"For much of the state of Maine, the environment is the economy"
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LNG Imports are Moot
2011 June 30
The increase in supply roughly matched that predicted by more contemporaneous pipeline flow data, meaning the market was not necessarily caught off-guard by the robust production increase reported. On a y/y basis, production is running well ahead of last year by 4.6 Bcf/d, led by growth in Louisiana and "Other States."
The success of shale gas, in particular from the Haynesville and Marcellus, in boosting these volumes is unmistakable. More recent pipeline data and rig count levels suggest production has not yet turned the corner to declines. Elsewhere in the data, net trade in April helped considerably to balance the market.
Low cost US production is obviating the need to import higher-priced gas elsewhere and is indeed making deeper inroads into Mexico, a trend we discussed recently in Natural Gas Weekly Kaleidoscope: Fueling Mexico, June 21, 2011. [Red bold emphasis added.]
Since oil and gas production began in the Cook Inlet region in 1958, more than 1.3 billion barrels of oil and 7.8 trillion cubic feet of gas have been produced, yet the new USGS assessment shows that significant undiscovered gas remains.
The USGS assessment of undiscovered gas resources ranges from 4.976 to 39.737 trillion cubic feet (95 percent and 5 percent probability, respectively. Of this total, about 72 percent is estimated to be found in conventional accumulations, 25 percent in coalbed gas accumulations, and 3 percent in tight gas accumulations. [Red bold emphasis added.]
Webmaster’s Comments: And yet, they are planning to import LNG, because they have run out of gas for local home heating and area electricity generation.
According to a 2006 report in New Brunswick's Telegraph-Journal, [Canada Prime Minister Stephen Harper] had promised to "pursue 'all diplomatic and legal means' to prevent LNG tankers from transiting Head Harbour Passage. Should Canada do this, one FERC official admitted that the Passamaquoddy (Bay) projects would be dead in the water." [Red bold emphasis added.]
Webmaster’s Comments: Downeast LNG has known for five years that it cannot transit LNG to its proposed terminal. And yet, Downeast LNG's president Dean Girdis would rather pick a losing fight with Canada than relocate to ensure his project could obtain the LNG essential for his project. Hubris apparently beats good business sense at Downeast LNG.
Canada's National Energy Board (NEB) has released recent data on LNG imports to the Canaport terminal located in New Brunswick. Platts LNG Daily [subscription required] reports that the 5.63 Bcf of LNG imported to Canaport LNG in April represents an approximately 50% decline from March 2011 LNG import levels. [Red emphasis added.]
Hess recently put in their requests to withdraw to FERC. There is a waiting period until July 5, at which point FERC can accept or reject the requests. Then the remaining item is to determine what might happen with the land in Fall River, which Fall River is ably handling.
SIX MONTHS after removing the liquefied natural gas (LNG) project from the portfolio of then Energy Minister James Robertson, Prime Minister Bruce Golding has returned the responsibility of overseeing the project to the energy ministry.
Alaska’s U.S. senators have expressed delight at a recent assessment by the U.S. Geological Survey that reports a significant untapped natural gas reserve in Cook Inlet. Others say this may only be good news on the surface.
“When you develop fuels, they create jobs but those jobs will always go away and you always feel the dislocation of those jobs like those plants that have gone away,” he said. “So if we invest in renewable energy like wind or tidal or geothermal, we can have flat-cost power and the jobs it produces are forever.” [Red bold emphasis added.]
2011 June 26
[W]e again declare our support for any decision to halt the [LNG] agreement with the Exmar consortium, given the prima facie evidence that the bidding process was infested with irregularities - and perhaps worse.
For example, the official who managed the technical side of Jamaica's plan to transition from oil to LNG had a separate, private business arrangement with Exmar, yet was part of a group that evaluated its bid. The same person was also deemed to have excluded one potential bidder that could have seriously challenged Exmar.
2011 Jun 25
Unconventional gas from shale and coal-bed methane has doubled the estimated technically recoverable gas resource in less than a decade, ensuring that gas will remain abundant and relatively low cost.
The IEA now puts technically recoverable resources at 404 trillion cubic metres of conventional gas and another 380 trillion cubic metres from unconventional sources, equivalent to 250 years worth of current production, according to the 2010 World Energy Outlook.
In a recent survey, the U.S. Energy Information Administration (EIA) put world shale resources at 6,622 trillion cubic feet (188 trillion cubic metres) distributed across China (20 percent), the United States (13 percent), Argentina (12 percent), Mexico (10 percent), Australia (6 percent) Canada (6 percent) and Europe (10 percent). [Red bold emphasis added.]
The [Washington-based International Monetary Fund] said the additional supply has discontinued plans for sizable LNG imports into the US, adding that some even suggest that the US could turn into a “significant gas exporter” in the coming period. [Red bold emphasis added.]
"The resulting boom is transforming America's energy landscape. As recently as 2000, shale gas was 1% of America's gas supplies; today it is 25%. Prior to the shale breakthrough, U.S. natural gas reserves were in decline, prices exceeded $15 per million British thermal units, and investors were building ports to import liquid natural gas. Today, proven reserves are the highest since 1971, prices have fallen close to $4 and ports are being retrofitted for LNG exports." [Red bold emphasis added.]
Webmaster’s Comments: The Providence Business News ignores Weaver's Cove Energy's lack of economic viability as well as the project's failure to select safe siting, even as indicated by the world LNG industry (see LNG Terminal Siting Standards Organization for more on safe LNG terminal siting).
These are the same project-killing realities facing Downeast LNG.
ANOTHER INDICATION that Jackson County is on the cutting edge of alternative energy is the arrival of the first shipment of liquefied natural gas to the new Gulf LNG terminal at the Port of Pascagoula.
Webmaster’s Comments: The Mississippi editorial board apparently doesn't read anyone else's news. Gulf LNG is a too-late project. The US is in a 100-year-long natural gas glut, and does not need more LNG import capacity. It is likely that Gulf LNG will sit idle.
Southern Union Company today confirmed receipt of a proposal by The Williams Companies, Inc. to acquire all of the outstanding shares of Southern Union for $39.00 per share in cash. The Directors of Southern Union will review the proposal in due course, consistent with fiduciary duties and in accordance with the terms and conditions of Southern Union’s previously announced merger agreement with Energy Transfer Equity, L.P.
Southern Union Company, headquartered in Houston, is one of the nation’s leading diversified natural gas companies, engaged primarily in the transportation, storage, gathering, processing and distribution of natural gas. The company owns and operates one of the nation’s largest natural gas pipeline systems with more than 20,000 miles of gathering and transportation pipelines and one of North America’s largest liquefied natural gas import terminals, along with serving more than half a million natural gas end-user customers in Missouri and Massachusetts. For further information, visit www.sug.com.
The cable noted that Minister Miller had alleged in a radio interview that the environmental group Re-Earth’s opposition to LNG was getting more media attention than it normally might because the group’s leader, Sam Duncombe, is white.
A working group of Southcentral Alaska utilities and Donlin Creek mine has determined that it will be necessary to start importing liquefied natural gas into the Cook Inlet region starting in 2014, Daniel Helmick, manager of regulatory affairs for Municipal Light & Power, told the Regulatory Commission of Alaska June 22. The utilities are in the process of negotiating commercial arrangement for LNG supplies, working together to share the cost of solving a shared problem, Helmick said.
Webmaster’s Comments: Let's get this straight — Alaska has been shipping Cook Inlet-source LNG to Japan since1969. But now, since they've shipped most of the natural gas to Japan, Alaska needs to import LNG to Cook Inlet in order for local utilities to generate power and for people to heat their homes.
Prior to the current shale gas glut, developers in the Lower-48 claimed the US needed to import LNG in the name of energy security. Now, there are numerous Lower-48 LNG export projects in play to ship vast domestic supply overseas — reducing US energy security.
These are examples of how the free-market, if not thoughtfully regulated, can abuse the country's best energy-security interests.
In a presentation this week to the Regulatory Commission of Alaska, members of the Long Term Gas Supply Work Group said nothing can prevent the state with one of the largest untapped supplies of natural gas in the world from importing gas to provide heat and electricity for the state's most populous region. [Red & bold emphasis added.]
Thursday's waterborne maneuvers marked the finale of a week's worth of a regional marine training held in Coos Bay. The sheriff's office is doubly concerned about preparedness this year, because if and when LNG tankers arrive in the bay, the sheriff's office is charged with protecting them.
[June 21], Jordan Cove Energy Project, L.P. responded to a filing submitted by the Western Environmental Law Center which suggested further NEPA analysis is required because project developers may be considering using their Jordan Cove LNG terminal for LNG exports as well as imports. In its reply, Jordan Cove LNG argues that no additional analysis under the National Environmental Policy Act (NEPA) is needed for the present project application because no formal request for export authorization has been offered and, should Jordan Cove LNG seek to export LNG, a separate application to FERC would be required and subject to additional NEPA analysis.
Consultants with Bernstein Research issued a report this week stating that LNG exports from the proposed liquefaction projects in Western Canada could raise the Henry Hub natural gas price by $2.54/MMcf in 2019 and $1.73/MMcf in 2020.
2011 Jun 21
Facing a supply glut, in recent years natural gas drillers like Chespeake Energy, EOG Resources and SandRidge Energy have all shifted investment dollars away from gas in favor of higher-priced oil. That’s spurred a boom in new oil plays like the Bakken of North Dakota and the Eagle Ford shale of south Texas. As a result, U.S. crude oil production was up 150,000 barrels per day to 5.51 million bpd last year, despite downturns in Alaska and the Gulf of Mexico. The Energy Information Administration forecasts Lower-48 growth of 230,000 bpd this year.
But ironically, going after oil instead of gas isn’t helping reduce the gas glut at all, because in virtually every oil field you’ll also find associated gas. With the price of oil so high the drillers are incentivised to give away the gas for free and just make money on the liquids. In the Woodford shale of Oklahoma, Continental Resources says the gas they produce is so “wet” with other liquids like butane and propane that they can get $8 per mmbtu, far more than the going rate of $4.32 for dry gas.
A shale gas "revolution" is in full swing in the United States, where domestic gas will drive out imported liquefied natural gas (LNG) and make North America an "island market" where low prices stimulate demand, particularly in power generation and the chemical industry, according to the International Energy Agency (IEA). [Red bold emphasis added.]
China’s largest oil company was paying a huge premium for the assets — $5.4-billion for half of a play and for the privilege of learning how to extract shale gas using new technology from one of the sector’s leaders. Encana’s entire market capitalization is $22-billion.
Meanwhile, gas prices are weak, PetroChina is learning the technology from others and the strategy of exporting the gas to Asia from Western Canada looks complicated and controversial. It includes building pipelines, liquefied natural gas terminals and starting new tanker traffic in a region where First Nations are militant and volatile. Those with similar strategies are sure to take note.
Encana has a 30 per cent stake in the proposed Kitimat LNG terminal on the northern B.C. coast, where natural gas would be condensed into a liquid and shipped to Asia Pacific customers on specialized tankers.
Dominion Cove Point LNG, LP has filed responses at FERC to criticisms of its proposed changes to the tariff for its LNG regasification terminal. Shell NA LNG and BP Energy Co. both have responded with additional filings.
Webmaster’s Comments: …An expensive, unnecessary addition to US natural gas oversupply.
Clatsop County filed a motion in Circuit Court Monday seeking reimbursement for more than $60,000 in attorney fees incurred in the legal dispute over the county’s jurisdiction of the Oregon Pipeline LLC land-use application.
2011 Jun 20
[A]ccording to the Potential Gas Committee, the United States possesses a total resource base of 1,898 trillion cubic feet (Tcf) as of year-end 2010. This is the highest resource evaluation in the Committee’s 46-year history, exceeding the previous record-high assessment by 61 Tcf. Most of the increase arose from reevaluation of shale-gas plays in the Gulf Coast, Mid-Continent and Rocky Mountain area. According to EIA, U.S. total nat gas reserves are estimated at 2550 Tcf (more than one century of supply) from which Shale gases account for 830 Tcf (Marcellus, Haynesville, Barnett and Fayetteville basins account for 600 Tcf). The U.S. economy is becoming self sufficient in terms of nat gas supply. Yet, one should always keep in mind that potential/technically recoverable resources are not the equivalent of proved reserves. [Red bold emphasis added.]
"Ten years ago, everybody thought the U.S. was going to be come a big net importer of natural gas," Finley said. Instead, shale plays, like the Haynesville formation in northwest Louisiana, have "really changed the game," with the U.S. becoming the biggest producer of natural gas in the world over the last three years. [Red bold emphasis added.]
CALGARY - Northeastern British Columbia's shale fields contain more than enough natural gas to feed a myriad of West Coast export terminals in the works, energy executives said at an industry conference [Jun 13]. [Red bold emphasis added.]
First, with regards to US natural gas spare capacity, currently daily consumption of natural gas in the US is approximately 62.4 Bcf/d while “technically recoverable” gas resources is estimated at 1,836 tcf out of which 616 tcf (unproved shale gas volume is 827 tcf per EIA, Annual Energy Outlook 2011) is attributed to shale gas . If these results are combined with the Department of Energy’s latest determination of proved gas reserves, the US has enough natural gas for the next hundred years. It should be noted that spare capacity, in a capitalistic system, does not necessarily mean domestic production minus domestic consumption. In an open market, a commodity will chase the highest price quoted for it globally. [Red bold emphasis added.]
[T]imes have changed, mainly as a result of the tremendous growth of production from shale gas plays across North America. “We now have estimations that total gas resources can meet current demand levels for at least 100 years,” Dave McCurdy, the American Gas Association’s president and CEO, said in a recent statement announcing the release of a new study on U.S. gas supply.
Instead of taking this large domestic resource base and marshaling it in a way to greatly reduce the nation’s dependence on oil, LNG import terminal owners, with the blessing of regulators and the support of natural gas producers, are pushing forward with their plans to export natural gas.
During the previous decade, the gas industry stressed the importance of “energy independence” in seeking to gain approval of LNG import terminal projects. Today, in their pleas for permission to export natural gas, LNG companies, such as Sabine Pass Liquefaction LLC, are extoling the benefits of an “open exchange of goods, including energy, with international trade partners.”
Wince said strong shale gas production in the U.S. is sustainable for the foreseeable future. “We have 59 years of drilling years left in Marcellus. It’s similar in all shales,” he said, according to the Platts report. [Red bold emphasis added.]
The National Oceanic and Atmospheric Administration (NOAA) has released regulations that will govern enforcement of prohibitions against takings of marine mammals, including by incidental harassment, during the normal operations and maintenance of the Neptune LNG deepwater port located offshore Massachusetts.
FERC announced this morning that it will prepare an Environmental Assessment (EA) for the Everett LNG import terminal's proposed nitrogen injection system. According to the announcement in today's Federal Register, public comments on the project are due by July 14, 2011.
Sabine Pass Liquefaction, LLC has filed its response to comments in FERC's proceeding examining Sabine Pass Liquefaction's request for expedited review of its proposed bi-directional LNG processing transactions.
A unit of China National Petroleum Corp is expected to begin work later this year on a $6 billion project to expand and upgrade an oil refinery in Cienfuegos on Cuba's southern coast, with plans including construction of a liquefied natural gas terminal.
At least four export facilities are being eyed for British Columbia, the most advanced being the Kitimat LNG terminal by Apache Corp., EOG Canada and Encana Corp., which just wrapped up regulatory hearings for an export license.
VANCOUVER—The struggle against the proposed Enbridge pipeline, which has galvanized First Nations throughout northern BC and earned popular support from people across the country, has become one of the highest profile Indigenous and environmental issues in Canada. Concerns are mounting that in Enbridge's shadow, other energy projects are slipping under the radar—with potentially explosive consequences.
The Kitimat Summit Lake (KSL) gas pipeline, also called the Pacific Trails Pipeline, is of emerging concern to Wet'suwet'en land defenders and local residents. If built, this pipeline would connect to an existing Westcoast Energy Pipeline at Summit Lake, near the geographical centre of BC, and cut west to Kitimat.
“Nobody showed up for the first open house in Houston—three people I think—so they cancelled all the other open houses. There was never another open house on the KSL pipeline,” said Glenda Ferris, a long time environmentalist who lives in the Buck Creek Valley near Houston BC. “There was never even a news article about this pipeline in the local papers...They did this all under the table,” she said. [Red bold emphasis added.]
Petronas has secured a 50% stake in three shale gas fields in British Columbia, partnering with Canadian company Progress Energy Resources Corp. Bloomberg reports that under the terms of the agreement, Petronas would more than double its initial investment should the companies decide to construct an LNG export project on the Canadian west coast. Petronas would own 80% of the LNG export terminal.
Progress Chief Executive Michael Culbert (image) said federal and provincial authorities should consider combining regulatory proceedings for multiple plants and pipelines, with so many proposals now in the works.
“This can be a well-orchestrated process, where we benefit from using the right-of-way once. If construction is all done at the same time, at least you’re going down the same right-of-way,” Culbert said.
After his resignation, a separate review at Kroger's request by Dale Koch, former presiding judge of Multnomah Circuit Court, found no evidence that Foster gave improper legal advice on liquid natural gas plants in Oregon as LNG supporters had charged.
But Koch noted that Foster used his work email in late 2009 to request permit approvals from Wasco County for a solar panel installation at his house. It wasn't appropriate for Foster to use government email that included his title to communicate with county officials, Koch wrote. But he added that it didn't appear Foster was seeking special treatment, and declined to refer the case to the ethics commission. Kroger decided to refer the case "in an abundance of caution."
The 307 km (192 mile) line will carry as much as 500 million cubic feet of natural gas a day from a liquefied natural gas import facility near Manzanillo, Colima, on the country's Pacific coast, to nearby power plant.
[June 2], Vopak and Enagas announced their purchase of the Altamira LNG import terminal in Mexico. Vopak will take a 60% stake while Enagas will own the remaining 40% of the terminal, which was previously owned by Shell, Total, and Mitsui.
Alaska and British Columbia have an important distance advantage over non-Australasian LNG shipments to North Asia, especially those from Atlantic Basin and Mediterranean sources. “North Asia high-priced spot markets, which are principally supplied from Atlantic Basin and Mediterranean sources, can accommodate BC’s Kitimat LNG planned export capacity displacing some LNG supplies from the Middle East”, stated Dr. Tom Woods of RBAC.
The U.S. Coast Guard announced this morning that it will establish a Chemical Transportation Advisory Committee to advise the agency on the safe and secure marine transport of certain materials in bulk, likely including LNG. [Red emphasis added.]
Speaking to the Pittsburgh Tribune-Review, famed oil investor and natural gas production supporter T. Boone Pickens said that "[i]t's bad public policy to export natural gas – a cleaner, cheaper domestic resource – and import more expensive, dirtier OPEC oil." The article goes on to cite other industry players and politicians' concerns with U.S. LNG export proposals and the possible effects LNG exports could have on the North American gas market.
2011 June 18
NEW YORK, June 2 (Reuters) - U.S. imports of liquefied natural gas in April plummeted 20 percent from the same month a year ago as ample domestic supply and slumping prices deterred spot shipments, the Department of Energy said on Thursday.
The South Hook LNG terminal in Wales will receive a cargo on 3 June from Qatar which was previously destined for the Canaport terminal in Canada, shipping data showed today. [Red bold emphasis added.]
That's where Houston-based Cheniere Energy operates its Sabine Pass liquefied natural gas plant, although "operates" implies a little more activity than it's had since opening two years ago. The facility has struggled because weak natural gas prices have undercut the market for imports.
The U.S. is the biggest producer of natural gas. Kay notes that the recent pullback of natural gas rig counts and increase in oil rig counts doesn't necessarily mean that natural gas production has fallen significantly -- given that natural gas is often a byproduct of oil drilling. [Red bold emphasis added.]
BIG NATURAL gas players in British Columbia and Alberta are scrambling to find new markets in Asia as an outlet for promising shale-gas discoveries. As US gas production surges, Canadas is flagging in the face of lower export demand from its traditional market and suppressed prices. Companies with significant gas holdings in the provinces, such as Encana, Apache and EOG Resources, are so concerned they will be unable to sell their Horn River gas to the US that last week they applied to Canadas National Energy Board for a 20-year permit to liquefy and ship it to Asia under long-term contracts with companies such as South Koreas Kogas and PetroChina. They are joined by South Africas Sasol, which has agreed to study the potential for gas-to-liquids developments in a C$1 billion ($1.02 billion) deal with Calgary-based Talisman Energy that closed this week. [Red bold emphasis added.]
Speaking this week at a conference, Progress Energy Resources CEO Michael Culbert said that his company plans to partner with Petronas to build an LNG export facility in British Columbia featuring two liquefaction trains with capacities of approximately 3.7 million mt/year each. Culbert said that the first train would be built over the next four to five years and then would be followed by the second train. According to Platts Gas Daily [subscription required], Culbert said that Progress will conduct a feasibility study on the project beginning in September 2011.
Bentek Energy analysts said yesterday that they expect the United States to export approximately 1 Bcf/d of LNG from 2018 through 2020. According to Platts LNG Daily, the analysts predicted that U.S. LNG exports will begin in 2015. [Red bold emphasis added.]
Although the Kenai LNG port in Alaska is the nation’s sole export terminal, the US is home to several import facilities. Built before the shale gas revolution transformed the US market, these liquefaction terminals operate at a fraction of their capacity because the country no longer needs to import LNG. [Red bold emphasis added.]
The United States is also the world's biggest natural gas producer, accounting for 19.2% of global supply, according to the most recent statistics from the IEA. And many European and Asian markets have a thirst for U.S. quality natural gas.
"U.S. is the Middle East of the natural gas market," he said. "If we can ship to Europe or India or wherever, natural gas prices will move higher to catch up with what importers are willing to pay, even though [U.S. and European prices] won't ever reach parity." [Red bold emphasis added.]
"This is the third year in a row that we've seen a stable market for natural gas. We anticipate that the trend has legs not only because of the shale plays now being developed but because of all our supply sources," NGSA President and CEO Skip Horvath said in a statement. [Red bold emphasis added.]
Geologists increased estimates of the amount of gas in the Marcellus formation. In 2002, the Geological Survey pegged Marcellus to hold 1.9 trillion cubic feet of natural gas. By 2008, researchers raised the estimate to more than 500 trillion cubic feet. [Red bold emphasis added.]
The stunning emergence of shale gas and coal-seam gas as a viable source has turned all that on its head, with the rapid delineation of new gas reserves swamping US gas markets and driving down prices.
Fortunately for BHP and Woodside, their import terminal plans never got off the ground. Others weren’t so lucky, with LNG import terminals in the country now lying idle due to depressed US gas prices.
The rapid surge in US gas reserves has already threatened Australia. The new gas source displaced LNG from Qatar, and there were fears that the Qatari LNG could swamp Asian markets instead and eat into the volumes being chased by Australian companies. [Red bold emphasis added.]
Less than a decade ago, major American energy companies were investing billions in constructing new terminals for importing liquefied natural gas - the cooled, dense state of methane that makes it economical for it to be transported by ship. Today, some of those same companies are contemplating spending billions to retrofit those facilities in order to export LNG.
What happened in the interim? Natural gas boomed in the U.S., thanks to major discoveries of unconventional gas deposits in shale rock and new extraction techniques. In 2011, the U.S. Energy Information Administration raised its estimate for "technically recoverable" natural gas reserves in the U.S. from 353,000 billion cubic feet to 827,000 billion cubic feet. At $4 for every million BTU, natural gas isn't that much more expensive than coal, which trades at a little over $2 per million BTU but produces twice as much greenhouse gas and significantly more air pollution.
"The real problem for shale gas is demand - they don't know where to put all of it," says Ben Schlesinger, an independent consultant to the natural gas industry. Meanwhile, Europe is paying two to three times the prices in the U.S., and countries that are entirely dependent on LNG, including Japan, Taiwan and South Korea, are paying even more - between $20 and $30 per million BTU. [Red bold emphasis added.]
Canaport LNG will be conducting maintenance at the terminal beginning the week of June 20. These maintenance activities will be carried out on the LNG storage tanks and the terminal will remain operational throughout the course of the maintenance. Flaring will be visible from some spots in the area surrounding the terminal for up to two weeks. This is a standard operation done to burn off small amounts of excess natural gas.
First, I would like to thank Joe Carvalho, Lilian Correia, Michael Miozza, and all of the other “Coalition” members for stopping Hess LNG’s proposed liquefied natural gas terminal from being established in our densely populated neighborhood. This small army of volunteers are largely responsible for stopping the proposed Hess LNG terminal.
The company said it abandoned the Weaver’s Cove project because its imported gas would not be able to compete against inexpensive shale gas being produced in North America. Opponents, however, claimed at least partial credit.
A flurry of New England LNG projects were proposed in the early and mid-2000s, including one on a Boston Harbor Island and several in Maine. None has been built on land, although two offshore ports were built about 10 miles off Gloucester, where LNG is vaporized on ships and pumped through an underwater pipe to shore. [Red bold emphasis added.]
Energy Transfer Equity, L.P. announced yesterday that it will acquire Southern Union Company for a total of $7.9 billion, including $3.7 billion of existing Southern Union debt. The acquisition also includes the Lake Charles LNG import terminal and several gas pipeline assets.
Just days after one of the main players described the contractor general's report on Jamaica’s liquefied natural gas (LNG) project as "shoddy", Contractor General Greg Christie said he stands firmly behind the findings, conclusions and recommendations contained in the document.
After three days of testimony and cross-examination last week, the National Energy Board hearing on KM LNG’s application to export natural gas via its proposed Kitimat plant was put on hold pending the results of talks between the company and the Gitxaala (Kitkatla) First Nation.
“The board allows Gixaala’s request to withdraw its motion. The hearing will proceed with the evidentiary and final argument stages. However, the board will refrain from rendering a decision on the application unless Gitxaala and KM LNG, prior to September 15, 2011, each notify the board that the settlement is final.”
While KM LNG had responded to Gitxaala concerns in many cases by saying they would be dealt with in the TERMPOL (Marine Terminal Review Process), the Gitxaala essentially argued that was putting the cart before the horse.
“Until the NEB actually sees the TERMPOL committee report, it is impossible for the NEB to know whether any identified risks have been sufficiently addressed in the context of the NEB’s public interest determination,” the motion pointed out.
VICTORIA -- While the B.C. New Democratic Party strongly opposes piping oil to the B.C. coast for shipment by tanker to Asian markets, the party is taking the opposite stance on trans-Pacific exports of natural gas.
“Natural gas is what we produce here in abundance, and we do sell it into a flooded market, mostly in the United States.” Flooded in the sense of too much product chasing too little demand, depressing prices. [Red bold emphasis added.]
Canadian producers are increasingly partnering with China, Japan and Korea to develop shale gas in B.C. -estimated in the trillions of cubic feet -and possibly export it in a super-cooled form from LNG terminals off the West Coast.
The shale gas resource is so large the company will need to have more than one "monetization source" to develop it, with LNG being an option for its Horn River production, Romanow said at the industry conference.
Producers hope to profit on prices currently $4 to $8 higher in Japan and Korea than in North America, and possibly see stronger prices at home even if competing export terminals spring up across the U.S.
The following link will access a PDF file; 164 KB.
With natural gas prices looking under pressure and rangebound in the near future due to rising U.S. output from shale plays, O’Kane said the start up of its planned LNG export terminal with Freeport LNG in Texas in 2015 will lead to further opportunities to trade the fuel.
2011 June 17
Domestic production now stands 7.0 percent above this time last year. The week’s production drop was offset somewhat by a 2.8 percent increase in Canadian imports, which averaged just under 5.6 Bcf per day. Canadian imports now stand 11.0 percent below year-ago volumes. Supply also abated slightly for liquefied natural gas (LNG) where imports eased to 0.8 Bcf per day during the week, but remain 39.7 percent below year-ago levels. [Red bold emphasis added.]
The truck terminal at Elba Island has not been used since the 1970s. In fact, currently, there is not a great deal of activity because LNG is $4 per million BTU's of energy in the U.S. as opposed to $8 in Europe.
Furthermore the oil and gas industry's recent finds in North America alone are almost astronomical in size. So, there is little incentive for overseas clients to do anything more than store gas at this facility. [Red bold emphasis added.]
At the outset, the coalition stated that we were not opposed to LNG as a part of the country’s energy needs. Our sole and overriding concern was where this project looked to be located, in a densely populated neighborhood in the city’s North End. As a result of our concern, we named our group the Coalition for Responsible Siting of LNG Facilities, accentuating the term RESPONSIBLE to indicate our intention.
Our opposition faced several obstacles, not the least being the rather evident collusion between the Federal Energy Regulatory Commission, or FERC, and the company, Weaver’s Cove/Hess-LNG. Noting that the company had some 33 meetings with the FERC board over the course of the initial years of the project, while then Fall River Mayor Edward Lambert had to wait several months for a single meeting with that same FERC board.
Compounding the collusion was the fact that FERC Commission Chairman, Patrick H. Wood III, formerly worked for Baker Botts, the law firm representing Weaver’s Cove/Hess-LNG. Chairman Wood, ignoring any democratic concepts of a conflict of interest, refused to recues himself from FERC’s vote on siting the project. The U.S. Navy, stationed in Newport, R.I., had initially cited many concerns regarding the giant LNG supertankers transiting Narragansett Bay, but, mysteriously, these concerns were quickly dismissed and the Navy did a flip-flop on the issue. [Red emphasis added.]
[Executive director of Save the Bay Jonathan Stone] noted that, while Hess cited unfavorable economics for its decision, “the project was always a bad idea for the bay. That's why Save the Bay fought this all the way. We reject the notion that Narragansett Bay has to be sacrificed in the pursuit of energy security.”
Despite significant litigation, extensive public opposition, and questionable economics, WCE LNG persisted for years in its ultimately fruitless pursuit of state and federal approvals for the project. For a number of those years, CLF took a leadership role in pressing for comprehensive environmental review, calling for a regional analysis of LNG terminal siting in New England, and insisting that federal authorities take a hard look at clean energy alternatives.
In the past winter, the two offshore LNG terminals – buoy systems that feed the gas into an underwater pipeline – in Massachusetts Bay went essentially unused. With all the new natural gas supplies discovered in North America in the past few years and the rising prices for LNG in Europe and Asia, importing gas by ship to these shores became much less profitable.
Hess LNG's decision to abandon plans for a liquified natural gas terminal in Fall River creates an opportunity for new development of waterfront land off Weaver's Cove that had been set aside for the project.
Hess LNG wanted to build a liquified natural gas terminal at Weavers Cover. A company spokesperson says it abandoned the project in part because its imported gas would not be able to compete against inexpensive shale gas. [Red bold emphasis added.]
Hess LNG released a press release Monday breaking the surprising news. “The significant increase in natural gas production from shale resources in North America resulting in lower prices as well as the growth in demand for LNG in the rest of the world,” Shearer said, “make it unlikely the company can secure supplies of LNG on economic terms attractive enough to ensure the sustained profitability of the project.” The proposal for the floating terminal was estimated to cost $700 million.
Although the press release from Hess is welcome news for most residents of the region, Wright said that he is remaining cautious. He said that he would not split up the LNG threat committee until he was 100 percent sure that the proposal was over. He still planned for the panel to meet last night at its regularly scheduled time at 6 p.m. at Town Hall. [Red bold emphasis added.]
Whatever the reason, we applaud the decision. It has been about a decade since Hess first announced plans to build an LNG terminal. The first proposed site was the Providence. Those plans were scrapped and Hess launched its campaign to construct the facility in Weaver’s Cove.
"I don't think after you spend 10 years working on anything and it doesn't work that you feel great about it," Shearer said. "It certainly feels better than if we'd built it and we had no business going through it. Then we'd be several hundred million dollars invested and nothing to show for it. That would be an awful lot worse." [Red bold emphasis added.]
Webmaster’s Comments: …words Downeast LNG should be considering.
A second tanker is expected. The two are part of a commissioning process for the terminal, El Paso Corp. officials told the Sun Herald on Wednesday. The liquefied natural gas in the tankers will be used to cool down the plant, acclimating the tanks and pipes to the temperatures. LNG is natural gas cooled to –260 degrees, the point at which it becomes a liquid.
Webmaster’s Comments: Yet another soon-to-be-idle LNG import terminal.
2011 June 13
The decision announced on Monday was immediately applauded by members of the Massachusetts and Rhode Island congressional delegations and other officials who had opposed the Weaver's Cove project. They said the terminal would have posed unacceptable risks to the heavily populated area.
In a statement issued today, Hess LNG cited “unfavorable economics for liquefied natural gas in the New England region” as the reason for withdrawing its applications with federal and state agencies. [Red bold emphasis added.]
“The decision was made several weeks ago,” said Hess LNG President and CEO Gordon Shearer. “It has become apparent that the market conditions both in North American markets and in the global gas markets have changed ... in a way that are very adverse to the project, and are not likely to reverse any time soon.” [Red bold emphasis added.]
“The significant increase in natural gas production from shale resources in North America resulting in lower prices as well as the growth in demand for LNG in the rest of the world make it unlikely the company can secure supplies of LNG on economic terms attractive enough to ensure the sustained profitability of the project,” said Gordon Shearer, president of Hess LNG.
"The possibility of this project has been an albatross on our waterfront," [Mayor Will Flanagan] said, stating the city would use the purchase opportunity "to finally develop the property the way it should be developed." [Red bold emphasis added.]
“This is terrific news for the Southcoast,” Rep. McGovern said. “At long last, Hess has realized that we were going to continue to fight and fight until they pulled the plug on their ill-considered proposal. I look forward to working with local, state and federal officials to help promote safe and sensible development in Fall River.”
LNG in Fall River is effectively dead. Scroll down to see how we got here. [Red bold emphasis added.]
"…Over the years I've always referred to this as the fight of a thousand paper cuts, and I always insisted that it wasn't going to be any one filing." — former State Attorney Patrick Lynch (transcribed from video)
The project was opposed by virtually all public officials in Massachusetts and Rhode Island. They expressed concern about how transporting LNG in Narragansett Bay could disrupt boating activities and traffic on bridges that cross the Narragansett and Mount Hope Bays.
"This is a victory for common sense and public safety and people up and down the Taunton River will be sleeping more soundly tonight knowing that this long fight has been won," said Sen. John Kerry. "We pulled out every stop to make sure the public was protected and after so many meetings and phone calls and letters, we got there." [Red bold emphasis added.]
Webmaster’s Comments: Unfortunately, Maine's Senators Snowe and Collins, and Representative Michaud do not have the same desire to protect Mainers' well-being as do the elected federal officials of Massachusetts and Rhode Island.
The news is a major victory for the dozens, if not hundreds, of politicians, local citizens' groups, environmental organizations and others who had fought since 2002 to prevent the controversial terminal at Weaver's Cove. Rep. Raymond Gallison of Bristol, whose home lies on the shores of Mt. Hope Bay, said the withdrawal was a victory not just for Taunton and Fall River, but for residents across Rhode Island and Massachusetts.
“I know there was a lot of stiff opposition,” [Ronald Rheaume, business manager of Local 1305 of the city carpenters’ union,] said with resignation. “I guess as Lambert (former Mayor Edward M. Lambert Jr.) said, they’d paper cut them to death — and I guess they did.”
Webmaster’s Comments: Improper LNG terminal siting was the problem from the beginning. Unfortunately, it took Hess Energy nearly a decade to learn that lesson.
2011 June 11
- Terminal comes online as U.S. gas production hits record
- Terminal will likely sit unused like others-analysts
NEW YORK, June 8 (Reuters) - El Paso's (EP.N) new liquefied natural gas terminal in Mississippi will begin operations next week but may join the ranks of idle import facilities in the U.S. as domestic gas production rockets.
Nearly $5 billion has been poured into LNG import terminals over the past decade on the expectation that the United States would be a major importer of natural gas. But since the corner stones were laid, huge domestic production increases have unexpectedly evaporated the need for imports.
Brand new terminals expected to receive several cargoes a month now sit unused for much of the year. Resigned to that fate, one terminal operator -- Excelerate Energy -- has decided to dismantle its terminal offshore Louisiana after not receiving a cargo for years.
[Project coordinator David Porco] said that Gulf LNG will look at re-export and possible liquefaction, but for now it is concentrating on getting the import terminal up and ready. [Red bold emphasis added.]
This link leads to a PDF file; 193 KB
SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice of receipt of an application filed on April 21, 2011, by Freeport LNG Development, L.P. (Freeport LNG), requesting blanket authorization to export liquefied natural gas (LNG) that previously had been imported into the United States from foreign sources on a short-term or spot market basis. The LNG would be exported from the existing Freeport LNG terminal facilities on Quintana Island, Texas, in an amount up to the equivalent of 24 billion cubic feet (Bcf) of natural gas to any country that has the capacity to import LNG via ocean-going carrier, and with which trade is not prohibited by U.S. law or policy. Freeport LNG seeks to export the LNG over a two year period commencing on the date of the authorization on its own behalf or as agent for others. The application is filed under section 3 of the Natural Gas Act (NGA). Protests, motions to intervene, notices of intervention, and written comments are invited.
Protests, motions to intervene or notices of intervention, as applicable, requests for additional procedures, and written comments are to be filed using procedures detailed in the Public Comment Procedures section of this notice, no later than 4:30 p.m., eastern time, July 11, 2011. [Red bold emphasis added.]
North American natural gas industry analysts told Platts LNG Daily [subscription required] that they do not believe that more than three or four North American LNG export projects will be completed, citing financing challenges, market conditions, and competition from other global players like Australia. Several analysts noted that the Kitimat and Freeport LNG export projects currently have advantages over competing export proposals. [Red bold emphasis added.]
Statoil Natural Gas LLC, BP Energy Company, and the Independent Petroleum Association of America (IPAA) have filed requests to intervene in the rate proceeding examining Cove Point LNG's actions to revise its tariff provisions. All three pending intervenors expressed criticism of the proposed tariff revisions that would encourage LNG shippers at the Cove Point terminal to import LNG on a more regular basis. [Red bold emphasis added.]
Webmaster’s Comments: There are three interesting peculiarities going on here:
- Cove Point LNG is importing so little LNG, it is requesting FERC help to force regular imports in order to keep the facility cooled down. If the facility were to warm up, it would become inoperable.
- Energy-industry members are opposing LNG importing.
- Cove Poing LNG is considering converting exclusively to exporting LNG from nearby domestic-sourced natural gas.
Gas companies built a raft of regasification terminals to import LNG to alleviate predicted shortfalls in domestic production. Now surging output has caused prices to fall sharply and the gas companies are applying for permits to reverse the LNG terminals and use them to export domestic production. [Red bold emphasis added.]
Not only does Canada have an abundance of resource, particularly as shale gas plays unfold in British Columbia and Alberta, its West Coast is closer to energy-thirsty Asian Pacific markets than competitors such as Qatar and Australia, said Paul Sullivan, global director of LNG with WorleyParsons, on Wednesday.
Natural gas prices in North America have yet to recover from the shock of shale gas plays flooding the market at the same time the recession dampened demand, falling 19 per cent during the first quarter of 2011 to average $4.19 US per mmBTU. [Red bold emphasis added.]
The National Energy Board is in the midst of weighing an LNG project proposed for Kitimat, B.C, on Canada’s northern Pacific coast. Lead partner Apache Corp., along with Encana Corp. and EOG Resources Inc., aim to start shipping LNG from there in 2015.
Royal Dutch Shell PLC has also mused about jumping on the West Coast LNG bandwagon. Nexen Inc. is actively hunting for a partner to help it develop its vast B.C. shale holdings, and its CEO has said LNG know-how would be a plus.
Then there is the Haisla-LNG Partners joint venture, seemingly well positioned to service the needs of the mid-caps - of which there are more than a few, all with significant quantities of natural gas to sell.
And now Shell has confirmed it is also looking at building an LNG plant on our coast. [Red bold emphasis added.]
Though Northeastern LNG import such as Repsol's Canaport facility and GDF Suez's Everett and Neptune terminals are located at the epicenter of immense supply growth coming from the Marcellus, Utica and Frederick Brook shale plays, they feed separate portions of the Northeast market, Repsol vice president of origination Vince Morrissette told attendees.
[P]ipeline constraints leading into New England markets which create exacerbated cash basis differentials in the winter remain in place despite new avenues of supply. And LNG into New England from Canaport or Everett remains one of the few options for reaching those constrained markets.
Webmaster’s Comments: The public is supposed to believe Repsol when its Canaport LNG in Saint John, NB, is only operating at around 21% of capacity, and believe Suez when its Neptune LNG offshore from Gloucester, Massachusetts, has taken almost no LNG cargos in two years. Repsol and Suez's financial interests are too sunk into importing LNG for their statements to have credibility.
(Reuters) - The first liquefied natural gas tanker to arrive at El Paso's (EP.N) Gulf LNG terminal in Pascagoula, Mississippi, will dock and offload on Monday, June 13, El Paso business development executive David Porco told Reuters on Wednesday.
Webmaster’s Comments: Yet another LNG terminal goes into service in an already-over-saturated market.
Just over two weeks after the Office of the Contractor General (OCG) issued a report on Jamaica's liquefied natural gas (LNG) project, another of the main players has described the document as "shoddy".
Coordinator of the LNG project, Stephen Wedderburn, said his initial reading of the report has revealed several errors of fact, misrepresentations and unfounded conclusions which are damaging to his character.
Asian utilities are interested in buying equity stakes in US independent Apache’s Kitimat LNG project in Canada, a senior executive said today.
Enbridge officials say the chance of an oil spill on the water is far from inevitable, the record of new pipelines is clean and, contrary to public perception, not all First Nations are opposed to the project.
Webmaster’s Comments: Part of the consideration is the potential consequences, even if the event is unlikely.