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The Challenge Of Ensuring Hong Kong’s Energy Supply

Oct 10th, 2008
by AdminCTA.
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Andrew Brandler, Oct 10, 2008 – SCMP

Chief Executive Donald Tsang Yam-kuen’s recent energy deal with Beijing, securing gas and nuclear power supplies for Hong Kong for the next 20 years, is a landmark in the development of the city’s energy policy.

We at CLP Power had been consistently advised for many years that Hong Kong would need to look after its own energy needs as Beijing wrestled with the very real challenge of securing reliable power for the fast-growing mainland cities and provinces. So this deal represents a new, critical development in Hong Kong’s energy policy. This was immediately followed by the Hong Kong government’s statement that the liquefied natural gas terminal project that CLP Power had proposed would not be approved.

CLP Power welcomes Beijing’s support for long-term energy supply. The task ahead is to turn good news into good results and complete the deal on behalf of the Hong Kong people – to secure sufficient gas at the best possible price, and in time for us to replace our declining supplies from the Yacheng gas field in the South China Sea.

It is a measure of Beijing’s good faith in this deal that we have immediately been able to begin detailed discussions with counterparts at the National Development and Reform Commission. But even with this fast start, we are going to face an acute time challenge to make adequate quantities of gas available by 2013.

Hong Kong needs new gas supplies in place then if our Black Point Power Station is to continue providing a significant portion of our power supply, reduce our reliance on coal and enable us to meet lower environmental emissions targets.

As the Yacheng supplies deplete, the deal opens the way to draw gas from three sources: from new gas fields planned to be developed in the South China Sea; from the second east-west gas pipeline bringing gas from Turkmenistan; and, from an LNG terminal to be located on the mainland.

None of these three sources is in place today. However, let us be very clear: Hong Kong’s needs are so substantial that we will need not one or two of these sources to be brought on stream, but all three.

Black Point will be using about 3.4 billion cubic metres of natural gas a year by 2013. In the following decade, as demand for electricity steadily rises and as Hong Kong progressively tightens caps on emissions from local sources, consumption will potentially rise to as high as 6 billion cubic metres by around 2023.

To meet this need, we have been advised that 2 billion cubic metres was planned to come from several new, but smaller, gas fields in the South China Sea to replace Yacheng. If the second west-east gas pipeline can be extended to Hong Kong, we would be able to draw 1 billion cubic metres from this source. With the planned volumes of gas from these two sources, a significant amount of gas will almost certainly need to be sourced from the new LNG terminal in the Pearl River Delta.

Our government’s decision to reject our proposal to build an LNG terminal on South Soko Island means we lose a four-year head start, and face a challenging timetable, as an appropriate mainland site needs to be found and approved, which will involve a rigorous Environmental Impact Assessment.

If we are to meet our targets to ensure power supply reliability over the coming decade, I can’t overemphasise the critical importance of government support and, where necessary, leadership, all the way to completion.

The Memorandum of Understanding is a starting point for meaningful cross-border collaboration in the power sector.

Its implementation and a successful outcome for Hong Kong will depend on the effective collaboration by mainland enterprises with CLP Power, encouraged, enabled and stewarded by our government and the mainland authorities. CLP Power will play its full part.

Andrew Brandler is CEO of CLP Holdings (SEHK: 0002) Limited

Gas Plan For Sokos Ditched By CLP Firm Looks To Invest In Mainland LNG Plant

Sep 12th, 2008
by AdminCTA.
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Denise Tsang, SCMP – Sep 12, 2008

CLP Power (SEHK: 0002) has abandoned its controversial HK$10 billion plan to build a liquefied natural gas plant on the Soko Islands off Lantau.

The power company will instead look to invest in an LNG processing plant on the mainland.

“The Sokos project is stopped,” CLP’s commercial director Richard Lancaster told the South China Morning Post (SEHK: 0583, announcements, news) yesterday.

To ensure a secure supply of the clean fuel, CLP wanted to invest in either a regasification plant planned by PetroChina (SEHK: 0857, announcements, news) in Dachen Bay, Shekou , or one planned by China National Offshore Oil Corp (CNOOC (SEHK: 0883)) in Zhuhai , Mr Lancaster said.

It would also negotiate on sourcing gas from CNOOC’s gas fields in the South China Sea and from PetroChina’s planned 4,800km pipeline from Turkmenistan via Kazakhstan to Shenzhen, he said.

CLP had said the LNG project – which involved building a storage and regasification plant on South Soko Island and a pipeline to carry the fuel to the Black Point power station at Tuen Mun – was needed because reserves at CNOOC’s Yacheng gas field, off Hainan , were far less than expected and would run out soon after 2011 at the current usage rate of 2.5 billion cubic metres a year.

Opponents challenged the plan over fears it would damage an environmentally sensitive marine area and lead to higher electricity bills.

The fate of the project was thrown into doubt when Hong Kong and Beijing struck an energy pact last month to guarantee supply to the city for another 20 years, with CNOOC saying that with further drilling, Yacheng, could supply at least 2 billion cubic metres a year.

“We concur with the [Hong Kong] government view that [the LNG plant] is not needed after a memorandum of understanding on energy supply to Hong Kong was signed,” Mr Lancaster said.

The accord, which includes nuclear power supply, ensures the availability of cleaner fuel for electricity generation – and better air quality – and may reduce pressure to raise power tariffs.

Green groups last night hailed the CLP decision.

Angus Wong Chun-yin, of Friends of the Earth, said: “Although using natural gas is good for the environment, building a liquefied natural gas plant on the Soko Islands could have harmed the environment more.”

He said the project would certainly have destroyed an important habitat of the Chinese white dolphin.

But Mr Wong said more needed to be done to switch to clean fuel.

“Dropping the Soko Islands project should not be the end of the story. The Hong Kong government should press harder to require power companies to use more natural gas to generate power.”

Natural gas and nuclear power each account for about 20 per cent of CLP’s fuel mix, with coal making up 60 per cent.

A government source described CLP’s decision as “realistic and clever”. The source said the Environment Bureau would facilitate talks between CLP and the mainland authorities and companies concerned.

Mr Lancaster said CLP would go ahead with a 20-year gas purchase agreement with British-based BG. A preliminary agreement for the gas, originally intended to supply the Sokos plant, was signed in June.

The BG deal would fill a supply shortfall, he said. The Black Power plant could consume 3.4 billion cubic metres of gas per year, while CNOOC would supply 2 billion cubic metres and PetroChina 1 billion cubic metres annually by 2013.

CLP Carbon Output Hits 15-Year High

Mar 13th, 2008
by AdminCTA.
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Cheung Chi-fai – Updated on Mar 13, 2008 – SCMPCLP Power’s carbon dioxide emissions rose 8.5 per cent last year, hitting a 15-year high as it generated power for the city using more coal and less natural gas.

The city’s biggest power supplier also emitted a quarter more nitrogen oxide – a smog-inducing air pollutant – after reductions were achieved in the previous two years.

The company blamed depleted gas reserves in Hainan for the greater reliance on coal.

CLP Power did not rule out using less gas this year unless its liquefied natural gas terminal project – which the government is still studying for feasibility – was approved soon.

Natural gases accounted for just 23 per cent of the company’s fuel mix last year, down from the 31 per cent in 2006. Coal use increased from 40 per cent to 48 per cent, while the share of nuclear power remained at 29 per cent.

Greenhouses gas emissions from the Castle Peak and Black Point power stations hit 19.5 million tonnes, the highest since 1993, and 8.5 per cent more than 2006. The increased reliance on coal saw nitrogen oxides in the air surging to 30,500 tonnes, although this was still within emission caps imposed by the Environmental Protection Department, CLP Power said. Sulfur dioxide emissions fell by 3 per cent to 35,100 tonnes last year, but the level of particulates rose by 5 per cent to 1,500 tonnes.

Lo Pak-cheong, station manager of the Castle Peak Power Station, said the LNG terminal project was needed if the company was to deliver on its pledge to increase gas use to 50 per cent of the fuel mix.

He said they could not import more energy from the nuclear plant in Daya Bay as the supply was capped.

A department spokesman said it had urged CLP Power to find alternative gas supplies.

Frances Yeung Hoi-shan, a Greenpeace energy campaigner, said the emission caps for power plants were either too lenient or tailor-made for the power operator.

Black Point Power Station Gets New License

Jan 3rd, 2008
by AdminCTA.
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Hong Kong’s Black Point Power Station Gets New License

January 3, 2008 – China CSR

Hong Kong’s Environmental Protection Department issued a renewed license for the Black Point Power Station at the end of December 2007.

“The renewed licence under the Air Pollution Control Ordinance will come into effect tomorrow (January 1) and remain valid until the end of 2009,” said an EPD spokesman in an issued press release. “Having regard to the need to keep the emissions to the minimum and the current level of natural gas supply, the emission caps of the Black Point Power Station will be maintained at the current levels. As natural gas for power generation emits significantly less air pollutants than coal-fired units, it is the Government’s policy to encourage the use of natural gas in place of coal to reduce emissions. For this purpose, we have provided in the licensing conditions for an increase in the use of natural gas at the Black Point Power Station whenever this is become feasible.”

The spokesman also said when there is an increase in electricity generation due to increase in the use of natural gas at the Black Point Power Station, the increase in emissions at the station has to be offset by a corresponding reduction at the Castle Peak Power Station by a ratio ranged between 5.6 to 58 times, depending on the particular different pollutants.

Hong Kong’s also tightened the emissions cap for the Castle Peak Power Station ein early 2007, effectively bringing down the emission of air pollutants from the power plants. To improve air quality, Hong Kong reached a consensus with the Guangdong Provincial Government in April 2002, to reduce, on a best endeavor basis, the emission of four major air pollutants — sulphur dioxide, nitrogen oxides, respirable suspended particulates and volatile organic compounds — by 40%, 20%, 55% and 55% respectively in the region by 2010, using 1997 as the base year.

To achieve the reduction targets, Hong Kong says it has implemented a series of measures to improve air quality, including the tightening of fuel and vehicle emission standards, requiring the retrofitting of emission control device to trap the particulate emission from diesel vehicles, strengthening vehicle emission inspections and enforcement against smoky vehicles, incentivizing early replacement of old diesel commercial vehicles with vehicles that comply with Euro IV standard, encouraging the use of environment-friendly vehicles through tax concession, limiting the emissions of volatile organic compounds from paints, printing inks and consumer products, requiring the installation of vapour recovery systems in petrol filling station and tightening the emission control on power stations.