"For much of the state of Maine, the environment is the economy"
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Need for LNG Imports Eliminated
LNG Export Terminal Proposals: US = 7; Canada = 5
Meanwhile, Natgas Consumption Grows, LNG Imports Fall
2011 December 29
[Red bold emphasis added.]
PITTSBURGH—About one-fifth of the United States’s annual natural gas production could be shipped to India, Japan, China and other countries if the Department of Energy (DOE) approves an increasing number of applications from companies that want to establish export terminals, a senior department official told the Tribune-Review.
The government estimates daily production of natural gas for 2011 will be 65.6 billion cubic feet a day. The export applications seek to ship a combined 12.51 billion cubic feet a day, or about 19 percent at the 2011 level.
A few years ago, energy experts predicted America would become a large importer of liquefied natural gas and companies scrambled to build plants to receive it from overseas. Owners of those ports want to reverse course and turn them into export terminals.
Webmaster’s Comments: The applications' cumulative export volume of 12.51 bcf/day is nearly 18 times the amount of LNG anticipated to be imported in 2012.
The threat of recession in Europe and a doubling in U.S. production from shale deposits are damping natural gas prices, encouraging suppliers worldwide to divert more LNG to Asia. Qatar, the biggest producer, has said it plans to boost Asian sales just as Angola and Australia start production from new projects. That may be sufficient to meet growing consumption and keep a cap on costs, according to the survey.
Webmaster’s Comments: The current mad US rush to export LNG could backfire, just as did the mad rush to import. The Energy industry has a very short memory.
Cheniere Energy Partners' recent October announcement of the first sale-and-purchase agreement for liquid natural gas from its Sabine Pass LNG receiving terminal capped a nearly decade-long effort to profit from the trade in supercooled gas. When construction of the terminal in Cameron Parish, La., was completed in mid-2009, it was the largest LNG terminal in the world, with 4 billion cubic feet per day of regasification capacity. By then, however, development of unconventional gas resources had already upset the gas industry's economics, and Cheniere had obtained a Department of Energy permit to re-export LNG.
LNG terminals have resorted to re-exporting to earn a return on their investment. "The industry overbuilt gasification facilities" in the early 2000s when gas prices were high and proven U.S. gas reserves were declining, said Stephen L. Thumb, principal, Energy Ventures Analysis, Rosslyn, Va. The rapid development of shale gas since 2004 has knocked the props from under gas prices, making LNG imports uncompetitive. As a result, most LNG terminals have all but shut down. In 2010, only two of 11 U.S. terminals had utilization rates greater than 18 percent. Sabine Pass, at 3.1 percent, was higher than six of the remaining nine terminals. Of the plan to liquefy U.S. gas for export, Thumb said, "This is an entirely new model for LNG."
Cheniere built Sabine Pass as a gas-import terminal. It received approval from the U.S. Energy Department to export liquefied natural gas and is awaiting a final decision from the commission for a project that would initially cost as much as $5 billion. Improved drilling techniques has made the U.S. the world’s largest gas producer, creating the prospect of ship- bound exports.
The pipeline, which would run through 12 central Maine towns if approved, would deliver natural gas over a 56-mile route. Kennebec Valley Gas Co. has already secured TIFs from three towns and expects approval from two others. Madison and Farmingdale have voted against issuing TIFs, and the other towns have not weighed in yet.
Webmaster’s Comments: Natural gas in Maine is abundantly available. What is missing is the distribution pipeline infrastructure. Downeast LNG built a dream on an opportunity that was never actually there.
Maybe it was a death by a thousand paper cuts. Maybe it was the closing of a window of opportunity. Whatever the ultimate reason, in June, Hess LNG pulled its controversial plans to build a liquified natural gas terminal on Weaver's Cove, ending a long and drawn-out battle between a community of concerned residents and a company looking to profit off an ideal location and growing energy needs. It was the No. 3 story of 2011 for Greater Fall River, as voted by our online readers. [Red emphasis added.]
The ongoing threat of a liquefied natural gas terminal that Weaver’s Cove planned on building in Mount Hope Bay came to a surprising end in June. The news came from Gordon Shearer – the CEO of Hess LNG, the company that owned Weaver’s Cove – who wrote a press release saying that the company would withdraw applications with state and federal agencies.
Publicly Shearer cited “unfavorable economics for liquefied natural gas in the New England region” as the reason that Hess took the proposal off the table. “The significant increase in natural gas production from shale resources in North America resulting in lower prices as well as the growth in demand for LNG in the rest of the world make it unlikely the company can secure supplies of LNG on economic terms attractive enough to ensure the sustained profitability of the project,” he said. [Red, yellow & bold emphasis added.]
Webmaster’s Comments: It took almost forever — after an-already-cockamamie terminal site was amended to build a cockamamie 4.5-mile cryogenic LNG pipeline under Mount Hope Bay and the Taunton River — for Gordon Shearer and Hess Energy to read the natural-gas-market writing on the wall. But, they finally read it and made the correct decision, killing the Weaver's Cove Energy LNG project.
Dean Girdis, Downeast LNG, and their investors Kestrel Energy Partners and York Town Energy Partners still cannot read, apparently. The message is glaring them straight in the face — and is jumping up and down, screaming at them.
There was no room for the Downeast LNG project even when it was first proposed, due to the three other LNG regional import terminals (Canaport LNG [with massive winter storage], Northeast Gateway Deepwater Port, and Neptune LNG) that were already years ahead. Those projects mooted the need for Downeast LNG. Market and logistics have only grown worse for Downeast LNG since then.
Now, Downeast LNG cannot meet the US Coast Guard's requirements to receive LNG ships, Canada prohibits the project's ships' passage into Passamaquoddy Bay, Downeast LNG has offended Native Tribal rights in the waterway, there is already an abundance of natural gas in Maine, State of Maine government recognizes that abundance, and Maine is taking advantage of that abundance by expanding its natural gas delivery pipeline infrastructure — without Downeast LNG's moot project.
Downeast LNG has been left in the dust. Perhaps it is all that dust that prevents Girdis, Downeast LNG, Kestrel Energy Partners, and York Town Energy Partners from seeing reality ...and from hearing reality's loud message.
Canada is too late into the game to compete as a supplier of liquid [sic] natural gas to meet the short- or even medium-term demand in Kansai for a buffer to produce energy while the future of nuclear is being decided and other sources of supply are being developed. We have a lot of gas, but no way to get it to the Japanese market before 2015, when the nation’s first LNG terminal is expected to open in Kitimat. [Red emphasis added.]
To Japanese analysts, however, it’s not so clear that there’ll be much long-term demand for natural gas that Canada will be able to fill. In a world where those who snooze lose, Canada’s energy industry has been downright dozy when it comes to tapping into Asian markets.
Sure, this sounds a bit crazy, but the dynamic’s already in place. Amidst all this year’s talk of energy independence, we also exported** more refined petroleum products than ever before. Why? Because we’re good at refining petroleum products, while other parts of the world are good suppliers of crude oil. The same is happening with natural gas. We had plans to import LNG until all of the domestic drilling glutted the domestic market; now we’re going to export natural gas. It’s how a global market works.
It’s time then that we stop talking about the mirage of energy independence and instead focus on energy efficiency, renewables and weaning ourselves from carbon-spewing, finite fossil fuels. Otherwise, we’re just going in circles. [Red bold emphasis added.]
2011 December 27
[Red bold emphasis added.]
SUMMARY: The Office of Fossil Energy (FE) of the Department of Energy (DOE) gives notice of receipt of an application (Application), filed on October 20, 2011 by Carib Energy (USA) LLC (Carib), requesting long-term, multi-contract authorization to export up to a total of 120,000 gallons per day of domestically produced liquefied natural gas (LNG) (equivalent to approximately 3.44 Billion cubic feet (Bcf) of natural gas per year) over a twenty-five year period, commencing on the earlier of the date of first export or five years from the date the requested authorization is granted. The Application states that the LNG would be exported from ports of export in the southeastern United States, which may include Jacksonville, FL, West Palm Beach, FL, Miami, FL, Tampa, FL, Mobile, AL, Gulfport, MS, Savannah, GA, New Orleans, LA, Houston, TX, Galveston, TX, and Pensacola, FL, to any country with which the United States has not entered into a free trade agreement (FTA) providing for national treatment for trade in natural gas located within South America, Central America or the Caribbean that has, or in the future will have, the capacity to import LNG via use of approved ISO IMO7/TVAC-ASME LNG containers (ISO containers) transported on ocean-going carriers, and with which trade is not prohibited by United States law or policy. The Application was filed under section 3 of the Natural Gas Act (NGA), as amended by section 201 of the Energy Policy Act of 1992. Protests, motions to intervene, notices of intervention, and written comments are invited.
The stats on domestic natural gas are ... eye-opening. Recoverable natural gas in North America is estimated at 4.2 quadrillion — or 4,244 trillion — cubic feet. At the current rate of consumption, that’s enough natural gas to power North America for the next 175 years. And it means that our continent has more robust gas reserves than Russia, Iran, Qatar, Saudi Arabia, and Turkmenistan — combined.
Roughly 272.5 trillion cubic feet of that total are in the United States. And production is going up so rapidly that liquified natural gas (LNG) import terminals are being reversed engineered to export surplus U.S. gas.
Webmaster’s Comments: Although we agree that there is an abundance of domestic natutural gas at our disposal, we advocate concentrating on renewable energy. We also disagree with the author's contention that energy-mining regulations are too onerous — especially when considering the enormous financial advantages that big energy receives from the federal government, even while big energy experiences record-breaking revenues.
In addition to three LNG tanks with capacity of 160,000 cubic meters each and a berth available for 260,000 cubic meter LNG carrier, which are included in the original plan, three 4.5 million tonne per year LNG trains will be installed at Corpus Christi LNG Terminal.
This is the second LNG export project by Cheniere after the one through Sabine Pass LNG Terminal. The company estimates that it will take 50 months before the construction of Corpus Christi Terminal is completed. In time for the commencement of the construction work, which is slated for October 2013, the company intends to complete the approval process by September 2013.
Cheniere already has signed three 20-year contracts of 3.5 million tpa each to supply LNG from its proposed Sabine Pass liquefaction project in Cameron Parish, Louisiana and is in negotiations with a buyer for the final 3.5 million tpa of firm capacity remaining at that facility.
BLACK-out prone Cuba plans to develop a 2 million tonnes per annum liquefied natural gas project relying on Venezuelan gas to help supply the country’s energy-parched economy, writes Tom Darin Liskey.
In the first place, if this is just a short-term business opportunity that will be over and done with in 10 years, then apparently Jordan Cove wants to make a quick buck while they tear up our bay and our forest and leave us with a white elephant. If it's good business, then the business will keep. We can afford to take the time to do it right.
2011 December 23
[Red bold emphasis added.]
Scarborough-based energy company Self-Gen has proposed building an underground natural gas line from central Maine to Rockland to help lower energy costs for midcoast businesses. The plan also includes building local power-generating plants at places like Dragon Cement and Pen Bay Medical Center that company officials say would generate cheaper, more efficient energy.
AUGUSTA, Maine — A legislative proposal that would aid plans to build an $85 million natural gas pipeline through central Maine could spur a broader debate about how Maine should diversify its energy portfolio to reduce costs.
Webmaster’s Comments: The oil and natural gas industries both get all kinds of federal tax breaks and incentives, even when they experience record profits.
Renewables are still drawing the short straw, tax- and incentive-wise.
A number of LNG export projects have been proposed for Western Canada, while in the U.S., proposals have been made to convert underutilized LNG import facilities in the U.S. to liquefaction and export facilities. These projects are expected to come online between 2014 and 2016.
They noted that abundant shale gas resources and commitment by energy majors to develop these reserves will likely ensure strong future growth of shale gas production. "Although tighter regulations might impose additional cost to shale gas development, it is unlikely that they would kill shale gas growth," the study authors commented.
Webmaster’s Comments: This points to Downeast LNG's financial catastrophe in continuing its project.
Thanks to new drilling techniques, record U.S. natural gas production has led to a series of competitive export proposals all hoping to sell liquefied natural gas (LNG) to higher paying, thirsty markets in Asia and Europe.
The following link opens a PDF file (3.4 MB).
Note 9. Natural Gas Imports and Exports. The United States imports natural gas via pipeline from Canada and Mexico; and imports liquefied natural gas (LNG) via tanker from Algeria, Australia, Brunei, Egypt, Equatorial Guinea, Indonesia, Malaysia, Nigeria, Norway, Oman, Peru, Qatar, Trinidad and Tobago, the United Arab Emir- ates, and Yemen. In addition, very small amounts of LNG arrived from Canada in 1973 (667 million cubic feet), 1977 (572 million cubic feet), and 1981 (6 million cubic feet). The United States exports natural gas via pipeline to Canada and Mexico; and exports LNG via tanker to Brazil, China, India, Japan, Russia, South Korea, Spain, and United Kingdom. Also, small amounts of LNG have gone to Mexico since 1998. [Red bold emphasis added.]
Webmaster’s Comments: The LNG export quantity and country of destination are bound to increase if and when the proposed US LNG export terminals are permitted and operational.
U.S. officials will soon weigh in on a fight between companies that want to export some of America's fast-growing supply of natural gas and big manufacturers that oppose the exports because they rely on cheap domestic gas.
In the next few weeks, Washington's number-crunchers are set to estimate whether exports would cause U.S. prices to swell—a finding they will use in deciding the fate of more than a half-dozen projects across the nation.
Big users of natural gas ... want the price of natural gas to stay low. Producers ... would like to see prices rise. And there’s at least one company that would like to help the producers boost prices — Cheniere Energy, Inc.
Cheniere’s original plan was to build an import facility in the Gulf of Mexico to convert liquefied natural gas (LNG) back to a gas and pipe it onshore for sale. The boom in shale gas production killed that idea, but the company’s plant at Sabine Pass is built and now the company wants to convert the plant to an export facility that would liquefy US-produced natural gas, load the LNG onto tanker ships, and send it to Japan or India or Korea where prices are nearer $13/tcf than $3/tcf.
The US Department of Energy is studying the issue and is expected to release a report in the next few weeks analyzing the effect of exports on domestic supplies and pricing. Depending on the conclusions of that report, one side will claim government interference in the market and the other will claim vindication. Stay tuned.
When Premier Christy Clark announced the B.C. Jobs Plan, the province committed to have the Kitimat LNG plant up and running by 2015, with a total of three LNG [export] facilities operating by 2020. We also committed to building our mining industry with eight expansions and seven new mines by 2015. In doing so, the province set a bold new path forward.
2011 marked one of the starkest contrasts seen yet between gas markets in North America and the rest of the world, as the ongoing 'shale revolution' in the US pushed prices to 2-year lows, while oil-indexed gas outside of the US spent much of the year tied to $100+ crude.
This production increase and the new EIA estimate of reserves put downwards pressure on gas prices in 2011, and with 2012 just around the corner the Henry Hub spot price is already at a 2-year low and flirting with a dip below $3 per MMBtu.
Webmaster’s Comments: Still claiming their project would lower natural gas prices, Downeast LNG is living in the past — wanting to take Maine along on a fantasy ride.
The reason for a risk assessment that covers the “unlikely” is that you need to intelligently deploy resources while understanding that the unexpected cannot be ignored, says Dr Richard Colwill, managing director of BMT Asia Pacific (Hong Kong).
It’s usually not just the obvious that causes most difficulty when you are dealing with those ‘outside chances’, and a number of problems can all come together. “Events, when you map them, often look like a bow tie,” says Dr Colwill. He explains a number of inadequately controlled hazards can knot together into escalating consequences.
Often more tugs are needed to mitigate these risks, with bollard pulls of 70T now on the market. But it’s not a ‘one size fits all answer’ as in exposed waters even the bigger tugs can find they’ve get a significant efficiency drop. This sets up a clash between planning and operational issues: for example, LNG facilities where the berths are located away from traditional sheltered port areas for safety, operational, environmental and economic reasons, and yet these are more exposed by nature so the tugs’ ability, and the availability of the berth, may be sharply reduced.
You can do a marine risk assessment, even quite a sophisticated one, which doesn’t go into sufficient detail or misses the point entirely, says Captain Stephen Gyi of GAC Training and Service Solutions. [Red & yellow emphasis added.] [Red, bold & yellow emphasis added.]
Webmaster’s Comments: This risk management article indicates — as do world LNG industry terminal siting best practices — that the Downeast LNG project terminal is inappropriately sited. It also indicates that the improbable must be taken into account. Sandia National Laboratories and FERC, however, deny as "improbable" cascading failure of all of an LNG ship containment — allowing imporper terminal siting and setting up terminals and emergency responders to be unprepared for such an event.
OFFSHORE AGUIRRE, Puerto Rico, Dec. 22, 2011 /PRNewswire/ -- Excelerate Energy has executed an agreement with the Puerto Rico Electric Power Authority (PREPA) to undertake the development and permitting of a floating offshore LNG regasification facility off the southern coast of Puerto Rico. The facility, named Aguirre GasPort®, will provide fuel to the Central Aguirre Power Plant and is a step forward in the island's strategy to convert power generation from high-cost, high-emissions imported oil to cost-effective, cleaner-burning natural gas.
The Aguirre GasPort will be located approximately four miles offshore the southern coast of Puerto Rico, near the towns of Salinas and Guayama and will utilize one of Excelerate Energy's 150,900 m3 floating storage and regasification vessels. The facility will operate year-round, delivering natural gas to PREPA'sAguirre Power Plant as its primary fuel source, eliminating the use of heavy fuel oil and diesel. Construction of the Aguirre GasPort will be Excelerate Energy's seventh floating LNG import facility ‒ the most of any company in the industry.
Webmaster’s Comments: Unlike Downeast LNG, this terminal and ship transit route are proposed to be safely away from civilian populations — four miles from shore.
GDF Suez and the China Investment Corp. (CIC) have closed a deal whereby CIC will acquire GDF Suez's 10% equity stake in the Atlantic LNG liquefaction facility in Trinidad and Tobago. According to a GDF Suez spokesperson, the deal also includes the transfer of production payments for Atlantic LNG’s trains 2, 3, and 4, for a total value of 600 million Euros. Platts LNG Daily [subscription required] offers additional coverage.
[Pacific Northern Gas (PNG)] has an agreement to operate an anticipated new pipeline called Pacific Trails which will feed a planned liquefied natural gas plant in Kitimat to be built and operated by a consortium of energy companies called Kitimat LNG. Official construction word is expected early next year with the final product bound for Asian markets where prices are much higher than in North America.
Critics of a proposed liquefied natural gas terminal in Warrenton are calling on state agencies to more closely scrutinize the company's lease agreement for a proposed LNG facility, which would rest on publicly owned land along the Skipanon River.
With domestic natural gas prices reaching record lows, because of new techniques in obtaining the gas by hyrdraulically fracturing shale deposits underground, LNG facilities that originally planned to import natural gas are now proposing to export LNG to overseas markets.
Former energy company executive and LNG critic Paul Sansone said Oregon's regulatory committees should now address whether an export facility is in the public good, and whether it was intended when public land was leased to LNG developers more than six years ago.
Though Oregon LNG has remained quiet on its future plans, Colin Coe, a senior commercial adviser for Oregon LNG, spoke at the North American LNG Exports Conference Dec. 1. His topic was exporting liquefied natural gas from Oregon. [Red emphasis added.]
Webmaster’s Comments: The Jordan Cove LNG site could not be more inappropriate — too close to an airport and civilian populations. (See LNG Terminal Siting Standards Organization for more on appropriate terminal siting.).
The 'removal-fill permit," granted by the Oregon Department of State Lands, allows the port to develop an access channel and multi-purpose vessel slip on Coos Bay's North Spit. It's an important step toward bringing new industries -- deep-sea wind energy, wave energy, ore and coal exports, or Jordan Cove's proposed liquefied natural gas terminal -- to the South Coast.
COOS BAY, Ore. (AP) — The state has granted the Port of Coos Bay the dredging permit it needs to build a new marine terminal on the North Spit that could be used by ships carrying liquefied natural gas.
2011 December 21
[Red bold emphasis added.]
[The following link will open a Flash online magazine.]
Kwok W Wan, LONDON: The transformation of the US gas market is almost complete - and next year could see it take the crucial steps towards becoming a significant liquefied natural gas (LNG) exporter. Just 10 years ago, such a change was almost unthinkable. Then, the world’s largest gas market was rushing to build import terminals to supply an expected shortfall in demand. Now, however, the US could now supply up to a fifth of the global market if all proposed export terminals are built. And all this is due to the abundant production from the US’ prolific shale-gas plays, output which is changing the US LNG market in two stages. The first was to meet demand domestic gas demand and kill the LNG import market. This has happened already. The second stage will – potentially - allow the US to start exporting large volumes of LNG. This could be...
Webmaster’s Comments: The LNG import market is dead — even according to Downeast LNG's own industry.
Cheniere Energy Inc., which already is working to install natural gas liquefaction adjacent its Cameron Parrish, La., terminal, has announced its subsidiary Corpus Christi Liquefaction LLC is developing LNG export capabilities at one of Cheniere's existing sites previously permitted for regasification.
Currently, Cheniere is developing a two-train LNG export capacity at its Cameron Parrish Sabine Pass LNG terminal through subsidiary Cheniere Energy Partners LP. The company anticipates the project will include four liquefaction trains capable of producing in aggregate up to 18 million tpy [tonnes per year] of LNG (OGJ Online, Nov. 16, 2011 http://www.ogj.com/articles/2011/11/contract-let-for-sabine-pass-lng-liquefaction-trains.html ).
"With our newly proposed project, we will be able to provide up to an additional 13.5 million tpy [tonnes per year] of liquefaction capacity in the Gulf of Mexico," said Charif Souki, Cheniere chairman and chief executive officer.
The project would be located in San Patricio County, near Corpus Christi, Texas, on a site Cheniere previously designated for an import terminal, the Houston-based company said in a statement today. No construction timeline or cost estimate was provided for the plant, which Cheniere said will handle 13.5 million tons of gas annually.
The Texas project could attract interest from gas producers such as Anadarko Petroleum Corp. and Chesapeake Energy Corp. that operate in a nearby geologic formation known as the Eagle Ford Shale , said Eliecer Palacios, an energy specialist at Maxim Group LLC.
Other Eagle Ford gas producers that may be interested in shipping fuel through the proposed Cheniere plant include Pioneer Natural Resources Co. and Plains Exploration & Production Co., Palacios said today in a note to clients.
Downeast LNG has insurmountable problems. The proposed LNG import project on Mill Cove in Robbinston and associated LNG ship delivery would place thousands of Mainers and New Brunswickers in harm’s way according to the U.S. Department of Energy’s LNG ship hazard zones. Plus, the company refuses to comply with the U.S. Coast Guard requirement to obtain approval from native tribes for use of the waterway, and cannot comply with the requirement to obtain secure LNG transit cooperation and coordination from the government of Canada — an issue unrelated to any existing maritime treaty.
...Downeast LNG continues to cite outdated 2006 and 2007 market data because reality weighs fatally against the project. Dean Girdis and company still want to increase U.S. dependence on overseas imports when the country is moving rapidly toward natural gas independence. Downeast LNG’s credibility has failed. [Red bold emphasis added.]
A report in "Poten & Partners – LNG in World Markets" suggests that Total remains interested in an LNG export deal with Cheniere Energy at the Sabine Pass terminal, but that the French company is concerned about contractual provisions that would require Total to pay a fixed charge for two years following declaration of force majeure. According Platts LNG Daily [subscription required], force majeure provisions would apply if both of Cheniere's LNG export authorizations are revoked.
Separately, bids for construction of the LNG infrastructure - a Floating Storage and Regasification Unit (FSRU) to be developed at Port Esquivel in St Catherine - have been pushed back from January 13, 2012 to February 24, 2012.
The recently released Wood Mackenzie report showed that LNG from Valdez could be delivered nearly one-third cheaper to the Asian market than that from the LNG project being developed in Kitimat, British Columbia, Canada. While Kitimat is signing up customers, are we really considering a project that would not bring Alaska’s gas through Alaska?
TransCanada and Exxon Mobil are deferring filing the next step in paperwork to get a natural gas pipeline built to the Lower 48, and they’re assigning responsibility for that to Governor Sean Parnell.
“The [AGIA-licensed Alaska Pipeline Project] resource reports are complete and ready to be filed. But as you will recall earlier this fall Governor Parnell encouraged the North Slope producers to work with the APP to evaluate an LNG option,” he said.
2011 December 19
[Red bold emphasis added.]
With domestic natural gas production booming, opponents of trucking liquefied natural gas — LNG — out of the import facility at Elba Island say the proposed project is no longer just a risky idea from a safety standpoint; it’s also not credible from a business perspective.
“When one looks at these different dockets and different projects, one now has the evidence to assert that the company is laying the groundwork and building the infrastructure to turn Elba into an export platform for domestically produced gas,” he said.
The Utica shale formation is just one of the latest discoveries, stretching from Kentucky all the way up to Quebec. The main areas of drilling in the shale so far have been in Ohio, where the authorities have estimated that this area alone contains recoverable reserves of 5.5bn barrels of oil and 15trn cubic feet of natural gas.
To put that in perspective, the US consumes 24trn cubic feet of natural gas a year. This is just one part of one shale play, in one state. Recent estimates have been 860trn cubic feet equating to 36 years of supply, and this is probably just the tip of the iceberg.
Webmaster’s Comments: The price of natural gas has fallen as low as $3.12 within the past few days.
Point Fortin — known in energy circles as the hometown of LNG production company, Atlantic – has a new claim to fame. Global energy conglomerate GDF SUEZ has named an LNG carrier vessel in honour of the Trinidadian town.
2011 December 17
[Red bold emphasis added.]
Oil companies invest billions in projects they think will be profitable in the future, but a change in the marketplace could make the project obsolete, as it happened with the LNG projects being built in the U.S. Companies spent billions building LNG import terminals, but new shale-drilling techniques have sharply increased domestic natural-gas supplies, eliminating the need for imports.
Cheniere said the LNG export facility in Corpus Christi, Texas, would be supplied with shale gas being produced in the Eagle Ford Shale, about 60 miles to the southeast. New drilling technology has unlocked large amounts of natural gas from shale in the U.S., making the prospect of exporting the gas more likely despite the huge costs associated with chilling the fuel into a liquid state for shipping.
The proliferation of oil and gas production in shale formations has brought down natural-gas prices, making the fuel attractive to other countries with growing energy needs. Natural-gas prices reached a peak above $15 per million British thermal units in December 2005, when dwindling domestic supply of gas raised the specter of the U.S. becoming an LNG importer. With the widespread use of the new drilling technology, natural-gas prices are now around $3 per mBtu.
Webmaster’s Comments: Meanwhile, Downeast LNG president Dean Girdis continues to claim that his ill--sited, Johnny-come-lately, "wrong-way-Girdis" proposed project would bring down the price of natural gas.
Less than a month after it began shutting down, the Nikiski Liquified Natural Gas plant Conoco-Phillips has some more business. Details are being kept confidential but basically the company is buying gas from a producing well complex in Kenai owned by Buccaneer Energy. Bucaneer is supposed to sell gas to Enstar, but that transaction is waiting for a storage facility to be put into operation. Conoco-Phillips now says it will ship more gas from the plant next year, but so far has not said if it will seek to renew its export license, which is currently extended until the end of next year. The plant is 42 years old and 40 to 50 people remained working there when it was mothballed last month.
“KM LNG is basically going to gobble up all the excess power in the province,” he explained, adding the demand for power in BC over and above what will be needed for LNG will also continue to grow in the future.
[Premier Christy Clark] said the plan to pipe natural gas from the northeast to Kitimat, where it will be cooled and placed on tankers bound for Asia, threatens the government’s 2007 Greenhouse Gas Reductions Targets Act, which calls for a 33 per cent cut in emissions by 2020.
Clark admits her government is wrestling with a conflict when it comes to creating jobs in the energy sector while sticking to British Columbia’s legal commitment to the toughest greenhouse gas emission cuts in North America.
Department Director Louise Solliday said Friday that the decision will hinge solely on whether the dredging and excavation proposed by the port comply with state rules and regulations. She said objections raised over whether exporting LNG is good for Oregon do not apply.
The state of Oregon and conservation groups both oppose the project, saying it will raise prices for consumers by reducing supplies. The Oregon Attorney General's Office has asked federal regulators to revoke a permit granted the LNG project, saying plans to switch from import to export would contribute to higher prices for natural gas.
The following link will access a PDF file (131 KB).
The Commission proposes changes in its rules and regulations relating to the filing of privileged material, in keeping with the Commission’s efforts to comply with the Paperwork Reduction Act, the Government Paperwork Elimination Act, and the E-Government Act of 2002. First, the Commission will establish for filing purposes two categories of privileged material: privileged material and Critical Energy Infrastructure Information. This revision will expand the ability to file electronically by permitting electronic filing of materials subject to Administrative Law Judge protective orders. Second, the Commission proposes to revise its regulations to provide a single set of uniform procedures for filing privileged materials. This effort is being undertaken as part of the Commission’s effort to reassess and streamline its regulations to ensure that they are efficient, effective and up to date.
Also, the Commission proposes to revise Rule 213(d) of its Rules of Practice and Procedure, which establishes the timeline for filing answers to motions, to clarify that the standard fifteen day reply time will not apply to motions requesting an extension of time or a shortened time period for action. Instead, the Commission proposes to set the time for responding to such motions at five days, unless another time period is established by notice based on the circumstances.
Webmaster’s Comments: As Save Passamaquoddy Bay has experienced, FERC typically does not even recognize or respond to official intervenors' motions for extensions of time. In addition, FERC allows applicants to stamp virtually all documents as being "Privileged" or "Critical Energy Infrastructure Information" (CEII), including those that intrinsically do not qualify — in order to keep those documents out of the public's view, to the detriment of the public interest.
Webmaster’s Comments: Angola LNG originally planned on the US as being its major customer; however, the US decades-long natural gas glut has forced Angola LNG to find other customers. It will be interesting to see if Gulf LNG can remain an import terminal, or if — as several other US LNG import terminals have done — it will seek to export US-source LNG.
2011 December 16
[Red bold emphasis added.]
B&V notes that, "North American natural gas prices have realized a separation from world oil prices and the price of natural gas in Europe, reducing the throughput on US LNG re-gasification facilities and increasing the potential for natural gas exports."
The Houston-based LNG developer plans to build the export plant at Corpus Christi, Texas, originally the site for a planned import terminal, according to a filing this week with the federal energy regulator.
Cheniere is launching the development of its second LNG export terminal, building upon its export capabilities in the Gulf of Mexico. Cheniere is currently developing an LNG export project at the Sabine Pass LNG terminal (the "Sabine Pass Project") through its subsidiary, Cheniere Energy Partners, L.P. The Sabine Pass Project, located in Cameron Parish, Louisiana, is anticipated to include four liquefaction trains capable of producing in the aggregate up to 18 mtpa of LNG. Cheniere has recently announced that is has entered into three long-term LNG Sale and Purchase Agreements ("SPAs") for the targeted contract quantity for three of the four trains under development and is currently in discussions with counterparties interested in entering into SPAs for the remaining capacity.
The contract with ConocoPhillips commences when Kenai Loop # 1 starts production in December 2011. The contract is expected to conclude on 30 April 2012, with the potential to end earlier, if construction of the Cook Inlet Natural Gas Storage (CINGSA) facility is completed prior to this date.
An approved natural gas import terminal in Coos Bay, Ore. has suddenly switched gears with a request to export natural gas to Asia. Some say that was their plan all along.
For onlookers watching the ongoing development of a proposed natural gas terminal in Coos Bay, Ore., it seemed a puzzling business strategy. Why would energy companies want to spend billions of dollars building a natural gas terminal and pipeline to import foreign gas, when the domestic market was about to blow up?
This September, the head-scratching plan suddenly made sense. After getting the go-ahead from the Federal Energy Regulatory Commission for a liquefied natural gas import facility in 2009, the Jordan Cove Energy Project switched tack and applied for approval to export gas from the recently opened Ruby Pipeline to Asian markets, where prices are three times higher.
It's right to look with caution at the proposed Jordan Cove project at Coos Bay, which has flipped abruptly from import to export terminal. The Oregon Justice Department has filed a motion with the Federal Energy Regulatory Commission demanding that it revoke its approval of the Jordan Cove terminal and reopen the record so the state can submit evidence that the revised project is not in the public interest.
The argument for exports is that the discovery of vast shale gas reserves will provide the United States so much gas that it could easily export 10 percent to 20 percent of the nation's daily usage, with little or no effect on prices. Well, maybe. But then again, only three years ago the party line was that the United States would soon be desperate for more of the world's gas.
A boom in shale drilling has oversupplied the domestic market for natural gas, sending its price plummeting from as high as $13 per million British thermal units to a closing price of $3.13 on Thursday.
The report notes, though, that exports would have a more significant effect at Gulf Coast terminals, and that would be manifest in prices at the Henry Hub in Erath, La., the main pricing point for natural gas futures.
On December 1, the U.S. Environmental Protection Agency (EPA) issued a final Prevention of Significant Deterioration air permit for the Port Dolphin LNG deepwater port project. This permit, announced in yesterday's Federal Register, regulates air pollutant emissions from the planned LNG deepwater port.
Earlier this week, Freeport LNG Development, L.P. filed a Request for Extension of Time with FERC, asking the Commission to grant a one-year extension of time to complete certain Phase II facilities at the Freeport LNG terminal.
By law, British Columbia must reduce its greenhouse-gas emissions in the year 2020 by at least 33 per cent below 2007 levels. It means total emissions are to be reduced to 45 million tonnes in the year 2020. A single LNG terminal and pipeline using fossil fuel for energy could put 3.4 million tonnes of carbon dioxide into the atmosphere annually, according to a recent Pembina Institute study.
“We are working through those issues now so I don’t have a definite answer for you. We do have enough [electricity] to do the first [LNG plant], and we’re working our way through how we can make the second, third, maybe fourth or fifth ones happen while maintaining our leadership on climate change.”
The Oregon Department of State Lands is set to deliver its verdict next week on an application by the Port of Coos Bay to build a two-slip marine terminal that could accommodate tankers to export natural gas to Asia.
2011 December 15
[Red bold emphasis added.]
The Houston-based LNG developer plans to build the export plant at Corpus Christi in Texas, originally the site for a planned import terminal, according to a filing this week with the federal energy regulator.
Once expected to be a major importer, the United States now has up to a century's worth of supply, prompting plans to ship the cheap fuel to thirsty markets in Europe and Asia where prices are up to five times higher.
Already Cheniere has filled nearly all its capacity for the first export plant, after deals signed recently with BG Group, Gas Natural Fenosa and GAIL India. Soon, markets across the world could be burning U.S. shale gas.
“Five years ago it was believed that America [had] almost exhausted its conventional gas fields. Some mass gas import through LNG terminals was expected, mainly in Texas and Louisiana at the Gulf of Mexico. Gazprom opened an office in Huston and used to brag about overtaking 10% of the US market through LNG export from Sakhalin. Meanwhile, the Americans found mass fields of shale gas and at the moment it is believed that there is enough gas for at least 100 years. Thus, from a possible big client of Gazprom they may turn into a major rival at the marking, since they are now building a terminal for LNG export. US Cheniere Energy, based in Huston, for instance, signed a contract for gas deliveries to Lithuania at prices that are 25% lower than those offered by Gazprom,” Alexiev commented further.
...Houston-based Cheniere Energy has said it will spend $6.5 billion to convert part of its LNG plant in southwestern Louisiana, originally constructed to import gas, into an export facility to send part of the glut to overseas markets.
A string of rival LNG export projects have been proposed in the US 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.
The report concluded there were sufficient volumes of domestic natural gas for both domestic consumption and LNG exports, and rebuffed suggestions of economic damage to the US resulting from such exports.
Webmaster’s Comments: It is difficult to believe the natural gas industry, especially since the industry has been advocating exports precisely to increase the domestic price — talking out of both sides of its mouth.
An LNG terminal anywhere on Passamaquoddy Bay faces opposition no less formidable than the Canadian government, which has said it will not allow LNG tankers to pass through Head Harbour Passage, a narrow stretch that Transport Canada (that country’s DOT) rated as the most dangerous passage in all of Canada. And Robbinston’s acceptance of the project notwithstanding, the debate over it and the other two LNG projects — one in Perry, the other in Calais — sharply divided residents of the Passamaquoddy Bay corridor six years ago. “We don’t oppose LNG or natural gas in general,” says Robert Godfrey of Save Passamaquoddy Bay, whose members come from both sides of the border. “We oppose inappropriate siting. All three of the proposed Passamaquoddy Bay LNG locations are closer to civilian populations than is considered appropriate by the industry’s own published best practices. It’s been a real shame. If the developers had sited these things more appropriately, they probably wouldn’t have had the problems that they had. As it is, they did a lot of damage to relationships among friends, neighbors, and communities.”
The Perry project was abandoned in 2009 when the Passamaquoddy tribe terminated its land lease with the developer, Quoddy LNG. Last year, Calais LNG put its plans on hold after losing its sole financial backer. Downeast LNG, meanwhile, remains interested in the Robbinston site, but the project has not advanced since the Federal Energy Regulatory Commission (FERC) issued a favorable draft environmental impact statement two years ago. LNG developers across the country are waiting for the federal Department of Transportation’s Pipeline and Hazardous Materials Safety Administration to issue its final review of new models for siting facilities, according to Cathy Footer, a Robbinston resident who is Downeast LNG’s community liaison (she also works part time as the town’s tax collector). Once that is complete, Footer says, the company expects to receive FERC’s final environmental impact statement and to apply for permits from the Maine Board of Environmental Protection. She says she has received more than 250 resumes from people interested in working for Downeast LNG.
Webmaster’s Comments: The Quoddy Bay LNG proposal in Perry was not "abandoned." It was dismissed by FERC, as is clearly stated in the FERC docket. Quoddy Bay LNG could not have continued, but could re-apply with a different site as an entirely new project.
Downeast LNG has attemted to fool the public with a "dog ate my homework" excuse. The flimsy excuse doesn't work. Downeast LNG was already a year delinquent in meeting FERC's deadline prior to the US DOT (Pipeline and Hazardous Materials Administration — PHMSA) moratorium on LNG terminal permitting.
The Jamaican government has approved an undisclosed shortlist of bidders in its LNG supply tender for Jamaica's long-delayed LNG import terminal project, Christopher Zacca, chairman of the Jamaican LNG Steering Committee, said Thursday.
'We're not the only country that has" natural gas, Braddock said at Wednesday's Bay Area Chamber of Commerce luncheon, where he presented a Jordan Cove Energy Project update. 'The U.S. has an opportunity to export natural gas as long as other countries, such as China, don't develop theirs."
The export permit is one of several hurdles Jordan Cove must face before building a terminal here. The U.S. Fish and Wildlife Service says it can't issue a biological assessment of the project without more information from Jordan Cove about the project's environmental impact, and the Bureau of Land Management hasn't signed off on permits for the Pacific Connector Pipeline that would connect the terminal with the nation's gas transport network. [Red emphasis added.]
Webmaster’s Comments: Jordan Cove LNG first joined the goldrush to import. It's project was a wasted effort. Now it has joined the goldrush to export. The proposed terminal site violates world LNG terminal siting best safe practices. (See LNG Terminal Siting Standards Organization.) Wasted effort seems to be Jordan Cove LNG's forte.
2011 December 14
[Red bold emphasis added.]
Webmaster’s Comments: The US also saw 10-year low natural gas prices in November. Today's US Henry Hub 2-year low natural gas prices ranged between $3.045 – $3.10 per million Btu.
FERC has submitted a set of questions to Cheniere Energy regarding the company's planned LNG liquefaction and export project at the Sabine Pass terminal. Specifically, the Commission is seeking information regarding the entity or entities that will serve as the operator of the liquefaction facilities, whether the facility can provide regasification and liquefaction services simultaneously, and pipeline operations.
Speaking at an industry event in Houston, Freeport LNG CFO Hugh Urbantke said that building and installing one liquefaction train at the Freeport LNG facility would cost $4 billion, while installing two liquefaction trains would cost $6.5 billion and three liquefaction trains would cost $10 billion.
2011 December 13
The U.S. has always had an abundant supply of natural gas, but until recently, the potential power of the U.S. has largely been trapped. That may be changing as shale is unlocked and the LNG market changes.
Cheniere Energy has signed a third long-term deal to export liquefied natural gas from its proposed plant in Louisiana, paving the way for the first U.S. export project of its kind in nearly 50 years.
The United States is making moves to export natural gas as huge increases in domestic production thanks to shale development swamp the market, turning a potential major importer into a country with a century's worth of supply.
Natural gas exports will reduce hefty U.S. supplies that have weighed down prices for the past few years. Supplies are nearly 9 percent higher than their five-year average, thanks to a rush by petroleum companies to develop new wells in underground layers of shale.
Houston-based LNG Partners LLC surprised the council of the Haisla First Nation when it showed up in 2008 with the idea of building a natural gas liquefaction operation within its land-claim area around Kitimat.
From LNG Partners' perspective, though, the idea of a partnership was simply a practical way of addressing an issue the company was told it would have to deal with, according to company president Tom Tatham.
The letter from Save Passamaquoddy Bay to FERC officials cites the company's "long history of FERC deadline abuse" and a changed natural gas market that makes new LNG import terminals unnecessary. [Red bold emphasis added.]
Most of the crude exported from Saudi Arabia, Iran, the United Arab Emirates, Kuwait and Iraq - together with nearly all the liquefied natural gas from lead exporter Qatar is transported through the channel. [Red bold emphasis added.]
2011 December 12
[Red bold emphasis added.]
Webmaster’s Comments: And yet, Downeast LNG continues to claim that domestic natural gas supplies are diminishing and that importing more LNG is needed. Who do you believe, Downeast LNG or 100 oil and gas industry executives with more exprience?
Even without access to Alaska’s abundant natural gas, domestic production has risen steadily for a decade, last year hitting its highest level since 1973, according to the federal Energy Information Administration. “Proved reserves of natural gas have grown significantly over the past several years,” the agency said recently. It estimates, moreover, that the country has about a century’s worth of technically recoverable natural gas resources at current rates of consumption. (United States oil reserves equal about a three-year supply.) Production of natural gas has risen about 20 percent over the last four years despite a low prevailing price for this commodity — an ideal situation for consumers.
That’s where the missing pipeline comes in. Prodigious amounts of natural gas are sitting in Alaska. It is conventional gas, which can be extracted without the problems associated with hydraulic fracturing for shale gas. (Some research suggests shale gas production via hydraulic fracturing causes methane emissions that offset the clean-burning advantage of gas.) If the natural gas in Alaska could be moved to the contiguous states, substantial long-term supply would be ensured. Buyers confidently could switch to natural-gas vehicles or gas heating; utilities confidently could switch from coal-fired generation, the dirtiest form of megawatts, to gas power.
In a significant development, state-owned GAIL (India) Ltd announced on Sunday that it has signed a Sales and Purchase Agreement (SPA) to procure liquefied natural gas (LNG) for over 20 years with Sabine Pass Liquefaction, LLC — a subsidiary of Cheniere Energy Partners, LP, USA —for supply of 3.5
million tones per annum (MTPA) of LNG.
The project is being developed in phases, the company said. Sabine Liquefaction recently announced that it has reached its targeted annual contract quantity of 7 million tpy for the first phase and is advancing towards making a final investment decision for the development and construction of two liquefaction trains.
Sabine Liquefaction is developing a liquefaction project at the Sabine Pass LNG terminal that would include up to four liquefaction trains capable of producing up to 18 mtpa of LNG. Sabine Liquefaction is targeting selling approximately 14 mtpa of the capacity under long-term SPAs. The project is being developed in phases. Sabine Liquefaction recently announced that it has reached its targeted annual contract quantity of 7 mtpa for the first phase and is advancing towards making a final investment decision for the development and construction of two liquefaction trains. The SPA with GAIL represents the first contract for the second phase of the project, which will also include two liquefaction trains with combined production capacity of 9 mtpa.
Webmaster’s Comments: "mtpa" = million metric tons per annum. 1 mtpa = 128 MMcf/d (million cubic feet per day). So:
7 mtpa = 896 MMcf/d (0.896 Bcf/d — 0.896 billion cubic feet per day)
9 mtpa = 1.152 Bcf/d — export capacity similar to one US LNG import terminal.
Delivery of the bridge volumes are to occur with the commencement of operations of train two, which is expected in 2016 and deliveries from train four are to occur upon commencement of its operations, which is expected as early as 2017.
Natural-gas producers in North America are expanding into new markets with LNG, super-chilled for shipping by tanker. Encana Corp., Canada’s largest gas producer, and Apache Corp. are proposing an LNG facility in Kitimat, British Columbia, to ship the fuel to Asia.
Webmaster’s Comments: It appears that this deal will unlink the LNG price from the world oil price. If so, that may put a downward pressure on world LNG prices, reducing the incentive to export US LNG overseas. So, if that happens, other North American LNG exporters may find their LNG export terminal investments sitting idle, much as US LNG import terminals are now doing.
This week, Jordan Cove won that approval for an export terminal despite a motion from the Oregon Department of Justice requesting it be rescinded, considering the terminal's new purpose. Under the Natural Gas Act, FERC must assure that the public interest benefits of a project outweigh its impacts. The Oregon DOJ wrote that FERC should require a new application for export and "make its public interest determination based on the stated benefits of export versus the adverse impacts to landowners, health and safety, the environment, the expected increase in the price of domestic natural gas, impacts on the economy, impacts on the country's energy independence, national security, and any other adverse impacts."
Some opponents of the terminal say enough is enough and last week asked the Federal Energy Regulatory Commission to pull the plug on the project after the firm backing it failed to meet a Nov. 8 FERC deadline for responding to 14 environmental data questions.
Robert Godfrey, a spokesman for the Save Passamaquoddy Bay organization in Eastport, cites in a letter to FERC what he terms a “long history of FERC deadline abuse” in asking the federal agency to dismiss the application filed by Downeast LNG.
Dean Girdis, president of Downeast LNG, said the deadline wasn’t met because it couldn’t be met, given that new federal standards and technical models for pipelines were only finalized in November. Girdis said he expects his company to file the environmental data requested within a few weeks.
A recent FERC analysis of natural gas markets supports Godfrey’s contention that the U.S. is experiencing a “glut” that doesn’t warrant expansion of imports. [Red, brown, yellow & bold emphasis added.]
Webmaster’s Comments: Dean Girdis' claim that new federal standards held up complying with FERC deadlines is hollow. Downeast LNG is two-years and five-months late in answering FERC's questions. Although there was a moratorium on LNG terminal permitting for approximately the last year, Girdis made no effort to supply responses in the year, or so, prior to that moratorium, and Girdis is still late in filing responses.
Dean Girdis falsely claims that pipeline capacity cannot be expanded. Even Downeast LNG's own website, as of today, states that the Maritimes & Northeast Pipeline can be readily expanded. See http://www.downeastlng.com/why.php
- The Potential Role of New LNG Supply in the Northeast Gas Market, paragraph 2:
"... Only the Maritimes & Northeast (M&NE) pipeline has expansion capacity available, up to 2.2 bcfd from its current capacity of 500 mmcfd. "
- New England: Increasing Gas Supply Connections, paragraph 1:
"... M&NE can readily expand capacity to serve demand growth."
[Independent oil and gas analyst Pedro Van Meurs] said the market in the Lower 48 will be flooded with shale gas. And before long, the Asian market, which Gov. Sean Parnell recently said Alaska should exploit, will be flooded with gas from Russia, Australia and Canada.
Van Meurs does see one possibility, however: Alaska, or one of the oil producers, could invest in a liquefaction plant on the North Slope, where the gas would then be sent out on Arctic tankers bound for Asia. "That's the only rational option I see," he said. If not that, then the idea of bringing Alaska gas to market is "finished."
2011 December 9
[Red bold emphasis added.]
What’s also incredible is that back in 2005, many people couldn’t see this, and there were even expensive import facilities being set up so as to supply the then-expensive market with supposedly cheaper imported liquefied natural gas. Such was the enterprise Cheniere Energy (LNG) set up to do. Today, it languishes under a ton of debt, while Natural gas goes nowhere and is actually cheaper in the US than elsewhere. Those facilities, meanwhile, are being converted into export terminals.
Webmaster’s Comments: WAKE UP, DOWNEAST LNG! The gravy train you've been chasing fell over 'way back in 2005.
Webmaster’s Comments: Exporting also makes no sense from a US energy-security standpoint.
The proposed Jordan Cove LNG terminal violates world LNG industry terminal siting best safe practices. For more on this issue, see LNG Terminal Siting Standards Organization.
Jordan Cove Project Manager Bob Braddock said Wednesday the company still hasn't lined up enough customers to make either an export or an import terminal worthwhile. He said that if customers don't materialize soon, the company will finish getting permits for an import-only terminal, then put the project on the shelf, awaiting a more favorable market.
Although the Energy Department gave exports a green light, the import terminal has run into other regulatory obstacles. The U.S. Fish and Wildlife Service says it can't issue a biological assessment of the project without more information from Jordan Cove about the project's environmental impact, and the Bureau of Land Management hasn't signed off on permits for the Pacific Connector Pipeline that would connect the terminal with the nation's gas transport network.
The Jordan Cove project requires a permit from FERC. Prior to issuing the permit, FERC, as a federal agency, is legally required to conform to the spirit and letter of NEPA. In this case, documentation of the process to date shows it to be a gross violation of NEPA. This reality forms the basis for the attorney general's motion. It is not a matter of Salem bureaucrats being against the economic needs of Coos County. The surest and quickest way to bring the Jordan Cove project to fruition would be to fully comply with NEPA. Failure to do so condemns the project to failure on procedural grounds without even having to get into the substantive issues.
“Natural gas is currently at a price disadvantage to coal in Europe,” he said. Couple that with the likely demand-depressing effects of the ongoing financial crisis and the slow recovery from the 2007-08 global financial collapse, Europe is unlikely to attract much US-produced LNG, no matter how much or how little liquefaction eventually gets built there.
NEW YORK, NY--(Marketwire - Dec 8, 2011) - In the coming years, the United States is poised to become a key player in the natural gas export market. With U.S. gas prices on the downswing due to a domestic supply glut, several companies are investigating the potential of export terminals on the U.S. coast in order to take advantage of higher prices abroad. The Bedford Report examines investing opportunities in natural gas and provides stock research on Clean Energy Fuels Corporation and Cheniere Energy, Inc.
This year, the US' Energy Information Administration estimated that China may hold almost 1,300 Tcf of technically recoverable shale gas, the world's biggest resource and almost 50% larger than the 862 Tcf estimated for the US.
Webmaster’s Comments: Ooops! Could the mad rush to export LNG be the same financial trap that was the rush to build LNG import terminals? The US now has 27 times the LNG import capacity than it will use next year, with terminals mostly idle, thanks to the same goldrush mentality that is still blinding Downeast LNG from seeing reality.
It takes a lot of energy to liquefy natural gas. Almost universally, around the world, LNG plants use a portion of their own natural gas supply to provide that energy. It appears, however, that BC Hydro is prepared to supply electricity, at BC’s below-cost industrial bulk energy rates, to the Kitimat LNG consortium, for their liquefaction operations.
And you want to know why BC Hydro rates for household electricity are on a course to double in about 9 years. . . . It’s because your Hydro bill has become an instrument of wealth redistribution – upward wealth redistribution – on a massive scale.
Yesterday FERC issued a notice of intent to prepare an Environmental Assessment (EA) of the boil-off gas project planned for the Cameron LNG import terminal. The deadline for public comments on the scope of the EA is January 13, 2012.
GE Oil & Gas has completed a fast-track refurbishment project to eliminate corrosion, or pitting, of compressor blades on 14 gas turbines at Atlantic LNG Company of Trinidad and Tobago’s production facility in Point Fortin.
Walker said that a spur line could ... supply ConocoPhillips Liquified Natural Gas plant in Nikiski, allowing that facility to increase its exports. Sending the mainline to Valdez to export LNG is largely to allow for the large volume that makes the project economical, he said. It also helps that a natural gas pipeline from Prudhoe Bay to Valdez has been permitted already, by Yukon Pacific.
ConocoPhillips spokesperson Natalie Lowman said Thursday the LNG plant went into a warm shut-down mode Nov. 26. No commercial contract is currently in place between Buccaneer and ConocoPhillips. Lowman said ConocoPhillips will re-evaluate the future of the plant at the start of 2012, or in early spring.
Webmaster’s Comments: The only existing LNG liquefaction and export terminal in the US has shut down due to lack of gas and customers, as previously announced.
2011 December 7
[Red bold emphasis added.]
The US could emerge as a major competitor to Australia's burgeoning gas-export market, challenging the viability or expansion plans of close to a dozen Australian liquefied natural gas projects, according to Noel Tomnay, the head of global gas at UK-based energy consultancy Wood Mackenzie.
An industry analyst with ICF International said yesterday that he expects North American LNG exports from the United States in 2020 to be a small fraction of the capacity contemplated in U.S. LNG export applications filed to date. Speaking at an energy conference in Washington, D.C., the analyst predicted that U.S. LNG exports will feed new incremental LNG demand.
Webmaster’s Comments: Jordan Cove still needs FERC and state permit approval.
HOUSTON, TX, Dec 07, 2011 (MARKETWIRE via COMTEX) -- Nearly a hundred executives converged in Houston, Dec. 1, to discuss the prospects for exporting LNG from North America. Eleven prospective projects were reviewed, including Cheniere Energy's Sabine Pass bidirectional plans on the U.S. Gulf Coast, the Apache-led Kitimat LNG on the West Coast of British Columbia, Dominion's Cove Point bidirectional proposal on the U.S. East Coast, and Leucadia National Corp's Oregon LNG proposal at the mouth of Columbia River.
The latest estimates for technically recoverable natural gas in the United States exceed 2.5 quadrillion cubic feet. This is more than double the US Geological Survey estimate of 1.1 quadrillion cubic feet in 1995. Canadian gas producers, which depend on U.S. markets, are especially hard hit by the U.S. surplus. Recent shale gas discoveries in Northeast British Columbia have pushed technically recoverable reserves from just three basins -- Horn River, Montney and Cordova -- to more than 1.0 quadrillion cubic feet. Five LNG export projects are now proposed along British Columbia's West Coast.
Pumping gas trapped in shale rocks has transformed the U.S. into the world’s largest gas producer, cut prices about 75 percent from their 2008 peak and made exports to higher priced markets in Asia and Europe a viable option. The fuel will overtake crude oil to account for more than 50 percent of Shell’s global production next year, driven in part by the development of shale gas fields in Texas and Pennsylvania.
A representative for Save Passamaquoddy Bay has submitted a letter to FERC that outlines Downeast LNG's history of failing to honor FERC's filing deadlines. The letter, available in FERC's eLibrary under Docket No. CP07-52, concludes that the Downeast LNG project application pending before the Commission should be dismissed. [Red bold emphasis added.]
The DEP plans to retain three bureaus –currently Air Quality, Land & Water Quality and Remediation and Waste Management– but instead of being structured around environmental media, they’ll be organized via the functions of resource protection, environmental assessment and resource administration.
Some examples of where consistencies will be created by a functional structure include inspection frequency, permitting processes, billing and collections, initiation of enforcement and compliance correspondence. Procedures for those services are currently specific to each bureau but under the new structure would apply across the agency, creating predictability for the regulated community.
Maine’s environment will be the immediate beneficiary of the proposed changes, Commissioner Aho stressed in her announcement Wednesday. For example, environmental data that has been historically monitored by different bureaus would be received and reviewed by one section of staff who will be able to better protect Maine’s air, land and water with their more comprehensive analysis.
Webmaster’s Comments: It will be interesting to see how many LNG ships do actually deliver to Gulf LNG Energy, since they bring the US LNG import capacity to 27 times more than is needed for 2012, and since LNG import terminals are largely idle due to the absolute glut of domestic natural gas resource supply.
The state of Oregon has asked federal energy regulators to rescind their approval of a natural gas pipeline and liquefied natural gas terminal in Coos Bay now that backers say they want to reverse the flow of gas and export compressed gas rather than import it. It's more than reasonable to make backers demonstrate that the benefits to the public of exporting gas outweigh any environmental considerations.
[I]n recent years, domestic supplies have been abundant and prices have been relatively low. So in September, developers of the Jordan Cove project asked the U.S. Department of Energy for permission to export gas instead. [Red bold emphasis added.]
2011 December 6
[Red bold emphasis added.]
Washington, 6 December (Argus) — US Department of Energy (DOE) will not grant additional licenses to export domestically-produced natural gas to all international markets until completing a review of cumulative economic impacts of liquefaction projects on US markets, a senior agency official said today.
The federal energy regulators appear to be sensitive to political pressure that could arise if LNG exports from the US lift domestic natural gas prices. The agency could reconsider the already granted applications if energy security or other factors are an issue, according to John Anderson, manager of natural gas regulatory activities at DOE's Office of Fossil Fuels.
A study by the Energy Information Administration (EIA) will focus on the effect of LNG exports on domestic prices of natural gas. That EIA study will serve as the basis for analyzing cumulative economic effects of LNG exports that will be conducted by an external contractor.
A critical factor appears to have been omitted: a project's commercial viability. Unlike the Federal Energy Regulatory Commission, DOE does not require developers to prove viability, focusing only on analysis of what happens if the terminal is built, Anderson said.
Thanks in part to strong production levels and resulting price reductions, US natural gas consumption now is expected to average 67.18 Bcf/d this year, up 100,000 Mcf/d from the Energy Information Administration's month-ago estimate.
Growing domestic gas production "has reduced reliance on natural gas imports and contributed to increased exports," EIA observed. It expects pipeline gross imports will fall by 6.5% to 8.5 Bcf/d this year and by another 3.6% to 8.2 Bcf/d in 2012. Projected US imports of liquefied natural gas will fall from 1.2 Bcf/d in 2010 to 0.9 Bcf/d in 2011 and to 0.7 Bcf/d in 2012, according to the report.
According to Washington-based consultancy PFC Energy, shale gas and oil will make up about one-third of total U.S. oil and gas production by 2020. By that time, the U.S. could be the top oil and gas producer in the world, surpassing even Russia and Saudi Arabia. LNG exports of domestic shale gas could become especially lucrative due to rapidly increasing demand from Asia, and from China in particular. The emerging superpower is exploring a switch from coal to gas in power generation to help curb its city’s serious air pollution issues.
U.S. shale is already making an impact on the country’s energy exports. In October, U.K.’s BG Group struck a US$8-billion deal with Houston-based Cheniere Energy Inc. to become the first company to export liquefied natural gas from the U.S. Under the deal, Cheniere will sell 3.5 million tonnes per year of LNG to BG for 20 years, with a potential 10-year extension.
A third terminal, Freeport LNG in Freeport, Texas, which is partly owned by ConocoPhillips , is moving in the same direction, while Sempra Energy has filed for a permit to export LNG from its Cameron LNG facility in Louisiana.
Scale is the primary reason why Canada’s contributions to the LNG trade will be small, even if all the five export terminals proposed to-date are built. Although project groups are not yet specifying exact send-out rates, Table 1 provides some estimates, based on what is known today. The list is likely to expand before long as others, like the Cordova Employment Producers Group led by Penn West, are also known to be evaluating LNG export options.
Realistically, and barring the unforeseen, it looks like Canada’s total LNG export capacity by the end of the decade will be somewhere between 3.0 Bcf/d and 5.0 Bcf/d. That type of throughput is very significant from the vantage point of the Western Canadian Sedimentary Basin (WCSB). These days, total natural gas exports to the US are of similar magnitude, about 5.5 Bcf/d. It’s possible that all southbound Canadian exports could be redirected westward to higher value markets.
The report’s findings reflect the dramatic impact of shale gas production in the United States. As recently as 2007, it was believed that the country would soon need to import large volumes of liquefied natural gas (LNG) for domestic consumption. Instead, shale gas production has more than doubled the size of the discovered natural gas resource in North America—enough to satisfy more than 100 years of consumption at current rates.
DOHA, QATAR—December 6, 2011—GE Oil & Gas has completed a fast-track refurbishment project to eliminate corrosion, or pitting, of compressor blades on 14 gas turbines at Atlantic LNG Company of Trinidad and Tobago’s (“Atlantic”) production facility in Point Fortin, Trinidad and Tobago. The project will prevent blade degradation and help to maintain high productivity of the 14 units, GE reported today at the 20th World Petroleum Congress in Doha.
Environmental agencies are applauding Oregon for formally requesting federal regulators revoke permits for a proposed liquefied natural gas pipeline [sic; see webmaster's comments] that would cross through Coos and Douglas counties.
Webmaster’s Comments: "Liquefied natural gas pipeline" is a misnomer, since LNG piping is illegal outside of LNG facilites. What is actually meant by the phrase is "natural gas pipeline to supply an LNG export terminal."
To build the terminal and use eminent domain to secure land for the pipeline, backers of the projects need a 'certificate of public necessity and convenience" from FERC, which regulates energy-related projects. In a motion filed Friday, the Oregon Department of Justice said the project is no longer in the public interest, because Jordan Cove Energy Project LP and Pacific Connector Gas Pipeline LP now plan to use the terminal and pipeline for export as well as import.
But prices have remained low since FERC granted the import certificate in December 2009, and Jordan Cove says it has no import customers. In September, Jordan Cove applied to the U.S. Department of Energy for permission to export North American LNG. [Red bold emphasis added.]
“Exportation of domestic natural gas will reduce the supply available to U.S. residential and industrial consumers, likely to result in increasing the domestic price of natural gas, which will have a consequent adverse impact on the regional economy,” said the filing by Janet Prewitt, senior assistant attorney general, on behalf of state Attorney General John Kroger. [Red bold emphasis added.]
Oregon appealed that decision because it said FERC had not objectively determined a need for such a facility, and that a domestic pipeline could meet the region's gas needs less expensively and with less environmental impact.
The gas market has since borne out the state's argument. Gas prices have tumbled as U.S. producers have used new drilling techniques to tap gas trapped in deep shale formations. Consequently, the economic rationale for building a terminal to import gas has collapsed.
Webmaster’s Comments: Similarly, there is no supply or economic rationale supporting the Downeast LNG proposal.
2011 December 4
[Red bold emphasis added.]
Webmaster’s Comments: Downeast LNG's investors, Kestrel Energy Partners and York Town Partners, are apparently only interested in the huge tax write-off in losses from their trainwreck project — placing a greater tax burden on the rest of us.
In February, the Haynesville eclipsed the Barnett Shale as the top US unconventional gasfield, pumping 5 billion cubic feet a day (cf/d) – more than exporter Australia’s total output in 2010. Now it’s even bigger, with year-end production approaching 8 billion cf/d, despite a 40% drop in drilling. It took 10 years and 10,000 wells to achieve those...
The company has taken another step toward its goal of exporting U.S. [liquefied] natural gas across the globe and has added another chapter in the U.S. oil and natural gas industry. Within a month of its deal with U.K.'s BG Group, Cheniere Energy Partners, a subsidiary, has struck another deal to export LNG.
Cheniere entered into an $8 billion deal with BG Group in October to supply 3.5 million tons per year of LNG from its Sabine Pass Liquefaction project. Now, it has entered into a similar deal with Spain's Gas Natural Fenosa. The $9 billion deal with Fenosa is to supply 3.5 million tons per year of LNG for a period of 20 years, which can be extended by 10 years.
WE HAVE been here before. Less than 10 years ago the US expected to be importing 40m cu m a year of liquefied natural gas by now; instead imports in 2010 were just over half that. Now there are suggestions, covered in Lloyd’s List last week, that the US may come to rival Qatar or Australia...
I think it’s timely. Witness the wailing and gnashing of teeth from Alberta oil producers, politicians and business leaders when the U.S. State Department announced it wouldn’t issue a decision on TransCanada Corp.’s Keystone XL pipeline until after the 2012 presidential election. Or how about the rush to build liquefied natural gas export terminals on the West Coast to ship shale gas from the Horn River and Montney basins to Pacific Rim markets? That’s occurring because of a flood of shale gas being produced in the U.S., which has dampened demand for Canadian natural gas, as well as prices for the cleanest burning fossil fuel. [Red bold emphasis added.]
Al-Faklih went on to say that only five years ago energy observers were talking about the need for the US to build LNG import terminals. That is no longer the case, “Now, by contrast, the challenge is finding an outlet for the new production of shale gas, and downward pressure on natural gas prices,” said Al-Faklih. “The positive impact of increased shale gas supplies on American petrochemicals manufacturing is already apparent, and given the vast shale gas resources and ramped-up production in the US, there are even plans to convert existing LNG import terminals into export facilities,” Al-Faklih said. “To get some sense of the scale of these changes, consider that the estimates of unconventional gas in place around the world are in the range of 35,000tnft3, compared to currently proven conventional gas reserves of 64,000tncft3.” Al-Faklih said that although the world consumed almost 30bbl of oil in 2010 industry was not only able to replace that consumption but find an additional 7bnbbl in reserves even with rising demand from China and India. “The massive heavy oil potential in both North and South America is drawing greater attention, and the future development of kerogen-based oil shales remains an enormous target,” said Al-Faklih.
To gather information for this book, Jacques Poitras, CBC New Brunswick’s provincial affairs reporter, travelled the entire length of the border from north to south, between New Brunswick and Maine, the reverse of how it developed as the first formal boundary between Canada and the United States. Along the way he jumps from past to present and back again, but manages to produce a smooth storyline.
Current border concerns also figure large in the book. Poitras addresses such topics as locals on both sides bemoaning the requirement for passports and increased security since 9-11, the transmission of New Brunswick electricity to Maine, the economic dominance of much of Maine by two New Brunswick families, the Irvings and McCains, and fears about a possible environmental disaster caused by a proposed LNG terminal in Maine on the shores of Passamaquoddy Bay.
SOMERSET — The next meeting of the Coaltion for Responsible Siting of LNG Facilities is Thursday, Dec. 8, 7 p.m., at the Somerset Old Town Hall, 1464 County St. Area residents and business people are invited to attend.
SAN JUAN, Puerto Rico — A proposal to build a controversial natural gas pipeline that would traverse Puerto Rico’s wetlands and rivers received a preliminary favorable nod Thursday from a federal agency that has final say on the project.
The U.S. Army Corps of Engineers said that after reviewing the proposal and reading through thousands of public comments, it had tentatively decided to not require developers to submit an environmental impact statement for the 90-mile (150-kilometer) pipeline.
“This conclusion could change based on additional comments and review,” project manager Robert Barron said. “The 6,000 comments have given us pause. ... We normally don’t put out a draft for people to look at.”
The pipeline would originate in southern Puerto Rico, where liquefied natural gas would be imported and regasified. The pipeline would then traverse 235 rivers and wetlands as it bisects the island and veers east toward the capital of San Juan. [Red bold emphasis added.]
Whether construction of the offshore regasification terminal will meet opposition on the basis of risks to aquatic wildlife and the environment, as similar projects have encountered in the United States, remains to be seen. Nevertheless, as long as the price differential between LNG and heavy fuel oil remains large (the OUR Generation Expansion Plan cites the US Energy Information Administration for prices of US$12.10/million Btu for heavy fuel oil and US$4.88 for natural gas in 2010), it is likely that many Caribbean nations that currently depend on oil imports may be tempted to consider switching to natural gas.
The company also has offshore prospects and has completed purchase of the Endeavour jack-up drilling rig for use in Cook Inlet. Buccaneer is also looking at the potential for liquefied natural gas for use in Alaska. Watt said “we feel we can move LNG from the Cook Inlet to Fairbanks and be very competitive.”
In the mid-2000s, Shell planned to build a liquefied natural gas terminal offshore in the Gulf of Mexico. The terminal was designed to suck up hundreds of millions of gallons of sea water a day in the process of warming and vaporizing the super-chilled liquid gas. Eggs and larva in the water would have been killed.
North American shale production is beginning to impact LNG-pricing in Asia-Pacific markets. "In recent rounds of negotiations, Russia has had to accept far lower prices from many of its traditional long-term customers and has accepted a partial link to gas-on-gas pricing," authors Ken Medlock and Peter Hartley write. [Red emphasis added.]
Oct. 13: The National Energy Board granted a 20-year licence to export liquid natural gas from a proposed facility near Kitimat. The licence clears the way for a private consortium to proceed with plans for an LNG terminal and pipeline, with final approval expected next year.