Thursday, May 17, 2018

Oil giant Shell on revving cars up with hydrogen

After getting a glimpse of a rather splendid hydrogen fuelled train, the Oilholic next had the pleasure of being driven in a hydrogen powered electric fuel cell Toyota model - The Mirai - overnight from Salzgitter to Hamburg, Germany.

Of course, much of the drive had to do with a demonstration of the fuel medium's prowess, the car's performance (come rain or shine of which we had plenty of), and more. We'll touch on that in the next post.

But for now one question well worth asking is – for such vehicles to reach critical mass and wider public acceptance, retail points for filling up them up and keeping them running would be needed; so how is that problem going to be addressed? 

Afterall Toyota has an ambition of putting 1 million emissions free vehicles on the road per year between 2020 and 2030, and rivals such as Hyundai and Audi have plans of their own. Enter oil giant Royal Dutch Shell - which says the fuel retail industry has the answers. 

Speaking to this blogger at Shell Germany's Hamburg hub, regional Chairman Stijn van Els opined that the new "Hydrogen Economy" will indeed require a rethinking of the retail infrastructure but that's "well within the industry's scope" given that major oil and gas companies are already well on their way to exploring the alternative fuels market.

"There is no competition with fossil fuels, there is co-existence as we move to a low carbon economy and Shell is committed to expanding its hydrogen fuel sales points. Furthermore, its not a shift we are attempting on our own." 

Survey data compiled at the end of 2017 suggests Toyota's home turf – Japan – has the largest number of hydrogen fuelling stations worldwide at 91, followed by the US (61), Germany (37) and the UK (18). The German figure is already above 40, at the time of writing this post, according to van Els, and the industry veteran hopes that at a pan-European level they'll be 400 sales points by 2019. 

Fuel retailers are expected to step up to the challenge for both retail and commercial clients over the coming decade, according to Toyota, with the automaker claiming "a hydrogen facility can be integrated into an existing refuelling station as an additional fuel offering."

There is certainly evidence of that. For instance, Shell's FTSE 100 rival BP is already attempting this with electric vehicle charge points, at conventional gas stations, the most recent example being its downstream venture in Mexico. The Oilholic was given a demonstration of a fuel point setting with the Mirai en route to Hamburg via a refuelling stop at a station in Wolfsburg (See below right, click to enlarge). 

Filling up a hydrogen car was not any different from a petrol or diesel car, nor did the "pump" look all that different, even if it was pumping in compressed hydrogen instead of a petroleum product.

Of course, when the hydrogen flows into the tank there's a chilling effect on the pump handle, unlike petrol or diesel refuelling where, well, you simply hear the liquid gurgling.

It's all done in a matter of minutes, and instead of paying per litre or gallon, you pay per kilogram which is on average €9.50 in Germany, €11.50 in France, and around a same-ish post-Brexit £10 in the UK. Roughly around 5kg would constitute a tank-full equating to around 60 litres, according to a Toyota spokesperson. You do the math, but the Oilholic would leave the fuel economy firmly parked for now, and touch on it in a blog post to follow. 

So going back to van Els, Shell reckons hydrogen would "certainly" play its part in the alternative fuels market and so do the oil major's fuel retail rivals. And much of the industry, including world's top 20 fuel retailers have also said they are not averse to establishing hydrogen refuelling stations as greenfield sites as well. So it all depends on consumer take-up, but the "commitment is there", according to both Toyota and Shell. Only time will tell how it all plays out. 

But for now, that's all for the moment folks! Time to load up on hydrogen and conclude the Mirai adventure. Keep reading, keep it 'crude' even if - as one said - the next few posts are going to be about hydrogen! 

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© Gaurav Sharma 2018. Photo 1: A Toyota Mirai in Shell signage. Toyota Mirai being fuelled with hydrogen at a facility in Wolfsburg, Northern Germany, with fuel pump and close-up of car inset. © Gaurav Sharma, May 2018.

Wednesday, May 16, 2018

Turning from diesel to hydrogen trains

The Oilholic finds himself on the road again; this time roughly 570 miles east of London in Salzgitter, Germany, at a research and testing facility of rail transport solutions provider Alstom. 

The French company's testing yard is abuzz for a (relatively) new reason – one of it's most popular Coradia series trains, namely the reliable diesel work-horse the Coradia Lint 54, is about to undergo a transformation like none other.

Meet the 'Coradia iLint', a full emission-free train that runs on Hydrogen powered fuel cells (see above). It only emits steam and condensed water, and no  carbon. To get a perspective, the Oilholic was given a demonstration ride on the train over a one mile track, before its due to enter service on German public transport this year. 

For all intents and purposes, it was a smooth ride and the quietest ever rail journey this blogger has been on. In fact, were it not for the wheel friction din and movement vibration, you wouldn't hear a thing. You'd imagine reducing pollution, also means minimising noise pollution and the Coradia iLint certainly fits that box.

The interior was that of a normal train in service across European public transport networks, meaning no clunky hydrogen tanks in eyesight or internal variations. (Click image below to enlarge and get a glimpse)


According to Alstom, the prototype is powered by an electrical traction drive. Electrical energy is generated onboard in fuel cells and stored in batteries.

The fuel cell provides electrical energy by combining hydrogen stored in the train's tanks onboard with oxygen from the environment, releasing good old H2O. 

While on the test track the train touched 80 km/h, out in the real world Alstom insists it would match the performance of a Coradia diesel unit, including comparable acceleration, braking and maximum speed (of 140 km/h) with the same travel range and passenger capacity as its hydrocarbon fuelled variant. 

Two things spring to mind; first being safety and the second being the infrastructure needed to power up the new train. On the first point, an Alstom spokesperson claimed that high pressure hydrogen reservoirs are actually safer than petrol tanks in comparable hazard situations, a point also made by Japanese automaker Toyota, which has been on its own hydrogen powered vehicle pathway since 2015 via its Mirai model. The technology has been rigourously tested, both mobility providers insist. 

As for the infrastructure needed, Alstom says it is offering the "complete package" consisting of the train itself and its maintenance, and also the whole hydrogen fuelling infrastructure, taking care of all rolling stock and hydrogen related matters, leaving operators to concentrate on their "core competencies."

The company's message chimes with that of other proponents of Hydrogen – intelligent energy management coupled with emissions free mobility.

And to make the point – a Toyota Mirai pulled up alongside the Coradia iLint (see above), with perfect timing. That's all from Salzgitter, as its time to ride the Mirai around Northern Germany and beyond! Keep reading, keep it 'crude', even if the next few posts are going to about hydrogen!

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© Gaurav Sharma 2018. Photo 1: Alstom's Coradia iLint. Photo 2: Glimpses of exterior, roof, interior and driver's cabin of the Coradia iLint. Photo 3: Coradia iLint and Toyota's Mirai hydrogen fuelled car © Gaurav Sharma May 2018.

Sunday, May 13, 2018

Crude talk in H-Town

As the Oilholic prepares to say yet another goodbye to Houston, one cannot but help wondering why the new found pragmatism here over the possible direction of the oil price is not reflected elsewhere in the oil market.

Brent is currently within touching distance of $80 per barrel, while the West Texas Intermediate is firming up above $71 per barrel. 

Having spent a whole week deliberating with market participants out here in America's oil capital, including physical traders, few seem to think the oil price can sustain three figures, even if it gets there.

The sentiment was echoed by several delegates at the Baker McKenzie Oil & Gas Institute 2018 with most there, including leading legal and financial advisers, dismissing a sustainable return to a three-figure oil price. In fact, most are advising their clients not to get carried away, and mark a return to the profligacy of the sort we saw in the US oil patch when the price was last in three figures back in 2014.

Their clients, i.e. representatives of leading oil companies and project sponsors also share the sentiment, and while appreciative of relatively higher oil prices, are in no mood to get carried away.

Yet with Venezuelan production heading to a historic dive below 1 million barrels per day, US President Donald Trump's withdrawal from the Iran nuclear deal and the general geopolitical malaise in the Middle East, hedge funds and money managers are piling in to the futures market in the hope of extending a rally largely supported by OPEC's output cuts.

Plenty of food for thought, but the oil market is in real danger of overstretching itself! And on that note, that's all from Houston folks. Time for the ride home to London. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: View of downtown Houston, Texas, USA from Burnett Street on the outer edge of town. © Gaurav Sharma, May 2018.

Thursday, May 10, 2018

Thoughts From Baker McKenzie’s Oil & Gas Institute 2018

Earlier today, the Oilholic was delighted to attend the Baker McKenzie 2018 Oil & Gas Institute; an event that grows bigger by the year, and has become a true 'crude' fixture in Houston.

From Big Oil getting to grips with Big Data to capital raisings in mature jurisdictions, emerging market legal considerations to mergers and acquisitions - there was plenty on the agenda to for everyone. Of course lurking in the background to it all is the direction of the oil price and US President Donald Trump's re-imposition of sanctions on Iran, the Israeli-Iranian tussle in Syria, OPEC and all the rest. It's pushed Brent crude above $77 per barrel and WTI above $71. 

While every US shale player would gladly accept the current prices; quite like the Oilholic, few at the Institute felt the elevated prices would last. Given there are several variables in the equation - including, but not limited to, what OPEC would do next month, what sort of levels US producers are likely to record, how many Iranian barrels are likely to be knocked off the market, etc. - getting carried away by the bulls would not be a good idea. 

To quote, Jim O'Brien, Chair of Baker McKenzie's Global Energy, Mining & Infrastructure Practice Group and one of the architects of the Institute, the US oil patch is "feeling good" about itself at the moment, but at the same time there is a fair degree of realism that a return to $100 prices is unlikely.

In fact, one of the key takeaways from the Institute was how oil and gas players, both large and small, were aiming to achieve breakeven at prices as low as $30. 

Underpinning that drive would be digitisation across the board enabled by big data, AI, automation and robotics coming together to bring about the kind of process efficiencies capable of making a tangible difference to the operating expenditure of oil and gas companies. Touching on this very subject was a keynote speech by Paulo Ruiz Sternadt, boss of Siemens-owned Dresser-Rand. (Full Forbes report here)

Representatives of Baker McKenzie, BP, Accenture, Shell and many others also touched on the topic. LNG, employment diversity and private equity in the business were other subjects under discussion, as was the topic of investing in Mexico (Forbes post here) and the latest developments in Saudi Arabia. All in all, another interesting afternoon of deliberations. But that's all for the moment from Houston folks. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: Delegates at the Baker McKenzie 2018 Oil & Gas Institute in Houston, Texas, USA © Gaurav Sharma 10 May, 2018.

Tuesday, May 08, 2018

In Houston Town To Trump's Iranian Frowns

The Oilholic is back in Houston, Texas for another round of events and networking. However, getting stuck in one's hotel room watching CNN on a sunny Texan afternoon certainly wasn't part of the plan.

Of course, with US President Donald Trump taking on himself to single-handedly tearing up the Iran Nuclear deal, there was little choice but add to the afternoon news-watchers ranks. 

And with customary aplomb, the Donald annulled the US end of a "very bad deal" with Tehran at 2pm Eastern. It's something he had always criticised, and had promised he'd annul if he won the Presidency. So, the Oilholic wonders, why is the market surprised? 

Here are one's thoughts on what the President's move could mean for the global supply and demand dynamic via a Forbes post. In fact, Moody's Analytics reckons Trump's sanctions have the power to knock off 400,000 barrels per day (bpd) of Iranian crude off the global market. 

But given the President's move is unilateral, unlike Barack Obama's multilateral sanctions, the volume would be less than half of what his predecessor managed inflict on the Iranian before they came to the table (i.e. 1 million bpd).

Of course, both leading up to and in the hours after Trump's announcement, both Brent and WTI fell by as much as 3% only to gain 2%, before ending the day firmly on a bullish note. While this blogger is not offering investment advice, a bit of caution is advised.

The Oilholic, for the moment is minded to stick to his average Brent price forecast range of $65-75 per barrel. These are early days, much needs to unfold here. But that's all for the moment from Houston folks. Keep reading, keep it 'crude'!

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© Gaurav Sharma 2018. Photo: Billboard in Houston, Texas, USA © Gaurav Sharma, May 2018. 

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For comments or for professional queries, please email: gaurav.sharma@oilholicssynonymous.com

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