"For much of the state of Maine, the environment is the economy"
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US saved $60 billion over past 5 years
Trinidad's US LNG 'Client' May Become Its Major LNG Competitor
Maine Governor Recognizes Natural Gas in Maine is Plentiful
Reality is staring Downeast LNG in the face.
Downeast LNG's 'Wrong-Way Corrigan' Project Leaves Them In the Dust
LNG Import Terminals are Scarcely Used
Downeast LNG Timing Couldn't Have Been Worse
2011 November 30
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LONDON Nov 30 (Reuters) - Booming output of gas and now oil from shale has raised the tantalising prospect of the United States becoming self-sufficient in energy, even a big exporter -- ending its dependence on imports from unstable places in Latin America, Africa and the Middle East, and giving a big boost to domestic manufacturing.
Following the deployment of horizontal drilling and hydraulic fracturing techniques in Texas' Barnett shale and elsewhere, the United States is now producing so much natural gas that the Department of Energy has granted Cheniere a licence to begin exporting liquefied natural gas (LNG) from its facility on the Gulf Coast.
The gas glut has temporarily pushed domestic gas prices well below international levels. But once Cheniere and others have secured permission and built their LNG export terminals, prices will start tracking international markets again.
While the industry still benefits from the current approximately $3.50 price/well head, Smead said many are hoping the prices will smooth out to about $5. Either way, low prices are not slowing development, he said. As demand picks up, and the US begins to export liquified natural gas (LNG) to international markets, prices will pick up a bit.
…In Saint John, Repsol's LNG (liquefied natural gas) terminal [Canaport LNG] which exclusively exports to the U.S., is operating at a third of its capacity, while Corridor's gas fields in Penobsquis returned just $606,000 in royalties to the province last year — down 85 per cent in two years. All consequences of the shale gas revolution unleashed in the U.S.
Webmaster’s Comments: The article is incorrect in stating that Canaport LNG exports exclusively to the US. In fact, Canaport also serves Canadian markets (see http://www.canaportlng.com/).
As for the Inpex partnership, the partners are looking into developing – wait for it – a liquefied natural gas (LNG) export terminal on B.C.’s coast. That brings the number of LNG export projects being pursued to ship B.C. shale gas to Asian markets to five. But I wonder if Nexen is arriving a little late to this LNG export party. We’ve written about this before, but cost inflation is a concern for the companies currently pursuing LNG export schemes on Canada’s Left Coast. There is also the question of whether Nexen and CNOOC can get such a project designed, approved and built before fast-movers like Qatar and Australia get to the Asian market first.
Local group Citizens for a Safe Secure Savannah submitted comments earlier this month to FERC outlining their concerns regarding the proposal to restart LNG truck loading operations at the Elba Island LNG regasification terminal.
Kingston, 30 November (Argus) – Trinidad and Tobago is negotiating an agreement with Panama under which the Caribbean country will supply a range of energy products, including LNG for power generation, LPG, and products, the Trinidadian government said.
“As Trinidad and Tobago is the only country in the Americas to export natural gas, we are well positioned to be first movers in this market,” the government said. Trinidad and Tobago's efforts to supply LNG to Panama are the result of the government's effort to diversify its market. The country is shipping less to the US and more to South America and Asia-Pacific, Ramnarine said in September.
Trinidad now exports 23pc of its LNG to the US against 67pc in 2007, Ramnarine said. [Red bold emphasis added.]
Webmaster’s Comments: Trinidad and Tobago's exports to the US have already dropped approximately 66%. The two-island nation's minister of energy expects LNG exports to the US to drop to zero.
In a speech last month to the oil and gas industry, Parnell said he wants the major North Slope players -- Exxon Mobil, BP and Conoco Phillips -- to coalesce behind a project that would allow for liquefied natural gas to be shipped overseas.
The catch is he wants them to do this under the framework of AGIA. In response to Parnell's request, the North Slope producers offered little more than dead silence. Why? Because this is the same bad song, just a different verse.
2011 November 29
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The EIA released data today on U.S. natural gas production for the month of September. On a seasonally-adjusted basis, natural gas production in the U.S. reached a new record-high level of almost 2.5 trillion cubic feet in September, and almost 6% above the year-ago level. Compared to September 2006, natural gas production has increased by 22% over the last five years.
“Shale gas production grew from 2% in 2005 to more than 20% in 2010 of total natural gas production,” Mr Robertson said. “Liquefied natural gas (LNG) facilities built prior to the shale boom in anticipation of large import volumes are sitting idle now, and some people are even talking about converting those facilities to export LNG.”
Natural gas prices in Europe and Asia are two or three times higher than US prices, said Roger Ihne, principal and Mid-America Oil and Gas Client Portfolio leader at Deloitte. “The US has the second-lowest cost market for natural gas, behind the Middle East. Innovations in technologies to turn natural gas into a more liquid form, such as diesel, and efforts to create an LNG export market will have a huge impact. “Lower US LNG imports means reduced trade deficits,” he continued. “Over the last five years, the US has saved over $60 billion in the amount of the energy it would have had to import in LNG from other nations.” The natural gas market also created nearly 400,000 direct and indirect jobs from 2005 through 2010, he added.
Cheniere (ASE: LNG) grabbed the headlines when it clinched a deal with the BG Group to export 3.5 million tons of LNG from its Sabine Pass terminal. The news came as a blessing not only for Cheniere, which had been incurring losses for the past 13 years, but also for the U.S. natural gas industry that has a glut of supply. Now, Cheniere has to find a way to manage the steep cost involved in building the export terminal.
Cheniere operated an LNG import facility in the U.S., but a glut of supply owing to increased production from shale fields turned it into a loss-making project. Cheniere had to take a lot of debt to sustain the facility and is now reeling under a financial burden. A walloping debt burden of about $3 billion is staring Cheniere in the face, and it includes a payment of $298 million due in May 2012. The company also reported a 19% decrease in cash and near cash equivalents to $131.3 million in the quarter ending Sept. 30.
With the U.S. already having enough reserves -- and thus supply -- to cater to international demand after fulfilling domestic needs, more and more export facilities like Cheniere's are expected to emerge.…
Nexen Inc. strikes deal with LNG expert firms
The partners plan to appraise the shale assets and make development decisions based upon economic conditions. Inpex already owns interests in LNG projects offshore Indonesia and Australia. In addition, Inpex is building a regasification terminal in Japan.
The Nexen-Inpex venture is the latest in a series of partnerships in which international companies are joining Canadian companies on gas development projects. Many of the partnerships have expressed goals eventually to ship LNG to Asia.
The Nexen deal is only the latest to bring Asian investors in Canada’s oil and gas sector, particularly the shale gas play in northeastern B.C., where producers are eager to build LNG capacity to tap lucrative Asian markets.
Like Petronas's tie-up with Calgary-based Progress Energy Resources Corp, Nexen and Inpex will study developing a liquefied natural gas plant on the West Coast as a way to supply markets across the Pacific and avoid the North American gas market, which is glutted with burgeoning shale supplies.
"The read-throughs here are pretty self-evident; we have trouble believing that Inpex does not plan to aggressively pursue LNG export capability over time," TD Securities analyst Menno Hulshof said in a research note.
The Government is addicted to terror plots and this one carries the unmistakable sub-title of an Islamic plot against a Hindu theocracy. And despite its alleged hand in uncovering this assassination plot, the US is not too troubled. That is uncharacteristic of the Americans since Islamic terror plots and political subversion by drug cartels have spawned billion-dollar spending by the US, and reams of policy paper. But the US has not issued a travel alert to warn its nationals of Trinidad and Tobago's potential danger and it has made no extra effort to secure its vital LNG supplies. Trinidad and Tobago supplies 40 percent of US LNG imports, critical in this winter. So either the US has lost interest in fringe radicals and drug cartels or our Government needs addiction therapy. [Red emphasis added.]
2011 November 28
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Nov 28 (Reuters) - Angola LNG is on track to deliver its first liquefied natural gas exports in early 2012 and is looking to sell its LNG to non-U.S. buyers after prices there plummeted due to an increase in [US] domestic gas production, a company executive said on Monday.
Angola LNG's plans to turn its focus away from U.S. buyers occurs in the wake of a rapid increase in shale gas production brought about by new drilling and extraction technologies which will bring U.S. gas production to a record high this year.
In documents filed with the review board in August, PEV says it’s entitled to compensation because it had a July 2005 written agreement with James Irving Warner to lease and develop his land as a liquefied natural gas terminal and facility.
Maine Natural Gas is one of three regulated, investor-owned gas utilities in the state. For these private companies, residential expansion is a measured, calculated undertaking. Unless homes are near a distribution line, getting service requires a critical mass of cash-ready customers living within certain distances of a gas main to cover the costs of construction.
"The construction costs associated with expanding the natural gas system can be significant," he said. "By Maine regulation, these costs must be covered over time by the customers who benefit from the expanded service." [Red bold emphasis added.]
Webmaster’s Comments: This explains why small communities — even when close to the Maritimes & Northeast Pipeline — are unlikely to gain access to natural gas infrastructure. Supply is not a problem. Downeast LNG is chasing a previous pipe dream.
Last week, FERC issued an order addressing a number of matters brought up during a July 2011 technical conference on proposed changes to the Dominion Cove Point LNG tariff. FERC adopted some of the proposed changes to the tariff, rejected others, and scheduled an informal settlement conference for November 30, 2011.
Regional and community-based organizations are a growth sector
Skeptics and detractors blithely disparage excesses of "the environmental movement." But the movement is hardly monolithic. The environmental sector consists of organizations large and small, national, regional and community-based. They might share certain large values, but they vary considerably in their missions.
Webmaster’s Comments: Human environment is included.
2011 November 25
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The U.S. shale gas boom has not only virtually eliminated the need for U.S. liquefied natural gas (LNG) imports for at least two decades, but significantly reduced Russia’s influence over the European natural gas market and "diminished the petro-power" of major gas producers in the Middle East and Venezuela.
Investment in LNG export facilities in the Middle East and Africa during the 1990s also have been rendered obsolete as the North American shale boom reversed forecasts saying the U.S. would need to import growing amounts of LNG to meet domestic demand.
The abundance of U.S. shale gas reduces the opportunity for Venezuela to become a major LNG exporter, and thereby lowers long-term dependence in the Western Hemisphere and in Europe on Venezuelan LNG.
The North America shale gas boom reversed the 2000 forecast that North America would be short on gas supply, and would need significant amounts of LNG imports to meet demand. Instead, growth opportunities for LNG developers are seen primarily in Asia.
SHALE gas has turned the American energy market on its head. Production has soared twelvefold since 2000, to 4.9 trillion cubic feet, or a quarter of the country’s total gas output. By 2035 the proportion could rise to half. As the shale gas flows, prices have come crashing down. Not long ago, America depended on imports of liquefied natural gas. Now it is likely to become a gas exporter. These benefits have not gone unnoticed in Europe.
When Cheniere Energy announced in March last year that it was looking at installing liquefaction capacity at its Sabine Pass regasification terminal in Louisiana, there was widespread scepticism that the concept was feasible. But Cheniere has managed to confound the sceptics with the announcement of fully-fledged long-term Sales and Purchase Agreements (SPAs), each for 3.5 mtpa, with two very experienced LNG players – namely BG Group and Gas Natural Fenosa. An Engineering, Procurement and Construction (EPC) contract has been concluded with Bechtel for construction of two liquefaction trains, and Cheniere seems to be heading for a final investment decision on the first two trains of its scheme in the near future. And the company is optimistic that there is more to come, with the possibility of moving to a four-train facility. As LNG Business Review discusses here, the commercial structure of the deals breaks some new ground, and places some interesting price risks with the buyers.
Although Cheniere finished the third quarter in the red with a $53.9 million loss -- bigger than its $40.6 million loss last year -- and reported negative earnings per share, one development might just turn the tables. The company has entered into a contract with Britain's BG Group to supply liquefied natural gas through its Sabine Pass Terminal project, owned by Cheniere Energy Partners. Under the deal, Cheniere will supply 3.5 million tons per annum, or mtpa, of LNG for 20 years. This type of LNG supply setup will be the first of its kind in the United States in more than 40 years.
Cheniere is cementing a strong base to capitalize on the booming global demand for LNG. America has become a big source of natural gas -- so much so that production has outpaced domestic demand, creating a supply glut. That's why LNG is fetching a much better price in overseas markets such as Asia and Europe. An export facility like Sabine's fits perfectly into the picture.
US-based Cheniere Energy has secured a second export capacity agreement at Sabine Pass, with Spain-based Gas Natural Fenosa (GNF) agreeing to take 3.5 million tonnes per annum (mtpa), putting the US company on target to sanction the liquefaction project in early 2012.
GNF said in a statement announcing the deal that it will market the LNG from Sabine Pass in both the Atlantic and Pacific basins with the imminent expansion of the Panama Canal. The Spain-based company said it expects the first delivery of LNG by 2017.
Although a new $5-billion export terminal in Kitimat is expected to begin shipping LNG to Asia by 2015, and an even larger terminal — backed by Royal Dutch Shell and three Asian firms — is reportedly being considered, Canada remains far behind the curve.
It didn’t have to be this way. Like the ill-fated Mackenzie Valley pipeline, which was first proposed in the 1970s, there were plans as far back as the early 1980s to export LNG from Canada’s West Coast. But nothing happened.
The bilateral trade in 2010-11 was USD 140.51 million with India importing large quantities of LNG and Petroleum products from Trinidad and Tobago.
[A news video is also present in this article.]
Officials arrest more than 10 people allegedly involved in assassination attempt on prime minister.
Police conducted several road block exercises throughout the nine policing divisions in the country, particularly in and around all areas leading to Port of Spain. The road block exercises caused massive traffic pile-ups as several parts of the Churchill-Roosevelt Highway were cordoned off as police searched persons and vehicles.
The government said in August that it was imposing a state of emergency in the country in response to intelligence information which, it said, could not be shared with the public. The country has been under the state of emergency since then, with an increased presence of police and army troops on the streets. [Red emphasis added.]
PORT OF SPAIN (Reuters) - Trinidad and Tobago Prime Minister Kamla Persad-Bissessar said on Thursday the country's law enforcement officials foiled a plot involving army soldiers and police officers to assassinate her and other government officials.
The twin-island nation, a top Caribbean gas and oil producer and a leading supplier of liquefied natural gas to the United States, has been under a state of emergency since August, with an increased presence of police and army troops on the streets.
Webmaster’s Comments: Trinidad and Tobago's LNG exports to the US have recently dropped by around two-thirds, due to massive US domestic natural gas production.
The plan, which allegedly involved members of the army and the police, aimed to take her life, and that of her ministers of National Security, Foreign Affairs and Information, as well as the Attorney General. In short, the heart of her government.
Energy accounts for a third of Trinidad’s $20bn economy. Traditionally, the country has supplied 70 per cent of the US’s liquefied natural gas imports. But LNG prices have tumbled, thanks to US development of shale gas, and “fracking”. A sagging economy with rising inflation can only have spurred the increasing allure of drug-trafficking – and drug gangs’ ability to kick-back when the rule of law is imposed. “There are people who are hurting, hurting them where it hurts most, the criminal elements in their pockets,” said Ms Persad-Bissessar. “I’m not surprised that such elements would make good on threats to carry out reprisals.” [Red emphasis added.]
PORT-OF-SPAIN, TRINIDAD—Trinidad and Tobago’s prime minister came under public pressure Friday to reveal more details of an alleged death plot against her that she blamed on criminals fighting back against a government crackdown.
Police said nearly a dozen people had been arrested, including members of the army and police, but authorities have not given more details, citing the need to maintain security in ongoing operations to dismantle the plot.
The Caribbean state, a leading supplier of liquefied natural gas to the United States, has experienced a spike in murders blamed on drug trafficking and related turf wars. Lying just off the coast of Venezuela, it is a trans-shipment point for South American cocaine headed to Europe and the United States.
Webmaster’s Comments: The Trinidad and Tobago energy minister recently announced that the country anticipates LNG exports to the US to drop to zero, due to the US natural gas glut.
NEW YORK Nov 25 (Reuters) - Operations were unaffected at Trinidad and Tobago's liquefied natural gas export plant on Friday, despite a high security alert following an alleged attempt to assassinate the prime minister.
"Operations are running as normal. We have not enhanced security arrangements at our Point Fortin facility," an Atlantic LNG spokesman said. "We continue to monitor the situation and maintain our ongoing liaison with the Trinidad and Tobago Coast Guard."
The government’s pushback on BC Hydro rates comes at the same time that Premier Christy Clark is promising huge industrial expansion to meet her jobs agenda. BC Hydro could be called upon to ramp up supply substantially in the next few years to provide electricity to three new liquefied natural gas plants and eight new mines. Mr. Reid said those additional demands add to the uncertainty around long-term forecasts. [Red emphasis added.]
2011 November 23
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Currently, the US energy grid has a strong strategic advantage in that there are plentiful natural gas reserves in North America. Natural gas is what supplies most of California’s energy grid, and increasingly is replacing coal plants in the US. It is supplied through a network of pipelines. This is different than, for instance, Japan, which relies on natural gas imports delivered by ship from around the world. While Japan pays upwards to $14 per unit for natural gas, the US’s unique situation means we’ve been paying much less—currently, natural gas sells for as little as $3 per unit.
[E]xport schemes add up to a disaster for both the US economy and environment. Exporting natural gas will raise US prices for natural gas. According to a study done for the Department of Energy, Cheniere’s LNG terminal alone will increase natural gas prices by up to 10 percent. As more terminals come on-line, prices will increase more, as a larger percentage of gas produced in the US leaves the country. This will mean higher prices for ratepayers.
In short, exporting LNG is a bad deal for everyone outside the fossil fuel industries. It will ensure that the US absorbs all of the impacts of gas drilling, and gets none of the benefits. There needs to be an immediate “time out” on LNG export permitting processes, and there needs to be a full public accounting of what this will do to our economy and environment.
Energy companies will harvest an increasing amount of natural gas from dense shale rock formations nationwide, with as much as 50 percent of the U.S. production coming from those sources by 2030, Deloitte analysts predicted Tuesday.
The boom in shale gas extraction has helped keep prices low — now around $3.39 per million British thermal units. Some industry officials have warned that the price is too low to sustain some of their drilling projects.
Soc Gen analyst Thierry Bros said in a report Tuesday that, with US Gulf Coast LNG expected to materialize in 2016, China will likely first look into a potential US LNG deal before signing a gas supply agreement with Gazprom.
LNG [Cheniere] has its fair share of headwinds in front of it regarding the actual construction of the export facility. … The profit potential ahead for LNG is enormous with Natural Gas selling around $4 here and as high as $16 in countries like Japan. Not to mention the overwhelming supply of Natural Gas that the United States has.
World Gas Intelligence reports that LNG shipments from Trinidad and Tobago are shifting away from North American destinations and trending towards Asian LNG markets. According to industry analyst Bentek, U.S. LNG imports from Trinidad are down 34% in 2011 compared with 2010.
Webmaster’s Comments: LNG exports to the US are expected to drop to zero, according to the Trinidad & Tobago energy minister. T&T had previously been supplying 70% of the US' imported LNG; however, it dropped to just 25% of US imports in the past four years (see this Platts article)..
Items of export from T&T include scrap metals, wood and wood products, asphalt,chemicals and liquefied natural gas (LNG). “Bilateral trade relations between India and T&T have considerable potential. India’s exports to this country showed exponential growth from US$8.8 million in 2001 to US$312.27 million in 2008-09. However, trade figures between the two countries for 2009-2010 and 2010-2011 have gone down principally on account of the global recession. T&T exports to India have shown a decline principally because of the shortfall in LNG exports, and the economy having been severely impacted by the global downturn, which has led to a negative rate of growth,” Bhardwaj said.
A group of British Columbia's coastal first nations wants an adjournment to the environmental review of Enbridge Inc.'s Northern Gateway pipeline project for an opportunity to re-start formal consultations with the company.
However, the move has more to do with formally maintaining their opposition to the controversial project than representing any change of heart over the prospect of an oilsands pipeline from Edmonton to Kitimat and tanker traffic off B.C.'s coast, according to Art Sterritt, executive director of the Coastal First Nations Great Bear Initiative.
2011 November 22
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Gas Natural SDG SA of Spain agreed to load 3.5 million metric tons of liquefied natural gas a year from Houston-based Cheniere's proposed Sabine Pass terminal in Louisiana for 20 years beginning in 2017, the companies said in statements after the market closed in the U.S. Cheniere rose 7.1 percent to $12.30 in New York premarket trading at 8:12 a.m. local time.
The contract is a landmark for both companies. Gas Natural, the biggest gas supplier in Spain and Latin America, has never imported from the U.S. and said it hopes to use its nine LNG tankers to deliver the fuel as well to Pacific destinations once the Panama Canal is expanded.
Gas Natural Fenosa will pay Cheniere about $454 million per year for use of the terminal, construction of which could begin in 2012. It will buy LNG from Cheniere at a 15 percent premium to U.S. benchmark futures at Henry Hub.
Five projects across the United States and two in western Canada have applied for construction and export licenses, seeking long-term deals predominantly with buyers in Asia where prices are four times higher than those in the United States.
Cheniere has already sold 7 mtpa of capacity in two recent deals with Britain's BG Group and Spain's Gas Natural Fenosa helping to secure financing for the first two trains of the project, which still needs environmental approval from the US federal energy regulator.
xInstead of importing large volumes of gas, the US has the potential to be a major exporter to higher-paying markets in Europe and Asia. Four other US projects are also under regulatory review, which together could export more than 10% of US needs.
Webmaster’s Comments: Sabine LNG exports equal nearly three times the volume of LNG expected to be imported into the US next year.
Cheniere Energy Partners' Sabine Pass Liquefaction subsidiary has entered into a 3.5-metric-MMtpy LNG sale and purchase agreement with Gas Natural Fenosa. The agreement follows on the heels of an $8 billion, 3.5-metric MMtpy agreement between Cheniere and BG Group in October.
Production from shale rock has made the U.S. the world’s largest gas producer and caused prices to collapse 75 percent from 2008’s highs, opening the prospect of ship-bound exports. Yesterday’s deal, following a 20-year contract with BG Group Plc, may help cash-strapped Cheniere attract financing for the first phase of its $10 billion Sabine export terminal, Societe Generale said.
At the start of the last decade, the United States experienced a surge in the construction of liquefied natural gas import terminals over fears its natural gas reserves were in terminal decline. These fears could not have been more wrong. Today, these terminals are sitting idle and the worries now center on finding buyers for the country’s surplus of gas.
Chris Faulkner, Breitling Oil and Gas CEO, said, "Natural gas and the impact LNG can have on our local commodity markets within the United States is something very timely and an important discussion to be having as we enter a new era of energy throughout the planet." Faulkner added, "I certainly feel America will be in the LNG business and Europe will be a major client within the next 3 years."
A representative for Apache told an industry conference in Rome that he expects LNG sale and purchase agreements and front end engineering and design contracts for the Kitimat LNG export project to be finalized in the first quarter of 2012. Read more in Platts LNG Daily [subscription required].
Earlier this year, Bangor Gas officials had proposed installing 12,400 feet of new pipeline stretching from the Verso Paper plant — which is already a major customer — to the town’s school complex. The company indicated at the time that it potentially would build several spurs if enough homes and businesses pledge to connect to the lines, although the exact route was unclear Monday night.
Webmaster’s Comments: Verso Paper has had natural gas access for several years, but no company had previously offered to take the risk to build a distribution pipeline network to other businesses and residents. Even as this story reports, adding distribution to homes and businesses will require the local public schools to commit to becoming customers.
Plentiful natural gas is available in Maine. What is absent is distribution infrastructure. Building that infrastructure requires natural gas distribution companies to take the risk; so, small rural communities are unlikely to gain access unless there are large anchor customers willing to make a commitment.
At issue is the Jones Act, which prohibits foreign flag ships from traveling from one U.S. port to another without a waiver. A new project at the Marcus Hook refinery in Delaware County has been held up because there are no qualified U.S. flag liquefied natural gas tankers available to transport natural gas from Delaware County in Pennsylvania to the Gulf region.
When Rep. Meehan and Sen. Toomey discovered that similar waivers were being issued to 60 foreign ships to participate in the America's Cup race, they threatened to put a hold on the America's Cup Act of 2011 in the House and Senate if similar waivers are not granted to the Marcus Hook tankers as well. [Red emphasis added.]
2011 November 21
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IT HAS been the question on the lips of many gas market commentators for some time — will the US start exporting its vast quantities of recently discovered natural gas, thereby reshaping international energy markets?The question was met with a resounding yes at the end of October, when UK...
BG GROUP’s global reach when it comes to liquefied natural gas means that US LNG could end up being sold around the world, not just into energy-hungry Asia.The company says it supplied LNG to 19 different countries in 2010, delivering 215 cargoes. It says it has now supplied to 22 of the...
Abundant shale gas resources in the US that have turned the natural gas supply outlook from a shortage to a surplus also are stimulating proposals to export—instead of import—LNG. Policies to encourage such projects should be carefully considered, witnesses told the US Senate Energy and Natural Resources Committee on Nov. 8. Higher prices resulting from possibly tighter supplies are the most obvious risk, they suggested. Five LNG export applications have been filed with the US Department of Energy, said Jim Collins, underground utilities director for the city government in Hamilton, Ohio, who testified on the American Public Gas Association's behalf. "Just the volumes enumerated in t...
“Last but not least, LNG export potential has been announced,” Yeager told investors. “There are four permitted export terminals [in the U.S.] right now and that’s growing rapidly, and there’s one new export contract that has been let for actual purchases of gas, should it be developed, and liquefied and sent into Europe, and all that’s happening at light speed. So as you can see, clearly, shale gas is changing the landscape and becoming a major source of hydrocarbons around the world for the future.”
"We welcome Gas Natural Fenosa as the next foundation customer for our Sabine Pass liquefaction project. Gas Natural Fenosa is a leading, integrated natural gas and power utility and a significant participant in the natural gas and LNG markets," said Charif Souki, Chairman and CEO. "With this agreement and the previously announced agreement with BG Gulf Coast, LLC, we have reached our contract capacity target for the first phase of our project. We will now proceed towards making a final investment decision in order to start construction on the first two liquefaction trains in early 2012."
“It’s clear Asian markets are looking to [liquefied natural gas or LNG],” said Brian Tanaka, director of business development and special projects for Spectra Energy’s pipeline operations in Western Canada.
Globalizing – Canada’s oil and gas industry ranks fifth largest in the world and is set to diversify its export capabilities into high-value, high-growth markets in the Asia-Pacific region. Momentum behind the globalization megatrend has massive implications to what the Canadian oil and gas industry will look like five and 10 years from now, especially when paired with the other megatrends listed above. Producers will have to consider how to position their prospective lands in the context of new supply routes. When Canada starts exporting meaningful quantities of LNG mid-decade, it will mark the beginning of a new period. Supplying customers to the west instead of to the east will be like switching end zones. Position accordingly, and remember not to accidentally shoot on your own net.
In northwestern BC, economic benefits for first nations and those who live in the Kitimat-Terrace region are crucial, Ellis Ross, chief councillor of the Haisla Nation in northwestern BC, writes in the Kitimat’s Northern Sentinel. Rio Tinto Alcan is investing $300-million as part of a $2.5-billion modernization of the Kitimat smelter and the Haisla are part of a joint venture with LNG Partners in a $3-billion LNG (liquefied natural gas) [export] facility before the National Energy Board.
[Webmaster's note: The following article is not available online without paid registration.]
Downeast LNG has informed the Federal Energy Regulatory Commission (FERC) that it anticipates filing a response to a request for additional information by Dec. 1.
U.S. Senator Jeff Bingaman, chairman of the U.S. Senate Committee on Energy and Natural Resources said last week," We had a hearing in 2005 on the future of LNG and the hearing topic from 2005 and today sound similar. However, in 2005 we were thinking about anticipating need to import growing quantities of LNG. Today we're thinking about what role LNG exports might play in our energy future." [Red bold emphasis added.]
Webmaster’s Comments: The response Downeast LNG says it will file on Dec 1 was actually due to FERC on Nov 7. They still have not completed answering FERC's questions from the Draft Environmental Impact Statement that were due on 2009 July 6, and are a year late in answering other questions from 2010 Sep. Downeast LNG continues its long history of regulatory deadline abuse.
While Downeast LNG is tardy in answering FERC's questions, the LNG market has passed them by — with no purpose in today's natural gas world.
[Webmaster's note: The following article is not available online.]
Could Spell Doom To LNG Imports
EASTPORT - Natural gas production is soaring in the United States which many say eliminates the need of importing liquid natural gas (LNG).
What has happened is that the United States Energy Information Administration announced on November 8 that US natural gas production is expected to reach record highs in 2012.
Conversely, it also expects liquid natural gas imports to drop from a high in 2007 of 770.8 billion cubic feet to an amazing low in 2012 of only 0.7 billion cubic feet. [Red bold emphasis added.]
[Webmaster's note: The following article is not available online without paid registration.]
"The Calais LNG website still claims Goldman Sachs is providing financial support to the project. In actuality, Goldman Sachs dumped the project in August 2010, taking millions in losses.
"Now, Goldman Sachs is telling the LNG industry to do exactly the opposite of what Calais LNG is proposing. Goldman Sacks (sic) says the U.S. has so much domestic natural gas that the market is in exporting LNG from the U.S. to overseas markets — the exact opposite af what Calais LNG is proposing."
Calais LNG representatives did not respond to interview requests. [Red bold emphasis added.]
Webmaster’s Comments: Calais LNG: No money, no terminal site, no office …no project.
In a determination issued last week, FERC informed Southern LNG Company, L.L.C. that the company would not have to comply with the Commission's pre-filing procedures during the review process for the installation of a boil-off gas compressor at the Elba Island LNG terminal.
"This year, for the first time, Southcentral Alaska will be without an operating liquefied natural gas plant in Nikiski, which in previous winters diverted gas to the region’s utilities during cold snaps. Plant owner ConocoPhillips is continuing with plans to mothball the facility in December after making one more shipment of LNG to Asia in late November ... This creates a new uncertainty, one more complication in a delicate regional energy situation. The gas wells that now supply the LNG plant are still available but it’s not as easy to turn them on and off to meet a short-term gas needs for the utilities. When the LNG is operating, the manufacture of the liquefied gas could more easily be turned off, or at least down, and the gas diverted to the utilities."
“We have stayed consistent with the people’s directive (the people’s initiative creating ANGDA passed two to one), and ANGDA has always championed bringing natural gas in a spur line from Glennallen into the Cook Inlet area," he said. "That linkage is a key part of any Valdez natural gas export (LNG) project and one that I worked on with Governor Hickel.”
Axsen is correct that all of the gas extracted in B.C. will be burned and contribute to CO2 emissions, regardless of where on this planet it is shipped and consumed. He is also correct that the market for LNG is primarily Japan, China, Taiwan and Korea, trading partners from whom we purchase many manufactured goods such as hybrid and electric vehicles. What Axsen does not mention is that the natural gas exports will displace other sources of energy heavily relied upon by our trading partners such as coal, oil and nuclear power. These sources are all considered less environmentally sound than natural gas. For instance, each kilowatt/hour of electricity generated by natural gas produces half of the CO2 emissions of producing the same kWh from coal. The use of natural gas will therefore result in a net reduction of CO2 emissions and provide other environmental benefits. This is why most jurisdictions outside B.C. regard natural gas as a clean fuel for electricity generation and transportation. The United Kingdom easily met its Kyoto commitments by displacing older coalfired electricity generators with efficient natural gas-fired generation, and we can observe a similar evolution taking place in Alberta.
Webmaster’s Comments: Shipping LNG across the Pacific and then regasifying it uses a significant amount of energy, as compared to domestic natural gas. The LNG-coal comparison in the above op-ed is not as straightforward as is presented.
2011 November 20
[Red bold emphasis added.]
Angola LNG, built to supply what was then a thirsty US market, will produce its first cargo in the first quarter of next year. But with the boom in shale-gas production, the US not only produces all the gas it needs – the country utilised just 8.5% of its LNG import capacity last year – but a supply glut has also...
Webmaster’s Comments: As late as November 11, Angola LNG was still indicating its major customer would be the USA (see the news article), but has finally figured out US natural gas realities. Angola LNG is showing more business sense than the obsolete-but-still-throwing-money-away proposal, Downeast LNG.
NEW YORK, Nov 16 (Reuters) - The head of Chesapeake Energy , one of the biggest U.S. natural gas drillers, does not want the country to ship its huge gas reserves overseas, despite agreeing to supply fuel for a proposed export project.
Record U.S. natural gas production has sparked a debate about whether the resource should be used more at home, potentially for wider use in transportation, or shipped abroad to fetch higher prices on the global market.
A string of rival liquefied natural gas (LNG) export projects have been proposed in the United States over the past year as unconventional gas production has left the country with a century's worth of cheap supply, evaporating import needs and thinning producers' profit margins.
…In the 1990s, deregulating wellhead prices and allowing power generators to consume gas created new markets that drove prices to historic high levels and supported the widespread deployment of hydraulic fracturing technology. As a result, the trend for increased liquefied natural gas (LNG) imports predicted by the Natural Petroleum Council in 2003 has been reversed. LNG imports are at 1994 levels, and companies are now seeking permits to export LNG.
Last week the U.S. senate met to review the licensing and permitting of LNG exports as they grapple with the concept of what global trading will do to the pricing of this previously domestic fuel. Regardless of the outcome, regulatory approvals and long-term deals are already being put in place, and gathering momentum.
CALGARY — Pipeline company Spectra Energy Corp. is looking at spending $2 billion to $4 billion over the next several years to gather natural gas in B.C. and transport some of it to export terminals on the coast.
One of those terminals, operated by Royal Dutch Shell with partners Korea Gas Corp., Mitsubishi Corp. and China National Petroleum Corp., will reportedly load 1.8 billion cubic feet a day of liquefied natural gas onto tankers bound for Asian markets.
On Tuesday … an official with Houston-based Spectra reportedly said it believes Shell is contemplating a 1.8 bcf/d project — bigger than the 1.4 bcf/d, $5.6-billion Kitimat LNG project led by Apache Canada with partners EOG Canada and Encana Corp.
Two other West Coast LNG projects have been publicly proposed — one from BC LNG Export Co-operative LLC and the second as part of a $1.07-billion partnership between Calgary producer Progress Energy Resources Corp. and Malaysian state-owned oil company Petronas.
"In terms of exports from North America, whether it is the Gulf Coast or whether it is Western Canada, it's something we're actively looking at," Andrew Swiger, senior vice-president of Exxon said at a Bank of America Merrill Lynch investors conference.
A group of major international energy partners led by Royal Dutch Shell PLC is contemplating an LNG export terminal for the British Columbia coast that is substantially larger than a rival’s project that could soon begin construction.
In a presentation to the Industrial Gas Users Association, Mr. Capps said Shell is examining plans for a 3.6 billion cubic feet a day project, which would be among the largest under consideration in the world. Spectra spokesman Peter Murchland later said the correct figure is 1.8 billion. That compares to the 1.4-billion cubic feet a day proposed by Kitimat LNG, whose backers are Apache Corp.
The following link leads to a PDF file (770 KB).
As estimates for the amount of U.S. natural gas resources have grown, so have the prospects of rising U.S. natural gas exports. Projects to export liquefied natural gas (LNG) have been proposed—cumulatively accounting for about 12.5% of current U.S. natural gas production—and are at varying stages of regulatory approval. Projects require federal approval according to Section 3 of the Natural Gas Act (15 U.S.C. '717b) with the U.S. Department of Energy's Office of Fossil Energy and the Federal Energy Regulatory Commission being the lead authorizing agencies. Pipeline exports, which accounted for 94% of all exports of U.S. produced natural gas in 2010, are also likely to rise.
The abundance of new domestic natural gas supplies shifted industry interest from building LNG import terminals to constructing LNG export terminals. As of October 2011, four companies have applied for permits to construct liquefaction facilities at existing LNG import terminals (also know as regasification facilities) and a fifth company has applied to construct a new LNG export facility in order to export domestically produced natural gas as LNG. A sixth company has applied to export U.S.-produced LNG, but would use existing LNG produced through other industrial processes in small quantities. Additionally, seven companies received authorization to re-export LNG cargos (take in foreign cargos, hold in storage, and then reload onto LNG tankers to go to foreign markets) from import terminals with one additional company application pending. Increased pipeline exports to Canada and Mexico may also rise if their domestic production continues to decline and their demand continues to increase.
[Starting in 2010, re-exporting] almost doubled U.S. LNG exports to other countries, including new recipients Brazil, India, Spain, and the United Kingdom. This trend is likely to continue, particularly as natural gas prices in the United States remain lower than elsewhere and U.S. production remains adequate for domestic consumption.
If all the proposed U.S. LNG export projects were operational today, the United States would rank second behind Qatar in global export capacity. However, U.S. LNG exports will face competition in the global LNG market. Global liquefaction capacity is projected to almost double by 2020 (see Figure 7), with many projects much further along than the U.S. projects.…
The US Energy Information Administration (EIA) announced new information on November 8 that US domestic natural gas production is expected to reach record highs in 2012. Conversely, it also expects liquefied natural gas (LNG) imports to drop from a 2007 high of 770.8 billion cubic feet (bcf) for the entire year (2.111 bcf/day) to an amazing low of only 0.7 bcf/day. And, LNG imports from Trinidad — the US's closest and greatest LNG supplier — have dropped 66%, due to flourishing US natural gas production according to Trinidad and Tobago Energy Minister Kevin Ramnarine on November 13.
Over 885 LNG carriers sailed through the Suez Canal last year, up from 525 in 2009 and 429 in 2008, figures from the Suez Canal Authority show, while other tanker trade never fully recovered from the 2008/2009 slump, increasing the likelihood that LNG ships will start to draw unwanted attention from pirates. [Red bold emphasis added.]
Incidents of piracy have risen in recent years, especially around east Africa and the Gulf of Aden, with a range of ships targeted – from oil tankers to cargo vessels. LNG carriers were thought to be safe because of their speed and height, but this may not be the case.
The Mariner Project, a joint venture between Sunoco Logistics Partners L.P. and MarkWest Energy Partners L.P., would transport ethane produced from the Marcellus Shale by pipeline to Marcus Hook and then by sea to the gulf coast, where ethane is used to make plastics.
Webmaster’s Comments: Congress' approval is an exception to the Jones Act that prohibits foreign-built vessels from transiting cargo between US ports.
Ethane is the second-largest (although small, in comparison) component of natural gas. Ethane is highly flammable and explosive when unconfined, and when the gas is burned, produces toxic gases, including carbon monoxide. It is slightly heavier than air. Ethane liquefies at around -93°C/-136°F (compared to LNG: -160°C/-260°F), so liquefied ethane is a cryogenic, and on regasification expands 437 times its volume.
Bechtel will design, construct, and commission the two liquefaction trains using ConocoPhillips’s Optimized Cascade technology. The liquefaction trains will be built next to the existing facilities at the Sabine Pass terminal, which include five tanks with storage capacity of 16.9 bcf, two docks that can handle vessels up to 265,000 cu m and vaporizers with regasification capacity of 4 bcfd.
[W]e're particularly vulnerable this winter because it appears we won't have Conoco Phillips' liquefied natural gas, or LNG, plant at Nikiski available to shift gas to the local utilities if there's very cold weather and a supply disruption. The company plans to mothball the plant after making a last shipment of LNG to customers in Asia, although the facility will be maintained so that it could be restarted.
…The regional utilities, Enstar and the electric utilities, have a legal responsibility to ensure we have gas and electricity. Because of that, they are being prudent and continuing to plan to import LNG by 2015 as a backstop in case the drillers are unlucky.
Larry Persily, working to smooth the way for a pipeline through Canada to Lower 48 markets, pounced on an audience-submitted question with a booming voice that left no doubt he stood. Following a panel discussion about Cook Inlet oil and gas exploration at the Resource Development Council's annual meeting on Thursday, Persily was asked:
"A panelist spoke of the need for Alaskans to pull together on a gas line. But we already did. In 2002, 138,000 Alaskans voted for the all-Alaska gasline, North Slope to tidewater, for LNG export to the world markets. Care to explain the disconnect between the wishes of Alaska voters and the public policy that is not consistent with voter wishes?"
All residents of this region are encouraged by the jobs and investments we are starting to see come this way, from the RTA modernization to the KMLNG project and the joint venture the Haisla have with LNG Partners of Houston in the BC LNG proposal now before the National Energy Board for an export permit.
What we look for in the projects that are being considered in our traditional territory are benefits (jobs, investment, business opportunities) that are not only meaningful to our people, but also to others who live in the Kitimat-Terrace region - and to British Columbia as a whole.
Webmaster’s Comments: At least Kitimat LNG does not place the Haisla community in harm's way from the LNG ship transits or the termina — unlike Downeast LNG and defunct Quoddy Bay LNG.
[Gov. John Kitzhaber ] has been lukewarm in his support for two projects the commissioners have been working on — a coal terminal and a liquefied natural gas terminal, both of which have come under fire from environmental activists and those skeptical of their economic feasibility.
There is no doubt that gas prices can only be raised to a desired level by looking at the supply side and doing something about it. Of course this is not easy given the state of the market and the sudden increase of supplies especially from the US with its "shale gas revolution". This factor is so strong that the US LNG terminals are now working at low capacity due to reduced imports. LNG which was destined to the US market is now sold in the spot market, undermining prices. The GECF is also under pressure from consuming governments not to attempt to become a "gas Opec" thereby influencing gas prices. Some ministers went out of their way to alleviate such a possibility, which admittedly is difficult due to the nature of the gas market and its differences from the oil market. [Brown and red bold emphasis added.]
2011 November 18
[Red bold emphasis added.]
…Some in the gas industry believe that supplies now are so abundant that the United States could become for the first time a major global player in the fuel trade. Last month, the first such deal was signed-an $8 billion agreement by Britain's BG Energy to purchase liquefied natural gas (LNG) supplied from a coastal terminal to be built by Houston's Cheniere Energy.…
As recently as five years ago, worries were high that the United States was running out of natural gas, and debate was raging over dozens of proposals for coastal LNG terminals, including one by Cheniere-to import gas. Only a few of those were ever approved. In the post-9/11 world, the idea of new supertanker traffic hauling potentially hazardous cargo near cities did not sit well in many communities. Moreover, those ships meant new energy dependence on countries like Nigeria, Trinidad, and Algeria. Cheniere built its terminal, at a cost of $1.4 billion, but it is now mostly idle.
Most importantly for U.S. consumers, natural gas prices have fallen 40 percent since 2005, and low prices are projected far into the future. For homeowners in the U.S. Northeast, the price of natural gas for home heating, when compared to oil heating, is at an all-time low.
Sempra Energy became the sixth US company, and the fourth in the US Gulf region, to declare its formal intentions to export US natural gas as LNG, having filed a request with US regulators on 10 November.
In the past, the company was bullish on domestic U.S. consumption and had even spent nearly $2 billion to build the Golden Pass LNG terminal near the Texas-Louisiana border. Now, however, the company is evaluating export options as LNG supply is superseding the domestic demand. Plans to export LNG from the U.S. and Canada indicate a major shift in the company’s thinking.
The basic idea of export from U.S. has been opposed by Chesapeake Energy Corporation, the second-largest natural gas producer in the country. The rival company does not want natural gas to be exported abroad, as going forward, it believes the capacity will be utilized in the U.S. itself.
It is an exciting time to be an energy investor in North America. North American natural gas prices are now the lowest in the world. This is a stunning development given that there were grave concerns about natural gas supplies in the early to mid-2000s. A massive build-out of liquified natural gas (LNG) import capacity (regasification) was planned.
In 2008, the natural gas market started to distort because of surging shale gas production in the United States. LNG import terminals were mothballed, plans to build them were either cancelled or changed to build LNG export terminals. It is only a matter of time before North American shale gas technology will be exported and applied around the globe. In the meantime there is a very large arbitrage opportunity for natural gas exports from North America.
Webmaster’s Comments: An illustration in the article shows North American Henry Hub prices at $3.66/million BTU, as compared to European prices at $10.26, and Japan/Korean prices at $17.45.
MORE than 100 liquefied natural gas carriers could be added to the global fleet to service new US LNG export projects.The latest forecasts on potential LNG carrier orders come as the US is poised to become a major LNG exporter as it extracts ever greater quantities of its domestic shale...
THE latest analysis of US liquefied natural gas exports suggests LNG shipping is poised to reap massive rewards.Commentators point to as many as an additional 100 LNG carriers required for US LNG export projects alone, with daily rates set to rise even higher than present sky-high...
What really put the stamp on the value of pipelines this month was Kinder Morgan's $38 billion buyout of El Paso, driven by the company's natural gas assets. The increased production of natural gas in the U.S. has changed the whole energy dynamic, and pipelines will play a major role in getting fuel where it needs to go.
Nov. 17 (Bloomberg) -- Petronet LNG Ltd., India’s biggest liquefied natural gas importer, has held talks to invest in U.S. terminals owned by Freeport LNG Development LP and Dominion Resources Inc. to secure supplies as domestic demand rises.
Petronet is also in talks with Cheniere Energy Inc. for a stake in the Sabine Pass plant and is waiting for U.S. regulatory approval for the companies to export gas. A surge in shale-gas production in North America helped the U.S. surpass Russia as the world’s biggest gas producer in 2009.
Now U.S. oil and gas companies can ship their excess natural gas as LNG to foreign markets — where natural gas is scarcer and widely commands prices of $10 to $15 per Mcf, and in the case of Japan, nearly $20 per Mcf.
VANCOUVER, Nov. 17 (Xinhua) -- A senior official with the government of British Columbia (B.C.) said Thursday that his recent visit to China offered encouragement toward the Canadian province's plan to export liquefied natural gas (LNG) overseas.
Tom Huffaker, vice-president for policy and environment at the Canadian Association of Petroleum Producers, said Canada is now the third largest producer of natural gas in the world but is losing North American market share because of increased U.S. production.
Prices slide on full storage facilities in Canada and the U.S.
An analysis carried in World Gas Intelligence [subscription required] argues that U.S. LNG export proposals could face significant challenges if the U.S. Department of Energy (DOE) changes its approach for evaluating LNG export applications. In particular, the piece notes that DOE may adjust its permitting approach once it has received the findings of two studies announced at a recent U.S. Senate committee hearing.
U.S. Sen. Olympia J. Snowe is pressing the federal government to broaden the use of energy funds to encompass natural gas lines and help pay for a line proposed for the Lincoln and Katahdin region paper mills, she said in a letter released Wednesday.
As tentatively planned by state officials, the new Great Northern Paper Co. LLC mills in East Millinocket and Millinocket, Lincoln Paper & Tissue Co. and several other manufacturers in the Katahdin and Lincoln Lakes regions would get natural gas from a line the state wants to install in two years, Gov. Paul LePage has said.
A natural gas advocate, Snowe said that America’s reserves of natural gas now rank second in the world. She said U.S. natural gas is half as expensive as that found in the United Kingdom and a quarter of the price found in Japan.
Webmaster’s Comments: Sen. Snowe appears to have finally fallen off her own "Maine should import foreign LNG" bandwagon!
His plan calls for delivered liquid natural gas, or LNG, at the plant next year. Lincoln Paper & Tissue invested $1 million installing natural gas-compatible burners in its two tissue machines in September and will do the same for its biomass boilers, and spend another $1 million, in January, Van Scotter said.
The LePage administration is helping natural-gas suppliers and Maine businesses prepare to run a branch line, or six- to eight-inch pipe, about 60 or 70 miles from the Old Town or Bangor areas through Lincoln and into the Katahdin region, where it would supply the two Great Northern Paper Co. mills, said Ken Fletcher, director of the state’s energy office.
Private investors would build the branch sometime in 2013. It would extend from Maine’s largest natural gas conduit, the Maritimes and Northeast Pipeline, which stretches from Halifax and Point Tupper in Canada to Portland (sic). It is among three main pipelines in Maine, Fletcher said.
Natural gas lines need companies such as Lincoln Paper & Tissue, Fletcher said — round-the-clock users that draw enough fuel to make the investment worthwhile. It’s almost a formula. Investors must balance the cost per mile of pipeline construction and maintenance against the potential savings natural gas provides and the time it would take for those savings to recoup the initial investment. Under present conditions, a 60- or 70-mile line through northern Penobscot County “is justifiable,” Fletcher said.
Webmaster’s Comments: Factual note: The Maritimes & Northeast Pipeline (M&NE) runs from Goldboro, NS, to Dracut, MA, and a M&NE spur from Methuen, MA, to Beverly, MA; not from Halifax, NS, to Portland, ME. There are M&NE spurs that run from Goldboro, NS, to Point Tupper, NS, and from around New Glasgow, NS, to Halifax. The northern terminus of the M&NE Pipeline is at Goldboro, although the gas comes ashore by pipeline from near Sable Island.
"I've talked to companies very recently that are interested in moving near the LNG plant," he said. "I can talk to corporations and companies not only in the United States, but internationally who use liquefied natural gas to fuel their manufacturing."
Webmaster’s Comments: LNG is not delivered through US pipelines. Ever. He's confusing LNG with natural gas.
Mississippi Governor-elect Bryant is advocating that it is better to buy expensive imported foreign LNG than to use the vast, cheap domestic natural gas resource virtually at our fingertips.
Webmaster’s Comments: The EcoEléctrica LNG terminal was new in March 2000. How is it that FERC did not obtain this information during the terminal application processing?
NOTE: Downeast LNG's Rob Wyatt worked on the environmental permitting for the EcoEléctrica LNG import terminal on Punta Guayanilla in Peñeulas, Puerto Rico. Unlike the proposed Downeast LNG terminal, the Peñuelas terminal does not require LNG ships to subject thousands of civilians to Federal Hazard Zones that violate the world LNG industry's own terminal siting best safe practices (see LNG Terminal Siting Standards Organization for more on this issue).
The latest LNG cargo to be loaded at Norway's liquefaction train at Hammerfest has been dispatched to Boca Chica, the first Snohvit cargo to sail for Latin America in two years and the first ever for the Dominican Republic.
Norway's state-controlled Statoil holds firm import capacity at Cove Point, whose operator has gone to arbitration through US energy regulator Ferc to compel capacity holders to supply enough LNG to keep the facility cool. [Red emphasis added.]
You already know that I have personally communicated with TransCanada, Exxon, BP, ConocoPhillips on these issues. I have let them know that, where their negotiations on commercial terms appear to be at impasse on a line to the Lower 48, that I want them to keep that option on the table, but move forward on a large-diameter LNG pipeline to tidewater in Alaska.
I have asked them to work diligently to see if they can get alignment on this. To their credit, each party has agreed to sharpen their pencils and harden their numbers on a large diameter, in-state, LNG project to see if the economics work.
Governor Parnell recently acknowledged that due to shale gas developments Alaska must change course and export its gas to the premium Asian markets. Owners of Lower 48 and West Coast Canadian liquefied natural gas (LNG) receiving terminals are likewise accepting market realities and converting their LNG receiving facilities into export terminals. Consequently Parnell now agrees that it is time for Alaska to build a gasline to tidewater to export LNG to Asia.
TransCanada and ExxonMobil will continue to resist Governor Parnell's call for a gasline to tidewater for LNG shipment because it does not go through Canada and because it would be in direct competition with ExxonMobil's many other worldwide LNG projects. If there was ever a time for Alaska to retain control of the Point Thomson Unit, it is now. [Red bold emphasis added.]
Tasked with taking rock samples last Monday for an engineering study of the natural gas line, workers turned around their pickup trucks after an encounter with a group of First Nations people and their unwelcoming sign: “Road closed 2 P.T.P. Drillers.”
Apache Corp., operator of the planned pipeline and LNG joint venture with EOG Resources Inc. and Encana Corp., acknowledged the opposition by two bands of the Wet’suwet’en Nation and said on-the-ground work for a pipeline study has wrapped up for the year.
B-C Jobs Minister Pat Bell says his trade mission to China this month was very productive -- and showed him how keen Chinese interest is in liquefied natural gas projects planned for the Kitimat area.
…Enbridge's $5.5-billion Northern Gateway pipeline proposal across northern B.C. from Alberta to Kitimat is opposed by at least 50 first nations along the pipeline corridor and on the B.C. coast, and it is also the next target for the North American environmental movement that so successfully delayed the Keystone pipeline from Alberta to the U.S. Gulf Coast.
[C]hamber president John Winter was surprised at how many respondents were either negative or unsure in their responses to many of the questions in the B.C. Chamber Energy Survey, which was to be released at Thursday evening’s opening of the two-day B.C. Chamber Energy Summit in downtown Vancouver.
“The resistance to becoming a major exporter of LNG results from a lack of knowledge ... I think the degree of support [shown in the survey] is worrisome and perhaps indicative that there’s not a lot of positive information being put forward.”
In other ways, Ms. Holder’s move makes eminent sense. One of the most pressing ambitions for Canada’s energy sector today is to open up exports to Asia. That effort is being largely led by women: both the past and current leaders of the Kitimat LNG project are women. The head of Royal Dutch Shell PLC, which is leading another major LNG project, as well as the Premier of B.C., who will play an important role as these projects come forward, are both women.
2011 November 15
[Red bold emphasis added.]
The best wind farms in the world are already competitive with coal, gas and nuclear plants. But over the next five years, continued performance improvements and cost reductions will bring the average onshore wind plant in line with cheap natural gas, even without a price on carbon, according analysis from Bloomberg New Energy Finance.
The wind industry has a conflicted relationship with natural gas. As a “dancing partner” for wind projects, natural gas can offer firm back-up when the wind isn’t blowing. However, the boom in shale gas extraction has dropped natural gas prices substantially, nudging out wind developers in large markets like Texas.
Webmaster’s Comments: Pro-wind or anti, more bad news for Downeast LNG.
The rapid development of massive U.S unconventional natural gas plays has changed the supply outlook for the world's largest gas consumer. Just a few years ago, most forecast the U.S. would need to import ever-larger quantities of LNG to meet growing demand; domestic supplies were dwindling, and Canada would no longer be able to supply enough gas via pipeline to meet demand.
A failure to reform gas prices in China has kept the price of LNG much higher than that of gas coming in through pipelines. As a result, analysts have dropped China's expected LNG demand from 33 million metric tons by 2015 to 31 million tons. Doesn't seem like a big difference, but if the price of LNG doesn't come down, there's no reason that number won't continue to shrink. Make no mistake, it is not China's demand for natural gas that is declining -- it remains high -- it is the demand for LNG that is receding.
Partners Location Status Anadarko
East Africa Concept-only Apache
Kitimat, British Columbia Permitting process; no customers Royal Dutch Shell
China National Petroleum
Kitimat, British Columbia Site purchased LNG Partners Kitimat, British Columbia Permitting process; no customers Cheniere Louisiana Permitting process;
secured one customer contract
Dominion Resources Maryland Permitting process; no customers Noble Energy Mediterranean Sea Concept-only
Webmaster’s Comments: Add Trinindad & Tobago to the list — and they already have liquefaction facilities.
The deal further upends the U.S. natural gas world. For one, it firmly underscores the 180 degree pivot away from building dozens of LNG importation projects ringing the coast of the United States over the past decade. And it stresses that the surplus of inexpensive natural gas could enable the U.S. to become an important exporter of LNG to the global marketplace.
LNG from Trinidad and Tobago has also been dispatched across the hemisphere to re-gasification facilities in Canada, Chile, the Dominican Republic, and Argentina. Indeed, it was Trinidadian gas delivered to Chile’s Quintero port and LNG receiving terminal in 2009 that officially marked that country’s integration into the global LNG market.
[T]he same firm at the center of the LNG export news in the U.S. also inked an MOU earlier this year to send LNG from the U.S. to the Dominican Republic. Indeed, Cheniere’s February agreement with Basic Energy to provide the power producer with natural gas supplies could serve to both further diversify the nation’s energy matrix as well as its newfound natural gas dependency.
The proposed Downeast LNG project principals have said for over six years that they planned to build an LNG import facility with a daily capacity of 0.5 bcf/day. The government indicates that the entire country is destined to import only slightly more LNG than is being proposed by still-unpermitted Downeast LNG. Downeast LNG's proposed project is completely unreasonable and unrealistic from any business or logical perspective. And, the US already has 13 other nearly-idle LNG import terminals — with a total capacity of 18.835 bcf/day — 27 times greater than the entire country will use next year. The US already has many times more LNG import infrastructure than it can possibly use due to the industry's previous rush to build unneeded terminals. And now, due to the well-documented, decades-long domestic natural gas glut the country is facing, the industry is actually starting a mad rush to export LNG overseas. Downeast LNG's bald assertion that their ill-conceived, wrongly-sited proposed project it is still needed staggers the mind. There is plentiful natural gas in the US, the Northeast, New England, and downeast Maine without yet another defunct-before-it's-even-permitted, idle LNG terminal — especially an inappropriately-sited one like Downeast LNG.
…It's time for Downeast LNG's Dean Girdis and cohorts, and their venture-capital partners, Kestrel Energy Partners and Yorktown Energy Partners, to face reality, pack up, and go home. [Red bold emphasis added.]
“They always say: ‘We are not an OPEC of gas,’” Guy Broggi, senior adviser to the director of liquefied natural gas at Total SA, said today at the European Autumn Gas Conference in Paris. “But if they link the price to OPEC crude oil, someone else is taking care of their interests.”
Webmaster’s Comments: This article points to another very good argument against Downeast LNG's proposal to import foreign LNG — that would cost more and would weaken US energy security.
2011 November 14
[Red bold emphasis added.]
Indeed Kevin Ramnarine, energy minister of Trinidad and Tobago, once the biggest exporter of LNG to the US, told Platts he expected exports of LNG from the Atlantic LNG complex in Trinidad to the US to fall to zero in the future as a result of rising shale gas output there.
BHP entered the shale gas industry this year with its acquisition of Petrohawk Energy and the $4.75 billion purchase of assets from Chesapeake Energy Corp. Shale may account for almost 50 percent of total U.S. gas production by 2020, the Melbourne-based company said in a presentation today.
“You need a hub, an anchor for natural gas and we are working on getting gas lines to Calais from the line going to the Woodland mill,” LePage said. He said talks also are underway to bring a line from Bangor Gas to the paper mill in Millinocket. He said that line could also serve Lincoln Pulp and Paper and some residential areas along the length of the pipeline.
Webmaster’s Comments: Gov. LePage clearly recognizes that Maine has sufficient supplies of natural gas already available without resorting to importing expensive foreign LNG. His desire, however, may be foiled by the lack of a profitable cost/return ratio for private enterprise to build natural gas pipelines to small rural communities. If it were profitable to supply natural gas to Calais (or, even Princeton or Baileyville, sitting nearly on top of the Maritimes & Northeast Pipeline), it is likely that a company would have already taken that risk.
[Gov. LePage's energy director, Ken Fletcher] says Maine needs to expand the use of wood pellets for home heating and increase the use of electric heat pumps for heating hot water. But the biggest change available to Maine, he says, is natural gas. Most states rely extensively on natural gas for home heating and other energy uses.
Speaking last week at an industry conference, Dominion Resources CFO Mark McGettrick said that he sees "significant value" for European and Asian customers for LNG exports from the Cove Point LNG facility. Read more in Platts LNG Daily [subscription required].
Sempra Energy has become the sixth US company, and fourth in the US Gulf, with formal intentions to export US natural gas as LNG, having filed a request with US regulators on Thursday to send out 12 million tonnes per annum (mtpa) from its existing Cameron LNG site.
Sempra’s DOE application follows the company’s previously announced plans to proceed with a liquefaction facility at its 1.5bn cubic feet (bcf)/day Cameron LNG import terminal in Cameron Parish, Louisiana.
Last month's landmark deal between BG Group and Cheniere Energy to export bountiful U.S. shale gas supplies to the world for the first time, looks set to turn the tide of the LNG business, analysts and traders say.
It paves the way for terminal developer Cheniere to secure financing for the its Sabine Pass project in Louisiana which could be the first LNG export plant built in the United States in nearly 50 years as U.S. gas production hits record highs.
Demand for tankers that haul liquefied natural gas is set to climb as much as 3 percent as Trinidad and Tobago ships more cargoes to Europe and Asia amid rising U.S. shale-gas production, Lorentzen & Stemoco AS said.
About 7 million metric tons of Trinidadian LNG will travel three or four times farther as imports into the U.S. decline, creating demand for up to 12 more ships a year, Knut Stangebye Olsen, a gas analyst at the Oslo-based shipping consultant, said by phone today. A fleet of about 350 tankers carries 217 million tons of the fuel a year, he said.
The North American shale gas glut offers ample opportunity for Houston-based KBR to grow closer to home, whether it is ethylene and gas-to-liquids projects that rely on cheap natural gas, or even conversion of LNG import facilities for export. Williams said early studies were taking place on the latter. [Red bold emphasis added.]
In 2003, Alan Greenspan sounded the alarm to Congress about the potential impact on natural gas prices (which were already on the rise) if significant action to increase imports wasn’t taken. The problem, though, was that natural gas can only be transported by pipeline or by container and only in a liquid form, but the reserves were mostly overseas. So, in 2005 there were plans for as many as 55 Liquefied Natural Gas (LNG)-importing facilities. Only six were built, and most sit idle today. Disruptive horizontal drilling and fracking technology opened up enormous reserves of previously unreachable natural gas in shale. Production skyrocketed and prices dropped by over 60%. Current estimates place U.S. reserves at 100 years or more…without additional technology.
[T]he study showed that extreme cold from spilling LNG combined with extreme heat from an LNG fire would severely damage a tanker, making it difficult to quickly move the vessel, Sandia's Michael Hightower, told a gas panel at NARUC's annual meeting in St. Louis, Missouri.
As part of the research, Sandia in December 2009 intentionally set a very large LNG fire in a 120 meter-diameter pool in New Mexico that was made for that purpose. The test LNG spill was 83 meters in diameter and created a 56 meter diameter fire, he explained.
The temperature of the fire reached about 280 kilowatts per square meter, which is much higher than the 200-220 kW/sq m temperature that had been assumed for the past 20-30 years, Hightower said. However, the fire was smaller, meaning the hazardous area is smaller than previously thought.
A video of the test showed a massive flame -- about 50 stories high -- covering a portion of the diameter of the spill. The heat from the fire creates its own wind as well as a billowing cloud of steam near the water.
"What we are seeing is the fires are hotter ... but they are not as high and they are not as wide as we had anticipated. So when you work through all the numbers it all kind of balances out and actually, the hazard distances to the public and to property reduce by about 2-7% versus what we had published in 2004 and 2008," he said. In humid areas, the hazard distance would be further reduced, he added.
Webmaster’s Comments: Since the fire is hotter, one wonders how that would be safer for the public at distance, since hotter fires have greater thermal radiation at distance.
Nov 14 (Reuters) - Cheniere Energy Partners L.P.'s subsidiary entered into a contract with engineering company Bechtel Oil, Gas and Chemicals Inc to construct liquefaction trains at the Sabine Pass LNG terminal in Louisiana.
The liquefaction trains will be built next to the existing facilities at the Sabine Pass LNG terminal, which include five tanks with storage capacity of 16.9 billion cubic feet equivalent (Bcfe), two docks that can handle vessels up to 265,000 cubic meters and vaporizers with regasification capacity of 4.0 billion cubic feet per day (Bcf/d).
Cheniere Energy Inc. (LNG), the liquefied natural-gas importer that Standard & Poor’s said is on the verge of default, boosted its cost estimate for a proposed U.S. gas- export terminal by 39 percent.
The first phase of Cheniere’s planned Louisiana plant will cost $4.5 billion to $5 billion for 9 million tons of annual processing capacity, the Houston-based company said today in a statement. That equates to $555 per ton of capacity, compared with Cheniere’s $400-per-ton estimate in an Aug. 5 public filing.
Webmaster’s Comments: There is a big lesson here for Downeast LNG. LNG terminal construction prices are skyrocketing.
Cheniere Energy Partners, L.P. ("Cheniere Partners") announced today that its subsidiary, Sabine Pass Liquefaction, LLC ("Sabine Liquefaction"), and Bechtel Oil, Gas and Chemicals, Inc. ("Bechtel") have entered into a lump sum turnkey contract for the engineering, procurement and construction of the first two liquefaction trains at the Sabine Pass LNG terminal located in Cameron Parish, Louisiana (the "EPC Contract"). Sabine Liquefaction is planning to construct liquefaction facilities capable of producing 9.0 million tonnes per annum ("mtpa") of liquefied natural gas ("LNG") in the first phase of its project and selling 7.0 mtpa of the production under long-term sales and purchase agreements ("SPA"). To date Sabine Liquefaction has contracted half of such production under a long-term, 20-year SPA with customer BG Gulf Coast LNG, LLC, and will make a final investment decision upon contracting the remaining 3.5 mtpa. Sabine Liquefaction intends to give Bechtel a notice to proceed with construction for the first phase upon achieving acceptable financing arrangements and receiving authorization to commence construction from the FERC. Construction is expected to begin in 2012 with LNG exports expected to occur as early as 2015.
A statement released last week by Jamaica's Office of the Cabinet said that six bids were received in response to a Request for Proposals for LNG supplies. Bids were received from Shell, Pace Global, Marubeni Corp., Morgan Stanley, Gas Natural, and Repsol.
The LNG sales and purchase agreement will be no less than three years and no greater than 20 years, with any proposed optional extension(s) five years or less. The base contract plus extension(s) shall not exceed 25 years.
Premier Clark plans to construct three massive liquefied natural gas (LNG) plants in Northern B.C. This won't only create jobs. Extracting shale gas and operating these plants will release enough global warming gases to undo B.C.'s other efforts to cut emissions. Clark claims these plants are in the best interest of B.C.'s families.
The sole purpose of liquefying B.C.'s natural gas is to feed the growing energy hunger of Japan, China, Taiwan and Korea. With continued depletion of B.C.'s most easily accessed natural gas reserves, Clark wants to meet Asia's demand with B.C.'s shale gas. Extracting shale gas is a much dirtier process that emits more greenhouse gases and harms local ecosystems and water supplies. Like Alberta's oilsands, shale gas development may produce some short-term economic gains while causing bigger problems for B.C.'s children and grandchildren. [Red bold emphasis added.]
Lastly, while mentioning shale, it seems ironic the US is looking to export its far cleaner natural gas, made more competitive due to shale gas, as LNG to Asia. Following on the heels of exports this summer and more ambitious plans to invest in LNG export facilities in southern states, even Alaska is looking to invest in a pipeline to the coast specifically to export LNG to Asia. Noted, LNG is not crude oil, and as a starter stock for petroleum and chemicals it has different advantages and disadvantages to crude oil, but with the right incentives provides a far cleaner hydrocarbon source than Canadian heavy bitumen-based tar sands. We export one and import the other — cost triumphs over logic it seems.
The development of liquefaction facilities to divert the gas for LNG exports has some potential, but at huge investment costs in a global market which will increasingly be awash with US and Canadian producers looking to export their shale gas LNG. Cash-strapped Mexico will have to partner with the private sector in order to realize the potential of these reserves and come up with some imaginative solutions to use the resources wisely. [Red bold emphasis added.]
2011 November 13
[Red bold emphasis added.]
The share of Trinidad and Tobago’s LNG exports accounted for by the U.S. has plunged to 25 percent, from 75 percent three years ago, Energy Minister Kevin Ramnarine said today in an interview in Doha, Qatar. The U.S. is the largest single destination for the Caribbean producer’s exports, he said.
Six years ago, the natural gas industry was scrambling to import LNG from the Middle East and Africa to meet America's increasing demand. More than 47 import terminals were certified for construction, triggering some local controversies about the safety of such facilities.
But then came shale-gas production, which combines horizontal drilling techniques with hydraulic fracturing to crack open vast swaths of deep shale. Areas such as Appalachia, long a backwater of small-scale gas producers, experienced a massive influx of drilling rigs. The industry says the country is sitting on a 100-year supply.
Gov. Parnell recently acknowledged that, because of shale gas developments, Alaska must change course and export its gas to premium Asian markets. Owners of Lower 48 and West Coast Canadian liquefied natural gas receiving terminals are likewise accepting market realities and converting their LNG receiving facilities into export terminals. Consequently, Parnell now agrees that it is time for Alaska to build a gas line to tidewater to export LNG to Asia.
The primary purpose of AGIA was to take the ironclad control of Alaska gasline development away from the leaseholders who have repeatedly stated they will not allow a project to go forward until Alaskans make significant, and irrevocable concessions on oil and gas taxes. Yet shortly after the AGIA contract was awarded, ExxonMobil partnered with TransCanada to become a primary beneficiary of the $500 million AGIA license dollars. Now Trans-Canada and ExxonMobil doggedly stay the course to permit a gasline into the collapsed North American gas markets where, according to the U.S. Department of Energy, due to vast amounts of shale gas, gas will remain at low prices for the next 100 plus years. And while ExxonMobil warehouses Alaska’s resources, it develops less economic LNG projects around the world to serve Asian markets.
2011 Nov 12
[Red bold emphasis added.]
Sempra Energy has become the sixth US company, and fourth in the US Gulf, with formal intentions to export US natural gas as LNG, having filed a request with US regulators on Thursday to send out 12 million tonnes per annum (mtpa) from its existing Cameron LNG site.
Sempra's DOE application follows the company's previously announced plans to proceed with a liquefaction facility at its 1.5bn cubic feet (bcf)/day Cameron LNG import terminal in Cameron Parish, Louisiana.
North America suddenly has a huge amount of natural gas thanks to advances in hydraulic fracturing and directional drilling in the shale beds which underlie much of the central and eastern U.S. Production from conventional sources - pockets of pressurized gas - is in decline but unconventional shale gas has more than made up the difference.
In Asia the price of natural gas is 3-4 times that of North America. Unfortunately, neither Canada nor the U.S. currently has liquefied natural gas (abbreviated LNG) export capability. Now, thanks to the profusion in gas supplies, an abrupt reversal is in progress. The rush is on to retrofit ports for LNG imports.
North American natural gas prices are likely to remain between $4 and $5/MMBtu in 2012 and 2013 as production from shale plays continues to increase, and will begin to rise to the $5-$6/MMBtu range in 2014 as demand begins to rise in the power sector, ICF International consultancy said Tuesday.
Gas prices will likely hold at that level through the rest of the decade before reaching the $6 to $7/MMBtu range by 2022 as the costs of drilling increase, according to the consultancy which forecasts total North American shale gas production to rise to 50 Bcf/d by 2030 from 10 Bcf/d in 2010.
But while conventional gas producers are competing for a shrinking share of the market as US shale gas has displaced conventional gas and LNG imports, the heads of state will have some cause for cheer as they contemplate a future where gas is set to grow and become the fuel of choice and as a replacement for nuclear power in the post-Fukushima era.
The deal further upends the U.S. natural gas world. For one, it firmly underscores the 180 degree pivot away from building dozens of LNG importation projects ringing the coast of the United States over the past decade. And it stresses that the surplus of inexpensive natural gas could enable the U.S. to become an important exporter of LNG to the global marketplace.
What is unquestionable is that the widely-circulated maps of proposed U.S. LNG import facilities that made their way around the natural gas conference circuit in the early 2000’s have been completely altered.
Cheniere has stepped up talks with Lithuania’s state-owned Klaipedos Nafta to secure a long-term LNG sales agreement for its proposed Sabine Pass LNG export facility, a senior executive at the US company said on Thursday.
An investment banker with Lloyds Banking Group told Platts LNG Daily this week that banks are likely to be wary of investing in U.S. LNG export projects due to political risks, which are not present in competing markets such as Australia. [Subscription required]
Canadians, who after all are the owners of Canada's natural gas resources, are served last when it comes to their longer term energy security and environmental interests. The lure of obtaining prices that are double or triple North American prices through LNG exports is impossible to resist for corporations looking at the near-term bottom line. The lure of royalty and lease sale revenue, and jobs building infrastructure and producing gas, is impossible to resist for politicians strapped for cash. This does not bode well for Canada's energy future.
Webmaster’s Comments: Canada is not alone.
“Please know that the safety and security issues you raise are extremely important to me,” wrote Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission. “However, to ensure the integrity and fairness of the commission’s decisional process, our regulations governing off-the-record communications preclude us from meeting at this time with parties to the proceeding.”
“While the EA will identify the environmental impacts related to LNG trucking, please note that the Federal Energy Regulatory Commission has no jurisdiction over truck transport of LNG,” Wellinghoff wrote. “As such, this Commission has no authority to alter the trucking routes for the transportation of LNG.”
Citizens for a Safe Secure Savannah filed a letter with FERC outlining their concerns for the security of the Hunter Army Airfield (HAAF) in Savannah, Ga., from the Southeast LNG trucking proposal. The commanding major general of HAAF, Anthony A. Cucolo III, noted in a January 2011 letter to the group that the risks posed by LNG truck transits have been vetted by the installation and it will recommend limiting LNG trucking around HAAF to "low-occupancy and low-traffic periods." [Red bold emphasis added.]
Webmaster’s Comments: While the concerns and recommendations make sense, would LNG trucking also be limited to "low occupancy and low-traffic periods" around the numerous schools, hospitals, and other civilian centers falling within the potential hazard area surrounding the truck route?
Minister of Energy and Mining, Clive Mullings, tells JIS News that efforts are being pursued to introduce the relatively cheap Liquefied Natural Gas (LNG) to meet at least 42 per cent of the country’s energy needs by 2030. The plan is welcomed by the high energy consuming bauxite/alumina sector, as this would drive down their production costs.
The Minister explains that all strategies being pursued must be done in concert with the environment. “We cannot be in contention with the environment, therefore we have to lower our carbon footprint and so the utilisation of LNG is part of the approach,” Mr. Mullings adds.
A plan to bring natural gas to the Anchorage area with a state-sponsored small-diameter pipeline is facing challenges from rivals, especially after new natural gas finds announced in Cook Inlet as recently as Friday.
Doing that would damage the chances of what the state really needs, said Merrick Pierce, chief financial officer for the Alaska Gasline Port Authority. It wants to build the so-called “All-Alaska” gas line from Prudhoe Bay to Valdez, to export liquefied natural gas to Asian markets.
Alaska Gov. Steve Parnell is urging energy producers, such as ExxonMobil and BP, to consider building a pipeline that would transport liquefied natural gas (LNG) from the southern coast of the state to other countries along the Pacific Rim.
The abundant supply of natural gas discovered in North American shale formations, which has depressed domestic gas prices, could be marketed economically to Asian markets where demand has increased in the aftermath of the nuclear crisis in Japan this year, Parnell said in an article published Nov. 6 by the Financial Times. [Red bold emphasis added.]
Webmaster’s Comments: The term "LNG pipeline" is a misnomer. What is actually meant is a natural gas pipeline to a coastal LNG liquefaction facility that would ship LNG to Asia.
Alaska has asked large energy producers including ExxonMobil and BP to examine the potential of building a gas pipeline to the southern coast with the aim of exporting liquefied natural gas to the Pacific Rim.
Gov. Sean Parnell said recently he'd like to see the state's major oil producers and pipeline licensee TransCanada work together under the AGIA framework toward the development of a large-diameter instate line, generally considered to be 48 inches in diameter. It would end in a tidewater community, where the gas can be liquefied and shipped by giant LNG tankers to the promising Asia market. TransCanada and partner ExxonMobil have been working under AGIA, which provides a $500 million reimbursement from the state, to send a line through Alberta, Canada, toward the Lower 48 market, where new shale gas discoveries have reduced the need for Alaska gas.
Clark is taking part in B.C.'s largest-ever trade mission to Asia, trying to expand on B.C.'s recent success developing the lumber market in China. And whether the product is liquefied natural gas, lumber or tourism, there are many other countries doing the same.
A representative of Jordan Cove LNG announced to an industry conference this week that the Jordan Cove facility will be a "dual-use facility," allowing for both LNG imports and regasification as well as LNG liquefaction and exports. The representative also noted that the Pacific Connector Pipeline's flow would be reversed.
Moscow, Russia, 11 Nov – The United State of America will be the main export market for the natural gas produced by the Angola LNG project, the head of the production department of the Oil Ministry, Alcides Santos said Thursday in Moscow, Russia.
Explaining the choice of the United States as the main market for Angola’s natural gas, Santos said that the US had been the first country to show interest in purchasing the gas and also had terminals ready to receive it, as well as the fact that US group Chevron is the main shareholder of Angola LNG. [Bold brown emphasis added.]
Webmaster’s Comments: A natural gas supply reality disconnect has occurred in Angola — much like the one at Downeast LNG. The US does not need Angola's LNG.
2011 November 10
[Red bold emphasis added.]
It goes without saying that developments in shale gas production have changed the natural gas supply picture in North America substantially. This, in turn, has turned expectations of increasing reliance on imported LNG – that were so pervasive just ten years ago – upside down. The LNG import terminals that were constructed are now scarcely utilized, and the prospects that the United States will become highly dependent on LNG imports in the coming years have receded, with proposals now emerging for exports of LNG from North America. Indeed, shale gas production in the United States has increased from virtually nothing in 2000 to over 10 billion cubic feet per day (bcfd) in 2010, and a recent Baker Institute analysis indicates it could rise to 50 percent of domestic production by the 2030s.
Full Committee Hearing
Statement of Christopher Smith Deputy Assistant Secretary for Oil and Natural Gas Office of Fossil Energy U.S. Department of Energy (Nov 8)
The following link will open a PDF file (45 KB).
Over the last several years, domestic natural gas production has increased significantly, primarily due to the development of improved drilling technologies, including the ability to produce natural gas trapped in shale gas geologic formations. … Natural gas prices have declined and imports of LNG have significantly declined. Recently, the domestic price of natural gas at the Henry Hub for November 2011 delivery was $3.60 per million Btu.2 International prices of LNG are significantly higher. Due in part to these changing market economics, DOE has begun to receive a growing number of applications to export domestically produced lower-48 natural gas to overseas markets in the form of LNG.
… The Natural Gas Act favors granting applications to export to non-free trade agreement countries unless it can be demonstrated that a proposed export is inconsistent with the public interest. In the case of exports of LNG to free trade agreement countries that require national treatment for trade in natural gas, DOE is without any authority to deny, condition, or otherwise limit such exports.
Testimony of Kenneth B Medlock III; James A Baker III; and Susan G Baker, Fellow in Energy and Resource Economics; James A Baker III Institute for Public Policy Rice University (Nov 8)
The following link will open a PDF file (139 KB).
Throughout the 1990s, natural gas producers in the Middle East and Africa, anticipating rising demand for liquefied natural gas (LNG) from the United States in particular, began investing heavily in expanding LNG export capability, concomitant with investments in regasification being made in the United States. At one point in the early 2000s there were over 47 regasification terminals with certification for construction, which was a clear signal regarding industry-wide expectations for the future of the U.S. supply. But the rapid growth in shale gas production has since turned such expectations upside down and rendered many of those investments obsolete. Import terminals for LNG are now scarcely utilized, and the prospects that the United States will become highly dependent on LNG imports in the coming years have receded, with proposals now emerging for exports of LNG from North America.
The following link will open a PDF file (238 KB).
LNG for export: Managed properly, LNG export could spur greater investment in U.S. supply and infrastructure; create domestic jobs and position our country as an energy exporter. The abundance of supply means that exports can be pursued in addition to expanding domestic uses of natural gas - - adding balance of trade benefits to domestic economic benefits with little impact on gas prices.
Testimony of Jim Collins Director of Underground Utilities for the City of Hamilton, Ohio on behalf of the American Public Gas Association (Nov 8)
The following link will open a PDF file (664 KB).
This Nation is at an energy policy crossroads. Today, for the first time in a very long time, gas prices are affordable and stable, as contrasted with the price volatility experienced for most of the past 20 years during which time prices for natural gas bobbed up and down from $15 to $5 to $10, with little rhyme or reason in terms of market fundamentals. Our Nation now has a unique opportunity to pursue a longstanding goal – energy independence – with optimism. Today, for the first time in almost forever, this Nation has the opportunity to be able to foresee the day when it can conduct foreign policy without being preoccupied by Middle East oil and hence Middle East politics.
The key reason we are in this posture is that suddenly, due to advances in technology relating to the acquisition of gas reserves from shale rock, it appears reasonable to prognosticate that the United States will not have to look abroad for natural gas supplies to supplement waning gas reserves in this country. This has obvious ramifications for natural gas policy; but even more importantly, it has huge potential ramifications for national energy policy (and therefore our national security).
… What seems clear beyond cavil is that if we export significant quantities of natural gas (in the form of LNG), we will become part of an international market in order for short-term profits to be made by the affected producers and exporters. But long-term the effects will be predictable and disastrous – we will experience price increases and the price volatility of the past will return, and our opportunity to displace foreign oil will be wasted – all for short-term profits of a few. You must not permit that result; but without action by Congress that is the inevitable result of current Department of Energy (DOE) policy on LNG exports.
To date, five applications for the export of LNG have been filed DOE. Applications have been filed by Sabine Pass and Lake Charles Exports in Louisiana and by Freeport LNG in Texas. More recently, we have seen an application filed for Dominion in Cove Point, MD. A fifth, Jordan Cove Energy Project, Oregon has yet to be published in the Federal Register. Some of these applications have already been granted and many more are expected to be filed.
Just the volumes enumerated in these few applications would make the United States the second largest exporter of LNG in the world. These five applications, if granted by DOE, would permit the export of just under 3 TCF of natural gas, which represents over 10% of our consumption on an annual basis. This level of export would have serious adverse implications not only for domestic consumers of natural gas but also for U.S. national security.
When applications are filed at DOE, there is a public interest test that must be met – but not by the applicants. In cases where the application is specific to identified countries with which the U.S. has a free trade agreement, the application is deemed to be consistent with the public interest and granted without modification or delay. In cases where an application is seeking exportation of LNG to countries with which the U.S. does not have free trade agreements, the burden is on those opposed to the application to demonstrate that the application is not consistent with the public interest. The structure of this process under which opponents of an export must prove a negative is counter-intuitive on its face and makes it extremely difficult, if not impossible, for opponents to defeat an application for the export of LNG. APGA supports the passage of legislation that places the burden of proof where it should be, on the applicant to demonstrate to DOE how the approval of that application is in the public interest.
… The point to be made, of course, is that the United States, which is at the forefront technologically of the development of shale gas reserves, should be exporting its technology and expertise – not spending billions of dollars to build facilities in order to export a commodity that can play such a vital role in contributing to our national well-being and that also may be abundant world-wide before the LNG export facilities can even be completed.
A government that has the pursuit of energy independence as its declared national policy should not authorize exportation of a valuable commodity whose value at home is incalculable and whose supply is unknown with any degree of certainty at this point in time. Policymakers should seize this window of opportunity to implement our long-declared (but never seriously pursued) policy of striving towards energy independence. The pursuit of energy independence requires that the United States wean itself off of imported oil, which accounts for approximately 50% of our domestic use.
"Not long ago, we feared that large-scale LNG imports would be necessary to meet our domestic demand," Murkowski said. "Suddenly, we have a considerable supply of natural gas, which can help us achieve many of our fundamental goals of making our energy supplies cleaner burning, secure, affordable and domestic."
U.S.-based Cheniere Energy plans to export liquefied natural gas (LNG) by 2015 and hopes to take a stake in a floating LNG terminal in Lithuania. … Cheniere Energy said in May that it was considering taking a minority stake in Lithuania's LNG terminal, which is being developed by Klaipedos Nafta. … "Gas demand in the U.S. cannot keep up with production, and we see LNG exports as the only way to take all that gas," Wisden said.
A report issued by BNP Paribas suggests that the United States could become the world's second largest LNG exporter in the coming decade, behind only Russia. According to Platts LNG Daily, however, the report notes that U.S. LNG export projects face significant infrastructure barriers. [Subscription required]
Calais LNG and Downeast LNG have both filed papers to restart the approval process for projects on the U.S. side of the bay. The government of Canada says it will block LNG tankers from traversing Canadian water to reach proposed terminals at Red Beach across the St. Croix River from Bayside, and Robbinston across from St. Andrews.
"As Calais LNG repeatedly requested with the Maine Board of Environmental Protection (BEP), the applicant appears to assume it will receive endless time extensions to remedy its financial and project site failings. However, the domestic natural gas market has reversed against Calais LNG's favor; plus, the U.S. already has around 15 times the LNG import infrastructure than is actually used," Save Passamaquoddy Bay researcher and webmaster Robert Godfrey of Eastport, Maine, wrote.
Meanwhile, on Nov. 2, Downeast LNG Inc. filed a 178-page electronic response to a Nov. 17, 2010, request by the FERC for more environmental data. On Nov. 8, Downeast LNG undertook to file responses by Dec. 1 to an Oct. 18 request for more environmental information. Downeast withdrew its application from the Maine regulators in November 2007. [Red bold emphasis added.]
Webmaster’s Comments: Calais LNG and Downeast LNG have done nothing to "restart" the approval process. Downeast LNG's federal processing was not stopped, other than being put on hold last year by FERC — along with all other LNG terminal project permits — until new vapor gas dispersion computer models were developed. Those models have been developed and approved, and Downeast LNG has resumed partially answering permitting questions — most of which have been extremely late in coming, some over 2 years and 4 months. Others are over a year late, and the company just filed to indicate it would not meet the latest deadline for new questions, November 8. Downeast LNG has a pattern of abusing federal permitting deadlines.
Calais LNG's application has continued to be sort-of-alive at the federal permitting process, even prior to their latest no-substance filing; however, they do not have financial capacity and they have no project site — they essentially have no project, despite their presence at the Federal Energy Regulatory Commission (FERC).
FERC Chairman Jon Wellinghoff has replied to a letter from Savannah Mayor Otis Johnson regarding the proposed Southeast LNG truck loading and distribution project. In his reply, Chairman Wellinghoff reports that Commission staff is working on its environmental assessment of the project. Once the project developers finish consultations with the U.S. Department of Transportation, Chairman Wellinghoff states that FERC will announce its target date for publishing the environmental assessment.
Earlier this week, FERC granted an extension of time to Port Dolphin Energy LLC to construct and place into service the onshore portion of its natural gas pipeline for the planned Port Dolphin LNG deepwater port.
FERC Chairman Jon Wellinghoff has responded to a September 27, 2011, letter submitted by several members of the U.S. Congress encouraging the Commission to approve the planned Sabine Pass LNG liquefaction and export project. Chairman Wellinghoff notes that Commission staff is in the process of preparing an environmental assessment of the project and that the public will have an opportunity to submit comments once the document is complete.
Plant owner ConocoPhillips is continuing with plans to mothball the facility in December after making one more shipment of LNG to Asia in late November, according to company spokeswoman Natalie Lowman.
This creates a new uncertainty, one more complication in a delicate regional energy situation. The gas wells that now supply the LNG plant are still available but it’s not as easy to turn them on and off to meet a short-term gas needs for the utilities. When the LNG is operating, the manufacture of the liquefied gas could more easily be turned off, or at least down, and the gas diverted to the utilities.
TEX reported that the US ConocoPhillips will sell a LNG cargo for November 2011 shipment from Alaska on spot basis. The company decided to halt Kenai LNG Plant in the first half of November and is continuing discussion with Tokyo Electric Power Company in order to sell a final cargo from the plant which is scheduled to be shut.
Meanwhile, ConocoPhillips must perform its obligation to supply gas to the local areas. Therefore, it is estimated that LNG production will be resumed in spring 2012 or later when it will have allowance to supply feedstock gas after winter demand season ends.
One of Canada's top energy experts says the National Energy Board's (NEB) approval of British Columbian shale gas exports to Asia via the port of Kitimat last month will shortchange Canadian energy consumers and undermine national energy security.
The Canadian Centre for Policy Alternatives is calling for B.C. to reduce its shale gas production, in a report titled "Fracking up our water, hydro power and climate". Report author Ben Parfitt compares B.C.'s shale gas development to Alberta's controversial tar sands oil, in that they both require a large amount of water and energy to produce.
2011 November 9
[Red bold emphasis added.]
America is swimming in natural gas from shale formations. It promises to be our bail-out from otherwise flat or falling gas supplies of other types – and provide important relief from our dependence on imported oil.
“We had a hearing in 2005 on the future of LNG. And the hearing topic from 2005 and today sound similar; however, in 2005 we were thinking about anticipating need to import growing quantities of LNG. Today, we’re thinking about what role LNG exports might play in our energy future.
“At the same time, I note that U.S. energy security requires reliable and affordable energy prices, not just reliable supplies. Therefore, understanding how exports might affect domestic prices is also critical. Currently, U.S. natural gas prices are considerably lower than prices in most of the rest of the world. How can we ensure that our export policy is consistent with our continued ability to reap the benefits of our newfound abundance of natural gas? …"
U.S. imports of liquefied natural gas are still expected to fall 25 percent to 0.9 bcf per day this year, down from 1.2 bcfd in 2010, the EIA said. Imports in 2012 are expected to fall further, to 0.7 bcfd.
Webmaster’s Comments: The proposed Downeast LNG project capacity of .5 bcfd is nearly equal to the capacity the entire USA — already with 13 LNG import terminals — will be importing in 2012!!! …And yet, Downeast LNG pretends it is a needed project.
WASHINGTON, Nov 8 (Reuters) - The U.S. Energy Department has commissioned two studies on the potential impact of exports from the booming U.S. natural gas sector, a senior official told a Senate hearing on Tuesday.
The studies, due in the first quarter of 2012, will help determine whether exports are in the national interest, said Christopher Smith, Energy Department deputy assistant secretary for oil and natural gas.
The deparment must decide whether to allow natural gas export permits, New drilling techniques have unlocked vast U.S. natural gas reserves, driving down domestic prices and raising prospects for exporting the fuel to markets like Asia, where prices are four times higher.
Earlier this year, the U.S. Department of Energy approved an export permit for the Sabine Pass LNG project in Louisiana and conceded the project would raise gas prices in the U.S. by more than 10 percent in 2015.
“Clearly, the department believes that raising natural gas prices by 10 percent meets the public interest test required by the Natural Gas Act,” Wyden said to Assistant Energy Secretary Chris Smith. “My question is, does the department believe that raising gas prices by five times that amount would be in the public interest?”
The Senate Energy Committee held its first hearing on liquefied natural gas since 2005 on Tuesday. In that time, the United States has gone from contemplating large imports of the fuel to now considering exports, a dramatic about face.
A spokesperson for Sempra Energy told Platts LNG Daily [subscription required] that the company plans to submit an LNG export application to the U.S. Department of Energy "in the very near future." The company hopes to export U.S. domestic natural gas via the Cameron LNG facility.
As you probably already know, LNG is a major remedy for the accelerating glut of American and Canadian unconventional production, which runs the risk of over-saturating the market and depressing prices. (See "A Solution for America's Natural Gas Surplus," November 2, 2010.)
Webmaster’s Comments: Downeast LNG president Dean Girdis apparently does not keep abreast of LNG industry news or he would have abandoned his project long ago.
Natural gas is always been considered a viable and desired fuel for power generation and that trend will grow. With the increase and availability of firm supply, natural gas is now being actively considered as an alternative transport fuel, as a fuel in expanded industrial application and as liquid for export growing global LNG markets.
The Calais LNG website still claims Goldman Sachs is providing financial support to the project, even though Goldman dumped the project in August 2010, taking millions in losses. Goldman is now advising the US natural gas industry to do exactly the opposite of what Calais LNG is proposing: Goldman Sachs says the US has so much domestic natural gas that the market is in exporting it overseas.
Calais LNG still claims to have access to its proposed terminal site even though it lost its option to the property on the 1st of September 2010. Without a terminal site there is no project. Calais LNG has made no progress in curing its financial and site problems for over a year.
Nielson and many other here still hold out hope that Calais LNG will one day get the financial backing and regulatory approval to build a controversial Liquified Natural Gas terminal here. The Passamaquoddy say they're working on efforts to put together water and wind power generation projects on their land. [Bold brown emphasis added.]
Webmaster’s Comments: Calais LNG has deteriorated into a phantom project. It was poorly timed and poorly sited.
It started several years too late to have any impact on the domestic natural gas supply, first because of the other three regional LNG import terminal projects already years ahead of it — Canaport LNG, Northeast Gateway Deepwater Port, and Neptune LNG — and second, because the domestic supply mushroomed into an overwhelming sea of surplus. Former financial backer Goldman Sachs saw the writing on the wall and dropped the project when it became obvious that Calais LNG had no prospect for success.
The real surprise is that it took so long for Goldman Sachs to see the light. Goldman Sachs announced on Oct 28th that LNG exports are the business to be in — the exact opposite of the Calais LNG proposal.
FERC has requested several pieces of engineering information from Sabine Pass LNG regarding the company's planned LNG liquefaction and export project. The information requested focuses mostly on facility design matters that the Commission coordinates with the U.S. Pipeline and Hazardous Materials Safety Administration.
Platts LNG Daily [subscription required] reports that industry analysts at Potent & Partners expect Total to secure both LNG liquefaction and export capacity as well as an equity position in the Sabine Pass LNG liquefaction project.
T&T's LNG leading edge has steadily receded as new, bigger, suppliers enter the business. The US, T&T's original and still its biggest single market, is due itself to become an LNG exporter. It would be the saddest of ironies if US producers should prove to be more efficient and quicker off the mark in supplying the Caribbean LNG market, with T&T left complacently marking time. [Red bold emphasis added.]
A representative for Progress Energy told Platts Oilgram News [subscription required] that efforts to develop a proposed LNG liquefaction and export facility in British Columbia, Canada, are accelerating. The representative noted that he expects a feasibility report to be submitted to project partners Progress and Petronas by August 2012 and that the project developers will make a final investment decision soon thereafter.
The following link is to a PDF file (25 KB).
The Office of Energy Projects is responsible for the licensing, administration, and safety of non-federal hydropower projects; the certification of interstate natural gas pipelines and storage facilities; and the authorization and oversight over the construction and operation of on-shore and near-shore liquefied natural gas (LNG) terminals. Thank you for the opportunity to appear before you today to discuss the process which the Federal Energy Regulatory Commission uses to review applications for facilities for the export of LNG.
Webmaster’s Comments: Mr. Williams' testimony is simply regarding the steps in the LNG terminal permitting process.
Over the last few months, the EPA has proposed important changes to Subpart W of the Mandatory Reporting of Greenhouse Gases Rule (Mandatory Reporting Rule or MRR).1 In addition, the EPA finalized provisions that broadly expand the ability of covered entities to use best available monitoring methods (BAMMs) for compliance in the 2011 reporting year. These changes take important steps to reduce the reporting burden, but numerous compliance challenges remain.
- Liquid (sic) Natural Gas (LNG) Storage: includes all onshore above ground LNG storage vessels as well as equipment associated with liquefying and regassifying (sic) LNG.
- LNG Import and Export Facilities: includes all equipment that receives LNG by ocean transport and delivers natural gas to the transmission and distribution system as well as equipment that receives natural gas and liquefies it for ocean transport.
Daily freight rates for spot LNG vessels rose to $112,000 in October from $42,000 a year earlier and from $110,000 in September, Pranay Shukla, a Gurgaon, India-based analyst at the shipping consultant, said in a note e-mailed today. Long-term rates climbed 29 percent to $90,000 a day last month.
Webmaster’s Comments: These multiplying LNG transit rates pile on the expense of already-expensive LNG, as compared to domestic natural gas.
2011 November 7
[Red bold emphasis added.]
The natural gas industry's favorite public relations ploy about the necessity of hydraulic fracturing (fracking), the process through which "clean natural gas" is now procured, is that the patriotic gas industry is championing the shale gas boom for domestic consumption and for "national security purposes." We now know definitively that this is pure propaganda.
Energy companies in the U.S., Canada and Australia are planning or have already begun building more than a dozen projects to liquefy and export natural gas as they seek to capitalize on growing demand for liquid-gas imports. Asia is the hottest market: its demand for liquefied gas is expected to grow 68% between 2010 and 2020, according to advisory firm Poten & Partners.
Canada faces the same about-face from its gas industry. Earlier this month, Canadian regulators approved export requests allowing Apache Corp., Encana Corp. and EOG Resources Inc. to export LNG from British Columbia to Asia.
U.S. natural gas production picked up substantially in 2007 and has continued to head higher. Together, the graphs reflect an apparent anomaly in the domestic market for natural gas: Drilling activity in unconventional plays remains robust despite, depressed natural gas prices -- a puzzling disconnect.
Earlier this decade, most analysts projected that U.S. LNG imports would increase steadily, offsetting lower domestic production. Back in 2003 there were at least two dozen proposals to build new re-gasification terminals. But U.S. LNG imports never reached the 812 billion cubic feet per year that the Energy Information Administration (EIA) projected in its Annual Energy Outlook 2004. In fact, the amount of liquefied gas delivered to the U.S. fell off a cliff after peaking in 2007. In fact, according to the EIA, the U.S. imported only 431 billion cubic feet of LNG in 2010, down from the 2007 peak of 771 billion cubic feet.
This precipitous decline in U.S. LNG imports, coupled with the demand destruction that occurred during the great recession, flooded the market with low-priced LNG in 2009. The commissioning of a number of liquefaction terminals worsened this oversupply.
Webmaster’s Comments: The US now has around 15 times the LNG import capacity than it has been using. Even the Northeast LNG import capacity is 244% of what the entire United States imports.
One can only wonder what it must be like for Downeast LNG's venture capitalist financiers — Yorktown Energy Partners' Kestrel Energy Partners — to continue throwing millions away on a 6-years late, inappropriately-sited, unneeded project that cannot comply with the US Coast Guard security and safety requirements, and cannot import LNG due to Canada's ban on LNG transits into Passamaquoddy Bay.
Even at the outset, Downeast LNG's owners/investors believed they would not succeed — as announced by Downeast LNG president Dean Girdis during his presentation at a 2005 public meeting in Robbinston.
Ken Fletcher, director of the Maine Office of Energy Independence and Security, said Maine's price of electricity is the lowest in New England. "So you think we're in pretty good shape? Unfortunately, New England is highest in the nation, or close to it. I don't think they give out medals for coming in next to last," he said.
"We want to foster competitive renewable energy because we know, particularly with oil, there is a finite amount, and the price is subject to supply and demand," he said. "We want to develop options. We say everything's on the table because there is no silver bullet."
In addition to conventional power, options include locally distributed generation and energy storage. He said Maine is doing well to produce renewable energy in comparison with the rest of New England and called for the state's neighbors to step up the pace.
Webmaster’s Comments: The Maine Office of Energy Independence and Security is making a valid argument against LNG import projects. Is Downeast LNG paying attention?
New England may face the unusual situation of having more power capacity than it needs over the next decade, but not enough fuel to operate the plants, according to a senior executive of Northeast Utilities.
To avert the problem, more natural gas pipelines need to be built into New England and more hydroelectricity transported from Canada, said James Robb, NU senior vice president for planning and development, who spoke Friday at the New England-Canadian Business Council meeting on energy trade in Boston.
Webmaster’s Comments: This article ignores some salient facts: Canaport is operating at far-below capacity, and around 30 new pipeline and pipeline expansion projects already are in the works to deliver more natural gas to the Northeast.
Stating that Gasfin already has agreements to ship LNG to countries in the region such as Martinique and Guadeloupe, [Prime Minister Kamla Persad-Bissessar] said she was advised by Gasfin executives that this was more feasible than the Caribbean gas pipeline initiative that the former PNM government was pursuing.
[Prime Minister Kamla Persad-Bissessar] said T&T will also host a conference of energy ministers of the Commonwealth next year to explore strategies and attract investment. Persad-Bissessar also said the Gaspin group was seeking a T&T-based initiative to set up a plant to sell LNG to other small Caricom states.
2011 November 5
[Red bold emphasis added.]
On Tuesday, November 8, the full committee will hear testimony on market developments for U.S. natural gas, including the approval process and potential for liquefied natural gas exports. Witnesses include Chris Smith, deputy assistant secretary for oil and natural gas, office of fossil energy, U.S. Department of Energy; Jeff Wright, director, office of energy projects, Federal Energy Regulatory Commission; Kenneth B. Medlock III, fellow in energy and resource economics and deputy director, Baker Institute for Public Policy, Rice University, Houston, TX; Andrew Slaughter, business environment advisor, Upstream Americas, Shell Exploration and Production Company, Houston, TX; and Jim Collins, director of underground utilities, City of Hamilton, Ohio, Hamilton, Ohio. (Dirksen 366 at 10:30 a.m.)
Last week US liquefied natural gas provider Cheniere signed a long-term agreement to sell BG (formerly British Gas) LNG exported from the Gulf Coast. The governor of Alaska was also recently quoted suggesting that his state's surplus natural gas might find a better market in Asia than if sent to the lower-48 via a new pipeline. Both stories indicate just how much the shale gas revolution has altered the US energy balance. They also provide further validation of its likely staying power. Coincidentally, they reminded me that time was running short to respond to my residential gas supplier's offer to lock in an annual fixed price, as I did last year. That's relevant, because even though the risk of a big spike in natural gas prices looks very low now, the prospect of future US gas exports--an unthinkable idea only a few years ago--serves notice that the shale bonanza is also stimulating new segments of demand that compete with existing ones and will tend to drive prices higher.
Dominion Cove Point LNG LP landed its first authorization on the way to equipping its Cove Point LNG import terminal with liquefaction facilities that will let terminal customers move domestic natural gas to overseas ports.
In the last decade, several new LNG import terminals were built in the U.S., including Cheniere's Sabine Pass facility, with the expectation the country would consume more natural gas than it produces.
If Cheniere gets final approval from the Federal Energy Regulatory Commission to build the liquefaction equipment at the Sabine Pass terminal, it would be the first North American LNG export project since 1969, when a facility opened in Kenai, Alaska.
The growing dependence of the U.S. on energy imports has for years seemed to be one of the immutable truths of the global market. This week, one part of that trend was flipped on its head as the first deal was signed to export liquefied natural gas out of the U.S.
With the onset of natural gas exports the U.S. must first set out to reverse the current use of its Liquefied Natural Gas facilities. Just a few short years ago natural gas was selling for more than double what it is now. It made sense to import cheaper LNG as demand was outpacing supply. With the implementation of hydraulic fracking, which we have written about, the U.S. supply of natural gas has blossomed. Currently, supply is outpacing demand and the price of natural gas has fallen below $4 per mcf. Other foreign natural gas producers no longer see the U.S. market as a destination of LNG. The companies that own the facilities designed to warm LNG back to its gaseous state are now tasked with making the facilities reverse the process and cool natural gas to its liquid form.
Gas prices have been depressed for the past few years, amid a surge of supply from newly accessible shale-gas reservoirs that has created a substantial glut. Prices below $4 (U.S.) per million British thermal units (BTUs) are so low that many wells are flirting with losses.
“We now expect gas prices to be low for the next five to 10 years,” Steve Laut, president of Canadian Natural Resources Ltd. (CNQ-T37.73-0.50-1.31%), said Thursday, when the company reported third-quarter earnings of $836-million, up 40 per cent from the same period last year, but down 10 per cent from the second quarter.
[H]e pointed to the huge amounts of natural gas that have been discovered with new drilling techniques, such as horizontal wells and underground fracturing. By some estimates, North America now has enough gas to maintain current supplies for a century.
Canada has taken a giant leap towards Asia by approving the Kitimat LNG project, which provides the first major outlet for an estimated 300 trillion cubic feet of stranded shale gas deposits from British Columbia and Alberta and the first LNG exports from Canada.
Peter Tertzakian, chief energy economist with ARC Financial, said a steep drop in exports to the United States – because of rapid shale gas development and an economically depressed market – is costing producers “tens of millions of dollars each day” has forced Canada to “act on market diversification … at least the industry buzz is now all about tapping into a new era of growth.”
This is not surprising. Any deal that has the effect of taking gas away from North American markets sits nicely with officials at the Calgary-based natural gas and liquids producer. Company chief executive Randy Eresman made no show of hiding is enthusiasm during a conference call to announce third-quarter results Oct. 20, noting that Encana would support “as many LNG export facilities as can be constructed in North America.”
It turns out that interest runs deep, and that natural gas producers aren’t alone in backing U.S. exports. Encana’s show of support via Twitter put me in the mind to look back at the approval given to Cheniere Energy for its 16-million-tonne-per-year Sabine Pass LNG project by the U.S. Federal Energy Regulatory Commission (FERC).
The $10/Mcf premium for natural gas in Asian markets compared with the US could shrink if North American LNG exports become established, the deputy chief of the International Energy Agency said Monday in Singapore.
"Just two or three years ago, everybody was talking about the US as the major import destination," he said. "Qatar facilities were built with the US in mind, and now all of a sudden the US is going to be not a customer but a competitor. It's hard to imagine, but that's the triumph of that technology."
The US Coast Guard has tried to address offshore oil and gas operations’ security issues, but could improve its process for managing security inspections, the US Government Accountability Office said in an Oct. 28 report. It urged the US Department of Homeland Security service’s commandant to ensure that annual inspections are conducted consistently by developing monitoring and tracking policies and procedures.
The report also contained recommendations for improving security at the four US deepwater oil and gas ports, two of which in the Gulf of Mexico and two which are in Massachusetts Bay. Unlike OCS production installations, these facilities enable tankers to unload crude oil or LNG for transportation ashore by underwater pipelines, it said.
The New Jersey chapter of the Sierra Club says Governor Chris Christie’s 2010 income tax return lists an investment in a company that treats frack wastewater. The firm, Ecosphere Technologies, provides on-site treatment of the frack fluid so that natural gas drillers can re-use the water to frack another well. The Ecosphere website says their technology has operated at more than 300 wells in shale plays across the country.
A press release put out by the Sierra Club says Christie earned more than $28,000 dollars last year from his stock in the company. The Sierra Club’s Jeff Tittel says the Governor’s investment is a conflict of interest.
“This raises concerns that the Governor is more committed to gas drilling than protecting New Jersey residents from the impacts of fracking. Unfortunately this leads to questioning decisions the Governor has made including vetoing the fracking ban bill and scrapping off-shore LNG which is a competitor to fracking.” [Red emphasis added.]
GE announced on Thursday that its co-owned Gulf LNG regasification and liquefied natural gas storage facility on the Gulf of Mexico has successfully begun operations. The terminal, operated by a subsidiary of El Paso Corp., is located adjacent to the Bayou Casotte Ship Channel in the Port of Pascagoula on the Gulf coast.
Webmaster’s Comments: …Several years too late to make a difference.
French oil and natural gas major Total is close to signing a firm long-term sales agreement with Cheniere Energy to lift 3.5 million tonnes per annum (mtpa) of LNG from its Sabine Pass liquefaction project, according to sources close to the deal.
STRATEGY TO DIVERSIFY ENERGY SUPPLY. The Government invites companies to submit proposals to provide the requirements for Liquefied Natural Gas Supply (RFP No. 2011/L001) (deadline: Oct. 31, 2011) and LNG Floating Storage & Regasification Terminal (RFP No. 2011/L002) (deadline: Nov. 30, 2011). Details: Public Sector Modernization Division. Office of Cabinet. Ann: Procurement Officer. Room 219, 2a Devon Rd.Kingston 6, Jamaica. Tel: (876) 929-8880/5. Fax: (876) 929-7266. E-mail: psmd.proc(a}cabinet.gov.jm. Web: http:// www. cabinet.gov. jm/prociiremenl
[Mr Eddinton Powell, CEO of power supplier Fortis TCI] said that natural gas is so abundant in Caribbean territories like Trinidad and Tobago and worldwide that its imminent use in power generation should serve to fill the 18 to 20-year void between the time technology makes wind and solar power reliable and commercially viable sources of electricity for use alongside diesel.
British Columbia Premier Christy Clark is breaking with a decades-long pursuit of treaties with first nations, saying that process has failed to deliver either economic growth for aboriginal communities or security for business investors.
The Premier is directing her government to focus instead on striking economic development deals with native leaders who are willing to do business. Those agreements may include land transfers or revenue-sharing on resources, and in other cases the province will broker deals between private investors and first nations on a project-by-project basis.
The first nations’ China strategy highlights the challenges Ms. Clark’s fresh approach will face. Although the B.C. government is not walking away from treaty negotiations, some native leaders are worried the policy will leave behind communities where there are no ready investment opportunities.
Ms. Clark visited the Haisla First Nation for a backdrop to the launch of her jobs agenda. The north coast community is a partner in a proposed liquefied natural gas facility – and the Premier said its success will be a linchpin in her plan.
However, [Haisla chief councillor Ellis Ross] said treaties still need to be settled for the long term. “First nations are looking for economic development, but fundamentally they want an answer to the question of land. Land is everything – it is the building block to wealth.”
While in China, Clark will meet with the governor of Guangdong, the mayor of Beijing and business groups interested in investing in the province. They include such areas as forestry, seafood, clean technology, and mining, among others, and liquefied natural gas lines that B.C. aims to have operational by 2020.
The development of LNG projects in Canada's west coast has gained traction as Asian buyers seek to diversify LNG supply and secure more competitively priced cargoes relative to those from Australia, Bernstein Research said Friday.
The Oregon Department of Justice asked the U.S. Department of Energy to put a hold on granting LNG export authority to Jordan Cove Energy Project LP until the developer "has cured the deficiencies in its application and the public is given an opportunity to participate."
Jordan Cove applied in September for export authorization from DOE. In an interview then, Braddock said an export facility in Oregon makes sense, given the natural gas reserves in British Columbia and the U.S. Rocky Mountain Basin.
Prolific domestic gas production has satiated a U.S. gas market that some years ago was hungry for LNG imports. Several terminal owners in the past year have made plans to expand import facilities by turning them into bidirectional import-export terminals capable of moving some of that abundant gas production to overseas markets. All of these applied to DOE for an export license before submitting an application to FERC for a certificate to build the liquefaction facilities. (DOE Fossil Energy Docket No. 11-127-LNG) [Red bold emphasis added.]
Webmaster’s Comments: The Jordan Cove LNG terminal site violates world LNG industry terminal siting best safe practices — for both importing and exporting. (See LNG Terminal Siting Standards Organization for more.)
Sinopec's offer to buy Daylight Energy of Canada for C$2.2 billion earlier this month may signal a trend toward more active resource acquisition efforts in Canada. This is particularly true in light of investments in Canadian pipeline and port facilities to enable the export of liquid natural gas (LNG) to China. The Daylight deal follows similar acquisitions announced earlier by CNOOC in its planned acquisition of Opti Canada for $2.1 billion and PetroChina's Canadian gas joint venture investment, valued at $5.4 billion.
2011 November 3
[Red bold emphasis added.]
“Just two or three years ago, everybody was talking about the US as the major import destination,” he said. “Qatar facilities were built with the US in mind, and now all of a sudden the US is going to be not a customer but a competitor. It’s hard to imagine, but that’s the triumph of that technology.”
Webmaster’s Comments: Is Downeast LNG's Dean Girdis reading this?
Assuming $4/mmbtu gas prices and $3/mmbtu for transportation, the deal looks workable for BG considering current Asian LNG spot prices of about $17/mmbtu. However, Cheniere does not have long-term gas supplies locked in at the lower prices and we think it is unlikely that the firm will be able to do so. If gas prices move higher as we expect them to do by 2015 (expected first gas at Sabine Pass) then the economics may become challenged. While BG remains a long-term bull of global LNG demand, it is unlikely it would enter into the deal without either some flexibility or a belief in the long-term economics. As a result, we see the deal as one more step in the eventual export of LNG out of the U.S., though many more steps are yet to be taken.
North American gas producers are aggressively pursuing projects to sell large quantities of liquefied natural gas to Asia, raising alarm among U.S. consumer groups that rising exports could drive up domestic prices.
Noting the current glut of North American supply, Alaskan Governor Sean Parnell has told TransCanada Corp. (TRP-T42.800.942.25%) to rethink its proposed pipeline project that would bring Arctic gas to U.S. markets. He wants TransCanada and its would-be gas suppliers to instead examine the potential for an LNG facility on the southern Alaskan coast aimed at the Pacific Rim.
All told, there are more than a half-dozen LNG export projects in the works in North America, including several in the United States that were built for imports but have been virtually idle. In Canada, the Kitimat, B.C., project led by Apache Corp. has been approved by the National Energy Board, while Royal Dutch Shell PLC is also considering building an export terminal on Canada’s west coast.
Often when Asian markets are mentioned it is the economic powerhouse of China that comes to mind first, closely followed by India. Indeed, a recent Reuters report quoted Philip Olivier, president of GDF Suez’s LNG unit has saying that the People’s Republic of China’s demand for LNG is expected to grow to 44Mta by 2020. The nation reportedly imported 9.4Mt of LNG in 2010. While it is quite possible that China’s demand for LNG may indeed hit those levels one may also reasonably ask why it would want or need to, or at least for very long. According to the US National Energy Administration (NEA), China currently has more shale gas reserves than any other nation in the world with 1300tnft3 – the US is second with 862tnft3.
Cheniere has $3.14 billion in outstanding debt, most of it stemming from a gas-import terminal it operates in southwest Louisiana, Habib said in his report. As a glut of North American gas from new wells in shale-rock formations wiped out demand for imports and terminals like Cheniere’s languished, Souki has sought federal permits for the export terminal.
Exporting LNG from the United States became the new “only answer” for both the producers’ predicament but also the obvious: with LNG connectivity it makes no sense for such price disparities. I wrote about this repeatedly and it was Cheniere’s position I had in mind. It was obvious that a relatively effortless technological tweak in already permitted facilities could convert the hitherto regasification terminals to the liquefaction facilities now required to reverse the flow from the United States to export locations.
BG Group has signed up to take 3.5 mta LNG from the Sabine Pass terminal in Louisiana. This marks the first long-term LNG purchase agreement from a liqufaction plant in the US Gulf. Construction of the liquefaction facilities at the import terminal are due to begin next year and first loadings are expected by 2015.
Eric Nuttall, manager of Toronto’s Sprott Asset Management’s Energy Fund, says that eight years ago the average natural gas well would initially produce 250,000 cubic feet of gas per day. That number is over a million cubic feet today. The go-big-or-go-home economics of shale gas mean North American supply is far outstripping demand, even though that is increasing, too, as users switch from more expensive (oil), more polluting (coal) or more dangerous (nuclear) energy sources.
Unconventional gas production is forecast to increase from 42% of total U.S. gas production in 2007 to 64% in 2020. There are boom towns springing up in the Barnett, Marcellus, Woodford, Bakken and other shale plays across America.
The growing supply of shale gas has already significantly reduced America’s dependence on imported gas. Even though U.S. use of natural gas is growing rapidly, we have at least 100 years of supply within our own borders.
Another three US Gulf coast LNG export projects – Lake Charles, Freeport and Cameron – are also under consideration, which would bring the US' total export capacity to 52 million t/y (over a fifth of the global LNG market of 225 million t/y) if they are all brought on line….
Lightfoot Capital will make a direct investment and own a 48 percent interest in Arc LNG Holdings, LLC, which will own a 20 percent interest in Gulf LNG Energy’s terminal in Pascagoula. GE Energy Financial Services, directly and indirectly, controls its 50 percent stake in Gulf LNG while a subsidiary of El Paso Corporation controls the other 50 percent and is the operator.
French oil and natural gas major Total is close to signing a firm long-term sales agreement with Cheniere Energy to lift 3.5 million tonnes per annum (mtpa) of LNG from its Sabine Pass liquefaction project, according to sources close to the deal.
Total is also understood to be taking the commercial export agreement one step further by assuming an ownership stake in Cheniere's Sabine Pass Liquefaction company. Specific terms of the equity stake were undisclosed.
Cheniere took on a lot of debt to build an import terminal for regasification. The terminal was built to pump gas to the major U.S. demand centers. But improvement in drilling techniques made extraction from unconventional areas feasible and created a glut of supply. This resulted in a decline in natural gas prices in the U.S., with imports incurring higher costs. [Red bold emphasis added.]
An analysis of the recent Cheniere-BG LNG export agreement carried in World Gas Intelligence [subscription required] notes that the agreement does not contain a take-or-pay provision that is common for LNG terminal use agreements. The analysis concludes that although the agreement with BG helps, Cheniere needs to secure similar agreements from other future LNG exporters in order to secure financing for the planned LNG liquefaction project at Sabine Pass LNG.
HOUSTON, TX--(Marketwire - Nov 2, 2011) - BG Group plc surprised the natural gas industry last week when it selected Cheniere Energy's LNG import terminal at Sabine Pass for export conversion over Southern Union's Trunkline terminal south of Lake Charles, La., where BG has a long-term import commitment. [Red emphasis added.]
Nov 03, 2011 (DEPARTMENT OF HOMELAND SECURITY DOCUMENTS AND PUBLICATIONS/ContentWorks via COMTEX) -- San Juan, Puerto Rico -- Coast Guard, federal and state emergency responders, in cooperation with the U.S. Virgin Islands Water and Power Authority (WAPA) will participate in a table top oil pollution response exercise Friday in St. Croix, U.S. Virgin Islands.
The PREP table top exercise involves approximately 11 federal and state agencies, industry partners and non-government organizations in the area including U.S. Coast Guard Sector San Juan, Environmental Protection Agency, National Park Service, U.S. Fish and Wildlife Service, National Oceanic and Atmospheric Administration, Virgin Islands Department of Natural Resources, Virgin Islands Emergency Management Agency, Nature Conservancy, WAPA, FR Consulting and Hovensa LLC representatives among others. Ecoelectrica Liquefied Natural Gas company representatives from Puerto Rico will also participate in the exercise.
Parnell said he told Bob Dudley he wants to get Alaska's gas to market as soon as possible. Last week Parnell told an oil and gas group that if the gas market has truly shifted from the Lower 48 to the Pacific Rim, he wanted the major North Slope players -- Exxon Mobil Corp., Conoco Phillips and BP -- to get behind a pipeline project that allows for liquefied natural gas exports to the Pacific Rim.
The current plan — a line through Alaska to Canada, with permits secured by pipeline builder TransCanada Corp. — doesn’t look favorable anymore with a shale gas boom sweeping parts of the Lower 48. And progress seems to have stalled on Alaska’s long-sought pipeline project, Parnell said at an Alaska Oil and Gas Association meeting in Anchorage on Thursday.
AGIA allows for an LNG pipeline to Valdez — also known among supporters as the “all-Alaska gasline.” If oil and gas producers show interest in the LNG option, Parnell said he’d try to work a bill through the Legislature promising “fiscal certainty.” Asked by Alaska Dispatch whether that meant locking in gas tax rates — as former Gov. Frank Murkowski had proposed in 2006 under another failed pipeline bill — Parnell said he wants a “tax regime that works for an LNG pipeline.”
Gov. Sean Parnell's surprise announcement last week that he now supports an LNG pipeline project -- the first governor to do so since Wally Hickel was at the helm -- has many wondering what comes next in the decades-old quest to tap the state's vast Arctic natural gas reserves.
Girling said indications from natural gas shippers were that they favored shipping gas from Alaska's North Slope overland to the continental U.S., rather than an alternative option that would take gas to the Alaskan port city of Valdez and super-cool it for shipment on tankers over seas.
An oversupply of natural gas in North America due to advancements in shale-gas drilling technology has given birth to several new liquefied natural gas export terminal projects in both the U.S. and Canada, as producers seek to sell their gas to Korea, Japan and China, where demand and prices are higher. [Red bold emphasis added.]
Speaking at an industry conference in Singapore, Richard Jones of the International Energy Agency (IEA) said that LNG export projects in the United States could trigger a convergence of global natural gas prices.
At the beginning of the summer, MarEx reported on a speed limit battle brewing between shippers and environmentalists concerning high traffic sea lanes infringing upon a national marine sanctuary for endangered whales. With the escalation of threat to the dwindling marine mammals, the U.S. Coast Guard has taken the plight to protect the whales even further by recommending that the shipping lanes in the Santa Barbara Channel be shifted out of harm’s way.