New base 13 december 2017 energy news issue 1113 by khaled al awadi-compressed

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. Page 1
NewBase Energy News 13 December 2017 - Issue No. 1113 Senior Editor Eng. Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE PM “ Countries failing to keep up with changes risk falling behind”
DUBAI, 12th December, 2017 (WAM) -- The Vice President, Prime Minister and Ruler of Dubai,
His Highness Sheikh Mohammed bin Rashid Al Maktoum Tuesday attended the 10th edition of
the Arab Strategy Forum (ASF).
"Through the Arab Strategy Forum, we are trying to politically and economically anticipate the
future," said His Highness Sheikh Mohammad. "The Arab world is going through rapid political
and economic changes, and countries that cannot keep up with the changes risk falling behind for
many years."
"Changes in 2018 will be positive for the UAE, because it is amply prepared economically,
politically and scientifically. We have a diverse economic base and strong international trade flow,
as well as immense experience that qualifies us to deal with and benefit from economic changes
in 2018," H.H. Sheikh Mohammad added.
"Major Arab nations will witness huge economic reforms in the coming year. From an economic
perspective, I am optimistic about 2018. We hope that 2018 will be a breakthrough year for some
critical Arab crises," he added.

The event was attended by H.H. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown
Prince of Dubai and Chairman of Dubai Executive Council, H.H. Sheikh Maktoum bin Mohammed
bin Rashid Al Maktoum, Deputy Ruler of Dubai, H.H. Lt. General Sheikh Saif bin Zayed Al
Nahyan, Deputy Prime Minister and Minister of the Interior, H.H. Sheikh Mansour bin Mohammed
bin Rashid Al Maktoum, Sheikh Nahyan bin Mubarak Al Nahyan, Minister of Tolerance,
Mohammad bin Abdullah Al Gergawi, Minister of Cabinet Affairs and The Future and Chairman of
ASF, along with a number of ministers and senior officials.
Speaking to delegates at the 10th annual Arab Strategy Forum in Dubai, former French president
Francois Hollande said that given a looming Brexit and the UK’s departure from the European
Union, France is an opportune position as the only EU nuclear power to lead a new defensive
posture for Europe.
The forum draws global thinkers, visionaries, academics and business leaders to Dubai every
year. World experts at the forum echoed Hollande’s concerns that economic, political and religious
challenges lie ahead in an uncertain 2018 regionally and globally.
Forum panelist Dr. Robert Gates, former United States secretary of defence who served under
eight American presidents, said, while speaking about the North Korean threat, that the isolated
country will continue to tempt world powers, including the United States, in its weapons testing.
"I think 2018 will see North Korea have a proven Intercontinental Ballistic Missile capability to
deliver a nuclear weapon anywhere in the world," Gates said. That said, Gates added that there
will be "a settling down" of the sabre rattling between North Korea and the US.

Oman: OPWP to study feasibility of first waste-to-energy
Oman observer - Conrad Prabhu
Plans for an ambitious Waste-to-Energy project — the first of its kind in the Sultanate — are being
firmed up with the Oman Power and Water Procurement Company (OPWP) — the nation’s sole
procurer of all new power and related water capacity — preparing to commission a feasibility
study into the landmark scheme.
The venture is based on a proposal floated by Be’ah — the Sultanate’s solid waste management
flagship — which has long advocated for a number of waste-to-energy schemes as possible
solutions to tackle the prodigious quantities of municipal waste ending up in landfills around
Oman.
Further details about this important initiative are expected to be presented at the Oman Waste and
Environmental Services Conference & Exhibition (OWES), which opens at the Sheraton Oman
Hotel today. The two-day event, organised by well-known events management firm Oman Expo in
partnership with Be’ah, will be formally inaugurated by Mohammed bin Salim al Tobi, Minister of
Environment and Climate Affairs.
Speaking ahead of the OWES event, a high-level executive of OPWP — member of Nama Group
(formerly the Electricity Holding Company) — said the state-owned procurer has plans to study
the feasibility of a waste-to-energy scheme based on Be’ah’s proposal. Brian Wood, Planning &
Economics Director at OPWP, referenced the proposed project in the context of OPWP’s ongoing
strategies to support the nation’s transition from gas-based electricity generation to renewables
and other sustainable energy sources.
The comments came during a forum hosted by The Embassy of the Kingdom of the Netherlands
in the Sultanate on the theme, ‘Energy Transition in Oman’, at the Crowne Plaza Muscat
yesterday.

Later, in remarks to the Observer, Wood stated: “As the buyer of the output from that project,
OPWP will do a feasibility study, as a first step, to evaluate the economics of the project before we
approach the government for approval for the development (phase).”
Be’ah, which oversees the solid waste sector in the Sultanate, is expected to be the source of the
feedstock for the waste-to-energy scheme, comprising mainly incinerable waste harvested from
landfills.
As such, Be’ah will not be the operator — per se — of the proposed scheme, which if proven to be
economically feasible, is expected to be procured on a long-term Power Purchase Agreement
(PPA) similar to contracts underpinning existing gas based power projects, as well as the
proposed solar PV utility as well, the executive explained.
A tender for the feasibility study for the waste-to-energy scheme is expected sometime early next
year, Wood added.
Wholly government owned Be’ah has mooted at least four schemes to harness the energy
potential of waste for generation of electricity at various locations around the country. These
proposed projects envisage the utilisation of mainly municipal solid waste as fuel, but other waste
streams as well. In South Al Batinah Governorate, Be’ah has proposed a waste-to-energy scheme
where the energy output will be used in the desalination of seawater.
In Dhofar Governorate, the company has unveiled plans to set up a plant for the manufacture of
high calorific Refused Derived Fuel (RDF), which can be used as a fuel source in cement
industries or in waste-to-energy schemes.
Yet another scheme mooted by Be’ah envisions the use of waste generated as a result of
Petroleum Development Oman’s oilfield operations in the production of steam for Enhanced Oil
Recovery (EOR) in Qarn Alam. Also on the table is a biogas recovery project planned in Barka.

Oman: Petrofac awarded contract for Khazzan Phase 2
Source: Petrofac
Petrofac has been awarded a lump-sum contract worth approx. US$800 million by BP for
the Phase 2 central processing facility (CPF) at the Khazzan Phase 2 (Ghazeer) gas
development in the Sultanate of Oman. This follows the US$ 1.4 billion Phase 1 CPF Khazzan
project, awarded to Petrofac in February 2014, which celebrated first gas on 22 September this
year.
The project comprises the addition of a third gas train with a capacity for nominally handling 500
million standard cubic feet of gas per day (mmscfd), which will help drive increased total
production capacity from the CPF to 1,500 mmscfd. The Engineering, Procurement, Construction
and Commissioning (EPCC) scope of work also includes liquid and compression trains and
associated infrastructure, as well as brownfield work associated with connecting the Phase 1 and
2 facilities.
Ayman Asfari, Petrofac Group Chief Executive commented:
'Petrofac has executed a large number of projects for BP across many aspects of our business
and we are delighted to be supporting them on the next phase of this pioneering project in Oman.
We have a very strong record for project execution in Oman and as part of this have delivered
significant in-country value. We look forward to continuing to demonstrate our commitment to a
sustainable and long-term presence in the Sultanate through the safe and timely delivery of this
project for BP.'
Bernard Looney, Chief Executive Upstream at BP, said:
'The successful start of production from Khazzan Phase 1 was a major milestone for BP in 2017.
We are now building on this, deepening our partnership with the Sultanate of Oman, as we work
towards development of the second phase and this award to Petrofac will continue the relationship
that delivered Phase 1.'
Elie Lahoud, Petrofac Senior Vice President, Operations said:
'We are proud to have been part of the Khazzan journey since the outset of Phase 1. This new
award comes shortly after the start of production from the Phase 1 CPF facilities in September.
That achievement provides us with a proven delivery model that, coupled with the knowledge
gained from the earlier project and the strong support from our contractors, positions us well to
deliver a great project for BP and Oman.'
BP Oman is lead partner in the Khazzan project with a 60% interest. Oman Oil Company
Exploration & Production holds 40%.

U.S. Is Exporting Oil and Gas at a Record Pace
Bloomberg - Laura Blewitt
The world’s largest oil consumer exported more hydrocarbons than ever before in 2017 and
shows no signs of slowing down.
You name it -- crude oil, gasoline, diesel, propane and even liquefied natural gas -- all were
shipped abroad at a record pace. While the surge comes many years after the shale boom
started, it can be traced straight back to the growth of horizontal drilling and fracking. U.S. exports
are poised to expand even further, as the fear of peak oil supply has all but vanished just as a new
demand threat emerges in the form of electric vehicles.
Crude Oil
Americans are expected to end the year pumping oil out of the ground at rates unseen since the
early 1970s. More and more of it is going overseas, giving OPEC a headache as the group
restrains its own output.
Last year the U.S. tested the export waters after a nearly four-decade-old ban was removed. But
this year, purchases of U.S. light, sweet crude have skyrocketed as pipeline and dock
infrastructure was built out and the wider price spread between Brent and West Texas
Intermediate crude coaxed more cargoes abroad.

Canada, once the only regular buyer of U.S. crude, finds itself competing with refiners in Europe
and Asia. China’s appetite for American oil is voracious: in April, China bought more than Canada
did for the first time.
“It’s pretty amazing, really,” said Matt Smith, ClipperData LLC’s director of commodity research.
"You learn to never say never in this market."
Of all the emerging trade flows this year, crude deliveries into Europe and Asia are most
surprising, according to Smith. Brent crude, the European benchmark, has maintained at least a

$4 a barrel premium to WTI since mid-August, and was $6.31 more expensive Tuesday. If the
price of European oil stays suspended into the New Year -- a good possibility after the Forties oil
pipeline was shut this week to repair a crack -- U.S. exports will continue hold above 1 million
barrels a day.
“The U.S. has fully integrated itself into the global market,” Smith said by phone. “You have U.S.
crude going into Europe, and European crude heading elsewhere because the U.S. is selling
crude into its own backyard.”
Fuel Bonanza
The growth of U.S. gasoline and diesel exports was more subtle this year, mostly filling the gaps
left as refiners in Latin America weren’t up to the task of meeting the region’s growing thirst for
fuel.
Refiners in the middle of the U.S. were pumping out fuel at a record pace, leaving a surplus of
refined products along the Gulf Coast ready to be shipped to eager Latin American buyers,
according to Mason Hamilton, an analyst with the U.S. Energy Information Administration.
“The Midwest is running at bonkers levels,” Hamilton said by phone from Washington. Weekly
preliminary government data show total gasoline exports hit a record 1.21 million barrels a day in
November.

July was a banner month for American refiners, who processed crude and exported distillate fuel
at a record clip, according to monthly data. The strong demand from Latin America will continue
into 2018, according to Hamilton.
NGL/LPG
Talk about alphabet soup. Exports of oft-confused natural gas liquids and liquefied natural gas
exports chugged along to records as well. NGLs like propane and butane are in high demand
around the world to feed plastics-making plants, heat homes and stoves. China and Japan
emerged as the biggest propane buyers in 2017.
LNG shipments are just warming up. The sole export terminal in the U.S., operated by Cheniere
Energy Inc., hit new highs this year after its capacity was expanded. Mexico, where demand for
natural gas increased following energy sector reforms, led all countries in 2017, followed by South
Korea and China. LNG is even reaching the Middle East, typically a top supplier of the fuel.

U.S: Refined coal is 20% of coal-fired power generation in 2017
Source: U.S. Energy Information Administration, Power Plant Operations Report
The U.S. power sector consumption of coal is increasingly shifting to refined coal, even as coal-
fired electricity generation decreases. Use of refined coal has increased from 17% of power sector
coal consumption in 2016 to 19% so far in 2017, based on data through September.
Refined coal has been processed to remove certain pollutants from raw, or feedstock, coal.
Electricity generators fueled by refined coal can produce fewer emissions than those fueled by
feedstock coal alone.
Refined coal is most commonly made by mixing proprietary additives to feedstock coal. These
additives contain a mixture of halogens (for example, bromine or chlorine) and metals to increase
the production of mercury oxides.
Oxidized mercury can be captured by using mercury emission reduction technologies such as flue
gas desulfurization scrubbers and particulate matter control systems. Oxidized mercury can also
be adsorbed by powder activated carbon injection (ACI) and captured by particulate matter control
systems.
EIA tracks the systems and control equipment that take advantage of the emission reductions
afforded by refined coal use in the Power Plant Operations Report, which is published monthly.
Based on year-to-date data through September 2017, 20% of subbituminous coal, 18% of
bituminous coal, and 17% of lignite coal were refined before being used to generate electricity.

The use of refined coal was encouraged by the American Jobs Creation Act of 2004, which
created a tax creditfor the production of refined coal as long as the coal is refined by facilities
unassociated with the consuming power plant.
Nevertheless, many refined coal processing facilities are located on power plant property. The tax
credit was designed to increase with inflation and was valued at $6.81 per short ton in 2016 and
$6.91 per short ton in 2017. By comparison, the Internal Revenue Service 2016 reference price of
feedstock coal was $53.74 per short ton, and the 2017 reference price was $51.09 per short ton.
To qualify for the refined coal tax credit, producers must have a qualified professional engineer
demonstrate that burning the refined coal results in a 20% emissions reduction of nitrogen oxide
and a 40% emissions reduction of either sulfur dioxide or mercury compared with the emissions
that would result from burning feedstock coal.
The producer must demonstrate the achievable emissions reductions every six months to
continue using the tax credit, and they can only qualify for the tax for the first 10 years the
processing facility is in service. Any facilities currently claiming the refined coal tax credit must
have been in service by December 2011.

UK Crack in Oil Pipe Roils Crude Trading From U.S. to Asia
Bloomberg
The effects of a hairline crack in one of the world’s most important oil conduits is rippling through
crude markets from Europe to the U.S. and Asia.
The Forties Pipeline System is being shut after the fault was discovered near Aberdeen, Scotland.
That pushed global benchmark Brent futures over $65 a barrel for the first time since June 2015,
extending their premium over U.S. marker West
Texas Intermediate. The outage will support
some types of oil from the Asia-Pacific region and
the Middle East as buyers look for alternatives to
North Sea supply, according to McKinsey Energy
Insights.
The U.K. link is critical because flows through it
make up the single largest constituent part of so-
called Dated Brent crude, which helps settle
more than half the world’s physical oil prices. It
feeds the Hound Point export terminal near
Edinburgh in Scotland and handles supplies from
over 80 fields, and the shutdown forced Apache
Corp.to suspend operations at its nearby Forties
asset.
The pipeline’s closure is a "force majeure
situation" that will prevent operator Ineos Group
Ltd. from moving oil through the system for the next few weeks, company director Tom Crotty said
in an interview on Bloomberg TV on Tuesday. Ineos will know in the "next few days" whether the
system will be closed for two or three weeks, he said.

“It’s more than just a supply disruption because it’s more significant as a price maker,” said Olivier
Jakob, an analyst at Petromatrix GmbH who’s based near Zug in Switzerland. “There’s one thing
which is the volume of oil which is lost, but it’s also that it’s a key price benchmark.”
Brent for February settlement rose 64 cents to $65.33 a barrel on the ICE Futures Europe
exchange at 9:54 a.m. in London. Prices gained $1.29 to $64.69 on Monday. The benchmark
traded at a premium of $6.90 to February WTI.
Controlled Shutdown
Ineos decided to perform a "controlled shutdown" of the pipeline so that it can perform a suitable
repair, according to a company statement on Monday. The operator discovered the crack during
routine maintenance, Crotty said.
"We can see visually there is absolutely no leakage from it," he said. While the crack appears to
have spread fairly recently, it’s not possible to say whether it existed before Ineos completed
its purchase of the pipeline system from BP Plc on Oct. 31, according to Crotty.
BP spokesman David Nicholas declined to comment.
Profits from turning crude into fuel in Europe may be squeezed by higher Brent prices, said Nevyn
Nah, an analyst at industry consultant Energy Aspects Ltd. While he seescurrent refining margins
in the region at about 50 cents to $1 a barrel above levels that would trigger cuts in operating
rates, he believes plants may begin bidding up alternative supplies from West Africa and the U.S.
if the outage is prolonged.
Outside Europe, the halt in Forties supply is expected to liftdemand for other light-sweet crudes
that typically have a lower sulfur content. Some grades from Asia-Pacific including Russia and
central Asia may prove to be alternatives, according to Tushar Tarun Bansal, a consultant from
McKinsey Energy Insights. Middle Eastern grades such as Abu Dhabi’s Murban crude could also
be supported, he said. Sellers of such grades may withhold offers for cargoes loading in February
as they assess the impact on demand, according to five traders.
Rare Halt
While routine maintenance work is commonplace for pipelines, halts related to cracks of this
nature are very rare. Two people directly
involved in lifting Forties crude said they couldn’t
remember seeing such a stoppage for at least
the last seven years, even if unplanned flow
reductions do arise from time to time. Richard
Longden, an Ineos spokesman, couldn’t confirm
the size of the fissure.
About 400,000 barrels of Forties crude were due
to load each day this month, according to a copy
of the grade’s loading program obtained by
Bloomberg. That’s about 40 percent of the
basket of crudes used to price the Dated Brent
benchmark. The others are Brent, Oseberg,
Ekofisk and Troll.
“We are working with the pipeline operator to find out more about the repair work, including the
impact to our production from the Forties field,” Apache said in an emailed statement. U.K. natural
gas jumped as much as 28 percent on Monday, the most since October last year.

Austrian Gas hub Explosion Rattles Europe’s Gas Market
Bloomberg - Rob Verdonck
Natural gas flows were set to recover in Europe after an explosion at an Austrian hub threatened
supplies already pinched by a closed pipeline in the North Sea and a cold snap across the
continent.
Oil company OMV AG, which controls the Baumgarten gas hub, managed to divert international
transit pipelines so that flows to Italy, Germany and Hungary can resume before midnight local
time, according to an emailed statement.
“We managed to technically isolate the affected area,” Stefan Wagenhofer, managing director of
OMV unit Gas Connect Austria GmbH, told ORF television. This allows the company to divert
international flows and “resume transit within hours.”
Natural gas and power prices earlier
jumped in Europe after the explosion,
and Brent crude oil futures rose above
$65 a barrel for the first time since June
2015, extending their premium over the
U.S. benchmark. Britain, which is
struggling to absorb the impact of a crack
that shut down a key North Sea pipeline
network, saw some of the biggest
increases.
A blast about 9 a.m. at the Baumgarten
compressor station killed at least one
person and injured at least 21 people,
interrupting flows at one of the main
points where Russian natural gas enters Europe. That followed two days of snow in London and
cooler-than-normal temperatures spread from the Alps to Scandinavia, which is raising demand
for heating fuels.
“The European gas market seems to be going through a perfect storm,” Massimo Di-Odoardo, an
analyst at Wood Mackenzie Ltd. in London, said by email.
Britain lacks the gas storage sites and web of interconnections that make most continental
European markets better able to cope with disruption. Reduced pipeline gas flows may increase
competition with Asia for liquefied natural gas cargoes this winter, according to WoodMac.
Front-month gas in Britain jumped as much as 23 percent to 73.7 pence a therm ($9.86 a million
British thermal units) on ICE Futures Europe, the highest since December 2013. The comparable
U.K. power contract rose as much as 15 percent, according to broker data compiled by
Bloomberg. Same-day gas soared as much as 46 percent.

Baumgarten, about 50 kilometers (31 miles) northeast of Vienna, transports the equivalent of a
10th of Europe’s gas demand.
Italian Supply
Flows on the Trans Austria Gas pipeline, which carries Russian gas to Italy, are set to resume by
midnight, Marco Alvera, the chief executive officer of gas transmission company Snam SpA, said
in an emailed statement.
Italy, which relies on Russian flows for 30 percent of its demand, earlier declared a state of
emergency for gas. OMV had initially said it would take “days” to fully restore the facility, roiling
power and gas markets across the continent.
For more on the Baumgarten accident, click here
A separate outage in the North Sea announced Monday affected both oil and gas flows. It will
support prices for some types of oil from the Asia-Pacific region and the Middle East as buyers
look for alternatives to North Sea supply, according to McKinsey Energy Insights. The link in the
Forties system offshore the U.K. is critical because flows through it make up the single largest
constituent part of so-called Dated Brent crude.
German power futures for next year climbed to the highest in more than four years, advancing as
much as 3.1 percent on the EEX exchange in Leipzig. Coal rose as much as 2 percent to $90.75 a
ton, the highest for a front-year contract since May 2013 on ICE Futures Europe. Power prices
also jumped in France and the Nordic region.
Gas flows into the U.K. surged to a four-year high overnight as shippers responded to higher
prices. LNG tankers may be able to fill some of the gap, but those vessels take days or even
weeks to arrive, said WoodMac’s Di-Odoardo. Europe may have to compete with Asia, the biggest
buyer of LNG, this winter, he said.
The market was already responding to a halt in production at some North Sea gas fields after a
shutdown of the North Sea Forties pipeline network. That boosted prices on Monday, when rare
snow fell across the U.K., forcing flights to be canceled in London and Birmingham. WoodMac
estimates the shortfall of supply from the Forties outage at about 10 percent of average winter
demand.

Compounding supply problems, the Norwegian network manager on Tuesday cut flows from
Troll, Europe’s largest offshore gas field, after an unplanned power outage that also affected other
sites in Norway, the U.K.’s biggest foreign supplier. Gas flows from Belgium and the Netherlands
also dipped from near-record levels after the explosionin Austria, as a constraint occurred on the
U.K. side of the BBL pipeline that delivers Dutch gas.
Baumgarten is Austria’s largest gas reception point and main distribution hub for imports from
countries including Russia, Europe’s biggest gas supplier. Moscow-based Gazprom PJSC said it
“is working on redistribution of gas flows and does its best to secure uninterrupted gas supplies to
the clients on this transport direction.”
Police are investigating the exact circumstances of the blast, which is assumed to be the result of
a technical incident, Gas Connect said on its website.
Rough Storage
The U.K. is more vulnerable than normal this winter because Centrica Plc is closing the nation’s
biggest storage site after more than 30 years. The Rough facility was able to meet as much as 10
percent of peak winter demand but that is now much reduced as it pumps out its last remaining
fuel.
It takes about two weeks to bring LNG from Qatar, the U.K.’s biggest supplier of the super-chilled
fuel. Only one tanker, the Bu Samra, is confirmed as arriving in the U.K. this month. The first
tanker from Russia’s Arctic plant Yamal LNG may also head to Britain and would arrive in about
five days, according to shipping website sea-distances.
The supply crisis in the U.K. may lead to more LNG imports from the U.S.’s Sabine Pass plant in
Louisiana, said Zach Allen, president of vessel-tracking company Pan Eurasian Enterprises. The
addition of the Cove Point facility in Maryland would cut shipping times to Europe, he said. The
Dominion Energy Inc.’s facility is preparing to start production.
“The good news is Europe will not "freeze in the dark," the bad news is keeping the lights and the
heat on may not be pretty,” Allen said.
Crack and Explosion Show Risks of Europe's Aging Energy Networks
Just before 9 a.m. Tuesday, the gray skies over the far eastern reaches of Austria lit up with an
explosion at a natural gas switching station, killing one worker, injuring almost two dozen others--
and sending shockwaves through Europe’s energy supply infrastructure.
The blast in Baumgarten, a village about a mile from the border with Slovakia, generated a fireball
so hot that it melted the plastic on cars parked half a kilometer away. With about 10 percent of
Europe’s gas needs passing through the station, the wholesale price of the fuel spiked by 23
percent, to its highest level in four years, as cold weather settled over much of the Continent.

“I rushed out,” said Walter Hansie, 88, standing in front of his grandson’s tractor shed about a
kilometer from the gas facility. “A fireball was rising in the air. Nothing like this has ever happened
here before.”
The Baumgarten explosion highlights the fragility of Europe’s energy infrastructure. Hours earlier,
a crack no wider than a hair and no longer than a hand shut down the Forties Pipeline System, a
web of mostly undersea pipes that brings crude from platforms in the North Sea. And the Rough
gas storage site--built to stockpile U.K. energy supplies--is being permanently
decommissioned after deteriorating pipelines made it unsafe to operate.
Most of Europe’s gas infrastructure was built from the 1960s to the 1980s, as the Soviet Union
began tapping Siberian fields to pump supplies westward in exchange for hard currency and
production expanded in the North Sea. Like an old washing machine or refrigerator, those facilities
require increasing levels of maintenance--just as rising demand for energy means they’re seeing
more wear and tear. With today’s low commodity prices, replacing most of the equipment is out of
the question. So repairs, and worries about dangerous incidents, will only become more
commonplace.
“Obviously, managing anything capital intensive is a challenge whether it’s new or old,” said
James Drummond, a consultant at Lloyd’s Register, an engineering advisory firm. “As it gets
older, those challenges change and most likely do increase.”
While the oil and gas industry seeks to mitigate risk and taps new technologies to extend the
useful life of equipment, the U.K. government says about half the oil and gas platforms in the
North Sea have outlived their expected lifespans. And the European Union has concluded that the

bloc’s energy infrastructure isn’t suited to fulfill future demand, with the gas and power networks
needing 210 billion euros ($247 billion) of investment.
The Forties system, begun in the 1970s, can carry some 500,000 barrels of crude a day from
about 80 fields. Ineos AG, which operates the network, said the problems may have occurred
because the pipeline abutted a rock. Others have said the nature of the issue--a crack rather than
the more-typical corrosion--raises broader concerns about the pipeline.
The network “started in 1975, so clearly maintenance of the line is essential, you’re going to find
these issues,” Ineos director Tom Crotty told Bloomberg Television. “We want to make this repair
as quickly as we possibly can because we’re losing a lot of money.”
Dating to 1983, the Rough gas storage facility sits underground in a depleted oil reservoir, relying
on a series of pipes to inject and withdraw gas stored for the winter. Steel casings designed to
keep gas from leaking had deteriorated so much that Centrica Plc, the unit’s operator, last year
initiated a series of shutdowns for repairs.
Because Rough is the U.K.’s only long-term gas storage site, it had been deemed crucial to the
country’s energy security. But facing more than $100 million in repair bills, Centrica this summer
decided to close the facility for good.
In Baumgarten, emergency workers were still swarming the gas hub hours after the explosion. A police helicopter
circled smoking debris. Fire engines continued to rush along the narrow road leading to the site nestled amid bucolic
fields of grain. The fire superintendent at the area said he is still trying to understand what happened.
David Aron, founder of Petroleum Development Consultants in London, said the Baumgarten facility, which opened in
1959, is coming under increasing levels of stress. With the current cold weather across Europe, demand is surging as
consumers crank up the thermostat, so the pumping station was likely reaching the limits of its capacity.

NewBase December 13 - 2017 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil prices recover on big US crude stock drawdown
Reuters + Bloomberg + NewBase
Brent had settled lower on Tuesday on profit-taking following a ramp up in prices on the closure of a key North
Oil prices rose on Wednesday as industry data showed a larger-than-expected drawdown in U.S.
crude stockpiles, while expectations for an extended shutdown of a major North Sea crude
pipeline also continued to bolster markets.
Brent crude was up 64 cents, or 1 percent, at $63.98 a barrel by 0413 GMT. It had settled down
$1.35, or 2.1 percent, on Tuesday on a wave of profit-taking after news of a key North Sea
pipeline shutdown helped send the global benchmark above $65 for the first time since mid-2015.
U.S. West Texas Intermediate crude was up 42 cents, or 0.7 percent,at $57.56 a barrel, having
settled the previous session down 85 cents.
Oil price special
coverage

Britain's biggest pipeline from its North Sea oil and gas fields is likely to be shut for several weeks
for repairs, its operator said on Tuesday.
The pipeline, which carries about 450,000 barrels per day (bpd) of Forties crude, was shut after
cracks were found. It has particular significance to global markets because Forties is the largest
out of the five crude oil streams that underpin the dated Brent benchmark.
A number of producers, including BP and Royal Dutch Shell, said they had closed down oil fields
in response.
"Four weeks is much longer than most projections," said Tomomichi Akuta, senior economist at
Mitsubishi UFJ Research and Consulting in Tokyo. "The pipeline incident came just when the
markets are tightening on coordinated production cuts."
After settlement on Tuesday, industry group the American Petroleum Institute said crude stocks in
the United States fell by 7.4 million barrels last week. That is almost twice the decline of analysts'
expectations for a drop of 3.8 million barrels.
Gasoline stocks rose by 2.3 million barrels, compared with analysts' expectations in a Reuters poll
for a 2.5 million-barrel gain. Distillate fuels stockpiles, which include diesel and heating oil, rose by
1.5 million barrels, compared with expectations for a 902,000-barrel gain, the API data showed.
The U.S. government's Energy Information Administration releases its weekly oil report on
Wednesday.
Selling had gained pace on Tuesday after the U.S. Energy Information Administration said in its
monthly short-term energy outlook that U.S. crude oil output will rise by 780,000 barrels per day
(bpd) to a record-high of 10.02 million bpd in 2018.
Crude Oil Price Forecast December 13, 2017, Technical Analysis
The crude oil markets initially tried to rally, but then broke down significantly below
support. This is a market that continues to be very noisy, but this return to lower levels
suggests that we are in fact going to continue to struggle.
Christopher Lewis

WTI Crude Oil
The WTI Crude Oil market rallied slightly during the trading session on Tuesday, but rolled over
rather drastically, slicing through the $57.50 level. Because of this, it’s a very negative looking
move, but I think that the $57 level is offering a certain amount of bullish pressure that could
cause a bit of a bounce.
I think that the longer-term outlook for oil is starting to roll over, as hedge funds have been taking
profits over the last couple of sessions. Market participants will have to deal with the lot of noise in
this market, but eventually we will settle into some type of range.
Brent
Brent markets also fell over after initially trying to rally, finding the $65 level a bit too expensive.
By doing so, we have broken below the $64 handle, finding support at the $63.50 level. I think we
could bounce from here, but if we were to break down below the $63 handle, at that point the
sellers would get aggressive, as it would essentially form a “two-day shooting star.
” I think volatility is here to stay, so pay attention, I look at this market as a binary opportunity, a
move above $64 tells us to serve buying, move below the $63 handle tells us to start selling. In
the meantime, it’s a lot of choppiness that essentially isn’t ready to put certainty into the
marketplace. Because of this, be patient and allow the market to tell you which direction to get
involved in.

NewBase Special Coverage
News Agencies News Release December 13-2017
Why the North Sea Oil Pipe Is Critical for Global Crude
By Julian Lee and Laura Hurst
The halt of the Forties Pipeline System after the discovery of a hairline crack matters to global
crude markets more than most such incidents. The North Sea oil price, its relative price and a
measure of the strength of the Brent crude market all surged after the halt. Oil refiners’ margins for
processing North Sea oil also slumped.
1. What is the Forties Pipeline System?
It’s a network of offshore and onshore oil and gas pipelines and terminals with the capacity to
carry 575,000 barrels of crude per day from around 85 fields in the North Sea, including several in
the Norwegian sector.
Crude is piped via a terminal at Cruden Bay on the Scottish coast to the Grangemouth refinery
and petrochemical plant, as well as to the Hound Point export terminal near Edinburgh. Average
daily throughput in 2016 was 445,000 barrels a day, according to Ineos, which took control of the
pipeline on Oct. 31 from prior operator BP Plc.
The discovery of a crack just south of Aberdeen meant that the entire line has to be shut, which
means all fields connected to the line will be affected. BP hasn’t commented so far on when it last
inspected the area where the crack was found.

2. Why is the Forties system important to the world?
Its importance goes far beyond the fact that it carries about 50 percent of U.K. oil production.
Forties is one of the North Sea grades that determines the value of the Brent futures contract.
Brent, in turn, affects the pricing of crude oil around the world.
A spike in Brent prices has a knock-on effect on crude exports from the Middle East and West
Africa. Official selling prices for Middle Eastern crude from countries like Saudi Arabia, Iraq,
Kuwait and Iran for buyers in Europe are often expressed as differentials to Brent. West African
crude exports are also priced relative to Brent.
3. What impact might this have on futures?
The absence of Forties could bolster Brent assessments, even without the inflationary effect of a
supply disruption. That’s because the Brent benchmark is based on the underlying physical
market, with Forties the biggest constituent.
The two are linked through the Exchange of Futures for Physical mechanism, which allows
participants to exchange futures positions for physical ones, according to ICE Futures Europe.
The value of the physical quote is set in part by the lowest of the constituent grades. This is often
Forties.
4. What impact might this have on producers?
A spike in Brent prices relative to other benchmark grades, such as WTI or Dubai, could make
West African and North Sea grades less competitive in Asia than rival Middle Eastern flows, which
are priced relative to Oman and Dubai crudes for Asian sales.
It could also make crudes from North and South America, which are priced against WTI, more
competitive in Europe and Asia against those grades priced relative to Brent.
The loss of around 400,000 barrels a day of Forties crude -- the amount that gets moved in
practice -- will boost the price of other similar grades, as buyers of physical cargoes look for
alternatives to meet their needs. Other North Sea grades, as well as West African and possibly
Caspian Sea crudes, could see higher prices as a result.
5. What does this mean for traders?
Ineos said the halt represents a “force majeure situation," though it didn’t immediately declare one.
Doing so would allow Ineos to miss contractual obligations. Either way, the simple fact is that for
two weeks, Forties barrels will stop flowing.
That will pose issues for traders, who won’t be able to collect the barrels they expected and supply
them to refineries. Many will have to pay more for other benchmark North Sea grades, urgently
seek cargoes from outside the region or consider purchasing barrels that are currently held in
storage. Alternatively, refiners may have to reduce refining rates. For oil traders the bottom line is
there will be a smaller pool of crude making up the physical benchmark grades for at least two
weeks.
6. What’s the impact on Ineos?
The company says it can keep running its Grangemouth refinery, which takes around 20 percent
of the crude piped through the Forties system. To do so, it will have to dig into its stocks or have
crude delivered through its Finnart pipeline in the west of Scotland. Finnart doesn’t handle Forties,
instead receiving barrels that are often imported from other locations.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
The Editor :”Khaled Al Awadi” Your partner in Energy Services
NewBase energy news is produced daily (Sunday to Thursday) and
sponsored by Hawk Energy Service – Dubai, UAE.
For additional free subscription emails please contact Hawk Energy
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 27 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 December 2017 K. Al Awadi

New base 13 december 2017 energy news issue 1113 by khaled al awadi-compressed

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to New base 13 december 2017 energy news issue 1113 by khaled al awadi-compressed

Similar to New base 13 december 2017 energy news issue 1113 by khaled al awadi-compressed (20)

More from Khaled Al Awadi

More from Khaled Al Awadi (20)

Recently uploaded

Recently uploaded (20)

New base 13 december 2017 energy news issue 1113 by khaled al awadi-compressed