Petroleum update december 2014 issue

CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : DECEMBER 2014

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CARIBBEAN Petroleum Update A Publication of the Caribbean Energy Information System (CEIS)

DECEMBER 2014 ISSUE

Status of Geothermal Activities in the Caribbean

M

a n y i s l a n d s i n c l u d ing Barbados, Jamaica and Grenada are planning or already have small scale wind and solar renewable energy installations which supplement the nation’s electricity supply. None of these countries have installed any form of geothermal energy. However, not all Caribbean countries have the capacity to utilize or install geothermal energy. Only six Eastern Caribbean countries (Dominica, Grenada, Montserrat, St. Kitts & Nevis, St. Lucia and St. Vincent and the Grena-

dines) have identified some form of geothermal potential. In this issue of the Petroleum Update we seek to highlight the current geothermal activities in the Caribbean.

Preliminary studies have shown that some countries have more Geothermal capacity than they will be able to use domestically, which could allow them to export geothermal power to neighboring islands via undersea cables.

Geothermal may be the largest renewable energy resource that can serve as base load for these islands, with the

lowest electricity generation cost in the long run. Current world geothermal electricity prices to the end user range between US$0.03kWh and US$0.12/ kWh which remains far cheaper than any other renewable energy resource and in comparison to the conventional electricity generation using fossil fuels this is a “win win.”

The islands of St. Kitts and Nevis being fully dependent on petroleum imports for their electric supply and also suffering from high, volatile electricity rates was the first to initiate the develop-

continued on page 2/

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Status of Geothermal Ac tivities in the Caribbean continued from page 1/ ment of geothermal in the Caribbean.

However, there is still much work to be done to characterize the geothermal resource on the Island, but initial estimates are that the resource on Nevis may be large enough to attract adequate capital investments, and the geographic location close to nearby islands may allow Nevis, if the reservoir capacity were to prove large enough to supply other islands, to expand the service area. Nevis is, therefore, potentially uniquely positioned for success. The Nevis Island Project opened gateway for geothermal energy development in the Caribbean and serve as an example for other islands to follow. However, identification of funding among other issues has impacted the development of the technology in the country.

country. Tourism in SVG is the main- opment of Caribbean geothermal plants stay of the economy. However, the include: cost of electricity ranges from 40 to 50 cents per kilowatt-hour which hampers • Lack of appropriate, consistent regulatory framework to govern geothereconomic development. Householders mal development and operations in and manufacturers are hoping that the geothermal energy exploration, which the islands. None of the countries has been underway for more than a have geothermal laws; many do not year, will in fact produce the 10 to 15 have laws for the regulation of the megawatts of electricity that the country electricity sector in particular. desperately needs to relieve its dependence on high-cost fossil fuels and give • Low priority for geothermal new life to the manufacturing and agroGeothermal development has not processing sectors. been a priority in the energy policies of the island governments. Traditionally, the islands have depended on diesel generation, with the excepA preliminary assessment of the potentions of Dominica and St. Vincent tial for the development of geothermal & the Grenadines which use hydroresources of St. Lucia under a Department of Energy (DOE) sponsored electric power. However, efforts are program was completed. Results underway to help resolve this issue. indicate that Geothermal potential on The Iceland Drilling Company has been St. Lucia comprise a very large solfatara • Limited financing and the high cost involved in the development of two near the village of Soufrière, numerous of geothermal exploration has held exploratory geothermal energy projects thermal springs, and very recent volcaback the projects in the feasibility on Dominica and Montserrat to inves- nic activity including both phreatic and stage. tigate the possible geothermal resource pyroclastic eruptions are evident. The on each island — followed by a drill- government is now seeking to design • No economic incentives for geothering program to drill production wells a realistic roadmap for financing the mal development. for geothermal electricity production. project`s second phase, in a manner that Two 1.5 MW test geothermal wells have protects the Government and People • Small population resulting in small already been developed in Montserrat of Saint Lucia from overexposure in markets of the islands hence the and results have proved positive. A the financing risks. Plans are also in potential for geothermal energy far third geothermal well is currently being place to host various discussions with exceeds the demand. However, the developed with funding support from donors and international developers to deployment of renewable projects DFID. The government of Montserrat determine the best way forward. at adequate scale will help to both is hopeful that the geothermal energy attract international interest and help production will exceed national requireto effectively diversify the energy ments and be available for export to Concerns/Challenge portfolio. By creating economies of neighboring islands such as Antigua. scale, Caribbean utilities can drive Although geothermal potential resourcprices down, allowing for efficient es appear to be high in the Caribbean, investment in each island’s power In St. Vincent and the Grenadines several factors have hampered its develsector.

(SVG), the fertile slopes of La Sou- opment. Concerns have been raised in friere volcano are now being explored the Caribbean regarding the long-term • Lack of capacity and infrastructure for its geothermal energy potential. The sustainability of geothermal energy in the islands to develop the techgovernment believes that geothermal production. However, long-term susnology and to facilitate sharing of energy will be a “game changer” for tainability for geothermal plants has energy generated between islands the local economy. The International been demonstrated in other parts of the that do not have any geothermal Renewable Energy Agency (IRENA) World. For example, at the Lardarello resources, e.g. Antigua & Barbuda. and the Abu Dhabi Fund for Develop- field in Italy since 1913, at the Wairakei ment (ADFD) has provided a US$15 field in New Zealand since 1958, and • Grid Stability There is a need to idenmillion towards development of a 10 – at The Geysers field in California since tify technical criteria and designs 1960.

Other issues impacting the develthat will allow grid stability to be 15 MW Geothermal power plant in the

CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : DECEMBER 2014

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Above: the Soufriere the only “drive-in” volcano in the world in St Lucia (CJ Photo).

Image source courtesy of http://www.caribjournal.com/ maintained. Two main power issues of concern are power output and frequency smoothing. Most Caribbean islands are small and have a small peak demand. Their power generation infrastructure requires high reserve capacity to provide adequate reliability, and most of this capacity currently comes from inefficient and outdated diesel generation. To add variable capacity to an island’s grid, one must consider the issues unique to each island as well as the macro issues that affect the entire Caribbean region. Dealing with grid stability on a micro level, each island’s grid and power generation infrastructure will have to be overhauled.

Action Supporting Geothermal in the Caribbean The Caribbean Development Bank (CDB), the Inter-American Development Bank (IDB), and Japan Interna-

tional Cooperation Agency (JICA) in July 2014, signed a Memorandum of Cooperation (MOC) agreeing to collaborate in order to promote programs and projects that foster cooperation among them. The MOC also facilitates exploration of a joint effort for further introduction of renewable energy and energy efficiency in the Eastern Caribbean Region, with special focus on geothermal development. The MOC highlights that the three parties may consider the possibility of co-financing projects of mutual interest on such terms and conditions as established in the Framework Agreement for Co-financing for Renewable Energy and Energy Efficiency (CORE).

Conclusion The Caribbean is evidently in a renewable energy revolution, the high and fluctuating fuel prices and heavy dependence on imported fossil fuels makes

renewable energy a “win win”. The thrust towards geothermal energy for electricity generation can only improve current situation of the countries for which efforts are focused. The issues regarding absence of regulatory framework, financing, sustainability, scalability can only be overcome through the cohesive and collaborative efforts of all stakeholders including the governments, utilities, developers and planners and most importantly the consumers.

Through geothermal power plant developments, the prospects of lower electricity costs (US$0.12/kWh) compared to US$0.42/kWh and less dependence on imported petroleum energy would be a welcome change for the Caribbean.

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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : DECEMBER 2014

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Image source: http://www.glogster.com/laurenrodrigues/geothermal-energy/

F rom A ll

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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : DECEMBER 2014

Prices at the Pump

DECEMBER 2014

Retail prices for Regular Unleaded Gasoline in the fourteen Caribbean countries reviewed at the end of December 2014 showed decreases in prices for ten countries: Barbados, Belize, Dominica, Grenada,Guyana Jamaica, Monsterrat, St.Kitts and Nevis and St.Vincent and the Grenadines and Suriname between 1% and 8.4%. Grenada saw the highest price decrease of 8.4%. Prices in the remaining four countries were stable. The average retail price at the end of December 2014 was 3.9% lower when compared to the previous month.

Unleaded Gasoline: Regular : Average Retail Price – January - December (US$/Litre) 2014 COUNTRIES

JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

AVG

ANTIGUA/ BARBUDA

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

1.23

BAHAMAS [91 OCT]

1.36

1.36

1.38

1.38

1.43

1.43

1.43

1.44

1.41

1.38

1.25

1.25

1.38

BARBADOS

1.54

1.57

1.59

1.66

1.76

1.76

1.81

1.81

1.78

1.79

1.81

1.71

1.72

BELIZE [87 OCT]

1.41

1.43

1.47

1.49

1.51

1.48

1.54

1.52

1.49

1.47

1.37

1.26

1.45

DOMINICA

1.15

1.16

1.18

1.19

1.19

1.22

1.30

1.25

1.25

1.15

1.10

1.07

1.18

GRENADA (95 OCT)

1.26

1.26

1.28

1.31

1.31

1.31

1.32

1.32

1.31

1.27

1.19

1.09

1.27

GUYANA

1.09

1.10

1.12

1.14

1.16

1.15

1.16

1.16

1.16

1.13

1.14

1.12

1.14

JAMAICA 87 Octane[E10]

1.21

1.23

1.25

1.27

1.25

1.26

1.26

1.25

1.23

1.18

1.14

1.06

1.21

MONTSERRAT

1.25

1.25

1.25

1.25

1.25

1.25

1.25

1.25

1.25

1.22

1.17

1.12

1.23

ST. KITTS/ NEVIS

1.35

1.35

1.35

1.28

1.28

1.29

1.29

1.29

1.29

1.03

1.03

0.98

1.23

ST. LUCIA

1.32

1.31

1.31

1.31

1.31

1.31

1.31

1.31

1.31

1.31

1.31

1.31

1.31

ST. VINCENT/ GRENADINES

1.13

1.13

1.15

1.16

1.16

1.19

1.22

1.23

1.24

1.22

1.19

1.14

1.18

SURINAME [95 OCT]

1.39

1.39

1.43

1.43

1.45

1.47

1.47

1.43

1.40

1.36

1.25

1.17

1.39

TRINIDAD/ TOBAGO [92 OCT]

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

0.42

NOTE: *US Gallon = 3.785 L *Imperial Gallon = 4.546 L *As at November 1, 2009 MTBE was phased out from all gasoline blends in Jamaica and replaced with 10% Ethanol.

2.00

Comparative Retail Pump Prices Regular Unleaded Gasoline DECEMBER Avg vs 12 Mths Avg (Jan - December 2014)

1.80

US$/Litre

1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00

14 Caribbean Countries

See prices for all products at www.cippet.org

International OIL PRICES

CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : DECEMBER 2014 Average Weekly & Monthly Crude Oil Prices (October December 2014)

110 100 90

US$/BBL

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80

91.44 78.24

70 60

67.18

50 40

Oct

Nov

Dec

30

Period

WK1

WK2

WK3

P E TS TATS - t h e Ca r i b b e a n E n e rg y I n fo r m at i o n System (CEIS) primary report of historical annual petroleum energy statistics provided for 18 Caribbean Countries. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, electricity, as well as financial and environmental indicators for over twenty years.

MTH AVG

120.00 110.00

106.60

106.61

107.81

100.00 90.00 80.00 70.00

2011

2012

2013

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Period

FEATURED OFFERS:

WK4

Average Monthly World Crude Oil Prices (2011 2013)

US$/BBL

Analysis of International Crude Oil Prices for the period October to December 2014 showed a continued downward trend in prices.

The period ended with an average price of US$59.95/bbl which showed a 30.3% decrease in prices when compared to October 2014 and a 20.7% decrease in average prices when compared to November 2014. The highest weekly was recorded in October at US$91.44/ bbl-reflected in week one while week four in December 2014 accounted for the lowest price of US$55.58/bbl. It is expected that prices will continue on a ownward trend if global production continues to rise and consumption is either constant or lower than expected.

Yr Avg

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