body led by the Communist Party of China.
Safety Concerns
The State Oceanic Administration said on April 7 that China in the future will limit the number of reactors to be built on the coast. The country, constructing more reactors than any other, has at least 14 atomic units in operation, according to data from the World Nuclear Association.
The country, which started operating its first commercial nuclear plant in 1994, is building at least 27 reactors and has 50 more planned, according to the association.
“Nuclear power’s strategic importance in China’s energy sector has not changed,” Cao Shudong, assistant to the president of China National Nuclear Corp., the country’s largest atomic plant operator, said in an interview. “The Japan nuclear accident only made china pay more attention to nuclear safety and adopt more advanced technology.”
China’s National Nuclear Safety Administration, a department under the Environmental Protection Ministry, will increase its staff including inspectors to more than 1,000 from about 300. By contrast, the U.S. Nuclear Regulatory Commission has almost 4,000 people overseeing 104 reactors, according to the NRC website.
–Editors: Ryan Woo, Amit Prakash.
To contact the reporter on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net
To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.
UK Renewable Energy Subsidies Slashed
Public subsidies for a range of renewable energy technologies are to be cut under plans unveiled by the government on Thursday, as ministers respond to complaints of “green taxes” driving up energy bills.
Power stations using biomass from plants or waste byproducts to generate energy are among the worst losers, with developers disappointed that their subsidy levels have been left at a level they say will not encourage new projects.
Companies generating energy from landfill gas will cease to receive any subsidies at all. Projects to produce energy from waste will have their subsidies slashed, and hydroelectric power will receive only half the subsidy it used to.
Gaynor Hartnell, chief executive of the Renewable Energy Association, said: “If the government wants to encourage a greater contribution from the very cheapest technologies, this is the wrong way to go about it. No new projects have been built since 2009, at the existing levels. Reducing them further cannot help.”
The savings from the subsidy cuts are likely to be small – they could be as little as £400m at the lower end, and no more than £1.3bn.
Chris Huhne, energy and climate change secretary, presented the reforms as a way of “getting more for less”, through cutting consumer energy bills. He said the government’s job was to ensure the subsidies were high enough to stimulate new green energy generation, but not so high as to encourage profiteering at the expense of bill-payers. “We have carefully studied what the level of subsidy should be, and we have pared them back [where they were] unnecessary, to get a lower level of consumer bills but a higher level of deployment,” he said.
The long-awaited review of renewable energy subsidies came as the solar panel industry braced itself for severe cuts to the feed-in tariffs (Fit) that have stimulated a mini-boom in panel installations in the last 18 months. Treasury officials are understood to be concerned by the success of the Fit scheme, where householders receive a guaranteed income for the power they generate, and want to rein it in.
The tariffs for domestic solar installations are likely to be slashed, greatly reducing their appeal to householders and, the solar industry fears, potentially scaring off investors and costing thousands of jobs.
The Fit scheme, like the renewable obligation, is not paid for from general taxation but by energy companies adding a small amount to all customers’ bills. Ministers are sensitive to a growing clamour in sections of the media attacking high energy bills and blaming “green taxes” for the problem, even though research shows low-carbon subsidies make up only a small fraction of bill rises.
Huhne had little comfort for the fledgling solar industry – although he refused to give details of cuts to the feed-in tariffs, he hinted strongly that they were to come, noting that the costs of photovoltaic technology had been falling by about 6% a year. “If suddenly there is a dramatic reduction in costs, it is appropriate that we should be looking at the energy bill payer and the taxpayer, and getting value for money,” he said.
Huhne has tried to make the case that investing in green energy will cut bills in the medium term, because soaring and volatile fossil fuel prices are the main cause for increasing energy bills. However, he is up against stiff opposition within the government.
Green campaigners and the renewables industry were relieved, however, that the cuts announced on Thursday were not much worse, as many had feared.
Doug Parr from Greenpeace said: “Despite some prominent Tory scepticism over the role renewables can play in delivering clean and secure energy, it’s a relief to see the doubters have lost this internal battle and incentives are being left in place to spark an expansion of green energy generation. David Cameron can build on this decision and show real leadership by now making the UK the world leader in marine renewables technologies, in the process providing new jobs and building economic growth.”
Under the new plans set out on Thursday, windfarms escaped relatively lightly. Onshore windfarms will have their subsidies cut, but only gradually by 10%, while offshore windfarms will be granted a breathing space until 2015, after which their support will be reduced by 5% in successive years.
Hartnell said: “Onshore wind developers should be able to live with this. It’s a modest reduction, but it will have an impact on smaller and community schemes. Offshore wind remains at the higher level introduced by the emergency review, which is welcome news.”
There were also a few clear winners – chiefly tidal and wave energy, which will receive five renewable obligation certificates for each megawatt (MW) on smaller schemes. However, bigger installations – above 30MW – will receive only two. Renewable obligation certificates are the means by which low-carbon energy is subsidised – energy companies buy them from developers to fulfil their legal obligations to generate green power.
Tim Cornelius, chief executive of Atlantis Resources Corporation, said: “This decision should provide the necessary economic stimulus to catalyse the next phase of growth in the UK marine energy sector. Technology developers and their project partners are preparing for commercial-scale deployment and this support will prime investment and create jobs. The industry can now proceed with confidence. Tidal energy has a major role to play in the UK’s future energy mix.”
Now that the government has laid out its plans, investors are expected to review their business plans and some that were put on hold may now be brought forward.
“There is great relief that this document has finally been published. The delay had put billions of pounds worth of investment on hold. Developers will need to see these new numbers in legislation before they can resume development activity, however. We welcome the broad thrust of the proposals, although we have views on some of the details, which we’ll feed in to the consultation,” said Hartnell.
Arnaud Bouillé, director at Ernst & Young’s environmental finance team, said: “With GDP growth forecast close to zero and much debate about affordability and increasing energy bills, today’s announcement of a cut in the support of both onshore wind and solar energy generation is not totally unexpected. The biggest loser will be the solar sector which is receiving its second setback in its short-lived UK history. This may be a missed opportunity for a maturing industry which had achieved significant cost reductions in recent years and demonstrated job creation benefits at a local level.”
Commenting on the collapse on Wednesday of talks between government and a consortium of companies to build a pioneering carbon capture and storage (CCS) plant in Scotland, Huhne blamed the withdrawal of the Longannet CCS demonstration plant on the specific conditions of that project, which could not be made economically viable. He said he was “confident we can deliver CCS elsewhere within the budget [of £1bn in public subsidy] and we have undimmed determination – CCS is a massive industry opportunity”. DECC officials pointed to half a dozen other potential CCS demonstration plants, including one at Peterhead in Scotland proposed by Scottish and Southern Energy.
Solar energy industry posts record growth, despite Solyndra collapse
Despite the Solyndra collapse that has tarnished solar energy, the industry has grown into “a major economic force” with a job base that expanded 6.8% the past year, nearly 10 times faster than the overall economy, industry representatives said Tuesday.
The solar business is now a $6 billion industry, up 300% from 2006, said officials with the Solar Foundation, a nonprofit affiliated with solar energy industry.
With 100,237 jobs as of August, solar employers expect their workforce to grow 24% next year, according to the foundation’s National Solar Jobs Census 2011, completed in partnership with BW Research Partnership’s Green LMI Consulting division and Cornell University.
“It’s great news,” said Andrea Luecke, executive director of the Solar Foundation. “Despite a struggling economy and the worst recession since the Depression and despite the Solyndra debacle, the industry is experiencing record-breaking trade numbers, record-breaking installed capacity, and record-breaking private investment.”
Solyndra Inc. was once considered a model “green” company producing state-of-the-art solar panels, but it is now at the center of congressional scrutiny and a FBI probe after the Fremont, California, firm filed for bankruptcy in late August and put more than 1,000 people out of work, even though it received $535 million in federal loan guarantees.
The bankruptcy leaves the government unlikely to get back the money it loaned. President Barack Obama touted the company in a visit last year.
Despite the controversy, the solar sector appears bullish, Luecke said.
“Solyndra, of course, is just one company, and they went out of business because they could no longer compete with not only Chinese manufactures but also U.S. manufacturers,” Luecke said.
“There’s nothing to indicate that the solar industry is not poised for growth, though we do need smart policy investment as all energies do,” Luecke added.
She was referring to state and federal legislation that would give “employers the confidence they need to expand their workforce,” she said.
California continued to be the national leader in solar employment, with 25,575 workers. Other states in the top 10 are Colorado, Arizona, Pennsylvania, New York, Florida, Texas, Oregon, New Jersey and Massachusetts, the group said.
The study identified 17,198 solar employments sites in the United States. The survey collected data from more than 2,100 companies.
“The National Solar Jobs Census is an important reference because the previous lack of data about solar employment was presenting difficulties to policymakers and training providers,” Philip Jordan, chief business officer at BW Research Partnership, said in a statement.
Added John Bunge, associate professor in the department of statistical science at Cornell University’s School of Industrial Labor Relations: “The jobs census is setting a new standard for clean energy job studies.
“The use of both primary and secondary data sources, along with careful statistical analysis, gives us high confidence in the results. We expect our rigorous methodology to be extended to econometric studies of green jobs beyond the solar industry,” he said in a statement.
Australian clean and renewable legislation passed
The Australian Clean Energy legislative package, which put a price on carbon emissions and promotes renewable energy, has been passed by the House of Representatives.
By Kari Williamson
The 19 Bills comprise the Clean Energy legislation and the Steel Transformation Plan Bill, which put a price on carbon emissions, promote investment in renewable and clean energy technologies, and support action to reduce carbon pollution on the land.
The legislation will now be introduced to the Senate, and aims to be passed through the upper house by the end of the year. According to media reports, there could be over US$13.2 billion on the table for renewable energy and other low-carbon investment if the legislation passes the Senate.
Australia is currently one of the top 20 polluting countries in the world.
Energy firms profits continue to soar…
The average amount of profit being made by energy companies has risen to £125 per customer per year, from £15 in June.
But the energy regulator Ofgem has predicted that the profit margins will fall back to about £90 next year.
The average dual-fuel bill is now £1,345 a year following recent price rises from all the big suppliers.
Ofgem has also confirmed it will force suppliers to simplify tariffs to make it easier to compare prices.
Ofgem’s profit margin figures measure the amount that will be made by suppliers in the next year if energy prices and bills remain unchanged.
As part of the simplification plan, suppliers will be forced to have no-frills tariffs, which would consist of a standing charge – fixed by the regulator – plus a unit charge for energy used.
It means that the only number consumers would have to compare between suppliers would be the unit energy charge.
Market reforms
More complicated tariffs would still be available, but they would have to be for a fixed period, with price increases not being allowed for the duration of the deal.
The regulator will publish its detailed proposals for consultation next month and hopes to have implemented some of its reforms in time for winter 2012.
“When consumers face energy bills at around £1,345 they must have complete confidence that this price is set by companies competing in a fully competitive market,” said Ofgem’s chief executive Alistair Buchanan.
“At the moment that is not the case.”
In addition to trying to boost competition by simplifying tariffs, Ofgem is looking at how to reform the wholesale energy markets, which are the places suppliers go to buy their energy.
Ofgem wants to reform those markets to allow greater competition with the big suppliers and will publish proposals in December.
The bigger suppliers have an advantage because they generate their own power, selling most of it to consumers, with little of it going to wholesale markets.
But earlier in the week, Scottish and Southern Energy announced plans to auction all of its power on the open market.
Ofgem has proposed that utilities must auction 20% of their electricity by 2013
