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RIL selects Technip as a technology supplier for ROGC project

Reliance Industries Limited (RIL) has selected Technip as a technology supplier and engineering contractor to implement its Refinery Off-Gas Cracker (ROGC) project.
This is part of the expansion project being executed at RIL's world-scale Jamnagar refining and petrochemical complex in Gujarat, on the West Coast of India.

The ROGC plant will be amongst the largest ethylene crackers in the world and will be using refinery off-gas as feedstock. The products from the plant will be utilized for the new downstream petrochemical plants being built at Jamnagar.

OMCs incurring daily under-recovery of ~Rs 3.56bn

The Petroleum Planning and Analysis Cell (PPAC) under theMinistry of Petroleum and Natural Gas have reviewed international prices ofcrude oil and petroleum products during the last fortnight of June 2012. 

Accordingly, the under-recovery on HSD (High Speed Diesel)applicable for First fortnight of July effective 01.07.2012 was marginallylower at Rs. 9.18/litre than Rs. 10.20/Litre.  

In case of PDS Kerosene and Domestic LPG theunder-recoveries declined to (Rs 27.20/Litre and   Rs. 319.00/cylinder respectively)for the month of July 2012. The under-recoveries are computed on monthly basisin respect of PDS Kerosene and Domestic LPG. Read more…

Infocus News

How is the Keystone XL pipeline progressing?

Four and a half years of studies and five failed votes in the House later, exactly where are we with the Keystone XL pipeline? Stuck on the US-Canadian border where it is likely to remain until mid-2013 despite the headline-grabbing issuance of one of three permits to begin construction in Texas for the smaller and much less controversial portion of the pipeline.

On 26 June, the US Army Corps of Engineers granted TransCanada Corp one of three permits required in order to begin construction on the $2.3 billion southern section of the Keystone XL pipeline, which would run from Cushing, Oklahoma to the Gulf of Mexico in Texas. This first in the permit series covers construction across the wetlands and waterways of Texas' Galveston district. TransCanada still needs to more permits from Tulsa, Oklahoma and Forth Worth, Texas, to complete this southern Gulf portion of the pipeline extension. Tulsa is set to rule on the second permit in a month and a half.

This southern section of the extended pipeline will carry 700,000 barrels a day of crude, to start with, to Texas refineries from Cushing. Construction will begin this summer. The southern line, permits pending, could be functional by mid-to-late next year. Indeed, Obama pledged to speed up the approval process to make this a reality.

But these permits are only for the southern extension of the Keystone pipeline, which seeks to extend the existing Keystone pipeline from Cushing, Oklahoma to the Gulf of Mexico. This is a much less controversial piece of the pipeline project, which by dint of not crossing the US-Canadian border and which is being pursued by TransCanada independently from the rest of the Keystone XL pipeline extension, does not require complicated approval.

The "greater" Keystone XL pipeline project would extend the existing Keystone pipeline, which runs from Hardisty in Alberta, Canada, then eastwards in Canada, dropping southwards into the US, through North Dakota, South Dakota, Nebraska, Kansas and ending in Cushing, Oklahoma, with an eastern branch spiking off at Steele City, Nebraska and running to Patoka, Illinois.

The proposed extension would run from Hardisty across the border through Phillips Country, Montana, and meet up with the existing pipeline at Steele City. This would represent 1,179 miles of new pipeline that would carry Canadian tar sands crude eventually to the Gulf of Mexico, with an initial capacity of 830,000 barrels per day.

In order to speed things up after President Barack Obama initially rejected the project in January this year, TransCanada has split the pipeline extension project into the northern and southern sections, pursuing the southern branch independently.

As such, issuing permits to begin construction on the southern extension through Texas and Oklahoma does not signify that the Keystone XL project is progressing just yet. Because the much larger northern extension crosses an international border, it must first obtain presidential approval, in accordance with an executive order implemented under George W. Bush in 2004.

A comment period on the proposal began Jun. 15, 2012, and will continue until 30 July 2012, but the State Department has said it would not be able to complete its review of the process until the first quarter of 2013. Approval is contingent upon whether the project is demonstratively in the country's national interest.

So, the trillion-dollar question is whether Keystone XL is in fact in the country's national interest. The more urgent question of course is whether Keystone XL is in the Obama administration's interests, specifically in the run-up to presidential elections.

On 27 June, House and Senate negotiators reached a tentative agreement over two-year bill to overhaul federal highway and transit programs-a bill Obama had vowed to veto if there were any attempts to slip approval of Keystone XL in the legislation. Republicans backed down over their insistence of language that would approve the pipeline in the bill.

The former question is complicated enough; the latter even more so. From an environment and jobs perspective, Keystone XL is not in the Obama administration's interests. Organized labor is not as interested as it might be in the jobs this would create at a time when the administration has been fairly successful at creating energy jobs elsewhere. On the environmental front, the Obama administration's hesitancy over the project is the stuff of heroism.

The Republicans had hoped to deal Obama a lethal campaign blow by setting a two-month deadline for the administration to approve Keystone XL in January. The Republicans knew that two months was not nearly enough to evaluate the project from an environmental and economic aspect, and that the administration would have to reject the project. The idea was to force the administration into publicly denouncing massive job creation and working against US energy independence ahead of the elections.

This hasn't been as successful as the Republicans had hoped. They had not counted on the relatively sober response from organized labor. The Obama administration has also racked up some very significant points in energy development that it can cash in to replace the loss of Keystone XL, and that includes (clean) job creation that is keeping organized labor at bay.

In terms of the oil and gas industry, here, too, the Obama administration doesn't have much to gain by approving Keystone XL ahead of the elections. It would not be the end-all for the oil lobby's harassment of the administration.

Back to our first question: Is Keystone XL in the country's national interest? It is almost a mute point in an election year, but we will entertain the notion simply to avoid being labeled cynical. The answer is, "no". It will create plenty of jobs, which is hardly a contested point, but there are plenty of other energy-related jobs already being created rather successfully. Environmentally, the project flies in the face of the administration's clean energy ambitions with the associated risk of oil spills and the increase in greenhouse gas emissions as a result of increased tar sands (dirty oil) extraction.

In terms of economics, there is some solid research showing that Keystone XL is more likely to result in higher prices at the pump. Canadian tar sands crude pumped into the Midwest and intended for domestic gas consumption would be diverted to the Gulf Coast where it would be used in diesel production and for global exports. It could very well mean reduced gas supplies and higher gas prices in the end.

Much like the Republican attempt to force Keystone XL to fail early on and force a vote loss on the Obama, the issuance of the first Texas permit for the southern extension is but a Democratic bone to big oil and a job-hungry public. It has little marrow. The Republicans lost this battle when TransCanada split the project in half, allowing the Obama administration to score points by supporting the smaller version while avoiding a decision on the larger project. Nothing will happen on the "greater" Keystone XL this year.

Special News

Q1FY13: What to expect from Oil & Gas this quarter?

• Crude oil prices corrected by 8% during the quarter. However, with equivalent depreciation in the rupee, gross under recoveries are expected to be at Rs430bn a rise of Rs19bn on sequential basis. We expect upstream to contribute 33%, while government sharing at 33%
  
• Refining margins have weakened on a sequential basis on the back of fall in gasoline and naphtha spreads. For RIL, these losses will be offset by higher throughput on sequential basis as the refinery underwent a three week shutdown in Q4 FY12. Petrochemical spreads have been weak across categories resulting in lower integrated margins on qoq basis. Crude oil production from MA-1 field and gas production from KG-D6 field are likely to be lower on a qoq basis. Inventory losses will impact profitability of HPCL, BPCL, IOC and MRPL as net GRMs will be further low.
  
• Higher production from MBA fields along with rupee depreciation is expected to translate into strong revenue and profit growth for Cairn India. For ONGC and Oil India, we expect net realizations to be in the order of about US$55/bbl.
  Sales volumes for crude oil and gas is likely to remain flat on sequential basis.
  
• GAIL should witness improved set of numbers on qoq basis owing to one time write offs in the previous quarter. Transmission volumes are likely to dip moderately on qoq basis. For GSPL, we expect lower transmission volumes on the back of falling KG-D6 gas production. Petronet is expected to see a strong growth in revenues driven by higher volumes. IGL earnings would be under pressure as rupee depreciation and higher proportion of imported LNG in its raw material basket will hurt margins.
  
• Our top pick in the sector is ONGC, Oil India, GSPL and Petronet LNG. Read more…

Domestic News

The 100 day countdown to PETROTECH 2012 begins

PETROTECH-2012, India’s prime showcase of the country’s hydrocarbon sector is back again. With 100 days to go, the biggest petroleum & energy event of the year has gathered momentum.  It promises to be a venerable event attended by outstanding thought leaders, Ministers, Bureaucrats, Scientists, Technologists, Academicians and invited delegates. 

It would be a perfect platform for interaction, exchange of ideas in oil & gas exploration, production & processing, refining, pipeline transportation, marketing, petrochemicals, Natural Gas, LNG, petroleum trade and global energy security. The Conference will also cover related topics on economics, R&D, health, safety and environment management in the oil & gas sector.

The biennial event, organised under the aegis of the Ministry of Petroleum & Natural Gas, is also an occasion of announcements by the Government of India on policies of far-reaching significance impacting the hydrocarbon sector. Pre-Conference Sessions, Theme Sessions, Plenary Sessions, Ministerial Discussions, Special Interactive Group Meetings, Technical sessions and CEOs Conclave during PETROTECH 2012 promise to bring to the table insights which have relevance to both sectoral players and general public.

Earlier, PETROTECH 2010 had attracted over 3400 delegates, including about 390 foreign and ministerial delegates.  There were 356 exhibitors including 205 international firms and country pavilions besides presentation of 368 poster papers and 74 oral papers. This time round it is expected to be a even greater extravaganza that will sow the seeds of a vibrant and energy-secure future.

Technip gets contract for ROGC plant from RIL

P. P Upadhya takes over as MD, MRPL

International News
 
Carlyle Group, Sunoco to form Philadelphia refinery JV

The Carlyle Group reportedly plans for a joint venture with Sunoco Inc. to operate the Philadelphia refinery in a move to keep the facility in operation.

According to reports, Sunoco will become a minority owner of a joint venture, Philadelphia Energy Solutions, to run the refinery.

The joint venture is expected to save 850 jobs, secure the region's fuel supply by continuing the daily flow of 10 million gallons of various fuels, and create 100-200 new, permanent jobs as well as thousands of construction jobs, reports added.

Iran drafts bill to stop Hormuz for Gulf oil tankers