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Something to keep in mind.............

 

 

India Said to Propose Sovereign Fund to Acquire Energy Assets

By Rakteem Katakey

 

March 17 (Bloomberg) -- India may create a sovereign fund to help state companies compete for overseas energy assets with rivals from China, a government official said.

 

The oil ministry has formally asked the finance ministry to use a part of the nationÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s $254 billion foreign-exchange reserves for the proposed fund, the official said, declining to be identified because a decision hasnÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t been reached.

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Such a fund would be very, very welcome if we are to compete with the Chinese,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ R.S. Sharma, chairman and managing director of state-run Oil & Natural Gas Corp., IndiaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s biggest energy explorer, said by telephone from New Delhi.

 

 

http://www.bloomberg.com/apps/news?pid=206...id=a.pCS_mI.5mU

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Well now I'm totally flummoxed...

 

Last week Metgasco mentioned in their quarterly that a smallish power station they were toying with building to make use of their coal seam gas in the northern rivers of NSW was no longer a good idea in the current circumstances. At the time I took that as yet more evidence that that outfit's management was simply buggerising around.

 

But then yesterday AGL, which is a company that typically is not prone to indecision, announced that they were shelving plans for a gas fired power station to be built to the north of Canberra, again due to the current tough circumstances. So what do they mean by that?

 

Well in the Sydney Morning Herald today there is an article that attempts to address that but imo makes an awful go of it.

 

http://www.smh.com.au/business/power-down-...1019-27wps.html

 

I accept that there are very complex dynamics affecting the situation but the journo seems to spend most focus on household demand which I think may be somewhat of a furphy. I heard recently that 75% of electricity accounts in NSW are for households but that 88% of electricity used in NSW goes to business. In strategic economic terms it is what is happening in the business sector that really matters here (and I accept that the knee jerk politics of household power bills is important to pollies). The gist of the tough conditions apparently is that electricity demand has actually fallen in NSW in the last couple of years whereas all the industry plans were based on handling electricity demand continuing to grow (the key question was assumed how many new power stations were needed to cover for what particular rate of that growth). The article mentions that an aluminium smelter had closed but spends more space on how laptops and tablets use less electricity than desktops. The article also seems to blame this drop in demand on the cost increases of electricity in local currency terms and makes only a fleeting mention of the high AUD.

 

But it seems to me that if 88% of demand is for businesses that have to compete with foreign competitors then the high Aussie is the killer punch here. If that is right then if and when the Aussie stops being irrational and drops back to where it should be (in rational terms) then much of that electricity demand will recover. But if not, and the higher prices for electricity paid locally is what is killing demand, then we wull have to get used to the worst of both worlds, low economic activity, low demand for electricity but with persistently high electricity prices.

 

I will have to think a lot more about what is happening here as it makes no sense to me at the moment. How does this affect the demand for coal seam gas and shale gas developments? Does this suggest that the local business sector has already fallen off a cliff but the economic indicators have not picked this up yet?

 

Anyone with any views or with links to articles that attempt to explain what is happening here please share them.

 

Thanks in advance.

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Possibly wolvie, or possibly there is some substance to the story doing the rounds that we can get petrol from moist air ;) .

 

http://www.newsdaily.com/stories/bre89i0v7-us-petrol/

 

Though I would love to know how much energy is expended to extract each unit of that petrol - the water and air may be free but the process likely comes at a considerable cost in energy.

 

Going back to the cause of my panic attack, actually the Oz newspaper does a better job of explaining what the issues are for AGL (if you can cut through the typical Murdock political spin).

 

In August, AGL said it was continuing to look at Dalton as a way to support its growing NSW customer base.

 

The project had yet to start construction but it was thought AGL would push the button on development this quarter.

 

But last month the NSW government released its draft frameworks for electricity prices from 2013-14 to 2015-16, which indicated price tariffs would fall.

 

Analysts at Credit Suisse estimate the proposed changes could wipe $23 million from AGL's bottom line this year. An AGL spokeswoman said the leading reasons for the project being shelved were uncertainty over the pricing regime and weakness in demand.

 

http://www.theaustralian.com.au/business/a...x-1226499612923

 

You could argue that BoF the Bozo might have cut the figures too close to the bone as he attempts to stay sweet with the hoi polloi or perhaps it is another example of big business attempting to hold the public to ransom. But the bottom line is if AGL takes 1000mw of power supply out of the equation then they will likely be able to charge higher prices from the energy they produce from existing investments. The NSW state government may be able to set electricity prices below what the power companies think is reasonable but it cannot force those power companies to invest in additional capacity to justify those lower prices.

 

In light of this explanation I am now less worried about there all of a sudden becoming a glut of gas coming onto the Australian east coast market. Also I see that Arrow confirmed that they are pushing on with preparations for their LNG project using massive amounts of coal seam gas from Qld, and that PetroChina has completed its purchase of csg assets from Molopo which will be used to feed LNG's Gladstone project. So even if the domestic demand for gas may be less than previously expected the much greater demand from north Asia still looks to be very strong.

 

http://www.smh.com.au/business/arrow-confi...1018-27tix.html

 

http://www.proactiveinvestors.com.au/compa...ets--34655.html

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As if in answer to my question as to whether the local energy sector has fallen into a pothole Michael West has an article in today's Sydney Morning Herald about the work done by some cow cocky to show that yes indeed peak demand has. It seems that this farmer, Bruce Robertson from the north coast of NSW, off his own bat has been able to show that at a time that peak electricity demand is actually falling the big energy companies have been bulking up their infrastructure to take advantage of the current pricing systems in place.

 

Back in May, [Mr Robertson] first said in these pages that the power companies had been ''gold-plating'' their networks. That is, they were deliberately over-spending because they earned a regulated return on the size of their assets. The more they spent, the more they made.Then in June, he outlined how billions of dollars had been earmarked to upgrade the National Electricity Market based on faulty assumptions of demand.

 

Demand for electricity had been falling since 2008 in Victoria, NSW and Queensland at roughly 1 per cent a year, despite forecast rises of 2.2 per cent a year.

 

Demand is now 10 per cent below where the industry forecast it would be four years ago. Mild weather, changing consumer behaviour and rising costs have all been factors in this, Robertson says.

 

http://www.smh.com.au/business/the-farmer-...1021-27zl1.html

 

Clearly the journo accepts Mr Robertson's assertions holus-bolus and rejects the energy industry's countering arguments. But this sort of analysis can be totally warped by the timeframes and starting and ending points you use. For instance he apparently uses 2008 as the starting point, which is just before the gfc really started to bite so yes you would expect relatively high electricity demands back then. I am sure the model jockeys in the energy companies could produce heaps of charts and tables showing that the longer term trends support their viewpoint more than it does Mr Robterson's.

 

But I also accept that companies will react rationally and if they are permitted to "gold-plate" their assets at the consumers' expense then they will. I remember how CSL when it was still a government owned enterprise managed to convince the public servants to pay for a new blood processing facility that was the best in the world, cutting edge, no expense spared but Brian McNamee then cleverly convinced another bunch of public servants to effectively sell that facility to a privatised CSL based on a commercial rate of return, which put a far far lower value on the facility (clever bloke Brian McNamee, more than a match for his regulatory overseers imo).

 

Interesting stuff I reckon, but as long as the east Asians keep thinking that they have to tie up as much of our gas as they can then I don't think our gas producers will be too badly affected (here's hoping).

 

 

 

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interesting paper - a bit old (June 2012) but some interesting stuff

 

https://www2.blackrock.com/webcore/litServi...ntId=1111166832

A glut of cheap US gas from shale rock has taken the world by surprise, and caused even seasoned energy analysts to completely redo their forecasts.

The global ramifications are huge. If ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ and this is a big if ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ the newfound energy can find its way to market, the US could become an energy exporter by 2030.

 

 

This publication discusses the boom's impact on energy prices, producers and services. The picture is not simple and things rarely happen in a straight line. This is true for energy as much as anything else

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interesting paper - a bit old (June 2012) but some interesting stuff

 

https://www2.blackrock.com/webcore/litServi...ntId=1111166832

QUOTE A glut of cheap US gas from shale rock has taken the world by surprise, and caused even seasoned energy analysts to completely redo their forecasts.

 

The global ramifications are huge. If ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ and this is a big if ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ the newfound energy can find its way to market, the US could become an energy exporter by 2030.

 

 

This publication discusses the boom's impact on energy prices, producers and services. The picture is not simple and things rarely happen in a straight line. This is true for energy as much as anything else

Hi nipper, fancy that -----two years have passed and suddenly observers are getting concerned about the downsides of a stronger USD, growing US shale oil production, and slowing global growth, which will not be helped if the FED really gets serious about raising US rates at the FOMC meeting starting tomorrow US time.

 

The flipside to any "backing off" raising US interest rates SHOULD be a WEAKENING USD and STRENGHTENING Global commodity prices, including our Energy Sector.

 

Thursday morning our time might make for very interesting trading in ASX energy stocks

post-20731-1410770061_thumb.jpg

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US firm APR Energy says it will be able to provide critical electricity grid stability to South Australia by 01 Dec after being chosen to supply a two-step fix for a fragile power grid with a new fast-start power plant initially powered by diesel fuel for the first two years.

 

South Australian Premier Jay Weatherill announced on Tuesday the state government would buy nine new GE TM2500 aero-derivative turbines through APR Energy to deliver up to 276 megawatts of generation to the grid should extra power be needed.

you don't think Wetherill is being a bit precious/ ideological?? Diesel, but not gas

 

... ah, but reading on - looks like deisel, then

"the hybrid turbines will then shift to an un-named separate permanent location where they will run on gas." Methinks there is a problem, Houston
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Here's some analysis of hydrocarbon demand in the US. The author argues that overall hydrocarbon demand there has peaked about a decade ago and is unlikely to bounce back. He breaks his analysis into coal - he describes coal as being in "superdecline" which I take to mean a structural decline - oil - he says that oil demand has been in a long-term holding pattern - and gas, which he notes is picking up, given how much and how cheap it is in the US (what with fracking and horizontal drilling).

 

He relies heavily on a point that I've not seen get much emphasis: that much of the "fleet" in the US that uses coal, which I take to mean power stations and systems used to tranport coal, is reaching the end of its economic life and so that infrastructure needs to be replaced, whether it be replaced with a coal based system or a system that uses an alternative energy source, and that on a head to head basis coal loses out. He provides no evidence that this is the case. He says that wind and solar energy is becoming increasingly competitive but gas based systems are more resilient to this competition than coal, partly because the gas "fleet" is much newer and so does not have to be replaced (unlike the coal "fleet").

 

https://medium.com/@gregormacdonald/us-foss...rn-18dca64427a0

 

As it happens I used to read Gregor MacDonald's energy blog about a decade ago and at the time I thought his analysis was always more insightful than just about any other's.

 

There is some evidence that coal is similarly affected even in China and India. Building power stations is a bit like the quote about ice hockey: you skate to where the puck is going to be, not where it is now. In a decade will coal be competitive with gas and wind and solar? Probably not, so why would you invest in a coal power station now.

 

https://www.macrobusiness.com.au/2017/08/wa...and-doom-adani/

 

PS. the first couple of commentators on that mb blog are regulars who take the piss, newbies often mistake their comments as genuine.

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