Focused Energy Report - XVIII...3 Executive Summary The Focused Energy Report for the month of September 2013 reviews the Energy Prices taking in consideration the comparison with

Focused Energy Report -

XVIII

Monthly Report-September 2013

Energy Desk

GAIL (India) Ltd.

1

Table of Contents

I. Energy Prices 4

II. Under-Recoveries on Petroleum Products 4

III. Can RLNG Replace High Price Liquid Fuel for Power Generation? 5

A. All India Generating installed capacity (MW) ........................................................................................................................... 5

IV. Natural Gas Hubs in Europe 7

A. CENTRAL EUROPEAN GAS HUB AG ............................................................................................................................................. 7

B. The National Balancing Point .......................................................................................................................................................... 8

C. The Title Transfer Facility .................................................................................................................................................................. 9

D. The ―Transit Hub‖: ZEE ....................................................................................................................................................................... 9

E. The Gaspool Balancing Services hub ........................................................................................................................................ 10

F. NetConnect Germany ..................................................................................................................................................................... 10

G. The Points d‘Echange de Gaz ...................................................................................................................................................... 10

H. The Punto di Scambio Virtuale .................................................................................................................................................... 11

I. Conclusions ......................................................................................................................................................................................... 11

V. LNG import for Non -FTA Countries from USA 12

A. US Trade Agreements ..................................................................................................................................................................... 12

B. US FTA ................................................................................................................................................................................................... 12

C. Non FTA Export Terminals of LNG at USA .............................................................................................................................. 13

1. Sabine Pass LNG Terminal in Cameron Parish Contracts: ........................................................................................... 14

2. Freeport LNG Terminal in Quintana Island, Texas Contracts ..................................................................................... 14

3. Lake Charles Terminal in Lake Charles, Louisiana ........................................................................................................... 15

4. Other Projects in line.................................................................................................................................................................. 15

VI. Geothermal Energy 16

A. Introduction ........................................................................................................................................................................................ 16

B. Geothermal Markets ........................................................................................................................................................................ 17

2

List of Tables:

Table 1: List of Applicants in line for Non- FTA Export Approvals: USA .................................................................................... 15

List of Figures

Figure 1: Natural Gas Hubs- Europe ........................................................................................................................................................... 7

Figure 2: Austria Pipeline Network .............................................................................................................................................................. 8

Figure 3: UK Pipeline Network ....................................................................................................................................................................... 8

Figure 4: Belgium Pipeline Infrastructure .................................................................................................................................................. 9

Figure 5: Germany Pipeline Infrastructure ............................................................................................................................................. 10

Figure 6: France Pipeline Infrastructure .................................................................................................................................................. 10

Figure 7: Italy Natural Gas Infrastructure ............................................................................................................................................... 11

Figure 8: USA Non- FTA Export Permission Granted Ports ............................................................................................................. 14

Figure 9: Geothermal Energy ....................................................................................................................................................................... 17

Figure 10: World Pattern of Plates ............................................................................................................................................................ 17

Figure 11: Average Annual Growth Rates of Renewable energy 2007-2012 ........................................................................... 17

3

Executive Summary

The Focused Energy Report for the month of September 2013 reviews the Energy

Prices taking in consideration the comparison with last month. There‘s an increase of

around 4 % in the WTI oil prices, the prices of natural gas Henry Hub have also increased

by 4.7 % and there‘s an increase of roughly 6.5 % in the crude oil prices of Brent.

Fluctuations are not normalised in comparison to last month especially for Brent and we

see rise in price of all three indices there can be multiple reason but the major concern is

military actions foreseen by US on Syria.

The under recoveries of the petroleum sector pertaining to Diesel, LPG and Kerosene have

also included.

The next discussion in the report is about RLNG‘s market in India and its potential

buyers. A lot has been said and written about potential sources of natural for the country

and their acceptability in the industry. Here an in-depth analysis is carried in regard with its

substitution with other liquid fuels and its feasibility as option is being considered here.

Natural gas market varies from region to region and its trade practices too. European

market which is a more matured one is considered here as centre point and is discussed at

length. All major natural gas hubs across the continent are discussed and their function

country wise are covered in this section of the report.

In the later part we some recent happenings across the western world. A close analysis

of the DoE approvals for non –FTA exporting ports is being carried along with trade

practices of USA with other countries. Towards the end segment of this analysis a list of

projects is there in accordance with their priority with DoE whose approvals are awaited for

non-FTA countries specifically.

A shift in approach towards energy security concerns has been seen across the globe.

There are different sources of energy being explored for above said one such is geothermal

energy. Countries like United States, China, Sweden, Germany, and Japan are forerunner in

this segment in world and have significant usage be it for heating or as electricity

generation.

4

I. Energy Prices

WTI crude oil ($/barrel) BRENT crude oil ($/barrel) Natural Gas ($/mmbtu)

Average International FOB Price & Exchange rate:

II. Under-Recoveries on Petroleum Products

(A) Product-wise Under-recovery of Public Sector Oil Marketing Companies(OMCs):

*additionally, a subsidy of Rs 0.82/Litre on PDS kerosene & Rs 22.58/Cylinder on Domestic LPG is provided by the

Government.

(B) The OMCs have reported the following under recovery during 1st quarter 2013-14:

Price on 1st August 2013 Price on 30

th August

2013 Change % Change

Brent crude oil 107.7 115.16 7.46 6.48 %

WTI crude oil 105.03 108.8 3.77 3.47 %

Henry Hub Natural Gas 3.45 3.6 0.17 4.7 %

Particulars Unit 29-Aug-13 Fortnight

(Aug 1-15, 2013)

Crude Oil(Indian Basket)

- In US Dollar

- In Indian Rupees

($/bbl)

(Rs/bbl)

114.07

723.68

106.64

6222.76

Exchange Rate (Rs/$) 67.71 61.13

Product Unit Under-recovery

( eff. 16th Aug 13)

Diesel (Rs/Litre) 10.22

PDS Kerosene* (Rs/litre) 33.54

Domestic LPG* (Rs/Cylinder) 411.99

Product Under-recovery

( eff. 16th Aug 13)

Diesel 10554

PDS Kerosene 6507

Domestic LPG 8518

5

III. Can RLNG Replace High Price Liquid Fuel for Power Generation?

All India region wise generation installed capacity (mw) of power utilities including allocated shared in joint and

central sector utilities.

S.No. REGION THERMAL NUCLEAR HYDRO R.E.S@

TOTAL COAL GAS DSL TOTAL

(Renewable) (MNRE)

1 Northern 33073.50 5031.26 12.99 38117.75 1620 15467.75 5589.25 60794.75

2 Western 50244.51 8988.31 17.48 59250.30 1840 7447.50 8986.93 77524.73

3 Southern 25182.50 4962.78 939.32 31084.60 1320 11353.03 12251.85 56009.48

4 Eastern 23727.88 190.00 17.20 23935.08 0.00 4113.12 454.91 28503.11

5 N.Eastern 60.00 1187.50 142.74 1390.24 0.00 1242.00 252.68 2884.92

6 Islands 0.00 0.00 70.02 70.02 0.00 0.00 6.10 76.12

7 All India 132288.39 20359.85 1199.75 153847.99 4780 39623.40 27541.72 225793.11

@ Renewable Energy Sources (RES) includes Small Hydro Project (SHP), Biomass Power (BP), Urban & industrial

waste power (U & I), Wind Energy and Solar Power.

A. All India Generating installed capacity (MW)

Total diesel based

power generation

capacity is 1199.75

MW & out of this

939.32 MW power

generation capacity

is installed in

Southern region

only. If we can

replace their fuel

with our RLNG, then

they will be

required of 5-10

MMSCMD of RLNG.

If we see Annual Report of CEA on Fuel Supply/Consumption for Gas based power stations in the county then we

find that

Installed

Capacity

( MW)

Gen

(MUs)

Gas

Requirement

at 90% PLF

( MMSCMD)

Gas Allotted

(MMSCMD)

Avg.Gas

Supplied/

Consumed+

(MMSCMD)

Alternate fuel used

(KL)

Gen Loss

due to

short

supply of

gas Naptha HSD

16926.27 92022.77 81.78 67.11 56.37 185288.42 225.60 10855.84

*Normative gas requirement at 90% PLF taking GCV of gas=9000 k.Cal/SCM, station heat rate-2900k.cal/kWh for

open cycle and 2000 K.Cal/kWh for combined cycle

From this we can see that gas supplied to power generation companies was 56.37 MMSCMD in comparison of

gas requirement of 81.78 MMSCMD. They used Naphtha and HSD to compensate of shortfall of natural gas.

6

COMPARISON OF PRICE AND ENERGY OF SPOT LNG WITH LIQUID FUELS

S.No Particulars Unit Spot

RLNG Naptha FO LSHS LDO Propane LPG

1

Gross Calorific of liquid of

fuel

Kcal/Kg

11370 10200 10300 10700 11900 11850

2

Gross Calorific

value spot RLNG

Kcal/SCM 10000

3 Cost of

Liquid fuels Rs/MT - 60970 41450 43290 52789 58500 65251

4 Cost Liquid fuels SU $

$/MT

1016.17 690.83 721.50 879.82 975.00 1087.52

5

One ton of Liquid fuel equivalent

to

MMBTU

45.12 40.48 40.87 42.46 47.22 47.02

6

One MMBTU

equivalent to

Kg

22.16 24.71 24.47 23.55 21.18 21.27

7

One MMBTU

equivalent to

SCM 25.2

8

One ton of Liquid fuel equivalent

to

SCM

1137 1020 1030 1070 1190 1185

9 Cost of

energy in $

$/MMBTU 15 22.52 17.07 17.65 20.72 20.65 23.13

10 Cost of

energy in Rs

Rs/MMBTU 900 1351.31 1024.06 1059.13 1243.25 1238.82 1387.62

11

Benefit of using Spot

RLNG in place of

one ton of Liquid fuel

Rs

20362.86 5021.43 6504.29 14574.71 16000.00 22929.57

conversion rate1$=60 Rs

Presently there has been shortage in availability of APM gas and there is no supply of gas to any power plant

after march-13. This has resulted in loss of generation of power through gas based power plant. In case of gas

based power stations having provision for the use of alternate fuels, such as naphtha, HSD, generation has been

augmented by use of such fuels. The actual generation using liquid fuels is costlier on prevailing high costs of

these fuels resulting in high cost of generation.

From the above comparison this is clear that use of RLNG is cheaper than the use of other liquid fuel even at 17

$/mmbtu. We should target these power generation companies and make them convenience for using RLNG

instead of other costlier fuel which they are using in present.

7

IV. Natural Gas Hubs in Europe

Natural gas is priced and traded at different locations throughout the country. These locations, referred to as

'market hubs', exist across the country and are located at the intersection of major pipeline systems.

Major hubs in Europe are as follow:

UK NBP 1996

Belgium Zeebrugge 2000,

Denmark TTF 2 0 0 3

Italy PSV 2003

France PEGs 2004

Austria CEGH 2005

Germany EGT 2006, HubCo 2002

German Gaspool and NCG in 2009.

Figure 1: Natural Gas Hubs- Europe

A. CENTRAL EUROPEAN GAS HUB AG

Central European Gas Hub (CEGH) located in Vienna, Austria, is the one of the leading hub for trading gas from

the Eastern to Western Europe. It was established in the year 2005. As an operator of Virtual Trading Point, CEGH

opens international gas traders a gateway for trading in the newly developed exit/entry zone of Austrian market.

Austria‘s role as a gas transit country linking East with West will increase significantly with the go ahead of South

Stream and Nabucco West projects.

8

It actually comprises 6

tradable locations across

Austria of which

Baumgarten is by far the

most important and the

one that registers the

most trades.

Baumgarten is situated

in the east of the

country on its border

with Slovakia. The

import terminal itself is

vast and is owned and

operated by Gas

Connect Austria.

Approximately one third

of all Russian gas supplies to Western Europe come through Baumgarten for onward transportation to Germany,

Italy, Slovenia and Hungary, as well as for supplying the national market. Austria is probably the most complex

country in Europe in terms of its gas network. It is actually 3 separate networks, known as Control Areas; the main

one in the east containing the transit pipelines, a high pressure transmission grid and a high and low pressure

distribution grid.

There are two further, much smaller networks in the west central and west of the country: Tyrol and Voralberg.

These two Control Areas are not physically connected to the Eastern Area, nor to each other but have direct

pipeline connections to Germany and so can be considered as separate distribution grids off the German NCG

system. A further complication is that the Austrian gas industry works to three different gas days: starting at 8am

for transit gas from Russia; at 6am for Austrian transmission; and midnight for Austrian distribution.The Exchange

offers different types of contracts. It started a Spot market in December 2009 and added a Futures market a

year later in December 2010.

B. The National Balancing Point

The National Balancing Point, referred as the NBP, is a virtual trading location

for the sale and purchase and exchange of UK natural gas. It is the pricing and

delivery point for the ICE (Inter-continental Exchange) natural gas futures

contract. It is the most liquid gas trading point in Europe[citation needed] and

is a major influence on the price that domestic consumers pay for their gas at

home[citation needed]. Gas at the NBP trades in pence per therm. The NBP

market has been a ‗mature‘ market for over 10 years now and therefore its

potential for further growth might be expected to be more limited.

Figure 2: Austria Pipeline Network

Figure 3: UK Pipeline Network

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C. The Title Transfer Facility

The Title Transfer Facility (TTF) is a virtual market place enabling national and international parties in the gas

sector to transfer ownership of gas that is already in the transport network to another party, effectively the whole

of the Dutch gas grid. The TTF, operated by Gas Transport Services B.V. (GTS), experienced substantial growth in

2008.The growth figures demonstrate that the Netherlands is becoming a European market place and is

increasingly attractive to gas traders and suppliers. This is crucial position as a gas interchange.

It offers market parties the opportunity to transfer gas that is already present in the system (‗entry-paid gas‘) to

another party. Using the TTF, it is straightforward for gas that is brought into the national grid via an entry point

to change ownership before it leaves the national grid at an exit point.

The TTF serves to promote gas trading. The TTF serves as a virtual entry point in the portfolio of a shipper or

trader who buys gas on the TTF or as a virtual exit point in the portfolio of a shipper or trader who sells gas on

the TTF.

D. The “Transit Hub”: ZEE

The ―transit‖ hubs are hubs that are

actual transit locations, or physical

points, at which market participants

can choose to trade gas; however,

their primary role is to facilitate the

transit of large quantities of gas for

onward transportation. Indeed, the

two transit gas hubs of North West

Europe, Zeebrugge in Belgium and

Baumgarten in Austria have the

capacity between them to handle

some 130bcma, or around 45% of the

demand in the downstream countries

they provide gas to32. This makes

these two locations very important in

the physical context of gas deliveries

to Western Europe; however, the

nature of their formation means that trading

has not developed as much as in

neighboring hubs.

ZEE is a physical hub centered on the actual location of the gas installations and meter points outside of the

town of Zeebrugge in north western Belgium. Trading at ZEE was lackluster for many years; saw a marked

increase in 2009, as did all the gas hubs, continuing to rise slowly since then. In absolute terms though, the

traded volumes at ZEE lag a long way behind the British NBP and its immediate neighbor, TTF, and are currently

similar to the traded volumes of the German NCG hub. Nevertheless, the number of participants has continued

to grow, reaching 78 member companies in 2011.

The purely physical set up has its advantages for the transportation of large quantities of gas and ZEE is indeed

ideally placed geographically to take advantage of gas flows to and from France, Britain, Norway, the

Netherlands, Germany and the adjacent LNG terminal and Belgian gas grid37. However, the fact that it is not a

virtual hub, covering all of the Belgian grid and that trading and the balancing regime at the Zeebrugge hub is

subject to shortfalls and pro-ration of volumes, has left this hub trailing behind as other Continental European

hubs advance in respect to their trading activities.

Figure 4: Belgium Pipeline Infrastructure

http://www.gastransportservices.nl/en/shippers/our_services/ttf_gas_exchange

10

E. The Gaspool Balancing Services hub

GPL is operated as a

physical hub rather than a

virtual one and that the hub

operator uses "balancing

services" in its title is

indicative of the physical

nature of this hub. Although

it does cover a large

geographical area, it is

mainly used by traders to

adjust their storage

portfolios and in relation to

the other German hub, NCG.

Nevertheless, traded volumes

which had remained more

modest than the main NWE

hubs, have seen a burst of

activity in the first quarter of

2012, rising 119%

over the

same period last year and in

so doing, overtaking in

absolute terms the volumes traded at the French PEGs.

F. NetConnect Germany

The ‗new‘ NCG was formed on 1st October 2011 by the merger of the Thyssengas H-Cal zone and the NCG H-Cal

zone; the new company has 6 TSO shareholders57, each holding an equal 1/6th share. NCG had been considered

until only recently as the ‗most promising‘ of the NWE gas hubs and indeed, total traded volumes have increased

significantly.

G. The Points d’Echange de Gaz

In France, the PEGs are quietly trading without

creating much of a ‗stir‗. Volumes have slowly

improved since this hub was started but are still

relatively low compared to their neighbouring

markets. Despite some unification on 1st January

2009 from the original model to the present three

zones, there are also high and low calorific contracts

tradable in PEG Nord. PEG Nord H (high cal) is the

most traded market, followed by PEG Sud and finally

PEG Nord B (low cal) and TIGF in the south west.

There are two TSOs, GRTgaz covering PEGs Nord and

Sud, as well as Total for PEG TIGF.

Figure 5: Germany Pipeline Infrastructure

Figure 6: France Pipeline Infrastructure

11

H. The Punto di Scambio Virtuale

When Italy announced the formation of

the PSV, there was great hope amongst

the gas trading fraternity that this could

be the beginning of truly pan-European

trading. The Italian Network Code for

gas is almost identical to the British

one, although entry capacity is not as

flexible. However storage is on an open

access basis and in fact all gas entering

the system goes through the PSV.

However, only a very small percentage

of all that gas is actually traded at the

hub and the National incumbent, ENI,

does not trade at the PSV at all.

I. Conclusions

European gas market developments had a transition from long term oil-indexed contracts to hub based

contracts. The past ten years or so have seen much development in the European traded gas markets

culminating in some significant changes since about 2009. However, not all the hubs have developed in the same

way or at the same pace.

The British and the Dutch are, and historically have been, trading nations and it is therefore no real surprise that

these are the two countries in Europe that have mature trading hubs. In future we too see development of more

hubs but contrary to previous situations its more favoring for non-physical ones.

In 2012 we observe that Britain‘s NBP is at the forefront, with a liberalised, fully mature traded market, offering

reliable marker prices. In Continental Europe TTF has emerged as the pre-eminent hub. Britain‘s gas supplies are

by and large all market priced whereas Continental Europe has lagged behind with most of its supplies still on

LTCs which have oil indexation formulae as their pricing mechanism.

This analysis is being carried out with a view of understanding European Hub and viz a viz Asian context.

Although European market had its own peculiarities but its maturation time period was less. There are some

areas for us to replicate in our continent too in terms of the course of development of natural gas market. The

fundamental difference lies in terms of physical trading of gas via pipelines, which is not so rampant in our

continent. Europeans could mature earlier owning to nearby natural gas availabilities. Asian too needs to think

about itself as an entity and integrate itself in terms of energy transportation infrastructure.

Figure 7: Italy Natural Gas Infrastructure

12

V. LNG import for Non -FTA Countries from USA

Fundamentals

Trade agreement, is any contractual arrangement between states concerning their trade relationships. Trade

agreements may be bilateral or multilateral—that is, between two states or more than two states. For most

countries international trade is regulated by unilateral barriers of several types, including tariffs, nontariff barriers,

and outright prohibitions. Trade agreements are one way to reduce these barriers, thereby opening all parties to

the benefits of increased trade.

In most modern economies the possible coalitions of interested groups are numerous, and the variety of

possible unilateral barriers is great. Further, some trade barriers are created for other, noneconomic reasons, such

as national security or the desire to preserve or insulate local culture from foreign influences. Thus, it is not

surprising that successful trade agreements are very complicated. Some common features of trade agreements

are:

(1) reciprocity,

(2) a most-favoured-nation (MFN) clause, and

(3) national treatment of non-tariff barriers.

Reciprocity is a necessary feature of any agreement. If each required party does not gain by the agreement as a

whole, there is no incentive to agree to it. If agreement takes place, it may be assumed that each party to the

agreement expects to gain at least as much as it loses. The most-favoured-nation clause prevents one of the

parties to the current agreement from further lowering barriers to another country. A ―national treatment of

nontariff restrictions‖ clause is necessary because most of the properties of tariffs can be easily duplicated with

an appropriately designed set of nontariff restrictions. These can include discriminatory regulations, selective

excise or sales taxes, special ―health‖ requirements, quotas, ―voluntary‖ restraints on importing, special licensing

requirements, etc., not to mention outright prohibitions. Instead of trying to list and disallow all of the possible

types of nontariff restrictions, signatories to an agreement demand treatment similar to that given to

domestically produced goods of the same type (for example, steel).

A. US Trade Agreements

Now from generic to specific below is an example of United States of America with their list of prevailing trade

agreements:

WTO & Multilateral Affairs

Free Trade Agreements

Trade & Investment Framework Agreements

Bilateral Investment Treaties

WTO & Multilateral Affairs: Overall responsibility for trade negotiations and policy coordination regarding

matters before the World Trade Organization (WTO), including the Doha Development Agenda negotiations. The

U.S. bilateral investment treaty (BIT) program helps to protect private investment, to develop market-oriented

policies in partner countries, and to promote U.S. exports. In addition to pursuing U.S. trade policy objectives

through the World Trade Organization, USTR, together with other agencies, works with various regional fora.

Among these are the Asia Pacific Economic Cooperation (APEC) forum and the Association of South East Asian

Nations (ASEAN), which has a Trade and Investment Framework Arrangement with the United States.

B. US FTA

A FTA is an agreement between two or more countries where the countries agree on certain obligations that

affect trade in goods and services, and protections for investors and intellectual property rights, among other

topics. For the United States, the main goal of trade agreements is to reduce barriers to U.S. exports, protect U.S.

13

interests competing abroad, and enhance the rule of law in the FTA partner country or countries. The reduction

of trade barriers and the creation of a more stable and transparent trading and investment environment make it

easier and cheaper for U.S. companies to export their products and services to trading partner markets.

The United States has 14 FTAs in force with 20 countries. The United States is also in the process of negotiating a

regional FTA, the Trans-Pacific Partnership, with Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico,

New Zealand, Peru, Singapore and Vietnam. Following is the list of currently having FTA with USA:

1. Israel 2. Australia

3. Jordan 4. Bahrain

5. South Korea 6. Canada

7. Mexico 8. Chile

9. Morocco 10. Colombia

11. Nicaragua 12. Costa Rica

13. Oman 14. Dominican Republic

15. Panama 16. El Salvador

17. Peru 18. Guatemala

19. Singapore 20. Honduras

C. Non FTA Export Terminals of LNG at USA

The development of U.S. natural gas resources is having a transformative impact on the U.S. energy landscape,

helping to improve energy security while spurring economic development and job creation around the country.

This increase in domestic natural gas production is expected to continue, with the Energy Information

Administration forecasting a record production rate of 69.96 Bcf/d in 2013.

Federal law generally requires approval of natural gas exports to countries that have an FTA with the United

States. For countries that do not have an FTA with the United States, the Natural Gas Act directs the Department

of Energy to grant export authorizations unless the Department finds that the proposed exports ―will not be

consistent with the public interest.‖

In particular USA Section 3 of the Natural Gas Act (NGA) (15 U.S.C. § 717b) prohibits the import or export of

natural gas, including liquefied natural gas (LNG) from or to a foreign country without prior approval from the

Department of Energy (DOE). Parties who want to enter into natural gas transactions with foreign sellers and

buyers must file for an import and/or export authorization under the rules and procedures found in (10 CFR Part

590) of DOE's regulations.

The Natural Gas Act of the United States, as amended has deemed exports to countries having a Free Trade

Agreement (FTA) to be in public interest and hence applications are authorized without any major delay.

However, non-FTA applications require the Department of Energy (DoE) to post a notice of application in the

federal register for comments, protests and motions to intervene, and to evaluate the applications to make a

"public interest consistency determination".

The authorized terminals are:

1. Sabine Pass LNG Terminal in Cameron Parish May 2011

(at a rate of up to 2.2 Bcf/d)

2. Freeport LNG Terminal in Quintana Island, Texas May 2013

(at a rate of up to 1.4 Bcf/d- 20-year approval to export up to 511 billion cubic feet (BCF) per year)

3. Lake Charles Terminal in Lake Charles, Louisiana August 2013

(2.0 billion cubic feet of natural gas a day (Bcf/d) for a period of 20 years)

14

1. Sabine Pass LNG Terminal in Cameron Parish Contracts:

Cheniere Partners owns 100 percent of the Sabine Pass LNG receiving terminal located on the Sabine Pass

Channel in western Cameron Parish, Louisiana. The Sabine Pass terminal has regasification and send-out capacity

of 4.0 billion cubic feet per day (Bcf/d) and storage capacity of 16.9 billion cubic feet equivalent (Bcfe).

Cheniere Partners is developing a project to add liquefaction and export capabilities to the existing infrastructure

at the Sabine Pass LNG terminal. As currently contemplated, the liquefaction project is being designed and

permitted for up to four modular LNG trains, each with a nominal capacity of approximately 4.5 mtpa.

The customers include

BG Gulf Coast LNG, LLC ("BG") for 5.5 mmtpa,

Gas Natural A provision amientos SDG S.A. ("Gas Natural Fenosa") for 3.5 mmtpa,

Korea Gas Corporation ("KOGAS") for 3.5 mmtpa,

GAIL (India) Ltd. ("GAIL") for 3.5 mmtpa,

Total Gas & Power North America, Inc. ("Total") for 2.0 mmtpa and

Centrica plc ("Centrica") for 1.75 mmtpa.

GAIL has recently signed long term agreements for 3.5 MMTPA with US based Sabin Pass Liquefaction Company

at a price benchmarked to Henry Hub gas price in USA and supply is expected to start from 2017/18.

2. Freeport LNG Terminal in Quintana Island, Texas Contracts

Michael Smith and ConocoPhillips (COP) each own 50% of the general partner of Freeport LNG Development,

L.P. (FLNG), Freeport LNG-GP, Inc. (FLNG-GP). LNG currently has four limited partners that, collectively, own all of

the economic interests in FLNG: (1) Freeport LNG Investments, LLLP, an entity owned by Michael S. Smith; (2)

ZHA FLNG Purchaser, LLC, a Delaware limited liability company; (3) Texas LNG Holdings, LLC, a wholly owned

subsidiary of The Dow Chemical Company; and (4) Turbo LNG, LLC, a wholly owned subsidiary of Osaka Gas Co.,

Figure 8: USA Non- FTA Export Permission Granted Ports

15

Ltd. Freeport LNG is proposing to add liquefaction infrastructure at the existing terminal to provide export

capacity of approximately 13.2 million metric tonnes per annum (mtpa) of LNG, which equates to processing

approximately 2.0 Bcf/d of pipeline-quality natural gas (feed gas).

The customers include

BP signed an agreement for 4.4 mtpa of liquefaction tolling capacity

Japan‘s Osaka Gas Co., Ltd. and Chubu Electric Power Co. Liquefaction Tolling Agreement (LTA) for a

total of 4.4 million tons per annum (mtpa)

3. Lake Charles Terminal in Lake Charles, Louisiana

Lake Charles Exports LLC, a venture between U.K.-based BG Group BG.LN - PLC and Texas-based Energy Transfer

Equity LP ETE that plans to ship up to two billion cubic feet a day from Lake Charles, La. The approval lasts for 20

years and permits sales to countries that lack free-trade agreements with the U.S., including some in Europe and

Japan.

The Energy Department announced that it has conditionally authorized Lake Charles Exports to export

domestically produced liquefied natural gas (LNG) to countries that do not have a Free Trade Agreement (FTA)

with the United States from the Lake Charles Terminal in Lake Charles, Louisiana. Lake Charles previously received

approval to export LNG from this facility to FTA countries on July 22, 2011. Subject to environmental review and

final regulatory approval, the facility is conditionally authorized to export at a rate of up to 2.0 billion cubic feet

of natural gas a day (Bcf/d) for a period of 20 years.

The Department granted the first authorization to export LNG to non-FTA countries in May 2011 from the Sabine

Pass LNG Terminal in Cameron Parish, Louisiana at a rate of up to 2.2 Bcf/d, and the second authorization in May

2013 from the Freeport LNG Terminal in Quintana Island, Texas at a rate of up to 1.4 Bcf/d.

4. Other Projects in line

Following is the list of applications received by DOE/FE to Export Domestically Produced LNG to Non – FTA

countries from the Lower-48 States (as of August 7, 2013):

Table 1: List of Applicants in line for Non- FTA Export Approvals: USA

Company Quantity FTA Applications

(Docket Number) Non-FTA Applications

(Docket Number)

Carib Energy (USA) LLC 0.03 Bcf/d: FTA

0.01 Bcf/d: non-FTA Approved (11-71-LNG)

Under DOE Review (11-141-LNG)

Dominion Cove Point LNG, LP

1.0 Bcf/d Approved (11-115-LNG) Under DOE Review (11-128-LNG)

Jordan Cove Energy Project, L.P.

1.2 Bcf/d: FTA 0.8 Bcf/d: non-FTA

Approved (11-127-LNG) Under DOE Review (12-32-LNG)

Cameron LNG, LLC 1.7 Bcf/d Approved (11-145-LNG) Under DOE Review (11-162-LNG)

Freeport LNG Expansion, L.P. and FLNG Liquefaction, LLC


Gulf Coast LNG Export, LLC


Gulf LNG Liquefaction Company, LLC


LNG Development Company, LLC (d/b/a


16

Oregon LNG)

Southern LNG Company, L.L.C.


Excelerate Liquefaction Solutions I, LLC


Golden Pass Products LLC 2.6 Bcf/d Approved (12-88 -LNG) Under DOE Review (12-156-LNG)

Cheniere Marketing, LLC 2.1 Bcf/d Approved (12-99-LNG) Under DOE Review (12-97-LNG)

CE FLNG, LLC 1.07 Bcf/d Approved (12-123-LNG) Under DOE Review (12-123-LNG)

Waller LNG Services, LLC 0.16 Bcf/d Approved (12-152-LNG) n/a

Pangea LNG (North America) Holdings, LLC


Magnolia LNG, LLC 0.54 Bcf/d Approved (12-183-LNG) n/a

Gasfin Development USA, LLC

0.2 Bcf/d Approved (13-06-LNG) n/a

Sabine Pass Liquefaction, LLC


Sabine Pass Liquefaction, LLC


Venture Global LNG, LLC 0.67 Bcf/d Pending Approval (13-69-LNG)

Under DOE Review (13-69-LNG)

Advanced Energy Solutions, L.L.C.

0.02 Bcf/d Pending Approval (13-82-LNG)

n/a

Total of all Applications Received for Non -FTA

20.31 Bcf/d

The market for LNG sourcing seems to be very promising on account of projects pending for approval with DoE.

Approximately 20.31 Bcf/d quantities are lined up for Non FTA as a futuristic source for LNG.

VI. Geothermal Energy

A. Introduction

Geothermal energy is the heat from the Earth. It is the thermal energy contained in the rock and fluid (that fills

the fractures and pores within the rock) in the earth's crust. Heat is a form of energy and geothermal energy is,

literally, the heat contained within the Earth that generates geological phenomena on a planetary scale.

'Geothermal energy' is often used nowadays, however, to indicate that part of the Earth's heat that can, or could,

be recovered and exploited by man, and it is in this sense that we will use the term from now on.

Calculations show that the earth, originating from a completely molten state, would have cooled and become

completely solid many thousands of years ago without an energy input in addition to that of the sun. It is

believed that the ultimate source of geothermal energy is radioactive decay occurring deep within the earth

The earth‘s centre is a distance of approximately 4000 miles and is so hot that it is molten. Temperatures are

understood to be at least 5000 degrees centigrade. Heat from the centre of the earth conducts outwards and

heats up the outer layers of rock called the mantle. When this type of rock melts and becomes molten it is called

magma. Magma can reach just below the earth‘s surface. Rain water sometimes seeps down through geological

fault lines and cracks becoming super-heated by the hot rocks below. Some of this super-heated water rises back

to the surface of the earth where it emerges as hot springs or even geysers. Sometimes the hot water becomes

trapped below the surface as a geothermal reservoir.

17

Figure 9: Geothermal Energy

One way of producing electricity from geothermal energy is by drilling wells into the geothermal reservoirs. The

hot water that rises emerges at the surface as steam. The steam is used to drive turbines producing electricity. If

the water is not hot enough to produce steam, it can still be used to heat homes and businesses, saving

gas/electricity.

World pattern of plates,

oceanic ridges, oceanic

trenches, subduction zones,

and geothermal fields. Arrows

show the direction of

movement of the plates

towards the subduction

zones. (1) Geothermal fields

producing electricity; (2) mid-

oceanic ridges crossed by

transform faults (long

transversal fractures); (3)

subduction zones, where the

subducting plate bends

downwards and melts in the

asthenosphere.

B. Geothermal Markets

Geothermal resources

provided an estimated

805 PJ (223 TWh) of

renewable energy in 2012,

delivering two-thirds as

direct heat and the

remainder as electricity.

The use of ground-source

heat pumps is growing

rapidly and reached an

estimated 50 GW of

capacity in 2012. At least

Figure 10: World Pattern of Plates

Figure 11: Average Annual Growth Rates of Renewable energy 2007-2012

18

78 countries tap geothermal resources for direct heat, while two-thirds of global capacity is located in the United

States, China, Sweden, Germany, and Japan. Geothermal electric generating capacity grew by an estimated 300

MW during 2012, bringing the global total to 11.7 GW and generating at least 72 TWh.

Geothermal energy is used for direct heating purposes, including district heat systems, bathing and swimming

applications, industrial purposes, agricultural drying, and other uses.65 Ground-source heat pumps can both heat

and cool space and represent the largest and historically fastest-growing segment of geothermal direct use.

Geothermal direct use continued to increase globally during 2012. Direct use refers to direct thermal extraction

for heating and cooling. A sub-category of direct use is the application of ground-source heat pumps (GHP),

which use electricity to extract several units of thermal energy from the ground for every unit of electrical energy

spent. Although there are limited data available on recent growth in direct use of geothermal energy, output is

known to have grown by an average of 10% annually from 2005 through 2010; much of that growth was

attributed to ground-source heat pumps, which experienced an average annual growth of 20%. Assuming that

these growth rates have persisted in the last two years, global geothermal heat capacity reached an estimated 66

GW in 2012, delivering as much as 548 PJ of heat. GHP represents the largest and historically fastest-growing

segment of geothermal direct use. In 2012, it reached an estimated 50 GW of capacity; this amounts to about

three-quarters of estimated total geothermal heat capacity, and more than half of heat output (>300 PJ). Of the

remaining direct heat use (nearly half), the largest share goes to bathing and swimming applications, with smaller

amounts for heating (primarily district heating), industrial purposes, aquaculture pond heating, agricultural

drying, snow melting, and other uses.

China remains the presumptive leader in direct geothermal energy use (21 TWh in 2010), followed by the United

States (18.8 TWh in 2012), Sweden (13.8 TWh in 2010), Turkey (10.2 TWh in 2010), Iceland (7.2 TWh in 2012), and

Japan (7.1 TWh in 2010).5Iceland, Sweden, Norway, New Zealand, and Denmark lead for average annual

geothermal energy use per person. About 90% of Iceland‘s total heating demand is derived from geothermal

resources.

Geothermal electricity generation, which occurs through kinetic conversion of high- or medium-temperature

steam, is estimated to have reached at least 72 TWh in 2012. Global geothermal electric generating capacity grew

by an estimated 300 MW during 2012—with new capacity coming on line in the United States (147 MW),

Indonesia (110 MW), Nicaragua (36 MW), and Kenya (7.5 MW)—bringing total global capacity to an estimated

11.7 GW.

19

The countries with the largest amounts of geothermal electric generating capacity are as follows:

the United States (3.4 GW),

the Philippines (1.9 GW),

Indonesia (1.3 GW), Mexico (1.0 GW),

Italy (0.9 GW),

New Zealand (0.8 GW),

Iceland (0.7 GW), and

Japan (0.5 GW).15

Note:

The data and information in the report is sourced from websites and documents available in public

domain and doesn’t purport to be official view of government or any organization. Sincere efforts have

been made to present correct data; however, errors and omissions, if any, are regretted and the same may

please be brought to the notice of Energy Desk for necessary corrective action.

Documents

Focused Energy Report - XVIII...3 Executive Summary The Focused Energy Report for the month of September 2013 reviews the Energy Prices taking in consideration the comparison with