3 Major Energy Projects Doomed to Fail

Electricity generation can have different sources, for example, coal, natural gas, nuclear power or renewables. While coal is falling out of favour due to the high level of pollution and renewable energy infrastructure is not yet developed enough to meet the demand, other sources get most of the attention. Even with their popularity and growing demand for electricity, not all nuclear and gas projects are guaranteed success. Here are the three projects that are unlikely to have a positive outcome.

1. Moorside nuclear power station project

The UK nuclear power plant plans started in 2009 when a joint venture of energy companies, called NuGeneration (NuGen), purchased the land in Cumbria. Eventually, only Toshiba was left as the sole owner of the Moorside project.

With the support dwindling, and the talks with potential buyers Korea Electric Power Corporation to take over the nuclear power plant project falling through, Toshiba decided to withdraw as well.  It was announced that the wind-up process of NuGen will start in January 2019 due to additional costs required to keep it in operation and the inability to find a buyer.

Is there hope?

Since the nuclear power plant is an important part of the UK’s energy policy, the development and further plans are unlikely to stop. However, it might not mean that the Moorside project specifically will help meet the country’s energy goals, even though it was supposed to provide about 7% of UK electricity.

Another nuclear power station in Somerset, the EDF Energy’s Hinkley Point C, has been in construction since 2016 and is expected to come online between 2025 and 2027. China has also expressed interest in investing in nuclear projects in the UK, as well as Japanese conglomerate Hitachi. The latter is expected to provide backing for the Wylfa nuclear power station project in Wales. If these projects are successful, it remains to be seen whether Moorside project will ever be revived.

2. Trans Mountain pipeline expansion

The historical Trans Mountain pipeline between Alberta and British Columbia in Canada has been delivering oil since 1953. To satisfy the growing demand, an expansion project was proposed in 2013 by the North American energy infrastructure company Kinder Morgan. It was projected to expand the capacity from 300,000 barrels per day to 890,000. However, it was met with considerable resistance.

Due to the high level of greenhouse gas emissions of Alberta’s oil sands, Canada is in danger of falling behind its Paris treaty obligations. This has caused many environmentalists to protest the expansion and instead encourage the development of renewable resources.

In August 2018, the Federal Court of Appeal overruled the approval for the project on the basis of the insufficient consultation with Indigenous peoples and failing to deliver a review of the impact on the marine environment.

Is there hope?

After the court decision, the appeals process has to be started anew or the case has to be carried over to the Supreme Court of Canada. Either way, it would take a lot of time and money to reach a conclusion. For instance, the original measures taken to fight regulatory issues and get necessary permits from the government took five years and cost more than one billion Canadian dollars.

On the other hand, the Canadian government believes that this expansion is crucial in order to open new overseas markets, especially in Asia. The belief in the project even pushed the government to buy it from Kinder Morgan for C$3.5 bn, with more costs awaiting after the court ruling and construction, if it ever goes ahead. Although with major investments already made, the expansion project will probably see the light of day, but the timeline and the ultimate success of it are still up for debate.

3. Trans-ASEAN Gas Pipeline

The Trans-ASEAN Gas Pipeline project was originally proposed in the 1980s to interconnect the existing gas pipeline infrastructure within ASEAN with a new system that would enable to transport gas across borders. This would heighten the region’s energy security, however, the project stalled due to political reasons, and now it might be too late.

There are several reasons why the Trans-ASEAN Gas Pipeline project has a dim forecast for its development. The major growth of the LNG market and the decline in regional gas production forced to adjust the original plans to include LNG, changing the strategic course of the project. More importantly, Southeast Asia has the propensity to build bilateral pipelines, connecting a buyer and a seller, but not multiple producers and end-users. This inexperience in delivering complex pipeline networks also stands in the way of the Trans-ASEAN Gas Pipeline.

Is there hope?

The depleting gas resources in Southeast Asia, territorial disputes in the South China Sea and the high exploration costs of the once-promising giant Natuna D Alpha gas field may transform the region from a large gas exporter to a net importer as soon as 2025, according to the International Energy Agency. This means that any pipeline developments would be for nought and better options for investors can be found in LNG infrastructure and regasification terminals.

For more discussions about LNG projects, register for the 3rd Annual LNG USA Summit in Houston on February 26-27, 2019.