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Passamaquoddy Bay & LNG

2010 October

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2010 Oct


27 October 2010

Natural Gas Plentiful in Northeast

Bank of America Corp: Natural gas prices under pressure on oversupply (Oct 26) — The Economy News, London, England, UK

"The global LNG market has been hit from all sides. First, the shale gas revolution diminished the need for liquid gas in North America. Second, liquefaction capacity expanded strongly." [Red bold emphasis added.]

US gas market is in good shape, FERC analysts tell commission — PennEnergy

“The abundance of domestic gas has resulted in moderate prices,” said Christopher Ellsworth, chief of the fuels market analysis branch in FERC’s enforcement office. “These prices, low compared to other fuels, contributed to record demand by power generators this summer.”

“Low gas prices are largely the result of the influx of new, low-cost shale gas, which has revolutionized the natural gas industry,” he report indicated.

“Shale gas development has turned the economics for drilling for gas on its head,” he said. “The cost of developing shale gas has declined and well productivity has increased as drillers gain experience with the new technology. In some instances, the time needed to drill a shale gas well has plunged from weeks to just days. This has driven down break-even costs for most gas shales to less than $4/MMbtu and even lower when natural gas liquids such as propane, ethane, and butane are present.”

The US is relying less on other source as shale gas production increases, he told the commission.

LNG imports, meanwhile, through eight US, one Canadian, and one Mexican terminal have dropped to less than 1 bcfd after peaking at a record 5 bcfd in January, he said. Ellsworth cited two reasons for the decline: Shale gas production growth has helped reduce US prices to well below international prices (with prices at the UK’s National Balancing Point averaging $1.30/MMbtu higher than at the Henry Hub, while some Asian prices have been almost $8/MMbtu higher). And while global liquefaction capacity increased 30% last year, global demand is up too (by 21% in Asia and 41% in Europe).

“New pipelines and capacity completed by January should add an additional 725 MMcfd, making a grand total of 1.2 bcfd added in the Northeast since last winter,” he said. “Much of the new pipeline capacity is targeted at improving the access of shale gas to markets.”

Prices for gas in the Northeast have narrowed relative to the Henry Hub, he continued. Prices in New York on Oct. 1 were $2.03/MMbtu higher than those at the Henry Hub for January 2011, substantially less than comparable price differences of $4.03 in 2010 and $5.51 in 2009. “The decline in these projected October-to-January differentials reflects market expectations about the change in winter price volatility due to added pipeline, LNG, and storage capacity in the region, as well as new supplies coming from the Marcellus shale formation and the Rocky Mountains via the Rockies Express pipeline expansion,” Ellsworth said. “It also reflects lower gas prices in general.” [Red bold emphasis added.]

Technip wins 2010 Global Pipeline Award (Oct) — Pipeline & Gas Journal, Houston, TX

Technip has been awarded the 2010 Global Pipeline Award in the field of Pipeline Transportation during the International Pipeline Conference in Calgary, Canada, for its Subsea Cryogenic Pipe-in-Pipe Pipeline Transfer System (C-PiP).

The award application featured the design for the Hess LNG Weaver’s Cove Energy project in Fall River, Massachusetts. Technip’s C-PiP technology was selected for this liquefied natural gas import terminal project based on its superior safety and reliability features. The C-PiP LNG transfer system was engineered to address the specific challenges of this project’s location and is currently proposed for the 4.25- mile (6.8 km) long offshore berth. [Red emphasis added.]

Webmaster’s Comments: The Weaver's Cove Energy LNG project proposes a 4.25-mile undersea cryogenic LNG pipeline from an offloading berth in the middle of Mount Hope Bay to storage tanks and regasification facilities up the Taunton River..

Wolters: Don't be scared of LNG [Op-ed column] — Savannah Morning News, Savannah, GA

Significant hazard is introduced with buried pipelines. They can corrode and crack. On Sept. 9 in San Bruno, Calif., the pressure forces - not the flammability of the gas - caused the rupture.

Truck transportation of LNG in the United States is safer than ever by new tank design features. LNG is safer than heavier fuels which persist at ground level and burn out wherever a spill might occur. Tests where a pool of LNG was intentionally ignited demonstrated a slow flame front that in many cases self-extinguished before reaching the pool. [Bold brown emphasis added.]

Webmaster’s Comments: Is Mr. Wolters claiming the pipeline rupture — not the burning natural gas — is what killed people? His claim that LNG is safer than heavier fuels falls flat on its face.

  • LNG is cryogenic, meaning merely touching it can severely injur or kill.
  • LNG vapors hug the ground and can become confined, presenting an explosion hazard.
  • LNG vapors are more flammable than gasoline or propane.
  • An LNG fireball produces little smoke and burns hotter than other common hydrocarbon fuels, presenting a greater thermal radiation hazard to civilians at distance than do heavier hydrocarbon fuels.
Wolters cited a study where lighting an LNG vapor cloud "in many cases" self-extinguished. He conveniently ignored the other cases when it did not self-extinguish.

Alaska and energy (Oct 26) — Energy Bulletin, Post Carbon Institute

Anchorage (by far the largest city in the state) faces a particular challenge with natural gas: currently nearly all houses are heated with gas, but supplies from Cook Inlet will run low in two years, even sooner with an abnormally cold winter. Most options to replace current sources (more drilling, LNG, alternative energy) will take longer than two years to develop. There is no serious planning for what to do about this.

Clatsop County wants to make sure Oregon LNG has emergency plans — Oregon Public Broadcasting (OPB)

Oregon LNG needs approval from Clatsop County to build a terminal in Warrenton. But county commissioners delayed a vote until Wednesday after getting conflicting information about emergency plans.

[County Commissioner] Robert Mushen: “We need to make sure that the company has an emergency response plan in place, and that response plan addresses anything that could happen in the county, and that also includes financial responsibility for being sure that the first responders are trained, and properly equipped, to deal with anything that happens.”


26 October 2010

Natural gas oversupply moots LNG expansion

Winter 2010–2011 Energy Market Assessment (Oct 21) — Federal Energy Regulatory Commission (FERC), Washington, DC

PDF file— The following link will download a PDF file; 401 KB.

Current Gas Market Conditions:

The gas market is in good shape. Production has reached levels not seen in more than 35 years, gas prices are moderate and storage is 90% full with about 3 weeks left in the traditional injection period.

The abundance of domestic gas has resulted in moderate prices. These prices, low compared to other fuels, contributed to record demand for gas by power generators this past summer, and also last winter.

Low gas prices are largely a result of the influx of new, low-cost shale gas, which has revolutionized the natural gas industry.

A geographical shift in natural gas production is changing the utilization of the nation’s pipeline infrastructure. This is apparent in the Northeast, where imports of Canadian gas have dropped by 50% since last October to less than 1 Bcfd. Western Canadian gas is being replaced by cheaper sources, including 1.7 Bcfd via the new Rockies Express Pipeline (REX) and Northeast production led by growth in Marcellus Shale. Marcellus Shale gas production has doubled in the past 12 months to around 700 MMcfd. Together, Marcellus production and Rockies supply are beginning to compete successfully against traditional Gulf Coast supply.

New England has access to more than 3.2 Bcfd of LNG terminal capacity, including 2 new offshore terminals in Massachusetts Bay and the Canadian Canaport terminal.

A considerable amount of new pipeline capacity has been added in the Northeast. Since spring, 503 MMcfd of pipeline capacity has been completed on top of the 5.6 Bcfd added in 2008 and 2009. New pipelines and expansions completed by January should add an additional 725 MMcfd, making a grand total of 1.2 Bcfd added in the Northeast since last winter. Much of the new pipeline capacity in the area is targeted at improving the access of shale gas to markets.

Prices are Trending Lower in the Northeast

In keeping with the trend over the past two years, prices for natural gas in the Northeast continue to grow closer to those at Henry Hub. … The decline in these projected October-to-January differentials reflects market expectations about the change in winter price volatility due to added pipeline, LNG and storage capacity in the region, as well as new supplies coming from the Marcellus Shale formation and the Rocky Mountains via the Rockies Express Pipeline expansion. It also reflects lower gas prices in general.

Webmaster’s Comments: New England's LNG terminal capacity, alone, is around 260% greater than the total volume of LNG imported into the entire country throughout 2009.

Musings: Curtain being pulled back from the Oz of gas shales — Rigzone

Gas is now so ubiquitous that we are considering not only burning it in every energy market but also exporting it to world energy markets in the form of LNG.

Therein lays the heart of Mr. Dizard's argument in his column. He postulates that there is a serious disagreement among industry participants over the shape of the decline curve for these gas shale resources. The differing views lead to sharply divergent conclusions about the volume of gas that can come from these shale basins, which not only determines their economic attractiveness but also how long our economy can count on the supplies being available.

…Mr. Dizard is worried about the harm to countries, their economies and citizens, if they are wrong about their strategy for powering their future economies. We recognize that risk, but also remain optimistic that technological developments will find ways to boost gas recovery at lower costs, but more importantly to find ways to improve energy storage and efficiency among our existing power sources.

Bank of America Corp: Natural gas prices under pressure on oversupply — The Economy News

"The global LNG market has been hit from all sides. First, the shale gas revolution diminished the need for liquid gas in North America. Second, liquefaction capacity expanded strongly."

Laborer dies in industrial accident at LNG plant — The Bay Net, Lexington Park, MD

The preliminary investigation revealed Copeland was working for Greg’s Marine as a laborer. His duties this day were to chip away old cement jackets placed over pilings at the gas dock, preparing these pilings for new jackets, approximately 1 mile off the coast of Calvert County. While conducting this task, Copeland was equipped with a neoprene wet suit, fins, a harness, and a diver’s helmet. Copeland slipped underwater and continued to the bottom of the Chesapeake Bay, approximately 40 feet. After several attempts, Copeland’s supervisor finally rescued his unconscious body from the Bay’s floor. CPR was conducted by Copeland’s co-workers as well as medical staff and members of the Calvert County Sheriff’s Office.

Webmaster’s Comments: This incident was not the result of an LNG release or fire.

Korea Gas starts commercial gas production in Canada — Gas Matters [Paid subscription required]

Koreas Gas (KOGAS), the world’s largest LNG importer, has started commercial gas production this month from the Jackpine field in Alberta, British Columbia - production from the field started from one exploratory well, and two more wells are planned for production this year and at least ten for 2011.

Oregon pipeline hearing will be limited to emergency plan issue — The Daily Astorian, Astoria, OR

Any public testimony offered at the hearing must be directed to the emergency response plan issue, and must also comply with the original hearing rule that allowed only information not reasonably available during the hearings officer review.

Reportlinker adds LNG Industry Outlook in North America to 2016 - Capacity Analysis, Forecasts and Details of All Operating and Planned Liquefaction and Tegasification Terminals [Press release] — Puget Sound Business Journal

GlobalData's energy offering, "LNG Industry Outlook in North America to 2016 - Capacity Analysis, Forecasts and Details of All Operating and Planned Liquefaction and Regasification Terminals" is the essential source for industry data and information relating to the LNG industry in North America. It provides asset level information relating to active and planned LNG terminals in North America. The profiles of major companies operating in the LNG industry in North America are included in the report. The latest news and deals relating to the sector are also provided and analyzed.

Webmaster’s Comments: The publication's price is a mere $5,000.


25 October 2010

Natural Gas Resources Are Skyrocketing

US Golden Pass LNG terminal receives first cargo (Oct 23) — Gas Matters

The Texas Golden Pass LNG terminal received its first LNG commissioning cargo from Qatar on Thursday – into an already well-supplied North American gas market where spot and forward prices are trading below $4.00/MMBtu.

Cheap gas coming? (Aug–Sep) — Chatham House,The Royal Institute of International Affairs, London, England, UK

PDF file— The following article link is to a PDF file (78 KB).

Last year, US natural gas production was 593 billion cubic metres compared to 524 billion in 2006. This sharp increase was completely unexpected. Before 2007, everyone thought US domestic gas production was about to slip into terminal decline with imports rising dramatically.

Shale gas was central to the increased production story, going from less than one percent of US production in 2000 to twenty percent by last year.

Already US investors in liquefied natural gas regasification plants have been badly hurt as the demand failed to materialise. [Red bold emphasis added.]

Land of gas [Opinion] (Sep 8) —

While this depends on one’s timeline, let’s first acknowledge that many who envisioned ten years ago a decline in US natural gas production–and with some justification–were wrong.

It’s blast-off from the get-go where these wells produce an enormous amount of natural gas. This is an NG gusher that pays back financing quickly. Steep decline? Yes. The declines can be massive, but from a very high point. So the well carries on afterward, producing at much lower levels. So what?”

Frankly, North America–not just the US but Canada as well–looks to have massive natural gas resources. Those who are still stuck in the analysis of last decade, therefore, need to stand down a little here and confront the fact that US natural gas production is heading towards all time highs. [Red bold emphasis added.]

Down East woman awarded for anti-LNG activism (Oct 23) — Bangor Daily News, Bangor, ME

PERRY, Maine — The Natural Resources Council of Maine has selected Vera Francis of Perry as the winner of its 2010 People’s Choice Award “for her work protecting Passamaquoddy Bay.”

Francis was nominated for her efforts to keep a liquefied natural gas company out of Sipayik, or Pleasant Point, according to the release. Of several dozen people nominated for the award, NRCM officials said Francis rose quickly to the top as one of three finalists.

“Her skills as an educator have certainly helped Vera communicate about the heart of the issue,” NRCM Executive Director Brownie Carson said in the release. “But it is no doubt her passion and deep understanding of what’s at stake that people respond to. She is a strong and compelling advocate for this cause.” [Red, yellow & bold emphasis added.]

Fire chiefs' LNG comments generated by industry — Savannah Morning News, Savannah, GA

Georgia fire chiefs signed remarks at request of Atlanta Gas Light

Three Atlanta- and Macon-area fire and emergency officials have filed comments with federal regulators in support of trucking LNG, liquefied natural gas, through Savannah.

On further reflection, however, [Jones County Fire Chief Don Graham] said he would be concerned about 58 trucks a day.

At the proposed rate of 58 trucks a day, Chatham could expect to see more than 21,000 loads of LNG shipped over its roads annually. Moreover, the figure of 58 truckloads is an estimate and not a regulatory limit - the number could be less, but it could also be more. [Red bold emphasis added.]

Delivery of second LNG cargo to Golden Pass terminal expected by year-end — LNG Law Blog

A spokesperson for Golden Pass LNG told Platts LNG Daily [subscription required] that the terminal expects to receive its second LNG cargo in November or December of this year.

Time to get serious about alternate energy [Opinion column] (Oct 23) — Anchorage Daily News, Anchorage, AK

Someday someone might find more gas in the Cook Inlet region or bring gas from the North Slope. I don't see anyone out there drilling in the Inlet, though, and it will be years before gas can be piped from the Slope. That could cost as much as imported LNG too.

We have before us, however, a wind-power project on Fire Island in Cook Inlet just offshore from Ted Stevens Anchorage International Airport. It could be in construction next summer and supply enough electricity to push off the import of LNG for two to three years. Electricity supplied from wind to the electric utilities lets them reduce their use of natural gas, which stretches out supplies.

Oregon LNG executive remains confident in project — LNG Law Blog

Speaking to Platts LNG Daily [subscription required], Peter Hansen, CEO of Oregon LNG, said that despite challenges facing the project, he remains confident that the import facility will eventually be constructed.

Gas exporters study OPEC for LNG market model — Gulf Times, Doha, Qatar

Gas-producing countries are studying Opec’s (sic) experience as they try to build a global natural gas market, the head of the recently-launched Gas Exporting Countries Forum (GECF) said yesterday.

Although GECF members have repeatedly said they are not going to seek an Opec-like (sic) model of commodity price influence by raising or lowering output, consumers are sensitive to any steps designed to increase control over gas market by the group.


22 October 2010

100-year Gas Boom

Canaport signs LNG contract — The Quoddy Tides, Eastport, ME

The Saint John LNG terminal earlier this month picked up a new contract to help ensure its supply of natural gas. On October 7 Repsol and Qatargas signed a multiyear agreement under which Qatargas will supply liquefied natural gas to Repsol Energy Canada Ltd. at the Canaport LNG facility.

Canaport LNG was opened in June of 2009 as the first land based LNG receiving and regasification facility to be built in over 30 years on North America's Atlantic coast. Repsol has delivered over 100 bcf of natural gas to the northeast U.S. since Canaport LNG opened. Canaport has a maximum capacity of 1.2 bcf per day, so it has operated at about 18.5% of its capacity.

Canaport's operating at less than 20% of capacity would appear to support the arguments of opponents of the proposed LNG terminals for Passamaquoddy Bay, who believe that there is plenty of capacity for LNG imports and no need for more terminals in North America. Many industry journals and experts are reporting that natural gas reserves in the U.S. and Canada are sufficient to meet the demand for more than 100 years and that the U.S. LNG import terminal sector is overbuilt. [Red bold emphasis added.]

U.S. has enough natural gas for 100 years, impact on corporations — The Market Oracle

We have an enormous amount of natural gas in the U.S.—enough to supply consumers for more than 100 years. And producers continue to drill. [Red bold emphasis added.]

US 'may become shale gas exporter' —

As the boom in shale gas drilling continues to drive supply high and lower prices, the US could begin exporting gas, especially to areas of the world where prices are more closely linked to oil indexes, a BG Group executive told an energy conference in Houston.

Before the US public might accept the idea of sending energy abroad, the gas industry would have to do a better job of explaining to the public how much gas is available in the US and that gas export would not hurt US energy security, Harris said. [Red bold emphasis added.]

Deepwater Horizon — PowerGen Worldwide

THANKS TO high oil and natural-gas prices in the middle part of the last decade, the ingenuity of independent natural-gas producers led to the development of means to tap into the vast resources of in-place hydrocarbons trapped in shale rock, essentially sedimentary rocks that have within them highly concentrated quantities of natural gas and oil. With astonishing speed, the United States was transformed from a country with declining production of natural gas to one which might just end up with growing surpluses. At the beginning of the 1990s, proved and probable American gas reserves covered between 25 and 30 years of consumption. Now, natural-gas reserves are estimated to be able to provide for 100-125 years of U.S. needs. What's more, natural gas has even become cheaper than coal, and not just at present, where "spot" gas is priced at $4 or less and coal is $5 or more for an equivalent amount; natural gas's discount to coal is maintained in future projections through the middle of the decade.

This natural-gas abundance changed the energy landscape entirely, with supplies clearly outstripping current and foreseeable demand. And this meant that America would no longer be a major (let alone the world's largest) market for liquefied natural gas (LNG). [Red bold emphasis added.]

Update: Golden Pass LNG receives first shipment (Oct 21) — (The Port Arthur News) iStockAnalyst

Golden Pass LNG is located less than a mile from Louisiana's Chenier LNG. Southeast Texas is the only area in the U.S. with two such facilities in close proximity and one of the only U.S. waterways that have both Q-Flex and a Q-Max ships traveling the waters.

Sabine Pass terminal gets its first shipment of LNG (Oct 21) — Houston Chronicle, Houston, TX

SABINE PASS — Thursday's shipment of about 7.5  million cubic feet of liquefied natural gas to the Golden Pass Terminal is a drop in the bucket for the U.S.' natural gas supply - but it was a big splash for the newly opened $2 billion facility.

The next shipment should arrive in November, and the terminal should be at capacity within the first three months of 2011, Bilnoski said. By that time, shipments should be arriving every two to three days. [Red bold emphasis added.]

Webmaster’s Comments: Where is all that gas going to go?

USCG issues Interim Rule establishing Security Zones for mooring basins at Sabine Pass and Golden Pass LNG terminals — LNG Law Blog

This morning the U.S. Coast Guard published an interim rule in the Federal Register establishing security zones for the mooring basins at the Sabine Pass and Golden Pass terminals when LNG vessels are present. Public comments on the interim rule are due by November 22, 2010.

LNG exports not under consideration at Golden Pass terminal — LNG Law Blog

Following the arrival yesterday of the Golden Pass LNG terminal's first commissioning cargo, a company spokesperson told Platts LNG Daily [subscription required] that LNG re-exports or exports are not currently under consideration by the project’s developers.

LNG imports to Southcentral are likely (Oct 24) — Petroleum News, Anchorage, AK

Faced with an impending utility gas delivery crunch, but with no possibility of North Slope gas coming to the rescue for several years, Southcentral utilities will likely have to import LNG to fill the pending shortfall in utility gas supplies from the Cook Inlet, Colleen Starring, president of Enstar Natural Gas Co., told the Anchorage Chamber of Commerce on Oct. 18 during a question and answer session following her talk on the Cook Inlet Natural Gas Storage Alaska gas storage project.


21 October 2010

Natural Gas Orphans LNG

U.S. gas boom orphans LNG (Oct 22) — The Wall Street Journal

Today, the billions of dollars spent on U.S. LNG import facilities by Exxon, Conoco, Total SA and some big industrial gas users such as Dow Chemical seems foolhardy. But few foresaw the impact of shale gas.

"Who could have predicted two years ago what natural gas prices would be?" [said Golden Pass LNG spokesman Robert Bilnoski]. [Red bold emphasis added.]

Gazprom redirects LNG (Oct 20) — The Moscow Times, Moscow, Russia

Gazprom said Tuesday that it was redirecting to Asia liquefied natural gas contracted for the United States from its Sakhalin-2 project on the Pacific coast, after rising U.S. production from shale rocks and an economic slowdown discouraged fuel imports.

Gazprom Global LNG bought some 900,000 metric tons of LNG for supplies to the United States and is still redirecting the volumes, she said. [Red bold emphasis added.]

Update 1-LNG tanker heads from U.S. Sabine Pass to China Sea (Oct19) — Reuters

  • Two US re-export deals expected this week
  • U.S. gas prices way below those in Europe and Asia

NEW YORK, Oct 19 (Reuters) - Cheniere Energy's (LNG.A) Sabine Pass liquefied natural gas terminal in Louisiana sent a cargo of LNG to Asia on Tuesday, the first of two U.S. re-export deals this week as shippers try to make the most of higher gas prices overseas.

This is the latest in a string of re-export deals from the U.S. where gas prices continue to fall under the weight of ample domestic supply, weak demand and swelling inventories.

Before this week, about 10 bcf of LNG had been re-exported from the United States this year, whereas imports have dipped to minimal contracted lows, leaving most terminals sitting idle.

Natural gas weekly update (Oct 20) — Energy Information Administration (EIA), Washington, DC

Natural gas spot prices fell across the board at most market locations, with declines as high as 25 cents per MMBtu. The largest declines occurred in areas in the Northeast United States, where prices fell between 10 cents and 25 cents.

Liquefied natural gas (LNG) sendout jumped this week, the result of cargoes arriving to the Gulf of Mexico. Sendout rose 17 percent on the week, according to BENTEK data, though it still remains 29 percent below last year’s LNG sendout levels.

Working natural gas in storage increased to 3,683 Bcf as of Friday, October 15, according to EIA’s Weekly Natural Gas Storage Report (see Storage Figure). The implied net injection was 93 Bcf, compared with last year’s net injection of 23 Bcf and the 5-year (2005-2009) average injection of 54 Bcf for the report week. Robust domestic production and low heating demand for this time of year likely contributed to the larger-than-normal rate of injections into storage.

Although the year-on-year storage deficit decreased for the sixth week in a row from 118 Bcf to 48 Bcf below last year’s level, stocks remain well above average. Working gas inventories were 286 Bcf above the 5-year average level. Working gas in storage exceeds the 5-year average for this time of year in each of the three storage regions, with the Producing region recording the largest surplus relative to the 5-year average of 176 Bcf. Inventories in the East and West regions exceeded the 5-year average by 60 Bcf and 51 Bcf, respectively. [Red bold emphasis added.]

First commissioning cargo arrives at Golden Pass LNG terminal (Oct 22) — LNG World News

The Golden Pass LNG terminal today received its initial commissioning liquefied natural gas (LNG) cargo aboard the Al Khuwair Q Flex ship at its regasification terminal located in Jefferson County, Texas, south of Port Arthur and northwest of Sabine Pass.

The Golden Pass LNG terminal will have the capacity to deliver the equivalent of 2 billion cubic feet per day of natural gas, when it reaches full operation. This represents enough natural gas to meet the average daily needs of about 10 million U.S. households.

Webmaster’s Comments: LNG import terminals are already largely idle, averaging around 10% of capacity over the last two years. The large-capacity Golden Pass terminal will likely further drag down profitability of most existing US LNG import facilities.

Golden Pass LNG terminal in Texas receives its first cargo — Bloomberg

The LNG tanker Al Khuwair arrived at the terminal from Qatar, according to Clark Vega, a company spokesman. The ship can carry 211,885 cubic meters of LNG, according to Bloomberg vessel-tracking data. The amount would equal about 4.56 billion cubic feet when converted to a gas, The cargo represents about 7.4 percent of daily U.S. gas production.

Golden Pass LNG's first cargo arrives in saturated market — NASDAQ

[T]he massive load of liquefied natural gas hauled by a 1,000 foot-long vessel all the way from Qatar, and those that follow, may not find a warm reception in the U.S. market, which is brimming with its own surplus of the gaseous fuel, made in the U.S.

"Maybe they can re-export it," said David Pursell, an analyst with Tudor, Pickering, Holt & Co. "We don't need another boatful of LNG." [Red bold emphasis added.]

U.S. natural gas vs. liquefied natural gas (LNG) — Energy & Capital

One of my readers recently asked me to weigh in on LNG. I've often seen LNG being compared to U.S. domestic production.

(You might remember how the U.S. made a huge push for LNG in 2007. Imports of LNG nearly doubled that year.)

Unfortunately, LNG is going to lose this game...

I don't believe LNG can overcome the domestic shale boom. You can see from the chart above that our imports of LNG are lagging — especially with natural gas prices below $4/Mcf. [Red bold emphasis added.]

Enbridge Gas 'committed to New Brunswick' (Oct 20) — New Brunswick Business Journal, Saint John, NB

Say, the (Canaport) LNG facility decided, 'We can get better value for our gas moving into Quebec and Ontario than the U.S. northeast because the U.S. northeast has become saturated, so we're looking at opening another market there and we can do it economically.'

FERC says Weaver's Cove Energy has not established sufficient site control for LNG project — LNG Law Blog

Responding to a request for rehearing filed by both the Commonwealth of Massachusetts and the City of Fall River, Mass., FERC determined this morning that Weaver's Cove Energy, LLC has not established sufficient site control for its LNG import project. Specifically, the Commission noted that it cannot determine who owns the so-called Wedge Lot and whether Weaver's Cove Energy has satisfied the U.S. Department of Transportation's exclusion zone regulations. FERC stated that the issue of the ownership of the Wedge Lot should be "addressed by a Massachusetts court under Massachusetts law."

First ship arrives at LNG terminal Thursday (Oct 20) —, Beaumont, TX

Each LNG onshore storage tank is large enough to hold the volume of 62 Olympic-size swimming pools.

Stop the Enbridge Gateway Pipeline, tanker traffic and all tar sands expansions to B.C.’s northwest coast! [Opinion] — It's Getting Hot In Here

The KSL ‘Pacific Trail’ pipeline project proposal, or the Kitimat-Summit Lake Natural Gas Pipeline Looping Project, is being proposed by Kitimat LNG and Pacific Northern Gas. This proposed 36 inch pipeline would transport gas from the Spectra Energy Transmission (SET), relying on Duke Energy facilities, over a distance of approximately 470 kilometres from Summit Lake near Prince George to Kitimat, B.C.

Any of these pipelines being built will necessitate construction of a Kitimat Liquid Natural Gas (LNG) Port Terminal, and a second supporting Prince Rupert LNG terminal, which in turn will require approximately 1500 tanker ships traveling in the narrow and treacherous northwest coast passageways yearly. With the record of tanker oil spills in open water, it doesn’t take much to foresee the disastrous results unfolding and the regrettable and long-term loss of marine life and sensitive coastal ecosystem due to a single mishap. [Red emphasis added.]

Anatomy of a pipeline — The McGill Daily, Montreal QC

In addition to LNG and shale gas, the Alaska Gas Pipeline Project, headed by Conoco Philips and BP, could potentially deliver 4.5 billion cubic feet of natural gas per day to North American markets. The 1,700 mile-long pipeline would be the largest private construction project in North American history, stretching from the Beaufort Sea to the American Midwest. [Red bold emphasis added.]

Webmaster’s Comments: The pipeline capacity alone would provide almost four times the amount of natural gas than US terminals have been providing in an already-oversupplied market.

County suspends pipeline meeting until Wednesday — The Daily Astorian, Astoria, OR

Board advises staff to look into emergency management plan; opponents say no plan exists

The debate currently hinges on the issue of whether or not there's an emergency management plan attached to the pipeline project.

The plan that does exist only refers to the proposed LNG terminal at the Skipanon Peninsula in Warrenton - not the pipeline, said Columbia Riverkeeper Executive Director Brett VandenHeuvel.

Webmaster’s Comments: With LNG terminal projects, emergency management plans are required for the terminal early on in the process; however, emergency management plans related to the communities along the LNG ship transit route are not required by FERC until after FERC issues a permit to construct.

Strong quake hits off Mexico's Baja California — Reuters AlertNet

6.9 magnitude quake strikes in Sea of Cortez

Sempra Energy, which operates a liquefied natural gas import terminal at Ensenada on the Pacific Coast of Baja California near the U.S. border said there had been no impact on operations.

CNG as a competitor to LNG – should the LNG industry be worried? — LNG Business Review [Paid subscription required]

What then are the real obstacles to development of seaborne CNG projects, and is CNG poised to pose real competition to LNG and FLNG schemes? In this article LNG Business Review steps outside the narrow world of LNG and asks whether we should be worried about the threat CNG may pose to LNG.


18 October 2010

LNG going to Canada, not US

Qatar to supply LNG to Canada for 3 yrs - minister — Reuters

Repsol deal LNG for use "only in Canada"

DOHA, Oct 18 (Reuters) - Qatar's deal to supply liquefied natural gas to Spain's Repsol (REP.MC) will run for three years, with the LNG destined solely for Canada, Qatar's energy minister said on Monday.

After former big LNG market the United States lost much of its appetite for imported gas over the last few years because of a North American shale gas boom, Qatar has increasingly relied on China to make up for lost U.S. sales. [Red bold emphasis added.]

Webmaster’s Comments: The "Canada only" provision contradicts earlier reports, and also begs the question of how Qatar could enforce such a provision. Perhaps the provision applies strictly to the LNG — not to the resulting natural gas; however, New England is well supplied with natural gas into the distant future, so it probably is of no consequence, either way.

Golden Pass LNG terminal may not have immediate impact on U.S. gas market — LNG Law Blog

A number of players in the U.S. natural gas market do not expect the Golden Pass LNG terminal to have an immediate impact on the U.S. gas market once it comes on stream, predicting that the facility will likely be used for gas storage plays. [Red bold emphasis added.]

Webmaster’s Comments: Since there is already an enormously underused overbuild of LNG import infrastructure, Golden Pass LNG may never have an impact on the US gas market.

Weaver's Cove Energy submits permitting process snapshot to FERC — LNG Law Blog

Last Friday Weaver's Cove Energy, LLC submitted a summary of the current status of key federal and state permit applications for the company's LNG import project.

Ship regasifies and discharges own LNG cargo — The Motorship, Fareham, Hampshire, England, UK

The first of a pair of novel LNG ships is shortly to enter service in connection with the Neptune LNG Deep Water Port in the USA.

Hoegh LNG and Mitsui OSK Lines are the joint owners of GDF Suez Neptune, which was handed over on a long-term charter contract to GDF Suez at the end of 2009. This first shuttle and regasification vessel (SRV), is an LNG tanker that is equipped with her own LNG regasification system, allowing her to regasify and discharge natural gas under high pressure directly into a designated deep water port.

The vessel incorporates the reinforced GTT MKIII cargo containment system with 145,000 m³ of cargo carrying-capacity at 100% volumes. She is fitted with three regasification skids for a total output capacity of about 21 million standard m³ of natural gas per day, and is also capable of operating as a standard LNG carrier.

The GDF Suez Neptune is equipped with a tri-fuel (boil-off gas, HFO, distillate fuel oil) diesel electric propulsion system, with a single screw and rudder. In 2006-2007, the group received the first three diesel electric LNG carriers in the world, specifically built on its order. Diesel electric technology for LNG carriers has since been adopted by many other companies and has also equipped two other recently-delivered long-term chartered LNG carriers for the group, the BW GDF Suez Paris and the BW GDF Suez Brussels.

Webmaster’s Comments: Neptune LNG Deepwater Port is around 22 miles offshore from Gloucester, Massachusetts — its transit route safely away from civilian populations, unlike Downeast LNG and Calais LNG. It has the capacity to deliver an average of 400 million cubic feet of natural gas per day, with peak output of 759 million cubic feet per day.


17 October 2010

LNG export rush supplanting LNG import

Liquified natural gas: When will the United States begin exporting it? (Oct 15) — iStockAnalyst

Within the next five years, the U.S. could become a major natural gas exporter in the form of liquefied natural gas (LNG).

It already produces a daily 57 billion cubic feet a day of natural gas. Selling a mere 10% of that abroad would make it the largest LNG exporter in the world.

The International Energy Agency last year warned of an oversupply that could last years. "Global gas markets have evolved from a seller's market, driven by tight supply and demand, to a buyer's one as demand weakens while new supply comes on stream."

That has proven especially true in the United States. Domestic prices have fallen to less than $4 per million BTU, down 70% from a peak of more than $13.50 in mid-2008.

In response, U.S. imports of LNG fell as well, despite predictions that they would rise sharply. Its 10 LNG import terminals – and two more under construction – have basically been rendered unnecessary.

…[A]s ConocoPhillips (NYSE: COP: 60.77, 0.43) CEO Jim Mulva stated, "Few countries can match our gas resources or our low (production) costs." [Red & bold emphasis added.]

B.C. on the cusp of new natural gas boom, driven by shale deposits: Officials (Oct 15) — The Vancouver Sun, Vancouver, BC

The opportunity, he said, is to exploit those huge pools of shale gas as fuel to satisfy North America’s appetite for cleaner forms of energy than coal or oil, and to feed an export market in Asia with exports of liquefied natural gas.

But how quickly the industry drills into the resource will depend more on the performance of a market that already has ample supplies of the fuel and has been dogged by lagging demand during the recession.

Bill Bennett, B.C.’s minister of energy and mines said those unconventional discoveries have expanded B.C.’s gas reserves beyond 91 trillion cubic feet, with the three biggest pools — the Horn River, the Montney and Cordova embayment — accounting for 1,500 trillion to 2,000 trillion cubic feet alone.

It is enough, he added, to fuel North America “for decades. [Red & bold emphasis added.]

Natural gas alters landscape for power producers — (AP) DelawareOnline

NEW YORK - By unlocking decades' worth of natural-gas deposits deep underground across the United States, drillers have ensured that natural gas will be cheap and plentiful for the foreseeable future. It's a reversal from a few years ago that is transforming the energy industry.

"We once thought we could face gas shortages and (electricity) brownouts. Now we are facing an enormous oversupply of natural gas," said Fadel Gheit, senior oil and gas analyst at Oppenheimer and Co. "We have not scratched the surface of potential of gas in the U.S. and across the world."

A recent study by the Massachusetts Institute of Technology on the future of natural gas found that 80 years' worth of global natural gas consumption could be developed profitably with a gas price of $4 or below. [Red bold emphasis added.]

Draft Chukchi SEIS out — Petroleum News

In addressing the question of possible Chukchi Sea natural gas development, BOEM has included within the supplemental EIS many sections of text that would augment the original EIS.

“No LNG ships have been built to handle severe ice conditions common in the Chukchi. Nearshore areas are relatively shallow and water depth could limit the size of LNG ships,” the SEIS says.

And a strategy of loading LNG tankers directly from offshore platforms would “face numerous economic, engineering and regulatory challenges,” the SEIS says.

Export license for LNG plant extended without conditions (Oct 14) — Alaska Journal of Commerce, Anchorage AK

The extension came without conditions, and without a provision the plant owners had agreed to in a 2009 export license extension that they purchase gas from other producers in the region.

The current federal license expires March 2011. The extension allows operations through March 2013.

While the federal agency did not attach conditions on local gas needs, plant operator ConocoPhillips has made agreements with regional gas utility Enstar Natural Gas Co. to supplement Enstar's supply during cold days, essentially meeting the spirit of the legislators' request without DOE having attached a condition.

Support CIRI's Fire Island Wind Project [Op-ed column] (Oct 16) — Anchorage Daily News, Anchorage, AK

Imported LNG would provide a supply solution, but at what cost? The Pacific Rim is a growing and energy hungry market. And the prices paid for imported LNG reflect this competitive market. Tokyo was paying more than $12 per thousand cubic feet for its gas last winter. That is 2.5 to 3 times what we paid for Cook Inlet natural gas last year. And for a variety of reasons, LNG imported to Cook Inlet could cost more than that.

Fire Island offers a local and private investment solution at a cost of power that will compete with or beat the utilities' cost of power produced from local natural gas -- and far below the energy costs for electricity made from imported LNG -- at the project's date of commercial operation. And let's be clear -- despite historic talk of other alternative renewable or non-traditional energy sources for Southcentral Alaska, Fire Island is the only project ready to help immediately. [Red bold emphasis added.]

Denali reports bids for 'significant capacity' — Midland Reporter-Telegram, Midland, TX

JUNEAU, Alaska -- Denali-The Alaska Gas Pipeline has reported receiving bids for "significant capacity" on its proposed natural gas pipeline in Alaska.

Denali President Bud Fackrell said in a statement that the bids included conditions, some outside Denali's control; he wasn't specific, though energy companies in the past have raised concerns about having long-range tax and royalty certainty from the state.

It is virtually agreed that there is only room for one major line, if one is built. TransCanada and Denali have each proposed lines that would deliver about 4.5 billion cubic feet of gas per day to North American markets by larger lines to Canada; the goal of each is to be in service by about 2020.

TransCanada, which is based in Alberta, Canada, also has offered another option: a $20 billion to $26 billion line that would lead to a liquefied natural gas facility that could export fuel by ship

Ore. gov hopeful Dudley doesn't back LNG pipeline (Oct 14) — Bloomberg Businessweek

Republican gubernatorial candidate Chris Dudley said Wednesday he does not think a proposed liquefied natural gas pipeline from Coos Bay through southwestern Oregon "pencils out," and he is more interested in seeing low-cost gas from the Rockies brought to Oregon.

He added that he doesn't think importing liquefied natural gas, which generally costs more, "pencils out the way it did in the past," and added that there are property rights issues to be considered in the route the pipeline would take.

Noise group disagrees with LNG claims (Oct 15) — Milford Mercury, Milford, Wales, UK

WORK to reduce noise pollution from a series of LNG tankers has been completed, but scepticism over the effectiveness of the action remains.

In a released statement, the South Hook noise community group said they welcomed the work done on the vessels, but added: “It appears as if the upgraded vessels are visiting other terminals, while we have other vessels outside the programme visiting us that have caused significant noise issues.

On Tuesday, the vessel Shagra was due to arrive at the terminal. The ship has twice before been registered as a statutory nuisance by Pembrokeshire County Council’s port health team.


14 October 2010

Long-term natural gas oversupply

Chesapeake Energy wants to export LNG — PennEnergy

Mike Stice, senior vice president for natural gas projects at Oklahoma City-based Chesapeake Energy, would like to create new markets for the natural gas that is inundating the US, due in part to dramatically increased production in shale gas plays. Speaking to an audience of most investment analysts in Washington, DC on Oct. 13, Stice said he would like to see developers build liquefaction capabilities into their LNG import terminals along the Texas Gulf Coast.

“Every operator on the Gulf Coast has a liquefaction plan,” he said.

Liquefying and exporting shale gas from shale plays like the Haynesville, Barnett, and Eagle Ford to global markets holds major promise as the US confronts an oversupply of cheap supplies, said analyst Rick Smead of Navigant Consulting. [Red bold emphasis added.]

Natural gas taking off — (AP) Pittsburgh Post-Gazette, Pittsburgh, PA

NEW YORK -- By unlocking decades' worth of natural-gas deposits deep underground across the United States, drillers have ensured that natural gas will be cheap and plentiful for the foreseeable future. It's a reversal from a few years ago that is transforming the energy industry.

The new natural gas discoveries, mostly beneath states in the East, South and Midwest, have kept prices remarkably low, even as demand has come back since the end of the recession. [Red bold emphasis added.]

Natural gas weekly update — EIA, US Energy Information Administration, Washington, DC

Natural gas spot prices at the Henry Hub are trading significantly below year-ago levels. At $3.58 per MMBtu in trading on October 13, prices at the Henry Hub were 11 percent, or $0.45 per MMBtu, below year-ago levels. Natural gas spot prices at most markets elsewhere in the lower 48 States were trading at about 7 to 26 percent below year-ago levels. The lower spot prices likely reflect robust levels of natural gas production and reduced natural gas consumption compared with last year at this time.

New report assesses offshore LNG market — PennEnergy

North America once represented the most prospective offshore regasification market. However, following the surge in shale gas production, combined with a fall in gas demand, many projects have been further delayed or canceled. At present, Asia represents the region of highest forecast capex associated with offshore regasification up until 2016. This will be driven by a number of proposed projects in Indonesia, Malaysia, Pakistan, Bangladesh, and India. In total, Asian-related capex represents 39% of total offshore regasification capex in the 2010-16 period.

Paiva Weed seeks tenth term in R.I. Senate — The Jamestown Press, Jamestown, RI

Opposed to the much-debated liquefied natural gas proposal and deeply invested in the protection of Jamestown and Newport’s environment, Paiva Weed said she believes that renewable energy projects and opportunities are important.

Atlantic (LNG) gets a new image — Newsday, Port-of-Spain, Trinidad & Tobago

Although Atlantic LNG Company of Trinidad of Tobago remains the company’s official name, it will be now known simply as Atlantic.

Governor contender Dudley appears solo in Medford; Kitzhaber due next week — (AP)

MEDFORD -- Republican gubernatorial candidate Chris Dudley says he does not think a proposed liquefied natural gas pipeline from Coos Bay through southwestern Oregon “pencils out,” and he is more interested in seeing low-cost gas from the Rockies brought to Oregon.

Dudley said he doesn’t think importing liquefied natural gas, which generally costs more, “pencils out the way it did in the past.” He added there are property rights issues to be considered in the route the pipeline would take. [Red emphasis added.]

Deepwater Horizon owners turn to old law used in 'Titanic' case — 24-7 Press Release

The Limitation of Liability Act limits the liability of the owner of a vessel to the value of its interest in the vessel at the end of the voyage. In other words, the owner cannot be sued for more than the value of [whatever remains of] the ship at the end of the trip. The Act was passed in 1851 when insurance for commercial shipping was still in its infancy, so that U.S. shipping companies would be competitive with their European counterparts, which also enjoyed government-imposed limits on liability. The Act cannot be used when the loss occurred due to negligence or unseaworthiness.

Because the Titanic was lost at sea, its owners turned to the Limitation of Liability Act to set its end-of-voyage value at just under $92,000--the value of its surviving lifeboats and related equipment. This meant that the many people who lost relatives and possessions on the ship were entitled to only a small share of that $92,000, regardless of the actual value of their loss.

In the case of the Deepwater Horizon oil rig, which sank two days after the explosion, the rig itself had been valued at $650 million. In its current position on the floor of the Gulf of Mexico it is valued at only $26.8 million. By invoking the Limitation of Liability Act, Transocean may only be required to pay claims totaling $26.8 million. [Red & bold emphasis added.]

Webmaster’s Comments: Implications regarding an LNG ship mishap: Under the current law, injured parties could collect value equal only to whatever remained of the LNG ship.


13 October 2010

Shale gas is king

Natural gas elbows its way to center stage — CNBC

NEW YORK - By unlocking decades' worth of natural-gas deposits deep underground across the United States, drillers have ensured that natural gas will be cheap and plentiful for the foreseeable future. It's a reversal from a few years ago that is transforming the energy industry.

"We once thought we could face gas shortages and (electricity) brownouts. Now we are facing an enormous oversupply of natural gas," said Fadel Gheit, senior oil and gas analyst at Oppenheimer and Co. "We have not scratched the surface of potential of gas in the U.S. and across the world." [Red bold emphasis added.]

EIA ups US gas production guess —

US production of natural gas is expected to rise 2.2% to 61.29 billion cubic feet per day this year, driven by a continued increase in drilling despite tanking prices, the EIA said in its October Short-Term Energy Outlook.

The number of horisontal rigs hit a record high of 929. [Red bold emphasis added.]

Short-term energy and winter fuels outlook — U.S. Energy Information Administration (EIA)

U.S. Natural Gas Production and Imports. Marketed natural gas production in the lower-48 states is expected to rise by 3.5 percent this year. EIA expects total U.S. marketed natural gas production to decrease by 1.5 percent in 2011, less than the 1.9 percent reduction forecast in last month's Outlook.

The increase in the natural-gas-directed drilling rig count since mid-2009, comprised of a growing share of natural-gas-directed horizontal drilling rigs in the lower-48 states, contributed to the production growth in 2010. Over the last year, the natural gas rig count increased from 712 on October 2, 2009, to 962 on October 1, 2010, according to Baker Hughes. However, the pace if (sic; "of") drilling for natural gas is expected to moderate slightly over the forecast period. The growing spread between petroleum liquids and natural gas prices has also favored a shift towards drilling in shale formations that contain a higher proportion of liquids.

EIA forecasts gross pipeline imports of 9.2 Bcf/d in 2011, an increase of 1.5 percent compared with 2010. Forecasted imports of liquefied natural gas (LNG) average 1.23 Bcf/d in 2010, a slight decline from 2009 levels. Growing domestic production and low U.S. prices relative to European and Asian markets have discouraged LNG imports. Nevertheless, EIA expects LNG imports to grow slightly in 2011 to 1.32 Bcf/d, a 7-percent increase. [Red & bold emphasis added.]

Webmaster’s Comments: 1.23 Bcf/d is roughly the equivalent of just 1¼ LNG import terminals. The US currently has 10 operating LNG import terminals, plus over 10 additional import terminals already permitted but not constructing due to lack of need.

Shalegas is bigger business all the time — IEEE Spectrum, New York, NY

Pat Wood, a former Texas energy regulator who chaired the Federal Energy Regulatory Commission during George W. Bush's presidency, has declared that the U.S. gas market is resembling its state in the 1990s, when prices stayed low by historic standards with minor seasonal variation. "Even if half the supply is unavailable for economic or environmental reasons, we could see sub-$6 gas for the rest of the decade," he has said. So promising is the situation, indeed, there's beginning to be serious talk of the United States challenging Russian and Middle Eastern producers in the global LNG export market. [Red & bold emphasis added.]

Low gas prices raise questions on deals — Calgary Herald, Calgary, AB

With natural gas prices languishing below $4 US per thousand cubic feet, and the forward curve showing no signs of recovery, one has to wonder why two deals valued at $3.5 billion for pieces of Chesapeake's Eagle Ford shale play were inked over the weekend.

What sets the Eagle Ford -- as well as the Marcellus play in Pennsylvania -- apart is that the natural gas contained in these formations is liquids rich.

According to FirstEnergy Capital's Mike Dunn, that means if natural gas is trading at $4/mcf, a barrel equivalent of liquids on a 6:1 ratio is worth $24.

[Eurasia Group's Robert Johnston], pointing to the Cheniere Energy project in Louisiana as one example, believes it's only a matter of time before U.S. natural gas finds its way overseas. [Red bold emphasis added.]

Shell sees "supply revolution" in natural gas [Blog] — ICIS

The Middle East, which had been in surplus, is now moving to a more balanced position in some countries, such as Saudi Arabia. But the USA, which had expected to need increased imports, may instead become a major exporter.

[Shell CEO Peter Voser] noted that the US now has "over a century's supply" of natural gas at current consumption levels. Yet, just a few years ago, it was thought that "domestic gas production would decline."

He also revealed that US producers were "queuing up" for export licences, based on using the terminals recently constructed for LNG imports. [Red bold emphasis added.]

Weaver's Cove CEO says LNG project not singled out by regulators — Wicked Local Westport, Westport, MA

FERC recently informed Weaver’s Cove that they must comply with the U.S. Department of Transportation regulations regarding new vapor-gas exclusion zone requirements before moving forward with construction of the planned LNG terminal.

Webmaster’s Comments: Weaver's Cove CEO is correct — All LNG projects currently going through federal permitting must comply with the new vapor exclusion zone requirements, since the US DOT discovered it had been requiring use of a flawed vapor dispersion model.

LNG opponents group sets meeting — The Herald News, Fall River, MA

The next meeting of the Coalition for Responsible Siting of LNG Facilities is Thursday, Oct. 14, at 7 p.m. at the Somerset Old Town Hall, 1464 County St. Residents and businesspeople are invited to attend.

Fort Worth League of Neighborhood Associations to release report on the state of natural gas pipelines in the city (Oct 12) — PR-Urgent

FORT WORTH, Texas (October 12, 2010) - The Fort Worth League of Neighborhood Associations (FWLNA), an umbrella organization representing the interests the city’s neighborhoods and residents, will present the findings of its yearlong study into the state of natural gas pipelines in Fort Worth with a public meeting Thursday, Oct. 21, at 7 p.m. The presentation will be held in the Fellowship Hall at University Christian Church, 2720 S. University Drive. The event is open to the public and the media.

In October 2009, the Fort Worth League of Neighborhoods was awarded a $48,000 technical assistance grant from the U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration. The yearlong study of natural gas pipelines made possible by this grant has resulted in a 36-page report with 26 recommendations for federal, state and local lawmakers and regulators, the pipeline industry and the citizens of Fort Worth.

The principal authors of this report were Richard Kuprewicz [member of the U.S. Department of Transportation’s Technical Hazardous Liquid Pipeline Safety Standards Committee and is the past chairman of the Washington State Citizens Committee on Pipeline Safety], president of Accufacts, Inc., and Carl Weimer, executive director of the Pipeline Safety Trust. They will both attend the presentation on Oct. 21 and have media availability. [Red emphasis added.]


12 October 2010

LNG headed away from — not to — USA

Al Dafna LNG tanker heads to Brazil, not USA — LNG World News

The destination of the huge “Q-Max” tanker was still showing on AIS as the Unites States when it headed south west through the Canary Islands in the western Atlantic on Sunday. But the vessel’s heading indicates it is going to Brazil, not North America.

The Golar Maria LNG tanker also passed through the Canary Islands on Monday, heading for the Brazilian port of Pecem, according to the AIS Live. The vessel loaded a cargo to re-export from Belgium in the first week of October.

Another Qatari LNG tanker, Al Hamla, is heading for Mexico’s east coast import terminal at Altamira, where it is expected to arrive on Oct. 29, according to AIS. Altamira saw four tanker deliveries in September, up from two tankers in August, an industry source said.

More Qatari LNG coming; deals inked for Canaport, Golden Pass (Oct 11) — Natural Gas Week, Energy Intelligence

North America’s natural gas market could hardly be more saturated with shale gas seemingly flowing from every location that could site a well, but that isn’t stopping state Qatar Petroleum from making arrangements to find homes on the western side of the Atlantic Basin for some of the 77 million tons of LNG it will be producing annually by the end of 2012 or so. [Red, yellow & bold emphasis added.]

Caricom's energy-charged power issue (Oct 9) — (Jamaica Observer) Trinidad Express Newspapers, Port of Spain, Trinidad & Tobago, West Indies

In 2004 Trinidad and Tobago and Jamaica signed an agreement for supply of 1.1 million tonnes of LNG per annum over a 20-year period, beginning 2009, that would mainly fuel alumina company Jamalco and the Jamaica Public Service Company power plants, together with other operators in the extractive industries. Trinidad later claimed their supply of LNG was inadequate to carry out its commitment to Jamaica. With the current surplus of LNG in the US, T&T is reconsidering its approach to the Jamaican market now engaged in the construction of its regasification facility. Despite prospective third-country suppliers, Trinidadian LNG could benefit from a shorter duty-free delivery distance to Jamaica.

Apache to buy BP's natural gas assets for $3.2B — Winnepeg Sun, Winnepeg, MB

The Houston-based company said Tuesday that its Canadian subsidiary has finalized a deal, worth $3.25 billion, to buy all of BP’s upstream natural gas business in Alberta and B.C.

In January, the company agreed to buy a majority state in Kitimat LNG Inc.’s proposed gas export terminal in Kitimat, B.C.

The terminal, where natural gas will be turned into a liquid for overseas shipment, seeks to be an escape valve for North America’s natural gas glut.

Despite setbacks, LNG backers still push for Ore. pipeline — (The Register Guard) KATU-TV, Portland, OR

Opponents of the Oregon project say the San Bruno disaster has spooked many of the 220 landowners from whom Pacific Connector is seeking permission to cross their rugged, forested land.

"The total volume of shale gas available in the continental U.S. now as compared to two years ago is just huge," [said Michael Carrier, Gov. Ted Kulongoski's natural resource adviser].

Reliance to digest US shale gas assets before buying more -source — (Dow Jones), Greece

Reliance Industries, India's biggest private oil refiner, has been actively diversifying its exploration portfolio across the energy spectrum, including into U.S. shale gas.

In April, Reliance Industries took a 40% stake in U.S.-based Atlas Energy Inc.'s (ATLS) Marcellus Shale acreage in a deal valued at $1.7 billion. It followed up in June with the purchase of a 45% stake in Pioneer Natural Resources Co.'s (PXD) Eagle Ford shale natural gas asset in Texas for $1.3 billion.

One reason for previous shale gas investment was high natural gas prices. But now a supply overhang resulting from shale output has driven U.S. gas futures to a one-year low. Shale gas output in the U.S. has also displaced imported liquefied natural gas, making more LNG available for other countries and keeping a lid on international prices.

China's state-run oil company Cnooc Ltd. Sunday chose shale gas for its first major investment in onshore U.S. energy assets, in a venture worth more than $2 billion.

It bought a third of Chesapeake Energy Corp.'s( CHK) southern Texas shale resources for $1.1 billion, and said it would finance another $1 billion in drilling costs. Media reports said earlier that Reliance Industries was initially in talks with Chesapeake. [Red & bold emphasis added.]

Repsol Canada is new Qatargas recipient — Gasworld

The proposed annual LNG sale to Canada will involve Q-Max deliveries from the Qatargas 3 Company. Supplies will arrive at the Canaport™ LNG facility in Saint John, New Brunswick (Canaport LNG) and have provisionally been secured for three years commencing with the first LNG delivery from Qatargas 3 project, Train 6.

People in Washington County gather to decry the fairness of Maine’s business regulations (Oct 8) — Bangor Daily News, Bangor, ME

Godfrey stressed that she was not going to discuss the pros and cons of LNG and facilities, but was dismayed that the state process for reviewing such applications was flawed and appears to favor the developers rather than the people and communities that would be affected.

She also said that leadership on the state level is not conducive to a smooth process, and that the recommendations of a Brookings Institute Quality of Place study should be written into state policies and processes. She also said the state should adopt international siting standards for LNG facilities and should establish an office of environmental justice to deal with disputes and complaints.

She said the state Board of Environmental Protection, which oversees the permitting process, should remain intact, but that once a developer has proposed an application, all board members should participate in all proceedings. She also said a member of one of the Native Tribes should be on the BEP board.

Public input sets Perry land use map changes in motion (Oct 8) — The Quoddy Tides, Eastport, ME

The committee voted to sharply reduce the size of a district located near the former toll bridge on the Old Eastport Road and to redesignate it from commercial‑industrial to marine‑fisheries activities in order to allow for a proposed tidal power generation facility. Eastport City Council President Robert Peacock provided input on how much area would be needed to accommodate the facility. The committee voted to eliminate a district adjacent to Pleasant Point that had initially been proposed as the site of Quoddy Bay LNG. After representatives of the Passamaquoddy Tribe provided new information on the status of a proposed airplane parts manufacturing facility and new tribal housing, the committee voted to eliminate a proposed district on annexed property. The committee also voted to reduce the size of a proposed commercial industrial district on the Gleason Cove Road.

The committee decided to eliminate a proposed commercial‑industrial district on the Shore Road that had been designed to accommodate a possible fishing pier and tugboat operation. The committee voted to retain a proposed commercial‑industrial district on the Route 1 corridor between Perry corner and the Johnson Road, and they voted to eliminate a proposed commercial‑industrial district adjacent to Route 1 abutting the Robbinston town line that had been designated in an effort to capture a benefit for Perry's tax base from industrial growth in Robbinston. [Red, yellow & bold emphasis added.]

Webmaster’s Comments: The district adjacent to Pleasant Point (Sipayik), the proposed tugboat operation, and "industrial growth in Robbinston" are all related to failed Quoddy Bay LNG or failing Downeast LNG and Calais LNG proposals in Passamaquoddy Bay.

FERC imposes new vapor rules on Weaver's Cove LNG — The Herald News, Fall River, MA

Two city residents raised objections with the U.S. Department of Transportation and FERC earlier this year in regards to Weaver’s Cove’s use of an outdated dispersion called SOURCE5 to show that vapor gas would not leave the company’s Fall River site.

In response to those concerns, the U.S. DOT informed the pair in July that the SOURCE5 model can not be used to comply with the agency’s vapor gas dispersion exclusion zone requirements. A similar determination was made in regards to the proposed Downeast LNG proposal for Robbinston, Maine. [Red, yellow & bold emphasis added.]

FERC requests LNG terminals address PHMSA guidance (Oct 11) — LNG Law Blog

Late last week FERC requested that a number of U.S. LNG terminals provide information addressing the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) recent guidance.

3 R.I. AG candidates vow to continue fight against LNG — The Herald News, Fall River, MA

[Rhode Island Attorney General Patrick Lynch] … is looking at the end of his career as the Ocean State’s top law enforcemnt officer, moving out of the office due to term limits. Five candidates are seeking to fill Lynch’s shoes and many have said they will continue to keep a focus on defeating the project.

City Talk: LNG trucking, storage questions come too late [Opinion column] — Savannah Morning News, Savannah, GA

[B]eyond the small chance of a catastrophe, there are other issues related to the facility.

LNG tankers disrupt traffic on the river. LNG trucks will add to the congestion on DeRenne Avenue and wherever else they travel. The storage tanks are unsightly.

Yes, there are obvious contributions to the city from the Elba Island facility, but something else would have happened there if the first tanks had not been built decades ago.

We'll never know what chances we have missed.

Golden Pass LNG to receive first cargo — (Port Arthur News) iStockAnalyst, Salem, OR

Oct. 12--PORT ARTHUR -- Golden Pass LNG in Sabine Pass is set to receive its first cargo shipment sometime this month.

The facility received damage during Hurricane Ike in 2008 causing a delay of just more than a year.

The Golden Pass LNG terminal will have the capacity to deliver the equivalent of 2 billion cubic feet per day of natural gas, when it reaches full operation. This represents enough natural gas to meet the average daily needs of about 10 million U.S. households.

Webmaster’s Comments: All of the entire United States is consuming nearly half the LNG than the Golden Pass LNG terminal can output, alone. US LNG terminals have been working at merely 10% of capacity. Golden Pass LNG's output will dilute average operating capacity even more.

LNG pipeline project facing hurdles (Oct 11) — (AP) KDRV-TV, Medford, OR

The Pacific Connector Gas Pipeline Project began the month by suing the state, claiming Oregon is using its permitting clout to hinder the proposed 230-mile line for political reasons.

Then an explosion at a natural gas line in San Bruno, Calif. leveled 50 homes and killed four people. The owner of the pipeline, Pacific Gas and Electric Corp. [PG&E], is among the partners in the Oregon proposal. [Red emphasis added.]

A healthy dose of skepticism required on the US becoming a major exporter of natural gas [Opinion] —

Mr. Miller would urge a healthy dose of skepticism on the US becoming a major exporter of Natural Gas. Within the last ten (10) years, the US has gone from abundant natural gas supply projections (i.e. dash to Natural Gas of late 1990's), to massive projected shortfalls of natural gas (i.e. development and construction of multiple LNG import terminals) and now back to projections of massive supplies of natural gas for the domestic and potential export market.

Mr. Miller has previously advised nothing will stop the natural gas revival and industry consolidation which is well under way within the US domestic market. However, sometimes the message has to be repeated, much like the military mantra; tell them what you are going to tell them, tell them, and then tell them what you told them, and tell them again. Financial markets have a very short memory as history has shown, so let's tell them again.

The U.S. needs a credible and sensible energy policy and emissions plan. We have "abundant natural gas and coal resources" to support our energy needs for many years into the future, if properly deployed for further usage into the industrial and consumer bases. We also have significant infrastructure problems, an aging pipeline and gathering system, among other challenges. [Red & bold emphasis added.]


8 October 2010

Repsol signs deal for Qatari LNG to Canada — New Brunswick Business Journal, Saint John, NB

[Canaport LNG] has the capacity to send out one billion cubic feet of gas per day and to meet one-fifth of the natural gas demand of New York and New England.

Repsol in New Brunswick signs major LNG deal — Bangor Daily News, Bangor, ME

Spain's Repsol YPF, S.A., Spain's top oil and gas company, has reached an agreement with Qatargas Operating Co. Ltd. to ship liquified natural gas to the Canaport LNG terminal in Saint John.

FERC approves south berth at Cove Point LNG facility for service commencement — LNG Law Blog

Yesterday, FERC approved the commencement of service for the south berth at the Cove Point LNG import facility. The berth was modified as part of Dominion Cove Point LNG, LP's Pier Reinforcement Project.

Consultants: LNG evacuation zone is 1 mile — Savannah Morning News, Savannah, GA

Fred Millar and Ben Johnson, who have worked with Homeland Security and Washington, D.C., officials on hazardous material transport issues, cited emergency response protocols that call for a 1-mile evacuation if an LNG truck spilled its cargo. Both men presented their findings to Savannah City Council Thursday morning and to a town hall meeting Thursday night at the Savannah Civic Center.

Within the 1-mile evacuation swath around the proposed Truman/DeRenne truck route, Johnson said, there are 186 schools, hospitals, banks and other "critical infrastructure."

He and Millar cited a precedent-setting 2005 LNG truck accident in rural Fernley, Nev., that burned so hot firefighters pulled back half a mile, evacuated residents for a full mile and had no recourse but to let the fire burn out. The 10,000 gallons of LNG burned for four hours.

Department of Energy approves LNG export license continuation (Oct 7) — APRN, Alaska Public Radio Network, AK

The approval allows the company to ship gas that was authorized but not yet delivered under a license granted in 2008 – but not to increase the quantities allowed at the time of the original agreement.

Democrat Chris Tuck, of Anchorage, also has been working on local energy needs for the Anchorage area. He says seeing the license extended can provide some comfort for residents until a new storage facility becomes available – now planned for the 2012-13 season. That will allow for a reservoir of 8 billion cubic feet of gas.

Our view: LNG export deal helps [Editorial] (Oct 7) — Alaska Daily News, Anchorage, AK

Despite our looming shortages of natural gas [access in Alaska], there's not enough demand in Alaska, especially in summer, to justify keeping the Nikiski plant open -- or even to justify aggressive exploration Cook Inlet without some incentives. With the export license, the Nikiski operation can sell to customers in Japan, the rest of the Pacific Rim and anywhere U.S. trade is permitted. That keeps Cook Inlet wells in operation, gas flowing and the plant running.

And that means the plant can continue to be a dependable backup during peak demand in winter, when gas can be diverted to meet Southcentral needs. Alaskans will need that backup because a gas storage facility in the works won't be operational for at least another two or three years.

DOE extends LNG export license; 2 more years to ship allotment (Oct 10) — Petroleum News

The companies now have until March 31, 2013, to finish exporting 99 trillion British thermal units of LNG, an allotment that DOE approved in 2008. The companies expect they will have shipped about 55 trillion Btu when the current license expires in March 2011.

In its Oct. 5 decision, DOE decided that the remaining amount “is not needed to meet regional demand” through the extension period. DOE also noted that extending the license would “continue benefits” to the Alaska economy and international trade.


7 October 2010

Domestic production dominates over LNG imports

US to take on rivals in natural gas — Financial Times, London, England, UK

The US could soon be competing with Russia and the Middle East to supply the world with natural gas, a shift in production that would reshape energy markets over the next decade, according to industry executives.

It comes as US natural gas production booms following technological breakthroughs that have made possible the extraction of shale gas.

The extra supply has prompted groups which invested in re-gasification plants to import liquefied natural gas to try to refit them to export that gas.

If the US were to have exported just 10 per cent of its natural gas last year, it would have been the biggest exporter of LNG, [PFC Energy manager of upstream and gas Nikos Tsafos] says.

The US has 10 LNG import terminals and two under construction, yet the boom in gas from shale rock means the import plants are all but redundant.

“US import terminals for LNG sit virtually empty and the prospect of the US becoming even more dependent on foreign imports has receded, with terminal owners now petitioning the US government for export licences,’’ the institute says in a report. [Red & bold emphasis added.]

Al Dafna LNG carrier heads for United States — (Reuters) LNG World News

The AIS ship tracker on Reuters showed that the “Q-Max” tanker, which with a capacity of 266,000 cubic metres is one of the world’s largest super-cooled gas carriers, passed the Algerian capital of Algiers on Wednesday night.

Work on Golden Pass began in 2006 before the United States lost much of its appetite for imported gas because of a surge in North American shale gas production.

Qatari vessels now rarely deliver to the United States because of a slide in prices, which has left many LNG producers scrambling for new markets and most terminals on the U.S. Gulf Coast sitting idle for months. [Red bold emphasis added.]

Repsol said to sign natural gas agreement with Qatar for Canaport terminal — Bloomberg

Repsol YPF SA, Spain’s largest oil company, signed a multi-year agreement with Qatar Liquefied Gas Co. for delivery of liquefied natural gas to the Canaport terminal in eastern Canada.

Qatar, the world’s biggest LNG producer, has signed contracts with China, Poland and other buyers in recent years, amid projections that demand in the U.S. won’t be as strong as expected because of a rise in American shale gas output. The Persian-Gulf sheikhdom plans to raise its LNG production capacity to 77 million metric tons by early next year. [Red bold emphasis added.]

Natural gas weekly update — EIA, US Energy Information Administration, Washington, DC

According to BENTEK estimates, supply of natural gas fell this week as well [as prices]. Even though production remained virtually flat (though still very robust compared to recent history), LNG sendout and imports were down, causing overall supply to decline. LNG sendout fell below its 5-year (2005-2009) minimum on several days during the report week. The low LNG sendout was likely the result of low demand, strong domestic production, and strong natural gas prices abroad relative to the United States. Additionally, imports from Canada to the United States also fell by about 7 percent from the previous week. [Red bold emphasis added.]

Council wants wind turbine bond defeated — The Jamestown Press, Jamestown, RI

…Winsor advised the council that the LNG Working Group had submitted to the Federal Energy Regulatory Commission a package of 24 resolutions opposing the Weaver’s Cove proposal. Twenty-two of the resolutions, including Jamestown’s, tracked the original document drafted by the LNG Working Group (with Middletown and Swansea having drafted resolutions of their own). The most recent signatory to the Working Group resolution was Gov. Donald Carcieri, Winsor said. Copies of the signed resolutions are available at www.lngwg. com.

Savannah consultants: Damage risk high if LNG truck explodes — Savannah Morning News, Savannah, GA

In a morning workshop with City Council, Fred Millar and Ben Johnson, who have worked with Homeland Security and Washington D.C., officials on LNG transport issues, cited federal regulations and emergency response protocols that call for a one-mile evacuation if an LNG truck accident were to happen.

Accidents are not the only risk. Trucks of 10,000 gallons or more are considered weapoms of mass destruction under federal guidelines, Johnson said.

The LNG trucks would carry 13,000 gallons.

"Hell no, we're not unfriendly to business," the mayor said. "We just want to protect our citizens."

Webmaster’s Comments: Protecting citizens is government's first responsibility. Calais LNG and Downeast LNG would prefer government cater to inappropriately-sited industrial projects that violate the LNG industry's own terminal siting best safe practices, rather than protect public safety.

Savannah City Council sets tonight's LNG meeting format — Savannah Morning News, Savannah, GA

Savannah City Council members agreed with a recommendation by Acting City Manager Rochelle Small-Toney to devote tonight's entire town hall meeting to the LNG proposal.

City consultants discuss dangers of LNG trucking proposal — WSAV, Savannah, GA

Savannah city leaders hired two consultants to present information about the proposal and the associated risks to the city and its citizens. Benjamin Johnson, former emergency manager for Richmond, Va., discussed the key infrastructure in the area along the proposed trucking route and the possible impacts of an accident on the port, Savannah's level 1 trauma center, and the surrounding neighborhoods. Dr. Fred Millar presented information about the dangers of LNG and prior incidents involving fires and explosions of LNG.

Senators applaud Nikiski LNG permit renewal — KTUU-TV, Anchorage, AK

LNG exports help make gas available for heating and power during the winter in Southcentral Alaska.

Webmaster’s Comments: By the above sentence, they mean that the LNG export facility acts as a peak shaving facility during the winter — the stored LNG can be regasified and put back into the local gas distribution system.

LNG project to go to vote in November — Opinion 250, Prince George, BC

Kitimat, B.C. – A major component to a multi-billion dollar project on BC’s North Coast will soon be in the hands of the Haisla First Nation.

Members will vote November 17th on a lease agreement for reserve land to be used for the $3 billion Kitimat LNG terminal. Kitimat LNG wants to build a liquefied natural gas terminal at Bish Cove near the Port of Kitimat. The facility would take delivery of gas from the Pacific Trail Pipelines, which will be connected to the existing Spectra Energy Westcoast Pipeline system.

LNG plant gets more time — Peninsula Clarion, Kenai, AK

The extension buys the plant time to export more than 40 bcf of gas they still have authorization to ship out.

Lowman would not say if the company had any customers signed up past the end of this March.

Natural gas pipeline crisis plans kept from public (Oct 6) — The Raw Story, Washington, DC

Govt lacks copies of emergency response plans developed by natural gas pipeline operators.

The emergency plans for companies operating natural gas pipelines like the one that exploded in San Bruno, Calif., killing eight people and destroying a neighborhood, are effectively off-limits to the public and industry watchdogs because the federal pipeline safety agency doesn't keep copies in its offices.

The policy of the Pipeline and Hazardous Materials Safety Administration means companies can keep their emergency plans hidden from people who might live near natural gas transmission lines. Because the government doesn't have copies of the plans, the public can't use the nation's open records law to request them.

A new U.S. Senate pipeline safety bill would require PHMSA to collect emergency response plans from natural gas and other hazardous liquid pipeline operators and, after removing sensitive details such as proprietary or security information, post them online. The bill is sponsored by Sen. Frank Lautenberg, D-N.J., chairman of the Senate Commerce, Science and Transportation Subcommittee on Surface Transportation, and Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va. [Red, yellow & bold emphasis added.]

Three Coast Guard members face court-martial — The Maritime Executive, Fort Lauderdale, FL

The U.S. Coast Guard announced Wednesday that three personnel are to be court-martialed over a December 2009 collision that killed an 8-year old boy.

Petty Officer Paul A. Ramos, the boat coxswain, has been charged with involuntary manslaughter, negligent homicide, aggravated assault, negligently hazarding a vessel, and dereliction of duty. Ramos has been referred to a general court-martial.

Petty Officer Ian M. Howell, has been charged with negligent homicide assault, negligently suffering a vessel to be hazarded, and dereliction of duty. Howell has been referred to special court-martial.

Petty Officer Brittany N. Rasmussen, has been charged with negligent homicide, assault, and dereliction of duty. She also has been referred to special court-martial.

The 33-ft Coast Guard vessel was en route to aide a grounded vessel when it collided with a 26-ft Sea Ray, a recreational boat. Eight year old Anthony DeWeese was killed and 5 others were severely injured in the accident, that took place while the family was out to see the annual Parade of Lights in the San Diego Bay. Two other children were taken to Rady Children's Hospital, and three adults were transported to University of California, San Diego Medical Center.

Webmaster’s Comments: See the…

The US Coast Guard makes errors, like everyone else — some of them fatal. The casting aside of SIGTTO terminal siting best safe practices during the Coast Guard's waterway suitability considerations, as it did in the Downeast LNG and Calais LNG Waterway Suitability Assessments, contradicts its Congressional duty to protect the public.

The Coast Guard goes to great lengths to encourage others to establish and abide by best practices. That makes the Coast Guard's own neglect of best practices less than lauditory. (See LNG Terminal Siting Standards Organization for more on this issue. SIGTTO = Society of International Gas Tanker and Terminal Operators.)

Mexico: CRE has no issues with Sempra LNG terminal, regulator says — LNG World News

Sempra has said it is the rightful owner of the property, but doesn’t need it to be in compliance with its operating permits, because the requirement for the buffer zone in 2003 by the Environment Ministry was eliminated in 2005 after a plant redesign. Nonetheless, Sempra said it bought the land in 2006 after all its permits had been issued.

The question of whether the plant operations should be suspended–now that it no longer has a buffer zone–continues to wind through the Mexican courts, Hulett said.

Micron Optics Sensing System approved for use in explosive environments [News release] — PRWeb

With this international certification, global customers working with explosive environments can be assured that Micron Optics’ dynamic optical sensing systems meet the IEC's standards for intrinsically safe products.

Micron Optics has accepted its first order for an application requiring the IECEX certification. The customer will be deploying Micron Optics optical sensing systems in LNG tankers. [Red & bold emphasis added.]

Webmaster’s Comments: LNG developers tell the public that LNG tankers can't explode, but here is a device intended for use in an explosive environment — an LNG tanker environment. (The 2004 Sandia Report for the US Department of Energy indicates LNG tankers can explode.)


6 October 2010

Natural gas supply soaring, LNG imports hurting

U.S. LNG imports hit 2-1/2 year low in August- DOE (Oct 5) — Reuters

  • August LNG imports lowest since December 2007

  • Ample domestic supply dampens import needs

Oct 5 (Reuters) - U.S imports of liquefied natural gas in August fell to their lowest monthly level in more than 2-1/2 years as ample domestic supply continued to dampen import needs, according to data from the Department of Energy on Tuesday.

Imports have slowed to minimal contracted volumes in recent months as gas prices continue to sink under the weight of increased gas production and weak demand, deterring shippers from sending any spot volumes to U.S. terminals.

[S]even U.S. import terminals sat idle in August as spot deliveries failed to show up. [Red bold emphasis added.]

LNG trumped (Oct) — Oilweek Magazine, Calgary, AB

The burst of enthusiasm for shale gas could put LNG on the sidelines of global gas trade

From the perspective of North American producers, the future of three gas sources (not two) is of interest. The first is the wild success of shale gas production in the United States and Canada. The shale gas revolution, as it is called, is largely the result of rapid innovation in such down-hole technologies as horizontal drilling, better bit design, coil tubing, down-hole motors, geosteering, microseismic, measurement while drilling tools and more powerful fracing systems. It has truly been a revolutionary development.

"Because of the development of shale gas formations like the Montney and Horn River and others with great potential right next to infrastructure and right next to pipelines, and with our existing conventional gas and our exports to the United States going down daily, we have more than enough [gas] for our own [use] so why is it important to build these pipelines? Why are we worrying about anything north of Alberta and B.C.?" asks Mann.

As a domestic source of supply, shale gas is an attractive alternative to imports. For the United States, which has huge trade deficits, it slows down the hemorrhage of U.S. dollars.

"North America is a great example," he concludes. "A few years ago, we wanted to have LNG receiver terminals dotting the east coast, the southern coast and the west coast of North America. People didn´t want them. Then all of a sudden by some miracle, we ended up with the shale gas revolution and we suddenly found we didn´t need them. So LNG - go away."

For North America, at least, shale gas was the game changer. Shale Gas five; LNG one. [Red bold emphasis added.]

Update 1-First U.S. Golden Pass LNG tanker due this month — Reuters

The Golden Pass LNG terminal near Port Arthur, Texas -- where construction was delayed by hurricane damage sustained in 2008 -- has yet to get permission to import the first of a number of expected test cargoes after applying to the U.S. Federal Energy Regulatory Commission (FERC) in late September.

Work on Golden Pass began in 2006 before the United States lost much of its appetite for imported gas because of a surge in North American shale gas production, which has left many LNG producers scrambling for new markets and most terminals on the U.S. Gulf Coast sitting idle for months.

With U.S. LNG imports hitting a 2.5-year low in August, some terminal operators have resorted to re-exporting LNG to higher-paying markets [Red & bold emphasis added.]

US LNG imports drop to two-and-a-half-year monthly low — Gas Matters, London, England, UK

Low US gas prices and high inventories has made the US an unappealing market for LNG sellers this year –and the latest Department of Energy (Doe) LNG data makes for unpleasant reading of US regas capacity holders. [Red bold emphasis added.]

Your Vote 2010 — The Race for Governor > Paul LePage — MPBN

LEPAGE: My over all energy strategy is to reduce the cost of energy to Maine people, and we will do that by looking at every source of energy out there and those who reduce the current cost of energy are the ones we will invest in. I do believe in nuclear, and I do believe in LNG, I do believe in hydro, it's proven - I mean the cheapest energy right now is coming out of Quebec and is hydro energy. Why aren't we looking at those energies? [Bold brown emphasis added.]

Webmaster’s Comments: First, Maine has been "looking at" LNG since the 1970s — Machias in the 1970s, at the request of Richard Nixon; and more recently, Gouldsboro/Corea; Harpswell; Gleason Cove in Perry & Pleasant Point; Split Rock at Pleasant Point; Calais/Red Beach; Cousins Island; Cumberland; Hope Island; Robbinston; Sears Island; and Yarmouth. (See Maine LNG Terminal Development Failure History.)

Second, importing LNG would likely result in higher — not lower — cost to Mainers, for the followng reasons:

  1. There is a 100-year natural gas supply glut in the US. LNG import terminals are operating at a small fraction of capacity, overall (averaging just 10% of capacity). The three New England LNG import terminals (Distrigas, Everett, MA; Northeast Gateway & Neptune LNG, Gloucester, MA) have been operating on average at just 30% of capacity, as of 2010 Aug 31. If they were to operate at 60% of capacity, their imports to would double. If they were to operate at 90% of capacity, imports would nearly triple. There is no need for a Maine LNG import terminal, since there is plenty of natural gas to meet demand.
  2. FERC requires all communities along LNG ship transit routes to have enhanced emergency response capability. (In Maine: Cutler [possibly], Whiting, Trescott, Lubec, Eastport, Sipayik, Perry, Robbinston, and Calais. In New Brunswick: Grand Manan, Campobello Island, Deer Island, St. Andrews, and Bayside.) That would increase cost to local taxpayers, as well as to federal taxpayers. Those local costs include the following:
    1. Hospital enhancements or construction for 100 burn beds, treatment equipment, and treatment personnel;
    2. Fire response capability, for both on shore and at sea, including additional equipment, buildings, and personnel;
    3. Emergency rescue capability, including additional equipment, buildings to house ambulances, and personnel;
    4. Additional security duties, such as on-shore security patrols by Local Police, County Sheriff, and State Police;
    5. Radio communications capability, to communicate with all other emergency response entities in all impacted communities, with the Coast Guard, County Sheriff, and State Police;
  3. The following would be negatively impacted by the presence of LNG ships:
    1. Fishing;
    2. Ferry operations;
    3. Tourism;
    4. Boating;
    5. Real estate values along the transit route and near the terminal;
  4. Cost to Maine residents would likely not be reduced by importing LNG, since:
    1. Natural gas is currently available via the Maritimes & Northeast Pipeline to Princeton, Baileyville, and Calais residents, if a company were to believe they could make money with such a distribution venture — but that has not happened because it would likely lose money. Importing LNG would not necessarily mean natural gas would be available to the public. (Note: There is so much natural gas available in the pipeline that Maritimes & Northeast obtained a FERC permit in 2009 to ship natural gas to New Brunswick, and has actually done so);
    2. There is a natural gas pipeline spur from the Maritimes & Northeast Pipeline to the Verso Paper mill in Bucksport; however, the Bucksport community has no access to any of that natural gas, probably because a local gas distribution business would lose money;
    3. Imported LNG is typically more expensive than domestic natural gas;
    4. Imported LNG has greater energy requirements due to the need for liquefaction, overseas transportation and regasification; thus, imported LNG is more polluting, meaning LNG would have greater negative impact on human health and the environment.

Canaport LNG terminal to receive cargo next week — Telegraph-Journal, Saint John, NB

Repsol YPF SA's Canaport liquefied-natural-gas terminal will receive a cargo of the fuel Oct. 11, according to vessel tracking data compiled by Bloomberg. The vessel, Madrid Spirit, can carry as much as 135,423 cubic metres of LNG, or about 2.92 billion cubic feet. It's bound for Canada after leaving Trinidad and Tobago, according to the data.

Analysis: LNG trucking disaster could endanger hospitals, schools — Savannah Morning News, Savannah, GA

If the contents of a 13,000-gallon LNG tanker truck leaked out in a road accident and ignited, the resulting fire could be hot enough to give blistering burns to unprotected people almost 700 feet away, a new analysis shows.

Along DeRenne Avenue and the Truman Parkway - the proposed route for up to 58 trucks a day taking LNG out of Elba Island - that hazard zone encompasses both Memorial's and Candler's emergency rooms, Spencer and Pulaski elementary schools, the Children's House day care facility, Buckingham South retirement community, portions of many neighborhoods and Savannah's wastewater treatment plant.

"The U.S. National Fire Protection Association guidelines that the Department of Transportation and the Federal Energy Regulatory Commission are supposed to follow are that an LNG facility should not allow more than 5 kilowatts per meter squared of thermal radiation off property," said Watson, founder of Watson Technical Consulting. "That is the level at which an unprotected person would get second-degree burns in 30 seconds." [Red bold emphasis added.]

LNG proposal focus of upcoming town hall meeting — WTOC, Savannah, GA

SAVANNAH, GA (WTOC) - The city of Savannah will hold a special town hall meeting Thursday on a proposal to truck liquefied natural gas through Savannah.

The public meeting will be held at 7 p.m. Oct. 7 in the Savannah Civic Center Ballroom.

FERC to prepare EA for Cameron LNG re-export project (Oct 5) — LNG Law Blog

FERC staff has announced its intent to prepare an Environmental Assessment (EA) analyzing the Cameron LNG re-export project. Comments from interested parties regarding the potential environmental effects of the project, reasonable alternatives, or impact mitigation measures are due by October 29, 2010.

LNG will always be cheaper for Jamaicans, says Colombian firm — Jamaica Observer, Kingston, Jamaica, West Indies

"You cannot look at the price of LNG alone. Whatever the price it is trading at, oil is more expensive -- so you save," stated a key negotiator in the deal who opted for anonymity due to respecting company media protocol. "That is because there is a gap in the trading with oil on top."

Caricom's energy-charged power issue [Opinion column] — Jamaica Observer, Kingston, Jamaica, West Indies

Minister Christopher Tufton is to be commended for boldly taking the first step in challenging the super-sensitive issue of Trinidad and Tobago's preferential energy-pricing policy. The policy has been particularly injurious to Jamaica's three key productive sectors, namely manufacturing, export and agriculture. The GOJ persistently baulked at confronting the issue, even while Jamaica's key productive industries continue to be severely eroded by T&T goods being imported duty-free at prices with which Jamaican producers find it very difficult to compete. The highly visible symptom of the anomaly is the approximate cost of US 3 cents per kilowatt hour for electricity in Trinidad, compared to Jamaica's cost of approximately US 30 cents per kilowatt hour, that has generated a spiralling Caricom trade deficit that reached US $1.6 billion in 2008. During the period January to April 2010 quoted by Mr Aubyn Hill on Friday, September 24, "Jamaica spent US $246 million (on Caricom imports) reflecting a 12 per cent increase over the corresponding period or 13 times the amount of money Caricom countries spent on Jamaican goods and services." The bulk of Caricom trade is with T&T.

Feds give OK to extension of Nikiski liquefied gas exports — The News Tribune, Tacoma, WA

The continued exports have stirred worries that the two companies are shipping overseas natural gas that might be needed to heat homes and businesses in Southcentral Alaska and generate electricity in the region.

Conoco and Marathon have eased some of those concerns by agreeing to keep local utilities supplied with gas, even if it means a production slowdown at the Nikiski plant. And some backers of their LNG plant say keeping the plant open could help pay for piping North Slope natural gas to Southcentral some day by serving as a major local customer of North Slope gas.

Details announced for Oct. 20 hearing on county LNG issue — The Daily Astorian, Astoria, OR

Following two public hearings last June, Hearings Officer Peter Livingston issued a ruling approving the application with conditions.

Both the applicant and project opponents led by Columbia Riverkeeper filed appeals of the hearings officer ruling.


4 October 2010

Natural Gas Industry: US supply "very strong"

— 'Appetite for LNG lost' —

AGA predicts ample natural gas supply will meet US winter demands — Platts

The American Gas Association said Monday that US natural gas supplies will meet consumer needs this winter, even if the market faces a repeat of the winter 2009-10 season's record demand.

"The [natural gas] supply picture seems very, very strong right now," McGill said. "You'd have to build an incredible disaster scenario for the coming winter heating season to believe that we're not going to be able to physically supply the market this year." [Red bold emphasis added.]

US has little LNG appetite — International Oil Daily, Energy Intelligence [Paid subscription required]

Despite a significant increase in global LNG exports in 2010 and the availability of almost 15 billion cubic feet per day of US LNG import capacity, the long-anticipated surge of LNG imports into the US has not materialized in 2010. [Red bold emphasis added.]

Shale gas growth will demand new markets, summit told — PennEnergy, Tulsa, OK

Today, with an estimated 100 years of supply of shale gas in Canada and the United States, "the question now revolves a lot less on supply development and more around where are we going to sell it and to whom are we going to sell it." [Red bold emphasis added.]

Unique energy ideas in auction — The Telegraph, Nashua, NH

For the past four years, the organization called ISO-NE has held an annual auction involving “capacity providers” like PSNH or Florida-based NextEra Energy Resources, which owns the Seabrook nuclear plant, and “load-serving entities,” which operate the lines and transformers and other parts of the grid.

ISO-NE – which stands for Independent Service Operator-New England, by the way – estimates how much power capacity we’ll need in three years, a figure that is increasing by less than 1 percent annually these days, and then auctions off the generation and distribution rights. The cost figure acts as a sort of floor for prices, all the companies can have some confidence when making investment decisions.

The most recent auction, held in August, indicates that we don’t need to worry about brownouts any time soon.

The auction also showed the usual effect of supply and demand. The final price for the capacity auction was a rock-bottom $2.95 per kilowatt-month, the lowest that it could go under ISO-NE rules.

This is a drop of one-third from the price bid three years ago, for our electricity capacity right now.

New England is on the cutting edge here. No other grid has gone so far incorporating demand response in the mix.

Oil and gas reserves increased in 2009, despite a 23% decline in capital spending — OilVoice

'We were very surprised at the strength of reserve additions given the weak economic conditions and tightness in credit markets during 2009,' said Nicholas D. Cacchione, director of IHS Herold and author of the report. 'As an industry, we spent fewer dollars, but they went further in terms of purchasing power.'

Strong natural gas reserve additions led reserve replacement rates to the highest levels in five years.

Reserves grow first time since 2005, says IHS Herold — PennEnergy, Tulsa, OK

NORWALK, Connecticut -- The worldwide upstream investment of 224 oil and gas companies decreased 23% to $378 billion in 2009, according to the 2010 Global Upstream Performance Review, released by oil and gas research firm IHS Herold. Although development spending fell nearly 20%, the first decline in a decade, total hydrocarbon reserves increased 3% as both oil and gas reserves grew for the first time since 2005. Production also increased 1%, driven by a 2.2% increase in natural gas output, the company says. [Red & bold emphasis added.]

US shale gas M&A acquisition spend totals US $21 billion in first half 2010 [Press release] — Wood MacKenzie

Robert Clarke, Unconventional Gas Research Manager for Wood Mackenzie adds, “The magnitude of the US Shale gas resource is extraordinary. We estimate the total resource potential of the 22 shale plays we currently analyze is approximately 650 trillion cubic feet of gas equivalent (tcfe): equivalent to a resource life of 32 years based on total US gas production in 2009. Shale gas production is set to increase from 17% in 2010 to 35% in 2020 of total US gas supply.” [Red bold emphasis added.]

Sabine Pass shrugs off maintenance —

"The compressor is down for scheduled maintenance, but the plant is operating normally," a Cheniere spokeswoman said in a Reuters report.

The terminal has not received a cargo since July.

Sabine Pass is the biggest LNG import terminal in the United States, with the capacity to send 4 billion cubic feet of gas per day to the onshore grid.

However, the terminal, like most in the United States, has received only sporadic volumes this year as weak gas demand and ample domestic supply has deterred shippers from importing much LNG from overseas. [Red bold emphasis added.]

US$3-B infrastructural upgrade coming with natural gas — Robertson (Oct 3) — Jamaica Observer, Kingston, Jamaica, West Indies

Breaking down the investment at a luncheon in recognition of Noranda Jamaica Bauxite Partners' first anniversary of operations in Jamaica, Robertson said the Liquid (sic) Natural Gas (LNG) infrastructure component was valued at approximately US$600 million, while some US$800 million would be expended on retooling within the country's five operational bauxite/alumina plants to make them more efficient. Some US$700 million was earmarked for the development of new generating capacity including renewable sources of energy, while around US$1.2 million was slated for increasing the efficiency and capacity of the national grid.

Union of B.C. municipalities oppose oil tankers, oil pipelines and offshore oil development [Blog] (Oct 2) —

The stance on the tar sands pipeline was the first ever taken by UBCM, while tanker traffic has been a long standing concern of the UBCM. In 2003 UBCM resolution requested that the federal Minister of Environment ensure the necessary steps are taken to protect provincial shorelines and fisheries from oil tankers. Then in 2008, UBCM delegated endorsed a resolution requesting the federal government to ban the passage of liquefied natural gas tankers in the waters of the Malaspina, Georgia, Juan de Fuca and Haro Straits, and Boundary Pass.

Presently, a Tanker Exclusion Zone (TEZ) exists along the BC Coast based on a 1988 agreement between the Canadian Coast Guard, US Coast Guard and representatives of the US tanker industry group. It is managed by the Coast Guard and specifically requires that tankers traveling from Alaska to the continental States remain west of the zone. The existing Tanker Exclusion Zone does not apply to tankers traveling to and from northern BC ports.

While this agreement was renewed in 2007, UBCM has now shifted to recognize the sensitivity of coastal marine ecosystems and the fisheries that depend upon them. [Red, yellow & bold emphasis added.]

Bulk to gain from Panama Canal expansion — American Shipper

A new set of locks triple the size of the existing ones, and widened entranceways on the Atlantic and Pacific oceans will enable container vessels greater than 12,600 TEUs to transit the isthmus compared to a maximum current capacity of 4,400 TEUs.

A canal able to handle 200,000 cubic meter tankers will be the first route of choice for liquefied natural gas trade between Trinidad and Chile, and between Peru and the U.S. Gulf Coast, should those develop, Sabonge said. [Red emphasis added.]


2 Oct 2010

Letters to the editor, Sept. 26, 2010: Readers energized by energy (Sep 26) — The Portland Press Herald

A decision by the Maine Bureau of Environmental Protection to grant a third extension to Calais LNG has tarnished its reputation as fair and impartial.

Is it credible, fair or responsible for Ms. Lessard to grant three extensions to the Calais LNG project despite credible public dissent? Even one of the most astute investment banks in the world, Goldman Sachs, understood the impossibility of the project and chose to cut its loses and abandon the project.

Opponents ask US FERC to reject Weaver's Cove's LNG import terminal (Oct 1) — Platts

A coalition of coastal communities in Massachusetts and Rhode Island has asked US energy regulators to reject on safety and environmental grounds a proposal by Weaver's Cove Energy to build an LNG import terminal in Mount Hope Bay.

The resolutions were adopted by: town councils in Swansea, Massachusetts, and in the Rhode Island communities of Barrington, Bristol, Cranston, Greenwich, Jamestown, Middletown, Newport, North Kingstown, Portsmouth, Tiverton, Warren and Warwick; the Rhode Island Statewide Taxpayers Coalition; and the Pokanoket and Pocasset tribes of the Wampanoag Nation.

NMFS says Weaver's Cove LNG's mitigation plan for fish habitat "not appropriate" (Oct 1) — LNG Law Blog

A representative from the U.S. National Marine Fisheries Service told FERC and the U.S. Coast Guard earlier this month that the plan proposed by Weaver's Cove LNG to mitigate the project's likely effects on the nearby winter flounder habitat is "simply not appropriate."

USA: Savannah neighbors turn out for hearing on Southeast LNG proposal (Oct 1) — LNG World News

“Being a representative of the people and having heard their concerns, I signed up to speak to be sure the federal government knows just how concerned we are and have so many public safety concerns about the LNG proposal,” said Alderman Jeff Felser.

Pipeline foes file state appeal (Oct 1) — The World, Coos Bay, OR

A coalition opposed to the proposed Pacific Connector Gas Pipeline is appealing to the state Land Use Board of Appeals to overturn Coos County's approval of the pipeline's land-use permit.

McCaffree said Thursday their appeal will focus on several county zoning requirements they claim Coos County commissioners disregarded when considering Pacific Connector's application.


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