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Thursday, 07 November 13
THE ENERGY INDUSTRY'S RISING WATER CHALLENGE - WOOD MACKENZIE
 Water poses a variety of business risks for the energy industry, and could play an influential role in shaping the future energy supply mix, according to Wood Mackenzie's latest research report "Troubled waters ahead? Rising water risks on the global energy industry", which utilizes data and maps from the World Resources Institute (WRI).
Working with WRI’s Aqueduct Water Risk Atlas, Wood Mackenzie identified that water risks could have the greatest impact on (1) shale gas in the US and with global expansion, (2) the upside for Middle East oil, and (3) China’s future coal mining and coal-fired power plants. Aqueduct mapped key energy production centers over baseline water stress levels (measuring the ratio of total water withdrawals to available supply). The analysis identified areas more likely to see high competition amongst local water users, increased depletion of the resource over time, and growing concerns over contamination of dwindling water supplies.
"The key water-driven business risks to the global energy industry include limited accessibility to new sources of supply, delays on project developments, increasing costs and asset downtime," said Tara Schmidt, Manager of Wood Mackenzie's Global Trends Service.
Almost all forms of energy production and power generation are dependent on water, and risks vary greatly by fuel type and asset location.
"Water is a risk to the energy industry. By progressing with innovative technologies, advanced water management practices and public policy engagement, the industry can rise to the challenge of reducing shared water risks," explained Paul Reig, Associate with WRI’s Aqueduct project.
Overall, the energy sector is the world’s largest industrial water user, at more than 15 percent of global supply and growing. The industry is under increasing scrutiny from the government and public on how it uses freshwater supplies.
"Some of the solutions to reduce water-driven risks include new technology implementation to improve operational environmental performance, and most importantly, early stakeholder engagement in the river basins, particularly with governments, to identify opportunities to collectively reduce water risks," added Reig.
Around the globe, access to water varies greatly depending on where assets are located, and thus on the local climate and socio-political conditions. The largest production locations for unconventional gas, oil and coal are in the US, Middle East and China, in areas of those countries that also happen to be some of the most water stressed.
Shale Gas in the US and with Global Expansion
If shale gas production is really to take off globally, government and public concerns over water use and contamination need to be addressed.
"The research shows that more than half of shale and tight gas reserves in the U.S. - as well as the top 10 countries by reserves volumes outside the US - are located in medium to extremely high baseline water stress areas, where competition is high with other local water users and concerns over water quality exist," explained Reig.
As a result, energy companies operating in these areas face risks of limited access to new sources of supply, and potential well cost increases of up to 15 percent, or sometimes substantially more.
However, across the global energy supply mix, unconventional gas holds some of the most promising opportunities to halve or altogether eliminate its water use with saline water sourcing, recycling and 'green completions’ – and potentially offset well cost increases as a result.
Likewise, some companies are beginning to address public concerns over water contamination with water impact assessment reporting and via collaborative public policy consortiums to more openly engage on shale gas production standards.
"Wood Mackenzie expects this trend in increasing transparency and public engagement to continue, as companies move into international markets with more pressing water concerns," added Schmidt.
Upside for Middle East oil
Middle East oil production is already facing constraints from inadequate water infrastructure for asset developments, and growing oil demand for local desalination needs will only exacerbate the situation.
"Inadequate water infrastructure contributes to significant project delays, and constrains opportunities to maximise production in the longer-term with more water-intensive enhanced recovery, completion techniques and recent shale gas exploration (such as in Saudi Arabia)," added Schmidt.
Lack of water injection for some of Iraq's biggest oil fields in the south is costing the region’s largest growing oil producer hundreds of thousands of barrels of oil per day.
With the central issue being the region's lack of water, both governments and energy companies are working to improve water management in the region by improving water infrastructure, conserving resources, and leveraging more efficient desalination technologies.
China's future coal mining and power plants
China’s coal mining and coal-fired power plants could face increasing water risks in the future, due to expanding operations in the water-stressed north and western provinces. According to Aqueduct, over 70 percent of China’s coal-fired power generation capacity is already located in areas of medium to extremely high baseline water stress.
Exacerbating the water challenge, coal production in these water-stressed areas is expected to increase 50 percent by 2030 while power output is expected to more than double.
"With the vast majority of China's water resources in the south, and the vast majority of new coal production coming on-stream in the north, the country is likely to face significant water constraints and conflicting water interests between population and industry," concluded Reig.
"Consequently, coal mining and power companies are likely to face future cost pressures in responding to government aspirations to minimize water use – be that from addressing regulatory changes, accessing water supplies and/or mitigating potential operational disruptions," said Schmidt.
In response to the challenge, coal companies are starting to mitigate their exposure by investing in water recycling and more water-efficient technologies – as well as working with other water users in search of collective solutions. For instance, some power companies are installing air cooling systems which could reduce up to two-thirds of their overall water use, while some coal producers are investing in waste water recycling.
Technology, Transparency & Engagement
Water risks could be leveled out in the future with technology, transparency and engagement offering opportunities to minimise risks for all fuel types. Companies can successfully deliver on these opportunities by:
1. Better understanding their operational water requirements,
2. Identifying their own water-driven business risks, and
3. Developing a clear and publicly available water strategy.
The big questions for energy companies are what future regulatory uncertainty they could face, where assets are located in water-stressed areas, and how they respond to rising water-driven business risks. If companies fail to rise to the challenge, there could be troubled waters ahead – posing risks to companies’ growth and the future energy supply mix.
About Wood Mackenzie
Wood Mackenzie is the most comprehensive source of knowledge about the world’s energy and metals industries. We analyse and advise on every stage along the value chain - from discovery to delivery, and beyond - to provide clients with the commercial insight that makes them stronger. For more information visit: www.woodmac.com
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Thursday, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
Tuesday, 22 October 13
NEWCASTLE PORT SERVED 38 OCEAN GOING VESSELS IN A WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 0.64 per cent week on week to 3.21 million mt for ...
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- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Ministry of Transport, Egypt
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- SMG Consultants - Indonesia
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- Latin American Coal - Colombia
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- IEA Clean Coal Centre - UK
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Mercator Lines Limited - India
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Ind-Barath Power Infra Limited - India
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Singapore Mercantile Exchange
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- SMC Global Power, Philippines
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Gujarat Sidhee Cement - India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Eastern Energy - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Kideco Jaya Agung - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bhushan Steel Limited - India
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Chamber of Mines of South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- PNOC Exploration Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bangladesh Power Developement Board
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indian Oil Corporation Limited
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Coal and Oil Company - UAE
- Larsen & Toubro Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- VISA Power Limited - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Commonwealth Bank - Australia
- The State Trading Corporation of India Ltd
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
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