New Zealand jet fuel rations increased as govt calls in navy to beat shortage

MOSCOW (MRC) — New Zealand will partially ease fuel rationing on Thursday night, a spokesman for the country's oil industry said, a sign that the five-day long fuel shortage that has caused air travel disruptions is subsiding, said Hydrocarbonprocessing.

More than 120 flights have been cancelled this week in New Zealand's largest city, Auckland, disrupting thousands of travelers each day, after the single privately owned pipeline that carries jet fuel from a refinery to the city's airport was damaged.

National carrier Air New Zealand said it expected flights to run as usual on Friday, with no cancellations for the first time since Sunday. Airline fuel allocations will rise to 50%, from 30%, at midnight on Thursday, said Andrew McNaught, manager for Mobil New Zealand Ltd and a spokesman for the customers of the country's only oil refinery operator Refining NZ.

Travel restrictions for government officials have been lifted, said Ministry of Business, Innovation and Employment Spokeswoman Carolyn Tremain in a statement. New Zealand's government and oil industry have taken a series of measures to try to contain the crisis, from fuel rationing to calling on the military to help truck in supplies of fuel, and have set up an industry-government group to handle the fallout.

A New Zealand navy vessel will ferry diesel fuel around the country as the government rushes to alleviate the shortage in the run-up to Saturday's national election. The ship will transport up to 4.8 MM liters of diesel—equivalent to 150 tankers—to enable the oil industry to focus on providing jet fuel to Auckland airport, Energy and Resources Minister Judith Collins said on Thursday.

"The government will continue to do everything it can to support industry efforts to address the disruption," Collins said in statement.

The measures are simply a stopgap until the pipe is repaired, which will take place by Sept. 26, McNaught said.
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Energy contract lawsuits expected to jump in Harveys wake

MOSCOW (MRC) — Lawyers expect a spate of force majeure contract lawsuits after Hurricane Harvey tore through Southeast Texas and parts of Louisiana last month, paralyzing a fifth of US fuel output and pushing some oil production offline, said Hydrocarbonprocessing.

Hurricanes and other natural disasters can affect the energy industry's ability to honor contracts related to oil and natural gas production, transport and oilfield services. Force majeure is a legal declaration that means the operator cannot fulfill a contract due to circumstances outside its control.

Damage in Texas wrought by Harvey is estimated at around USD180 B, according to Texas Governor Greg Abbott, with some of that in the oil-rich Eagle Ford shale region southwest of Houston.

While the full extent of Harvey's effect on the Gulf Coast energy industry is still being tabulated, damage from hurricanes Katrina and Rita in 2005 shut in more than 8 Bcf of gas production and 1.5 MMbpd of oil production. Hurricane Ike, which came less than a month after Hurricane Gustav in 2008, had a similar effect on oil and gas production and disrupted the chemical industry, leading some companies to declare force majeure of certain products and supplies.

Many chemical and refinery plants along the US Gulf Coast have already restarted operations or are beginning to ramp up after damage by Harvey. Once they do, customers may insist on reviewing contractual terms with their energy industry suppliers for the product they did not receive while plants were shuttered.

Force majeure issues typically arise in both contract lawsuits and tort suits, which allege negligence, said Jessica Crutcher, an attorney for Houston law firm Meyer Brown. "Every force majeure clause is different, especially when you're dealing with heavily negotiated contracts in the energy sector," she said on Tuesday during a force majeure webinar sponsored by the law firm.

In tort disputes, defendants can best defend themselves if they took every reasonable effort to protect their property from storm damage or other factors, according to Crutcher. Force majeure notices should clearly outline a connection between Harvey and the reason for making the notice.
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Japan fires up biomass energy, but fuel shortage looms

MOSCOW (MRC) — As the sun sets on Japan's solar energy boom, companies and investors are rushing into wood-burning biomass projects to lock in still-high government subsidies, said Hydrocarbonprocessing.

More than 800 projects have already won government approval, offering 12.4 GW of capacity—equal to 12 nuclear power stations and nearly double Japan's 2030 target for biomass in its basic energy policy.

The sheer number of projects has raised questions about how they will all find sufficient fuel, mostly shipped in from countries like Canada and Vietnam, while some experts question the environmental credentials of such large-scale plants.

The projects approved to date that use general wood fuel would need the equivalent of up to 60 MMt of wood pellets, compared with global output of 24 MMt in 2014, said Takanobu Aikawa, a senior researcher at Japan's Renewable Energy Institute.

Other fuels such as local forest thinned woods or palm kernel shells from Indonesia and Malaysia would not make up the shortfall, he said. "There will be a scramble for fuels as countries like China and South Korea are looking to expand biomass power," he said.

Biomass plants generate energy by burning fuels, releasing carbon dioxide into the atmosphere. They qualify as renewable because plants absorb CO2 as they grow, with a lifespan of years rather than the millions of years needed to make fossil fuels such as coal.
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Magellan Midstream, Valero form JV to expand Pasadena marine terminal

MOSCOW (MRC) — Magellan Midstream Partners, L.P. and Valero Energy Corporation announced the expansion and joint development of the marine storage facility currently under construction along the Houston Ship Channel in Pasadena, Texas, said Hydrocarbonprocessing.

The Pasadena facility, which will handle petroleum products, including multiple grades of gasoline, diesel and jet fuel, and renewable fuels, will be owned by a limited liability company that is owned 50/50 by Magellan and Valero and will initially include 5 MMbbl of storage, truck loading facilities and 2 proprietary ship docks.

As previously announced in July 2016, phase 1 of this facility is already under construction, which includes approximately 1 MMbbl of storage and a new marine dock capable of handling Panamax-sized ships or barges with up to a 40-ft draft. This first phase will now be owned by the jointly-owned company.

Further, this facility will be expanded by an incremental 4 MMbbl of storage, a 3-bay truck rack and a second marine dock capable of handling Aframax-sized vessels with up to a 45-ft draft (phase 2). After completion of this expansion, the Pasadena facility will be connected via pipeline to Valero's refineries in Houston and Texas City, Texas and the Colonial and Explorer pipelines in addition to the already planned connection to Magellan's Galena Park terminal facility.

Combined, phases 1 and 2 of the Pasadena marine terminal are currently estimated to cost approximately USD820 MM, which will be funded equally by capital contributions from Magellan and Valero. With the new arrangement, Magellan's incremental capital spending will be approximately USD75 MM more than its previous spending estimates of USD335 MM for phase 1 alone. Both phases are fully contracted with long-term customer commitments.

Magellan currently serves as construction manager and will serve as operator once construction is complete. Phase 1 of the new terminal is expected to be operational in early 2019, with phase 2 expected to come on-line in early 2020, subject to receipt of necessary permits and regulatory approvals.

If warranted by additional demand, the new Pasadena facility could be expanded to include an incremental 5 MMbbl of storage, another 3 docks and expanded truck loading capacity, for a maximum footprint of up to 10 MMbbl of total storage and up to 5 docks. All future expansions are expected to be owned by the jointly-owned company.
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Solvay completes the sale of its joint venture stake in Brazilian PVC compounder Dacarto Benvic

MOSCOW (MRC) -- Solvay is a multi-specialty chemical company, committed to developing chemistry that addresses key societal challenges, said the company on its website.

Solvay innovates and partners with customers in diverse global end markets. Its products and solutions are used in planes, cars, smart and medical devices, batteries, in mineral and oil extraction, among many other applications promoting sustainability.

Its lightweighting materials enhance cleaner mobility, its formulations optimize the use of resources and its performance chemicals improve air and water quality.

Solvay is headquartered in Brussels with around 27,000 employees in 58 countries. Net sales were € 10.9 billion in 2016, with 90% from activities where Solvay ranks among the world’s top 3 leaders. Solvay SA (SOLB.BE) is listed on Euronext Brussels and Paris and in the United States its shares (SOLVY) are traded through a level-1 ADR program.
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