Last Updated: April 20, 2017
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-System has already prevented more than 300,000 tons of carbon dioxide from entering the atmosphere since beginning operations-


PRESS RELEASE

April 17, 2017 – Secretary of Energy Rick Perry and Governor of Texas Greg Abbott joined the chief executive officers of the Petra Nova carbon capture and enhanced oil recovery system partners – NRG Energy (NYSE: NRG), JX Nippon Oil & Gas Exploration Corporation (JX Nippon), and Hilcorp Energy Company (Hilcorp) - to celebrate the operations of the carbon capture and enhanced oil recovery system.

Petra Nova, a 50-50 joint venture by NRG and JX Nippon, is the world’s largest carbon capture system retrofitted onto an existing coal plant. It was constructed on-time and on-budget and commenced operations at the end of 2016. The project has delivered more than 300,000 tons of carbon dioxide (CO2) to the West Ranch oil field. The CO2 is injected into the oil reservoir to increase oil production in an established process known as Enhanced Oil Recovery (EOR).

“I commend all those who contributed to this major achievement,” said Secretary Perry. “While the Petra Nova project will certainly benefit Texas, it also demonstrates that clean coal technologies can have a meaningful and positive impact on the Nation’s energy security and economic growth.”

“Everything is bigger in Texas so it is fitting that the largest post-combustion, carbon-capture facility in the world is right here in the Lone Star State,” said Governor Abbott. “Texas has become a global leader in innovation thanks to the pioneering spirits of companies like NRG and JX Nippon who are fueling the next generation of energy production through projects like Petra Nova.”

“Petra Nova demonstrates our leadership on energy innovation at commercial-scale,” said Mauricio Gutierrez, President and CEO of NRG Energy. “We have built the largest carbon capture system on an existing coal-fired power plant in the United States on-time and on-budget. This further shows what can be achieved when collaboration and competitive markets come together to make our existing domestic energy infrastructure more secure and sustainable.”

“JX Nippon is very pleased that the construction of Petra Nova’s Carbon Capture System (CCS) was completed on-schedule and on-budget,” said Shunsaku Miyake, President and CEO of JX Nippon. “Also JX Nippon is delighted to say that shipping of oil produced through enhanced oil recovery by means of CO2 injection, is currently proceeding smoothly. This project enables us not only to decrease greenhouse gas from the coal-fired power plant, but also, at the same time to dramatically boost oil production. It is a great honor for us, as a Japanese company, to participate in this innovative project in Texas and we are grateful to Petra Nova Team for this incredible opportunity.”

“We are excited to be a part of this project,” said Jeffery D. Hildebrand, Chairman and CEO, Hilcorp Energy Company. “The CO2 delivered from Petra Nova to West Ranch will provide employment and long term economic opportunity for both the local economy and the State of Texas. We are proud of the fact that West Ranch has one of the most extensive monitoring programs for an enhanced oil recovery project in the United States, making sure that this project not only provides greater energy security for our nation and an economic benefit to the region but also is done in a safe and environmentally responsible manner.”

Petra Nova captures more than 90% of CO2 from a 240 MW equivalent slipstream of flue gas off an existing coal-fueled electrical generating unit at the WA Parish power plant in Fort Bend County, southwest of Houston. The project can capture more than 5,000 tons of CO2 per day, or the equivalent of taking more than 350,000 cars off the road.

Hilcorp, the operator of West Ranch oilfield, uses the captured CO2 to boost production at West Ranch oilfield, jointly owned by NRG, JX Nippon and Hilcorp. Both Hilcorp and the University of Texas Bureau of Economic Geology are monitoring the movement of CO2 deep in the oil reservoir. Over the next few years, oil production at the field is currently estimated to increase from approximately 300 barrels per day before beginning EOR operations to up to 15,000 barrels per day using captured CO2.

About NRG

NRG is the leading integrated power company in the U.S., built on the strength of the nation’s largest and most diverse competitive electric generation portfolio and leading retail electricity platform. A Fortune 200 company, NRG creates value through best in class operations, reliable and efficient electric generation, and a retail platform serving residential and commercial businesses. Working with electricity customers, large and small, we continually innovate, embrace and implement sustainable solutions for producing and managing energy. We aim to be pioneers in developing smarter energy choices and delivering exceptional service as our retail electricity providers serve almost 3 million residential and commercial customers throughout the country. More information is available at www.nrg.com. Connect with NRG Energy on Facebook and follow us on Twitter @nrgenergy.

About JX Nippon

JX Nippon Oil & Gas Exploration Corporation is a core business company in the JXTG Group, which was established in April 2017 through a business integration of the JX Group and the TonenGeneral Group. The JXTG Group is the leading “integrated energy, resources and materials business group” in Japan. JX Nippon Oil & Gas Exploration Corporation engages in oil and natural gas exploration and production (E&P) business around the world. In the U.S., JX Nippon owns assets in the Gulf of Mexico, ranging from the continental shelf to deep water area. In addition, JX Nippon participates in the Syncrude Project in Canada, which produces synthetic crude oil from oil sand, and manages the project at Houston office. More information is available at www.nex.jx-group.co.jp/english.

About Hilcorp

Hilcorp, founded in 1989, is one of the largest privately-held independent oil and natural gas exploration and production companies in the United States. Hilcorp is consistently ranked as one of the top places to work in America by multiple regional and national publications. Headquartered in Houston, TX, with over 1,500 employees, Hilcorp has operations across the United States including the Gulf Coast of Texas and Louisiana, Wyoming, Northeast U.S. and both the Cook Inlet and North Slope of Alaska. More information is available at www.hilcorp.com.

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Is Document Verification effective in managing identity theft?

Technology has indeed changed the way we think, act and react. Every activity we perform is directly or indirectly linked to technology one way or another. Like everything else, technology also has its pros and cons, depending on the way it is used. Since the advancement in cyberspace, scammers and hackers have started using advanced means to conduct fraud and cause damage to individuals as well as businesses online. 

According to the Federal Trade Commission (FTC), 1.4 million cases of fraud were reported in 2018 and in 25% of the cases, people said they lost money. People reported losing $1.48 billion to fraudulent practices in 2018. This has caused considerable loss to individuals and businesses. Global regulatory authorities have introduced KYC and AML compliances that businesses and individuals are encouraged to follow. However, banks and financial institutions have to follow them under all circumstances.

KYC or Know Your Customer refers to the process where a business attains information about its customers to verify their identities. It is a complex, time-taking process and customers nowadays don’t have the time or resources to deal with the government, consulate, and embassy offices for their KYC procedures. However, due to technological advancement, the identity verification process has been automated through the use of artificial intelligence systems. These systems seamlessly increase the accuracy and effectiveness of the identity verification process while reducing time and human efforts.


The following methods are used to digitally authenticate identities nowadays:

  • Face Verification

The use of artificial intelligence systems to detect facial structure and features for verification purposes.

  • Document Verification

The use of artificial intelligence systems to detect the authenticity of various documents to prevent fraud.

  • Address Verification

The use of artificial intelligence technology to verify addresses from documents to minimize the threat of fraudsters.

  • 2-Factor Authentication

The use of multi-step verification to enhance the protection of your accounts by adding another security layer, usually involving your mobile phone.

  • Consent Verification

The use of pre-set handwritten user consent to onboard only legitimate individuals.


Digital Document Verification

Document verification is an important method to conduct KYC or verify the identity of an individual. The process involves the end-user verifying the authenticity of his/her documents. In banks, financial institutions and other formal set-ups, customers are required to verify their personal details through the display of government-issued documents. The artificial intelligence software checks whether the documents are genuine or have been forged. If the documents are real and authentic, the digital documentation verification is completed and vice versa. 

There are four steps that are mainly involved in the digital document verification process. First, the user displays his/her identity documents in front of the device camera. Then the document is critically analyzed by artificial intelligence software to check its authenticity. Forged or edited documents are rejected by the software. The artificial intelligence system then extracts relevant information from the document using OCR technology. The information is sent to the back-office of the verification provider and analyzed by human representatives to further validate the authenticity. Then the results are sent to the business or individual asking for the verification. The whole process takes less than five minutes.

The document authentication process can detect both major and minor faults in the documents. It can detect errors and faults in forged documents, counterfeed documents, stolen documents, camouflage or hidden documents, replica documents and even compromised documents. The verification process can be done on a personal computer or a mobile device using a camera. Although only government-issued documents are used for the authentication process, the following are accepted by most verification providers:

  • Govt ID Cards

  • Passports

  • Driving Licenses

  • Credit/Debit Cards

Illegal and fraudulent transactions have dangerous consequences for both individuals as well as businesses. Losses due to scams and frauds trickle down at every level and ultimately have negative consequences on the whole system. Therefore it is imperative to conduct proper customer verification and due diligence in order to minimize the risks of fraud. Digital documentation verification plays a key role in the KYC process. 



April, 02 2020
Your Weekly Update: 23 - 27 March 2020

Market Watch   

Headline crude prices for the week beginning 23 March 2020 – Brent: US$27/b; WTI: US$23/b

  • After falling to an 18-year low last week, crude oil prices have managed to recover from their lowest level since 2003… but just barely
  • A huge swathe of economic stimulus packages announced by governments worldwide, including a US$2 trillion bipartisan injection in the US economy, soothed financial markets, which in turn supported commodity prices
  • More stimulus, however, may be needed as confirmed Covid-19 cases in Italy and the USA overtake China’s total, with the pandemic increasingly containing in the latter but accelerating at a dangerous pace in Europe and North America
  • While the Covid-19 saga plays out, former allies Saudi Arabia and Russia remain at odds over crude oil prices; Russian President Vladimir Putin has accused Saudi Arabia of ‘oil price blackmail’, vowing not to cave in
  • However, various reports from Russia suggest the low crude prices are beginning to bite economically, with Russia still ‘open to cooperation’ but committed to a war of attrition
  • With Saudi Arabia unlikely to want to cave either, the USA is exercising its muscle in an attempt to intervene in the price war; the Department of Energy will be purchasing some 77 million barrels of (US) crude to bring its Strategic Petroleum Reserve to maximum capacity
  • Meanwhile, the US is reportedly also open to a joint US-Saudi Arabia alliance in a bid to stabilise prices, a scenario that was previously unthinkable but may be necessary if the US shale patch is to be saved; such an alliance, however, is likely to invite reprisals from Russia
  • The record low crude oil prices has led some traders to build up positions, hiring tankers and supertankers to store crude and fuel products at sea while betting that prices will eventually rise; the world’s largest oil trader Glencore has chartered one of the world’s two Ultra Large Crude Carriers for six months to serve as floating storage, while other traders are beginning to store jet fuel
  • As expected, the low prices have begun to bite on the US active rig count, which fell by a net 20 to 772 sites; the situation is worse in Canada, where the industry lost 77 sites over the week to fall to 98 active sites
  • While prices have managed to recover from their lows, the outlook for crude remains weak as long as the oil price war persists and the Covid-19 pandemic shows no sign of containment; expect prices to remain rangebound at US$28-30/b range for Brent and US$23-25 for WTI

Headlines of the week

Upstream

  • CNOOC has announced a new ‘large-sized’ oil discovery in the Bohai Bay, with the Kenli 6-1 structure being the first major discovery in the Laibei Lower Uplift
  • Husky has halted work on the West White Rose project offshore Newfoundland and Labrador in Canada until the Covid-19 pandemic blows over
  • MOL and its partners in the PL820S in the Norwegian North Sea have struck oil, with the Evra and Iving exploratory wells fielding oil (and gas) in multiple formations in the Balder and Ringhorne fields; the discoveries are expected to be developed as a tie-back to nearby existing installations
  • Malaysia is preparing for its 2020 licensing round – with bids due in late May – offering stakes in eight fields, which include discovered assets with more than 12 million boe of proven undeveloped resources

Midstream/Downstream

  • Brazil’s Petrobras has extended the deadline to submit binding offers for eight of its refineries in Brazil, hampered by the volatility in global oil prices
  • Shell has paused construction of its massive ethane cracker in Beaver Country, Pennsylvania to help contain the rapid spread of Covid-19 in the USA
  • A second fire in less than a year has broken out at the Petronas-Saudi Aramco 300 kb/d PRefChem refinery in Malaysia, with output likely to be further curbed by a strict lockdown on private operations instituted by the government
  • Work on upgrading the Abadan oil refinery in Iran has been halted until at least mid-April, until the Covid-19 situation in the country is under control
  • Gazprom has started up a new CDU at its Moscow refinery, adding some 140 kb/d of processing capacity to the key processing site

Natural Gas/LNG

  • After almost two decades of attempted development, the Abadi LNG project in Indonesia may be in jeopardy as Japan’s Inpex is ‘reviewing investment plans’ in light of the Covid-19 virus; a delay is very likely, although Inpex has recently secured key land permits for the project’s planned onshore LNG plant
  • Australia is planning legislation to lift the country’s current moratorium on onshore gas exploration and production in 2021, following a cautious green-light by the Victorian Gas Program task force
  • US regulators have given Cameron LNG an additional four years to complete a two-train expansion at its LNG export project in Louisiana
  • Sempra expects to delay FID on its Port Arthur LNG export project, but remains on course to sanction its Energia Costa Azul project by Q2 2020
  • The Woodfibre LNG project in Canada’s British Columbia has delayed construction until 2021, as a key contractor filed for bankruptcy
  • Total has announced a new gas/condensate discovery in the UK North Sea – with the Isabella 30/12d-11 well in license P1820 yielding ‘encouraging flows’
  • INOX India and an Indian subsidiary of Shell have signed an MoU to partner and develop LNG demand and distribution, to be sourced from Shell Energy India’s 5 million tpa LNG receiving terminal in Hazira, Gujarat
March, 27 2020
This Week in Petroleum: Oil market volatility is at an all-time high

Crude oil prices have fallen significantly since the beginning of 2020, largely driven by the economic contraction caused by the 2019 novel coronavirus disease (COVID19) and a sudden increase in crude oil supply following the suspension of agreed production cuts among the Organization of the Petroleum Exporting Countries (OPEC) and partner countries. With falling demand and increasing supply, the front-month price of the U.S. benchmark crude oil West Texas Intermediate (WTI) fell from a year-to-date high closing price of $63.27 per barrel (b) on January 6 to a year-to-date low of $20.37/b on March 18 (Figure 1), the lowest nominal crude oil price since February 2002.

Figure 1. West Texas Intermediate crude oil futures prices

WTI crude oil prices have also fallen significantly along the futures curve, which charts monthly price settlements for WTI crude oil delivery over the next several years. For example, the WTI price for December 2020 delivery declined from $56.90/b on January 2, 2020, to $32.21/b as of March 24. In addition to the sharp price decline, the shape of the futures curve has shifted from backwardation—when near-term futures prices are higher than longer-dated ones—to contango, when near-term futures prices are lower than longer-dated ones. The WTI 1st-13th spread (the difference between the WTI price in the nearest month and the price for WTI 13 months away) settled at -$10.34/b on March 18, the lowest since February 2016, exhibiting high contango. The shift from backwardation to contango reflects the significant increase in petroleum inventories. In its March 2020 Short-Term Energy Outlook (STEO), released on March 11, 2020, the U.S. Energy Information Administration (EIA) forecast that Organization for Economic Cooperation and Development (OECD) commercial petroleum inventories will rise to 2.9 billion barrels in March, an increase of 20 million barrels over the previous month and 68 million barrels over March 2019 (Figure 2). Since the release of the March STEO, changes in various oil market and macroeconomic indicators suggest that inventory builds are likely to be even greater than EIA’s March forecast.

Figure 2. Crude oil futures price spreads and inventories

Significant price volatility has accompanied both price declines and price increases. Since 1999, 69% of the time, daily WTI crude oil prices increased or decreased by less than 2% relative to the previous trading day. Daily oil price changes during March 2020 have exceeded 2% 13 times (76% of the month’s traded days) as of March 24. For example, the 10.1% decline on March 6 after the OPEC meeting was larger than 99.8% of the daily percentage price decreases since 1999. The 24.6% decline on March 9 and the 24.4% decline on March 18 were the largest and second largest percent declines, respectively, since at least 1999 (Figure 3).

Figure 3. Frequency of West Texas Intermediate (WTI) futures daily price percentage changes (January 1999 - March 2020)

On March 10, a series of government announcements indicated that emergency fiscal and monetary policy were likely to be forthcoming in various countries, which contributed to a 10.4% increase in the WTI price, the 12th-largest daily increase since 1999. During other highly volatile time periods, such as the 2008 financial crisis, both large price increases and decreases occurred in quick succession. During the 2008 financial crisis, the largest single-day increase—a 17.8% rise on September 22, 2008—was followed the next day by the largest single-day decrease, a 12.0% fall on September 23, 2008.

Market price volatility during the first quarter of 2020 has not been limited to oil markets (Figure 4). The recent volatility in oil markets has also coincided with increased volatility in equity markets because the products refined from crude oil are used in many parts of the economy and because the COVID-19-related economic slowdown affects a broad array of economic activities. This can be measured through implied volatility—an estimate of a security’s expected range of near-term price changes—which can be calculated using price movements of financial options and measured by the VIX index for the Standard and Poor’s (S&P) 500 index and the OVX index for WTI prices. Implied volatility for both the S&P 500 index and WTI are higher than the levels seen during the 2008 financial crisis, which peaked on November 20, 2008, at 80.9 and on December 11, 2008, at 100.4, respectively, compared with 61.7 for the VIX and 170.9 for the OVX as of March 24.

Figure 4. Changes in implied and historical volatility measures

Comparing implied volatility for the S&P 500 index with WTI’s suggests that although recent volatility is not limited to oil markets, oil markets are likely more volatile than equity markets at this point. The oil market’s relative volatility is not, however, in and of itself unusual. Oil markets are almost always more volatile than equity markets because crude oil demand is price inelastic—whereby price changes have relatively little effect on the quantity of crude oil demanded—and because of the relative diversity of the companies constituting the S&P 500 index. But recent oil market volatility is still historically high, even in comparison to the volatility of the larger equity market. As denoted by the red line in the bottom of Figure 4, the difference between the OVX and VIX reached an all-time high of 124.1 on March 23, compared with an average difference of 16.8 between May 2007 (the date the OVX was launched) and March 24, 2020.

Markets currently appear to expect continued and increasing market volatility, and, by extension, increasing uncertainty in the pricing of crude oil. Oil’s current level of implied volatility—a forward-looking measure for the next 30 days—is also high relative to its historical, or realized, volatility. Historical volatility can influence the market’s expectations for future price uncertainty, which contributes to higher implied volatility. Some of this difference is a structural part of the market, and implied volatility typically exceeds historical volatility as sellers of options demand a volatility risk premium to compensate them for the risk of holding a volatile security. But as the yellow line in Figure 4 shows, the current implied volatility of WTI prices is still higher than normal. The difference between implied and historical volatility reached an all-time high of 44.7 on March 20, compared with an average difference of 2.3 between 2007 and March 2020. This trend could suggest that options (prices for which increase with volatility) are relatively expensive and, by extension, that demand for financial instruments to limit oil price exposure are relatively elevated.

Increased price correlation among several asset classes also suggests that similar economic factors are driving prices in a variety of markets. For example, both the correlation between changes in the price of WTI and changes in the S&P 500 and the correlation between WTI and other non-energy commodities (as measured by the S&P Commodity Index (GSCI)) increased significantly in March. Typically, when correlations between WTI and other asset classes increase, it suggests that expectations of future economic growth—rather than issues specific to crude oil markets— tend to be the primary drivers of price formation. In this case, price declines for oil, equities, and non-energy commodities all indicate that concerns over global economic growth are likely the primary force driving price formation (Figure 5).

Figure 5. Rolling 60-day correlation between daily price changes in West Texas Intermediate (WTI) crude oil prices and other indicators

U.S. average regular gasoline and diesel prices fall

The U.S. average regular gasoline retail price fell nearly 13 cents from the previous week to $2.12 per gallon on March 23, 50 cents lower than a year ago. The Midwest price fell more than 16 cents to $1.87 per gallon, the West Coast price fell nearly 15 cents to $2.88 per gallon, the East Coast and Gulf Coast prices each fell nearly 11 cents to $2.08 per gallon and $1.86 per gallon, respectively, and the Rocky Mountain price declined more than 8 cents to $2.24 per gallon.

The U.S. average diesel fuel price fell more than 7 cents from the previous week to $2.66 per gallon on March 23, 42 cents lower than a year ago. The Midwest price fell more than 9 cents to $2.50 per gallon, the West Coast price fell more than 7 cents to $3.25 per gallon, the East Coast and Gulf Coast prices each fell nearly 7 cents to $2.72 per gallon and $2.44 per gallon, respectively, and the Rocky Mountain price fell more than 6 cents to $2.68 per gallon.

Propane/propylene inventories decline

U.S. propane/propylene stocks decreased by 1.8 million barrels last week to 64.9 million barrels as of March 20, 2020, 15.5 million barrels (31.3%) greater than the five-year (2015-19) average inventory levels for this same time of year. Gulf Coast inventories decreased by 1.3 million barrels, East Coast inventories decreased by 0.3 million barrels, and Rocky Mountain/West Coast inventories decrease by 0.2 million barrels. Midwest inventories increased by 0.1 million barrels. Propylene non-fuel-use inventories represented 8.5% of total propane/propylene inventories.

Residential heating fuel prices decrease

As of March 23, 2020, residential heating oil prices averaged $2.45 per gallon, almost 15 cents per gallon below last week’s price and nearly 77 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged more than $1.11 per gallon, almost 14 cents per gallon below last week’s price and 98 cents per gallon lower than a year ago.

Residential propane prices averaged more than $1.91 per gallon, nearly 2 cents per gallon below last week’s price and almost 49 cents per gallon below last year’s price. Wholesale propane prices averaged more than $0.42 per gallon, more than 7 cents per gallon lower than last week’s price and almost 36 cents per gallon below last year’s price.

March, 27 2020