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Passamaquoddy Bay & LNG

2011 July

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2011 July 29

FERC announces plans to revise its Draft EIS for Downeast LNG — LNG Law Blog

FERC issued an update yesterday on the Commission's regulatory review of the proposed Downeast LNG import project. In its update, FERC stated that it is gathering additional information to develop a Revised Draft Environmental Impact Statement (DEIS) for the Downeast LNG project. This Revised DEIS would address changes to the Pipeline and Hazardous Materials Safety Administration's safety regulations for LNG facilities. Prior to issuing the Revised DEIS, however, the Commission will open a scoping comment period to receive new comments on the proposed project to assist in guiding the Revised DEIS. [Red bold emphasis added.]

Mining news: Alaska mines, utilities eye LNG imports — North of 60 Mining News, Anchorage, AK [Paid subscription required]

Cook Inlet expansion, ASAP may not prevent Southcentral residents from joining Pebble, Donlin in looking abroad for reliable gas

Alaska boasts some of the largest metals deposits on earth as well as vast quantities of coal, oil and natural gas. Ironically, companies such as Donlin Gold LLC (formerly Donlin Creek LLC) and Pebble Limited Partnership are looking overseas to find a reliable source of natural gas as they study the....

State's Slope gas pipeline plan moves ahead, a step at a time — Alaska Journal of Commerce

A consultant study done as part of the AGDC work showed that imported LNG would cost $14 to $18 per mmBtu, Fauske said, which with utility distribution costs added would increase the price to $16 to $21 per mmBtu. That is more than twice what AGDC believes North Slope gas delivered through its 24-inch pipeline would cost gas customers in the Southcentral region. [Red emphasis added.]

Study: All-Alaska Gas Pipeline could bring state $400 billion (Jul 28) — KTUU-TV, Anchorage, AK

“If the free market determines that (liquefied natural gas) at tidewater in Valdez, destined for markets in Japan or other Asian countries is the appropriate outlet for North Slope gas then that's what's going to happen,” Gibson said. “But only if they think that's where it needs to go.”

Repsol expects November start up for Manzanillo LNG terminal — LNG Law Blog

Speaking yesterday in Madrid, Repsol CEO Miquel Martinez said that he expects operations at the Manzanillo LNG terminal to "ramp up" in November. Martinez also noted that a significant portion of Repsol's LNG production in Peru will be directed to the Manzanillo terminal.


2011 July 28

US Natgas Surplus Is Growing

[Red bold emphasis added.]

U.S. shale gas: The geopolitical impact — The Foundry, The Heritage Foundation

Europe benefits from U.S. gas wealth. The major exporter of natural gas to Europe has long been Russia, which managed to dominate natural gas consumers there. The authors of the Baker Institute’s study believe that shale gas discoveries in North America have the potential to reduce Russia’s (non-former Soviet Union) European natural gas market share from 27 percent in 2009 to about 13 percent in 2040 and reduce Moscow’s ability to use energy policy as a tool for political gains. This is because the U.S. is not going to buy as much liquefied natural gas (LNG) as was originally thought on the world market, and Europeans may benefit from the glut as supplies from Qatar, Nigeria, Algeria, and West Africa become cheaper.

Exxon’s gas bubble — MarketWatch

There’s a growing surplus of natural gas, especially in North America. This is partly the result of the so-called shale revolution — a reference to the new technologies that now allow drillers to tap natural gas trapped in vast shale deposits.

A decade ago, utilities were building billion-dollar import terminals for liquefied natural gas to take advantage of ample, cheap supplies on the global market. Now there’s talk of building gas-liquefaction plants in the United States to ship a homegrown surplus of gas overseas. At the same time, the volume of U.S. gas being sent via pipeline to neighboring Canada and Mexico is rising.

FERC approves interim partial settlement on Cove Point LNG supply issues — LNG Law Blog

Yesterday FERC approved the interim partial settlement proposed by Dominion Cove Point LNG, LP to address the terminal's supply issues. FERC noted that the proposed settlement was not contested by any of the interested parties and concluded that it "appears to be fair and reasonable and in the public interest."

Buccaneer boosts Kenai gas estimates (Jul 27) — (Morris News Service—Alaska) Homer News, Homer, AK

Australia-based Buccaneer Energy Ltd. said a gas discovery made in its Kenai Loop No. 1 well on the Kenai Peninsula in Alaska earlier this year is now estimated to contain 38.3 billion cubic feet, the equivalent of 4.8 million barrels of oil, the company announced July 20.

"This could be a game-changer for Cook Inlet," said State Sen. Tom Wagoner, whose district includes the Kenai area. "Thirty billion cubic feet is a big discovery for Cook Inlet, and this could alter the current plans by utilities to import liquefied natural gas, and for the state to build a pipeline to bring gas from the North Slope." [Red & bold emphasis added.]

It's a mad, mad, mad, mad world in Cook Inlet [Op-ed] (Jul 27) — Homer News, Homer, AK

The Agrium fertilizer plant is now closed, its jobs and tax revenues gone. The Conoco Phillips LNG plant is not far behind. And we knew the day they opened they would eventually close, because they rely on finite, non-renewable resources.

If we invest now in wind, tidal and geothermal power, however, we can avoid the inevitable boom/bust cycles that come with fossil fuels, provide affordable flat-cost power to Alaskans, and create long term jobs that won't disappear when a giant corporation decides it can make more money elsewhere. [Red emphasis added.]


2011 July 27

Dominion Cove Point, Statoil seek rehearing on FERC order addressing Cove Point's proposed tariff revisions — LNG Law Blog

Dominion Cove Point LNG, LP and Statoil Natural Gas LLC have both submitted responses to FERC's June 24, 2011 order addressing Dominion Cove Point's proposed tariff revisions. Dominion Cove Point argues that FERC’s decision is "arbitrary and capricious" and that the Commission ought to reverse its outright rejection of the operational flow order portion of the proposed revisions. Separately, Statoil's submission requests that FERC clarify its June 24, 2011 order. In the alternative, Statoil seeks rehearing on certain issues in the June 24 order.

AES Dominicana seeking spot LNG cargo for Dominican Republic — LNG Law Blog

An official with AES Dominicana told Platts LNG Daily that his company hopes to purchase a spot LNG cargo for December delivery to the Dominican Republic. [Subscription required]

Guest viewpoint: Federal regulators need to revise their thinking on LNG [Op-ed column] — The Register-Guard, Eugene, OR

The Register-Guard’s July 21 editorial, “LNG does an about-face,” was right on the money, especially the last sentence: “All parties involved ... will have to bring their thinking up to date.” Driving the need for revised thinking is the fact that the need for liquefied natural gas import terminals has been eliminated, while the attractiveness for LNG export terminals has become compelling.

At the federal level, the agency most in need of revising its thought process is the Federal Energy Regulatory Commission.

The first thing FERC must do is put to rest once and for all its pending approval for the Jordan Cove LNG import terminal planned for Coos Bay. Not only is the approval currently under appeal by the state of Oregon and a number of non-governmental organizations, but there is no longer a need for this import facility, as documented by FERC itself.

FERC clearly states in the Final Environmental Impact Statement for Jordan Cove that the Ruby pipeline project, which will bring natural gas from Wyoming to the West Coast, “could satisfy most of the main objectives” of the Jordan Cove project. The Ruby pipeline is nearing completion. Clearly, the idea of a Jordan Cove import terminal is a dead issue, and it is high time FERC personnel cleared the decks and began the task of “bringing their thinking up to date.” [Red & bold emphasis added.]


2011 July 26

US Natgas Abundance

[Red bold emphasis added.]

Report: World gains from US natural gas abundance — Voice of America

Just five or six years ago, U.S. demand for natural gas was outpacing supply and countries with large reserves were developing plans to use special container ships to export gas to the United States.

But a report from the James Baker Institute at Rice University in Houston, called “Shale Gas and U.S. National Security,” indicates the United States no longer needs to bring gas from far away.

“There was just a really strong push to bring liquified natural gas to the United States, and so what basically has happened with growth in domestic production is that all that expectation has been turned upside down,” said Medlock.

The case for shale gas (Jul 23) — Houston Chronicle, Houston, TX

Study on abundant resource points up national security advantages.

"Shale Gas and U.S. National Security," coauthored by Baker scholars Kenneth B. Medlock III, Amy Myers Jaffe and Peter Hartley, offers exhaustive, objective and incontrovertible scholarly argumentation for aggressive development of this resource. The work provides a veritable connect-the-dots between development of shale gas in places like South Texas, Arkansas, West Virginia and Pennsylvania and the undeniable national security benefits such development would bring.

Virtually eliminate U.S. requirements for liquefied natural gas from the Middle East for at least two decades.

Shale gas changing the energy balance of power —

Rising U.S. natural gas production from shale formations has already played a critical role in weakening Russia's ability to wield an "energy weapon" over its European customers, and this trend will accelerate in the coming decades, according to a new Baker Institute study, "Shale Gas and U.S. National Security." The study, funded by the U.S. Department of Energy, projects that Russia's natural gas market share in Western Europe will decline to as little as 13 percent by 2040, down from 27 percent in 2009.

The Baker Institute study dismisses the notion, recently debated in the U.S. media, that the shale gas revolution is a transitory occurrence. The study projects that U.S. shale production will more than quadruple by 2040 from 2010 levels of more than 10 billion cubic feet per day, reaching more than 50 percent of total U.S. natural gas production by the 2030s. The study incorporates independent scientific and economic literature on shale costs and resources, including assessments by organizations such as the U.S. Geological Survey, the Potential Gas Committee and scholarly peer-reviewed papers of the American Association of Petroleum Geologists.

Shell, BP offer comments supporting proposed interim settlement for Cove Point LNG supply issue — LNG Law Blog

Shell NA LNG LLC and BP Energy Co. submitted comments to FERC in support of a proposed interim partial settlement addressing Cove Point LNG supply matters.

USA: Dominion Cove Point finds short-term solution for lack of LNG imports — LNG World News

Dominion Cove Point LNG wants the US Federal Energy Regulatory Commission to quickly accept an agreement to address the lack of liquified natural gas imports to its Maryland terminal, documents show.

In May, Cove Point raised concerns that the 1.8 million Dt/day terminal was not receiving the number of LNG imports it needs to keep its cryogenic facilities cool enough to be operational.

The company met with its shippers July 14 and unanimously agreed to a short-term solution to the problem, it said in Friday filing at FERC. [Red emphasis added.]

Atlantic LNG upgrade up for vote (Jul 25) — UpstreamOnline

Board members at the Atlantic LNG plant in Trinidad and Tobago are set to vote next month on a project to de-bottleneck the export facility.

Canada 'could be competitive' in LNG (Jul 23) — Edmonton Journal, Edmonton, AB

[M]ajor discoveries of gas in northern British Columbia and the explosion of shale gas projects across the continent have turned the tables. And the temptation is obvious. Natural gas can be compressed and liquefied, basically shrinking 600 times by volume, then piped into LNG ships and transported to Asia and Europe where gas prices track the oil market - and gas sells for three times the North American price.

Construction is set to begin on Canada's first LNG export project at Kitimat, on B.C.'s northern coast. It will have an initial capacity of five million tonnes a year, which would double if a proposed expansion is successful.

Two other projects are also in early stages [Douglas Channel LNG Terminal; and Shell Canada and its Asian partners].

Borough will research LNG options (Jul 22) — KTVF-TV, Fairbanks, AK

FAIRBANKS, Alaska; Last night the Borough Assembly voted to research the viability of Natural Gas trucking options in the Interior. The goal is to get liquid natural gas from the North Slope into Fairbanks, and the report will compare several options, like the bullet line, the in–state gas pipeline, and trucking options.

Canada's NEB plans hearing on BC LNG export project — LNG Law Blog

Yesterday, Canada's National Energy Board (NEB) announced its plans for a hearing on BC LNG Export Co-operative LLC's application for a 20-year LNG export license. The announcement states that the NEB will consider the contemplated export markets in the Pacific Basin and natural gas supply, LNG transportation arrangements, environmental matters, and the status of regulatory authorizations.

Canada: NEB to hold public hearing on BC LNG application for LNG export licence — LNG World News

This application is based on projections that the demand for natural gas in Pacific Rim markets will continue to increase substantially over the next 20 years. In its application, BC LNG is requesting authorization to export up to 1.8 million tonnes of LNG annually.

Any person wishing to intervene in the hearing or make an oral statement must file the required documents with the Board and serve a copy on BC LNG and its counsel by Thursday, 1 September 2011. The deadline to file a letter of comment will be announced at a later date.


2011 July 22

US Natgas Supply Keeps Piling On

[Red bold emphasis added.]

US shale gas weakening Russian, Iranian petro-power, study finds (Jul 20) —

"The geopolitical repercussions of expanding U.S. shale gas production are going to be enormous," said Amy Myers Jaffe, the Wallace S. Wilson Fellow for Energy Studies and one of the authors of the study. "By increasing alternative supplies to Europe in the form of liquefied natural gas (LNG) displaced from the U.S. market, the petro-power of Russia, Venezuela and Iran is faltering on the back of plentiful American natural gas supply."

The study concludes that timely development of U.S. shale gas resources will limit the need for the United States to import LNG for at least two to three decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy. By creating greater competition among gas suppliers in global markets, shale gas will also lower the cost to average Americans of reducing greenhouse gases as the country moves to lower carbon fuels.

Government, academic experts defend long-range projections for U.S. shale gas production (Jul 20) — NewsOK, Oklahoma City, OK

“The data clearly show that shale gas has rapidly become a significant source of domestic natural gas supply,” Howard Gruenspecht, acting administrator of the U.S. Energy Information Administration, told the Senate Energy and Natural Resources Committee.

“It's grown to 23 percent of production for 2010. Production and production share growth has continued into 2011. I really do believe that EIA is doing a solid job in effectively tracking the emergence of shale gas in the U.S. energy system and thoughtfully reflecting it in our projections.”

“We carefully looked at the NY Times article,” Gruenspecht said. “We found nothing in it that causes us concern regarding the methodology, data and analysis that underlie the shale gas projections that we published.”

Shell’s decision to sell off of Mackenzie Delta holdings puts pipeline project in doubt. (Jul 20) — Industrial Fuels and Power

Right now, with Canadian natural gas prices averaging between CDN$4 and CDN$5 per thousand cubic feet (Mcf) one would have to wonder about the purpose of shipping natural gas south to a market that is already saturated and looks set to remain so for some time. Basically, the Mackenzie Delta gas was needed and viable some ten years ago and it may just have missed its timeslot for southern markets.

Shale gas and U.S. national security [Blog] (Jul 20) — FuelFix

Just a decade ago, companies were planning large scale investments that would allow them to import substantial volumes of liquefied natural gas (LNG) to all coasts of the US from Africa, Russia, the Middle East and Australia. This was spurred by the expectation that domestic supplies would continue to dwindle and demand, particularly for power generation, would continue to grow. However, success in the development of shale gas spurred by upstream innovations involving the use of horizontal drilling and hydraulic fracturing has turned this thinking on its head. U.S. shale gas production has risen from virtually nothing in 2000 to over 20 percent of domestic production today, which, in turn, has rendered the LNG regasification terminals in North America largely idle. Moreover, modeling at the Baker Institute indicates this is not likely to change for two to three decades.

Natural gas facts & figures from MIT (Jul 21) —

Two technologies — hydraulic fracturing (“fracking”) and horizontal drilling – have rapidly increased natural gas production from shale formations. The proportion of total U.S. gas production coming from shale resources grew from less than 1% in 2000, to 20% in 2010. By the end of 2011, this is expected to reach 25%. Shale gas now makes up an estimated 36% of all U.S. gas resources.

MIT’s mean estimate of recoverable shale gas volumes is 630 Tcf, or just over 30% of all U.S. gas resources.

Natural gas facts & figures from EIA (Jul 21) —

After a decade of stagnation, U. S. natural gas production increased by almost 17 percent between 2006 and 2010, reaching 21.6 trillion cubic feet (Tcf) in 2010, the highest level since 1973. Production has continued to increase despite a significant and sustained decline in natural gas prices since mid-2008.

In EIA’s Reference case projection, which assumes no changes in public policy, total natural gas production grows by 26 percent, from 21.0 to 26.3 Tcf, between 2009 and 2035, due primarily to significant increases in shale gas production, which comprises about 47 percent of U.S. dry gas production by 2035. Production increases faster than demand resulting in net imports declining to below five percent of consumption by 2023.

Planned LNG terminals market - Global analysis, competitive landscape and capacity forecasts to 2016 (Jul 20) — Online PR Media

The transition of the US from a net importer of LNG to a net exporter looks inevitable with the increase in shale gas production there over the last five years. In 2009, the US overtook Russia to become the largest natural gas producer, globally. Shale gas production in the US has increased from 3.5bcf/day to 8.5bcf/day in 2009 and it will increase significantly through 2016. The rise in shale gas has lowered US dependence on natural gas imports and created a surplus for LNG exports.

Editorial: LNG does an about-face (Jul 21) — The Register-Guard, Eugene, OR

Oregon’s long-running battles over liquefied natural gas terminals have been turned upside down. The boom in U.S. and Canadian natural gas production has eliminated the need for natural gas imports, while the economic logic for LNG exports has become compelling — particularly from West Coast terminals. New conditions will require new thinking.

[N]ow, with abundant, low-priced supplies of U.S. gas, importing LNG from half a world away makes less sense. Last month, the U.S. Department of Energy approved Cheniere Energy’s proposal to retrofit its Sabine Pass LNG terminal in Louisiana for exports. At current U.S. prices, even with the costs of liquefaction, transportation and regasification, Cheniere is expected to be able to deliver LNG to Europe for $7.15 per million Btu, and to Japan for $9.15. The company sees the U.S. price advantage as big enough to justify a $6 billion investment, and IT hopes to begin exporting LNG in 2015.

The character of the argument over regulatory processes also will change. Congress gave the Federal Energy Regulatory Commission broad authority to approve LNG import terminals, reasoning that decisions about the nation’s energy supply were too important to be left to local authorities. LNG exports would improve the nation’s balance of trade, but would not enlarge or diversify the U.S. energy supply. The switch to exports strengthens state and local governments’ case in pressing for a larger role in the approval of LNG facilities.

Buccaneer boosts estimates in Kenai field — Alaska Journal of Commerce, Anchorage, AK

Australia-based Buccaneer Energy Ltd. said a gas discovery made in its Kenai Loop No. 1 well on the Kenai Peninsula in Alaska earlier this year is now estimated to contain 38.3 billion cubic feet, the equivalent of 4.8 million barrels of oil, the company announced July 20.

This could be a game-changer for Cook Inlet," said State Senator Tom Wagoner, whose district includes the Kenai area. "Thirty billion cubic feet is a big discovery for Cook Inlet, and this could alter the current plans by utilities to import liquefied natural gas, and for the state to build a pipeline to bring gas from the North Slope."

Study sees shale gas changing global balance (Jul 21) — Israel National News

According to the study, the estimates of gas available from shale have quadrupled since 2003 while the costs of its extraction have decreased markedly. This will cut US dependence on the imports of natural gas to a minimum and terminals that had been readied for the import of natural gas are submitting permits for exporting it.

NOAA issues proposed authorization for limited impacts on marine mammals at Northeast Gateway LNG Deepwater Port (Jul 21) — LNG Law Blog

In [the Jul 21] Federal Register, NOAA released a proposed incidental harassment authorization and request for comments. The authorization would permit limited impacts on marine mammals incidental to operations at the Northeast Gateway LNG deepwater port.

FERC requests additional environmental information from Distrigas on nitrogen injection project — LNG Law Blog

FERC has requested additional environmental information from Distrigas on the company's nitrogen injection system project for the Everett LNG import terminal.

U.S. ACE requests revised mitigation plan for Sabine Pass Liquefaction project (Jul 21) — LNG Law Blog

Earlier this month, the U.S. Army Corps of Engineers (ACE) requested that Cheniere submit a revised mitigation plan for phase II of the company's planned Sabine Pass LNG liquefaction project.

Cheniere expanding Sabine Pass LNG facility (Jul 20) — OilOnline

Currently the Sabine Pass facility is housed in Cameron Parish, Louisiana, on 853 acres. It consists of a 40ft ship channel 3.7mi from the coast. It has five LNG storage tanks with approximately 17bcf storage capacity, 4.3bcf/d peak regasification capacity and 5.3bcf/d of pipeline interconnection to the US pipeline network.

The expansion comprises up to four liquefaction trains with 6 GE LM2500+G4 gas turbine driven refrigerant compressors per train. The expansion also proposes a sixth storage tank. The addition will make the Sabine Pass facility the first to have bi-directional terminals that can import and export LNG.

Planned gas pipeline in Puerto Rico brings criticism (Jul 21) — People's World, Chicago IL

Its supporters call it the "Green Way" (Via Verde), but the massive planned liquefied natural gas pipeline that is going to cut across the island of Puerto Rico diagonally for 92 miles (148 kilometers) has environmentalists and opponents of Puerto Rico's right-wing governor, Luis Fortuño of the New Democratic Party, seeing red. Although the pipeline is billed as a means to radically decrease energy costs in Puerto Rico, its opponents think that the benefits are exaggerated and instead point to the damage the project may do to the environment. Moreover, questions have been raised about the contract bidding process.

Canada: Kitimat LNG partners pushing for both trains — LNG World News

The project has regulatory approvals needed to build a 700 million cubic feet per day capacity, single-train plant in the B.C. harbour town. Until now, proponents have talked about a second train only as a possible future expansion.

“The economics of the project significantly increase if you actually do both phases so we’ve been looking at that from the beginning. We are aggressively trying to move forward to do both phases of the project at this time.”

Canadian minister expects approval of Kitimat LNG export license in fall of this year (Jul 21) — LNG Law Blog

Speaking to Platts LNG Daily [subscription required] in Alberta, Canada's Natural Resources Minister Joe Oliver said that he expects the National Energy Board to approve the 20-year LNG export license sought by Kitimat LNG this upcoming fall. Minister Oliver noted that this license would be the first for exporting natural gas to a market outside the United States.

So that’s what was at stake (Jul 19) — The Daily Astorian, Astoria, OR

Natural gas producers want to send gas out of the U.S., into the export market. That is not what we were told when Texas interests were promoting a liquefied natural gas terminal at Bradwood. Ted Sickinger of The Oregonian reported Sunday that, “Experts say export economics from Oregon are a slam dunk, potentially doubling the price that Canadian and U.S. producers net for their gas domestically.” The dynamic in this equation is extraction of natural gas from shale formations, which holds the prospect of a sizable surplus of domestic natural gas.

In the years that we have fought over LNG terminals in the Columbia-Pacific region, the party line from two LNG groups was that these terminals were for importing natural gas, which was vital to Oregon’s economy and would be a boon to the county in which the gas landed. [Red emphasis added.]

Jordan Cove LNG project may become import/export terminal (Jul 19) — KCBY, Coos Bay, OR

Senator Ron Wyden has come out in opposition of the idea, saying he's concerned exporting natural gas will benefit gas companies at the expense of the American consumer.

Webmaster’s Comments: Adding export capability does not correct Jordan Cove LNG's inappropriate terminal siting. (See LNG Terminal Siting Standards Organization for more.)

Natural gas losing its lustre as climate change transition fuel (Jul 20) — The Vancouver Sun, Vancouver, BC

At the same time, extracting natural gas from shale, as well as transporting it in the form of liquefied natural gas (LNG), has helped to increase availability to well beyond 200 years, according to the International Energy Agency (IEA).

"The inclusion of emissions associated with LNG liquefaction and transportation can materially increase the emissions intensity of gas-fired power," said David Stokes of Timera Energy.

"Focusing only on emissions from power plant combustion can be misleading as it ignores emissions produced over the fuel 'life-cycle' including extraction, processing and transportation."


2011 July 19

EIA Affirms Century-long Natgas Predictions

[Red bold emphasis added.]

EIA officials stand by natural gas predictions — FuelFix

The U.S. may have a 100-year supply of natural gas locked underground, but how much of it gets extracted hinges on what the federal government does to promote the fuel, energy experts told a Senate panel today.

With a turnaround in domestic supply, Houston-based Cheniere Energy Partners LP now is modifying one such LNG terminal in southwestern Louisiana so it can export the product.

The MIT and EIA energy experts both stood by their predictions about expanding shale gas resources in the U.S., and criticized a June 26 New York Times article that warned the estimates may be overly optimistic.

Sen. Murkowski: Expanding natural gas use good for Alaska, nation [Press release] — US Senate Committee on Energy & Natural Resources

“…Just in the past several years, we’ve witnessed game-changing technological innovations that have unlocked tremendous volumes of previously inaccessible natural gas. Those resources are already benefitting our nation by further diversifying our energy supplies, growing our economy, and creating thousands and thousands of well-paying American jobs.

“Today, however, new applications of technologies such as horizontal drilling and hydraulic fracturing have significantly shifted that picture. At moderate cost, our vast natural gas resources can meet the most aggressive projections of demand and amount to more than 100 years of supply at today’s consumption rates.…"

Cheniere to spend $6 billion on LNG [export] terminal — (AP) New Orleans Net, LA

LAKE CHARLES, La. (AP) — Cheniere Energy Partners LP says it will spend $6 billion to modify its liquified natural gas terminal in southwestern Louisiana to export natural gas.

Jindal, Cheniere Energy announce $6 billion facility — KPLC-TV, Lake Charles, LA

Cheniere Energy anticipates beginning construction of the facility in early 2012. Hiring of the new permanent jobs will begin in 2014 and the facility will commence operations in 2015. The final phase of the project is expected by the end of 2018. Adding liquefaction capabilities will transform the Sabine Pass terminal into a bi-directional facility capable of exporting LNG in addition to receiving LNG for regasification.

Cheniere Energy, state announce LNG facility — The Newsroom, New Orleans City Business, New Orleans, LA

The international facility will link the Houston energy firm’s Sabine Pass terminal to the prolific Haynesville Shale play in northwest Louisiana and will convert natural gas mined there and at other unconventional shale plays into liquefied natural gas, or LNG, for shipment.

Oregon LNG backers see renewed hope - in exports —

Originally, backers of the terminals planned to use them for imports. The Oregonian newspaper reports that two years ago they laughed off the idea that they could use the terminals to export gas.

But now, they're talking about doing just that — encouraged by economics that would allow U.S. producers to get double or triple their net by exporting to Asia rather than selling domestically.

Energy infrastructure update (for Jun) — Office of Energy Projects, Federal Energy Regulatory Commission (FERC)

Note: The following will open a PDF file (147 KB).

PDF fileWeaver’s Cove LNG and Mill River Pipeline filed to surrender their certificates to construct and operate the LNG terminal and associated pipeline near Fall River, MA. (The Commission vacated the authorizations on July 6, 2011.) [Red emphasis added.]

Clashing views on the future of natural gas (Jul 16) — The New York Times, New York, NY

A NEW YORK TIMES article last month, “Insiders Sound an Alarm Amid a Natural Gas Rush,” warned across two columns at the top of the front page that high expectations for companies drilling shale gas might be headed for a fall. It was the kind of story you wish The Times had written about Enron before it collapsed. Or about Bernard Madoff.

No question, the article challenged conventional thinking, and perhaps some of the shale gas independents will eventually founder. But the article went out on a limb, lacked an in-depth dissenting view in the text and should have made clear that shale gas had boomed.

USA: Feds issue progress report on truck loading facility at Elba Island LNG terminal — LNG World News

The brief update indicates regulators at the Federal Energy Regulatory Commission are waiting for Southern LNG to complete a consultation with the U.S. Department of Transportation before completing their environmental assessment of the project.

“I appreciate them bringing up the fact that if FERC sticks to the rules they’ve set themselves they have to admit that this facility as it exists doesn’t meet current safety codes,” she said. “FERC set the precedent of making facilities that want to be significantly altered meet the current code,” [said Sierra Club activist Judy Jennings].

Community groups, particularly those with geographical ties to the route, are opposed to the proposal, citing what they deem an unacceptable risk of catastrophic fire from the trucks.

Anchorage Chamber gets optimistic update on in-state gas line project (Jul 18) — KTUU-TV, Anchorage, AK

In-state gas line managers gave the Anchorage Chamber of Commerce an upbeat report on ASAP – the Alaska Stand Alone Gas Pipeline project.

The ASAP line would be 24-inches in diameter. Walker says a 48-inch line would be needed to carry the volumes of gas needed for LNG exports.

Lawmakers like gas pipeline report, but questions emerge (Jul 18) — Peninsula Clarion, Kenai Peninsula, AK

“There are huge LNG deals being done in Asia, and Argentina is even looking at imports of LNG. We should be in this game,” [State Sen. Joe Thomas, D-Fairbanks] said.

Meanwhile, the prospect of an in-state gas line delivering North Slope gas by 2019 won’t dampen the drive by utilities in the region to import liquefied natural gas to meet gas shortages that could occur in 2014, said Jim Posey, general manager for Anchorage’s city-owned Municipal Light and Power. ML&P is working with Chugach Electric, Matanuska Electric Association and Homer Electric Association on a plan to purchase imported LNG as a stop-gap.

Canada: KOGAS wants Shells stake in MacKenzie Valley Pipeline — LNG World News

Korea’s state-owned natural gas company may be interested in snapping up Royal Dutch Shell PLC’s stake in the Mackenzie Valley Pipeline, an energy consultant said Monday.

Korea Gas Corp., or Kogas, is the world’s largest importer of liquefied natural gas, or LNG. It has shown an interest in the development of terminals on Canada’s West Coast, where gas from British Columbia’s prolific shale fields would be liquefied and exported abroad by tanker.


2011 July 18

EIA: U.S. Imports of LNG at 6-Year Low — CompressorTechTwo, Waukesha, WI

Sendout has averaged 380 MMcfd so far in July, down more than 50% from June and a fourth of the normal July sendout. Year-to-date, sendout has averaged 867.2 MMcf per day.

The EIA explained that higher domestic gas production has reduced prices, causing more expensive LNG to be diverted to Asian and European markets. [Red bold emphasis added.]

Bucksport explores bringing natural gas to downtown (Jul 15) — Bangor Daily News, Bangor, ME

In a letter to Bucksport economic development director David Milan, Bangor Gas representatives proposed 12,400 feet of new pipeline stretching from the Verso Paper plant — which is already a major customer — to the town’s school complex.

Town Manager Roger Raymond said Friday that the company has also expressed a willingness to build additional spurs if enough homes and businesses pledge to connect to the lines. But Bucksport’s schools are the linchpin to the deal.

During Thursday’s meeting, the council directed the town’s Finance Committee to meet with Bangor Gas officials to discuss the proposal, which as written would require Bucksport to contribute $240,000 of the construction costs. That meeting is tentatively scheduled for 6:30 p.m. Aug. 10 at the town office.

“The project will be a challenge to economically justify due to the infrastructure cost and the estimated revenue generated,” Livengood wrote. “As a result, the success of the project will rely on a close collaboration between the people of Bucksport and Bangor Gas Co.”

Webmaster’s Comments: Providing the proposed natural gas pipeline would cost Bucksport taxpayers around $5000.00 per customer. The reason the distribution pipeline had not been built previously is stated in the article: it would be difficult for the pipeline company to make a profit (due to the small number of potential customers). Distribution infrastructure costs are the reason Maine has little access to prolific supplies of natural gas passing through the Maritimes & Northeast Pipeline.

Verso Paper verbally supported Calais LNG in 2009, claiming the LNG impot project was needed in order for the paper mill to have enough natural gas (see 2009 Mar 27 Saint Croix Courier, "Washington County: We want our LNG"). Verso Paper is now willing to allow natural gas from its pipeline spur to be distributed to Bucksport residents and businesses, revealing that Verso Paper's 2009 statement had no merit.

FERC dismisses rehearing request in Weaver's Cove LNG proceeding as moot — LNG Law Blog

Following its termination of the proceeding examining the Weaver's Cove LNG project, FERC dismissed a request for rehearing of an order granting additional time to project developers as moot.

Webmaster’s Comments: The developer killed the project due to lack of market in New England for imported LNG. FERC's decision to grant additional time to Weaver's Cove LNG developers no longer has any effect on the dead project or potentially-impacted citizens.

FERC staff requests information on plans for Kenai LNG facility — LNG Law Blog

In preparation for its annual post-certification review of the Kenai LNG liquefaction facility, FERC staff has requested information from facility owners ConocoPhillips and Marathon Oil Co. The request seeks operational information as well as preservation and decommissioning plans for the facility. FERC has scheduled its review for September 13 and 14, 2011.

Lots going on — Calgary Herald, Calgary, AB

The [Kitimat LNG] project is before the National Energy Board seeking a long-term export licence. If granted, this would be the first new export licence for natural gas destined for a market outside of the U.S. The NEB hearings resumed July 13 and a final decision is expected in the fall.

Natural Resources Canada, and the Department of Foreign Affairs and International Trade recently led a trade delegation to Asia to promote liquefied natural gas exports.

Oregon politics: State labor talks, Wu's fundraising, LNG shuffle (Jul 17) — The Oregonian, Portland, OR

LNG EXPORTS?: For at least a couple of years now, fights over the siting of liquefied natural gas terminals in Oregon have been a common feature of the state's political scene (in fact, it's hard to run for statewide office without being pressed to take a stand on the issue).

But The Oregonian's Ted Sickinger says there is a new wrinkle to the LNG fighting. In the past, the issue was always about liquefied natural gas being imported into the U.S. from across the Pacific. But with new discoveries and technology, U.S. and Canadian companies are now looking at exporting the fuel to Asia. [Red emphasis added.]


2011 July 17

West Coast LNG Proposal Converts to Exporting

Oregon LNG terminal plans reverse from importing to exporting gas (Jul 16) — The Oregonian, Portland, OR

Two years ago, energy companies trying to build terminals to import liquefied natural gas to Oregon laughed at the notion of using their projects instead to export burgeoning supplies of U.S. and Canadian gas to lucrative markets in Asia.

The idea, LNG backers said, was a conspiracy theory concocted by environmentalists and landowners who didn't want pipelines laid across public and private lands.

Today, those opponents can safely remove their tinfoil hats.

With domestic reserve estimates surging because of successful drilling in tight shale formations, gas producers and terminal developers are pushing hard to export what they describe as surplus gas.

"This is the bastard marriage of our oil industry and the financial industry," said Paul Sansone, a former energy company executive and LNG opponent who lives in Gales Creek. "All along, the goal has been getting gas to be like oil; to break up these regional markets and have a world price so they can speculate on it." [Red bold emphasis added.]

Gas glut produces record U.S. exports to Mexico (Jul 16) — Fuel Fix

U.S. natural gas is flowing to Mexico at a record pace as demand for the fuel south of the border provides an outlet for surging supplies that have battered prices.

Rising shipments to Mexico signal that U.S. gas exports may keep expanding as onshore production climbs, said Biliana Pehlivanova, an analyst at Barclays Capital in New York. U.S. regulators are weighing three proposals to build terminals to liquefy gas and send it to overseas buyers.

Net U.S. exports to Mexico rose 53 percent from April 2008 to a record in April 2011, according to the Energy Department. Deliveries to Mexico in April equaled 2.2 percent of marketed output. [Red bold emphasis added.]

FERC rubber-stamps approvals for natural gas industry [Opinion] (Jul 16) — Press Action

FERC is not in the business of protecting the environment, even though federal law requires the agency to assess a natural gas project’s environmental impact. The agency is not even in the business of serving as an honest broker in its regulation of the natural gas industry. FERC’s mission, with regard to the natural gas industry, simply is to ensure gas pipelines, storage facilities and LNG terminals get built as quickly and seamlessly as possible.

[I]f you decide five years after getting FERC approval for your LNG import terminal project that you want to convert the facility into an LNG export terminal, don’t worry. FERC will give you permission to make the change, even though you argued five years earlier that the U.S. was in desperate need for your LNG import terminal in order to meet demand.

FERC sets schedule for Cove Point LNG tariff revision proceeding (Jul 15) — LNG Law Blog

FERC issued the schedule for the Cove Point LNG tariff revision proceeding, setting hearings for April 2012 and an initial decision in September 2012.

Webmaster’s Comments: Cove Point LNG is requesting to re-export imported LNG.

LNG project still in works — Anchorage Daily News, Anchorage, AK

Fairbanks Natural Gas LLC continues to pursue a liquefied natural gas project from the North Slope, the company told the Regulatory Commission of Alaska recently.

The lone natural gas utility serving the Fairbanks area is aiming to have the project in place before its existing supply contract in Cook Inlet expires on May 31, 2013.

County delays hearing on pipeline, oysters (Jul 15) — The World, Coos Bay, OR

A hearing to review the impact of the proposed Pacific Connector Gas Pipeline on Olympia oysters in Haynes Inlet has been postponed to Sept. 21.

The pipeline is an essential component of plans to build a liquefied natural gas terminal at Jordan Cove on the North Spit. In March, the Oregon Land Use Board of Appeals directed the Coos County commissioners to give more consideration to the oyster question, after Citizens Against LNG and other pipeline opponents appealed the commissioners' approval of a conditional land use permit for the pipeline.


2011 July 14

GDF Suez’s Boston LNG terminal set to receive cargo on July 30 (Jul 13) — Bloomberg

Maran Gas Coronis, the tanker carrying the shipment, can move as much as 145,700 cubic meters of LNG, or about 3.14 billion cubic feet of gas, equivalent to 4.8 percent of estimated daily U.S. gas production.

Webmaster’s Comments: Suez's Neptune LNG terminal has received almost no cargos since its commissioning in early 2010.

NOAA issues authorization for Impacts on Marine Mammals Incidental to Operations at the Neptune LNG Deepwater Port — LNG Law Blog

The U.S. National Oceanic and Atmospheric Administration (NOAA) has issued an authorization permitting limited impacts on marine mammals incidental to operations at the Neptune LNG deepwater port facility located offshore Massachusetts. The authorization will be valid until July 10, 2016.

The Coalition for Responsible Siting of LNG Facilities to meet Thursday (Jul 13) — The Herald News, Fall River, MA

The Coalition for Responsible Siting of LNG Facilities will continue to hold monthly meetings until such time as the ownership and beneficial use of the land now held by Hess-LNG/Weaver’s Cove Energy is resolved. This month’s meeting is scheduled for Thursday, July 14, at 7 p.m. at the Calvary Temple Assembly of God, 4321 N. Main St. Topics will include the aforementioned land use and ownership, as well as preparations for a celebration to acknowledge the group’s efforts in defeating the Hess-LNG/Weaver’s Cove project. For additional information, call Coalition President Joe Carvalho at 508-646-3616.

Dominion Cove Point LNG requests FERC waive pre-filing requirements for LNG re-export proposal (Jul 13) — LNG Law Blog

Dominion Cove Point LNG, LP submitted a request to FERC last week asking that the Commission determine that the company's planned LNG re-export project is not subject to pre-filing procedures under the National Environmental Policy Act (NEPA). [Red, yellow, and bold emphasis added.]

Webmaster’s Comments: Downeast LNG president Dean Girdis held Cove Point LNG up to the public as a model terminal. Now, however, Cove Point LNG is desperately seeking other avenues to stay in business. Just recently — resulting from a lack of import cargos — it tried to get FERC to force shippers to deliver LNG to the terminal. That attempt failed. Now, Cove Point hopes to receive LNG and then re-export it to overseas markets. In the meantime, it is considering converting exclusively to liquefying domestic natural gas and exporting LNG.

Downeast LNG should take heed of its model terminal. Cove Point LNG has no domestic market, due to the vast abundance of nearby domestic natural gas. Downeast LNG has the same problem — a project without a purpose.

LNG project in legal limbo — Go-Jamaica, Kingston, Jamaica, West Indies

The committee, set up by the Cabinet to review the Government’s Liquified Natural Gas (LNG) project, has started deliberations on the legal implications of the Administration’s decision to retender the project.

LNG contract going back to tender — Jamaica Observer, Kingston, Jamaica, West Indies

Paulwell, who was addressing a press conference at the People's National Party headquarters in Kingston yesterday revealed that the project is to be separated into two contracts -- one for the provision of onshore facilities and the other for offshore facilities including the proposed degasification terminal.

Alaska needs to get out from under AGIA [Op-ed column] (Jul 13) — Anchorage Daily News, Anchorage, AK

The AGIA legislation precludes the State of Alaska from assisting in any gas line project with a volume exceeding 500 million cubic feet of gas per day, which is less than one-fifth of the volume available for export from the North Slope. The state funded AGIA, Trans-Canada/ExxonMobil open season closed a year ago and no results have been released. Reality struck, however, when the BP/Conoco Phillips' Denali project was abandoned due to the lack of interest from its own principals and other leaseholders in taking Alaska's gas into the saturated markets of Canada and the Lower 48. The discovery of vast amounts of shale gas has prompted the development of numerous liquefied natural gas (LNG) export projects from the Lower 48 and Canada into the premium Asian market. This is precisely the market that the late Govs. Bill Egan, Wally Hickel and Jay Hammond and the late Sen. Ted Stevens recognized as the incredibly lucrative and only viable market for Alaska's gas.

Kitimat LNG to purchase Eurocan industrial site — Digital Journal, Toronto, ON

The site provides the Kitimat LNG project with a suitable area for a work camp, lay-down and storage area as the project continues to move forward with clearing and grading at the LNG export facility site.

PHMSA offers draft decision approving DNV's PHAST-UDM vapor gas dispersion model (Jul 13) — LNG Law Blog

The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued a Draft Decision approving engineering firm Det Norske Veritas' (DNV) vapor gas dispersion model. The PHMSA docket contains additional information on the Process Hazard Analysis Software Tool – Unified Dispersion Model (PHAST-UDM) program.


2011 July 12

Natural Gas Production Grows, LNG Imports Shrink

Update 1-EIA sharply raises 2011 US natgas production growth — Reuters

With year-over-year 2011 [natural gas] production growth now seen exceeding 2010's 4.5 percent increase, total domestic output this year should easily set an all-time high, eclipsing the previous record high, hit in 1973, of 62.05 bcf daily.

U.S. imports of liquefied natural gas are expected to fall nearly 17 percent from 1.2 bcfd in 2010 to 1 bcfd in 2011 and 2012, as increased demand in quake-hit Japan boosts LNG prices, the EIA said. [Red bold emphasis added.]

Natural gas outlook: August contract prices fall over 2 percent lower (Jul 7) — Drovers CattleNetwork

Supply remained essentially level over the week and posted a modest 1.2 percent increase over last week. According to Bentek Energy estimates, U.S. production increased only 0.4 percent over last week. There were notable differences, however, in other supply sources between this week and last week, with Canadian imports increasing 12.4 percent and LNG imports declining by 29.5 percent. Net Canadian imports increased across the board, with the most significant increase in the Northeast where Canadian imports exceeded last week’s level by 29 percent. Conversely, LNG imports fell 29.5 percent, continuing the decline experienced last week and ending on July 1 at the year’s lowest level of 400 million cubic feet (MMcf) per day. The largest decline, 340 MMcf per day, was at Golden Pass, with Everett experiencing the second largest decline of 130 MMcf per day. Domestic weekly gas production averaged slightly less than 64.7 Bcf per day. Production held above 64 Bcf per day throughout the week and exceeded 65 Bcf per day on Monday and Tuesday before falling back on Wednesday. Domestic production now stands 7.2 percent above this time last year. Canadian imports are 9.8 percent below year-ago volumes and LNG imports are 47.4 percent below. [Red bold emphasis added.]

Barnett Shale still has lots of life (Jun 27) — Fuel Fix

In our work at Rice, we rely on peer-reviewed, scientific assessments of the properties of shales to develop technically recoverable estimates and associated finding and development cost curves. We distinctly avoid non-technical publications such as investor relations reports. Much of the data we use comes from writing in the annals of the AAPG, the Potential Gas Committee and the U.S. Geological Survey. To that point, geologists have been writing about shale resources for decades, and only recently, innovations enhancing the technical feasibility of shale have occurred. The fact that geologists have been writing about the properties of shales since the at least the early 1970 is indicative of the fact that, to many of them, shale becoming technically and commercially exploitable was largely an issue of technology, not necessarily geology. Indeed, innovations continue at a pace that is, on average, raising the initial production rate and expected ultimate recovery of wells drilled every year. These two things combined drive down the per unit cost of development, thereby making more resource economically viable at a given price. The importance of this cannot be understated, from a geopolitical, environmental, and market development perspective. Numerous links to various studies are available on the Baker Institute Energy Forum website, which includes even more detailed information about the assessments used in our own modeling.

…In fact, our recent work indicates that as demand for natural gas continues to increase, particularly in Texas, the Barnett shale will remain an important contributor to the overall natural gas market balance. The full presentation I gave at the Dallas Fed is available online. The presentation, and many others I have since made, describes our research and shows that the U.S. is unlikely to become a major importer of LNG as a result of the robust developments in shale that have been occurring over the last decade. [Red bold emphasis added.]

Shell Canada throws its hat into LNG ring (Jul 6) — Alberta Oil Magazine, AB

The “shale gale” that has struck the United States has changed that supply picture and in hindsight, many people in the energy industry erred in investing time and money on developing these [LNG] import schemes. But now that Shell Canada has announced it has partnered with China National Petroleum Co., Korea Gas Corp., and Mitsubishi Corp. to consider building yet another export terminal to ship LNG from British Columbia to overseas markets, I wonder if today’s energy players are falling into a similar trap.

The Shell Canada announcement means there are now four potential liquefaction facilities being considered for the B.C. coast – Kitimat LNG, B.C. LNG Export Co-operative LLC, as well as an unnamed project being pursued by Progress Energy Resources Corp. and Petronas. [Red bold emphasis added.]

Utilities negotiate for LNG (Jul 6) — Homer News, Homer, AK

Southcentral Alaska utilities are negotiating with potential LNG suppliers to meet a projected deficit in local gas supplies that will begin in 2014 and grow to 10 billion cubic feet a year by 2015 and 47 billion cubic feet a year by 2018, a spokesman for a utility planning group said June 27.

ConocoPhillips and Marathon Oil Co. own and operate an LNG export plant near Kenai that is planned to be closed later this summer due to declining gas reserves in the region. The two companies have said that parts of the plant could be used to import and regasify LNG.


2011 July 11

Natural Gas Industry's 'Bait & Switch' Ploy

The great natural gas export swindle [Commentary] (Jul 3) — Press Action, Washington, DC

Throughout the previous decade, the gas industry argued the United States was in dire need of natural gas imports or else high prices and shortages would become the norm. FERC put the fast-track on all applications that companies submitted requesting permission to build LNG import terminals. Lo and behold the natural gas industry has changed its tune. The industry now contends the nation is awash in gas supplies and that it must be allowed to export to sustain its member companies’ healthy quarterly earnings.

During the past decade, one of the slogans of the natural gas industry was “energy independence” as it campaigned to drill for gas on public lands and in environmentally sensitive areas. But now we know the industry’s use of that slogan was just a ruse to get permission to drill in regions that may have remained off-limits if government officials had known the industry would end up running off with the gas supplies to sell to overseas markets. [Red bold emphasis added.]

What the Times said about fracking aren't the only issues for European shale (Jun 30) — The Barrell, Platts

Immediately following [The New York Times] article's publication, Ed Markey (Democrat-Massachusetts), the ranking member of the House of Representatives Natural Resources Committee and a senior member of the Energy and Commerce Committee Ed Markey, succinctly posed the question everyone in the energy industry wants answered: "We need to know whether the natural gas located underneath the surface is a real source of fuel for the next generation, or a speculative bubble hyped by the oil and gas industry, and echoed by the federal government's energy experts."

If the answer to the first question is no and the second is yes, then there is every chance that the US will once again start planning dozens of LNG import terminals. The world will be short of gas once more, and gas will lose its competitive edge as it becomes pricier. [Red bold emphasis added.]

Pipeline project gets tentative TIF — Mainebiz

A proposed 56-mile natural gas line has netted tentative tax-increment financing agreements from 12 central Maine communities.

Kennebec Valley Gas Co. first pitched the pipeline in March. If the project is approved, it will connect to the Maritimes and Northeast pipeline that stretches from Baileyville to Kittery. Construction would happen in either 2012 or 2013, according to the paper. [Red bold emphasis added.]

Webmaster’s Comments: Just as with the Baileyville paper mill accessing natural gas from the Maritimes & Northeast Pipeline, both projects demonstrate there is no shortage of natural gas in Maine — and that Downeast LNG is a project without a purpose. There is no need in Maine for an LNG import terminal.

LNG export: A U.S. natural gas game changer? (Jul 10) — Poten & Partners

Morgan Stanley has estimated that North American LNG export capacity may exceed 6 bcf/d by 2015, or around 10% of the current US daily production of 60 bcf/d. Morgan Stanley said it expects the ramp-up of the LNG export to ease the current stranded price environment as both the US and Canada have LNG export projects in the works targeting LNG export by 2015.

With an estimated 100 years of domestic shale gas supply at current rates of demand, and a farily flat domestic demand outlook, it is understandable the excitement of market players from the prospect of gas exports to higher priced markets in Asia and Europe. [Red bold emphasis added.]

Looking for oil and gas values, and avoiding value traps (Jul 8) — Oakshire Financial, Baltimore, MD

… I think we’re stuck in a $4–$5/Mcf trading range until 2015, at which time North America will become an exporter of natural gas. … I think we’re going to see a lot more regasification facilities on the Gulf of Mexico seek approval to become exporters. [Red bold emphasis added.]

Safety: Evaluation of DEGADIS 2.1 (Jul 7) — Federal Energy Regulatory Commission (FERC)

In the United States, Title 49, Code of Federal Regulations (C.F.R.), Part 193 prescribes the federal safety standards for liquefied natural gas (LNG) facilities. The siting requirements in Subpart B specify that each LNG container and LNG transfer system must have vapor-gas dispersion exclusion zones calculated in accordance with §193.2059. The regulation specifically approves the use of two models for performing these calculations, DEGADIS and FEM3A, but also allows the use of alternative models approved by the U.S. Department of Transportation.

In 2009, the NFPA LNG Technical Committee revised the 2009 edition of NFPA 59A, Standard for the Production, Storage, and Handling of Liquefied Natural Gas, to remove the prescription of DEGADIS and require that a model be acceptable to the Authority Having Jurisdiction based on an evaluation using the MEP. [Red bold emphasis added.]

FERC terminates Weaver's Cove LNG proceeding, vacates previous authorization for project (Jul 8) — LNG Law Blog

Earlier this week, FERC terminated its proceeding examining the proposed Weaver's Cove LNG import project. FERC also vacated its previous authorization and certificate to build the terminal. [Red bold emphasis added.]

Webmaster’s Comments: The Weaver's Cove LNG terminal project in Fall River, Massachusetts, is now officially dead.

Fall River Hess LNG terminal plan officially terminated, says FERC (Jul 7) — Wicked Local Westport, Westport, MA

The door has officially closed on Hess LNG’s proposed liquefied natural gas terminal.

Technical conference, prehearing conference set by FERC for Cove Point LNG tariff revision proposals (Jul 8) — LNG Law Blog

FERC has set technical and prehearing conferences for July 14, 2011, to discuss the tariff revisions proposed by Cove Point LNG.

Sabine Pass LNG withdraws petition for Declaratory Order on bi-directional terminal capacity transaction (Jul 8) — LNG Law Blog

Sabine Pass Liquefaction, LLC has withdrawn its previous petition for a declaratory order or waiver for its proposed bi-directional terminal capacity transactions. Sabine Pass informed FERC that the transactions now contemplated are different from those described in the original petition, so its petition is moot.

Robertson mulling over OCG report on LNG Project — Real Jamaican Radio News, Kingston, Jamaica, West Indies

Government officials are mulling over the report of the Office of the Contractor General (OCG) on its special investigation into the selection of a bidder for the Liquefied Natural Gas (LNG) Project.

Confused on natural gas? Stand by for more (Jul 2) — Anchorage Daily News, Anchorage, AK

Are we running out of natural gas in Southcentral Alaska? If the answers seem confusing, don't feel lonely.

On one hand, we had utilities in the region telling the Regulatory Commission of Alaska on June 22 that we'll have a gap in gas supply by 2014, three years from now, and we'll have to import liquefied natural gas.

On the other hand, we had the U.S. Geological Survey earlier last week telling us there are 17 trillion cubic feet of gas yet to be found in the Cook Inlet Basin, about twice what has been discovered to date.

The dilemma facing the utilities and the RCA, and really all of us consumers, is whether we should invest in LNG import facilities or a regasification capacity, if there is indeed more gas to be found in the region, and maybe soon?

Is B.C. about to drop a new carbon bomb? —

"Altogether, four proposed terminal projects could see up to four billion cubic feet of gas exported a day, the lion's share of the region's expected daily production of 5.5 billion cubic feet -- though production could ultimately be much higher."

In typical fashion for our mainstream media to deliberately fail to connect the dots, the article contains not a word about greenhouse gases. So I went and did the math, and 4 billion cubic feet of natural gas per day converts to 81.5 Mt per year. That is equivalent to 1.5 times existing B.C.'s gas footprint associated with exports.

KM LNG hearing to resume (Jul 4) — Northern Sentinel, Kitimat, BC

The National Energy Board has announced it will reconvene its hearing into the KM LNG natural gas export application on July 13.

LNG Co-op gives National Energy Board a nudge (Jul 11) — Kitimat Northern Sentinel, Kitimat, BC

In a May 25 letter to the board, the Co-op asks that it issue a hearing order “as soon as practicable”, and adds the Co-op itself is facing an October 31 deadline for getting the export licence.

That deadline reflects arrangements it has made with its potential suppliers and “the need for producers to consider making alternate arrangements if the BC LNG facility is not going to be available to them.”

Korea Gas Corporation joins BC shale gas project (Jul 7) —

Japan's Mitsubishi Corporation announced that it will sell 5% of its stake in the Cordova Embayment gas project in British Columbia, Canada, to South Korean state-run company Korea Gas Corporation (Kogas).

How the American Gas Association learned to stop worrying … (Jul 9) — Press Action, Washington, DC

“Large-scale export of natural gas via LNG will not only play havoc with the current supply/demand situation (and hence the price of natural gas), but also, because the price of LNG abroad is tied to the international oil market, will inevitably link the domestic price of natural gas to international oil markets, which are substantially more volatile and less transparent than our domestic market,” he wrote.

FERC to institute public review of regulations [News release] — Federal Energy Regulatory Commission (FERC)

Federal Energy Regulatory Commission (FERC) Chairman Jon Wellinghoff announced today that the Commission will implement President Barack Obama’s executive order asking independent agencies to engage in a public effort to reassess and streamline their federal regulations.


2011 July 1

Domestic Natgas Trump Imports

Natural gas price forecast 2012 — ETF Daily News

Natural gas prices plunge per U.S. supply glut

With so much recently discovered gas being dumped into the U.S. market, prices have plunged. Prices hovered near $4.00 per million British Thermal Units (mBTUs) for more than a year. [Red bold emphasis added.]

Apache Canada leads a global push for Canadian gas — Alberta Oil, Edmonton, AB

A proposed West Coast LNG project will face fierce competition

Cue Kitimat LNG, a $4.5-billion export megaproject that is quickly taking shape on B.C.’s northwest coast at Kitimat. The partnership’s application to the National Energy Board (NEB) for a 20-year export license describes the LNG foray as primarily “a response to a rapidly changing North American gas market.” Advances in horizontal drilling and hydraulic fracturing techniques have unlocked vast reserves of shale gas. The U.S. Energy Information Administration (EIA) pegs supplies of technically recoverable reserves south of the 49th parallel alone at a staggering 827 trillion cubic feet. Already, the wave of shale gas has eroded Canadian exports of the cleanest burning fossil fuel to traditional markets and, in the process, obliterated provincial revenue windfalls in Alberta.

Interestingly, the same forces that underpin interest in developing LNG exports from the West Coast could heighten competition on global markets. Before shale gas showed up on corporate radars, North America was forecast to be a net importer of LNG. Investments were made in the early 2000s in upstream production, liquefaction and shipping capacity. Global supplies of LNG destined for the continental U.S. have since been re-routed to Europe and, increasingly, Asia, thanks mainly to massive volumes of natural gas getting produced in basins like the Marcellus, in Pennsylvania, and the Eagle Ford in Texas. “As a result, the LNG market is flush with supply,” says Kenneth B. Medlock III, in a white paper released by the Energy Forum at Houston’s Rice University under the title Impact of Shale Gas Development on Global Gas Markets. [Red bold emphasis added.]

Marcellus boom, bust at same time? [Editorial] (Jun 29) — The Times-Tribune, Scranton, PA

But the issue is far broader than the question of private investment. The sudden emergence of supposedly abundant shale gas is a major driver of federal energy policy. Bills are pending in Congress to subsidize the development of more vehicles powered by natural gas and more power plants fueled by gas rather than coal. Gov. Tom Corbett has talked of shipping Marcellus Shale gas abroad through the port of Philadelphia. Whereas a decade ago a debate raged about building port facilities to accept and process liquefied natural gas from abroad, the debate now is about building facilities to liquefy natural gas and export it, especially to China.

Risk is inherent in oil and gas exploration. And so far, the Marcellus Shale generally has produced at or above projections, with inevitable variations from site to site. [Red bold emphasis added.]

Koreans eye Mackenzie Valley gas (Jun 27) — The Tyee, BC

Canada is the world's third largest producer of natural gas, after the United States and Russia. It also has a supply surplus because of a controversial technique called "fracking" whereby massive quantities of chemical-laced water are injected into boreholes under pressure, thus cracking shale and releasing previously inaccessible gas.

Kogas has already bought into the shale gas bonanza in northeastern British Columbia, acquiring $1.1 billion of EnCana's assets in February 2010. The challenge, now, is to move the gas to the Pacific Ocean and onwards to South Korea. [Red bold emphasis added.]

Update 1-India's Petronet eyes U.S. LNG supplies, plans new plant (Jun 30) — Reuters

(Reuters) - India's Petronet is talking to Cheniere Energy and Freeport for liquefied natural gas (LNG) supplies, Chief Executive A. K. Balyan said on Thursday, as the U.S. companies progress towards exports.

U.S. companies are looking to export to major importers for the first time in over forty years as the country's shale gas deposits give it flexibility for overseas sales.

U.S. gas exports to Mexico could grow in 2012 (Jun 27) — Downstream Today

Exports of U.S. natural gas into Mexico are expected to average 1.3 Bcf/d, a 450 MMcf/d increase from 2010, and the tightening of Mexican supply/demand balances should lead to further U.S. export growth in 2012, Barclays Capital reported last week.

U.S. gas exports to Mexico represent a relatively small part of U.S. gas balance, or one percent in 2010, and have not attracted much attention, but the exported BTUs are starting to add up, and more important, several factors suggest this trend could continue in the next few years. Barclays expects U.S. flows to Mexico to increase by another 200 MMcf/d in 2012, to an average of 1.5 Bcf/d. [Red bold emphasis added.]

UK energy practices need to be alert to the ‘shale gale’ (Jun 27) — The Lawyer, London, England, UK

Thanks to the rise of shale gas, tight gas and coal-bed methane, the US has overtaken Russia as the world’s largest gas producer. [Red bold emphasis added.]

Pickering: A conspiracy among gas drillers or those who write about them? [Opinion column] (Jun 28) — Fuel Fix

Cheap prices, falling gas-focused drilling, a recovering economy, eventual LNG exports – this is why industry executives are getting more bullish on the gas macro. However, even with optimism growing, most E&P companies are still hedging 2012 gas production at $5/mcf and/or selling down gas properties to fund oil drilling. Midstream companies are building gas pipelines like crazy. Several new LNG export projects are underway.

Webmaster’s Comments: This column is a commentary on the Jun 25 The New York Times article, "Insiders sound an alarm amid a natural gas rush", below.

FERC rejects Cove Point's tariff revisions, calls for technical conference (Jun 27) — LNG Law Blog

FERC issued an order last week rejecting a number of tariff revisions proposed by Dominion Cove Point LNG, LP, including one that would require shippers at the Cove Point facility to import LNG cargos in order to maintain proper temperature and operational status for the terminal. In its order, FERC tentatively scheduled a technical conference to discuss the proposal on July 7, 2011. [Red emphasis added.]

Webmaster’s Comments: Resultinf from a lack of imports, Cove Point LNG wanted FERC to force shippers to deliver LNG to Cove Point in order to keep the terminal cold, as required to remain operational. Cove Point LNG has been considering converting exclusively to exporting domestic-source LNG from copious nearby gas fields.

Sonangol: Gulf LNG terminal to begin operations in October (Jun 29) — LNG Law Blog

A report published by Sonangol, Angola's state-owned energy company and shareholder in the Gulf LNG [Mississippi] regasification project, states that the Gulf LNG facility is on schedule to begin commercial operations in October.

FERC authorizes Gulf LNG to cool down remaining facilities at terminal — LNG Law Blog

Yesterday, FERC authorized Gulf LNG Energy, LLC to continue to cool down its remaining facilities and equipment at the company's regasification terminal in Pascagoula, Miss.

Louisiana State Senators offer support for Lake Charles LNG export proposal (Jun 28) — LNG Law Blog

Nine state senators from Louisiana have submitted a joint letter to the U.S. Department of Energy's Office of Fossil Energy in support of the proposed Lake Charles LNG export project.

Chesapeake Energy wants $6 gas (Jun 29) — The Energy Collective

After listening to all of the stories that the industry is telling, you also have to watch their actions; those often provide a much better insight than listening to any selection of the various stories. One of the actions that the oil&gas industry has taken in recent years is to invest hundreds of billions of dollars into increasing its capacity to transport Liquified Natural Gas (LNG) around the world. From a long term perspective, it makes perfect investment sense for companies like Exxon, Shell, Chevron, and BP to overproduce shale gas in the US for a few years to keep prices low and build the market demand.

When production from the rapidly depleting “plays” falls off a cliff, the same multinational companies that influenced our entire political system because of an economic addiction to low extraction cost petroleum from the Middle East and Africa oil will add a dependence on Qatari, Australian, Azeri, Iranian, Russian and UAE natural gas. [Red emphasis added.]

Queensland, Texas ink agreement to promote LNG cooperation (Jun 29) — PennEnergy

Both Texas and Queensland will also use the Agreement to support collaborations that increase knowledge and expertise in the fields of LNG, agribusiness and creative industries.

Govt looking at smart grid technology — Jamaica Information Service, Govt. of Jamaica, Jamaica, West Indies

In Jamaica’s case, according to experts, [smart grid] introduction and application could lead to at least a US$0.5 reduction in the cost of electricity. This, coupled with the projected reduction of US$0.10 through the use of Liquefied Natural Gas (LNG), could see a combined conservative reduction of US$0.15, and would put the island’s productive sector in good stead to compete internationally.

Government to review LNG proposals Jamaica (Jun 27) — Go-Jamaica, Kingston, Jamaica, West Indies

The Government is set to begin looking at proposals geared at moving ahead with its plans to set up a Liquefied Natural Gas (LNG) facility in the island.

The Government’s plans to establish a terminal hit a snag after the Office of the Contractor General (OCG) said it had uncovered irregularities in the bidding process.

Utilities say they need LNG by 2014; uncertainties loom — Alaska Journal of Commerce, Anchorage AK

Southcentral Alaska utilities are negotiating with potential LNG suppliers to meet a projected deficit in local gas supplies that will begin in 2014 and grow to 10 billion cubic feet a year by 2015 and 47 billion cubic feet a year by 2018, a spokesman for a utility planning group said June 27.

There are also concerns as to whether the U.S. Federal Energy Regulatory Commission can deal with an application to build an LNG import terminal and regasification facility by 2014.

ConocoPhillips and Marathon Oil Co. own and operate an LNG export plant near Kenai that is planned to be closed later this summer due to declining gas reserves in the region. The two companies have said that parts of the plant could be used to import and regasify LNG.

USGS raises estimate of Alaska's Cook Inlet natural gas reserves (Jun 28) —

HOUSTON -(Dow Jones)- Alaska's Cook Inlet, birthplace of the state's oil and gas industry, could hold more than eight times the amount of natural gas it was previously thought to contain, the U.S. Geological Survey said Tuesday.

Alaska could meet gas needs through 2020 with new investment: study — Platts

A new study by the state of Alaska released Friday indicates sufficient natural gas resources exist to meet local needs possibly through 2020 from existing fields assuming producing companies make investments in new drilling and compression.

Without new investment, gas production will fall below annual demand by local utilities by 2012, the study said.

Export visions stoke deep divisons in a coastal town — Alberta Oil, Edmonton, AB

Ellis Ross and the Haisla First Nation support a proposed LNG [export] project on the coast, but see few reasons to back a crude oil pipeline.

LNG trying to dock — Global News, Toronto, ON

A former officer in the Canadian navy who navigated the rugged B.C. coast extensively, Mr. Theal estimates the area can handle a maximum of three bcf/d to five bcf/d of LNG export capacity. That limited capacity is beginning to lead some producers with large gas resources in Western Canada to look south for options, including building terminals in the U.S. West Coast, in Oregon. One industry source noted that three LNG facilities were planned before gas prices collapsed — Portwestward LNG in Clatskanie, Oregon LNG in Astoria, and Jordan Cove Energy Project in Coos Bay and those plans could be revived. The U.S. West Coast is accessible to Canadian producers through existing pipeline connections and could benefit from alliances with U.S. producers that are also looking to export to Asia.

Canada: Shell in talks with Asian companies over building BC LNG terminal — LNG World News

Shell is competing for first mover status on B.C. LNG export with Kitimat LNG, a proposed project for B.C.’s northwest by Apache Corp., EOG Resources Ltd. and Encana Corp. that is working through regulatory reviews, before a final investment decision later this year.

Calgary oil and gas producer Progress Energy Resources Corp. also announced in May its $1.07-billion partnership with Malaysian state-owned oil company Petronas to develop the Alberta firm’s shale gas assets and look at the feasibility of a B.C. west coast LNG export facility Petronas would operate.

In March, BC LNG Export Co-operative LLC proposed a more modest LNG export facility for the province’s West Coast.

Shell identifies Asian partners for LNG facility — Calgary Herald, Calgary, AB

Shell Canada has partnered with China National Petroleum Co., Korea Gas Corp. and Mitsubishi Corp. to look at building a liquefied natural gas export facility in British Columbia.

Shell is competing for first mover status on B.C. LNG export with Kitimat LNG, a proposed project for B.C.'s northwest by Apache Corp., EOG Resources Ltd. and Encana Corp. that is working through regulatory reviews, before a final investment decision later this year.

American Gas Association launches bid to host World Gas Conference in Washington, DC (Jun 29) — LNG World News

The USA candidate for IGU President is David Carroll, president and CEO of the Gas Technology Institute (GTI). David is currently Chairman of the Steering Committee for the 17th International Conference & Exhibition on Liquefied Natural Gas (LNG 17), due to take place in Houston in 2013. The candidate for WGC National Organizing Committee Chairman is Dave McCurdy, president and CEO of the American Gas Association.

Insiders sound an alarm amid a natural gas rush (Jun 25) — The New York Times, New York, NY

[T]he gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells.

In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.

Others within the industry remain optimistic. They argue that shale gas economics will improve as the price of gas rises, technology evolves and demand for gas grows with help from increased federal subsidies being considered by Congress. “Shale gas supply is only going to increase,” Steven C. Dixon, executive vice president of Chesapeake Energy, said at an energy industry conference in April in response to skepticism about well performance.

Webmaster’s Comments: Anti-fracking or not, this article exhibits questionable journalistic ethics. See below.

The New York Times flays natural gas to the cheers of the oil industry, OPEC, and coal producers [Opinion column] (Jun 28) — Huffington Post

Quite incredibly, for two days running including a two column boldface headline on this Sunday's front page, "Insiders Sound Alarm Amid a Natural Gas Rush", and again on Monday, "Behind Veneer, Doubt on Future of Natural Gas" The New York Times descended into a realm approaching yellow journalism: reportage of freighted opinion presented as news often with only the flimsiest attribution, often undated or old enough no longer to be germane given the explosive developments in the field, repeatedly out of context and clearly selected to substantiate a predetermined point of view. In doing so, offering a selection of documents "including hundreds of industry emails, internal agency documents and reports by analysts" imparting the New York Times' imprimatur to documents whose "names and identifying information have been redacted to protect the confidentiality of source, many of whom are not authorized by their employers to communicate with the Times." Documents presented without context nor permitting the reader in too many cases to be able to ascertain the who, why, and motivating factors. Is this the new world of newspaper reporting? [Red emphasis added.]

Webmaster’s Comments: Pro-fracking or not, the New York Times article, above is questionable journalism.

Canadian official cautions on LNG exports from United States (Jun 27) — LNG Law Blog

Robert McLeod, minister for industry, tourism and investment for the Northwest Territories, told a conference in Washington, D.C., that he would be cautious in supporting LNG exports by American companies. McLeod cited climate change concerns in his comments, questioning why the United States would export natural gas supplies while still using energy sources with higher greenhouse gas emissions. [Red bold emphasis added.]

Canada’s economy could miss out in the coming “age of gas” (Jun 29) — Troy Media, Calgary, AB

Ninety per cent of all gas wells drilled in the U.S. since 1949 have utilized the hydraulic fracturing technique, paving the way for potential major shale gas production from Beijing to New Delhi to Warsaw and Buenos Aires. [Red emphasis added.]

Webmaster’s Comments: This webmaster has contacted the above article's author, requesting a source for the percentage of US wells drilled with fracking since 1949.


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