Patagonia, Argentina, is the site of Vaca Muerta, a geological formation known for its oil and gas reserves. Image: Gervacio Rosales
Since taking office in late 2015, Argentinean president Mauricio Macri has prioritised investment in the energy sector to help reverse a costly energy deficit. Argentina’s abundant shale resources have attracted a growing number of major international companies, and attention has mostly been focused on the Vaca Muerta shale fields. Located in Patagonia they are one of the world’s largest reserves of shale gas.
The proposed investments revealed in YPF’s strategic plan for 2018-2022 indicate that the company intends to contribute $21.5bn directly, with the remainder coming from partnerships and associated companies.
Mauricio Macri has focused on increasing investment into Argentinian energy during his tenure as President. Image: Marcos Corrêa/PR
YPF intends to ramp up oil production and continue the development of Argentina’s huge shale resources. The company said its non-conventional production is expected to grow by 150% over the period 2018-2022, with half of its hydrocarbon production coming from shale and tight oil and gas by 2022. The lifting of shale gas output will be helped by the continued fall in development costs.
Shale gas growth will increase the availability of natural gas liquids (NGLs) for chemical production. YPF estimates that the growth in shale gas will result in a 45% increase in its supply of NGLs between 2017 and 2022. YPF indicated that it has identified opportunities to invest in petrochemicals in Argentina, Brazil, Peru, Bolivia and Paraguay.
Shale oil and gas is accessed though hydraulic fracturing or ‘fracking’. Image:
These investments would take advantage of the regional market imbalance together with shale gas growth, it said in its strategic plan, presented to investors in October 2017. ‘The region is a net petrochemical importer with room for a world scale complex,’ it added.
There is room for one or two more ethylene sites, one or two methanol sites and two or three urea sites in the region, according to YPF.
The company said it is also developing opportunities to stimulate demand for natural gas, because demand in Argentina is highly seasonal. Opportunities include power generation, exports to Chile, Uruguay and Brazil, as well as petrochemical investments.
YPF is Argentina’s largest petrochemicals producer, with a capacity of 2.2m t/year. It has three plants, located in Ensenada, Plaza Huincul and Bahía Blanca. Output includes benzene, toluene, mixed-xylene, ortho-xylene, cyclohexane, solvents, methyl tert-butyl ether (MTBE), 1-butene, oxo alcohols, tert-amyl methyl ether (TAME), linear alkylbenzene (LAB), linear alkylbenzene sulfonate (LAS), polyisobutylene, maleic anhydride, methanol and urea. The Bahía Blanca site is operated by nitrogen fertiliser producer Profertil, a 50:50 joint venture with Canadian company Agrium.
Argentina’s potential for new petrochemicals investments was highlighted recently by Marcos Sabelli, president of the Latin American Petrochemical and Chemical Association (APLA).
Speaking at the Latin American Energy Organization’s Forum on Regional Energy Integration in Buenos Aires, he said development of the Vaca Muerta shale fields improves the potential for steady feedstock supplies.
‘We are proposing that we replicate the US model,’ he said. The US shale boom enabled the US to move from an importer to an exporter of petrochemicals. ‘Argentina has this potential. There is feedstock, market and companies,’ he added.
YPF said it is the largest shale operator outside North America, with a daily production exceeding 67,400 barrels of oil equivalent. The company participates in 50% of Argentina’s Vaca Muerta shale gas and oil reserves area, with more than 550 producing wells; 168 are horizontal.
The Green River Formation, Colorado, US, is one of the richest oil deposits in the world. Image: National Park Service
Conventional hydrocarbons will remain the basis of the company’s production, with the development of more than 29 projects and the drilling of more than 1600 wells, it said. YPF has three refineries, accounting for 50% of Argentina´s capacity.
The company expects its production of oil and gas to grow by 5%/year over the next five years, reaching 700,000 barrels of oil equivalent per day in 2022. Exploration efforts will continue, with reserves targeted to rise by 50%. YPF also intends to boost its electricity production, much of it through renewables, as part of efforts to become a fully integrated energy company. YPF is pledging the investments at a time when President Macri’s pro-market government is on a drive to attract investments to consolidate an economic rebound after six years of stagnation.
YPF are hoping to up its production of oil and gas as energy resources by 5% a year by 2022. Image: Pixabay
Argentina’s GDP is forecast to grow by 2.9% in 2017 and 3.2% in 2018, according to the Organisation for Economic Co-operation and Development (OECD). The country’s shale gas boom, combined with economic growth, could make it an attractive candidate for a major new petrochemicals project.
Installing new energy infrastructure on the Isles of Scilly, UK, is a tricky proposition, given the islands’ location 28 miles off the Cornish coast, and a population of just 2,500 to share the high costs.
But an exciting new project is about to transform the islands’ energy provision, reducing energy costs and supporting clean growth, through the use of a smart energy grid.
By 2025, the Smart Islands programme aims to provide the Isles of Scilly with 40% of its electricity from renewables, cut Scillonians’ electricity bills by 40%, and revolutionise transport, with 40% of cars to be electric or low-carbon. The key to this will be an integrated smart energy system, operated by a local community energy services company and monitored through an Internet of Things platform.
In the UK Government’s Industrial Strategy, published in November 2017, it was announced that the Local Growth Fund would provide £2.95m funding to the project, via the Cornwall and Isles of Scilly Local Enterprise Partnership.
The project will be led by Hitachi Europe Ltd in a public-private partnership, along with UK-based smart energy technology company Moixa, and smart energy software company PassivSystems.
Colin Calder, CEO of PassivSystems, explained, ‘Our scalable cloud-based energy management platform will be integrated with a range of domestic and commercial renewable technologies, allowing islanders to reduce their reliance on imported fossil fuels, increase energy independence and lower their carbon footprint.
‘These technologies have the potential to significantly increase savings from solar PV systems.’
Aiming to increase the renewable capacity installed on the island by 450kW and reduce greenhouse gas emissions by 897 tonnes CO2 equivalent per annum, 100 homes on the islands (a tenth of the total) will be fitted with rooftop solar photovoltaic systems, and two 50kW solar gardens will also be built.
100 homes will also get energy management systems, and 10 of them will pilot a variety of additional smart energy technologies such as smart batteries and air source heat pumps.
Chris Wright, Moixa Chief Technology Officer, said: ‘Ordinary people will play a key role in our future energy system. Home batteries and electric vehicles controlled by smart software will help create a reliable, cost-effective, low-carbon energy system that will deliver savings to homeowners and the community.
‘Our systems will support the reduction of fuel poverty on the Scilly Isles and support their path to full energy independence. They will be scalable and flexible so they can be replicated easily to allow communities all over the world to cut carbon and benefit from the smart power revolution.’
The burgeoning smart energy industry is attracting serious investment – only this week, the Department for Business, Energy and Industrial Strategy (BEIS) announced it will invest up to £8.8 million in new ideas for products and services that use smart meter data to reduce energy demand in small, non-domestic buildings; while Manchester-based smart energy start-up Upside Energy this week announced it had secured £5.5m in its first round of venture capital financing to commercialise and deploy its cloud-based smart grid platform.
Smart energy covers a range of technologies intended to allow both companies and households to increase their energy efficiency. Smart meters are currently being offered by energy suppliers, with the aim of allowing energy companies to automatically manage consumer energy use to reduce bills, for example, running your washing machine when energy demand (and therefore cost) is low.
Battery technology also plays a major role in smart energy, allowing users to store renewable power and potentially even sell back into the grid as demand requires. In the Industrial Strategy, the government announced a new £80m National Battery Manufacturing Development Facility (NBMD) in Coventry, which will bring together academics and businesses to work on new forms and designs of batteries, as well as their chemistry and components.
The Isles of Scilly’s small population and remote access issues make it an interesting candidate for a smart energy project. Image: NASA, International Space Station Science
The funding for this and a further £40m investment into 27 individual battery research projects have been allocated from the £246m Faraday Challenge, which was announced in July.
The Smart Islands project promises a real-world demonstration of how a community can harness the power of the Internet of Things to maintain an efficient, inexpensive, and clean energy system.
It has been a year since Prime Minister Theresa May announced the launch of the Industrial Strategy Challenge Fund at CBI’s annual conference. At the time, May said the fund would ‘help to address Britain’s historic weakness on commercialisation and turning our world-leading research into long-term success’.
Since then, Innovate UK has worked closely with the government and research councils to identify the great innovation challenges the UK faces.
‘Innovate UK have been in this right from the very beginning,’ said Ruth McKernan, Chief Executive of Innovate UK, speaking at Innovate 2017. McKernan explained that the organisation has held several engagement events to find out what ‘industry and researchers see as the challenges of the future and where economic growth can be developed in the UK’.
The first three challenges sponsored by the Industrial Strategy Challenge Fund were announced in April this year: The Faraday challenge, medicines manufacturing, and robotics and autonomous systems.
Andrew Tyrer, Interim Director of Robotics and Autonomous Systems is now responsible for the £69m investment into research on AI in extreme conditions.
Research projects in this cohort include robotics in deep mining, space exploration, and off-shore energy. ‘One of the challenges is that you cannot put people in these environments,’ he said.
Space is just one of the dangerous environments being researched in robotics projects. Image: NASA
However, the UK does not currently have the research capacity to access the global market, Tyrer explained. For example, he said ‘the nuclear decommissioning market in five years will be at £150bn a year in Europe alone’ – a market the UK is currently struggling to make an impact.
‘The programme is about taking academic and business excellence, linking those value chains together, and building those industries,’ Tyrer said.
On the other end of the spectrum, is the Faraday Challenge – a ‘commitment’ to research into the battery development of driverless cars and an area of research the UK has already seen success in – headed by Jacqui Murray and Kathryn Magnay.
The UK have pledged to have all petrol and diesel vehicles off roads by 2040. Image: Wikimedia Commons
‘Automotive has been a real success story in the UK in the last 10 years,’ said Murray, with the UK reaching ‘world-class’ in productivity levels.
However, there are ways the UK needs to improve, said Magnay. ‘In the UK we have a huge gap between the research that we do and how you scale that up in the manufacturing process,’ she said.
This is the inspiration for the upcoming £65m Faraday Battery Institute, which will serve as a hub for universities, as well as other academic institutions and industry partners, to further their science. Magnay said that Innovate UK wants to ‘provide a facility that companies and researchers can go to and take their ideas to trial them at scale’.
Will smart energy solutions be the next challenge?
Further challenges under the Industrial Strategy Challenge Fund are currently unknown, although there are rumours of an early 2018 announcement. Which challenge will be next?