New base 690 special 20 september 2015 r

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,

or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this

publication. However, no warranty is given to the accuracy of its content.

NewBase 20 September 2015 - Issue No. 690 Senior Editor Eng. Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE

Bahrain, Saudi sign deals for new oil pipeline 350,000 BPD Reuters + NewBase

Saudi Arabia and Bahrain have signed contracts worth around $300 million to lay a new 350,000-barrel per day (bpd) oil pipeline between the two countries, with the link due to be operational in 2018, Bahrain's Energy Minister said on Thursday. Bahrain relies on output from the Abu Safa oil field that it shares with Saudi Arabia for the vast majority of its oil and the new pipeline will replace an ageing 230,000 bpd link and enable Bahrain Petroleum Company (Bapco) expand the processing capacity of its 267,000 bpd Sitra refinery.

Eventually the new pipeline's capacity could be increased to 400,000 bpd, Abdul-Hussain bin Ali Mirza said at a

signing event in Manama.




"It will be finished by the end of 2017 or early 2018 and then there will be a six-month trial period for the new pipeline," said Mirza, adding that the old pipeline was likely to be removed from service in the second half of 2018.

Arabian Light crude oil will flow from Saudi Aramco's Abqaiq plant via the 115-km pipeline, 73 kms of which will run overland and the rest under the Gulf. Agreements to build the pipeline were signed with Saudi Arabia's Al Robaya Holding Company and National Petroleum Construction Company of the UAE. The former will complete onshore engineering, procurement and construction (EPC) work in Saudi as well as conducting engineering and procurement work in Bahrain. The latter has been awarded an EPC

contract for the offshore work. A contract for construction at the Bahrain end of the pipeline has yet to be awarded, according to a statement from Bapco. The cost of the pipeline will be met by nogaholding, an investment vehicle which holds the Bahraini government's oil and gas assets. The new pipeline has been long talked about. Mirza told Reuters in March the pipeline would be ready in 2018, after officials had previously estimated completion by the third quarter of 2016. -




Egypt: SacOil commences phase 2 development at its Lagia oil field, Source: SacOil

SacOil Holdings, through its subsidiary Mena Interna tional Petroleum Company, has announced the commencement of phase 2 of the field development operations at its 100% owned Lagia oil field in Sinai, onshore Egypt.

This second phase includes the installation of steam facilities for a thermal reco very process on the existing production wells and the drilling of a minimum of 5 additional thermal wells with the intent of further enhancing existing production and the recovery of oil from the field.

SacOil procured a steam generator earlier this year and is proud to confirm that the generator arrived on site on 4 September 2015. Commissioning and operational testing is currently under way and the Company is to commence full-scale steaming by the end of September 2015.

Initial steaming will focus on the existing production wells, which are currently producing oil from cold flow only. It is anticipated that each well will be steamed and allowed to soak for a number of days before starting production.

The commencement of phase 2 also coincides with the drilling of a minimum of 5 additional wells. The drilling of Lagia 11 to 15 will start in mid-October 2015.

Aligning the steaming process with the additional drilling programme presents an ideal scenario to optimise the use of on-site resources and test the potential upside of the field, which is in line with the Company’s strategy to fast-track the development of the Lagia oil field to production of above 1 000 bbls/d.

More details on the results of the second phase of development, as well as progress on the current operations, will be announced in due course.




Malaysian oilfield supplier eyes Mideast contracts Gulf Times Correspondent + NewBase

Kuala Lumpur-based drilling and oilfield services provider UMW Oil & Gas Corp Bhd is setting its sight on the Middle East in a bid to secure lucrative contracts in the industry, local media reported.

The company, whose earnings dropped 93% in the second quarter ended June 30, is in dire need for new jobs away from its home

market Malaysia where the downfall in oil prices has

created uncertainty on

the future of the hydrocarbon industry growth. The company’s president Rohaizad Darus said UMW Oil & Gas is currently bidding for 23 contracts valued a total more than $1bn in Malaysia and other countries, including the Middle East. “In order to get sufficient jobs, we must target where the biggest demand is, which is the Middle East,” Darus said, adding that contracts especially in the Gulf states, where he particularly mentioned Saudi Arabia, would not make up for the reduction of business in Southeast Asia, but at least provide a “buffer” for the company. However, operations in the Middle East would be a new arena for UMW Oil & Gas. Its current foreign projects are limited to six countries, namely China, Vietnam, Myanmar, the Philippines, Thailand and Turkmenistan, while in Malaysia it is mainly dependent on government-owned oil giant Petronas. Due to the continued low oil price, most of the company’s eight offshore rigs are at risk of standing idle by the end of the year.

Plans of UMW Oil & Gas to enter the Middle Eastern market are not new, though. In May this year, at a press conference after the company’s annual general meeting, Darus already talked about such expansion plans which now are obviously getting another push from the weak earnings in the second quarter 2015, when net profit fell to just $1.04mn from $14.2mn in the same period last year, mainly owing to lower revenue contribution from both its drilling and oilfield services segments. This came after the company already registered a 40.1% decline in net profit to $7.6mn in the first quarter this year over the same period last year.

Darus said he was not surprised by the low crude oil price as he was aware that the oil and gas sector is cyclical. However, he noted that the firm’s main concern during this low oil price phase was to achieve “decent financial results“ at a time when oil and gas industry as a whole has seen a 30% decline in the number of tenders locally and internationally.

UMW Oil & Gas is a relatively small player in the Southeast Asian region, competing with far larger Corps such as British contract drillers Noble Corp and Enso plc. It is a subsidiary of state-backed Malaysian industrial conglomerate UMW Holdings, one of the largest companies and also one of the leading industrial enterprises in Malaysia, active across Asia-Pacific. Parts of UMW Oil & Gas were listed at the Kuala Lumpur Stock Exchange in a $750mn-IPO at the end of 2013 at an issue price per share of 2.80 ringgit. The price shot up to 3.92 ringgit in September 2014, just to slump to an all-time low of 0.86 ringgit in August 2015 in the wake of the weakening Chinese economy. The price recovered to 1.25 ringgit as of last week, though.




MOL Group Announces Oil, Gas Discovery in Pakistan MOL + NewBase

MOL Group on Friday announced oil and gas discovery in Karak block in Pakistan. The block is operated by Mari Petroleum Company Limited (MPCL) with 60 percent working interest while MOL Pakistan Oil & Gas Co. B.V has 40 percent in the block.

Kalabagh-1A ST1 discovery is the joint venture’s second success in the Karak block after its first crude oil discovery made at Halini-1 Exploratory Well-1 in 2011. Based on a comprehensive 3D seismic campaign the structure was confirmed as an independent closure at about 8km distance from Halini discovery. Kalabagh-1A ST1 has been successfully drilled down to a depth of 3,003 meters.

During testing, the well flowed gas and condensate in Datta Formation at a rate of 618 boepd and 160 bblpd, respectively. In the Samanasuk Formation it flowed gas and condensate at a rate of 877 boepd and 180 bblpd, respectively. Finally, the testing of Lockhart Formation flowed commercial quantity of crude oil at 500 bblpd.

This is MOL’s 10th discovery since 1999 in three different blocks, the company said.




Ghana Inaugurates China Funded Gas Project

Ghana on Wednesday officially inaugurated its first China funded natural gas infrastructure project at Atuabo, about 218 km from Accra, reported Xinhua.

The gas processing plant has been funded by China Development Bank and built by Sinopec. It has the capacity to process about 120 million cubic feet of gas from the Jubilee field daily. The gas is being supplied to the Volta River Authority to run thermal plants to generate electricity. Ghana's President John Dramani Mahama who inaugurated the project said the processing

plant is a game changer.

Chinese Ambassador to Ghana Sun Baohong said the completion of the plant would enable Ghana to harness the gas resources within its own capacity and take the initiative of transforming the advantage of resources into the strength of development, Xinhua reported.




NewBase 20 September - 2015 Khaled Al Awadi

NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE

Oil falls after US warns on health of global economy Reuters + NewBase

Oil prices fell on Friday after the US central bank warned on the health of the global economy and bearish signs persisted that the world's biggest crude producers would keep pumping at high levels. The Federal Reserve decided against raising interest rates from historic lows on Thursday, saying uncertainty about global economic growth had forced its hand. The bearish sentiment sent European stock markets sharply lower on Friday, with London's FTSE 100 and Frankfurt's Dax down 1.4-2.8 per cent. The oil market had mixed reactions to the Fed decision, with concerns about economic weakness sending commodities lower, but a fall in the US currency also meant buying dollar-traded crude became cheaper. "The perception of 'ZIRP (Zero Interest Rate Policy) forever' should provide some underlying support to the commodity complex," said Olivier Jakob, a strategist at Petromatrix, a Swiss-based consultancy.

Brent crude was down 65 cents at $48.43 a barrel at 1230 GMT, after touching an intraday high of $49.75. US West Texas Intermediate (WTI) crude futures were trading down $1.30, or 2.8 per cent, at $45.60 a barrel.

Oil price special

coverage




Brent was set to make its first weekly gain in three weeks, hinting at a turn in momentum for a commodity that has declined nearly 30 per cent since spring. Kuwait, a key member of the Organization of the Petroleum Exporting Countries (Opec), said on Thursday the oil market would balance itself but that this would take time, indicating support for the group's policy of defending market share despite falling prices. Other sources at Opec backed this view, saying they expected oil prices to rise by no more than $5 a barrel per year to reach $80 by 2020, with a slowing in rival non-Opec production growth not enough to absorb the current oil glut. Iran's deputy oil minister Rokneddin Javadi was quoted as saying the country would unveil new oil contracts in the coming weeks, earlier than previously expected. The prospect of sanctions-free Iran adding more barrels to an already oversupplied market is fuelling bearish momentum. Javadi also reiterated Iran's plans to regain its oil production share once Western sanctions are removed. Russia acknowledged for the first time on Friday it would cut production if oil prices fall below $40 a barrel, floating the possibility that one of the biggest oil producers may resort to proactive measures to prop up prices.

U.S. crude tumbles 5 percent; Wall Street selloff offsets rig data Oil prices tumbled on Friday, with U.S. crude falling 5 percent, after a selloff in Wall Street equities offset the positive impact of a third weekly decline in the U.S. oil rig count. A rise in the dollar, fears that OPEC oil production will not slow and reduced political tensions in the Middle East from U.S-Russia talks on Syria also weighed on oil.

U.S. crude futures' front-month settled down $2.22, or 4.8 percent, at $44.68 a barrel. The front-month in Brent, the global oil benchmark, fell $1.61, or 3.3 percent, at $47.47.

Oil services firm Baker Hughes's report on the weekly U.S. oil rig count showed a drop of eight rigs this week. It was the third weekly decline of the rig count, a sign that a renewed fall in crude prices since July may be slowing some drillers from returning to the well pad in a bigger way.

U.S. crude futures, already down 3 percent before the Baker Hughes report, pared losses just briefly on the news. "The industry is getting so much more production from new technology that a decline in working rigs doesn't mean nearly as much as it used to," said David Thompson at Powerhouse, a commodities broker in Washington specializing in energy.

Shortly after the rig count report, oil prices began a sharper descent as Wall Street's key S&P 500 stock index .SPX headed for its biggest rout since the start of September. The dollar also rebounded from a 3-week low hit earlier in the day after a Federal Reserve decision to keep interest rates unchanged. Oil started the session lower after OPEC member Kuwait said it would take time for the oil market to balance, indicating that the producer group would continue defending market share over production cuts to bolster prices.

Other OPEC sources said they expect oil to rise no more than $5 a barrel a year to reach $80 by 2020. Iran's deputy oil minister Rokneddin Javadi, meanwhile, reiterated Iran's plans to regain its oil production share once nuclear-related sanctions are removed against Tehran, adding that new oil contracts would be unveiled in coming weeks. Gasoline futures fell 1.4 percent, while ultralow-sulfur diesel slumped 2.5 percent on Friday, in an extended selloff across the petroleum complex.




$50 crude puts Saudi deficit beyond reach of spend cuts

Bloomberg

The slump in oil prices has spurred Saudi Arabia’s government to search for savings, contemplate project delays and sell bonds for the first time since 2007. It won’t be enough to prevent the kingdom’s biggest deficit in decades.

“The revenue drop is so severe that it’s unrealistic to expect spending cuts to have any meaningful impact on the deficit in the near term,” said Simon Williams, HSBC’s chief economist for central and Eastern Europe, the Middle East and North Africa. The longer oil prices stay weak, “the greater the pressure on the authorities,” he said in an e-mail.

Though Saudi Arabia has reserves to cope, analysts said that using them to avoid further cost-cutting would put its credit rating at risk while delaying policies with a

longer-term benefit, including the reduction of subsidies and the introduction of more taxes to diversify revenue beyond oil. Even after the measures already announced, Riyadh-based Samba Financial Group estimates state outlays will rise by 0.4% next year.

The International Monetary Fund predicts Saudi Arabia’s budget deficit to exceed 400bn riyals ($107bn) this year, with oil accounting for 81% of revenue compared with about 90% previously. It expects shortfalls above 10% of economic output for the next four years.

“Saudi Arabia can afford its oil regime and the economic status-quo in the near-term,” Bank of America Merrill Lynch economist Jean-Michel Saliba said in a report last month. “However, the domestic macro costs of its unchanged policy choices are likely to become more acute and apparent.”

So far, the government has been short on specifics on how it will reduce spending, though planners are said to be considering measures long viewed as off-limits or unnecessary, including phasing out fuel subsidies and investing in renewable energy.

Saudi Arabia was in a similar position in 1998, until a rebound in oil prices alleviated the need for drastic measures. The cost of maintaining the state has increased since, in part due to the late King Abdullah’s social spending.

King Salman bin Abdulaziz, when he came to power earlier this year, handed a two-month bonus to government employees, retirees, students and social security beneficiaries at a cost of 71bn riyals, according to IMF estimates.




Subsidised gasoline, which costs 16 cents per litre, is taken for granted among Saudi consumers, while there’s no personal income tax on the nation’s 30mn people. With crude sinking below $50 a barrel, something has to give. The break-even oil price for Saudi’s budget last year was $106 a barrel, compared to $69 a barrel in 2010, according to the IMF.

“There’s no time to waste nowadays,” Mohammed al-Sabban, a former senior economic adviser to the kingdom’s oil ministry, said by phone on September 6. “I think we are getting very serious, and that will have a positive impact on the economy very soon.”

Likely savings will come from the privatisation of some state-owned companies and reducing costly subsidies for products like gasoline, Samba Financial’s deputy chief economist James Reeve said by phone from London last week. The government probably won’t cut the salaries of state employees or reduce defence spending with Saudi Arabia heavily involved in the war in Yemen.

Removing all fuel subsidies, including for consumers, would provide a boost to government revenue equal to 8% of economic output, Reeve said.

Authorities are considering energy price reforms for commercial and industrial users, the IMF said in a report released on September 9. The neighbouring UAE stopped subsidising gasoline in August.

As evidence of policy change, former oil ministry adviser al-Sabban pointed to a royal directive this month to open Saudi Arabia’s wholesale and resale markets to companies with 100% foreign ownership.

In another move, all government projects costing more than 100mn riyals ($27mn), must now be approved by the Council for Economic and Development Affairs, a body created this year to streamline decision-making.

The government has also scaled back plans to build new sports stadiums, according to the IMF.

With net foreign assets held by the central bank at $661bn and record-low debt, the kingdom is looking for ways to cut “non-essential spending,” Finance Minister Ibrahim al-Assaf said in an interview with CNBC Arabia.

But the focus continues on the main development projects and building human capabilities in the kingdom,” he said. “The kingdom is prepared for this crisis, and God willing, we will deal with it with the importance it deserves.”




These are the African nations most exposed to China slump

Bloomberg China’s slowdown is rippling across Africa and these three nations are the most exposed, relying on demand from the Asian economy for almost half their exports: Republic of Congo, Angola and Mauritania.

Oil accounts for the bulk of Angola’s and Congo’s exports, damaging their prospects after crude prices plunged 55% since the beginning of June last year to below $50 a barrel. The price of iron ore, which makes up more than 40% of Mauritania’s exports, has dropped by almost a third in the past year. The three nations each shipped more than 45% of their exports in 2014 to China, data from the International Monetary Fund shows.

“For countries like Angola, which basically only has one commodity, there is a huge knock when prices fall and less oil is being exported to China,” Christie Viljoen, an

economist at NKC African Economics, said by phone from Paarl, outside Cape Town. “It’s a case of when things are good, it’s really good, but when it turns bad, it’s really bad.”

Angola, Africa’s second-largest oil producer after Nigeria, has been forced to devalue its currency twice since June and has slashed its budget by a quarter following a slump in revenue. Congo’s fiscal deficit almost doubled to 8.5% of gross domestic product in 2014 from the previous year and in May Finance Minister Gilbert Ondongo cut $500mn of spending from the 2015 budget to bring it down to $4.5bn.

Reliance on a single commodity and exposure to one country for the bulk of exports is a double-whammy. China’s slowdown means weaker currencies and higher import prices for these African nations, which in turn feeds into more pressure on their exchange rates and a run down of central bank reserves, said Viljoen.

“If you are at the top of the list in terms of dependence on China and your economy is not well diversified, there are a bunch of negative things which can fall like dominoes,” he said.

Angola’s kwanza has dropped 24% against the dollar this year and was trading at 135.86 on the interbank market as of 11.35am yesterday in Luanda, the capital.

While South Africa is the continent’s single biggest exporter to China - with shipments totalling $45bn in 2014 - its exports are more diversified and destined to a wider range of countries. China buys 37% of South Africa’s goods, followed by the European Union at 20%.

Commodities such as gold, platinum and iron ore still make up the bulk of exports at just over half, though vehicle shipments have grown in importance to reach 13% of the total, according to data from the South African Revenue Service.




China Is Hoarding the World's Oil Bloomberg - Grant Smith

Even after China’s slowing economy dragged crude to a six-year low, oil’s second-biggest consumer remains the main safeguard against a further price meltdown.

While China’s surprise currency devaluation helped trigger Brent crude’s slump to about $42 a barrel last month, the nation’s stockpiling of oil can staunch further losses.

In the first seven months of the year, China purchased about half a million barrels of crude in excess of its daily needs, the most for the period since 2012, according to data compiled by Bloomberg. As the country gathers bargain barrels for its strategic petroleum reserve, the demand is cushioning an oversupplied market from a further crash, according to Columbia University’s Center on Global Energy Policy.

“It throws a lifeline to the market” that safeguards against the risk of crude touching $20 a barrel, Jeff Currie, head of commodities research at Goldman Sachs Group Inc. in New York, said by phone. “That lifeline lasts through late 2016.”

Other countries have emergency oil-supply buffers, and while the U.S. Strategic Petroleum Reserve has been stable at about 700 million barrels for years, China is expanding its stockpiles rapidly.

The Asian nation has accumulated about 200 million barrels of crude in its reserve so far and aims to have 500 million by the end of the decade, according to the International Energy Agency. It’s currently filling a

19 million-barrel facility at Huangdao and will add oil at six sites with a combined capacity of about 132 million barrels over the next 18 months, the Paris-based adviser on energy policy estimates.

“The fact that China is stockpiling crude for public strategic storage certainly offsets the weaker sentiment on China’s oil-product demand,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London.

China’s demand growth is set to slow to an annual rate of 2.3 percent by the fourth quarter compared with 5.6 percent in the second quarter, a reflection of “weak car sales data, declines in industrial activity, plummeting property prices and fragile electricity output,” the IEA said in a report on Sept. 11.

Price Floor

Brent for November settlement fell 0.8 percent to $48.67 a barrel at 3:46 p.m. on the London-based ICE Futures Europe exchange. The international benchmark has fallen about 50 percent in the past year.




When amassing inventories, China’s import demand can swing by as much as 1 million barrels a day, or about 15 percent above monthly average levels, said Colin Fenton, a fellow at the Center on Global Energy Policy at Columbia University in New York. Because the country buys when prices dip, it helps shield crude against extreme losses and effectively makes $30 a floor for Brent, he said by e-mail.

“It’s going to be really, really hard to stay there or push lower because that price has already been demonstrated by the Chinese to be one where you should expect hundreds of thousands of barrels per day of import demand to appear,” said Fenton, who was global head of commodities research at JPMorgan Chase & Co. from 2010 to 2015. “China is the only country that can do it.”

Long-Term Slowdown

These discretionary purchases, while tempering oil’s recent slump, still need to be considered against the long-term slowdown in China’s energy consumption and the size of the current oversupply of crude, according to Barclays Plc.

“The surplus in the market at the moment is close to 2 million barrels a day,” said Miswin Mahesh, an analyst at Barclays in London. “China’s support for the SPR would only be able to take a fraction out of that.”

While Chinese stockpiling will “taper off” in 2016, it’s helping the oil market to digest excess production gradually, according to Goldman Sachs’s Currie.

By mopping up some of the surplus, China encourages a gentler scenario in which the “financial stress” of $40 oil gradually causes highly indebted shale producers to curb production, Currie said. “You reduce the likelihood of a scenario where the market only balances when prices collapse below production costs, at about $20 a barrel,” he said.




NewBase Special Coverage

News Agencies News Release 20 Sep. 2015

Storage solutions for UAE’s renewable energy vital for future progress

The National - Daniel Bardsley

The power of the sun and wind provides an opportunity for infinite energy, but how can it be harnessed? It is a problem that continues to confound scientists who are working to make such power sources viable. As everyone knows, renewable energy is big business in the UAE. Not only is Abu Dhabi home to the headquarters of the International Renewable Energy Agency or Irena, the country’s solar-power sector is also growing fast. This year, it was predicted that the industry would add 1,000 jobs over the coming two years, with the growth in projects – from household scale upwards – helped along by the country’s abundant supply of sunshine.

But despite the growing interest in renewables here and elsewhere, a major difficulty remains in how to store the electricity the sector generates for the times when it is needed most. Unlike, say, coal-fired power stations, solar and wind farms cannot simply be switched on at times of greatest demand. The elements decide the levels of power that can be generated. One solution now being employed

involves redox flow batteries (RFBs) that make use of the element vanadium (VRFBs). These can be used to convert electrical energy into chemical energy, which then can be turned back into electricity when needed. But there are downsides to this, with cost being the most notable. “There are several VRFB installations that have been deployed worldwide in the hundreds of thousands of kilowatts,” says Dr Saif Al Mheiri, an assistant professor of mechanical and materials engineering at the Masdar Institute of Science and Technology. “However, the technology still needs further improvement in order to achieve its maximum potential.” VRFBs make use of the fact that vanadium, which occurs naturally in dozens of minerals, can exist in several oxidation states when dissolved in solution. The oxidation state reflects the number of electrons, or negatively charged subatomic particles, associated with each vanadium particle.




A VRFB consists of two tanks separated by a membrane, with each tank containing vanadium in solution in two oxidation states. The battery’s chemical energy is discharged and turned into electricity when, on each side, pumps force the liquids past electrodes. On one side of the battery the vanadium releases electrons, and on the other it accepts them. Protons move across the battery’s membrane to balance out the movement of electrons. Charging the battery involves the opposite process. Having vanadium on both sides of the battery eliminates the risk of contamination across the membrane. In batteries using two different elements, such contamination can lead to a loss of performance. Studies have indicated, Dr Al Mheiri notes, that the economic case for using batteries to store electricity is stronger when the power is generated from the sun rather than wind. This makes it appropriate that, as a researcher in a country with no lack of sunshine, he is trying to develop better, more efficient versions of these batteries. “We need to improve the low-energy density of VRFBs by improving the solubility and the stability of the vanadium species (the active metal in these batteries,” he says. “Another limit is that these batteries, for now, are only operational between 10°C to 40°C. This requires innovative thermal management solutions in hot and cold climates.” Dr Al Mheiri, an Emirati with bachelor’s, master’s and doctoral degrees from US universities, is carrying out his research in collaboration with Massachusetts Institute of Technology scientists. Improvements in battery technology are especially sought after because the need to store electricity is only going to increase. Peter Taylor, a professor of sustainable energy systems at the Centre for Integrated Energy Research at the University of Leeds, says an inability to store power is less of a problem when renewables account for a small percentage of total energy production. Other more flexible power sources, such as coal, can make up any shortfall. But when they form a higher percentage of total production – some experts have put the figure at about 30 per cent of total capacity – this changes. As Dr Tim Mays, head of the department of chemical engineering at Bath University , puts it, “a mismatch between supply and demand” develops. “As you increase the penetration of renewables into electricity grids, you’re no longer able to accommodate intermittency,” he says. There are alternatives to storage, such as using large interconnectors to transfer power between countries. This can smooth out the fluctuations in generation capacity. “But storage is one of the key options and, in many circumstances, it might be easier,” says Prof Taylor. While Dr Al Mheiri is looking into vanadium-based batteries, there are alternatives. A report last year from Lux Research, Flow Battery Cost Reduction: Exploring Strategies to Improve Market Adoption, noted that the use of flow batteries commercially “is still in the early stages”, and although vanadium is most often used, “the most competitive systems may eventually come from electrolytes that are currently at lab scale today”. Geoffrey Heal, the Donald C Waite III professor of social enterprise at Columbia Business School, says it is too early to say that storage technologies will dominate. “I suspect there will be several




and that utilities, which need to store hundreds of megawatt hours, will use different technologies from households, who only need a few kilowatt hours,” says Prof Heal, who teaches about energy markets and has written 18 books.

“The former may use flow batteries, the latter conventional lithium ion batteries or their replacements. It is also possible that hydrogen will emerge as an energy-storage vehicle.” There could be greater use of combined forms of storage, such as super capacitors – devices that can deliver electrical energy at a very high rate – used along with batteries to allow faster charging and discharging. “If you can develop different types of hybrid systems, that would be good as it will result in devices that have more advantages and fewer weaknesses compared to standalone storage technologies,” Prof Taylor says. Whatever the future holds, it is likely to involve VRFBs. Dr Al Mheiri is identifying the mixtures of solvents that perform best, with “binary mixtures” of two solvents offering promising results. He is also focused on improving the electrodes. “At a later stage, we plan to put everything together – the binary solvent mixtures and the enhanced electrodes – in a real battery cell to simulate the actual conditions of an operating battery,” he says. “If everything moves according to plan we will connect these small battery cells together to make a stack. A stack is the basis for any industrial-scale battery.” So as the solar – and wind – industries begin to shine, the batteries needed to make these sources of power viable are going to become ever more efficient. [email protected] Daniel Bardsley is a freelance journalist in the UK and a former reporter at The National. He has science degrees from the University of Oxford and the University of East Anglia.




Oil supply glut reversal seems getting closer Syed Rashid Husain ( images by NewBase )

THE debate is on! Who has won this round of battle? Opinions and counter opinions continue to make rounds. Efficient producers have finally begun elbowing out the non-efficient ones, some are asserting. Does it indicate the success of the Saudi-led OPEC strategy? Non-OPEC supply is slowing down and demand is picking up, OPEC is now asserting. Output from non-member states would grow by only about 160,000 bpd next year - 110,000 bpd less than projected earlier - OPEC is now saying. Non-OPEC production would hence stay around 58 million bpd in 2016 - significantly lower than earlier estimates. And this OPEC projection is in line with the forecast made by the OECD energy watchdog IEA too. "The Saudi-led OPEC strategy to defend market share regardless of price appears to be having the intended effect of driving out costly, inefficient' production," the IEA asserts. Consequently it has cut forecast for non-OPEC supply by 0.3 million bpd next year to 57.7 million bpd. IEA is now emphasizing non-OPEC production is heading for its worst decline since 1992. Arctic and ultra deepwater exploration remain in trouble, while mature prospects such as the UK sector of the North Sea continue to see job and capex cuts. "Cheap oil prices ushered in by Saudi Arabia-led OPEC policy of protecting market share will end up squeezing high-cost producers like US shale drillers, leading next year to the biggest drop in output in nearly a quarter century," the IEA report added.

The casualties of the "success" of the OPEC strategy are evident, OPEC, the EIA and the IEA - all seem to concur. "US oil production has shown signs of slowing," OPEC reported. "This could contribute to a reduction in the imbalance of oil market fundamentals, however, it remains to be seen to what extent this can be achieved in the months to come."




The US Energy Information Administration (EIA) too is saying that production from several important shale-oil fields is likely to fall by 80,000 bpd by next month. Seasonal factors offshore and weak economics onshore are expected to lead to a decline in US crude oil production. In its short-term market report, EIA is asserting; the total US crude oil production will decline 4.3 percent from expected full-year 2015 levels to 8.8 million barrels per

day by 2016. The Paris-based IEA is no different. "After expanding by a record 1.7 million bpd in 2014, the latest price rout could stop US growth in its tracks," an IEA report said. "US oil production is likely to bear the brunt of an oil price decline that has already wiped half the value off" the main international oil contract. Consequent to all these changes, global oil output may drop by half a million bpd next year - the biggest decline in 24 years - with US shale producers

accounting for four-fifths of that drop, the report underlines. Crude oil output from the Eagle Ford shale in Texas, one of the hottest spots during the US drilling boom, has already been dropping for seven straight months, down 17 percent over that time, according to Clipper Data’s analysis. Fitch Ratings reported the near 55 percent drop in US Lower 48 rig counts during the first half of 2015 would contribute to a second half 2015 production decline of roughly 7 percent in tight oil and shale gas regions at June operating and activity levels. This exit production rate would be around 3 percent lower than year-end 2014 levels, it emphasized. In the meantime, the US inventories have also fallen by 2.1 million barrels in the past week, suggesting a drop in US production at a time of painfully low prices. On the other hand demand is also growing. Lower prices have helped strengthen the global crude demand. OPEC projects the world oil demand growth to be around 1.46 million bpd for 2015, an upward revision of about 84,000 bpd, projecting the global demand to rise from 93 million bpd to 94 million bpd in 2016. As per the IEA, oil demand growth is set to hit a five-year high this year, touching 1.7 million bpd and 1.4 million bpd next year. The IEA also increased its forecasts for overall demand this year and next by 0.2 million bpd to 94.4 million bpd and 95.8 million bpd, respectively.




The IEA does not make supply forecasts for OPEC, but said it expects market demand on OPEC supplies is projected to rise to 31.3 million bpd in 2016, an increase of 1.6 million bpd, as low prices dent high-cost production and support higher demand, the IEA highlighted. One indication of the success of the Saudi-led OPEC strategy was their growing share in the otherwise comparatively healthy Asian crude markets too. From January to June 2015, total crude oil imports reported for seven major Asian countries averaged 19.1 million bpd, about 700,000 bpd higher than during the same period in 2014. The share of these crude oil imports from Saudi Arabia averaged 23.2 percent from January to June, compared to 23.9 percent in the same period in 2014. Exports to Asia make up more than half of Saudi Arabia’s total crude exports in much of 2014 and 2015. Additionally, US imports of Saudi medium and medium light crude oil also rose by 275,000 bpd over the second quarter of 2015, even though US total imports from OPEC was down on lower - basically because of less exports of Iraqi oil to the US. Despite all this - the debate is far from over. While some continue to point out the success of the OPEC strategy, others still seem skeptical. Crude futures fell 2 percent or more on Friday a week before, a after influential Wall Street trader Goldman Sachs reported cutting its outlook on oil, lowering its 2016 forecast for US crude to $45 a barrel from $57 previously, and Brent to $49.50 from $62, citing oversupply and concerns over China's economy. "The oil market is even more oversupplied than we had expected and we forecast this surplus to persist in 2016," Goldman said in the note entitled "Lower for even longer." Citing "operational stress" as a growing downside risk, it projected crude could even fall to near $20 a barrel. Germany's Commerzbank has also cut its oil outlook, joining a long list of banks that have downgraded crude price projections on supply glut concerns. The debate is on. Jury is out. Yet, more voices are now stressing turnaround could be closer than anticipated earlier. Let's keep our fingers crossed .




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Khaled Malallah Al Awadi, Energy Consultant

MS & BS Mechanical Engineering (HON), USA Emarat member since 1990 ASME member since 1995 Hawk Energy member 2010

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Khaled Al Awadi is a UAE National with a total of 25 years of experience in the Oil & Gas sector. Currently working as Technical Affairs Specialist for Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy consultation for the GCC area via Hawk Energy Service as a UAE operations base , Most of the experience were spent as the Gas Operations Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility & gas compressor stations . Through the years, he has developed great experiences in the designing & constructing of gas pipelines, gas metering & regulating stations and in the engineering of supply routes. Many years were spent drafting, & compiling gas transportation, operation & maintenance

agreements along with many MOUs for the local authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE and Energy program broadcasted internationally, via GCC leading satellite Channels.

NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE

NewBase 20 September 2015 K. Al Awadi




6th

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New base 690 special 20 september 2015 r

Engineering

Transcript of New base 690 special 20 september 2015 r