cdm opportunities in the oil & gas sector · cdm opportunities in the oil & gas sector ......
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CDM Opportunities in the Oil & Gas Sector
Methane to MarketsOil and Natural Gas Technology Transfer WorkshopApril 17-18, 2008
Paul SoffeAssociate DirectorEcoSecurities
© 2008 ECOSECURITIES GROUP PLC
EcoSecurities IntroductionEcoSecurities is a leading company in the business of sourcing, developing and trading carbon credits in the global carbon market.Founded in 1997, EcoSecurities’ project portfolio today is comprised of:
• Over 60 projects registered or submitted for registration with the CDM Executive Board
• Over 200 projects validated or submitted for validation
• Projects have the potential to generate over 142 million CERs through 2012
• Developed and/or contributed to more than 10 UN approved methodologies
• Over 300 of the projects have secured financing and over 250 are under construction or operational
> 437 projects at different stages of the CDM cycle
> spanning 36 countries, using 18 technologies
© 2008 ECOSECURITIES GROUP PLC
Company HistoryOct 2005 La Esperanza project,
structured by EcoSecurities, receives carbon credits from first-ever issuance
Nov 2005 EcoSecurities Consultancy Services is voted the world’s leading greenhouse gas advisory firm for the 5th year in a row
Dec 2005 EcoSecurities successfully lists on AIM, raising € 80 million
July 2007 Credit Suisse strategic investment and institutional placing, raising € 100 million
Selected EcoSecurities clients
Governments: Denmark, Austria, Japan,
International organizations: UNDP, UNFCCC, FAO, UNEP, IUCN, WWF, FAO, IPCC
Financial institutions: Tokyo-Mitsubishi Securities, World Bank, International Finance Corporation, ADB, EIB
Private clients: Shell, Essent, Toyota Tsusho, Harza, Vallourec & Mannessmann, EnXco Windpower, CDC, Alkane Energy, Cargill, Eskom, SGS
© 2008 ECOSECURITIES GROUP PLC
EU25Canada JapanLargeFinalEmitters
EU ETS
Russia, Ukraine, Former Eastern Bloc
countries
AAU supply via GIS?
CDM / JI projectsCCX, RGGICalifornia?Australia?
US Federal system?
CER/ERU forward stream supply
Keidanren VoluntaryAgreement
The Kyoto Carbon Credit Market
© 2008 ECOSECURITIES GROUP PLC
Secondary Market EnvironmentSTAN
DAR
D/ S
TRU
CTU
REDBILATERAL
BROKERED
EXCHANGE/ CLEARED
Swaps, options, financial products
Physical forward contracts
Spot Market
WH
OLE
SA
LE M
KT
INDUSTRIAL ENERGY CONSUMERS
“RE
TAIL”
MK
T
Advance as ITL launches
© 2008 ECOSECURITIES GROUP PLC
Historical carbon pricesECX CFI Futures Contracts: Price and Volume to 21st June 2007
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
06/0
2/20
06
20/0
2/20
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06/0
3/20
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20/0
3/20
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03/0
4/20
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19/0
4/20
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03/0
5/20
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17/0
5/20
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01/0
6/20
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15/0
6/20
06
29/0
6/20
06
13/0
7/20
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27/0
7/20
06
10/0
8/20
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24/0
8/20
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07/0
9/20
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21/0
9/20
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05/1
0/20
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19/1
0/20
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02/1
1/20
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16/1
1/20
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30/1
1/20
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14/1
2/20
06
29/1
2/20
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15/0
1/20
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29/0
1/20
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12/0
2/20
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26/0
2/20
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12/0
3/20
07
26/0
3/20
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10/0
4/20
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24/0
4/20
07
08/0
5/20
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22/0
5/20
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05/0
6/20
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19/0
6/20
07
VOLU
ME
(tonn
es C
O2)
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Pric
e pe
r ton
ne (E
UR
)
Total Volume Dec07 Sett Dec08 Sett
© 2008 ECOSECURITIES GROUP PLC
% of Volumes31 Dec 2006
31 Aug 2007
Landfill gas 12% 6.2%Biomass electricity 17% 14.0%Biodiesel 9% 8.0%Afforestation 0% 0%Hydroelectricity 22% 23.2%Coal mine methane 6% 2.0%Anaerobic digestion -Wastewater
3.5% 3.4%
Anaerobic digestion –Swine
1.5% 1.0%
Natural gas fuel switch 5.5% 8.4%Geothermal 3% 4.7%N2O 13% 11.6%Other 7.5% 17.5%Total 100% 100%
Diversification by project type Diversification by geography
% of Volumes31 Dec 2006
31Aug 2007
China 44% 44 %
Brazil 16% 11%Indonesia 7% 11%
India 5% 4%Thailand 3% 2%Rest of Asia 3% 5%
Rest of South & Central America
13.5% 10.5%
Eastern Europe 1.5% 1.0%
Rest of Africa & Middle East
7% 11.5%
Total 100% 100%
EcoSecurities’ diversity
© 2008 ECOSECURITIES GROUP PLC
ImplementationTianji N2O abatement project, China
Aguascalientes Landfill project, Mexico
© 2008 ECOSECURITIES GROUP PLC 9
The CDM project cycle
PDD & Methodology
DesignatedNational Authority
Operational Entities
Project Owner
Executive Board
Registration
Financing & implementation
Monitoring
Issue CERs
Host Country Approval
Validation
Verification
4-8
mon
ths
1 ye
ar
© 2008 ECOSECURITIES GROUP PLC
Implementation update
One of the largest implementation teams in the world, with 77 CDM-trained staff at period end, using sophisticated internal tools and systems.
Implementing a portfolio equivalent to 18% of global market (UNFCCC)
Ongoing delays and challenges with local DNAs, the CDM EB and external validators and verifiers (DOEs)
0
50
100
150
200
250
EcoS
ecur
ities
AgC
ert
Pric
ewat
erho
useC
oope
rs
Ecoi
nves
t
Bei
jing
Tian
qing
Pow
er
Econ
ergy
CA
MC
O
Agr
iner
gy
Zeni
th E
nerg
y
Sen
ergy
Glo
bal P
rivat
eLi
mite
d
Wor
ld B
ank
MG
M In
tern
atio
nal
Mille
nniu
m C
apita
lS
ervi
ces
Mits
ubis
hiC
orpo
ratio
n+C
limat
eE
xper
ts
Glo
bal C
limat
e C
hang
eIn
stitu
te
Unregistered projectsRegistered projects
Source: UNEP Risoe
© 2008 ECOSECURITIES GROUP PLC
Slow progress through the CDM project cycle
Of the 2042 projects, only 191 have received CERs
191
494
79
1213
14
5
12
8
26
2042
0 500 1000 1500 2000 2500
Registered CERs issued
Registered
Reg. request
At validation
Rejected by EB
Withdrawn
Correction request
Under review
Request review
Grand Total
Number of PDDs
Source: UNEP-RISOE 31/05/2007
© 2008 ECOSECURITIES GROUP PLC
Implementation highlights
Registration of first gas flare capture project in the Middle East, Al-Shaheen offshore of Qatar
First project registered by the Company in Thailand
The Company’s first N2O abatement project in China has commenced carbon credit generation after the completion of baseline determination
Tianji N2O abatement project, China
© 2008 ECOSECURITIES GROUP PLC
• Oil Sector– Upstream Opportunities– Downstream Opportunities
• Gas Sector• Our Presence in Oil & Gas
– Track Record– Current Work– Our Coverage
Emission reduction opportunities in the O&G sector
© 2008 ECOSECURITIES GROUP PLC
Oil Sector Overview
Avoided Venting / Flaring at Oil Production Facilities
AM9, AM37
Vapour Recovery at Crude Oil Storage Tanks
No Meth
Oil Refining and Petrochemicals Production
Several
Upstream Downstream
© 2008 ECOSECURITIES GROUP PLC
Oil wells
Separation units
Oil storage tanks
Flare
Pipeline Oil storage tanks
Refining and/or shipping
Gas processing
plant
Dry gas, LPG, condensate
Replaces similar products in the
market
Natural gas pipeline
On site power
generation
Recovered associated or tank
gas (vapor)
Venting
Tank vapor recoveryNo meth
AM0009
Flare (only for vapor
recovery)
Associated gas
Oil
Tank vapor
Oil + Associated gas
Use as feedstockAM0037
Upstream Oil
Upstream opportunities
© 2008 ECOSECURITIES GROUP PLC
Recovery
ProcessingPlant Market
Power Plant
Pipeline
Oil wells
•AM0009, AM0037•2 kg CO2/Nm3 of gas•100,000 CERs with 175,000 Nm3/day
CCS*
Flaring
Feedstock
Upstream Oil
Flare recovery
© 2008 ECOSECURITIES GROUP PLC
Oil wells Refinery /Market
ProcessingPlant
Power Plant
Pipeline
Flaring
• No methodology • 6 kg CO2/Nm3 of gas• 100,000 CERs/year with 50,000 Nm3/day
RecoveryVenting
Downstream Oil
Vapour recovery
© 2008 ECOSECURITIES GROUP PLC
– Most energy intensive industrial sector
Downstream Oil
Oil refineries
© 2008 ECOSECURITIES GROUP PLC
• Waste Gas Recovery (Avoided Flaring)
• Steam System Optimisation
• Process Optimisation
• Fuel Switch• Energy Efficiency
Refineries
Potential types of projects
© 2008 ECOSECURITIES GROUP PLC
• Flares are safety devices that prevent the release of unburned gas to the atmosphere– Risk of reaching an ignition source
outside the plant• Flare Gas Recovery Units can capture
waste gases either for use in the plant or for sale
• EcoSecurities developed methodology AM0055
• One project registered (La Plata) generating 194,000 CER/yr
Refineries
Waste gas recovery
j1
j2
幻灯片 20
j1 acm12, am37jcarlos, 2008-1-14
j2 220,000jcarlos, 2008-1-14
© 2008 ECOSECURITIES GROUP PLC
Production
Waste Heat RecoveryLeak Reduction
Avoided FlaringWaste Heat RecoveryLeak Reduction
Wellhead Gas CaptureDehydrator VentsGas Flare ReductionLeak Reduction
Processing
Transmission
Natural Gas Sector
© 2008 ECOSECURITIES GROUP PLC
• Wellsite completions– Upon completing a well, the dirty gas is vented for a
period of time• Use portable equipment to recover and clean the gas
• Casinghead gas– When the well pressure drops below the pipeline
pressure, the gas is vented to the atmosphere• Install compressors to recover vented gas • Require ~ 10 wells to generate 50,000 tCO2/yr
• No methodology for these techniques
Natural Gas Sector
Wellhead gas capture - production
© 2008 ECOSECURITIES GROUP PLC
• Projects can be in all sectors of gas industry• Various leak abatement methods:
– Valve stem packing replacement (asbestos synthetics)– Directed Inspection & Maintenance (DI&M)
• detect, tag & measure, repair, monitor)– Rod packing replacement (reciprocating units only)– Wet to dry seal conversion (centrifugal units)
• Historical projects indicate a potential for over 13,000 tCO2/yr per compressor station– Many pipelines have 10’s of compressor stations
• Thus, a potential for over 130,000 tCO2/yr per network
Natural Gas Sector
Fugitive leak reduction
© 2008 ECOSECURITIES GROUP PLC
• Dehydrators are used in condensate (wet) gas wells and at processing plants
• Removes gas liquids prior to transmission– Glycol dehydrators: absorb water + methane and then vent to
the atmosphere when glycol is regenerated (vapours flash at low pressure)• Reduce circulation rates – often 2-3 times higher than required• Install flash tank separators – recover previously vented methane• Switch to solid desiccant dehydrators (no emissions)• Generally a relatively low amount of CERs (~ 3,000 tCO2/yr per
unit), but can be many units at large plants or wells
• No methodology for these techniques
Natural Gas Sector
Gas dehydrator vents
© 2008 ECOSECURITIES GROUP PLC
• Gas-powered pneumatic devices are used at sweet gas wells and at processing plants– Replace high-bleed pneumatics with low-bleed– Convert to instrument air or electric actuators– Increase maintenance frequency
• Typical potential for about 1,000 tCO2/yr per device
• No methodology, though similar in principal to AM0023, leak reduction in compressor stations
Natural Gas Sector
Pneumatic devices
© 2008 ECOSECURITIES GROUP PLC
• EcoSecurities has developed one of the few successful projects using the approved methodology AM0009– "Recovery and utilization of oil gas from wells that would
otherwise be flared" on behalf of Qatar Petroleum, in the Al-Shaheen oil field• Registered within 1 year of contract signature
– The project may generate between 1.5 and 2 million emission reduction credits per year.
EcoSecurities’ track record
© 2008 ECOSECURITIES GROUP PLC
• In Argentina, new methodology and Project Design Document for the “La Plata recovery and utilization of flare waste gases” project with YPF S.A. (Repsol YPF)– Methodology AM0055 and ACM0012, developed by EcoSecurities
and approved by the CDM Executive Board. • EcoSecurities is also working with Gas Natural from Spain
and its subsidiaries in South America. – CEG in Rio de Janeiro to develop methodology approved “Leak
reduction from a natural gas distribution grid by replacing old cast iron pipes with polyethylene pipes.” AM0043
– Revision of AM0043 was developed and applied to a similar project in Monterrey, Mexico.
Current work
© 2008 ECOSECURITIES GROUP PLC
• In Russia, EcoSecurities is working with the World Bank in the development of a JI project which applies the AM0009 methodology to reduce gas flaring at oil wells. The project is located in the Komsomolskoye field, and is managed by Rosneft.
• Additionally, EcoSecurities is working with Mexico’s national petroleum company, PEMEX, in energy efficiency projects in its refinery operations. Finally, EcoSecurities is developing another project under AM0009 with PT Tanjung Jabung Power in Indonesia
Current work
© 2008 ECOSECURITIES GROUP PLC
Buenos AiresBangkokBeijingBernCasablancaChengduClaremontDelhiDubaiDublinJakartaJohannesburgKarachiKievKuala Lumpur
LimaMadridManilaManamaMexico CityNew YorkOxfordPortlandRio de JaneiroRomeSan JoseSantiagoSingaporeThe HagueTokyoCountries where EcoSecurities
has projects
EcoSecurities’ current office locations or representatives
Our coverage