Report:Tenders For 6 Blocks to be Re-Invited

Tenders For 6 Blocks to be Re-Invited

EP Report

State-owned Petrobangla has planned to re-invite bids from the aspiring International Oil Companies (IOCs) for six shallow-water sea blocks that went without bidding on closing of bid submission deadline last month.

Officials said that Petrobangla has sent a proposal to the Energy Division under the Ministry of Power, Energy and Mineral Resources to re-tender the six shallow-water blocks in the Bay of Bengal.

The fresh date for bid submissions and other necessary issues for the six shallow-water blocks will be notified later after getting approval from the Energy Division, the officials added.

"We have planned to re-tender for the remaining six shallow sea-blocks to facilitate bid submissions by some aspiring IOCs. Some IOCs were seeking further extension of the bid submission deadline for shallow sea-blocks. But we didn't do that then," said an official.

The terms and conditions including the oil and gas prices, profit sharing and cost recovery provisions will not be changed from the previous offer, the Petrobangla official said.

The six shallow-water blocks planned for a fresh offer are SS-02; SS-03; SS-06; SS-08; SS-10 and SS-11.

Petrobangla on April 2, 2013, received bids for just three of the nine shallow-water blocks it had offered in the latest bidding round after extending the initial bid submission deadline of March 18, 2013.

Petrobangla chairman Hussain Monsur then attributed the lukewarm response to the non-availability of primary data on the blocks.

US-based ConocoPhillips submitted an offer for block SS-07, and India's ONGC Videsh Ltd. for blocks SS-04 and SS-09.

Petrobangla last week completed evaluation of the bids it received from US's ConocoPhillips and India's ONGC Videsh Ltd for oil and gas exploration in three shallow water blocks in the Bay of Bengal and recommended awarding the blocks to them.

It has sent recommendations to the Energy Division for final approval.

Bangladesh on December 9, 2012, had launched the country's fourth bidding round for oil and gas exploration offering 12 offshore blocks --- nine in shallow waters and three in deep waters.

It had closed bid submissions for shallow-water blocks on an extended deadline on April 2 but decided to receive bids for three deep-water blocks at a later date after further sweetening the production sharing contract terms.

Petrobangla has not yet announced the bid submission deadline for the deep-water blocks.

It has decided to fix a bid submission deadline for deep-water blocks after the new terms and conditions have been firmed up.

"Mere re-tendering the shallow-water blocks will be not enough to attract IOCs for oil and gas exploration," said Farid Uddin, an oil sector expert, who is also a Bangladesh agent for an IOC.

The government should change the terms and conditions of the shallow-water blocks too to make those lucrative to the IOCs, he said.

Under the model production sharing contract (PSC) for shallow-water blocks, state-owned Bangladesh Petroleum Exploration and Production, or Bapex, will have a 10 per cent carried interest stake.

The gas price has been pegged to high sulphur fuel oil (HSFO) prices.

The floor price for HSFO has been fixed at $100 per tonne and the ceiling price at $200 per tonne.

The latter works out to around $5.50 per Mcf (1,000 cubic feet) before a 37.5 per cent corporate tax that has to be paid by the contractor.

For deep-water blocks, Petrobangla is considering raising wellhead price of gas to be produced from these blocks

It is also considering a tax holiday, allowing direct sales of hydrocarbons to third parties and raising the cost recovery limit.

Petrobangla has proposed raising the cost recovery limit to a maximum 70 per cent per calendar year, up from an earlier 55 per cent, and will allow contractors to sell 50 per cent of their output from a block directly to domestic third parties bypassing Petrobangla.

Petrobangla will have the first 'right of refusal' for only 50 per cent of the blocks' output. Contractors will also enjoy a tax holiday for the entire duration of the contract.

Petrobangla has proposed raising the ceiling price of high sulphur fuel oil, to which gas prices are pegged, to $220 per tonne for deep-water blocks, compared to $200 per tonne for shallow-water blocks.

This will equate to a gas price of $6.50 per Mcf, when HSFO is at $220/mt.

In the country's previous 2008 bidding round, the floor price for HSFO in the formula was fixed at $70 per tonne and the ceiling price at $180 per tonne.

Bangladesh had offered 28 offshore blocks in the 2008 bidding round, but the response was poor due to the country's maritime boundary disputes with Myanmar and India.

The country could award only parts of two deep-water gas blocks, DS-08-10 and DS-08-11, to ConocoPhillips, due to the disputes, and only after three years of consultations.

Irish Tullow was awarded a shallow-water block, SS-08-05, in the Bay of Bengal, but a PSC has yet to be signed as the block lies in disputed waters.

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Energy Ministry to ‘Get Tk 2,291cr in Next Budget’

EP Report

The Energy Ministry is expected to get Tk 2,291 crore in the coming fiscal (2013-14), up by Tk 643 crore than the current fiscal (2012-13) year’s Tk 1,648 crore.

“We’ve been asked by the Finance Ministry to keep our new budget within the framework Tk 2,991 crore with Tk 2,255 crore for development expenditure and Tk 36 crore for revenue expenditure,” said a senior official at the Energy Ministry.

In the current fiscal, development expenditure is Tk 1,608 crore while revenue expenditure Tk 40 crore.

Though the coming budget has been directed to increase by Tk 643 crore, only a few new projects was included in the annual development programme (ADP) of the coming budget of the fiscal year 2013-14.

They informed that there were a total of 38 projects in the ADP of the current budget ending on June 30. The projects were reduced to 36 in the revised ADP of the current fiscal. But the new ADP will get 27 projects.

Of the 36, 10 will be completed in the current fiscal while the remaining 26 will continue in the coming budget. “No new, but one, is going to be added to the new ADP of the coming budget,” said another senior official preferring anonymity as he is not authorised to speak on the issue.

The new one is installation of SCADA (supervisory control and data acquisition) system in the gas transmission network of the country.  The Gas Transmission Company Limited (GTCL), a subsidiary of the state-owned Petrobangla, will implement the project at a cost of Tk 294 crore.

The major ongoing projects of the current ADP include installation of a number of gas transmission pipeline projects, drilling of wells and gas production enhancement in a number of gas fields, including Srikail, Semutang, Kapasia and Sundalpur and Sunetra.

Petrobangla has been successful in getting positive results from these projects. But its worst performing project was Sunetra field where it spent more than Tk 50 crore in drilling purpose, but found no gas.  Officials said the Energy Ministry has undertaken a move to implement a good number of development projects through newly formed Gas Development Fund (GDF) beyond the ADP.

As per an order of the Bangladesh Energy Regulatory Commission (BERC), the Energy Ministry formed the GDF by the additional income from the sale of gas at an increased rate.

While passing an order to allow Petrobangla to increase gas price in 2009, the BERC ordered the authorities concerned to create a new fund through the additional income to be made from the increased price of gas.

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Summit Power Gets Suppliers’ Credit

EP Report

A high-powered body approved $ 22.57 million in foreign loans for the Summit Bibiyana-II Power Company Limited to continue implementation of its power plant project.

The committee styling ‘Committee for Approval of Private Sector Foreign Loans’ also approved two other loan proposals - $ 2 million for Global Attire Limited and $ 0.6 million for Silver Company Ltd.

The approval was given at the committee’s 75th meeting held at the central bank office, according to a Bangladesh Bank (BB) statement.

The committee approved total credits to the tune of $ 25.17 million.

Dr Atiur Rahman, governor of the central bank presided over the meeting. Committee members including representatives of the Prime Minister’s Office, Ministry of Finance, Ministry of Commerce, Ministry of Industries, Board of Investment and officials of the committee secretariat were also present.

In the calendar year 2012 and 2011, the committee approved foreign loan $ 1490 million and $ 819 million respectively.

Summit Group of Companies Chairman Muhammed Aziz Khan said the work to implement the Bibiyan-II power project goes on in full swing.

“I am hopeful to implement the Bibiyana-2 power project by March or April next year,” the Summit boss said.

But it would require more time to complete the project. The project can be finished by August or September next year instead of March or April, power division insider said.

The government agreed to make capacity payment to Summit for Bibiyana-II power project subject to failure of gas supply to the plant during the proposed commercial operation date (COD) period, power division official said.

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3 Nations Meet to Devise Hydropower Work Plan

EP Report

The working committee for water resources management and hydropower development of the tri-nation alliance at its first meeting recently accepted a draft framework for future procedure proposed by Bangladesh.

The delegates from Bangladesh, India and Bhutan did not discuss any specific hydropower project but rather focused on preparing a framework for tri-lateral cooperation.

Primarily, for the hydropower project, Bangladesh has selected nine sites in India and four others in Bhutan — all in trans-boundary rivers.

“This is our first meeting and we needed to discuss the preparation of a framework on how the three nations will work together in future in this regard. So we have not discussed dam sites much,” an official present at the meeting said.

At the meeting, held in a Dhaka hotel, Bangladesh proposed a draft terms of reference (ToR) to make the framework on how the tri-nation alliance, the first ever of this kind in the region, would work further.

The meeting decided that the proposed ToR would be taken up for finalization in line with the tri-partite framework.

The next meeting will be held in India at any mutual convenient time, sources at the meeting said.

The delegates discussed the matter with highest importance. The prime ministers of Bangladesh and India had already agreed on this issue and it was included in the joint communiqué signed in 2010.

Bangladesh and India along with Nepal have formed a similar sub-regional alliance for identical cooperation.

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Why Go Green With Your Smart Grid When You Can Go Evergreen?

Stephen Heiser

Seriously, the Smart Grid saves time, money, and potentially even lives. When was the last time Tom Cruise prevented a multi-state black out or kept a hospital from losing power?

While smart grid technologies and assets are being brought online all over America and the rest  of the world, a recent survey by Pike Research has found that “Many Consumers Remain Unfamiliar With Smart Grid Concepts.” For example the study found that nearly one-third of respondents (30 percent) were unfamiliar with smart grids, and about one-quarter (24 percent) were unfamiliar with smart meters.

Now, don’t get me wrong, I understand that seeing celebrities get drunk and embarrass themselves is a Constitutionally protected right (and should be), but how about a little attention for the systems that makes it possible for you to see the humiliating video on your wide-screen TV? And how many celebrities can dynamically reroute power around a failed device or auto-start back-up/reserve power. As impressive as Beyonce was at the Super bowl, I don’t think she was the one who restored the lights to the stadium so that the game could continue.

As important as it is to know that Lindsay Lohan has another court date, I think it is also important for people to know that Smart Grid technologies make wind power feasible. Especially now, when so many workers  are seeing their weekly paychecks getting smaller and so many businesses are watching their profit margins shrink.  You’d think that something that will help replace some of that lost money would make more headlines.

The report, “Smart Grid Consumer Survey,” details findings from a web-based survey of 1,001 consumers in the United States. The study assesses consumer preferences, opinions, and awareness toward smart grid applications. More specifically, the report analyzes the dynamics of consumer demand, preferences, and attitudes toward several key smart grid product and service categories: smart grids and smart meters, home energy management, time-of-use pricing, renewable energy, prepaid electricity services, smart appliances, and demand response.

Pike Research’s examination of demand dynamics is segmented by various demographic and behavioral characteristics. The survey was conducted in the fall of 2012 using a nationally representative and demographically balanced sample. An Executive Summary of the report is available for free download on the Pike Research website.

The problem isn’t that the Smart Grid is uncool. For the most part, anyone who I talk to about the Smart Grid thinks that the new technologies are very cool.  And the fact that these technologies are being deployed now makes them even cooler. This takes them out of the realm of science fiction and brings them into the realm of Smart Phone Apps.  Truth be told, the technology to use a Smart Phone to interface with the Smart Grid already exists. Some business owners are already able to turn off the lights they left on in their offices from their cell phones and/or computers.

The survey also found that nearly three-fourths (73 percent) of consumers have concerns about the impact electricity costs have on their monthly budgets, and 63 percent are interested in managing energy used in their homes. When it comes to taking action on that interest, however, fewer than half (49 percent) are aware of companies offering home energy management services, and fewer than 40 percent have a high level of interest in participating in programs such as demand response.

So maybe the grid owners and operators should hire a publicist. The Smart Grid could do a segment on Oprah, make an appearance at the Oscars, and/or date a movie star.  After all investments in the Smart Grid are good for the long-term, as the Smart Grid is definitely going to out-last pretty much any celebrity marriage.

All we need now is some paparazzi to snap some pictures of the Smart Grid getting out of a sports-car in front of some Hollywood hot-spot and the hype will take care of the rest. It may not be the most dignified way to educate people about the features, benefits, and status of the Smart Grid, but it would be effective.

In the meantime I recommend checking out this Smart Distribution White Paper from Alstom. EP Desk; Source: PennEnergy

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An American Oil Find That Holds More Than All of OPEC

EP Desk

An initial exploration well 40 miles northwest of Rifle, Colorado, owned by American Shale Oil LLC. It sits atop part of the Green River Formation of shale, believed to contain 3 trillion barrels of oil. (Courtesy Roger L. Day/American Shale Oil LLC)

Drillers in Utah and Colorado are poking into a massive shale deposit trying to find a way to unlock oil reserves that are so vast they would swamp OPEC.

A recent report by the U.S. Government Accountability Office estimated that if half of the oil bound up in the rock of the Green River Formation could be recovered it would be "equal to the entire world's proven oil reserves."

Both the GAO and private industry estimate the amount of oil recoverable to be 3 trillion barrels.

"In the past 100 years — in all of human history -- we have consumed 1 trillion barrels of oil. There is several times that much here," said Roger Day, vice president for operations for American Shale Oil (AMSO).

The Green River drilling is beginning as shale mining is booming in the U.S. and a report by the International Energy Agency predicts that the U.S. will become the world's largest oil producer by 2020. That flood of oil can have major implications for the U.S. economy as well as the country's foreign policy which has been based on a growing scarcity of oil.

The IEA report does not detail where the American oil will be coming from, but the largest deposit is the Green River formation which has yet to tapped in any significant way.

This tantalizing bonanza, however, remains just out of reach, at least for now. The cost of extracting the Green River oil at the moment would be higher than what it could be sold for. And there are significant environmental obstacles.

The operation might require so much water it would compete with Denver and agriculture for vital supplies, the GAO report warned, could pollute underground streams, affect fish and other wildlife, and kick up so much dirt it would leave national monuments in a cloud of dust.

Nevertheless, the federal government has authorized six experimental drilling leases on federal land in an effort to find a way to tap into the riches of the Green River Formation.

Getting oil from Green River shale is a different proposition than getting gas and oil from other sites by using the controversial method of "fracking," fracturing the underground rock with pressurized, chemical-infused water.

The hydrocarbons in Green River shale are more intimately bound up with the rock, so that fracking cannot release them. The shale has to be heated to 5,000 degrees Fahrenheit before it will give up its oil.

Producers have been trying to accomplish that in one of two ways: Either they bring the shale to the surface and then cook it , or they sink a deep shaft and place an electric heater at the base, a process called in-situ. AMSO has been testing in-situ with mixed success.

"We put in a 600 kilowatt electric heater in, 2,100 feet below the surface," said Day. "The idea was that this would heat the shale and cause the conversion of solid hydrocarbons into liquid oil and gas. These, then, would be brought to the surface."

Things have not gone smoothly.

"We plugged it in the first week in January," said Day, referring to the heater. "It burned out like your toaster, only this is a toaster that costs several million dollars to repair. Just in the past month we've figured out what went wrong. We expect to re-install in December. If we're lucky, we'll put heat in the ground again before the end of the year."

If everything pans out and if AMSO gets the green light from the federal government, the company's half-dozen wells initially might produce about 1,000 barrels a day. Later, at peak production, Day estimates they could produce "100,000 barrels a day for 30 years."

Enefit, an oil producer headquartered in Estonia, has been producing oil from oil shale in Europe for more than 30 years, according to the CEO of its Utah subsidiary, Enefit American Oil. Rikki Hrenko says Enefit brings the shale to the surface, then heats it in retorts.

"It's more labor intensive to have to mine the shale," Hrenko said. "But the economics are still quite feasible." She puts the break-even price at about $65 a barrel. The cost of producing in Utah, she thinks, will be only slightly higher than in Estonia.

Enefit doesn't lease its Utah site from the U.S. government; it owns it. "We purchased it March 2011," Hrenko says. The company's goal is to have all the necessary permits by the end of 2016, start construction, and to be producing oil commercially in 2020 at the rate of 25,000 barrels a day.

Among the hurdles faced by would-be Green River producers are environmental costs, first among them being water consumption, according to the GAO report. Current estimates on how much water might be needed to realize the potential of Green River oil "vary significantly," the report admits. But water in the arid west already is in short supply, and ranchers and environmentalists eye warily the oil industry's potential thirst.