WTI $72.36 +31c, Brent $75.82 +38c, Diff -$3.46 +7c, NG $3.82 +11c, UKNG 261.39p +12.15p
Oil price
Another modest rise yesterday in what was a volatile day, the EIA inventory stats were read differently dependent on your point of view. The crude headline was a draw of only 241/- bbls but a build of 2.4m at Cushing disappointed some as did the add of 3.9m b’s of gasoline and 2.7m of distillates.
Elsewhere there appears to be a continued feeling of confidence that Omicron will be beatable, yesterday Pfizer said that they thought that three hits of its vaccine would be enough to see off this one. In the UK Plan ‘B’ has been put into play which is mainly mask related.
Scirocco Energy
Scirocco has announced that, its subsidiary, SEUK has signed an exclusivity agreement with leading sustainability technology provider, SEM. This exclusivity will be for the benefit of SEUK, its affiliates and its investee company Energy Acquisitions Group Limited.
SEM (https://sem.world/), is a leading developer of technologies within the circular economy sector. It is anticipated that SEM will provide EAG with digestate management and nutrient recovery technology, known as H2OPE System.
The system processes digestate, a by-product of the biogas process, into nutrient dense, high-quality fertiliser, nutritionally balanced growth media and a sustainable peat substitute which can be used within a range of growing environments across the sector. It also produces re-usable water, and significantly reduces CO2 emissions compared to traditional practices. Trials are also taking place for the use of the material to make biodegradable plant pots for nurseries and growers, removing the reliance on single use plastic.
Key terms of the agreement:
· SEM will exclusively supply to SEUK, its Affiliates, EAG (the “Scirocco Parties”), the H2OPE System for the application to digestate generated from AD plants within the UK and Ireland;
· The exclusive period runs until end June 2023, unless extended by the parties in accordance with the agreement;
· SEUK will use reasonable endeavours to purchase or procure that the Scirocco Parties purchase a minimum of five units of the H2OPE System within the exclusivity period;
· If Scirocco Parties do not meet certain order requirements during the exclusivity period, the exclusivity may fall away, but Scirocco Parties are still able to order units of the H2OPE System from SEM during the term on a non-exclusive basis.
EAG intends to apply the technology to its operating plant at Greenan, as well as working with other owners of other operational AD plants to assess the potential benefits of funding the installation of a ‘bolt-on’ nutrient recovery system on a merchant basis.
The addition of the H2OPE System technology to existing AD plants has the potential to deliver an additional revenue stream through the creation of high value co-product, depending on the level of refinement required for a specific market sector while simultaneously reducing the carbon intensity of the process.
Commenting on the agreement, Scirocco CEO Tom Reynolds said:
“This represents the next step in our investment strategy supporting investment in ‘Circular’ within the agricultural sector, alongside our existing investment in EAG. The application of this kind of technology will help optimise the operational and environmental performance of our current and expected future AD plants, as well as providing a new revenue stream that can be scaled in line with our portfolio. The exclusive nature of the agreement provides Scirocco Energy and its investee company, EAG, with a valuable head start in deploying a value adding technology to its asset base as it grows.”
Chris Kerr, MD of EAG added:
“Firstly, this technology enables EAG to implement its active optimisation programme for its current assets, driving value through each of the businesses, and also solves the issue of digestate spreading to land, which in some cases is already saturated with nutrients. Recovery of nutrients from the biogas process is the perfect opportunity to provide growers and their customers in the fresh produce sector with a sustainable and effective alternative to fossil fuel derived fertilisers.
“Reducing carbon through the food chain is something we have been focussed on for a number of years now, and we believe the end-to-end nature of the SEM technology will provide the entire fresh produce sector in the UK and Ireland the opportunity to introduce a genuinely circular economy into their business models.”
John Jones, CEO and Founder of SEM Ltd added:
“Our engagement with EAG and Scirocco Energy is fantastic news for SEM. Their understanding of what the market needs are, and exactly where our technology fits within that space has made the deal straightforward. It has been really exciting working up the plans for the new plants at which the technology is expected to be deployed throughout 2022.
“At SEM we have a vision of a waste-free circular economy both now and in the future, securing our planet’s health and wealth for generations to come. Our H2OPE technology is set to have a hugely positive impact on the environment, as well as on the agriculture industry, by maximising the conversion of waste co-products into valuable by-products, while significantly cutting CO2 emissions.
“Both EAG and Scirocco Energy share this vision – a common alignment which will ensure our strong future working relationship gets off to the best possible start. We can’t wait to see where the next part of the journey takes us all.”
This looks to be an interesting move within the investment in the agriculture industry. Whilst I will probably need a teach-in on this and other potential moves there is little doubt that digestate is rapidly becoming a go-to product which uses existing processes to become fertiliser. It also, as commented on by the CEO, adds to the Scirocco investment in AD plants.
More importantly it looks like Scirocco has identified the technology component which has the potential to add significant value to add to existing AD investments. This is the start of a portfolio here and one they can generate returns from previously poor paybacks. Its a chance to generate revenue and cash and will hopefully be self-fulfilling and build rapidly.
Serica Energy
Serica has provided the following operations update. As previously announced, hydrocarbons from the C1z development well started flowing into the Arran subsea system on 24 November. The commingled Arran and Columbus production streams are now being exported to the Shearwater platform for processing and onward export to the gas and liquid sales points.
Early production has been constrained due to a temporary unavailability of full capacity in the export system, however during the first 14 days of production, average gross Columbus production rates of 6,300 boe/d have been achieved of which over 80% is gas. Full capacity in the export system is expected to be available to Columbus by mid-January 2022.
Production performance in the second half of 2021 is benefitting from the investment in the Rhum R3 well reintervention and the Columbus development project which were undertaken during 2020 and 2021. Serica’s net production is as follows: