"For much of the state of Maine, the environment is the economy"
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Plus: US LNG 'Importer' Port Dolphin LNG in Florida
2011 October 30
[Red bold emphasis added.]
Gross imports of natural gas declined somewhat during 2010 as falling LNG imports into the United States more than offset modest increases in pipeline imports. In 2010, the United States imported 3,741 billion cubic feet (Bcf) of natural gas, the lowest level since 1999, and the fourth consecutive year that natural gas imports to the United States declined.
‚ÄúAs was just announced, we are pleased that BG Group plc has again affirmed its commitment to pursuing our joint export application to develop and install liquefaction facilities at the Lake Charles terminal to export LNG. Even as we move forward with the announced sale of the Company, we continue to work hard with BG, our longstanding partner, to ensure that Lake Charles will become the premier U.S. exporting site."
Webmaster‚Äôs Comments: Now-defunct Quoddy Bay LNG held this LNG import terminal as an example for its own project that ultimately failed.
BG Group announced today that it has signed a fully-termed sale and purchase agreement with Sabine Pass Liquefaction, LLC, a subsidiary of Cheniere Energy Partners, L.P., for the purchase of 3.5 million tonnes per annum (mtpa) of liquefied natural gas (LNG) over a 20-year period from the Sabine Pass LNG terminal located in Louisiana, USA.
The agreement, which is subject to certain conditions and approvals, is the first long-term LNG purchase agreement from a project on the US Gulf Coast, allowing BG Group to secure LNG volumes for export from the US to international gas markets. LNG exports are expected to commence as early as 2015.
Construction of the liquefaction facilities at Sabine Pass is expected to commence in 2012, with the initial phase to consist of two trains capable of producing up to 9 mtpa of LNG. BG Group is not an investor in the proposed liquefaction facilities.
The widening price gap is benefiting companies in Canada that are being hurt by declining sales to the U.S., which is turning to cheaper, domestically produced fuel from shale deposits. Canadian gas exports to the U.S. may fall about 7 percent this year, according to Barclays Capital. Demand from Japan may rise almost 40 percent by 2020, Bernstein said.
Canadian as well as U.S. producers can make money exporting LNG, Goldman Sachs Group Inc. analysts led by Johan Spetz in New York said yesterday in a report. Houston-based Cheniere Energy Inc. agreed to a 20-year contract to ship LNG from its terminal in Sabine Pass, Louisiana, to BG Group Inc. in Berkshire, England, and similar announcements are expected, Goldman said.
Webmaster‚Äôs Comments: Goldman Sachs is the same Goldman Sachs that deserted financing the ill-timed and ill-sited Calais LNG import terminal project for being a bad investment, and is, instead, advocating LNG exports.
"If market demand for gas has truly shifted away from the Lower 48 [states] to Pacific Rim markets, then the state of Alaska must also be willing to move with that, and we are," Parnell said, speaking at an event in Anchorage held by the Alaska Oil and Gas Association that was webcast.
Parnell's comments come as U.S. and Canadian natural gas companies reposition themselves to export gas from North America to fast-growing markets in Asia and Europe, rather than import gas, as U.S. gas prices have plunged due to ample supply and slow-growing U.S. demand.
The draft memo states: ‚ÄúThe Georgia Department of Education, in consideration of the potential risks involved, believes it to be incumbent upon the Savannah-Chatham school system to require a Risk Hazard Study to be conducted on the conveyance vehicle to determine the range of danger, injury, and fatality that would result in a worst-case explosion on the streets of Savannah.‚ÄĚ
Earlier this month council went further, passing a second resolution urging the Federal Energy Regulatory Commission to deny the application outright based in part on a need to be consistent ‚Äúwith the Commission‚Äôs rulings in the past concerning similar terminal facilities such as KeySpan LNG in Providence, Rhode Island.‚ÄĚ
The resolution states ‚Äúthe current Elba Island LNG facility is ‚Äėgrandfathered‚Äô under several regulations: The Natural Gas Pipeline Safety Act of 1938; Federal LNG Safety Standards 49 CFR part 193 of February 1980,‚ÄĚ and ‚Äúthe Elba Island Facility does not meet the current safety standards (of the) National Fire Protection Agency (NFPA) 2001, 59.‚ÄĚ [Red bold emphasis added.]
Three Savannah aldermen shared their concerns about trucking liquefied natural gas through the city with White House officials and say they have been promised a separate meeting with the transportation secretary.
The terminal, operated by a subsidiary of El Paso Corporation, is located adjacent to the Bayou Casotte Ship Channel in the Port of Pascagoula on the Gulf Coast. It receives, stores and regasifies ‚ÄĒ turns back into gas ‚ÄĒ imported liquefied natural gas, known as LNG. The terminal consists of two 160,000 cubic meter storage tanks with a combined capacity of 6.6 billion cubic feet (Bcf); 10 vaporizers, providing a base send-out capacity of 1.3 Bcf/d; and five miles of 36-inch pipeline connecting to downstream pipelines owned by Gulfstream, Destin, Transco, and Florida Gas Transmission. The pipelines provide access to the Pascagoula Gas Processing Plant operated by BP America Production Company.
Webmaster‚Äôs Comments: It will be interesting to see if Gulf LNG actually succeeds as an import terminal, since other LNG terminals are either adding LNG export capability ‚ÄĒ or are going out of business, altogether (Gulf Gateway Deepwater Port, about 130 miles directly offshore from Gulf LNG).
Cheniere Energy, Inc. has filed materials in response to FERC's request for public versions of previously submitted analyses of potential hazards at the company's planned Sabine Pass LNG liquefaction project.
An advisor for the Jamaican LNG import project told Platts LNG Daily [subscription required] that the Jamaican government will accept bid submissions for LNG supply and infrastructure for its project until November 11, 2011.
ConocoPhillips is exploring potential opportunities for the Kenai liquefied natural gas plant, currently expected to ship out its last tanker of LNG in November. The plant could be used to handle imported LNG or refurbished as an export facility. ConocoPhillips believes such opportunities exist, but....
Anchorage, Alaska ‚Äď Governor Sean Parnell will conduct an economic trade mission with energy and seafood officials in Europe next week. The focus will be on increasing Alaska‚Äôs international trade in seafood and building on the state‚Äôs global reputation as a leader in oil and gas production.
Alaska politicians are interested in Gov. Sean Parnell's push to try to export the state's natural gas to Asia rather than the Lower 48, with influential lawmakers saying the state should consider paying to help to make it happen.
The state has worked for years toward building a pipeline from the North Slope through Canada for North American markets. But Parnell said last week that the effort led by the pipeline firm TransCanada appears stalled, with commercial negotiations at an impasse.
So Parnell announced that he wants a pipeline from the North Slope to a Southcentral Alaska port where the gas would be liquefied and shipped overseas in tankers. Pacific Rim markets could hold more promise than North America for Alaska's gas, he said. [Red bold emphasis added.]
WASHINGTON, D.C. - U.S. Senator Lisa Murkowski, R-Alaska, today urged Alaskans to consider all options for commercializing the state's huge natural gas resources on the North Slope, including expediting construction of a pipeline as far as Fairbanks.
"On Nov. 8, I will host a hearing of the U.S. Senate Energy and Natural Resources Committee in Washington, DC, on developing markets for natural gas, including LNG export. Commercializing Alaska's gas will be a central part of that discussion."
Monika Gonda, Energy Exchange portfolio director, commented that, ‚ÄúThe timing for this inaugural North America Gas Summit is ideal considering the ongoing debate surrounding the potential of natural gas across the continent, the EPA study and talks about LNG export.‚ÄĚ
2011 October 26
[Red bold emphasis added.]
(Reuters) - Britain's BG Group (BG.L) took the lead in a race to export liquefied natural gas from the United States on Wednesday, inking a landmark $8 billion deal with Cheniere Energy (LNG.A) to open a new chapter in the shale gas revolution that has redefined global markets.
The deal, under which Cheniere will supply leading LNG trader BG Group with gas to ship across the globe over 20 years, will help Cheniere secure financing to build the first U.S. export terminal in nearly 50 years at Sabine Pass in Louisiana. Shares in Cheniere surged 50 percent on the news.
The agreement is a milestone for a U.S. natural gas market that has been turned upside down by the discovery of a century's worth of cheap shale reserves. Cheniere built Sabine Pass for imports in 2008, but those quickly dried up as demand slowed and prices tanked.
Port Dolphin Energy LLC has requested that FERC extend its deadline to place into service the onshore portion of the natural gas pipeline associated with the company's proposed LNG deepwater port project until December 3, 2016. In its request, Port Dolphin states that it has recalibrated its business plan for the project in response to shifting natural gas market conditions and now may consider U.S.-based LNG supply options for the project.
Webmaster‚Äôs Comments: Port Dolphin LNG is not yet constructed, but ‚ÄĒ since the US is afloat with 100-years' worth of domestic natural gas ‚ÄĒ instead of scrapping the project for a natural gas pipeline, Port Dolphin Energy has decided to import US-source LNG that would likely cost more than piped natural gas. Does that make sense for Floridian consumers and commercial/industrial users? No. It merely helps keep Port Dolphin Energy from losing its shirt over a bad project decision.
Speaking at an event in Washington, D.C., Sen. Lisa Murkowski (R-Alaska) expressed concerns about the potential effect of LNG exports on U.S. natural gas supplies. According to Platt LNG Daily, Sen. Murkowski said that she supports a "very thorough licensure and regulatory process to ensure that we don‚Äôt tip that [domestic gas supply and demand] balance." [Subscription required]
Webmaster‚Äôs Comments: LNG has been exported to Japan from Sen. Murkowski's home state of Alaska since 1964.
Low prices for gas have provided broad benefits to North America during difficult economic years, as the cheap commodity is used to generate electricity to power industry, and to heat homes. But analysts believe, based on historical precedents, that North American prices will rise if producers ship significant amounts of gas to Asia.
Shell‚Äôs announcement is the third LNG proposal for Kitimat and marks a milestone for the company in its plans to become a major player in the Asian natural gas market. KM LNG, a partnership of Apache Oil, OEG Resources and Encana has already received a National Energy Board licence to ship 1.4 billion cubic feet of gas a day to Asia from a plant it has already started work on. And a proposal by the Haisla First Nation and LNG Partners of Houston, Texas, for a more modest 125 million cubic-feet-a-day terminal is working its way through the regulatory process.
A panel of the United States Court of Appeals for the Fifth Circuit has vacated the Federal Energy Regulatory Commission‚Äôs (FERC) Order Nos. 720 and 720-A, which imposed new requirements on non-interstate pipelines not normally subject to FERC‚Äôs jurisdiction over interstate natural gas pipelines. In an October 24, 2011 decision, the Court concluded that the orders exceed the scope of FERC‚Äôs statutory authority under the Natural Gas Act of 1938 (NGA).
Webmaster‚Äôs Comments: While this article is not LNG-specific, it reflects upon the lead federal LNG terminal permitting agency.
Webmaster‚Äôs Comments: Mayor Johnso indicates having significant safety concerns regarding Elba Island LNG's proposal to truck significant amounts of LNG through the city's busiest intersections and adjacent to numerous schools, hospitals, and other civilian-occupied infrastructure.
"As was just announced, we are pleased that BG Group plc has again affirmed its commitment to pursuing our joint export application to develop and install liquefaction facilities at the Lake Charles terminal to export LNG. Even as we move forward with the announced sale of the Company, we continue to work hard with BG, our longstanding partner, to ensure that Lake Charles will become the premier U.S. exporting site."
Senator Mary Landrieu (D-La.) was joined by all seven members of the Louisiana delegation to the U.S. House of Representatives in requesting FERC to move forward on its review of the Sabine Pass LNG liquefaction project.
The company, which recently bought Marathon Oil Corp.'s minority interest in the plant, has repeatedly extended operations at the facility. In February, officials said they planned to idle the plant after more than 40 years in operation, citing market changes. They said there was no longer a business case for continued exports. The wind-down was expected to take several months.
A striking feature of the government's jobs strategy is the number of very electric-intensive projects it entails. The strategy calls for the development of new mines and liquefied natural gas (LNG) facilities, all of which will require very large amounts of electricity.
The first phase of the proposed LNG plant at Kitimat in itself will reportedly consume some 1.5 million megawatt hours of electricity per year, or roughly one-third of the entire output of the proposed Site C dam project.
Just in supplying the electricity needed in the first phase of the Kitimat LNG facility, BC Hydro would lose some $90 million per year, possibly more. Similarly, in supplying each major new metal mine, BC Hydro would lose an additional $40 million to $50 million per year. [Red emphasis added.]
Randy Eresman, president of Encana, said last week that his company would welcome as many LNG export facilities in North America as can be constructed. He also noted that there is "plenty of room" for other LNG export projects on North America‚Äôs West Coast.
More than eight LNG export terminal projects have been forwarded in the U.S. involving the reversal of existing or proposed import terminals to boost the resource‚Äôs value. Earlier this year the Department of Energy approved Cheniere Energy to export LNG from its Louisiana terminal.
Webmaster‚Äôs Comments: Several of those US LNG export projects are actually re-export projects ‚ÄĒ importing foreign LNG, and then re-exporting it to overseas markets.
2011 October 19
[Red bold emphasis added.]
A single long-term cargo, carrying some 79.7 million cu m, berthed in August having traveled from Trinidad & Tobago. The volume is a slight decline from the 82.3 million cu m received, also from a lone ship from Trinidad and Tobago, in July.
An analysis carried by Platts LNG Daily [subscription required] examines the ways the Cameron LNG, Cove Point LNG, and Freeport LNG import terminals are adjusting to changing conditions in the North American gas market.
Webmaster‚Äôs Comments: Read "exporting."
Canaport LNG plans to conduct an emergency response exercise today between 8 a.m. and 5 p.m. Emergency vehicles and personnel will be visible at Canaport LNG and on Red Head Road near the terminal throughout the day. The company said the purpose of the exercise is to test its emergency plans and response.
Kinder Morgan CEO Rich Kinder told World Gas Intelligence [subscription required] that his company will retain ownership of the Elba Island and Gulf LNG terminals once Kinder Morgan completes its acquisition of El Paso. Kinder noted that the terminals are within Kinder Morgan's usual business model since they are "fee based and fully subscribed." [Red emphasis added.]
Jamaican administrations, however, have been ditheringly slow at formulating a workable energy policy. And when they agree on something, they have been grossly inept, and perhaps deliberately obfuscatory, at implementation. The recent embarrassment over the tender process for an LNG storage and regasification facility is a case in point.
Apache Canada, EOG Canada and Encana plan to build the Kitimat LNG facility on IR#6 Bish Cove, approximately 650 kilometres (400 miles) north of Vancouver. The facility is planned to be built on First Nations land under a unique partnership with the Haisla First Nation. The initial phase of the facility has a planned capacity of approximately 5 million metric tonnes of LNG per annum or the equivalent of nearly 700 million cubic feet per day. PTP is planning to build a 463-kilometre (287-mile), 914-mm (36-inch) diameter underground line from Summit Lake, B.C. to Kitimat. Pacific Northern Gas Ltd. (PNG) will operate and maintain the planned pipeline under a seven-year agreement with Apache Canada, EOG Canada and Encana, with provisions for five-year renewals.
China is now B.C.'s second largest trading partner, taking over Japan during the last year.Trade with the U.S. is still important, with natural gas being a significant factor. Pastrick said though natural gas is not on the radar right now as a commodity traded with Asia, that could change with the advent of liquid (sic) natural gas (LNG).
What Mar can't do, of course, is expedite infrastructure needed to reach Pacific markets. While the Apache Canada-led Kitimat LNG project obtained regulatory approval this week ‚Äď less than a year from the date project proponents originally submitted their export application to the National Energy Board ‚Äď to ship super-cooled gas to Asian markets, Enbridge Inc.'s Northern Gateway is nowhere near approval, never mind construction.
2011 October 17
[Red bold emphasis added.]
The US Energy Information Administration (EIA) raised its estimate for US gas production for the fifth straight month earlier this week to a record 66 billion cubic feet per day ‚Äď smashing through the record high of 62 billion cubic feet per day in the early 1970s.
Webmaster‚Äôs Comments: Dean Girdis of Downeast LNG also claimed in 2005 (considerably less than a decade ago) that the US needed to import LNG ‚ÄĒ and he isn't going to let reality change his mind.
In the near future, that is during the next presidential term, the US is expected to become an exporter of LNG again. This will allow the domestic natural gas markets to export their surplus supplies and get a value that is close to international crude oil prices.
The ability for the US to start to export its surplus Natural Gas production as value enhanced LNG is significant. The world expected the US to be the largest importer of LNG, when it will in fact become an LNG exporter.
[W]hen the Kitimat proposal was activated in the middle years of the past decade, it was for a terminal to import LNG to North America from overseas, the expectation being that domestic production couldn't meet a growing demand.
The NEB's decision on KM LNG's export licence is tremendously important for the Canadian natural gas industry and potential future LNG proponents. The Board recognized that changing market dynamics in North America are reducing demand for Canadian natural gas and that Canadian natural gas producers must target new markets for their product. As a result, the Board applied its traditional requirements in a flexible manner to allow Canadians to participate in the Asian LNG marketplace. This decision will therefore serve as an important precedent for future LNG export licence applications. The decision also sends a strong signal that LNG exports from Canada to Asian markets are in the Canadian public interest and that the NEB will not impose undue restrictions on Canadians' abilities to access these markets.
In this modern age, all maritime schools are spending a great deal of money and time buying and training our students to operate the latest technologies in ship operations and management. Why then would Maine Maritime Academy want to also train them to sail an eighty year old sailing ship?
Shiphandling: As master of a modern containership, car carrier, or LNG ship you will be carrying more sail area than the largest sailing ship ever built. If you don‚Äôt understand the effects of wind on a sail you will forever be at a disadvantage when handling your vessel. If, however, you have learned to handle a sailing vessel you will find it intuitive to use the wind as an assisting force whenever possible. Even when not under sail, a sailing ship is a strict teacher of shiphandling, for such vessels are typically under-powered, carry a large amount of windage, and have very delicate projections at each end (bowsprits and boomkins and such). [Red emphasis added.]
Webmaster‚Äôs Comments: Since LNG is lighter than water, LNG ships sit high in the water and are subject to more windage than most freighters, presenting a hazard to neighboring vessels and infrastructure. Hence, when transiting slowly within confined transit routes, extra-powerful tractor tugs are required to maintain control of the vessel's transit.
For the same reason (among others), the world LNG industry recommends LNG terminals and transit routes be kept safely away (more than 2.2 miles, according the federally-defined LNG ship Hazard Zones) from civilian populations ‚ÄĒ industry best practices that Downeast LNG decided to ignore when it selected Passamaquoddy Bay for its project. (See LNG Terminal Siting Standards Organization for more on this topic.
But of greater importance is how Port-of-Spain uses its energy - the high cost of which is a major downside to this Jamaica's economy - to support development here. Indeed, Port-of-Spain's reneging on a deal to supply Jamaica with liquefied natural gas helped to scuttle a major expansion of the Jamalco alumina refinery. But perhaps there is an opportunity, if Mr Dookeran's words carry any value, to revive such a scheme.
Gas production from gas fields in the Cook Inlet basin continues to decline, but a new source of supply from Anchor Point Energy's North Fork gas field on the Kenai Peninsula, coupled with the availability of gas put into storage by gas producers during the summer, will offset that decline. However, there is uncertainty about the situation regarding the closure of the Nikiski LNG plant on the Kenai Peninsula -- closure of that plant could make available more gas for utility use, Slaughter said.Top
2011 October 16
[Red bold emphasis added.]
Platts LNG Daily [subscription required] reports that several studies offered by LNG export proponents predict that U.S. LNG exports will raise Henry Hub natural gas prices by some 22 cents per MMBtu between 2016 and 2035. The studies also say that the export projects could create 100,000 jobs annually.
Webmaster‚Äôs Comments: The price increase amounts to around 5% of the current Henry Hub price.
While Dominion is based in Virginia, their claims for the necessity of the export terminal don't quite add up. "It is in our nation's best interests to develop our natural resources responsibly and reliably," Dominion chief Farrell said. "In the process, we will be able to improve the nation's balance of trade."
Of course, if the "nation's best interests" were the gas drillers' concern, they would sell the Marcellus production domestically and thereby reduce imports. But companies aren't actually operating in the interest of providing American energy security or "improving balance of trade." They're trying to open the valves wide to cash in as quickly as possible on these massive shale plays - wherever the markets exist - before anyone slows them down.
Shale development involving hydraulic fracking and horizontal drilling is sold to the American public and to locally-impacted communities as a great boon for American energy security and self-reliance. But in reality, much of that shale gas pumped out of the Marcellus and other shale deposits is going to flow immediately outside our borders to markets with higher prices, making the big companies richer and leaving Americans just as energy poor - and cleaning up the industry's messes too.
Until now, the United States has been the sole export market for Canadian gas. This is the first LNG export license approved by Canada's National Energy Board since Canadian gas markets were deregulated in 1985.
The abundance of shale gas in the United States has taken a toll on Canada's energy business. As a result, Canada's natural gas production has dropped by 3 billion cubic feet per day in the past three years to 14.5 billion cubic feet per day, the Calgary Herald reports.
In a measure of how much gas the export terminal is expected to move, the licence allows Apache to export more gas than it currently has in established reserves. The 20-year term would use up virtually all of the reserves currently held by EOG, while Encana has substantially more than its export commitment would require.
It's the first license Canadian regulators have issued to export LNG, reflecting the shift in North American gas markets as horizontal drilling technology unlocked vast new supplies of natural gas from shale rock. The new supplies sent North American gas prices plummeting, and plans to open more terminals to import natural gas from abroad were converted to export from oversupplied markets in the U.S. and Canada.
Citing changed market conditions and a shifted focus toward LNG exports, Freeport LNG informed FERC this week that the company has decided to withdraw its application to install and operate a natural gas liquids (NGL) extraction system. Freeport LNG's filing is available under Docket No. CP03-75 in FERC's eLibrary.
Speaking in Washington, D.C., earlier this week, Spectra Energy CEO Gregory Ebel said that developers of LNG export projects in Canada and the United States are competing for LNG buyers around the world. Platts Gas Daily [subscription required] also said that he hopes Canadian authorities will grant an LNG export license for the Kitimat LNG project soon.
The potential mergers and acquisitions activity comes as competition grows to export LNG to energy-starved nations like Japan, Taiwan and South Korea. In our upcoming November issue, Alberta Oil senior editor Jeff Lewis writes about the competition Canadian projects will face from countries like Qatar and Australia in securing customers for their chilled product. The United States is also looking to join the LNG export party. Two Gulf Coast LNG export projects that could process 4.4 billion cubic feet of natural gas per day are in front of the U.S. Federal Energy Regulation Commission ‚Äď although those terminals likely wouldn‚Äôt be after a piece of the Asian market due to their location.
Growing domestic natural gas production has reduced reliance on natural gas imports and contributed to increased exports. EIA expects that pipeline gross imports of natural gas will fall by 4.8 percent to 8.6 Bcf/d during 2011 and by another 3.1 percent to 8.4 Bcf/d in 2012. Projected U.S. imports of liquefied natural gas (LNG) fall from 1.2 Bcf/d in 2010 to 0.9 Bcf/d in 2011 and to 0.7 Bcf/d in 2012. Pipeline gross exports to Mexico and Canada are expected to average 4.1 Bcf/d in 2011 and 4.2 Bcf/d in 2012, compared with 3.1 Bcf/d in 2010.
PORTLAND, Maine ‚ÄĒ Environment Maine unveiled a plan Thursday to reduce Maine‚Äôs dependence on oil by nearly 40 percent by 2030, beating established legislative energy benchmarks without expanding use of natural gas, which is a central component of Gov. Paul LePage‚Äôs energy strategy.
‚ÄúNatural gas is not a part of this road map,‚ÄĚ Emily Figdor, director of Environment Maine, told the Bangor Daily News Thursday. ‚ÄúWe‚Äôre saying we can do that without turning to other fuel sources that have their own host of environmental problems. We think Maine should be very cautious before we ramp up use of natural gas.‚ÄĚ [Red, brown & bold emphasis added.]
Hydropower-generated electricity, whether from Canada or generated locally, can make an impact. Conservation Law Foundation lawyer Jerry Elmer says the Chafee administration has been more attentive to small renewable-energy projects than its predecessors. We applaud the governor for this. Of course, Rhode Island and its neighboring states must look at all energy sources, not just renewables. The region lost a great opportunity earlier this year, when a liquefied-natural-gas terminal was blocked from being built in Fall River. [Bold brown emphasis added.]
Webmaster‚Äôs Comments: That failed Hess Energy LNG terminal "great opportunity" would have cost the public more than from domestic natural gas, would have created all kinds of problems (environmental, economic, and social) in Mount Hope Bay, and would have placed tens of thousands of people in harm's way. The Providence Journal's editorial staff has been unwaivering in its puzzling support of the now-dead (and rightly so) Weaver's Cove Energy LNG project.
Mottley, who was the feature speaker at the Energy Chamber‚Äôs Annual General Meeting on October 5 noted that US shale gas production had set a competitive challenge to gas producers in the gas intensive industry here. Another challenge, and incidentally the first cited by Mottley, followed on the indication that new gas reserves, possibly in deeper waters, were going to be more expensive to develop. In the meantime, the impact of the production of shale gas in the US lowering American gas prices can not be ignored, particularly as more than 70 percent of United States imports of liquefied natural gas come from Trinidad and Tobago.
Enbridge, known mostly for its oil pipeline from Alberta to Ontario, said this week it is buying a large gas-processing plant in northeast British Columbia (BC) and wants to buy into a planned liquefied natural gas (LNG) terminal on the country‚Äôs west coast. Enbridge would help gather and process the shale gas before moving it onto LNG tankers bound for Asia.
In the letter submitted to the U.S. Department of Energy, a state attorney asked DOE to defer ruling on the application 'until Jordan Cove has cured the deficiencies in its application and the public is given an opportunity to participate in accordance with the Department's regulations."
The application doesn't show that the gas won't be needed in the United States. That contradicts Jordan Cove's statements in support of its application for an import facility, saying that there is a need for imported LNG in the Pacific Northwest. [Red bold emphasis added.]
2011 October 12
[Red bold emphasis added.]
Historically, an area's rig count and the rise or fall of its output showed a rough correlation. But in unconventional plays in the past several years, new drilling mechanics and technology to wrest larger volumes of hydrocarbons from wells have altered that equation, analysts say.
Wall Street experts say well economics motivate producers to keep drilling for gas even when prices have sifted into the mid-$3s/Mcf. Even at lower prices, analysts say operators still receive good rates of return from gas drilling in the Haynesville and Barnett, as well as other gas fields such as the Fayetteville Shale in Northwest Arkansas and the Marcellus Shale in Appalachia. The Marcellus especially is close to desirable Northeast US markets where premiums to the Gulf Coast Henry Hub price can be $0.50/Mcf or more, experts said.
The EIA said the entire growth in 2011 gas output stemmed from increases in onshore production in the lower 48 U.S. states, which will more than offset a year-on-year decline of nearly 1 bcf per day in Federal Gulf of Mexico production.
It is not farfetched to think that the United States could export liquid natural gas (LNG) to Europe, which has been stifled under Russian energy dominance. The surfeit of gas from shale gas production has made such a change a compelling eventuality. At least two major LNG players, Cheniere in Houston, operators of the world‚Äôs largest re-gasification terminal at Sabine Pass at the Texas-Louisiana border, and Dominion, operators of the Cove Point LNG terminal in Maryland have announced plans to make their terminals capable for both importing and exporting LNG. I predict that natural gas prices three years from today will be $8 per million Btu, and remain that way for a long time. Such prices will make hydraulic fracturing even more widespread.
Webmaster‚Äôs Comments: If the price prediction is correct, Americans will be paying double what they are now paying for their natural gas. So, how does exporting benefit Americans, other than natural gas investors?
FERC has granted Southern LNG Company, L.L.C.'s request to vacate the Commission's previous authorization to construct Phase B of the planned Elba Island LNG terminal expansion, envisioned to include an LNG storage tank and submerged combustion vaporizers.
Webmaster‚Äôs Comments: Elba Island LNG terminal is experiencing the impact of the US natural gas glut ‚ÄĒ no need to import LNG.
He also says that the current ongoing gas boom in North America further dampens the need and prospects for new natural gas storage. ‚ÄúThere clearly is plenty of gas available at all times now,‚ÄĚ Hansen says.
His LNG competitor, Jordan Cove‚Äôs Bob Braddock, agrees: ‚ÄúI don‚Äôt think it will become clear whether and where new gas storage is needed until the natural gas grid equilibrates to the new production patterns that have been created by the various new shale gas plays.‚ÄĚ
Save Passamaquoddy Bay, a group opposed to LNG import projects in the region around the Passamaquoddy Bay region, has requested that FERC dismiss the application to build and operate the Calais LNG import terminal without prejudice. [Red, yellow & bold emphasis added.]
Signet will use the tugs to execute a 20-year marine transportation contract from Angola LNG Supply Services, which supplies liquefied natural gas to Gulf LNG Energy's $1.1 billion liquefied natural gas terminal in Pascagoula.
Webmaster‚Äôs Comments: Well, Angola is not so hot to ship LNG to the US, now that prices are much higher elsewhere. See "Less gas to be delivered to United States," below. Who will be paying the bill for the new tugs?
I participated in one roundtable session that discussed new LNG projects. Most participants were representing Lower 48 LNG receiving terminals that due to the "bonanza" of shale gas are now seeking LNG export licenses. Their goal is to convert shale gas to LNG and ship it from the Gulf Coast states to the Asian markets.
Webmaster‚Äôs Comments: This op-ed author advocates selling Alaska's natural gas assets to Asia ‚ÄĒ not using it to heat Alaskan's homes or to make value-added products. In other words, to make a fast buck while selling off Alaska's energy security future.
Platts LNG Daily [subscription required] reports that ConocoPhillips has purchased Marathon Oil's 30% ownership stake in the Kenai LNG liquefaction and export facility. The purchase comes as the facility winds down its LNG export operations, and is expected to suspend LNG exports altogether in the coming weeks. [Red bold emphasis added.]
The purchase was completed Sept. 26 but was not announced, according to Natalie Lowman, the spokeswoman. The transaction occurs as ConocoPhillips, the operator, prepares to mothball the plant, which is expected to occur near the end of October, Lowman said.
The plant is in Nikiski on the Kenai Peninsula, about 10 miles north of the city of Kenai and 60 miles south of Anchorage. ConocoPhillips and Marathon both supply gas to the plant with ConocoPhillips‚Äô gas coming from the Tyonek platform at the North Cook Inlet gas field and Marathon‚Äôs gas coming from several onshore fields the company operates. ConocoPhillips is the operator of the LNG plant.
Last month, developers of the Jordan Cove Energy Project announced their desire to export liquefied natural gas via the North Spit. Expansion of U.S. gas production had turned topsy-turvy their original plan to import LNG from overseas. [Red bold emphasis added.]
2011 October 11
[Red bold emphasis added.]
A green light for the Kitimat LNG project could see the rapid establishment of a regional export hub, one that major global energy players are keen to join. By the end of this decade, three billion cubic feet a day of gas could flow through Kitimat ‚Äď equal to all of B.C.‚Äôs current production and close to 20 per cent of Canada‚Äôs current output.
Amid high natural gas prices during the past decade and uncertain future supply, experts throughout the gas industry were convinced the U.S. needed terminals to import gas and several multibillion-dollar facilities were built. They now sit mostly idle. One struggling importer, Cheniere Energy Inc. on the Gulf Coast in Louisiana, received approval in May to export gas, which it hopes to do by 2015.
As it increasingly draws from prolific domestic natural gas reserves, the U.S. is meeting more and more of its own gas needs, and some speculate that the country will eventually not need any gas at all from Canada. But in Asia the need is great, and the strong demand means prices are much higher.
North America may export 5 billion cubic feet a day of LNG by 2017 from projects turning surplus gas from shale into the liquefied fuel for shipment to Asia and Europe, New York-based consultant Eurasia Group said in a report Aug. 31. Encana Corp., Canada‚Äôs biggest gas producer, said Oct. 4 it expects to make a final investment decision on the 1.4 billion cubic feet-a-day Kitimat LNG facility in British Columbia in early 2012.
A key reason for the deal is that Daylight is predominately a natural gas company and China would like to export liquefied natural gas from western Canada, said Neil Beveridge, a research analyst at Sanford C. Bernstein & Co in Hong Kong.
Canada has long billed its oil and natural gas resources as a solution to its southern neighbour‚Äôs ravenous demand for energy. But the discovery of a way to extract natural gas from tightly packed shale rock has meant the US no longer needs to import as much natural gas.
The US has been an importer of natural gas, which must be transported by special tanker in the form of liquefied natural gas (LNG). But recent development of technology for gas shale wells made the US essentially self-sufficient in the fuel. The sudden ample supply has depressed gas prices, and left producers looking for new customers.
He told reporters that DOE has "no preconceived limit" about how many terminals can be built without affecting domestic prices. He said DOE is looking at each application, in order as it is filed, for the impact on a series of factors, including jobs and prices. The effect assessment will therefore change each time an approval is issued, he said.
The U.S. Department of Energy (DOE) has approved Dominion Cove Point LNG's application to export up to 1Bcf/d of LNG to countries with which the United States has entered or will enter into a free trade agreement.
Webmaster‚Äôs Comments: The Cove Point LNG terminal has been virtually stagnant, importing almost no LNG ‚ÄĒ indicative of the vast amount of domestic natural gas in the Northeast.
The new application seeks permission to export as much as 1 bcfd over 25 years, Dominion said. Liquefaction facilities would have to be added to the Cove Point terminal at Lusby, Md., with construction potentially beginning in 2014 and service starting at yearend 2016, it said.
The project would also require approvals from the US Federal Energy Regulatory Commission and other federal, state, and local governmental authorities, Dominion noted. ‚ÄúWhile this project offers substantial potential benefits, Dominion has not made the final decision on pursuing [it] and does not plan to do until the necessary regulatory approvals, customer commitments, and approval by Dominion‚Äôs board of directors are received,‚ÄĚ it added.
Speaking to an industry conference in Washington, D.C., Platts LNG Daily [subscription required] Department of Energy (DOE) Deputy Assistant Secretary Christopher Smith said that he expects his office to issue decisions on two LNG export applications "in the not-too-distant future."
Separately, AOL Energy reports that Deputy Assistant Secretary Smith said that his office would focus on the potential impacts of natural gas exports on domestic gas prices when evaluating LNG export applications. He also noted that the agency‚Äôs review of each terminal is "precedent-setting."
The Liquefied Natural Gas (LNG) industry has undergone a dramatic pace of change in the last few years as the economy has gone through major upheaval and technology has improved enough to make smaller commercial projects possible. In particular, LNG in North America is set to change as a recent discovery of shale gas has ensured that the domestic market is secure, pushing many organisations to move from importing to exporting.
The U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) has approved two additional vapor dispersion models for calculating exclusion zones: Det Norske Veritas's Process Hazard Analysis Software Tool ‚Äď Unified Dispersion Model and GexCon US Inc.'s FLACS (Version 9.1, Release 2). [Red bold emphasis added.]
Webmaster‚Äôs Comments: This means that LNG terminal applications that have been on hold for over a year may now recommence ‚ÄĒ including Downeast LNG.
Oct. 11 (Bloomberg) -- Cheniere Energy Inc.‚Äôs Sabine Pass terminal in Louisiana is scheduled to receive a cargo of liquefied natural gas Oct. 18, according to vessel tracking data compiled by Bloomberg.
As recently as April, construction of a third jumbo tank at the eastern facility was completed, boosting total storage capacity to 10 billion cubic feet. Maintenance work completed through May brought the daily send-out capacity to 1.2 billion cubic feet. The total is equal to the planned initial daily delivery of gas along the long-delayed Mackenzie Valley pipeline, although the highest daily send-out as of May 2011 stood at 0.8 billion cubic feet. The challenge for Marcoux and Repsol, through its marketing arm, is selling gas into an already saturated market. ‚ÄúOur focus right now is to ensure we grow the market for natural gas,‚ÄĚ Marcoux says. In the U.S. northeast especially, ‚ÄúWe have been pushing hard to get more people to come back to natural gas.‚ÄĚ
The sales pitch is complicated by the proximity of gas users in the New England region to budding reservoirs expected to yield tremendous volumes of shale gas. Unlike companies seeking long-term sales agreements with buyers in China, Taiwan and South Korea, gas marketed by RENA to local distributors, large industrial users and commercial customers across the northeast faces fierce competition for short delivery contracts.
As a result, Repsol, a fully integrated LNG producer involved in liquefaction, transport, marketing and re-gasification around the world, has positioned itself as an incremental supplier to the region with an eye to capturing a greater share of the growing power generation market. (New England‚Äôs Independent System Operator expects roughly 3,800 megawatts (MW) of new gas-fired capacity will be available by 2013, increasing the 13,181 MW of capacity it has today). ‚ÄúWe have really tried to differentiate ourselves [based on] the quality of supply and meeting the market requirements,‚ÄĚ Marcoux says. [Red bold emphasis added.]
Webmaster‚Äôs Comments: Natural gas imports via the Maritimes & Northeast Pipeline have continued to decline, despite Repsol's glowing optimism.
There is a remarkable contrast between the success of the Everett LNG terminal and the market performance of the Cove Point LNG terminal that was built a few years later and a few hundred miles south. While the GDF SUEZ facility in New England was growing and receiving 50% of the LNG shipments received in the US during the period from 1971-2003, the Cove Point facility was virtually mothballed. It stopped receiving any LNG shipments in 1980. It did not start receiving additional shipments until 2003.
Webmaster‚Äôs Comments: And were it not for Cove Point LNG's applications to export LNG, the terminal might have been mothballed, yet again.
The 240,000 dekatherms per day (Dth/d) project includes approximately 8 miles of 30‚Ä≥ pipeline looping and modifications to four existing compressor stations in Pennsylvania to provide natural gas transportation from the Marcellus Shale supply area to existing delivery points on the TGP system. All of the capacity is subscribed through agreements with Chesapeake Energy Marketing, Inc., a wholly-owned subsidiary of Chesapeake Energy Corporation, for 140,000 Dth/d and Southwestern Energy Services Company, a wholly-owned subsidiary of Southwestern Energy Company, for 100,000 Dth/d.
‚ÄĚWe are pleased to announce our fourth expansion project in as many years which brings our total investment in Marcellus infrastructure to $1.3 billion and adds nearly 1.5 Bcf/d of capacity,‚ÄĚ said Norman Holmes, president of Tennessee Gas Pipeline. ‚ÄúThis project leverages TGP‚Äôs strategic location and provides significant new firm transportation capacity for two prominent Marcellus Shale producers.‚ÄĚ [Red bold emphasis added.]
Webmaster‚Äôs Comments: This increases the Northeast's access to copious domestic natural gas supply.
The habitat proposed to protect the coqu√≠ llanero comprises freshwater wetlands in Sebana Seca, Toa Baja, that are currently threatened by multiple development projects. However, the most significant threat is an ill-conceived, 92-mile long liquefied natural gas pipeline [sic], misleadingly called Via Verde (‚Äúgreen way‚ÄĚ). The construction, operation and maintenance of the pipeline would directly affect the only natural drainage body of the wetland. Because the frog is entirely dependent on the wetland status of the land, and is geographically restricted to Sebana Seca, the proposed project threatens to irreversibly alter the only known territory of the coqu√≠ llanero.
Part of the gas will be sold in the domestic market while the remaining amount will be supplied to a liquefaction plant of Atlantic LNG. The gas reaching the Atlantic's plant will be liquefied and exported as LNG to international markets including the US and Europe. BP holds 39% average working interest in Atlantic LNG.
A single project, the proposed Shell LNG facility, could be the largest consumer of power in the province ‚Äď capable of consuming the entire capacity of the $8-billion Site C project, which the province has committed to building, though it still faces regulatory hurdles.
As natural gas prices fell on abundant volumes in North America, the lure increased to move gas in a super-cooled form to Asian markets where it fetched about $10 per million British thermal units last year ‚Äď more than twice as much as in North America.
Encana signed to the project this year, joining Apache Corp. and EOG in forwarding the project, which would have an initial output capacity of five million tonnes per year of LNG by 2015. [Red bold emphasis added.]
With respect to LNG, during the Clean Energy Conference there was plenty of discussion regarding the huge increase in demand for power that is coming as a result of shale gas development and mining activities, primarily in the northern portion of the Province. In the Throne Speech Premier Clark stated that "We are committed to enabling the development and operation of three LNG terminals by 2020, with sufficient sources of electricity to make it possible. Where will this electricity be sourced from, and at what cost? This is what is uncertain at the moment, and what permeated the general mood of participants at the Clean Energy Conference, including IPP project proponents, which could be best described as "anxious uncertainty".
Natural gas in particular brings several benefits. At current prices, it‚Äôs cheap. And efforts to build LNG export terminals offer the potential of bringing Canadian energy resources across the Pacific. Those factors have drawn substantial spending into the rich shale gas fields of northeastern B.C. from companies like Mitsubishi Corp., Korea Gas Corp. and Petronas.
Some major gas producers in northeastern British Columbia have recognized that the massive resource potential of the Montney and Horn River basins is at odds with current North American natural gas fundamentals. So as Canadian gas exports to the United States continue to fall, Apache Corporation, EOG Resources, Inc. and Encana Corporation are co-investing in an LNG facility on Canada¬īs West Coast and plan to ship LNG to Asian markets. [Red bold emphasis added.]
"We believe the preponderance of gas we think we can produce can not only go to help the local market demand, but in the longer-term, can supply gas to the Kenai LNG facility and take advantage of LNG [liquefied natural gas] export opportunities in Asia," Burton speculated, noting the surge in Japan's LNG demand due to the earthquake and tsunami in March that knocked out much of Japan's nuclear power plants. China's growing demand for LNG also presents another export opportunity for Cook Inlet gas.
Global tank-storage firm Vopak has joined forces with Spain-based Enagas to acquire 100% of shares in the LNG import and re-gasification terminal in Altamira, Mexico. The acquisition was made from prior owners Shell (50%), Mitsui & Co (25%) and Total (25%), the companies said. The financial terms were not disclosed. The companies formed a joint venture for the deal, in which Vopak owns 60% of the shares and Enagas 40% (with joint management control). The move is in line with the companies' expectations that gas-fired power generation capacity in Mexico will outpace gas supply, guaranteeing strong demand for imported LNG. This reflects our forecasts, which show gas-fired power generation capacity expanding by as much as 7.5% in 2011.
2011 October 9
[Red bold emphasis added.]
Dominion, which is in the midst of constructing a large natural gas processing plant along the Ohio River in Marshall County, is seeking permission from the U.S. Department of Energy to ship liquefied natural gas to any country with which the nation allows trade.
"But the main reason is the increased supply. Not only from Marcellus Shale, but several shale plays in other part of the country. Our supply study only includes a small amount of Utica Shale, but increasing supplies from other shales," he said.
The Jordan Cove project in Coos Bay, Ore., includes a pipeline to a natural gas pipeline hub in Malin, Ore. The 680-mile Ruby Pipeline, which just opened for service in July, stretches from Opal, Wyo., west to Malin.
San Diego-based Sempra, which owns liquefied natural gas (LNG) import terminals in Louisiana and Baja California, is considering export as record domestic U.S. gas production pressures prices far below global levels.
[A] number of LNG importers have applied for permits to export LNG from the United States. The about turn has been prompted by massive increases in shale gas production which have eroded U.S. LNG import needs and dented prices since 2007.
Presently, Natural Gas prices are close to an 11-month low as moderate autumn weather across most parts of the US was expected to limit demand for the fuel. New drilling techniques have resulted in an oversupply of Natural Gas, which has kept prices down since the recession.
Reports from Bloomberg find that Liquefied Natural Gas prices are surging to a three-year high as demand from Japan, China and India outpaces supply increases, boosting sales for producers. Liquefied gas costs surged about 33 percent after Japan's March 11 earthquake and tsunami caused reactor meltdowns at Tokyo Electric Power Co.'s Fukushima plant, and have since climbed toward $16 per million Btu, according to Mark Greenwood, an analyst at Citigroup.
Webmaster‚Äôs Comments: There is no viable economic or energy security argument for the Downeast LNG project.
"‚Ä¶Nationally, allowing for LNG export at Sabine Pass is important to natural gas development, creating or sustaining 30,000 to 50,000 jobs in producing areas, particularly in our home state of Louisiana. This improved infrastructure also will support upwards of $6 billion in new investment," wrote Landry and Landrieu.
Webmaster‚Äôs Comments: Remember how recently the LNG industry argued that importing LNG was important for the country? Exporting LNG from Sabine Pass would be selling America's energy security.
THE BAHAMAS must focus on oil exploration and liquefied natural gas (LNG) as potential "platforms for sustainable economic growth", a leading businessman urged yesterday, warning that failure to do so would cause high unemployment and the $4 billion-plus national debt to persist.
Acknowledging the environmental implications of developing LNG or oil exploration in the Bahamas, he added: "We have to balance the sensitivities with the real needs of the economy, and if we don't do that, you manage one risk but you enable another risk. The other risk we see manifest itself almost daily in the crime statistics, because of the level of unemployment."
Use icebreakers to get to the North Slope and ship LNG by tanker to a place like Dutch Harbor, where it would be transferred to regular tankers. A project along those terms could start in 2018 and make the gas economical enough to compete with the Yamal project in Russia.
The two-person panel, chaired by Guy Lewis, Managing Director, Exploration and Production for the Gas Technology Institute (GTI), will see Bill Walker, General Counsel to the Alaska Gasoline Port Authority, and Curtis Burton, CEO, Buccaneer Energy, discuss E&P activities and natural gas advocacy efforts in the Alaska region. Topics for discussion include: -- Fueling the state's economy and ensuring natural gas is a viable source to meet energy needs - Alaska's offshore waters and onshore prospects; -- The All-Alaska Gas Pipeline plan in the context of rising Asian gas prices, lower shipping costs and geographic proximity; and -- Assessing future plans of LNG export to Japan and Asia. [Red emphasis added.]
The North American natural gas price has been falling as more resources are discovered. But there is a prime export market for the liquefied version across the Pacific and a $5-billion project at Kitimat, B.C., could be the solution for a stagnating sector. [Red bold emphasis added.]
A green light for the Kitimat LNG project could see the rapid establishment of a regional export hub, one that major global energy players are keen to join. By the end of this decade, three billion cubic feet a day of gas could flow through Kitimat ‚Äď equal to all of B.C.‚Äôs current production and close to 20 per cent of Canada‚Äôs current output. [Red bold emphasis added.]
‚ÄúKitimat is the preferred project. Pipelining into Kitimat is relatively straight forward compared to Prince Rupert, which is the other proposed port,‚ÄĚ Daniel said, though talks continue with both projects.[Red bold emphasis added.]
CALGARY - Encana Corp. has sold its stake in the Cabin gas plant in B.C. to Enbridge Inc., a pipeline operator that wants to expand in the gas processing business as it looks to tap into lucrative Asian markets.
"We believe there is going to be the need for LNG exports off the West Coast, and that's simply because the value of world gas prices, especially in Asia, far exceeds North American prices,"[said Al Monaco, in charge of Enbridge's natural gas business].
When it was pointed out that the company was spending a lot of money on something that hadn‚Äôt even received board approval yet, Wall laughed: ‚ÄúWe‚Äôre pretty confident, it‚Äôs a good project.‚ÄĚ [Red bold emphasis added.]
The most advanced LNG foray on the northwest coast ‚Äď the $4.5-billion Kitimat LNG project‚Ä¶ ‚Äď is still awaiting approval from the National Energy Board to begin shipping up to 10 million tonnes of the chilled gas annually to markets in Japan, Taiwan, India and China beginning in 2015. Daniel told Reuters that he would rather Enbridge have a role in that project than competing ventures that are under consideration by companies ranging from Shell Canada Ltd. to Progress Energy Resources Corp. ‚ÄúKitimat is the preferred project. Pipelining into Kitimat is relatively straight forward,‚ÄĚ he told the wire service.
Webmaster‚Äôs Comments: Oregon LNG, Downeast LNG, and Calais LNG, are three of the five remaining LNG import projects still hopelessly wanting to import LNG when the US now finds itself in a 100-year natural gas glut.
NORTH BEND -- A liquefied natural gas terminal in Coos Bay might be good for the local economy but bad for the nation, state Attorney General John Kroger said at the Bay Area Chamber of Commerce's Wednesday Business Connection luncheon.
'The reason it is not a no-brainer -- I realize it is good for your local economy -- but the price of gas in China is three times more expensive than here," Kroger said. This is because there is no global market for trading gas.
'But if we have a world market, that price would equalize. It would be more expensive here and less expensive there," he said. He said his job is to ensure the project doesn't increase gas prices 'all over Oregon."
[T]he rise of gas production in the eastern states has driven gas producers in the western United States and Canada to look for export markets in Asia, and Jordan Cove Energy Partners made the decision to seek permits for an export plant. [Red bold emphasis added.]
2011 October 8
[Red bold emphasis added.]
In the midst of the week‚Äôs anemic consumption pattern and declining price environment, overall supply was also off modestly. According to BENTEK estimates, the week‚Äôs overall average total nominal gas supply posted a 0.5 percent decrease from last week‚Äôs level. Domestic weekly dry gas production averaged 62.5 Bcf per day, 0.7 percent lower than the previous week. Domestic dry gas production now stands 8.7 percent above this time last year. The slight fall in this week‚Äôs production was offset somewhat by a 1.7 percent increase in Canadian imports averaging 5.6 Bcf per day. However, Canadian imports remain 5.5 percent below year-ago volumes. Supply gains remained muted in the liquefied natural gas (LNG) arena during the week where imports came in at 476 million cubic feet (MMcf) per day and remain 34.2 percent below year-ago levels.
Two items of breaking news in early September 2011 sum up the paradox that is the western Atlantic Basin LNG market. First it was announced that US LNG imports in July had slumped to their lowest level since December 2002. Furthermore the monthly total of nine cargoes represented a volume of gas that was 44 per cent down on the LNG imports recorded in July 2010. One of the cargoes, a spot shipment to the Freeport LNG terminal in Texas, was subsequently re-exported to Brazil....
BG Group, based in Berkshire, U.K., is considering modifying its Lake Charles, Louisiana, terminal to start exporting LNG in 2018 at the earliest, Elizabeth Spomer, a senior vice president for business development, said today in an interview in Washington.
The commission has already approved Jordan Cove to build its southern Oregon terminal to import 1 Bcf/d of LNG. It also cleared the company to build a 230-mile pipeline that would carry the gas to Malin, Oregon, on the California border.
The company told FERC Friday that if it gets the nod from DOE, it will ask the commission to allow it to change the project to export. "Jordan Cove is fully aware that that it will require FERC authorization to modify its plans for the terminal so that it can be used for LNG exports as well as imports."
Jordan Cove is the latest in a string of LNG terminals that have applied to export domestic gas. The trend is being driven by booming US gas production, which has led to low gas prices and slumping LNG imports.
Landowners and environmentalists in the region mounted a fierce campaign to block three proposals to build LNG import terminals in Oregon, including the one in Coos Bay. They insisted all along there was no need for imported gas and now say backers are pulling a bait and switch by converting to export projects. Either way, they believe the terminals and associated pipelines will harm forests, farms and salmon habitat.
The idea of importing gas is now ludicrous given the additional supplies as producers use hydraulic fracturing to tap gas trapped in deep shale formations. There is ongoing debate over the environmental impact of "fracking," as well as the long-term productivity of those wells. But with domestic markets oversupplied, producers are eying Asia, where gas prices are three to five times higher.
‚Ä¶The industry has been battered by the emergence of abundant shale gas in the United States. Prices and profits have collapsed, and shipments to the U.S., Canada‚Äôs only export customer, have been halved. Without an export route to Asia, there is a risk that the major discoveries of shale gas in British Columbia, as well as reserves in Alberta, will be left in the ground.
This summer, Dominion requested to become a re-exporting facility, where shipments would come in, be stored on site and then re-exported, and then submitted the first phase of its application to become a regular export facility, in addition to its current status as an import facility, vaporizing LNG into natural gas. The first part asked the Department of Energy for exporting ability to countries that have a free trade agreement with the U.S.; the second, filed on Monday, requested permission to export to countries without a free trade agreement.
‚ÄúDominion Cove Point has connections to several interstate pipelines and is well-positioned to provide customers access to abundant and diverse domestic gas supply,‚ÄĚ Dominion chairman, president and CEO Thomas F. Farrell Jr. said in a press release. ‚ÄúThe facility is particularly well-situated to export gas production from the prolific Marcellus Shale and promising Utica Shale formations. It is in our nation‚Äôs best interests to develop our natural resources responsibly and reliably.‚ÄĚ
If the project is approved, Dominion would export up to 1 billion cubic feet per day, or 7.82 million metric tons per year, over a 25-year term to any country with which the U.S. does not prohibit trade, a press release states. Dominion would not actually own or directly export the LNG; customers would be responsible for supplying the natural gas to the terminal and then shipping and selling the LNG to foreign entities. [Red bold emphasis added.]
Webmaster‚Äôs Comments: Dominion Cove Point LNG proposes to export more LNG per day than Downeast LNG proposes to import.
Thomas F. Farrell II, chairman, president and CEO of Dominion, said: "Dominion Cove Point has connections to several interstate pipelines and is positioned to provide export customers access to abundant and diverse domestic gas supply. The facility is particularly situated to export gas production from the prolific Marcellus Shale and promising Utica Shale formations. It is in our nation's best interests to develop our natural resources responsibly and reliably. In the process, we will be able to improve the nation's balance of trade."
The Savannah City Council will urge the Federal Energy Regulatory Commission to outlaw the plan to truck liquefied natural gas through parts of the city. The council passed a resolution asking the Feds to deny the application by Southeast Liquid Natural Gas to expand its Elba Island LNG terminal. [Red emphasis added.]
Southern LNG, which operates the massive Elba Island LNG import terminal, petitioned federal regulators in August 2010 to reopen its truck-loading facility there. If the petition is approved, plans call for up to 58 tanker truckloads of liquefied natural gas to be hauled out of Elba and across busy DeRenne Avenue daily, passing two major hospitals and numerous schools, businesses and residential neighborhoods.
Community groups and Savannah City Council oppose the proposal, citing what they deem an unacceptable risk of catastrophic fire from the trucks and a burden on the community to provide disaster prevention and relief. [Red bold emphasis added.]
"Parts of our federal government are more concerned about the industry than about the people and our environment, says Rhode Island Attorney General, Patrick Lynch, who lead the fight against a LNG import facility in Providence-the only LNG terminal FERC has recommended against to date.
Cheniere Energy CEO Charif Souki told Platts LNG Daily [subscription required] yesterday that he expects long-term customers at the Sabine Pass LNG terminal will be charged between $2 and $3 per MMBtu of natural gas processing. Souki noted that construction costs for the company‚Äôs planned LNG liquefaction project have not increased, but the company has found a stronger market for its liquefaction services than it anticipated. [Red bold emphasis added.]
SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice of receipt of an application (Application), filed on August 22, 2011, by ConocoPhillips Company (ConocoPhillips), requesting blanket authorization to export liquefied natural gas (LNG) that previously had been imported into the United States from foreign sources in an amount up to the equivalent of 500 Billion cubic feet (Bcf) of natural gas on a short-term or spot market basis over a two year period commencing on November 30, 2011. ConocoPhillips further requests that such authorization extend to LNG supplies imported from foreign sources to which ConocoPhillips holds title, as well as to LNG supplies imported from foreign sources that ConocoPhillips may export on behalf of other entities who themselves hold title. The LNG would be exported from the LNG terminal facilities owned by Freeport LNG Development, L.P. (Freeport LNG) on Quintana Island, Texas, to any country with the capacity to import LNG via ocean-going carrier and with which trade is not prohibited by U.S. law or policy. The application was filed under section 3 of the Natural Gas Act (NGA), as amended by section 201 of the Energy Policy Act of 1992. Protests, motions to intervene, notices of intervention, and written comments are invited.
[T]he commissioner of police has not responded to an assertion made two weeks ago by the contractor general that he was given sensitive, compelling and grave information concerning persons connected to the LNG project. This information was shared months ago with the commissioner, and up to last week, the information had not reached the desk of the usual investigating branch. The contractor general's position was created by an act of Parliament and it has powers similar to a judge and can commandeer sensitive information. Therefore, it is baffling that there has been no response from the commissioner of police. It does not appear fair to the OCG and it does give the impression that the various government agencies are not cooperating to eradicate corruption.
[E]nergy conglomerates say that they are unable to construct the pipelines faster than they can get the gas. The resource is therefore wasted, or money literally up in smoke. Beside piping it, the companies are considering liquefying the gas and creating LNG that would be globally shipped.
If producers could monetize the gas and make a profit, they would do so. That's why they are investing billions throughout the LNG value chain -- everything from liquefying stations, to transport ships to re-gasification ports to pipelines.
Encana Inc. (ECA) has announced that the proposed Kitimat liquefied natural gas export terminal in British Columbia will help to stabilize gas prices in North America and provide an outlet for growing production from the province's Horn River Basin.‚Ä¶
Webmaster‚Äôs Comments: "Stabilizing" prices, in Encana-speak, must mean "raise prices," since natural gas prices in North America are already stable, at around $4.00/mbtu.
The road in question is being rebuilt due to a new Liquefied Natural Gas facility being built at Encana's Cavalier Plant. The agreement itself would be a part of the development permit for that facility, which itself is contentious for some of council.
Webmaster‚Äôs Comments: LNG developers seem to behave badly, no matter where they are.
Enbridge is interested in joining one of two proposed Canadian LNG projects to ship natural gas to Asia, it said this week, as ample North American supply pushes gas prices far below global levels, the report said.
"Kitimat is the preferred project. Pipelining into Kitimat is relatively straight forward compared to Prince Rupert, which is the other proposed port," Daniel said, though talks continue with both projects.
But it's also becoming increasingly difficult for local service businesses to find staff when the wages are so much higher at the work camps now under construction for Rio Tinto Alcan's $2.5-billion rebuild of its Kitimat aluminum smelter and the $4.5-billion KM LNG partnership that's ramping up to build a pipeline and liquid natural gas export terminal.
There are several proposals for LNG plants on the B.C. coast, of which the most advanced is Kitimat LNG, a partnership between Apache Canada Ltd., Encana Corp. and EOG Resources Canada Inc. It has filed an application with the National Energy Board to build a $4.5-billion export terminal able to process 700 million cubic feet of gas a day, along with a $1.2-billion pipeline. Another group, BC LNG Cooperative LLC, a partnership between the Haisla First Nation and a familyowned company in Houston, Texas, has applied for a smaller project, a terminal to handle 125 million cubic feet a day that would cost less than $450 million. Shell Canada is also looking at a possible LNG plant in partnership with China National Petroleum Co., Korea Gas Corp. and Mitsubishi Corp., as is Malaysia's state-owned oil company Petronas with its partner Progress Energy, a Calgary oil and gas company with shale gas assets in northeastern B.C.
The province said it plans to accelerate the establishment of an LNG industry by reducing today's lengthy permitting process and improving collaboration with First Nations and local communities. It hopes to have up to three LNG export terminals in operation by 2020.
Thirty years ago, there were multiple proposals to build plants to liquefy natural gas for shipment to the emerging market in Japan. Foremost among them was Dome Petroleum's $1-billion plan for an LNG terminal at Port Simpson, just north of Prince Rupert. But the Australians captured the Japanese market with a competing proposal of their own, the B.C. project went nowhere, and Dome eventually went bankrupt.
But once again the Australians are there ahead of us. They've already got two LNG terminals operational and the financing lined up for several others. The Americans are angling to build their own LNG plants, reliant on their gas as well as ours.
‚ÄúWe want to create a new industry with the capacity to export B.C.‚Äôs liquefied natural gas,‚ÄĚ Clark said, adding she wants to see the $4.5- billion Kitimat LNG terminal ‚ÄĒ plus a related $1.2-billion pipeline ‚ÄĒ in operation by 2015.
‚ÄúI think it‚Äôs premature to conclude that the United States now has so much natural gas that it can afford to export it overseas,‚ÄĚ said U.S. Sen. Ron Wyden, D-Ore. ‚ÄúI think there ought to be a time-out on approving LNG exports until there is a better understanding of how much natural gas there is, whether it can be safely extracted, and what the impact on the U.S. economy would be from LNG exports.‚ÄĚ
[I]n the past three years, changes in gas supply and demand have made domestic gas cheaper than imported. [Red bold emphasis added.]
FERC issues a "certificate of public convenience and necessity" for energy projects that gives them the right to use eminent domain. Backers of most projects have to prove that their project will benefit the public.
But not natural gas projects. Tamara Young-Allen, a spokesperson for FERC, said applications for import pipelines haven't had to prove that they benefit the public. Since the Hackberry LNG Terminal case in 2002, FERC has assumed that increasing the public supply of gas is a good thing. FERC considers only the safety and environmental impact of gas projects.
The U.S. natural gas prices are set to rise as new LNG terminals and transports (ships) are built. There is tremendous demand for natural gas in Asia. US LNG could probably also undercut some of the European natural gas suppliers. The LNG business is predicted to start boosting the price of U.S. natural gas in 2012. This should progress sequentially higher each year until at least 2015 as more LNG terminals and ships are built (finished). The price of natural gas may well grow even more strongly after that. At the end of August Russian natural gas was approximately $400/thousand cubic meters. There are 35.3147 cubic feet in a cubic meter. The U.S. futures value of a thousand cubic feet of natural gas is $3.657. This makes the U.S. price of a cubic meter = $3.657 * 35.1347 = $128.48. This is only about one third of the current Russian price shown in the chart below. [Bold brown emphasis added.]
Webmaster‚Äôs Comments: Exporting domestic-source LNG is selling off America's energy security.
2011 October 5
[Red bold emphasis added.]
This abundance of natural gas is very different from what was expected a half decade ago. It was then anticipated that constraints on domestic natural gas production would result in high prices for consumers and the migration of gas-using industries‚ÄĒand the jobs that go with them‚ÄĒout of the United States to parts of the world with cheaper supplies. The United States was also expected to be importing substantial amounts of natural gas in the form of liquefied natural gas (LNG). That would have added as much as $100 billion to our trade deficit.
Enbridge would be interested in LNG projects being developed on British Columbia‚Äôs northern Pacific coast, executive vice president Al Monaco said on Tuesday, as ample supply pushed North American natural gas prices to 11-month lows.
Natural gas producers and LNG terminal developers have been scrambling for approval to export LNG from North America over the past year, as higher shale gas production evaporated import needs and pushed prices far below levels in Asia and Europe.
Encana Corp.‚Äôs Dave Thorn, vice-president of Canadian marketing, says the Calgary company‚Äôs Kitimat LNG gas liquefaction and export facility proposed with EOG Resources Inc. and Apache Corp. for the B.C. coastal community is intented to meet Chinese demand for gas.
The industry's biggest problem is the commodity's prolonged price slump, which few see lifting for years to come and which arose as a result of new drilling technology that has unlocked huge reserves of previously inaccessible shale gas across North America.
Those depressed prices are expected to lead to sharp production declines over the next five years, especially in Alberta, and have cut industry profits to less than $1 billion today from more than $8 billion in 2005, according to a recent report from the Conference Board of Canada.
Webmaster‚Äôs Comments: Natural gas imports from Canada are declining and LNG imports from abroad are declining. The US has become natural gas independent. The five still-existing LNG import terminal projects at FERC ‚ÄĒ including Downeast LNG and essentially-dead Calais LNG ‚ÄĒ are wearing blinders to market realities.
USFWS has launched a study of the eels‚Äô sustainability after an initial review of a petition by the Center for Environmental Science, Advocacy and Reliability, formerly the Council for Endangered Species Act Reliability. In its petition to the federal agency, the center states many reasons for the decline in eel populations, including dams and disease, but habitat loss leads the list, and Maine is a key offender. The center maintains that habitat loss has been the greatest ‚ÄĒ 91 percent ‚ÄĒ between Maine and Connecticut.
Webmaster‚Äôs Comments: Downeast LNG is proposing its terminal berth in American eel (Anguilla rostrata; brown eels) habitat.
LNG ships at the Downeast LNG terminal would uptake 20‚Äď56 million gallons of water per ship for ballast and engine cooling, sucking up or entraining lobster larvae, fish eggs, fish, plankton, and eel elvers (a.k.a., glass eels, baby brown eels/American eels), contributing to the endangerment of American eels and depleting local lobster, and other species. (See the US Fish & Wildlife Service webpage on the American eel.) Downeast LNG has known of this problem since 2009, or before, but has elected to continue with its ill-sited project instead of relocating to an appropriate site. Meanwhile, problems for the Downeast LNG project continue to mount.
Dominion Cove Point LNG has asked the US Department of Energy for authorization to export 1 Bcf/d of liquefied natural gas to countries with which the US does not have a free trade agreement, a license it says would only modestly boost gas prices.
The addition of Cove Point exports to the mix would cause Henry Hub prices to exceed $6 in 2027, two years earlier than in the reference case, the application said. Henry Hub prices would be $5.27 in 2020, a 5.7% increase; $6.61 in 2030, a 4.1% increase; and $9.16 in 2040, a 6% increase. And Dominion South Point prices are projected to be $5.22 in 2020, $5.66 in 2030 and $6.17 in 2040, the study said.
If the export proposals by the Lake Charles facility in Louisiana and the Freeport terminal in Texas also come to fruition -- and all LNG export terminals operate at 90% of capacity -- Henry Hub prices would increase 11% in 2020, 3.5% in 2030 and 5.3% in 2040. In this scenario Henry Hub prices would reach $9.64 in 2040. [Red & bold emphasis added.]
Webmaster‚Äôs Comments: Exporting US natural gas as LNG would be selling America's energy security future.
Quizzed by the Opposition about the bidding process during Tuesday‚Äôs sitting of the House of Representatives, Mr. Mullings told law makers that the new bidding process has been proceeding according to plan.
KINGSTON ‚ÄĒ The Steering Committee set up by Prime Minister, the Hon. Bruce Golding, to handle the country‚Äôs push towards the implementation of a Liquefied Natural Gas (LNG) project, held a pre-bidding meeting on September 26 for interested parties.
Chairman of the Steering Committee, Christopher Zacca, said the bidding process comprised two components - one to do with the setting up of the Floating Storage and Regasification Terminal, and the other for the supply of natural gas.
Pointing out phases one and two of the KM LNG plant would create 3,000 jobs and $4.5 billlion in investment, she added that was just one project ‚Äúand there are five other companies that have expressed interest in LNG up here.‚ÄĚ
In Kitimat Village, Clark said B.C. will take several steps to help develop a liquefied natural gas industry, with a goal of opening an LNG plant in Kitimat by 2015, and possibly three LNG facilities in the area by 2020.
The Canadian Press quotes Michael Culbert, the chief executive of Progress Energy Resources Corporation, as suggesting the potential of the Montney or the Horn River, plus additional supplies of even conventional gas in Alberta and B.C, could support three or four projects at a total of four billion cubic feet a day.
Meantime, Reuters News Agency says, with so many proposals now on the drawing board, Progress is pushing for a consolidated regulatory process, for pipelines and liquefied natural gas export plants.
It adds the big driver is the previously announced plan to build the billion-dollar LNG plant on the West Coast, to take all of the shale gas production from the partner‚Äôs lands, in the North Montney region.
Work on the controversial Sunrise Powerlink transmission line between San Diego and Imperial counties was briefly halted last week after a startling series of mishaps involving helicopters ferrying supplies and equipment to Powerlink work sites.
‚Ä¶The grounding came the day after a load of straw wattle used for erosion control fell from an improperly rigged helicopter. The previous Thursday, September 22, a load of plywood had likewise plummeted to the desert floor from a helicopter rigging, just three days after the same thing had happened to a load of micropile pipe -- rigid steel tubes used to reinforce foundations, like a much stronger form of rebar.
Opponents of the transmission line point out that SDG&E's parent company, Sempra Energy, is the owner and developer of the gigantic Costa Azul liquefied natural gas terminal in Ensenada, Mexico, as well as the 625-mw Termoelectrica de Mexicali gas-fired power plant three miles from the US border near Mexicali, and the pipeline that connects the two: the 185-mile Gasoducto Bajanorte. Sempra built the power plant in Mexico 10 years ago due to what it said were onerous licensing requirements for new power plants in California. A decade ago, when that plant was under construction, Sempra was claiming energy development in Mexico would "help alleviate California's energy crisis." Though the plant is hooked up to the existing Southwest Powerlink -- the line whose failure was responsible for the September blackout -- having additional transmission certainly wouldn't hurt. In 2008 SDG&E told San Diego Union-Tribune reporter Dean Calbreath it didn't intend to use the Sunrise Powerlink to import any energy from any new plants in Mexico, but at the same time Sempra was developing the 156-mw Energia Sierra Juarez wind project in La Rumorosa, across the border and a few miles south from Ocotillo Express Wind. All of the power from Energia Sierra Juarez would be sold to SDG&E, and the plan is to connect it to the Sunrise Powerlink near Jacumba.
Webmaster‚Äôs Comments: Sempra Energy is looking a lot like safety-deficient, accident-prone, and deadly-to-workers (and, potentially, the public) BP.
With natural gas supplies still rising despite the move towards liquids and slowing demand in a cooling economy, an energy analyst for Wells Fargo slashed by double digits his gas price forecast Wednesday.
LNG plants in the development or construction phase are likely to have higher cost bases than those currently in operation that were built during an era of cheaper oil, credit ratings agency Fitch said in a report released today. Higher crude prices are pushing up capital and operating costs, making new projects more reliant on sustained high oil prices to generate adequate returns.
Webmaster‚Äôs Comments: Downeast LNG is now facing higher costs in addition to existing and accumulating obstacles.
2011 October 4
[Red bold emphasis added.]
Simply put, there is an issue regarding whether the US can take in all this added supply, forecast to come to market in the next two to three years as a result of the shale gale bringing more quantities of crude, NGLs and natural gas on to the market.
Could it be feasible that the US market could become too dependent on exports? Chemical companies producing in the US currently have an economical feedstock and product margin advantage over just about every other region, except possibly the Middle East. Primary reason: dirt-cheap natural gas.
Besides creating a cheap fuel that‚Äôs increasingly becoming the fuel of choice for power plant operators, a number of companies are putting plans in place to turn their LNG import terminals into bi-directional facilities.
BG Group, based in Berkshire, U.K., is considering modifying its Lake Charles, Louisiana, terminal to start exporting LNG in 2018 at the earliest, Elizabeth Spomer, a senior vice president for business development, said today in an interview in Washington.
Webmaster‚Äôs Comments: Yet another LNG import terminal wanting to export domestic-source LNG.
The government is also keen to diversify away from exporting to the oversupplied U.S., which now consumes much of Canadian output and sees facilities such as the Kitimat LNG terminal as opening routes to more lucrative Asian markets, Oliver said.
We are all too aware of the impact the development of shale gas reserves in the U.S. has had on the North American price for the commodity. By extension, it has displaced the need for LNG imports into the U.S. market and stranded a number of LNG terminals. The balance has tilted so far, says Johnston, that the U.S. Federal Energy Regulatory Commission has recently asked companies to abandon their regas applications for these import terminals.
Webmaster‚Äôs Comments: Downeast LNG is irresponsibly ignoring FERC advice and market reality.
Officials with Jordan Cove Energy Project applied for a federal export license with the U.S. Department of Energy. This is a preliminary step in turning the proposed liquefied natural gas export terminal in Coos Bay into reality, but not a reality that residents of Coos Bay had initially imaged.
North America may export about 5 billion cubic feet a day of LNG, or roughly the combined LNG export capacity of Nigeria and Algeria, globally by 2017 from projects that turn surplus gas from shale-rock formations to LNG for shipment to customers in Asia and Europe, according to the Eurasia Group, a New York- based consultant. That‚Äôs about half of the six proposed developments by companies including Cheniere in the U.S. Gulf Coast and British Columbia.
States less populous than Maine, such as Montana, Idaho, North Dakota and South Dakota, all have more access to natural gas service. Maine is joined in its outside-looking-in status regarding natural gas by New Hampshire and Vermont.
Currently, natural gas is available in a dozen Greater Bangor communities and in several Southern Maine towns. The fuel passes through Maine in a pipeline that begins in Goldboro, Nova Scotia, which is where natural gas is imported from the Sable Island natural gas fields on the edge of the continental shelf.
The pipeline was built in 1998 not to make the fuel available for Maine businesses and residents, but to reach the natural gas grid in Dracut, Mass., to serve the high demand in southern New England. Maine was able to get a couple of spurs off the line, one that extends to the Verso Paper facility in Bucksport and one that allows a plant in Veazie to produce electricity by burning the fuel.
Webmaster‚Äôs Comments: Access to the ample supply of natural gas in the Maritimes & Northeast Pipeline ‚ÄĒ with decreasing imports from Canada and increasing imports from Pennsylvania, New York, and the Gulf states ‚ÄĒ is related to private enterprise's unwillingness to take risk to deliver to small remote communities, or lack of community creativity in solving the access problem. More Mainers are gaining natural gas access, as evidenced in recent news.
"It's a substantial project. We are hoping the citizens of Madison believe that this is something worthy of becoming investors. The town of Madison will own the pipeline, which means the voters who approve the bond, if the bond is approved, will be the investors in the pipeline," Hikel said.
Webmaster‚Äôs Comments: This is another example of how Maine has access to ample natural gas ‚ÄĒ without generating more dependence on expensive overseas energy, such as Downeast LNG would require.
Ed Ridzwan of Qatargas told an industry conference in Washington, D.C., yesterday that given the relative proximity of U.S. LNG terminals along the Gulf Coast to natural gas consuming markets in Central and South America, these U.S. LNG facilities could become key export points for LNG. According to Platts LNG Daily, Ridzwan also noted that Qatargas has no plans to begin exporting U.S. domestic gas as LNG.
In original filings, the Gitxaala First Nation objected to a lack of consultation between the Crown and the First Nation as well as expressing concerns about the in adequacy of the Transport Canada TERMPOL process which is looking at the environmental and socio-economic effects of tanker traffic on the west coast. (TERMPOL is also part of the Enbridge Northern Gateway application).
CALGARY -(Dow Jones)- Encana Inc. (ECA) said Tuesday the proposed Kitimat liquified natural gas export terminal in British Columbia will help to stabilize gas prices in North America and provide an outlet for growing production from the province's Horn River Basin.
Executives from Encana, which holds a 30% stake in the $2.9 billion Kitimat project, said during an investor presentation Tuesday that they're in talks with six customers in Asia to take delivery of shipments from the Kitimat LNG terminal.
Webmaster‚Äôs Comments: Newsflash to Encana: North American natural gas prices are already stabilized for the long term. (What Encana really means is that exporting would increase natural gas prices in North America.)
David Thorn, Encana vice president of Canadian marketing, said in a conference call with analysts and reporters that the company expects the front-end engineering and design study "to be completed by year-end, with final decision in the first quarter of next year."
Developers plan to build the proposed Kitimat LNG export terminal, with an initial capacity of 700,000 Mcf/d, about 650 kilometers (about 400 miles) north of Vancouver at Bish Cove near the Port of Kitimat. Encana will own 30% of the project, which will be 40%-owned and operated by Apache Canada, with EOG Resources Canada owning the remaining 30%.
An engineering study is underway to pin down the costs of the Kitimat LNG terminal, in which Apache Corp. (NYSE:APA) and EOG Resources (NYSE:EOG) are also partners, said David Thorn, vice-president of Canadian marketing.
According to Bloomberg data, record Japanese imports to replace nuclear power after the Fukushima Dai-Ichi disaster and a 27% leap in China's first-half purchases may send prices to roughly $20 per million British thermal units this winter, up 71% from last year and the highest since 2008.
Webmaster‚Äôs Comments: LNG prices are high and could go considerably higher ‚ÄĒ more reason to rely on domestic natural gas rather than on imported LNG from projects such as ill-timed, ill-sited, and ill-fated Downeast LNG.
2011 October 3
[Red bold emphasis added.]
"My personal quest in writing The Quest was to try and provide a framework to see how these things all tie together," Yergin says. "It has become increasingly interconnected. If you wind the clock back to 2008, the United States was going to be a huge importer of liquefied natural gas from the Middle East, from countries like Trinidad, from Angola, from Nigeria and maybe from Russia. That's all off the table because we're now self-sufficient in terms of natural gas, and suddenly that gas that was going to come in cargoes and ships to the United States has to find other destinations."
RICHMOND, Va., Oct. 3, 2011 /PRNewswire/ -- Dominion (NYSE: D) has filed with the Department of Energy for permission to use its Dominion Cove Point facility on the Chesapeake Bay in Lusby, Md., to export liquefied natural gas (LNG) to any country with which the U.S. does not prohibit trade.
This filing is the second phase of a two-phase export authorization request. The first phase, requesting authorization to export LNG to countries that have a Free Trade Agreement (FTA) with the U.S., was filed Sept. 1. The current list of FTA countries is very limited and none of the countries import significant volumes of LNG.
Biliana Pehlivanova Global Gas Consultant New York At current natural gas prices, North American LNG exports appear extremely attractive. The existence of an alternative market, however, and the size of the required investment add complexity to the prospect. Soaring demand The success of shale gas development has changed the face of North America's natural gas industry. From a market heading just 5 years ago towards increased dependency on imports, North America has been transformed into a booming production region now in search of new demand. A look abroad offers a promising picture: Natural gas demand is soaring in Asia, Latin America, and the Middle East. Much of this growth is being m...
"‚Ä¶Russia is already feeling the growth of American energy, Jaffe says. As the U.S. produces more of its own natural gas, Europe is free to purchase liquefied natural gas the US is no longer buying."
"The American energy boom, Jaffe says, could endanger many green-energy initiatives that have gained popularity in recent years. But royalties and revenue from U.S. production of oil and natural gas, she adds, could be used to invest in improving green technology."
A [president of Center for Liquefied Natural Gas Bill Cooper]: CLNG was formed in 2004 when the need arose for reliable information on LNG for the public and policymakers. Of course, back then the focus was on LNG import terminals, since we thought we‚Äôd need to import gas over the long term to meet demand in the US.
Webmaster‚Äôs Comments: Center for LNG president Bill Cooper is the same person who argued to the US Department of Transportation that the public should not be allowed to comment on gas-dispersion vapor hazard zones around LNG terminals ‚ÄĒ a public safety issue (see Bill Cooper's comments opposing public participation in the DOT-PHMSA docket).
Platts LNG Daily [subscription required] offers two articles that discuss Gulf LNG's start-up in the midst of a challenging market for LNG import projects. The pieces focus on competition in the Gulf of Mexico region from onshore shale natural gas production that is discouraging high volumes of LNG imports to the terminals along the U.S. Gulf Coast.
While the newly opened Gulf LNG import terminal near Pascagoula, Mississippi, will have access to growing demand for natural gas from Southeast power generators, it will find itself competing with supply from a number of shale plays in the region, market watchers said.
‚ÄúShale gas is coming in heavy,‚ÄĚ Beckman said. ‚ÄúThere‚Äôs something like 15 Bcf/d at Perryville (Louisiana) and a lot of that gas is coming across to [Transco's compressor] station 85. There is a tremendous push into the Southeast.‚ÄĚ
Senator Mary Landrieu (D-La.) and Congressman Jeff Landry (R-La.) sent a joint letter to FERC this week encouraging the Commission to complete its initial environmental review of the Sabine Pass LNG liquefaction project promptly. Specifically, the letter requests that FERC release its Environmental Assessment of the project by the end of this week in order to allow the project to begin construction activities as scheduled in January 2012.
A report released this week by Fitch Ratings suggests that the relatively high capital costs for LNG export projects in the United States, particularly at the Sabine Pass LNG facility, could impact economic competiveness with traditional LNG exporters.
Earlier this month, Congressman Luis V. Gutierrez (D-Ill.) submitted a list of questions to FERC Chairman Jon Wellinghoff regarding proposed modifications to the EcoElectrica LNG terminal in Puerto Rico. Representative Gutierrez's letter is available in FERC's eLibrary under Docket No. CP95-35.
He went on to explain that assuming an oil price of US$90 a barrel, an increase of 10,000 barrels of oil a day in national oil production would translate to US$1.4 billion in revenue collected by the State. Minister Ramnarine argued that oil is intrinsically more valuable than natural gas.‚ÄúOil is fungible and is therefore easier to commercialise. This is not the case with natural gas in T&T where, in the absence of pipelines to other countries, the raw material must be converted to LNG, ammonia or methanol before it is commercialised.‚ÄĚ The minister noted that over the course of last decade in T&T moved sharply towards natural gas which resulted in our transition to what is described as a ‚Äúgas economy.‚ÄĚ
‚ÄúThe effect is that we produce seven times more natural gas than oil on an equivalency basis. The time has come to adjust this balance and tilt the energy sector back towards oil. This does not mean that we will ignore natural gas and that less attention will be paid to the development of natural gas projects and the expansion of the downstream sector, but that we would also keenly focus on optimising and increasing oil production.‚ÄĚ
Speaking at a farewell function in his honour on Thursday night at the Hilton Trinidad, Prieto said that Atlantic [Atlantic LNG] has gas to meet all its current contracts, but the future for Trinidad and Tobago will depend on two things‚ÄĒagreements with Venezuela and new methods of exploration.
Calgary-based energy firm Encana Corp. reminded the investment community Monday that it‚Äôs hosting a conference call tomorrow morning with executives about its resource development model at Horn River.
The firm is also promising to offer updates on its Kitimat LNG proposal for a liquefied natural gas liquefaction and export facility at Kitimat, B.C., a partnership with EOG Resources Inc. and Apache.
Two energy industry analysts told Platts LNG Daily that they expect the infrastructure needed to support the various LNG export terminals proposed for Western Canada, particularly pipelines for gas supplies, could present significant challenges to project developers.
CALGARY, Alberta -- Encana Corporation (TSX, NYSE: ECA) will hold a conference call and webcast for the investment community highlighting its Horn River resource play on Tuesday, October 4, 2011 at 9:00 a.m. MT (11:00 a.m. ET). The presentation will be hosted by members of Encana‚Äôs senior management team and will include information detailing the company‚Äôs strategy, resource play hub development model and operations in the Horn River play, as well information on the Kitimat LNG project.
If nuclear power remains a verboten energy source into 2012, incremental LNG demand could peak at 30 bcm, the IEA says, creating ‚Äúsignificant supply tensions‚ÄĚ in the global market given planned additions worldwide of just 13.6 bcm of new LNG capacity for 2012.
"So far in 2011, 45 new LNG ships have been ordered, compared with just five in 2010, and most of these have been ordered on a speculative basis," said Andrew Buckland, senior LNG shipping analyst at consultancy Wood Mackenzie. But, he added: "Ships ordered now, which will be delivered around 2014-15, have no guarantee that new supply projects will choose to charter these vessels rather than order their own purpose-built ships."