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Ida may cut US Gulf coke, coal supply for weeks

  • Spanish Market: Coal, Petroleum coke
  • 01/09/21

US Gulf petroleum coke production may be disrupted for weeks after a Category 4 hurricane made a direct hit on the refining and shipping hub of New Orleans, Louisiana, this weekend.

Hurricane Ida's 150mph (240km/h) sustained winds and nine-foot storm surge made it one of the strongest storms to ever hit Louisiana when it made landfall on 29 August. Most refineries, industrial plants and shipping terminals within its path had yet to determine the full extent of the damage to their facilities even days later, as flooded roads, downed power lines and lack of mobile phone service made travel and communication challenging.

Lack of electricity service was the biggest impediment to starting up refineries and solid fuel terminals. All eight power transmission lines serving the New Orleans area were knocked out of service, with some power lines falling into the Mississippi River and creating a navigation hazard. The US Coast Guard yesterday established a safety zone between mile marker 105 and 108 near the Huey P Long Bridge just upriver from the city of New Orleans. All vessels are prohibited from entering the area without express permission until 30 September or until salvage operations are complete.

Local utility Entergy managed to restore electricity to parts of greater New Orleans last night. But it was unclear how long refineries and terminals on the Gulf coast might remain without power, with the utility warning on 29 August that a hurricane of this strength can shut down power for up to three weeks. Even with full power restored, refinery restarts are typically lengthy and dangerous processes that can take several weeks to complete.

The storm knocked more than 2mn b/d of Louisiana refining capacity off line, or roughly 13pc of total US capacity. This includes key fuel-grade petroleum coke producers Marathon Petroleum's 565,000 b/d Garyville, ExxonMobil's 500,000 b/d Baton Rouge, PBF Energy's 190,000 b/d Chalmette and Valero's 215,000 b/d St Charles refineries.

Marathon said yesterday that Garyville was damaged and without power, with the facility running off generators in order to conduct repairs. The company was still "working on a timeline for resuming operations". The Chalmette refinery may also be in a precarious position, as 22 barges in the Mississippi River abutting the facility came loose from their moorings, causing damage to at least one bridge and threatening levees in the area. Phillips 66's 250,000 b/d Alliance refinery in Belle Chasse, downriver from Chalmette, confirmed yesterday that it had flooded after a storm surge broke through a temporary levee. Shell's 250,000 b/d refinery in Norco, located between Chalmette and Garyville on the river, said there was "evidence of some building damage", as images on social media showed flooding around the facility's storage tanks. The latter two refineries are key anode-grade coke producers.

The ExxonMobil Baton Rouge refinery, further inland up the river, did not sustain damage and was already beginning to restart procedures yesterday. The facility had initially tried to continue operating some units throughout the storm, but power outages led to its complete shutdown on 30 August. Chevron needed some time to conduct an assessment of its 356,000 b/d refinery in Pascagoula, Mississippi, but said today that it continues to operate.

Looking to Laura and Harvey

Other hurricanes in recent years have damaged refineries and petroleum coke calciners, at times leading to companies declaring force majeure on petroleum coke cargoes and driving up spot prices.

Hurricane Laura's landfall in eastern Texas and Louisiana last year lowered coke production by an estimated 500,000t. The Argus 6.5pc sulphur US Gulf fob assessment rose by $9.50/t from 26 August to 30 September 2020 to $61/t, roughly one month after Hurricane Laura hit. The specification rose by the same amount from 23 August to 20 September 2017, to $72/t, following Hurricane Harvey's reduction of coke supply on the Texas coast. Harvey disrupted more than 25pc of total US refining capacity.

Petroleum coke buyers have been eager for US Gulf coke production to return to normal levels following the Covid-19 pandemic's impact on refined product demand. But although refinery throughputs have risen in recent months, US Gulf high-sulphur coke production has remained lower than normal, in part because of a switch to lighter crudes.

This switch has been particularly pronounced in Louisiana. Citgo chief executive Carlos Jordá told Argus last week that the company's Lake Charles refinery has been reconfigured to use 90-95pc light crude in response to changing market conditions in the region.

Coal export impacts could compound tightness

The lower coke production in Louisiana recently could mean that petroleum coke supply reductions may not be as deep as during Laura or Harvey, even if some refineries remain down for weeks. But one key difference with Ida is its effect on coal export infrastructure.

The lower Mississippi river is one of the major hubs for US coal exports, which have been on the rise recently. Over 5.3mn t of coal shipped out of the New Orleans area in the first half, more than triple the volumes of a year earlier, according to US Census Bureau data. Convent Marine Terminal, United Bulk Terminal and International Marine Terminal, all of which ship petroleum coke and coal, are out of service following Ida, with their restart dates uncertain. The Burnside Terminal was also heard to have declared force majeure. Convent Marine Terminal owner Suncoke Energy said last night that the facility "sustained modest damage" but that it expected to be able to resume operations within 24-48 hours of electricity being restored. Rail and barge service bringing coal and coke to the terminals has also been shut down.

European coal prices were already at their highest levels since 2008 because of supply shortages in the Atlantic basin, which has contributed to the US ramping up shipments as a swing supplier. India has also been buying more US coal recently as it seeks out lower-cost fuel options, with imports of US coal in the first seven months of the year reaching nearly 9mn t compared with around 7mn t in full year 2020.

If the hurricane impacts disrupt US Gulf coal exports for even a moderate length of time, this may contribute to even higher coal prices and further boost petroleum coke prices for those cargoes that are still available to ship.

The coke market early last week was looking as though it could be on the verge of tipping lower as a larger number of high-sulphur cargoes were being offered in the Gulf. But the disruption from Ida now looks likely to sustain prices at record-high levels, even if the storm does not result in the roughly $10/t price increases seen after Harvey and Laura.

US Gulf coast refinery status, post-Hurricane Ida
NameCapacity b/dStatus as of AM, 2 Sep
Marathon Garyville565,000Shut, unspecified damage
ExxonMobil Baton Rouge500,000Restarting
Citgo Lake Charles425,000Normal
Phillips 66 Alliance250,000Shut, unspecified damage
Shell Norco250,000Shut, unspecified damage
Valero St Charles215,000Shut
PBF Chalmette190,000Shut
Valero Meraux135,000Shut
Delek Krotz Springs80,000Unknown
Placid Port Allen 75,000Normal
Calcasieu Refining136,000Normal
Chevron Pascagoula 356,000Normal
Phillips 66 Lake Charles264,000Normal

Lower Mississippi petroleum coke assets

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22/11/24

Japan’s Taketoyo to resume biomass co-firing in 2027

Japan’s Taketoyo to resume biomass co-firing in 2027

Tokyo, 22 November (Argus) — Japan's largest electricity producer Jera aims to resume coal and biomass co-firing at the 1.1GW Taketoyo plant in 2027's first quarter, after a fire halted plant operations in January. Jera announced on 22 November that the thermal power plant in central Japan's Aichi prefecture would resume co-firing wood pellets with coal at a rate of 8pc, around the end of the 2026-27 fiscal year ending in March. This will come after its safety measures are completed. The plant's co-firing rate was 17pc before the serious fire, which was caused by an explosion of dust from wood pellets. The company will consider increasing the co-firing rate again in the future, provided safety can be ensured. But the plant will restart coal-only combustion in early January 2025, operating mainly during the summer and winter seasons, when electricity demand is high. Jera will keep operation rates low at Taketoyo and other coal-fired plants when electricity demand is low and rely more on gas-fired generation, to achieve its initial plan to cut CO2 emissions through co-firing at Taketoyo. Taketoyo started co-firing operations in August 2022 and burned around 500,000 t/yr of wood pellets imported from the US and Vietnam. It will burn 200,000 t/yr after it resumes co-firing at 8pc. The plant will slow down the speed of wood pellet conveyors to reduce friction as a part of safety measures, which means it must also reduce its coal and biomass co-firing rate. It is also currently working on other safety measures, such as installing air pressure conveying facilities dedicated to wood pellets and explosion suppressor systems to inject fire extinguishing agents. The outage at Taketoyo has encouraged Jera to boost replacement gas-fired generation, with the extra gas-fired costs accounting for most of the estimated cost resulting from the shutdown, which could be tens of billion yen in the 2024-25 fiscal year ending in March. By Takeshi Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cost of government support for fossil fuels still high


21/11/24
21/11/24

Cost of government support for fossil fuels still high

London, 21 November (Argus) — The cost of government measures to support the consumption and production of fossil fuels dropped by almost a third last year as energy prices declined from record highs in 2022, according to a new report published today by the OECD. But the level of fiscal support remained higher than the historical average despite government pledges to reduce carbon emissions. In an analysis of 82 economies, data from the OECD and the IEA found that government support for fossil fuels fell to an estimated $1.1 trillion in 2023 from $1.6 trillion a year earlier. Although energy prices were lower last year than in 2022, countries maintained various fiscal measures to both stimulate fossil fuel production and reduce the burden of high energy costs for consumers, the OECD said. The measures are in the form of direct payments by governments to individual recipients, tax concessions and price support. The latter includes "direct price regulation, pricing formulas, border controls or taxes, and domestic purchase or supply mandates", the OECD said. These government interventions come at a large financial cost and increase carbon emissions, undermining the net-zero transition, the report said. Of the estimated $1.1 trillion of support, direct transfers and tax concessions accounted for $514.1bn, up from $503.7bn in 2022. Transfers amounted to $269.8bn, making them more costly than tax concessions of $244.3bn. Some 90pc of the transfers were to support consumption by households and companies, the rest was to support producers. The residential sector benefited from a 22pc increase from a year earlier, and support to manufacturers and industry increased by 14pc. But the majority of fuel consumption measures are untargeted, and support largely does not land where it is needed, the OECD said. The "under-pricing" of fossil fuels amounted to $616.4bn last year, around half of the 2022 level, the report said. "Benchmark prices (based on energy supply costs) eased, particularly for natural gas, thereby decreasing the difference between the subsidised end-user prices and the benchmark prices," it said. In terms of individual fossil fuels, the fiscal cost of support for coal fell the most, to $27.7bn in 2023 from $43.5bn a year earlier. The cost of support for natural gas has grown steadily in recent years, amounting to $343bn last year compared with $144bn in 2018. The upward trend is explained by its characterisation as a transition fuel and the disruption of Russian pipeline supplies to Europe, the report said. By Alejandro Moreano and Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: Australia backs no new coal power call: Correction


20/11/24
20/11/24

Cop: Australia backs no new coal power call: Correction

Corrects missing word in headline London, 20 November (Argus) — Major coal producers Australia and Colombia, along with the EU and 23 other countries including the UK, have pledged not to allow any new unabated coal-fired power generation in their energy systems at the UN Cop 29 climate summit in Baku, Azerbaijan. This comes a day after Colombia, New Zealand and the UK joined a Netherlands-led international coalition focused on phasing out incentives and subsidies for fossil fuels. Most of the coal pact signatories are members of the Powering Past Coal Alliance, under which some countries have committed to phasing out existing unabated coal power generation. Australia is not listed as a member of the alliance, but the cities of Sydney, Melbourne and Canberra are. Unsurprisingly, the list of signatories did not include China or India, the two world's largest coal importers. It also does not include the US, although the country is part of the Powering Past Coal Alliance. "There is no space for new unabated coal in a 1.5°C or even 2°C aligned pathway, yet coal capacity rose by 2pc last year," the pact signatories said today. The pledge focuses on coal-fired generation and does not mention the phasing out of exports or imports. Australia, is the world's second-largest seaborne coal exporter. The country is looking to host Cop 31 in 2026 by outbidding Turkey for the spot. But no realistic policy changes in coal exports is expected from Australia, which will have a federal parliamentary election by May 2025 and winning votes from key coal mining regions in New South Wales and Queensland has proven to be crucial in recent elections. Turkey is on track to overtake Germany as Europe's largest coal-fired generator this year and was not among the signatories of today's coal pledge. Amid calls for a faster phase-down of unabated coal-fired power generation, global coal trade is set to reach a record high of more than 1.5bn t this year , surpassing last year's 1.38bn t, according to IEA data. Coal consumption will probably remain resilient, supported by higher electricity demand growth in China and India. China has not set a new climate plan since 2021, but it is expected to ramp up its ambitions in a new plan due by February 2025. India and Indonesia are strongly encouraging higher coal production to ensure energy security. The US Energy Information Administration (EIA) in September lowered its forecast for US coal-fired generation in this year but raised its expectation for 2025 . By Shreyashi Sanyal Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Indonesia advances coal-fired power phase-out to 2040


20/11/24
20/11/24

Indonesia advances coal-fired power phase-out to 2040

London, 20 November (Argus) — Indonesia plans to retire all coal-fired power plants within the next 15 years, advancing an earlier target of 2056, President Prabowo Subianto said today. This follows from Subianto's address at the G20 Summit in Rio de Janeiro, Brazil, on 19 November, where he emphasised the importance of global collaboration to achieve green energy transition. He also claimed Indonesia is optimistic it can reach net zero emissions before 2050, a decade ahead of its previous commitment. "We plan to build more than 75GW of renewable energy in the next 15 years [to replace coal-fired power]," Subianto added. His claims come at a time when Indonesia's deputy minister of energy and mineral resources (ESDM) Yuliot Tanjung admitted in a speech today that the country's reliance on coal for electricity is still high. Tanjung said the country has huge potential for solar and hydropower generation, owing to its geographical location, but they require technological developments and large investment. Indonesia has the world's fifth-largest operating coal-fired power capacity of 52.31GW, with about 9.81GW more under construction, according to Global Energy Monitor data. Only about 15pc of Indonesia's total installed generation capacity of more than 90GW is currently powered by renewables. New coal-fired projects have continued to be proposed this year, despite the Indonesian government's previous commitment in 2021 to stop building new coal-fired plants after 2023. In addition to power generation, coal is also heavily utilised in Indonesian industry, which contributed to domestic coal production reaching a record 720mn t so far this year. Indonesia could also be on track for a new output record this year, with ESDM expecting 2024 output to surpass 800mn t, up from 775mn t in 2023, if the current output trend continues for the rest of this year. Indonesia and the Philippines are the two most coal-reliant countries in southeast Asia, according to energy think-tank Ember. By Ashima Sharma Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

China to quit coal baseload power by 2050: Think tank


20/11/24
20/11/24

China to quit coal baseload power by 2050: Think tank

Singapore, 20 November (Argus) — Coal power in China will shift from being a baseload to a backup power source by 2050, according to a government-linked think tank last week. China is expected to move to a cleaner energy system with solar and wind power as its core, displacing coal as the main power source, according to the China Energy Transformation Outlook 2024 released on 13 November at the Cop 29 climate conference in Baku, Azerbaijan. The Energy Research Institute of the Chinese Academy of Macroeconomic Research, a think tank under China's National Development and Reform Commission, was the key contributor to this report. Installed renewable power capacity is projected to account for 95pc of China's potential total capacity of 10,530-11,820GW in 2060, before which China aims to achieve carbon neutrality, according to the report. Renewable sources are expected to generate 93pc of power in 2060. This would be a significant change from the current mix in China. Renewables made up 52pc of total capacity of 2,920GW in 2023, while thermal power capacity was 48pc, according to China's National Energy Administration. Renewable sources and thermal power, which is mainly coal-fired, generated 30pc and 70pc of power respectively in 2023, according to the country's National Bureau of Statistics. "By 2050, coal power will preliminarily serve as an emergency and backup resource for the grid, providing essential support in critical power events," the report said. Solar and wind Significant growth in solar and wind installations is expected to lead China's energy transition, supported by lower costs. Solar power capacity is projected to reach 6,370-7,240GW in 2060, accounting for two-thirds of total capacity, while wind power capacity could reach 2,950-3,460GW, according to the report. Among the installed solar capacity, 70pc will be distributed systems, which are smaller power generation systems compared to large, utility-scale systems. Costs of solar and wind power generation in China have fallen by 80pc and 60pc respectively over the past decade, the report said. The report elaborated on ways to manage the volatility of renewable sources via various energy storage systems. Solar power output usually increases rapidly during the day with abundant sunlight. When output exceeds the power load, energy is stored in pumped hydro, chemical, hydrogen and electrofuels, electric vehicles and industry demand response storages. These storage systems can then discharge electricity to generate power in the evening when solar output stops, and when wind output is low. New energy storage solutions are expected to support increased electrification in China, which will play a key role in reducing the country's carbon emissions, the report said. Electrification involves replacing technologies or processes that use fossil fuels with electrically-powered equivalents, such as electric vehicles. By Jinhe Tan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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