Hydrocarbon Engineering

HYDROCARBON ENGINEERING

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Request your free chemical value chain wall poster at www.catalysts.basf.com/catalog. January 2013contents Volume 18 Number 1 ISSN 1468-9340

03 Comment 39 loading up liquid Joy Baker and Eric Harbaugh, Enersul, USA, explore the issues that arise when transporting liquid sulfur away from the production 05 World News site Contract awards, project updates, industry latest, news digest, diary dates, mergers and acquisitions 44 A level playing field Hans Westerlind, Emerson Process Management, Sweden, outlines 12 stepping on the gas how new tank gauging technologies are able to reduce the cost of Michel Myhre-Nielsen, Statoil, Norway, provides an outlook improving terminal efficiency and safety for the European gas market, focusing on the political, supply and demand issues that are the driving forces in the region 51 EU standards: measure up Simon Harwood, Allison Engineering Ltd, UK, and Jack Koeken, 18 bits and Pieces: EUropean gas Fluid Components International, USA, demonstrate how to Jason Knights, Lloyd’s Register, UK, traces the current trends in measure flare gas in line with the European Union Emissions the European gas market, arguing that the current fragmented Trading Scheme marketplace is hampering progress 54 treading water Nauman Rashid, GE Power & Water, UAE, discusses how desalination and advanced water treatment are essential for economical operation in modern refineries

59 Tiers for fears: Part 2 George Anderson, Steve Mayo and Peter-Paul Langerak, Albemarle Corporation, USA, and Stefano Melis, Albemarle Catalysts BV, The Netherlands, discuss how FCC pretreater unit operations can be optimised to reach Tier 3 gasoline sulfur targets. Part two of this two part article provides three illustrative examples of the expected impact of Tier 3 gasoline on refinery units

18 65 catalyst review Hydrocarbon Engineering provides an overview of some of the 23 making the most of it most advanced catalyst technologies available within Diego Ruiz and Fernán Serralunga, Soteica Europe SL, Spain, the hydrocarbon processing industry today and Gian Luigi Diana, Pinuccio Floris and Francesco Mallica, SARAS SpA, Italy, demonstrate how a reduction in energy costs was achieved at the SARAS refinery complex 80 15 facts on... catalysts 15 nuggets of information on catalysts, exploring their history and application in various processes both inside and outside 29 leaning forward of the oil and gas industry Simon Bennett, AVEVA, UK, argues that new technology is about to bring lean manufacturing principles to plant construction

33 the case of the 'missing' hago Zvi Merchav, Merchav Engineering, Israel, and Fred Justice, Chemstations, USA, investigate the process of troubleshooting on this month’s cover a crude unit main column at a refinery

AVEVA is a leader in engineering design and information management Member of ABC Audit Bureau of Circulations solutions for the plant, power and marine industries. Its brand new plant Copyright© Palladian Publications Ltd 2013. All rights reserved. design software, AVEVA Everything3D™ No part of this publication may be reproduced, stored in a (AVEVA E3D™) drives lean construction retrieval system, or transmitted in any form or by any means, adoption. AVEVA E3D enables EPCs to electronic, mechanical, photocopying, recording or otherwise, break down barriers between design and without the prior permission of the copyright owner. All views construction, reducing overall project expressed in this journal are those of the respective cost, schedule and risk. contributors and are not necessarily the opinions of the publisher, neither do the publishers endorse any of the claims made in the articles or the advertisements. Printed in the UK. www.energyglobal.com 1207_e www.airliquide.com Because ourgenesleadustoanirrepressible passionfornewsolutions. Z\Z[HPUHISLHUKJVZ[LɈ we innovaterelentlessly inorder tobring choice –worldwide. Global E&CSolutionsisyourpartnerof plant andsystemsolutions,AirLiquide When itcomestoproviding innovative is thelistofourinnovations. The onlythinglongerthanourcompany history No surprise,since LJ[P]LZVS\[PVUZ as well.Yours couldbethenextone. ring reference pr of by thousands communities. Thisisnotonlydemonstrated customers, suppliers,academicsand to society, levera patents, butbypionee- ojects around the ging partnershipswith globe globe comment Claira Lloyd Editor

appy New Year from all of us at Hydrocarbon attention to the plight the downstream industry is facing. Engineering; we hope you enjoyed the festive season! The article reports on a European refi nery that forced a As one year ends and another begins, I sit down to step change reduction in intake water to simply stay in the arduous task of collating and monitoring all the business after its major water source was redirected to editorial topics that have proved to be popular over agriculture. It highlighted the growing number of plant Hthe year, and it always ends up being interesting and helpful expansions and upgrades in the Far East that have been for planning new editorial features. Inevitably, topics such forced to halt until the governments’ water utilisation as catalysts and sulfur can always be found in the top spots. targets are met and it discussed the general increase in However, this year water/wastewater/water treatment joined regulations and their enforcement concerning refi nery them. water systems around the globe. Not only was water a popular topic in the magazine during However, whilst the above seems like ‘bad news’, KBC 2012, but it also fuelled debate and discussion on our LinkedIn believes that as refi neries are ‘threatened and forced to group. This extension drew my attention to the fact that water has spend large sums on equipment that does nothing for the been a hot topic in the industry in general, and not only within the bottom line,’ there is light at the end of the tunnel. The realms of Hydrocarbon Engineering. Water is needed in all areas company asserts ‘that application of structured techniques, of life: from agriculture to energy to sanitation and of course for some simple, some advanced, can give refi ners big water drinking. In the downstream industry alone it is used for everything savings, without resorting to high capex solutions.’ So, is an from cracking to waste disposal to product cleansing. However, all round and simpler approach to water use, recycling and with competition for this resource increasing all over the globe, reuse going to be the better way forward for our industry? we appear to be beginning to take this cheap resource for granted, Should we evaluate and assess the straightforward things and there may well be troubled times on the way. like meters, operational excellence and new technology 2012 was made the ‘European Year of Water’ in the hope that potential? I am inclined to say yes as we will most likely people all over the continent would learn the real value of this end up with maximum results from minimum expenditure precious resource and understand that conservation is needed, (and we may even be able to adopt some water saving and for the sake of our ecosystems if nothing else. However, it was recycling principles in the home to lend an extra helping an ‘Outlooks on Energy’ comment from KBC that really drew my hand).

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KBC | Optimisation and efficiency Worldwide | Training

BC Advanced Technologies signed the technical and operating sector of and Solutions a contract in the second half of the 110 000 bpd Esmeraldas Refinery in K ajor industrial companies 2012 for a large optimisation and Ecuador over a period of four years. from various sectors of the efficiency project in China. This project The comprehensive programme of M process industries are turning to is with Fujian Refining and support includes the full range of KBC Honeywell's UniSim® technology to Petrochemical Corp. Ltd. (FREP), a joint services to improve overall provide industrial operator training venture of Fujian Petrochemical performance, with a focus on margin and process design solutions. Company Limited, ExxonMobil, China improvement and the capability of the Honeywell has signed 10 new Petroleum & Petrochemical Company workforce. As part of the contract, simulation projects worth a Limited and Saudi Aramco Sino EP PetroEcuador will take a five year combined US$ 20 million, driving Company Limited. licence for KBC’s process and energy growth for its process simulation Under this multi million US dollar modelling software tools, including the business. contract, KBC will provide a five year full Petro-SIM™ suite, to optimise the The UniSim portfolio includes Petro-SIM™ and ProStream™ software operation of the refinery. UniSim Design Suite, a steady state license, build a refinery and KBC will work with EP and dynamic simulation tool that petrochemical integrated flowsheet PetroEcuador, both directly and through helps engineers create optimal model, online utility optimiser and a major subcontractor, to improve its process designs based on critical complex wide LP model for FREP, and core work processes and support business objectives, and UniSim will train FREP personnel on software systems, as well as develop the Operations Suite, which provides model building and applications. technical capability of the workforce. an advanced operator training Implementation of the project will The total contract award is solution and capabilities for control effectively improve production and US$ 100 million and the contract will system checkout. operation conditions and provide be delivered over four years, having Recent contracts have included: strong technical support and a vast started in December. It is anticipated a European based refining company application platform for FREP's that significant elements of the making a multi million dollar optimisation and profit improvement technology transfer package, including investment in Honeywell's OTS work. the Petro-SIM licences, will be technology to help improve KBC has also signed a contract with delivered in the early stages of the operator competency and safety at EP PetroEcuador (the integrated state contract and delivery of significant multiple facilites; a leading national oil company of Ecuador) for consulting milestones will take place petrochemical producer selecting the supply of a best practices plan for within the first 12 months. Honeywell to deliver it largest corporate OTS program for refining and natural gas liquids process units in the Middle East; a Korea natural gas supplier choosing Honeywell to Kuwait | pmc contract for new plant provide comprehensive automation solutions, including the UniSim MEC, the international the largest in the Middle East and will Operations Suite for LNG terminals; Aengineering and project increase Kuwait’s refinery capacity by a north American petroleum refiner management company, has been 615 000 bpd. It will be a key part of adding two production facilities to awarded a US$ 528 million project Kuwait’s long term strategy, producing its list of sites employing UniSim management consultancy (PMC) cleaner fuels to meet its electrical technology; and a US based contract by the Kuwait National power generation growth and demand chemical manufacturer relying on Petroleum Company (KNPC) for a new while adhering to the latest Honeywell to help simulate amd oil refinery at Al Zour, Kuwait. environmental standards. design a first of its kind processing When completed in 2018, the multi The contract is expected to create facility that will produce ammonia billion dollar refinery is expected to be approximately 300 new jobs for AMEC. from biomass.

Hydrocarbon 5 Engineering January 2013 w rld news

| INBRIEF Estonia | SRU TO UPGRADE REFINERY

acobs Engineering Group Inc. has services are being provided from USA Jreceived a contract from Viru Keemia Jacobs’ Leiden offi ce in The KBC Advanced Technologies plc and Grupp AS (VKG) to provide a license Netherlands. MSE (Consultants) Limited are pleased package and services for a sulfur Under the terms of the contract, to announce that they have signed a recovery unit (SRU). The SRU is part of Jacobs is licensing its proprietary memorandum of understanding for VKG’s investment to upgrade its shale EUROCLAUS® technology to VKG, and KBC to promote and distribute MSE's oil refi nery complex in Kothla-Jarve, is also providing the basic design compressor design software, PRO-M, Estonia. package, training, start up and as part of KBC's Petro-SIM™ process Offi cials did not disclose the commissioning assistance services for simulator. This will make a specialised contract value, but noted that the the new SRU. turbomachinery add in to KBC's full facility simulator available to the oil and gas industry. China | PUMPS FOR REFINERY PROJECT Australia ulzer Pumps will supply 40 pumps 10 pumps for the oil storage and Sto PetroChina, the largest oil transportation unit and utility unit. Intergraph® SmartPlant® Enterprise has producer in China, for the Guangxi Oil Guangxi Oil Refi nery Project Phase II is been selected by INPEX, operator of the Refi nery Project Phase II. Located in the scheduled for operation in Ichthys LNG Project in Australia, which is Guangxi Province in southern China, the October 2013. All of these pumps will a joint venture between INPEX and Total, project will refi ne imported high sulfur contribute to the refi nery capacity to Tokyo Gas and other participants. INPEX crude oil. It will have a total annual produce gasoline, diesel, jet fuel and has implemented the solutions, which capacity of 10 million t to supply fuels LPG, as well as petrochemical products. include SmartPlant Enterprise for Owner to south western areas of China. Sulzer Pumps' facilities in Suzhou Operators (SPO) as the information The scope of supply includes and Dalian, China, will produce management system; SmartPlant 3D and 12 pumps for the residue 34 pumps. The remaining pumps will be SmartMarine® 3D (collectively known as hydrodesulfurisation unit, 18 pumps for manufactured in Bruchsal, Germany, Smart 3D); SmartPlant Instrumentation; the diesel oil hydrotreating unit, and and packaged in Suzhou. SmartPlant P&ID and SmartPlant Electrical. Foster Wheeler | TAKE THREE Singapore oster Wheeler AG has acquired Finally, a subsidiary of Foster Singapore LNG Corporation Pte Ltd Three Streams Engineering Ltd., a Wheeler's Global Engineering and (SLNG) has awarded a FEED contract to F privately held engineering company Construction Group has signed a three WorleyParsons to define the scope located in Calgary. It is a multi year frame work agreement with Statoil of the expansion of its LNG terminal discipline full service engineering, Petroleum AS for the provision of FEED send out and storage capacities. The procurement and construction services for future projects at the expansion plans include the installation management company with upstream Kårstø and Kollsnes processing plants, of additional facilities to increase the and downstream projects with located in Norway, north of Stvanger terminal’s capacity from its current approximately 450 employees. and northwest of Bergen, respectively. 6 million tpy throughput to a new Foster Wheeler AG's Global The frame agreement includes an capacity of 9 million tpy, and the Engineering and Construction Group option for Statoil to extend the construction of a fourth tank. The project has also made an announcement. It has agreement for a further two years and officially kicked off on 29th October 2012 won the British Safety Council Sword for Foster Wheeler to execute concept and is expected to be completed by early of Honour for health and safety studies as well as FEEDs. Q2 2013. managment excellence and Globe of The value of the agreement has not Honour for environmental managment been disclosed and bookings will be excellence. recorded as work is released by Statoil.

6 HYDROCARBON January 2013 ENGINEERING

w rld news

| INBRIEF West Africa | GAS MARKETING JV FORMED USA asol plc, a West African energy natural gas to be sold by Cogaz will be Gdevelopment company, has purchased form Gasol or one of its PetroSkills has acquired the training and announced that it has singned a joint affi liates. consulting business of John M. Campbell venture (JV) agreement with Societe Furthermore Gasol and Bengaz have & Company of Norman, Oklahoma. BenGaz S.A., following the agreement in also signed an asset management PetroSkills and John M. Campbell are principle between the two companies agreement, under the terms of which both members of the PetroSkills Alliance, announced on 3rd September 2012. Gasol will provide management a leading training alliance for the Under the terms of the agrement, assistance to BenGaz in respect of its international petroleum industry with Gasol and Bengaz will form a JV 2% stake in the 690 km offshore West 25 industry members. company branded Cogaz S.A., which will African Gas Pipeline established to market gas in Benin, Togo and other transport natural gas from Nigeria to UAE countries in the West African region. All consumers in Benin, Togo and Ghana. Following the set up of AS-Schneider Asia-Pacific in 2011, the Armaturenfabrik GE | TECHNOLOGY FOR REFINERIES Franz Schneider GmbH + Co. KG has opened AS-Schneider Middle East FZE etroleum Company of Trinidad & benefi t of a small footpring with high in Dubai. The Middle East region plays Tobago, Ltd. (PETROTRIN) has operating effi ciency. a strategic role for AS-Schneider. The P contracted GE to design, construct, Specifi cally, the new facility will subsidiary on the Arabian Peninsula has operate and maintain a temporary include fi ve of GE's M-PAK mobile UF been on the cards for some time. water treatment plant, utilising GE's units, four 600 gal./min. MobileRO advanced ZeeWeed ultrafi ltration (UF) units, three circular tanks, RO feed Australia and MobileRO reverse osmosis (RO) pumps, transfer pumps, waste pumps, Alfa Laval has won an order to supply technology, which will supply the RO cleaning skid, air compressor for compact heat exchangers to an LNG refi nery with 3.5 million imperial gal./d instruments and an offi ce trailer with plant in Australia. The order is worth of fi ltered water. storage and laboratory. GE will design, approximately SEK 50 million and delivery PETROTRIN has undertaken a clean construct, install, own, operate and is scheduled to take place in 2013 and fuels programme, which involves the maintain the facility for two years. 2014. The compact heat exchangers will addition of new plants and an upgrade Elsewhere, GE will also provide a be used to recover and reuse heat in of the existing FCC unit to enhance the wide range of equipment and services the gas cleaning process, prior to the economic performance of the refi nery for a major plant upgrade of the Izmit liquefaction. By reusing heat, the compact and to meet future demands in gasoline Tupras refi nery, located on the Gulf of heat exchangers will contribute to quality. As a result of these changes Izmit, Turkey. bringing down energy consumption and within the refi nery, the refi nery steam The GE technology will power a

CO2 emissions. and cooling water demand will increase cogeneration site that will produce a to sustain these process units. reliable supply of energy and steam to France Therefore, the water demand will meet the growing needs of the Tupras French authorities have approved the increase in tandem with the increased facility, which is among the most sale of the petrochemicals and nuclear steam and cooling water demand. advanced oil refi neries in the and specialities divisions of Manoir The mobile treatment plant will be Mediterranean region. Industries to China's Yantai Taihai. The located within PETROTRIN's refi nery at GE will supply two Fram 6B gas sale agreement, signed October 31st 2012, Pointe-a-pierre, Trinidad and Tobago, turbines, one steam turbine and three by Manoir Industries and Yantai Taihai, West Indies. The new mobile water generators to Técnicas Reunidas of was still subject to authorisation by treatment plant will provide RO process Spain, the EPC contractor for the Izmit the French Ministry of Economy and water to meet the higher demand for Tupras upgrade project. The equipment Finance due to the strategic nature of the fi ltered water that will be used for contract also includes performance activities being sold. industrial processes inside the refi nery. testing, services, spare parts and GE's technology offers the added technical advisors.

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21 – 23 February he American Fuel And that nearly all auto manufacturers have Russia & CIS Executive Summit TPetrochemical Manufacturers have warned that warranties will be voided, Downstream Oil & Gas urged the Environmental Protection may now fi nally resonate with Madinat Jumeirah Conference Centre Agency (EPA) to consider the American regulators. Dubai, UAE Automobile Association's warning on EPA could now be forced to use Tel: +359 884 102 468 use of E15 gasoline. real science rather than political Email: [email protected] A new survey from the AAA science because it would be diffi cult to provides yet another confi rmation that dismiss the AAA, which represents the 24 – 27 February the EPA's hasty approval of E15 interests of 53 million consumers. EPA is Laurance Reid Gas Conditioning threatens consumer engines and rushing to impose a new fuel into the Conference vehicles. Instead of simply acting on marketplace while ignoring studies that NCED Conference Center and Hotel very limited testing rather than a demonstrate that E15 damanges existing Norman, Oklahoma, USA comprehensive analysis, the Agency automobiles, small engines like those Tel: +1 405 325 3386 rubberstamped the Growth Energy on chainsaws or lawnmowers, off road Email: [email protected] petition and approved E15 for sale into engines and gasoline refueling the general marketplace.Evidence infrastructure. The AFPM is confi dent 17 – 19 March showing that 95% of consumers that legal challenges moving through AFPM Annual Meeting surveyed had not heard of E15 gasoline, the judicial process will eventually Marriott Rivercenter thereby raising the likelyhood of misuse confi rm that the EPA violated the law in San Antonio, Texas, USA and engine harm, coupled with the fact approving a partial waiver for E15. Tel: +1 202 457 0480 Email: [email protected] API | ENVIRONMENT PROTECTION

17 – 20 March merican Petroleum Institute (API) report is based on spending data from Middle East Turbomachinery Symposium Ahas released a new report representative companies extrapolated Qatar National Convention Center detailing the oil and natural gas to estimate industry wide Doha, Qatar industry's massive spending on performance. Tel: +1 979 845 7417 environmental performance. The oil and natural gas industry is Email: [email protected] 'Investment in our communities and one of the largest investors in low and our environment are critical to our zero carbon technologies in addition to 19 – 21 March operations. Since 1990, our members advancing carbon capture and StocExpo: The Storage Terminal Operators' have spent a quarter of a trillion dollars sequestration technology. Over the Conference & Exhibition on environmental protection', said past decade, the US based oil and Antwerp Expo, Howard Feldman, director of regulatory natural gas industry investments Antwerp, Belgium and scientiﬁ c affairs. 'This is part of our exceeded the federal government and Tel: +44 (0)20 8892 1929 continuing responsibility to the almost as much as the rest of private Email: [email protected] communities in which we operate and industry combined. to the public we serve.' Feldman added: 'One of every ﬁ ve 7 – 10 April The Environmental Expenditures dollars invested in alternative enery 92nd Annual GPA Convention Survey conducted by API estimates technologies like wind and solar is from Marriott Rivercenter that the US oil and natural gas industry the oil and natural gas industry and we San Antonio, Texas, USA has invested more than US$ 252 billion are committed to doing more. Above Tel: +1 918 493 3872 to improve the environmental all, the industry is committed to making Email: [email protected] performance of its products, facilities sure Americans have affordable, safe and operations since 1990, and reliable sources of energy to ensure approximately 65% of that directed a healthy environment, strong economy toward cleaner air and water. The and job growth.'

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1MBUJOVNt1BMMBEJVNt3IPEJVNt3VUIFOJVNt3IFOJVNt(PMEt4JMWFS Processing facilities and technical service offices around the world STEPPING GAS ON THE his year, perhaps more so than any in the In this context, Statoil is conﬁ dent that gas has an preceding decade, it is important to review the important role to play in providing European member states political and economic backdrop against which a means to meet their carbon emissions targets by 2020.

Statoil and many other energy companies are After all, natural gas power plants emit at least 50% less CO2 Toperating in European gas markets. Politics is arguably having than those fuelled by coal: coal being the fossil fuel that still the largest impact on the powers a signifi cant share of energy markets these days. At European electricity the highest levels in Europe, Michel Myhre-Nielsen, Statoil, generation. Perversely, this there exists an ambitious Norway, provides an outlook for the fi gure has been growing package of policy during recent years as the prescriptions intended to European gas market, focusing on low costs of carbon coal reduce the EU’s carbon the political, supply and demand have outcompeted gas in the dioxide emissions by 20% power generation industry. from 1990 levels by 2020, issues that are the driving forces in In the UK, where Statoil initiated by the European the region. has made signifi cant long Climate Change Programme term investment over many (ECCP). On top of this, the years, the Coalition European Commission has initiated many climate related Government of the Conservatives and the Liberal Democrats measures aimed at promoting electricity from renewable has recently made announcements that are so encouraging energy, voluntary commitments by car manufacturers to towards long term gas development that it has been reduce CO2 emissions by 25% and proposals on the taxation accused by some of initiating a second ‘dash for gas’, much of energy products. like the country experienced in the 1980s with its own North Sea finds. That being said, a Government gas strategy mix, which had remained at 16% from the late 1960s – 1990s, should hopefully provide clarity that will cut through the has risen to 21% in 2011. hyperbole of various campaign groups. The UK is also no exception to the somewhat controversial Pipeline gas debates around the possibilities for shale gas development In September 2011, natural gas was fed into the first string of and for carbon capture and storage (CCS). Influenced by their the Nord Stream gas pipeline, beginning the commercial confidence in both these technologies, many senior supplies of Russian gas directly to the EU. Gas imports to the politicians, reportedly including the Chancellor of the EU are anticipated to grow in the coming decade by nearly Exchequer (the UK’s finance minister), have been reluctant to 200 billion m3, which would be more than a third of current sign up to restrictions on gas after 2030 and a decision in total demand. As such, the new gas pipeline is a significant March to permit unabated gas power generation up to 2045 development for the gas industry. However, Europe’s Southern (whilst coal generation will be excluded from the mix after Gas Corridor project, which could see Caspian gas flowing to 2030) underlines this. Europe in 2018, is still uncertain. Final decisions on the Of course, in all this, it is important to highlight, as the Southern Corridor pipeline, as well as Azerbaijan’s giant Shah UK’s Energy Secretary Ed Davey does regularly, that support for Deniz II field, are expected in less than a year. The plans for gas and a strong commitment towards renewables can go hand these will certainly affect the supply of gas into Europe and in hand. A recent announcement by the Department of Energy are being closely watched by energy companies and energy and Climate Change of a record breaking round of applications officials in Europe. for 167 new licenses covering 330 North Sea blocks, plus its statement that the UK’s oil and gas sector still provides almost LNG and the post Fukushima effect half of the country’s energy and is by far the largest single As a result of the Fukushima nuclear disaster and the industrial UK investor, appears to have set a favourable scene subsequent nuclear phase out policy, Japan’s demand for LNG for the recent Energy Bill and Gas Strategy. as well as low sulfur fuel oil and crude oil for power So, on the whole, the UK’s political backdrop seems to generation increased significantly. Japan’s total LNG imports offer the ‘green shoots’ of long term certainty for investment increased by 12% to 79 million tpy in 2011 and will likely be in and development of gas. However, a look across the North higher this year as the country continues to shift away from Sea to Germany reveals a different perspective, where a shift nuclear. The Japanese Government’s new policy, which from nuclear to renewables, gas, coal and lignite, is taking earmarks a 30 – 35% share to natural gas in electricity place. The country’s renewable targets are a key focus for generation, while reducing the share of nuclear to 15 – 20%, politicians and the public. However, in recent years Germany will likely see the country importing significant volumes from has also increasingly burnt coal, with coal consumption rising Qatar and Australia, and could ultimately see supplies coming 4.9% since Chancellor Merkel announced a plan to start from new East African sources and potentially even the USA, shutting the country’s nuclear reactors after last year’s following their shale gas boom. Fukushima disaster in Japan. Adding to that, the renewable The US looks set to become a net exporter of LNG by support scheme has started to take its toll on electricity 2021, according to the Annual Energy Outlook 2012. This consumers recently being presented raising electricity prices. should also have a significant impact on global prices, with the Germany’s largest utilities RWE and EON AG (EON) are potential for prices to have new global benchmarks. With shunning cleaner burning natural gas because of the falling increased production, average annual wellhead prices for price of coal, while the collapsing cost of carbon permits natural gas will remain below US$ 5/1000 ft3 (2010 dollars) means there is little penalty for burning coal. It is said that through 2023. These projected prices reflect continued US Germany’s increasing coal consumption is part of a global industry successes in tapping the extensive shale gas resource. return to the fossil fuel that is cheaper than most alternatives. After 2023, natural gas prices will generally increase as the Indeed, the amount of coal burned worldwide rose 5.4% in numbers of tight gas and shale gas wells drilled increase to 2011 to account for 30% of total energy use, its highest meet growing domestic demand for natural gas and offset proportion since 1969, according to BP. declines in natural gas production from other sources. Other European countries are somewhat divided in their opinions on the role of gas, with France focusing on its nuclear Shale gas exploration in Europe assets and Spain looking to build its renewable energy market. How do European shale hydrocarbons fit into this picture? As The development of shale gas and new discoveries in Europe The Economist noted in a recent special report, it is true that will likely determine the position of gas in the energy mix geologically, the chances of finding shale gas in Europe are across Europe as politicians and officials from all governments ‘every bit as good as in America’. In 2011 the IEA published a look to the ‘shale revolution’ in the USA with great interest. report entitled Are We Entering a Golden Age of Gas? but the triumphant sounding title belies some of the significant Supply challenges that face ‘a shale gas bonanza’ in Europe. Probably There have been a number of developments over the last two one of the more interesting long term supply side dynamics years that will likely shape the future level of gas supply into playing out in Europe at the moment in terms of gas is the Europe: most notably the North American shale gas debate over shale gas development on the continent. In the discoveries, but also new LNG export facilities, prospects of most ambitious scenario, the IEA report suggests that the new supply from the Caspian region and new discoveries in share of gas in the global energy mix could rise from 21% today the North Sea. Already the share of gas in the overall energy to 25% in 2035. Of course, all of these supply factors could

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