Oil Prices to Have Minor Impact on the Market for Scrubbers and Absorbers

The market for scrubbers and absorbers for industrial plants will grow by over 14 percent from 2015 to 2019 at oil prices of $80/barrel during the period.  At $40/barrel, the growth will only be 12 percent.  This the latest forecast in N008 Scrubber/Adsorber/Biofilter World Markets published by the McIlvaine Company.  (www.mcilvainecompany.com)

There are a number of variables which will determine the market growth for scrubbers, adsorbers, biofilters and absorbers.  New insights are continually generated which justify changes in the forecasts.  The Iran nuclear agreement is just one example. The plunging economy in China is another.  However, the most significant development recently is the plunge in oil prices to $40/barrel. 

Presently, oil and gas only account for 4 percent of the scrubber/absorber revenues.  However, a legitimate question is whether lower oil prices will affect other scrubber markets. The impact of future oil prices on the market can be best predicted by estimating the impact on the individual segments.

Oil and gas can be divided into two segments.  The aftermarket and routine purchases for small projects represent only 2 percent of the 2015 market. The longer term large project revenues also represent only 2 percent of the current market.  If the price of oil were to continue to remain at $40/barrel through 2019, revenues for this segment would shrink over the period by 75 percent to an amount equivalent to only 0.5 percent of the total 2015 market. The biggest regional impact would be in Canada where many scrubbers are used in oil sand extraction.

The petrochemical market will grow at $40 oil. Municipal wastewater is one of the big scrubber markets due to the need for odor control at each plant. This market will be unaffected by the fluctuation in oil prices.

Lower prices will result in more gasoline being consumed and more oil which needs to be refined. Therefore, scrubber sales to refineries will be unaffected.

Municipal and industrial solid waste combustor scrubber sales are slated to account for 22 percent of 2015 scrubber revenues. This market will be unaffected by lower oil prices and will rise to the equivalent of 25 percent of the 2015 market by 2019.

McIlvaine will continue to assess the likely changes in oil prices based on the following factors:

·       The break-even cost for a new well

o   Hydraulic fracturing break-even point is $30 to $50/barrel equivalent based on improved management practices and the extraction of more product from existing wells.

o   Oil and tar sands projects break even at $65/barrel.

o   Subsea is more expensive.

·       New technology developments

o   Bechtel experience with coal seam gas to LNG in Australia indicates lower break- even costs than subsea extraction.

o   China coal to syngas and chemicals could be an alternative which is more than competitive at $40 oil.  McIlvaine has recommended marrying the two stage (HCl/SO₂) scrubbing along with conventional hydrochloric acid leaching to extract rare earths and generate byproduct revenue.

·       Demand

o   The slowdown in China could impact demand as could economic problems in Greece and other countries.

o   Demand is a function of industrial activity.  There is little activity needed to extract Saudi oil. On the other hand, over 2,000 companies rely on the Alberta oil sands market for their revenues. The greater the industrial activity the greater the oil demand.

·       Supply

o   Saudi Arabia could choose to restrict production.  In many ways the situation is analogous to the gold in Ft. Knox.  You could sell it at any price and generate positive cash flow. However, it is a precious and finite resource which is important to future generations.

o   Market driven companies will typically be reactive rather than proactive and will only increase drilling after oil prices rise to a level to make drilling profitable.

·       Political developments

o   Lifting the Iran embargo on oil exports.

o   Russian activities in the Ukraine and elsewhere.

o   Chinese efforts to manage the economy.

o   Uncertainties in North Korea, Greece and Venezuela.

·       Regulatory initiatives

o   Export restrictions.

o   Climate change regulations.

o   Pollution control requirements for hydraulic fracturing.

·       Traumatic events

o   Major oil spills.

o   Large meteorite impact, earthquake or major volcano eruption.

Some of these developments are more predictable than others.  The low oil prices lead to lower extraction activity which eventually leads to shortages and higher prices.  On the other hand, wars, oil spills and earthquakes cannot be easily predicted.  As a result there will be the need for continuous changes in the forecasts to take into account the surprises.

For more information on N008 Scrubber/Adsorber/Biofilter World Markets, click http://home.mcilvainecompany.com/index.php/services-drop-down

By 2030 Fifty-Six Percent of Vietnamese Electrical Capacity will be Coal

Vietnam will add over 50,000 MW of coal-fired capacity by 2030. This will equal nearly 20 percent of the present coal capacity in the U.S. and will equal planned U.S retirements. To put it another way, the combined coal-fired capacity of the U.S. and Vietnam is presently 280,000 MW and it will be the same in 2030.

In 2014, annual coal consumption was 19.1 million tons, a 21 percent increase over 2013. Coal consumption has continued to increase in 2015 as unseasonably hot weather contributed to a decline in hydropower generation. Vietnam is still in the process of developing its coal mining sector and must import relatively higher-priced coal. State-owned PetroVietnam (PV) is seeking to purchase 11 million tons of coal per year starting in 2017 to supply Vietnam's domestic power industry.

The McIlvaine World Power Generation Projects tracks every project on a monthly basis

World Power Generation Projects

Project Location

For more information on World Power Generation Projects, click on: http://home.mcilvainecompany.com/index.php/databases/28-energy/486-40ai

Oil Price and China Stock Market Plunges Will Impact the Air Filtration and Purification Market

The market for air filters used for residential, commercial and industrial HVAC applications will grow by over 14 percent from 2015 to 2019 at oil prices of $80/barrel during the period and Chinese economic growth of 7 percent per annum.   At $40/barrel and no growth in China the air filter world growth will only be 7.6 percent.  These are the latest forecasts in Air Filtration and Purification World Market published by the McIlvaine Company.  (www.mcilvainecompany.com)

There are a number of variables which will determine the growth for the air filter market.  New insights are continually generated which justify changes in the forecasts.  The Iran nuclear agreement is just one example. The plunging economy in China and the plunge in oil prices to $40/barrel are the most significant.  

Lower oil prices will result in more air filters for gas turbines and, therefore, the power sector of the air filter market would benefit from low oil prices.

China represents 10 percent of the total world air filter market, therefore, changes in the forecasts for this country will significantly impact the total market.  If the Chinese economy were to sink to a zero growth rate, air filter sales would fall by 17 percent over a four-year period.  If the economy continues to grow at 7%/yr. then Chinese air filter sales in 2019 will be 33 percent higher than in 2015.

The plunge in oil prices will drive down the price of fibers used in air filters. So this will negatively impact the revenues of filter media people but increase margins as they pass along only a portion of the raw material savings.

Some of these developments are more predictable than others.  The low oil prices lead to lower extraction activity which eventually leads to shortages and higher prices.  On the other hand, the Chinese economy, wars, oil spills and earthquakes cannot be easily predicted.  As a result, there will be the need for continuous changes in the forecasts to take into account the surprises.

For more information on N022 Air Filtration and Purification World Market, click on: http://home.mcilvainecompany.com/index.php/markets/2-uncategorised/108-n022.

Renewable Energy Briefs

OPIC and Kipeto Energy Sign Financing Agreement to Bring New Wind Power to Kenya

The Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, committed $233 million in debt financing to support construction and operation of the Kipeto Wind Power Project in Kajiado, Kenya.

The 100-megawatt, grid-connected wind power facility located south of Nairobi will be, when complete, one of the first utility-scale wind projects to come online in Kenya, where over 75 percent of the population still lack access to reliable electricity. Situated in an area with strong, consistent wind currents, the Kipeto project will provide cleaner and more reliable energy to Kenya’s national grid, helping to further bolster the country’s growing economy.

The Kipeto project is being developed in partnership with African Infrastructure Investment Managers (AIIM), one of Power Africa’s 100 private sector partners and fund advisor to African Infrastructure Investment Fund 2, Kenyan independent power producer Craftskills Wind Energy International, Ltd, and the International Finance Corporation. Craftskills initially began development of this project in collaboration with General Electric in 2010.

SolarReserve Receives Environmental Approval for Breakthrough Solar Plant with Energy Storage in Chile

SolarReserve, has received environmental approval from the Chilean government to develop one of the world's largest solar projects with energy storage. Utilizing SolarReserve's proprietary solar thermal energy storage technology, the Copiapó Solar Project, scheduled to reach commercial operation in 2019, will deliver 260 megawatts (MW) of reliable, clean, non-intermittent baseload power 24 hours a day to consumers of the central interconnected system (SIC). The project technology is based on SolarReserve's successful Crescent Dunes project in the U.S., which is complete with construction and is currently in final commissioning.

The Copiapó project, located in the Atacama Region, consists of SolarReserve's industry leading concentrating solar power (CSP) tower technology with molten salt thermal energy storage combined with solar photovoltaic panels (PV). This hybrid concept will maximize the output of the facility, delivering over 1,800 gigawatt hours (GWh) annually, while providing a highly competitive price of power. It will produce up to 260 MW's of firm baseload power which is critical to Chile's industrial sector, particularly the mining companies; operating at a capacity factor and availability percentage equal to that of a coal fired power plant.

PSEG Solar Source Adds Brownfield Facility with Acquisition of 25.4 MW California Solar Farm

PSEG Solar Source announced that it has acquired the Columbia Solar Project from Hanergy America Solar Solutions. The facility, built on a remediated brownfield, is located 40 miles northeast of San Francisco in Pittsburg, CA.

The 25.4 MW-dc facility, to be named PSEG Pittsburg Solar Energy Center, is scheduled to go into service in October 2015 after the testing and commissioning process is completed. It has a 20-year power purchase agreement (PPA) with Pacific Gas & Electric.

The new facility has 83,000 solar panels on a 105-acre remediated parcel located in a historically industrial zone. The site underwent an extensive cleanup, led by site owner USS-POSCO Industries, over several years under the supervision of the California Department of Toxic Substances Control.

The energy produced at the facility will help PG&E meet California's mandate that 33 percent of the energy sold by investor-owned utilities must come from renewable resources by 2020.

FFP New Hydro and Crestline Investors Team up to Deliver 21 Hydroelectric Projects on Existing Dams in the U.S.

FFP New Hydro LLC announced the continued expansion of its hydroelectric power portfolio in the U.S. with its closing of a senior loan facility with Crestline Investors, Inc., a Texas-based alternative asset management firm, and the acquisition and integration of Rye Development, FFP New Hydro's manager, into the company. FFP New Hydro has completed these transactions in order to pursue continued development of its portfolio of 21 advanced stage hydropower projects on existing dams across five states, the first of which received a 50-year license from the Federal Energy Regulatory Commission (FERC) in September of 2014.

The loan will enable FFP New Hydro to advance its portfolio of projects, totaling more than 200 megawatts of new generation capacity in Pennsylvania, West Virginia, Indiana, Mississippi, and Ohio. Once built, the projects will generate approximately 900 gigawatt-hours of energy each year, enough to power more than 80,000 homes. Building on the company's vision to capitalize on existing dams in the U.S. in order to increase hydropower's carbon-free contribution to the nation's electricity needs, the projects will bring substantial infrastructure investment as well as clean renewable energy to these regions.

Siemens, Blue Lake Rancheria, and Humboldt State University Partner to Install Low Carbon Microgrid on Native American Reservation

Blue Lake Rancheria, a Native American reservation in Northern California, and Humboldt State University’s Schatz Energy Research Center have partnered with Siemens to build a low-carbon community microgrid to power the government offices, economic enterprises, and critical Red Cross safety shelter-in-place facilities across 100 acres. The microgrid, funded in part through a $5 million grant from the California Energy Commission’s Electric Program Investment Charge (EPIC) program, will be powered by a 0.5 MW solar photovoltaic installation, 950 kWh battery storage system, a biomass fuel cell system, and diesel generators. Operators will manage and control these energy resources with Siemens Spectrum Power Microgrid Management System (SP MGMS) software. The microgrid will allow the reservation to operate independently of the power grid in coordination with local utility Pacific Gas & Electric. This project constitutes the largest solar array in Humboldt County, CA and is estimated to reduce 150 tons of carbon per year.

For more information on Renewable Energy Projects and Update please visit http://www.mcilvainecompany.com/brochures/Renewable_Energy_Projects_Brochure/renewable_energy_projects_brochure.htm

Headlines for Utility E-Alert – August 21, 2015

UTILITY E-ALERT

#1237– August 21, 2015

Table of Contents

COAL – US

§  Ameren Missouri says Coal to remain Large Part of Power Generation Mix

COAL – WORLD

§  Sindh Engro says Coal-fired Power Generation to start by 2018

§  Longannet in Fife Coal-fired Power Plant to close March of 2016

§  Prophecy provides Updates on its Chandgana Coal-fired Power Plant and Ulaan Ovoo Mining Project in Mongolia

§  TEPCO moving forward with 2 x 500 MW IGCC Facilities in Fukishima Prefecture

§  ECUST-ICCT provides Gasification Technology and is actively developing Novel Technologies

GAS/OIL – US

§  Rockland prepares for negotiations on $200 Million Natural Gas Project

§  Connecticut DEEP schedules Hearing to approve Air Permits for CPV Towantic Energy

§  By 2030 56 Percent of Vietnamese Electrical Capacity will be Coal

GAS/OIL – WORLD

§  KPA Unicon to deliver a Power Boiler to South African Steel Mill

NUCLEAR

§  Watts Bar Unit 2 is Substantially Complete; TVA Requests Issuance of License

§  BWXT Subsidiary awarded Design and Manufacturing Contracts for HPR1000 Nuclear Power Plant in Guangxi, China

§  Approval by Georgia Public Service Commission of $169 Million Capital and Construction Costs submitted as part of 12^th Vogtle Construction Monitoring Report         

§  Finnish Firm contracted for Hanhikivi Nuclear Project

BUSINESS

§  Engie plans over $1 Billion Sale of Asian Coal-fired Power Plants

§  Eagle Mountain signs Strategic Participation Agreement

§  Fuel Tech awarded Air Pollution Control Orders Totaling $7.7 Million

§  NO_x Control Market leveling off but at a High Level

§  Investment in Coal-Fired Power Plants will exceed Other Energy Sectors in 2016

HOT TOPIC HOUR

§  Total Solutions Hot Topic Hour (August 20) confirms the Trend toward Greater Outsourcing

§  Upcoming Hot Topic Hours

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Bob McIlvaine
President
847-784-0012 ext 112
rmcilvaine@mcilvainecompany.com
www.mcilvainecompany.com