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Australia’s Santos joins OGCI zero methane initiative

  • Market: Emissions, Natural gas
  • 21/02/24

Australian independent Santos has signed the Aiming for Zero Methane Emissions initiative, which seeks "near-zero" methane emissions by 2030 from signatories' operated oil and gas assets.

The project, which now has 23 signatories, was launched in March 2022 by the Oil and Gas Climate Initiative (OGCI) — a group of 12 major oil and gas companies.

Santos has operations in Australia, Papua New Guinea, Timor-Leste and the US. The company produced 92.2mn bl of oil equivalent in 2023 and has set a target of net zero emissions across scopes 1 and 2 by 2040 for its equity share.

The company is also looking to develop three carbon capture and storage (CCS) hubs offshore Australia, which could have a total future storage capacity of up to 35mn t/yr of CO2 — though Santos did not provide a timeframe. Its Moomba CCS project is 80pc complete and the first CO2 injection is expected in the middle of this year.

Santos today also formally endorsed a World Bank initiative to eliminate routing flaring from oil operations by 2030. Santos will "will develop and implement plans to achieve its commitment under this initiative", it said. It will also report "flaring and improvement progress" to the World Bank on an annual basis, from 2025.

The recent UN Cop 28 climate summit, in November-December 2023, placed scrutiny on oil and gas producers' emissions reduction plans. Companies representing over 40pc of global oil production pledged to cut emissions — including methane to "near zero" by 2030. The summit saw renewed focus on methane emissions, although the frameworks are voluntary.


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12/07/24

Gas struggles hinder Brazilian industry: Study

Gas struggles hinder Brazilian industry: Study

Sao Paulo, 12 July (Argus) — A lack of natural gas supply is hindering 9pc of Brazil's industry, according to a study conducted by the country's industry confederation (CNI). According to CNI, 14pc of the Brazilian industry uses natural gas in its production processes, with 9pc reporting some sort of supply issue in the last 12 months. The study also showed that 10pc of industry have limited access to energy in general. Among those who do not use natural gas in the production process, 10pc point to the lack of access to energy as the main reason for choosing another energy source, 8pc blame the lack of distribution infrastructure, such as gas pipelines, and 5pc said prices are too high. The study provides some insight to the industry, but it may not paint the most accurate picture, given that gas usage is more intense in some specific sectors, CNI's energy policy and industry expert Rennaly Patricio Sousa said. Brazil's south holds the heaviest natural gas users in the country and its regional federations have been very active in advocating for a more competitive gas market. "The attraction of new investments to the south is related to the availability of gas," Santa Catarina state's industry federation president Glauco Jose Corte said on 10 July during an industrial forum. "Therefore, we need to discuss improvements in transport infrastructure, supply strategies, the entry of new players and the role of regulatory agencies." CNI's study makes it clear that low competition in the natural gas sector holds back both industry and consumers, making the Brazilian product more expensive and less competitive. Hence, lowering the price of natural gas is important to increase investments and revenues in sectors that are very dependent on it, such as the petrochemical industries, steel, ceramics, glass, aluminum and mining, the report said. The 2021 new gas law made room to reform the sector, but the market remains very concentrated, Sousa said. "So opening up the gas market is a good bet to help resume growth in the industry that consumes about 60pc of this energy." By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Japan’s Shikoku to shut Ikata reactor for maintenance


12/07/24
News
12/07/24

Japan’s Shikoku to shut Ikata reactor for maintenance

Osaka, 12 July (Argus) — Japanese utility Shikoku Electric Power is planning to shut down the 890MW Ikata No.3 nuclear reactor on 19 July, to carry out regular maintenance works. The absence of Shikoku's sole reactor could prompt the utility to boost thermal power generation at coal-, gas- and oil-fired units to meet expected rises in electricity consumption for cooling purposes during the peak summer demand season. The Ikata No.3 reactor is set to close for a three-month turnaround, after around 13 months of continuous operations. Shikoku plans to start test generation in the final phase of the maintenance on 30 September and complete the entire turnaround process on 25 October. The potential fall in nuclear output could theoretically increase LNG demand by 170,270t over August-September, assuming an average gas-fired generation efficiency of 50pc. Shikoku operates four thermal power plants, including the 1,385MW Sakaide gas- and oil-fired plant, 750MW Saijo coal-fired plant, 700MW Tachibanawn coal-fired plant and 450MW Anan oil-fed plant. Thermal capacity accounts for around 60pc of the utility's power portfolio. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Australia's Climate Active program drives ACCU demand


12/07/24
News
12/07/24

Australia's Climate Active program drives ACCU demand

Sydney, 12 July (Argus) — The Australian federal government-backed Climate Active certification program continued to drive voluntary demand for Australian Carbon Credit Units (ACCUs) last year, although future growth remains uncertain as the scheme will undergo a planned reform. Cancellations of ACCUs for Climate Active certification reached 592,837 units in 2022, down from an all-time high of 625,705 in 2021, according to estimated data that the Department of Climate Change, Energy, the Environment and Water (DCCEEW) recently disclosed to Argus . Figures for 2023 are not yet available, according to the department, but cancellations may have reached a new high between 650,000-700,000 units, according to Argus estimates ( see table ). Each ACCU represents 1t of CO2 equivalent (CO2e) stored or avoided by a project. The Clean Energy Regulator (CER) said it does not have a dataset of ACCU cancellations for Climate Active certification, despite having disclosed figures in some of its quarterly carbon market reports in recent years. It mentioned late last year that the program accounted for around 0.5mn of a total 0.8mn cancelled for voluntary purposes in the first three quarters of 2023, and later reported total voluntary cancellations of 290,146 units in the fourth quarter alone. Voluntary cancellations reached nearly 1.1mn units in 2023 , a new record high. Certification under the Climate Active standards is awarded to businesses that measure, reduce and offset their carbon emissions to achieve carbon neutrality. More than 700 certifications have been provided to entities including large and small businesses, local governments, and non-profit organisations. But significant changes in climate science, business practices and international benchmarks since the program was established in 2010 prompted the federal Labor government to seek modifications aimed at driving a more ambitious voluntary climate action in Australia, following its separate reform of the compliance market's safeguard mechanism . The DCCEEW late last year launched a consultation with proposals to reform Climate Active, which would require more climate ambition from businesses seeking to be certified under the program. The use of carbon credits to offset emissions that have not been reduced by businesses would be tightened, with a requirement that all eligible international offset units meet a five-year rolling vintage rule, replacing the existing post-2012 vintage requirement. Other proposals include mandating a minimum level of gross emissions reductions and a minimum percentage of renewable electricity use. "The government is working through feedback on these proposals and will announce the consultation outcome later this year," a DCCEEW spokesperson told Argus . No expected changes in eligible offsets ACCUs have been representing a small share of the total offsets used for Climate Active certification at between 5.7-10.8pc in recent years, despite the estimated record high last year, according to DCCEEW estimates ( see table ). Organisations can currently use certified emissions reductions (CERs) and removal units (RMUs) under the program, as well as verified carbon units (VCUs) from the Verra registry and verified emissions reductions (VERs) from Gold Standard. The DCCEEW did not provide a breakdown of cancelled volumes per credit type. No minimum use of ACCUs and no changes to the list of eligible international units are expected in the near term, following advice from a review from Australia's Climate Change Authority (CCA) in 2022. But some market participants have been asking for the removal of CERs, which account for the "vast majority" of carbon offsets surrendered by Australian organisations, according to utility AGL. CERs are "outdated", utility Origin Energy said in its submission to the Climate Active consultation. "We consider it would be consistent with international carbon reduction mechanisms to introduce a clear end date to phase out the use of CERs from the program and ensure greater alignment with the more relevant Paris Agreement," Origin said. "This reform is considered an immediate priority, and of more urgent need than some of the other proposals in this consultation." Uncertainties over future demand More investor and activist pressure in recent years over the use of carbon offsets with perceived low levels of integrity have also been forcing companies to review not only their offset standards, but also claims of ‘carbon neutrality' and similar terms. One of the DCCEEW's proposals is to discontinue the use of ‘carbon neutral' to describe the certified claim and to choose a different description. "A lot of the voluntary demand for carbon offsets in Australia has traditionally come from Climate Active, but the landscape is indeed moving quickly and the concept of carbon neutrality is being replaced by net zero," said Guy Dickinson, chief executive of Australia-based carbon offset services provider BetaCarbon and head of carbon trading at sister company Clima. This should drive more price stratification between carbon removals and carbon avoidance credits, he noted. Telecommunications firm Telstra, one of the biggest companies in Australia, recently announced it will stop using carbon offsets to focus instead on reducing its direct emissions. It will no longer seek Climate Active certification as a result and will remove references that its plans are ‘carbon neutral' or ‘carbon offset'. This could prompt other businesses to follow suit, market participants said. Another source of uncertainty over future voluntary demand comes from a DCCEEWW proposal that abatement from all ACCUs used under Climate Active would count towards meeting Australia's Nationally Determined Contribution (NDC) under the Paris Agreement. The use of ACCUs under the program have so far been treated as ‘additional' to Australia's emissions reduction target through accounting under the Kyoto Protocol. If the government goes ahead with such a proposal, this could disincentivise participation in Climate Active as organisations might consider this as "paying to help the government meet its targets through the voluntary action of businesses," utility EnergyAustralia warned in its submission. There has been increased interest in emerging and alternate standards to those acceptable under Climate Active, such as the American Carbon Registry, Climate Action Reserve and Puro.Earth offsets, according to environmental marketplace Xpansiv's vice president of carbon and Australian energy, Peter Favretto. But Climate Active has reported positive growth in certified brands since its inception and will likely continue to create demand for offsets in the international voluntary market and the Australian ACCU market, he said. "With the upcoming mandatory climate reporting legislation in Australia , and a similar atmosphere in other global jurisdictions such as the US and the UK, there is a growing demand that could lead to further growth in Climate Active certifications," Favretto added. By Juan Weik ACCUs used for Climate Active certification units Year Volume Total voluntary ACCU use Climate Active % 2019 243,105 329,145 73.9 2020 417,405 605,499 68.9 2021 625,705 844,445 74.1 2022 592,837 855,081 69.3 2023 650,000-700,000* 1,090,575 60-64* DCCEEW, CER *Argus estimates Total offsets under Climate Active unit Year ACCUs Total offsets ACCUs % 2019 243,105 4,230,011 5.7 2020 417,405 6,857,628 6.1 2021 625,705 5,796,466 10.8 2022 592,837 7,472,711 7.9 DCCEEW Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Houston power outages creeping down toward 1mn


11/07/24
News
11/07/24

Houston power outages creeping down toward 1mn

Houston, 11 July (Argus) — Slightly more than 1mn Houston-area homes and businesses were without electricity Thursday afternoon as local power distribution company CenterPoint Energy continues to slowly restore service after Hurricane Beryl. The storm knocked out power to about 2.1mn customers on 8 July when it made landfall southwest of the city as a Category 1 hurricane. The pace of restoration of service to areas that include major oil refineries, petrochemical plants and an LNG export terminal has been seen by many in the region as far too slow. At 6:50mp ET on Thursday about 1.04mn customers were still without power, according to CenterPoint. The company estimates that about 1.2mn customers have had power restored so far, another 400,000 should be restored by the end of day Friday and another 350,000 by the end of day Sunday. The 2 Bcf/d (57mn m³/d) Freeport LNG terminal in Texas remained offline and without power on Thursday after it was shut down ahead of Beryl's landfall. The electric power sector accounts for about 45pc of Texas' gas use, and gas generates about 43pc of the state's electricity, according to the US Energy Information Administration. Spot gas prices at the Katy storage hub, a key natural gas market near Houston, averaged $1.715/mmBtu on Thursday, down by 7.2pc from the previous session but 5.2pc higher from the start of this week. The index began July at $1.97/mmBtu. By David Haydon Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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US June inflation slows to 1-year low of 3pc


11/07/24
News
11/07/24

US June inflation slows to 1-year low of 3pc

Houston, 11 July (Argus) — US inflation slowed in June to the lowest in a year while core inflation hit a more than three-year low, signs of easing price pressures that may prompt Federal Reserve policymakers to begin cutting borrowing costs in the fall. The consumer price index (CPI) slowed to an annual 3pc in June, lower than economists' estimates for a 3.1pc reading, from 3.3pc in May and 3.4pc in April, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, rose by 3.3pc in June, the lowest since April 2021, and slowing from 3.4pc in May. The energy index rose by an annual 1pc in June, down from 3.7pc in May, while the gasoline index contracted by 2.5pc in June compared with a 2.2pc gain in May. Energy services rose by an annual 4.3pc, slowing from 4.7pc the prior month. After the report, the CME's FedWatch tool signaled an 81pc probability that the Fed will cut its target rate by a quarter point in September from near 70pc odds Wednesday. Probabilities of three quarter point cuts by December rose to 38pc today from 26pc the prior day. Food costs rose by 2.2pc in June from 2.1pc the prior month. Shelter rose by 5.2pc from 5.4pc the prior month. Transportation services rose by 9.4pc in June following a 10.5pc gain the prior month. Airline fares fell by 5.1pc in June after a 5.9pc decline. Headline inflation had risen from 3.1pc in January to as high as 3.5pc in March as economic data, especially job gains, had come in stronger than expected. That had prompted the Federal Reserve to delay widely expected rate cuts as it said it needed "greater confidence" that inflation was on a "sustained" path towards its 2pc target. The Fed hiked its target rate to a 23-year high of 5.25-5.5pc in July 2023 and has kept it there since to rein in inflation that hit a high of 9.1pc in June 2022. The Fed, in its latest policy meeting last month, penciled in one likely quarter point cut this year, down from three penciled in last March. CPI contracted by a seasonally adjusted 0.1pc in June from the prior month, after a flat reading in May, a 0.3pc monthly gain in April and 0.4pc gains in February and Marhc. Core CPI was up by 0.1pc for the month after a monthly gain of 0.2pc in May. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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