New base energy news issue 919 dated 31 august 2016

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NewBase Energy News 31 August 2016 - Issue No. 919 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE: Masdar and MIT researchers develop device that
makes steam from sunlight
The National - LeAnne Graves
Researchers at Abu Dhabi’s Masdar Institute and the Massachusetts Institute of Technology
(MIT) have collaborated to create a device that makes steam from the sun, all without the use of
solar panels.
Using bubble wrap and plastic foam, the team of researchers developed a solar-conversion
system that floats on water. The device converts 20 per cent of the solar energy captured into
steam.
"The technology is particularly suited for the UAE’s dusty climate, as it fully uses the entire
spectrum of sunlight for thermal applications rather than just the direct portion, which can be
hindered by aerosols," said TieJun Zhang, an assistant professor of mechanical and materials
engineering at Masdar Institute.
However, the technology is in its nascent stages, according to Steve Griffiths, the vice president
for research and associate provost of Masdar Institute. While the device has been proven to
generate steam, there will need to be further research and development on the ways in which it
can be utilised.
"Right now this is a great scientific finding in the direction of applications that we really care about,
and now we just need to put the engineering behind it to figure out the market to make this
applicable," he said.
The first deployment and commercialisation will come after researchers pinpoint the area in which
this will be best used, whether it is in desalination or even medical sterilisation.
However, another winning factor with the device is the absence of solar panels, which on average
make up about 30 to 40 per cent of the total cost for solar photovoltaic projects.

The technology is composed of a floating sponge that has a light absorber, which is in between
bubble wrap and foam. The receiver soaks up water and evaporates it, producing a steady flow of
steam.
"This project is an excellent demonstration of how international collaboration and use-inspired
research can yield cutting-edge scientific findings that have direct application to the sectors that
are at the core of the UAE’s continued evolution toward an innovation and knowledge-based
economy," Mr Griffiths said. .

Iraq Pledges to Support an OPEC Freeze Deal, Shifting Its Stance
Bloomberg - Khalid Al Ansary
Iraq would support a proposal for OPEC and other major oil producers to freeze output at talks in
Algeria next month, Prime Minister Haidar Al-Abadi said in Baghdad.
The endorsement marks a slight shift by Al-Abadi, who was quoted by Reuters on Aug. 23 saying
that Iraq still hadn’t raised production sufficiently. The country’s deputy oil minister, Fayyad Al-
Nima, said the following day that Iraq would support measures to establish fair crude prices.
The Organization of Petroleum Exporting Countries will hold informal talks during an industry
conference in Algiers in September, fanning speculation the group could revive an initiative with
non-members such as Russia to limit output. A previous attempt collapsed in April amid political
tensions between Saudi Arabia and Iran.
“Our opinion is to freeze output to support prices,” Al-Abadi said. “The drop in oil prices is causing
volatility and this is harming Iraq because our revenues are based on oil.” Iraq is the second-
biggest member of OPEC, whose other major producers have signaled only qualified backing for
an output accord.
Saudi, Iran
Saudi Arabian Energy Minister Khalid Al-Falih said Aug. 26 that while a freeze would be “positive”
for market sentiment, no “intervention of significance” is required as global markets are
rebalancing by themselves.
Iranian Oil Minister Bijan Namdar Zanganeh said that the country expects to recover its market
share -- eroded during years of international sanctions -- as a condition of co-operating with
OPEC, according to an Aug. 26 report by news service Shana.
OPEC gave Iraq an exemption from the individual quotas imposed on members from 1998 as the
country contended with years of sanctions and war. While Iraq has boosted output in recent years
after signing deals with international companies, its production was still below capacity in July,
according to the International Energy Agency.
Iraq has shown more willingness to co-operate with OPEC as the plunge in oil prices -- down 50
percent since 2014 -- and the fight against Islamic State battered its finances. The country has
secured a $5.3 billion loan from the International Monetary Fund to stabilize its reeling economy.
The nation’s current
expansion plans may
be difficult to reconcile
with a production
freeze. Iraq told
international oil
companies to boost
output after reversing
previous instructions to
cut investment, Iraq Oil
Report said Aug. 23.

Uganda gives Tullow Oil, Total production licences
Reuters - Elias Biryabarema
Uganda granted on Tuesday five production licenses to UK-listed explorer Tullow Oil and three to
France's Total, clearing a major hurdle as the east African country aims to move more quickly
toward crude production.
Commercial oil reserves were discovered in Uganda a decade ago, but production has been
repeatedly delayed amid wrangling over taxation and field development strategy. The licenses
cover Exploration Area One (EA1), operated by Total, and Exploration Area Two (EA2), operated
by Tullow, Energy Minister Irene Muloni told reporters.
Muloni said the offer of licenses ended a period of protracted negotiations and it was "now time for
serious work to start." "The grant of these production licenses will trigger the immediate work
program ... for production of petroleum in Uganda."
Total, Tullow, and China's CNOOC
jointly own Uganda's fields and the
Chinese firm was the first to be
granted a production license in
2013. The licenses offered on
Tuesday are valid for 25 years and
can be renewed for an additional five
years.
Tullow and Total are required to
make final investment decisions 18
months after receiving the licenses
and Muloni said commercial oil
production was expected to begin in
2020. When production from all the
nine licensed areas starts, output
would be between 200,000-230,000
barrels per day, Muloni said.
Uganda wants to build a $2.5 billion
refinery to process its crude so it can
earn more from its oil resources,
which it discovered in 2006.
The domestic refinery, aimed at
processing 60,000 barrels per day,
will reserve the right of priority
access to the Ugandan crude and
the remainder will be exported via a
crude pipeline to the Indian Ocean
port of Tanga.
Tullow and Total are expected to invest a combined $8 billion in infrastructure required to support
oil production, including drilling 500 wells and erecting central processing facilities and feeder
pipelines. Uganda has 6.5 billion barrels worth of reserves in its fields located near its border with
the Democratic Republic of Congo, according to estimates by government geologists.

US: Coal consumption by U.S. universities has declined by 64%
U.S. EIA, Quarterly Survey of Non-Electric Coal Data
Coal consumption by educational institutions such as colleges and universities in the United
States fell from 2 million short tons in 2008 to 700,000 short tons in 2015. Consumption declined
in each of the 57 institutions that used coal in 2008, with 20 of these institutions no longer using
coal at all.
Many of these institutions participate in the American College and University Presidents Climate
Commitment, a program aimed at reducing greenhouse gas emissions. Coal consumption has
decreased as institutions switch from coal to natural gas or other fuels.
Coal use at educational institutions is small, making up less than 0.1% of total coal consumption in
2015. But coal use at educational institutions has a long history. Many educational institutions
used coal to produce their own electricity and heat as early as the 19th century, when access to
the electric grid was limited.
The Public Utility Regulatory Policies Act of 1978 allowed many independent power producers,
including institutions, to sell their surplus electricity back to public utilities, further encouraging
educational institutions to generate their own electricity.

Educational institutions in New York, South Carolina, Idaho, and South Dakota ceased to use coal
between 2008 and 2015. These institutions either built or expanded their natural gas capacity,
aided by state funding, or increased their electricity purchases from public utilities.
The largest reductions in coal consumption by educational institutions between 2008 and 2015
occurred in Indiana, Michigan, Missouri, and Tennessee. Educational institutions in Indiana
collectively reduced coal consumption by 260,000 tons (81%) from 2008 to 2015. Coal was
replaced mostly by natural gas
and geothermal heat to meet
sustainability initiatives set by
each university.
Educational institutions in
Michigan reduced their coal
use by more than 80% over
this period, adopting natural
gas as the major fuel. Some
institutions in Missouri added
more renewable sources of
power, replacing coal with
biomass. Three institutions in
Tennessee stopped using coal
between 2008 and 2015,
resulting in a 94% drop in coal consumption by institutions in the state. Many of their cogeneration
plants were converted to burn only natural gas.

Norway: Statoil prepares ‘major’ exploration campaign in Barents Sea
Statoil + Offshore News
Norwegian oil company Statoil aims to conduct a major exploration campaign in
several parts of the Barents Sea in 2017. During the past months, Statoil has increased its
share in several licenses in the Norwegian part of the Barents Sea through agreements with Point
Resources, DEA, OMV, and ConocoPhillips.
Statoil has increased its interest in five licenses. Namely, its increased shares regard licenses
722, 615 and 615B on the Hoop discovery and licenses 718 and 720 on the Stappenhøyden area.
Jez Averty, Statoil’s head of exploration on the Norwegian continental shelf (NCS), said: “We have
worked systematically on developing an exploration portfolio for testing good and independent
prospects in 2017 and 2018.
“For 2017 we see promising prospects in different parts of the Barents Sea. For example, we want
to explore the Blåmann prospect in the Goliat area, Koigen Central in PL718 on Stappen High and
the Korpfjell prospect in PL859 that was awarded in the 23rd licensing round.”
In addition to an exploration well in PL849 (Blamann), awarded in the Award in Predefined Areas
(APA) in January 2016, Statoil and the operator Eni have also agreed on drilling a new exploration
well in PL229 (Goliat) in 2017.
Statoil already has a rig on contract which is suitable for operation in the Barents Sea. The
company is working on obtaining approval from partners and authorities for an exploration
campaign in 2017 covering between five and seven wells in the Barents Sea.

Averty added: “Giving us access to new acreage, the transactions demonstrate our belief in
continued exploration potential on the NCS. We have played a leading role in the Barents Sea for
40 years, and we are still a guarantee for high activity in the area.”
Statoil said that new and major discoveries are crucial to maintaining the current NCS production
level up to 2030 and beyond, especially areas off North Norway.
“Through these agreements, we are strongly increasing our presence in the Hoop area, we are
fortifying our position around Johan Castberg, and we see new opportunities in the southwestern
part of the Barents Sea.
“We have also worked efficiently on reducing costs by developing new technology, such as Cap-
XTM, and improving drilling efficiency. The wells to be drilled in the south-eastern part of the
Barents Sea next year seem to be the most inexpensive offshore exploration wells throughout
Statoil,” said Averty.

NewBase 31 August 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices dip on stronger dollar; rise in US crude stocks data
Reuters + NewBase
Crude oil futures fell in early trade on Wednesday as the U.S. dollar held around three-week highs
and industry stocks data indicated a build in U.S. crude inventories.
International Brent crude oil futures were trading at $48.27 per barrel at 0052 GMT, down 10 cents,
or 0.2 percent, from their previous close. U.S. West Texas Intermediate (WTI) crude futures were
down 16 cents, or 0.4 percent, at $46.19 a barrel.
The U.S. dollar index, which measures the currency against a basket of six majors, rose as high as
96.143, its highest level since Aug. 9, on Tuesday.
A stronger greenback makes dollar-priced commodities like oil more expensive for holders of
other currencies and possibly capping demand.
The dollar strengthened after recent hawkish comments by Fed Chair Janet Yellen and Vice Chair
Stanley Fischer boosted expectations that a rate hike by the U.S. central bank at its September
policy meeting could be on the horizon.
"The pullback in commodity prices is likely to continue in the short term with a stronger USD and
weaker fundamentals," Australian bank ANZ said in a note.
U.S. crude stocks rose by 942,000 barrels in the week to Aug. 26 to 525.2 million, nearly in line
with analysts' expectations for an increase of 921,000 barrels, data from industry group the
American Petroleum Institute showed on Tuesday.
Oil price special
coverage

Official U.S. oil inventories data published by the EIA is due for release on Wednesday. Concerns
over refinery production outages caused by storm threats in the Gulf of Mexico have done little to
support prices as a product glut in the United States persists.
"Prices didn't receive any support from news that nearly a quarter of the capacity in the Gulf of
Mexico has been shut due to storms," ANZ bank said.
Oil Heads for Biggest Monthly Gain Since April Before OPEC Talks
Bloomberg - Ben Sharples BenSharps
Oil is poised for the biggest monthly advance since April amid speculation informal talks among
OPEC members in Algeria next month may result in action to stabilize the market.
Futures slid 0.2 percent in New York, trimming the monthly gain to 11 percent. Iraq would support
a proposal for the Organization of Petroleum Exporting Countries and other major producers
to freeze output, Prime Minister Haidar Al-Abadi said in Baghdad. U.S. crude stockpiles increased
by 942,000 barrels last week, the industry-funded American Petroleum Institute was said to report.
Government data due Wednesday is forecast to show a 1.3 million build.
Oil entered a bull market Aug. 18, less than three weeks after tumbling into a bear market. A cap
on production would bepositive for the market, Saudi Arabia’s Energy Minister Khalid Al-Falih said
in an interview last week, while ruling out a cut to output. A deal to freeze supply was proposed in
February but a meeting in April ended with no final accord.
“A freeze based on current maximum production levels, or somewhere near that, may not have
too much practical impact on the market,” said Ric Spooner, chief analyst at CMC Markets in
Sydney. “We are moving into the maintenance season for refineries and we could see some
inventory builds starting to happen. There is the possibility that prices could drift lower.”

West Texas Intermediate for October delivery was at $46.27 a barrel on the New York Mercantile
Exchange, down 8 cents, at 11:16 a.m. in Hong Kong. The contract declined 63 cents to settle at
$46.35 a barrel on Tuesday. Total volume traded was about 42 percent below the 100-day
average.
Output Freeze
Brent for October settlement, which expires Wednesday, was 6 cents lower at $48.31 a barrel on
the London-based ICE Futures Europe exchange. Prices dropped 1.8 percent to $48.37 on
Tuesday. The global benchmark was at a $2.05 premium to WTI. The more-active November
contract slid 8 cents to $48.65 a barrel.
The drop in prices is hurting Iraq, Al-Abadi said, pledging to support a potential output freeze deal.
The nation is the second-biggest member of OPEC, pumping 4.36 million barrels a day in July,
according to data compiled by Bloomberg. Saudi Arabia is the largest, producing 10.43 million a
day.

NewBase Special Coverage
News Agencies News Release 31 August 2016
Shell Says While Gas Is the Future, It Won’t Be Traded Like Oil
Bloomberg - Kelly Gilblom KellyGilbl
Natural gas is rapidly becoming one of the most traded global commodities, but that doesn’t mean
it will have a global price, according to Royal Dutch Shell Plc.
While the fuel can be transported any where on liquefied natural gas carriers, it will probably
remain regionally priced for the time being, with some contracts continuing to track oil, said Roger
Bounds, senior vice president for global gas at Shell. Prices will depend on location, regulation
and infrastructure, as some countries replace coal in electricity generation to cut carbon
emissions.
“I shouldn’t say it’s not possible, but what would it take for such a price to be possible?” Bounds
said in an interview in Stavanger, Norway. “We have some way to go.”
For a global gas price to emerge, pipelines would need to shed some interstate regulations like in
the U.S., trade data would need to be more transparent and widely available and buyers and
sellers would need more confidence their contracts will be respected, he said. Europe is partly on
that path with some hub pricing, he said.

“We’re somewhere back from that in a number of other markets,” Bounds said. “We’re not that
close to that in India, we’re not close to that in China.”
Interchangeable Sources
Until then, there will be many two-party gas trades. Additionally, conventional contracts that link
the price of gas to the price of oil will remain, partly because the two will become increasingly
interchangeable as energy sources.
Those changes to the global gas market structure will come amid a renaissance for the fuel, Shell
says. It will probably be used more because when transitioning to a lower-carbon economy, gas
complements renewable energy sources, which aren’t yet able to consistently provide
uninterrupted electricity to customers during peak periods.
Additionally, some European countries may introduce a floor on the price of carbon that could
hasten a switch to gas-fired power.
“There’s been a period of weakness in carbon prices in Europe but in the near future we’re likely
to see that starting to bite,” Bounds said. When that happens, “we think more gas will get drawn
into the system,” he said.
LNG Consumption
European Union carbon has dropped 85 percent from its peak in 2006 as lawmakers struggle to
deal with a glut. The price hasn’t been high enough to rid Europe of coal use.
Bounds expects global LNG consumption to climb by 5 percent to 7 percent a year. A trend of
declining usage in Europe may also reverse due to the higher demand, with supply coming from
U.S. export terminals and fields in Russia and North Africa. Shell CEO Ben Van Beurden said on
Monday that he expects gas demand to grow at twice the pace of oil.
At the moment, there is a global glut of natural gas as producers scramble to gain a foothold in the
expanding market. That will probably balance out in the early 2020s, said Bounds.
Santos’s 'fanciful' LNG projections 'inflating value of assets by billions'
The Gardian
Santos, one of the companies driving Queensland’s liquefied natural gas export boom, is relying
on price projections so optimistic that they inflate the value of the company’s assets by billions of
dollars, according to a leading analyst.
This month Santos announced a write-down of the value of its Gladstone gas export project,
GLNG, of US$1.5bn. The value of the project dropped because the price it gets for the exported
gas is tied to the price of crude oil, which has dropped.
But according to an analysis by the pro-renewables financial activist group Market Forces, that
write-down of its assets relied on an optimistic prediction for how the oil price will change, with
Santos’s projections significantly higher than those of competitors Woodside and Beach Energy,
brokers such as Deutsche Bank and Goldman Sachs, as well as analysts at the World Bank.
According to Santos’s own explanation of how its asset’s value is tied to oil prices, if it had used
Goldman Sachs’ projected oil prices rather than its own optimistic ones, the value of its assets
would be US$3.5bn less in 2020.

Alternatively, if it followed the World Bank’s forecast to 2020, its assets would take more than a
US$2bn hit that year.
Even its peers in the market, Woodside Petroleum and Beach Energy, projected oil prices to 2021
that would result in Santos’s assets taking more than a US$1bn write-down most years.
Santos’s write-downs have led some analysts to speculate that parts of the brand-new facility
would be mothballed within a year or two.
The latest company update from Goldman Sachs on Santos recommended investors sell their
stock in the company, noting long-term expectations for the price of oil.
Santos declined Guardian Australia’s request to comment on the issue.
“It just seems fanciful,” said Daniel Gocher from Market Forces, who prepared the analysis.
“They’re a good $5 to $15 above the median forecast price per barrel.
“The comparison is pretty representative – we’ve got the brokers in there, and the World Bank,
who you’d think would be rather conservative. And we’ve also got their peers.
“There is plenty of opinion out there that says that they’re on thin ice already,” Gocher said, adding
that Santos had more debt than similar companies in the market. “If they’re not getting the prices
for gas that they were expecting, then they’re going to find it harder to meet their debt obligations.”
Santos now has the lowest investment-grade credit rating of BBB-. When the company declared
its recent write-down, the rating agency Standard & Poor’s said if oil prices stayed low, Santos
could start selling its assets to meet its debt obligations.

Bruce Robertson from the pro-renewables financial analysis group, the Institute for Energy
Economics and Financial Analysis, said if Santos did declare a multibillion-dollar write-down, it
“would be in all sorts of trouble”.
“In my opinion it would make financing of the business very problematic,” Robertson said.
He said the large discrepancy in forecasts showed Australia needed consistent reporting of the
value of gas reserves and resources, as in the US.
The inconsistent reporting made it hard for investors to judge the value of a company, he said, but
it also made it hard for policymakers to judge how large the country’s available reserves were.
“There’s no transparency or consistency. Each company is calculating reserves and resources
using a different set of assumptions.”
Gocher said Santos’s “fanciful” projections pointed to the over-investment in the LNG sector in
Australia. “A lot of those investments will be in jeopardy and wouldn’t get the go-ahead today if
they were making the same decision now,” he said.
ExxonMobil, BP and ConocoPhilips are looking to exit the Alaska
LNG project … LNG World News Staff
following a report by Wood Mackenzie stating the project’s competitiveness ‘ranks poorly’ under
current market conditions. Speaking to the Alaskan House and Senate Resource
Committees, David VanTuyl, regional manager for BP in Alaska, noted the project is commercially
challenged.

The pre-FEED work on the Alaska LNG project is over 90 percent complete, however, Van Tuyl
noted that the next phase will likely cost over one billion dollars.
“We don’t want to rush into the largest energy project in North America only to end up
losing lots of money for all of us. So right now is not the time to make that
commitment,” he said.
He stressed BP has not given up on the project but noted the cost of supply have to be reduced in
order to make the project competitive.
Bill McMahon, ExxonMobil’s senior commercial advisor for the project said that the company
supports the state’s plans to assume full management of the project through Alaska Gasline
Development Corp.
The company will be a part of the development of Alaska’s North Slope natural gas resources
through investment in the development of Prudhoe Bay and Point Thomson and by making gas
available for sale for the project.
Alaska’s governor Bill Walker commented on the report by Wood Mackenzie stating that at current
LNG market prices, Alaska LNG project could struggle to make “acceptable returns even under
US$70/bbl price,” saying that there is still potential for the project to be viable.
By exploring alternative project structures it could be economically viable even at $45/bbl oil
prices, Walker said.
AGDC, that is currently holding transition meetings with BP, ConocoPhillips, and ExxonMobil, said
it expects the transition to be completed by the end of the year. According to AGDC’s plans,
FEED work could start in 2018 while the construction could begin in 2019.
The liquefaction and export facility of the $45 billion-plus Alaska LNG project will be built on the
eastern shore of Cook Inlet on the Kenai Peninsula. The plant would receive gas via an 800-mile
pipeline from the North Slope and is expected to be able to produce about 20 mtpa of LNG from
three liquefaction trains.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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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
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 26 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 31 August 2016 K. Al Awadi

New base energy news issue 919 dated 31 august 2016

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