Oil-Rich UAE Pushes U.S. to Consider Green Energy

[Abu Dhabi] The capital of the UAE, Abu Dhabi, is investing heavily in alternative sources of energy. The oil rich emirate, the fourth largest OPEC producer, with 10 percent of the world’s known oil reserves, is keen to become a global center for the development and implementation of clean energy technology. The Masdar Initiative - a carbon-neutral city - backed by hundreds of millions of dollars of Abu Dhabi’s money is considered an ambitious goal. However, this historic step does not indicate that the rich emirate wishes to reduce its future investments in oil and gas. The oil and gas sectors still retain dazzling appeal to United States oil companies.

Big U.S. energy firms have a strong presence in UAE’s oil and gas sector, with a market share of 51%, according to published data. The giant multinational Halliburton unveiled plans last March, to move its base to Dubai, one of the UAE's seven emirates. Halliburton, which was headed by U.S. Vice-President Dick Cheney until 2000, said this move will take advantage of the Gulf region's vast oil and gas markets. The New York Times quotes Energy Intelligence Group analyst Susan Shook saying, “they are moving to the center of the Eurasian-African hemisphere and that’s where the bulk of the work is going to be in the future.”

According to the National U.S. Arab Chamber of Commerce publication, last June the U.S. Ambassador to the United Arab Emirates, Michele Sison, said, “with almost $12 billion in U.S. goods exported to the UAE in 2006, opportunities for American industry are virtually unlimited. Among the many sectors showing excellent promise are aircraft and parts, the oil and gas sectors, construction materials, safety and security equipment, medical equipment and project management and architectural and engineering services. “

The country’s current total oil production is around 2.8 million barrels per day, but in April 2007, the UAE’s Minister of Energy, Muhammad Bin Zain Al-Hamili, announced plans to increase production to 3.5 million barrels per day by 2009. Al-Hamili was also president of the Organization of Petroleum Exporting Countries (OPEC) in 2007.

One of the more important energy investments planned for the UAE in the next few years will be by ExxonMobil, which along with ADNOC and the Japan Oil Development Company, plans to increase production from Abu Dhabi’s huge Upper Zakum oil field from 520,000 barrels a day to around 750,000 barrels. ExxonMobil is also establishing a Technology Center in Abu Dhabi to support and train personnel in the most advanced production technologies. Abu Dhabi Oil and Gas City, a $1 billion tax-free zone for the energy industry, will house offshore firms in such fields as engineering, project management, consulting and finance. Occidental Petroleum is also working on the Dolphin Project, a multi-billion dollar initiative to bring natural gas from Qatar to the UAE and Oman.

Given the UAE’s critical need for energy and power, the energy sector is a key area for investment. A vital component of this strategic relationship is maintaining an unhindered flow of oil and gas.

In his meeting with David Hamoud, chairman of the American Arab Chamber of Commerce, ‘Salah Salim A-Shamsi, chairman of the Abu Dhabi Chamber of Commerce and Industry encouraged American companies to increase their investments in Abu Dhabi. A-Shamsi stressed the importance of allowing American companies an opportunity to enter the fields of engineering consultancy, oil services, and other fields and assured Hamoud that the UAE authorities would facilitate and pave the way in this regard.

Clean Energy

Abu Dhabi, bloated with oil money, is eager to explore the clean energy sector, which will definitely represent new opportunities for U.S. clean-tech companies. The Masdar initiative has attracted both attention and skepticism due to the relatively simple fact that Abu Dhabi’s Masdar initiative to research and develop renewable energy sources seems odd coming from one of world’s leading oil exporters. Despite the criticism, Masdar is still pursing its goals and showing how serious it is. Thus, Masdar is partnering the most prominent U.S. companies, educational institutions, and investment firms. The Abu Dhabi Future Energy Company (ADFEC), a government owned organization mandated to execute the Masdar Initiative, is open to new partnerships from all over the world.

Dr. Sultan Al-Jabir, CEO of Masdar, explained, "The world needs a portfolio of solutions, It can no longer be hydrocarbons or renewables. It is a combination of both." Since its commencement, Masdar gained momentum and support by participating in the Clinton Global Initiative on Energy and Climate Change (CGI) last year in New York.

In February 2007, the ADFEC signed a cooperative agreement with the Massachusetts Institute of Technology (MIT) whereby MIT faculty would help expand the curriculum and organization of the Masdar Institute. Sultan Ahmad Al-Jabir, CEO of Masdar, hailed the agreement with one of the world’s most prominent universities. He said “The Masdar Institute will serve as the nucleus of the Masdar Initiative, feeding it with talent and innovative technologies to enhance economic development and promote new industries using renewable energy and resources in the emirate and the region.”

President George W. Bush visited a proposed model of Abu Dhabi’s Masdar City at the Emirates Palace Hotel in January this year. He said, "We just heard a briefing about how they're going to construct a city based entirely upon renewable energy. It will be an opportunity to see what works and what won't work, and an opportunity to share their technology with others.”

In Jan 21 this year, the ADFEC hosted the first World Future Energy Summit in Abu Dhabi, attracting around 200 of the world’s foremost innovators and experts clean energy, and an exhibition of alternative energy technologies. During the summit, His Highness, General Sheikh Muhammad Bin Zayyid Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, announced the most ambitious sustainability program ever launched by a government, to be funded by an initial investment of $15b. for projects targeting solar, wind and hydrogen power; carbon reduction and management, and sustainable development.

It is worth noting that American companies and universities are involved in the building and operation of Masdar. U.S. company CH2M HILL was appointed program manager for the first phase of the development and will be responsible for technology integration. Also, the American Louis Berger Group of consulting engineers will manage the Masdar city design process. So far, four architects firms have been shortlisted for the contract for designing the Abu Dhabi Future Energy Company (Masdar) headquarters in its planned carbon-neutral city. Shortlisted are Foster & Partner, Murphy & Young and Atkins, all of the UK, and the US firm, Smith & Gill. Khalid 'Awad, director of the property development unit at Masdar said, "We will announce the winner soon." Groundbreaking on the world’s first zero carbon emmission city took place on 9 February. On the other hand, some analysts say that this city seeks to create a new global community only for the elite as it is not a social project.

SIDEBAR:

UAE-U.S. Security Ties By Sherin Deghedy

Security issues play an important part in the U.S.-UAE bilateral relationship, and given regional tensions, will continue to do so for the foreseeable future. For more than a decade, the Defense Cooperation Agreement of 1994 between the U.S. and the UAE has provided a solid basis for military cooperation and coordination. Under this agreement, the UAE has participated in joint military training exercises with U.S. forces and offered U.S. forces access to UAE ports and territory. Lockheed Martin Corporation, for example, has worked closely with the UAE government on providing solutions to its defense needs, such as the F-16 fighter plane. Raytheon has had a presence in the UAE for decades and has been a key provider of UAE air defense systems since 1980.

Written by Sherin Deghedy

photo credit - NREL

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Favorable winds fueling sharp rise in renewable-energy stocks

By Steven Mufson The Washington Post

The planet isn't the only thing heating up because of climate change. Some renewable-energy stocks have been pretty hot too.

Shares of Vestas Wind Systems, the world's biggest maker of wind turbines, have doubled in the past year, despite the market's latest turmoil. The Danish company is ramping up production in its two biggest markets, China and the U.S., and expects sales to rise 17 percent this year. It recently announced that profit jumped fivefold in the most recent quarter.

Vestas might seem a perfect place to invest for an era of global climate change. The fortunes of many firms are tied to changes in the Earth's temperatures and to the evolving legislative climate, and that can present an array of investment opportunities, as well as pitfalls. There are builders of nuclear power plants, traditional utilities, wind turbine-makers, solar companies and biofuel firms.

"This is not a social or moral issue only. It's an investment issue," said Edward Kerschner, chief investment strategist at Citigroup Inc. "Whether or not you believe in climate change is not germane to how you invest your money."

But before jumping in, investors would be wise to carefully study the companies involved. Vestas, for example, faces hurdles. Wind turbines use hundreds of parts that are in limited supply, raising the specter of bottlenecks despite strong demand. The company also depends in large measure on continued government subsidies. And it faces stiff competition as companies such as General Electric Co. and Siemens AG expand and take aim at Vestas' market-leading position.

Investors also need to pay close attention to action in Congress. The final details of climate-change legislation, such as whether to auction or distribute carbon-dioxide emission allowances, could turn some companies from losers to winners, or vice versa.

One thing a lot of analysts agree on: Some kind of regulation or tax for emissions is coming, and that could affect the fortunes of several companies, including Lake Forest-based Tenneco Inc. and Chicago-based Exelon Corp.

Though not the most potent greenhouse gas, carbon dioxide is the most common, accounting for 77 percent of the gases. And because carbon dioxide is produced by the most common forms of energy use -- coal, oil and natural gas -- that could alter a wide range of behavior and investments.

*Transportation. California and Florida plan to require the carbon content of tailpipe emissions to drop by at least 10 percent by 2020. That won't help just Toyota Motor Corp. and its hybrid vehicles, but Tenneco, which supplies emission-reduction technologies for diesel-fueled engines, could benefit, Citigroup said.

Tenneco has jumped 25 percent since the start of the year. Diesel engines are more efficient than gasoline engines and, as a result, diesel-powered vehicles emit 10 percent to 30 percent less carbon dioxide than gasoline-fueled ones.

Anticipating a rise in diesel market share, Marathon Oil Corp. is investing in its largest U.S. refinery to be able to produce equal quantities of gasoline and diesel. Marathon is up 13 percent since the start of the year. Diesel car sales will climb to about 750,000 this year, but sales of gas-electric hybrid vehicles are growing faster and pose competition for carbon-conscious consumers.

*Coal. If Congress and the White House agree on legislation that puts a price on carbon-dioxide emissions, utilities that have a lot of nuclear power capacity, such as Exelon, could benefit from being able to sell carbon-free electricity. Others, such as American Electric Power Co., whose coal-fired plants are leading emitters of carbon dioxide, could face new costs.

A cap-and-trade system would set a national ceiling on emissions and issue allowances for that amount. Companies with extra allowances could sell them to those falling short.

Any company that figures out the best method of separating carbon dioxide from coal-plant emissions and burying it safely underground stands to make lots of money. There are three unproven, and costly, technologies now, pioneered by the likes of GE, Siemens, Babcock & Wilcox and Alstom.

Meanwhile, the coal rush has shown some signs of slowing. Several plants have been blocked by lawsuits, soaring construction costs and regulatory delays. Citigroup recently downgraded coal stocks.

*Biofuel. Federal regulations requiring growing use of ethanol by gasoline refiners have boosted the fortunes of countless ethanol producers. Ethanol production in January averaged 375,000 barrels a day, up 30 percent from the year before. Legislation approved by the Senate would require that use to rise to 2.3 million barrels a day over the next 15 years, half of it corn-based and half using other plants, such as wood chips or switch grass, as feedstocks.

Corn-based ethanol saves little energy compared with petroleum because of the energy that goes into growing and distilling corn. Cellulosic ethanol, or sugar-based ethanol, has a better balance between energy and carbon and would fare better than corn-based rivals under legislation that placed a value and price on carbon emissions.

So far, however, all the major U.S. ethanol producers, led by Decatur-based Archer Daniels Midland Co. and Verasun Energy Corp., use corn. Profits at those firms have been squeezed by high corn prices.

*Solar power. This is much more expensive than other forms of power generation, but it would become more competitive if lawmakers tax or price carbon-dioxide emissions."Electricity prices could go up 50 percent over the next 10 years. Then solar will be cheaper than the grid," said Jesse Pichel, a senior analyst at Piper Jaffray, who expects rising oil and coal prices and falling solar costs as companies innovate the way semiconductor chip firms did. For now, solar relies heavily on government subsidies.

Shares of Suntech Power Holdings Co, a Chinese maker of photovoltaic cells used in solar panels, were up as much as 35 percent in the past year before sliding during the market turbulence this month. The company's output has surged, however, making it the world's fourth-biggest manufacturer of solar cells in 2006. Next year's Summer Olympics in Beijing could prove to be a showcase for Suntech's products.

Although the problem of polysilicon shortages and a sevenfold price increase over five years is squeezing profits at Suntech and its competitors, it has proved a boon to companies that turn sand into polysilicon. Among those companies are a unit of Dow Corning and MEMC Electronic Materials Inc., based in St. Peters, Mo. The polysilicon industry is expected to more than double production by 2010.

*Nuclear power. Advocates for nuclear power believe their time has come. The Bush administration has been pushing for a nuclear power revival, and the Energy Policy Act of 2005 contains powerful financial incentives, especially for the first half-dozen plants.

If lawmakers make companies pay for carbon emissions, nuclear would get another boost. So far, 17 companies are weighing license applications for more than 30 plants, and other plants are being built abroad. The main companies in the nuclear-power construction business are a unit of GE, Areva of France, a unit of Mitsubishi Heavy Industries and the Westinghouse Electric unit of Toshiba.

In anticipation of a nuclear resurgence, uranium prices have soared, brightening the fortunes of firms such as Cameco Corp. of Saskatchewan, the world's largest uranium producer. Uranium prices rose to $136 a ton in mid-July from $11 a pound in June 2003, though they have fallen to $105 per ton.*Natural gas. Carbon dioxide emissions from natural gas are far lower than those of other fossil fuels. That should keep demand strong for domestic natural gas producers and importers of liquefied natural gas.

Costly LNG projects mostly involve big utilities and major oil and gas multinational firms. Sempra Energy and Cheniere Energy are active in new LNG terminals in the U.S. Exxon Mobil is helping Qatar expand its LNG export sector. In a recent climate change report, Citigroup noted that every 1 billion gallons of additional ethanol production would require 28 billion cubic feet of natural gas to fire the ethanol distilleries.

*Wind. There is a giant backlog of orders for wind turbines. Most manufacturers have enough orders to keep busy through 2009. Gearboxes, blades, castings and bearings are all in short supply. Technology has more than doubled the power output from each turbine, with size growing from about 10 yards in diameter in the 1970s to more than 80 yards today. The biggest turbinemakers are Vestas Wind Systems, Spain's Gamesa, GE and Siemens.

Developers of wind farms also could benefit. Citigroup pointed to Babcock & Brown Wind Partners Group, an Australian company, which has an interest in 33 wind farms, many in the U.S.

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Dutch Build Towering Wind Turbines Out At Sea

IJMUIDEN, Netherlands - There is no shortage of wind in the densely-populated Netherlands but there is a shortage of space and in a nation which likes its houses small and its gardens cosy, opposition to wind farms is immense.

That is why a new Dutch wind farm is being built so far out to sea it is barely visible on the horizon, reducing the visual impact of its 60 turbines to virtually nil whilst at the same time harnessing higher offshore wind speeds.

Offshore wind farms are likely to appear more and more frequently off European coastlines as governments seek to increase their use of renewable energy without angering their citizens by placing giant turbines on their doorsteps.

The 383 million euro ($522.3 million) Q7 wind park development, 14 miles from the Dutch North Sea coast, is the farthest offshore wind park anywhere in the world, and its developers Econcern and Eneco Energie say a further five to 10 such wind parks will likely follow in the next few years.

"Q7 will contribute enough electricity for 125,000 households, but it is also a learning process. We are learning how to build these wind farms, how to organize the supply chain, and how to manage and operate them," said Bernard van Hemert, one of the wind farm's engineering directors.

"Most campaigns against turbines are based around the noise and the visual impact, and these have been reduced by going offshore. It is more expensive to do it here than to do it on land, but we have all agreed we don't have enough space on land," said van Hemert.

Blessed with shallow sandy soils around their coastline, Dutch engineers say the foundations for the turbines can be hammered 82 feet into the ground in just a matter of hours, although there are myriad other challenges.

The proportions are breathtaking. The turbines extend about 320 feet from the ocean, with three sharp narrow blades, each 130 feet long.

It is hoped that when they start rotating in early 2008 they will cut carbon-dioxide emissions by 225,000 tonnes, helping the Dutch to meet a target of 20 percent renewable energy use by 2020.

TRICKY LOGISTICS

The turbines are so massive they can only be transported by sea and there is just one factory in Europe which can weld and construct the 15-foot-diametre piles, which must be first driven into the sea to form the base of the turbines, van Hemert explains.

"It is a huge logistical operation which requires lots of space. There are only a few crane vessels which can handle those huge structures and hammer them down."

"But bringing up the cables is the most challenging for all offshore wind projects."

Expert divers are helping to fit the electrics.

Developers have also had to ensure that the wind park is well away from busy shipping channels.

"Studies in the United Kingdom have shown that there can be some radio interference but in the situation we have here it is completely safe and there is no risk of confusion or reduced visibility for vessels."

Jim Mollet, chairman of a Dutch group campaigning against wind energy acknowledges off-shore wind farms have some benefits over land-based wind turbines.

"They can be a better solution. But the problem is people tend to believe they are an entire solution. We think the vast sums spent on wind farms would be better spent on research and innovation in other energy sources."

Wind farms cannot generate the sheer amounts of energy the continent requires with cost or space efficiency, he added.

From: Alexandra Hudson, Reuters