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Passamaquoddy Bay & LNG

2011 August

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2011 Aug

2011 August 31

US Natgas Production Limits LNG Imports, Lowers Cost

[Red bold emphasis added.]

Shale gas discovery and development in USA to change market dynamics (Aug 30) — Plastemart, Mumbai, India

Rising US natural gas production from shale formations has weakened Russia’s hold on its European customers, and this trend will accelerate in coming decades, concluded researchers from Rice University’s Baker Institute. Researchers forecast Russia’s gas market share in Western Europe could decline to 13% by 2040 from 27% in 2009. Iran’s ability to tap energy diplomacy as a means to strengthen its regional power also could be hindered by rising US gas production. The study forecast US shale production could quadruple by 2040 from 2010 levels of more than 10 bcfd, reaching more than 50% of total US natural gas production by the 2030s. US shale gas development could limit the need for the US to import LNG for at least 20-30 years, thereby reducing negative energy-related stress on the trade deficit and economy. By creating greater competition among gas suppliers in global markets, shale gas also could lower the cost to average Americans of reducing greenhouse gases as the country moves to lower carbon fuels. Other findings of the study include that US shale gas will:

3 studies confirm shale gas is not worse than coal — The Energy Collective

The Carnegie Mellon team focused on shale gas from the vast Marcellus formation underlying several eastern states. (See Friday's posting for some perspective on the scale of this resource.) They found that while the current techniques for developing and completing a Marcellus shale gas well do result in higher methane emissions than from conventional gas wells, the extra methane only increases lifecycle GHG emissions from well to burner tip by 3% on average. This is the case because, "The life cycle emissions are dominated by combustion that accounts for 74% of the total emissions." As a result, when burned in a combined cycle power plant to generate electricity, shale gas results in emissions per kilowatt-hour (kWh) that are 20-50% lower than those from coal, depending on equipment and sources. This is the crucial comparison that Howarth's paper gave short shrift. They also compared shale gas emissions to those from LNG, which we'd now be importing in large quantities had shale gas development not ramped up as it did a few years ago. The Mellon team found shale gas and LNG roughly comparable, with both emitting around a quarter less CO2 equivalent per BTU than diesel fuel. That suggests that shale gas isn't just a lower-emitting fuel for power generation, but also for transportation. Finally, they looked at the possibility of shale gas wells being fractured multiple times, rather than just once during their production life, and found that it would take more than 25 fracturing events to negate gas's advantage over coal.

Mike Moran: Don't bank on Green Futures' vision for LNG site [Opinion column] — The Herald News, Fall River, MA

Joe is high on the list of tenacious individuals who signed, sealed and delivered Weaver’s Cove’s walking papers. Sure, he and Green Futures don’t own the property, but I suppose for his role in the demise of the LNG plan, Joe has earned the right to preach about what should go there as much as anybody. Frankly, I like his rather direct style. [Red emphasis added.]

Irene rips up US Northeast power distribution, other infrastructure OK (Aug 28) — Platts

There did not appear to be any known catastrophic structural damage to any power plants, refineries, pipelines or LNG terminals. But, serious flooding and downed power lines along the Eastern Seaboard and in some inland areas posed challenges to thousands of crews undertaking power distribution repairs. Also, railways looked to clear lines and resume normal operations.

Pursuing a more secure energy future for Jamaica (Aug 28) — The Gleaner, Kingston, Jamaica, West Indies

Was the resultant response the consequence of the controversy and uncertainty surrounding the LNG project? The RFP clearly gave preference to bids which were LNG compliant as being more responsive and would receive 15 per cent more in its ratings over bids which indicated other alternatives. However, given the uncertainties regarding the LNG supply to the country, the price at which the gas would be procured, the price at which the gas would be sold to off-takers, and other ambiguities surrounding the LNG project, could these and other related issues have deterred potential investors? Would the RFP have motivated a stronger response, if the request was made after certain policy agreements and infrastructural requirements were completed?

BP begins natural gas production from Serrette field, offshore Trinidad (Aug 29) —

With Serrette, bpTT now has production from 13 offshore Trinidad platforms. Production from Serrette is tied into bpTT's Cassia B hub via a 26-inch diameter, 32-mile long pipeline. The platform is expected to average 400 million standard cubic feet a day (mmscfd) of gas and associated condensate from five wells. Production from this facility will supply the domestic market and Atlantic LNG's liquefaction plant for export as LNG to international markets, such as the US and Europe, the company added.


2011 August 26

FERC vacates Creole Trail LNG authorization — LNG Law Blog

FERC has vacated its authorization to construct and operate the Creole Trail LNG import terminal. The Commission stated that its 2006 authorization expired on June 15, 2011.

Webmaster’s Comments: Another LNG import terminal — one that had already received FERC permitting in 2006, about the same time that Downeast LNG was just beginning the FERC permitting process — is dead. Creole Trail never began construction because it was already obvious in 2006 that there was a gross LNG import infrastructure overbuild with no market for the additional imported LNG. Latecomers — doomed-Downeast LNG, now-defunct-Quoddy Bay LNG, and beyond-last-gasp-Calais LNG — were already too late for need or any probability of success.

Have Downeast LNG, and its financial backer Yorktown Partners, ever been paying attention to US natural gas market realities?

FERC authorizes construction on EcoElectrica terminal modification project — LNG Law Blog

FERC has authorized construction for the EcoElectrica Terminal Modification Project [in Peñuelas, Puerto Rico], but noted that no LNG can be introduced to these facilities until the terminal demonstrates compliance with the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration's exclusion zone rules. [Red emphasis added.]

Webmaster’s Comments: The EcoEléctrica LNG terminal at Punta Guayanilla, near Peñuelas, Puerto Rico, has the same USDOT-FERC Exclusion Zone restrictions as does Downeast LNG. Unlike Downeast LNG, however, EcoEléctrica controls acreage well beyond the terminal's fenceline, and is appropriately distant (over two miles) from civilian populations — and unlike Downeast LNG, complying with SiGTTO world LNG industry terminal siting best safe practices. (See LNG Terminal Siting Standards Organization for more on SIGTTO best practices.)

Trinidad & Tobago: BP starts gas production from Serette field — LNG World News

Production from this facility will supply the domestic market and Atlantic LNG’s liquefaction plant for export as LNG to international markets, such as the US and Europe.


2011 August 25

Downeast LNG — where does it stand? (Aug 18) — Calais Advertiser, Calais, ME

[Note: The following article is not available online.]

At one time there were three liquid (sic) natural gas [LNG] proposals for this area. Over time two of those proposals have fallen by the wayside for one reason or another. Downeast LNG, the second one on the scene, is the only one remaining.

Girdis said one of the current holdups deals with permits relating to vapor-gas exclusion zone (sic). "FERC [Federal Energy Regulatory Commission] had stipulated that no project, Downeast and all the others that are export oriented, can proceed forward to permit approval or construction, depending where they are in the permitting process until the new vapor models are developed," he said.

[FERC External Affairs spokesperson Tamara Young Allen said,] "We're basically saying the project is still pending before FERC." "But, until DOT completes its process the project here will continue to be pending. Our staff will prepare a revised draft Environmental Impact Statement [EIS] (sic) to include the new information from DOT."

Girdis said he anticipates finalization of the GIS (sic; EIS) early in 2012 with work to begin in the fall of that year. [Red, yellow & bold emphasis added.]

Webmaster’s Comments: It is interesting that the Calais Advertiser considers Calais LNG to be dead. Even though that project has no money and no project site, it remains in the FERC permitting process.

It is also interesting that Dean Girdis stated that the vapor-gas dispersion model issue is just one of the current holdups to Downeast LNG.

Downeast LNG anticipates EIS (Draft EIS, or Final EIS?) completion in 2012; however, Dean Girdis is overlooking another gorilla staring at him from the corner — the US DOT has not yet addressed the flawed thermal radiation exclusion zone model that FERC failed to notify DOT of way back in 2009.

Just as the vapor-gas dispersion model required reconstruction, so does the thermal radiation model. And, from independent research submitted to FERC demonstrating critical false assumptions in the current model, it appears that the current model's shortcomings indicate Downeast LNG's terminal site is severely undersized, with no way to expand it to accommodate the required exclusion zone.

The thermal radiation model flaws (and FERC's 2009 violation of responsibility to inform the DOT of those flaws) is now on the US DOT's Pipeline and Hazardous Materials Administration (PHMSA) docket (PHMSA-2011-0159) for consideration.

As far back as 2006, or earlier, the Government of Canada warned Downeast LNG and the other local terminal proposals to relocate outside of Passamaquoddy Bay; that LNG ship transits through Head Harbour Passage and Passamaquoddy Bay are banned. Instead of taking the responsible approach and heeding Canada's warnings, all three LNG projects decided they would rather fight with Canada than succeed. Despite Downeast LNG's claims to have the right of innocent passage through Canadian waters, in actuality, the US does not have that right according to the UN Convention on the Law of the Sea (UNCLOS) and according to traditional maritime law (since the coastal state — Canada, in this case — determines what qualifies as "innocent" under traditional law).

If Downeast LNG had heeded Canada's warnings, it could have found a new location of sufficient size to fulfill the DOT-FERC exclusion zone requirements — as well as made sure their project could actually receive LNG by ship. Now, however, Downeast LNG has two immutable obstacles:

  1. Canada's prohibition of LNG ship transits to the proposed Downeast LNG terminal, and
  2. A project site that cannot accommodate the required exclusion zones.

Not only that, but the US Coast Guard, in its Letter of Recommendation and Waterway Assessment, requires that Downeast LNG

  1. Obtain a letter of consent from Native American tribes whose waterway rights would be impacted by the project — a requirement that Downeast LNG is defying; Downeast LNG has essentially claimed that Native Americans have no rights in Passamaquoddy Bay (see FERC docket filing by Maine Historic Preservation Commission regarding this concern); and
  2. Obtain cooperation and coordination from the Government of Canada for safe and secure LNG transits in both US and Canadian waters — something Canada has steadfastly indicated will not be forthcoming.

The Coast Guard makes no idle requirements. What it requires of Downeast LNGis impossible for Downeast LNG to fulfill.

One wonders what the venture capital firm Yorktown Partners, Downeast LNG's financial backer, could possibly be thinking.

Canaport LNG terminal received two LNG cargos in June — LNG Law Blog

Canada's National Energy Board reported this week that the Canaport LNG import terminal in St. John, New Brunswick, received two LNG cargos during the month of June, with import volumes totaling more than 238 million cubic meters of LNG.

Webmaster’s Comments: The stated volume of 0.238 Bcm converts to 8.4 Bcf. Canaport LNG's output capacity is 1.0 Bcf per day. So, the volume imported for the entire month equals Canaport's output capacity for just 8.4 days — just 28% of Canaport's monthly output capacity.

Factbox-U.S. East Coast energy sites brace for Irene — Reuters

GDF Suez (GSZ.PA) said its Everett, Massachusetts, liquefied natural gas import terminal has backup power and no ship arrivals scheduled during period Irene is a threat.

East Coast energy firms brace for Irene impact — Reuters

France's GDF Suez, which operates the Everett liquefied natural gas terminal in Massachusetts, said its facility was built to withstand a Category 5 hurricane with winds up to 150 miles per hour. It has not changed its shipping schedule due to Irene, and has back-up power generation.

Northeast gas pipelines, LNG plants on hurricane watch for Irene — Platts

With a strengthening Hurricane Irene expected to bear down on the East Coast during the weekend, several natural gas pipeline companies and LNG facilities in the storm's path are cautiously waiting, but not yet taking any precautionary actions.

GDF Suez representative Julie Vitek said its operations at the Everett, Massachusetts, terminal near Boston are not expected to be affected and have not put out any kind of warnings as of yet. "At this point we are not making any changes to our shipping schedule," Vitek said.

Similarly, Repsol spokeswoman Mary Usovicz said the Canaport LNG facility in St. John, New Brunswick, Canada, would not be affected at this point, although personnel are closely tracking the storm.

Natural gas outlook: Prices spike after East Coast earthquake — Dairy Herd Network

In the midst of this increasing consumption yet soft price environment, overall supply was up slightly. According to BENTEK Energy estimates, the week’s average total nominal gas supply posted a 0.7 percent increase from last week’s level. Domestic weekly dry gas production hovered around 62 Bcf per day (up 0.3 percent) from the previous week. Domestic dry gas production now stands 6.8 percent above this time last year. The week’s slight production gain was further bolstered by a 3.8 percent increase in Canadian imports averaging 5.7 Bcf per day. However, Canadian imports remain 16.6 percent below year-ago volumes. Supply gain remained anemic in the liquefied natural gas (LNG) arena during the week where imports came in just under 0.4 Bcf per day and remain 56.9 percent below year-ago levels. [Red & bold emphasis added.]

Webmaster’s Comments: The US has an LNG regasification output capacity of 15.5 Bcf per day. (That does not include Canaport LNG's or the Peñuelas, Puerto Rico, terminal capacity.) The week's average LNG imports for the entire USA were a measly 2.5% of US capacity.

Is Downeast LNG paying attention?

Northwest unprepared for boom times — Terrace Standard, Terrace, BC

The list of projects includes the estimated $404 million transmission line, the $700 million being spent by AltaGas to build the run-of-river Forrest Kerr power project, the several hundred million to be spent by Imperial Metals on its Red Chris copper project, the more than $2 billion Rio Tinto Alcan is spending to modernize its Kitmat aluminum smelter and the more than $4 billion to be spent on a pipeline to feed a liquefied natural gas plant at Kitimat.


2011 August 24

Shale Natgas Has Clobbered LNG Imports

[Red bold emphasis added.]

Renewables will face stiff competition from shale oil, analyst says — Renewable Energy Magazine

You may remember that 10 years ago we were talking about dramatic gas shortages in the United States. At that point billions were being invested in LNG – LNG processing plants were on drawing boards and under construction, LNG ships were being planned… and we were looking at bringing in vast quantities of LNG at a price that probably would have been about $20 from places like Qatar in the Middle East. So the whole industry has been turned upside since about 2005.

The first dramatic increase in shale production didn’t start until 1998. So suddenly while renewable energy has been trying to gain traction, shale gas has burst through the roof and if that hadn’t happened, you and I would be able to go to the gulf coast and we would have seen ships lined up waiting to offload LNG and that’s not happening. We’re now actually now talking about refitting those plants so they can export rather than receive gas. That’s probably the single most dramatic thing that’s happened to the renewables industry.

Webmaster’s Comments: Downeast LNG and the other two LNG projects* in Passamaquoddy Bay began at exactly the wrong time — too late to even be perceived as needed.

* Quoddy Bay LNG is now permanently dead; and, Calais LNG is barely alive at FERC, is without financing, and is without a terminal project site.

North America Gas Summit in Washington, DC, features commercial worlds of supply and demand for U.S. gas market [Press release] — Digital Journal

A true industry first, this unique platform will convene senior-level energy executives, regulators and thought leaders from across the entire supply chain – thus opening the dialogue between gas supply and demand - to address the latest regulatory issues shaping the future of the North American market, share best practices and discuss the impact of gas prices on shale gas development, public and media perception around hydraulic fracturing, demand creation through natural gas vehicle development and infrastructure needs, the potential of LNG exports and technology needs of liquefaction facilities, natural gas trading and pricing patterns, EPA regulations and expected outcomes of the current study undertaken, as well as the inherent realities of alternative energy.

Webmaster’s Comments: In previous years, before the LNG import bubble burst, Downeast LNG president Dean Girdis might have presented at this event, effusing about his project. Now, though, importing LNG into the US has become a market dinosaur, with Downeast LNG one of, literally, a mere handful of unpermitted US LNG import projects still thrashing about, refusing to face market realities.

One can only hope that at this event, 'sharing best practices' will include SIGTTO LNG terminal siting best practices (see LNG Terminal Siting Standards Organization for more) — the best practices that Downeast LNG's Dean Girdis proved he was ignorant of when he inappropriately selected Passamaquoddy Bay for his project.

Note: Girdis exposed his ignorance of SIGTTO LNG terminal siting best practices in his statements in a 2006 Mar 9 Bangor Daily News news article, "Regulators advance review process for LNG proposal."

SIGTTOSociety of International Gas Tanker and Terminal Operators. SIGTTO represents virtually the entire world LNG industry.

FERC requests additional information concerning Sabine Pass LNG liquefaction project — LNG Law Blog

FERC has requested additional environmental and engineering information concerning the planned Sabine Pass LNG liquefaction project. The request for information, available in the Commission's eLibrary under Docket No. CP11-72, seeks a response within 20 days of the date of the letter.

Webmaster’s Comments: As Save Passamaquoddy Bay has learned re Downeast LNG (now over 2 YEARS LATE answering FERC's questions), LNG terminal applicants are under no actual obligation to comply with FERC "deadlines."

Parnell: Alaska gas projects should be merged — Daily News-Miner, Fairbanks, AK

JUNEAU, Alaska - Gov. Sean Parnell says he's frustrated by the lack of progress toward securing a major natural gas pipeline in Alaska and believes it's time for the various gas proposals to merge.

Several have been floated as ways to commercialize natural gas on Alaska's North Slope. They include the major line being worked on by TransCanada Corp.; a smaller, in-state pipeline and a proposal to ship liquefied natural gas overseas.

Construction completed on Guadalajara — Pipelines International

The entire pipeline is made up of two sections, with the first consisting of a 6km, 24 inch diameter pipeline connecting a newly-built LNG regasification facility, located near Manzanillo on the Pacific Coast of Mexico, to the CFE-owned CT Manzanillo power plant. This section has the capacity to transport 500 MMcf/d of natural gas to the power plant.

The remainder of the pipeline is bi-directional, allowing gas to flow from north to south or south to north. It has a diameter of 30 inches and transports 320MMcf/d of natural gas from the Manzanillo LNG terminal to an interconnection with Pemex Gas y Petroquímica Básica’s national pipeline system near Guadalajara, in the state of Jalisco.

Gazpromexport sees future for US LNG imports — Argus Media

London, 25 August (Argus) — The director of Russian gas exporter Gazpromexport's pricing and contracts division expects higher US gas prices in 2012-13 and a potential future for renewed LNG imports.

Webmaster’s Comments: Yeah, and Nikita Khrushchev wore Italian shoes.


2011 August 23

Importing LNG Is No Longer Economically Practical

[Red bold emphasis added.]

Re-thinking the fracking debate (Aug 22) —, Boston, MA

Natural gas is a big deal, and fracking has transformed energy policies. Natural gas now constitutes 25 percent of US energy consumption. In only 10 years, shale gas, released through fracking, has risen from 2 to 30 percent of all natural-gas production. Shale depositories in states as geographically diverse as Texas, Montana, and New York have made the US essentially self-sufficient in natural-gas production, and even potentially an exporter of the commodity.

That is good news for Massachusetts. The controversial Weaver’s Cove LNG terminal that was proposed for Fall River was abandoned in part because importing natural gas in huge ships from Trinidad or Yemen to flow through expensive pipelines is no longer economically viable. One day, we might even imagine Mayor Menino’s longtime nemesis, the Everett LNG terminal, being closed.

Natural gas pipeline project in gulf forced to adapt to economic reality — St. Petersburg Times, St. Petersburg, FL

But in 2005, the first shale gas well was discovered in Pennsylvania, and now there are more than a hundred wells there. As a result, the price of gas has plunged to less than $4 per mmBTUs, and there's no longer a need to import it.

Some existing offshore LNG terminals built with high expectations in the past decade now face the very real possibility of being mothballed, she said.

"The problem is no longer whether the U.S. will run out of natural gas," she said, "but rather what should we do with all the gas supply we now have."

Webmaster’s Comments: Excelerate Energy's 116-mile offshore from Louisianan Gulf Gateway Deepwater Port, newly-built in 2005, is being taken out of service and scrapped by the company due to lack of market. The two new LNG import terminals in Massachusetts have received almost no LNG in the past two years.

Downeast LNG needs to read the writing on the wall — actually, just reading their own industry news should be sufficient. The Downeast LNG proposed LNG import terminal has no hope of success, since Maine, the Northeast, and the US have plenty of domestic natural gas for the next century.

Former deputy issues warning (Aug 22) — Telegraph-Journal, Saint John, NB

SAINT JOHN - After years of honing his skills as a hazardous materials technician - then rising through the management ranks of the Saint John Fire Department - Mark Gillan has left his job as acting fire chief to perform risk assessments in cities across the country with the federal government.

With a nuclear power plant, Canada's largest oil refinery and only liquefied natural gas plant within close proximity - along with old housing, all stretched over a large geographical area - Gillan said the city needs more emergency preparation.

Webmaster’s Comments: So much for the 'LNG will pay for emergency management' myth.

No 'visible' damage to Cove Point LNG terminal - Dominion — CNBC

NEW YORK, Aug 23 (Reuters) - Dominion Resources' said there were no "visible" damages to its Cove Point liquefied natural gas terminal in Maryland or gas pipelines after an earthquake struck the area.

LNG demand forecast to reach 3.43Mm3 in 2015 (Aug 22) — Business News Americas [Paid subscription required]

Projected LNG demand in the Dominican Republic in 2015 will reach 3.43Mm3 compared with this year's expected 1.46Mm3, according to the industry and tr...

Trinidad declares state of emergency to fight crime — (Reuters) The Morning Call, Allentown, PA

PORT OF SPAIN (Reuters) - The government has clamped a limited form of emergency rule on Trinidad and Tobago in a bid to halt a surge in violent crime linked to the drug trade in the oil-rich Caribbean country.

Persad-Bissessar linked the crime spree in the southern Caribbean nation to recent drug seizures and to violent reprisals against a crackdown by police on the use of Trinidad as a transshipment point for South American cocaine headed to Europe and the United States.

She did not elaborate but Trinidad and Tobago, which is a leading supplier of liquefied natural gas to the United States, has long been considered a hotspot for drug and arms smuggling through the Caribbean.

Authorities last imposed a state of emergency in Trinidad and Tobago in July 1990 when members of a local extremist Muslim group, Jamaat al Muslimeen, staged a coup attempt. [Red emphasis added.]

Report shows value of all-Alaska gas line (Aug 22) — Anchorage Daily News, Anchorage, AK

The Alaska Gasline Port Authority has released the results of the Liquefied Natural Gas Project Comparison Study performed by global energy analysts Wood Mackenzie. Go to to read the full report. The study compared the economics of the large-volume All-Alaska Gasline/LNG project to Valdez -- which would run parallel to TAPS, with a spur line to Southcentral Alaska -- with nine other LNG projects being advanced or under construction in Australia, Western Canada and the Lower 48.


2011 August 20

Natural gas outlook: Spot prices decline with cooler temperatures (Aug 18) — Dairy Herd Network

Declining temperatures this week led to a considerable drop in consumption of natural gas for power generation. Power burn fell almost 19 percent week over week, according to data from Bentek Energy Services, LLC. Supply declined slightly under 1 percent during the week as declines in LNG and Canadian imports offset ever so slight production increases. Dry production increased 0.2 percent from the previous week, while Canadian imports fell 10.4 percent and LNG imports declined by over 30 percent, with LNG imports averaging only 314 million cubic feet (MMcf) per day this week. [Red bold emphasis added.]

Webmaster’s Comments: The Northeast, alone, has 3.465 billion cubic feet (Bcf) per day of LNG import capacity. Thus, the entire United States imported a mere 9% of the Northeast's LNG import capacity.

It is more than abundantly clear that Downeast LNG is not needed.

Dominion Cove Point, Shell, and Statoil submit reply comments following FERC technical conference (Aug 18) — LNG Law Blog

Dominion Cove Point LNG, LP, Shell NA LNG LLC, and Statoil Natural Gas LLC have submitted reply comments that follow up on earlier responses to a FERC technical conference regarding proposed changes to the Cove Point LNG terminal tariff.

FERC launches environmental review for LNG exports from Freeport terminal (USA) (Aug 18) — LNG World News

The US Federal Energy Regulatory Commission is launching the environmental review process for Freeport LNG’s plan to liquefy and export domestic gas from its import terminal on Quintana Island, Texas, according to a notice released Thursday.

While Freeport has not yet filed a formal application with FERC, the commission is already beginning work on an environmental assessment for the proposed project under the National Environmental Policy Act. [Red bold emphasis added.]

T&T must look to Japan’s LNG market — The Trinidad Guardian, Port-of-Spain, Trinidad & Tobago

While LNG prices in Japan and South Korea are unlikely to stay at such high levels forever, it is certain that in the future the price of the commodity will be higher in these two Asian giants than in the US, where natural gas prices have declined by 11 per cent this year. Japan is the world’s largest importer of LNG followed by South Korea and Spain, according to the 2010 data compiled by the Web site Petroleum Insights. Last year, imports of LNG into East Asian countries totalled 123 million tonnes, which was 17.5 per cent higher than in 2009 and 14 per cent higher than the previous peak in 2008. The LNG import data for 2010 indicate that demand for the commodity in Japan constituted 57 per cent of total East Asian demand while South Korean imports amounted to 26 per cent of the region’s total imports. [Red & bold emphasis added.]

Asian LNG prices rise above US$15 on demand — The Trinidad Guardian, Port-of-Spain, Trinidad & Tobago

…In the Atlantic, US gas prices hit five month lows on Thursday and ample supply continued to deter spot LNG shipments to terminals there. Flows from US terminals hit 0.63 billion cubic feet per day on average last week, according to Tudor Pickering Holt analysts. The flows are near contractual minimums, as traders ship gas elsewhere. US deliveries averaged 1.2 bcfd in 2010. [Red bold emphasis added.]

Webmaster’s Comments: Asia is paying around triple the price of natural gas in the US. Since LNG imports to the US are not profitable, especially in comparison to Asian and European markets, US LNG terminals are regasifying only what they must in order to comply with their contracts. Downeast LNG is a project with no need or purpose.

‘Golden era’ for gas (Aug 18) — Newsday, Port-of-Spain, Trinidad & Tobago

Noting that the United States has been the primary market for LNG from TT, Ramnarine said “the game has changed” with the US exploiting large quantities of shale gas domestically, shifting its focus from being a gas importer to being a gas exporter. He explained that because “the US is awash with natural gas,” Government has been looking to exploit opportunities in other areas. Ramnarine said he is optimistic that the National Gas Corporation (NGC) would be able to make an investment in Ghana soon. He also said Tanzania has expressed an interest in holding talks with the NGC. [Red bold emphasis added.]

Legislators queasy over big bucks committed to gaslines (Aug 18) — Alaska Journal of Commerce

"We're being asked to approve substantial appropriations for both a 48-inch pipeline proposed by TransCanada and ExxonMobil and a separate 24-inch pipeline the state itself is pursuing, but we have very little information as to whether either will come to anything," said Sen. Bill Wielechowski, D-Anchorage, during two days of oversight hearings on the two pipeline initiatives held Aug. 15 and Aug. 16.

There are also concerns that recent gas discoveries and renewed exploration for gas in Cook Inlet, a plan by utilities to install facilities to import liquefied natural gas, or LNG, and a recently-announced plan by Golden Valley Electric Association and Flint Hills Resources to truck LNG from the North Slope to Fairbanks, could result in "stranded" investments by utilities in those facilities if a gas pipeline is built.

State: Additional Cook Inlet investments could find new gas (Aug 17) — Homer News, Homer, AK

The region's utilities, however, are skeptical that investments by producers will actually be made, and are proceeding with plans to have imported LNG available in Cook Inlet within three years.

Despite what the state study said, Cook Inlet producers are actually drilling about half the new wells needed to sustain current production levels, Posey said. Four new development wells are planned for 2011.

Black & Veatch begins design phase of Kitimat LNG facility (Aug 18) — E&P Magazine, Houston, TX

The project is owned by HN DC LNG Limited Partnership (Haisla Nation), LNG Partners, LLC and Douglas Channel Gas Services Ltd. It will be the first barge-mounted export facility serving the Pacific Basin, as well as the first for exporting Canadian natural gas. The facility’s location takes advantage of North America’s northernmost, ice-free port and provides more direct delivery routes to Asian markets. The project also benefits from existing infrastructure such as a nearby natural gas pipeline and local hydroelectric power. [Red emphasis added.]

Pipelines and tankers: the building pressure [Opinion column] (Aug 19) — The Gazette, Montreal, QC

Meanwhile, the entire energy calculus has changed with the discovery of extraordinary quantities of shale gas in Canada and the US. America estimates it has enough gas to meet its domestic energy needs for 200 years. Canada's supply, centred mostly in northern BC and Alberta, is similarly generous. Since the US will need less Canadian gas, the obvious place to sell it is to Asian markets. And that means pipelines and liquid (sic) natural gas (LNG) terminals for coastal BC.

Despite huge opposition to the Northern Gateway Pipeline project in British Columbia, Enbridge is sensing success and is massaging the public with a national advertising campaign designed to humanize its image from one of the least responsible of all pipeline corporations to one that cares for the public over profits. Its corporate slogan, "Where energy meets people" has been neatly spliced into nearly full-page colour newspaper ads depicting Canadians energetically engaged in activities that are supposed to connect human challenges to the importance of pipelines, to show that personal fulfilment cannot be separated from Enbridge's crucial role in our lives. "Where Energy Meets Culture" shows ballet dancers in a dramatic pose on an open stage, "Where Energy Meets Pride" shows four aboriginal runners wending their way along a lonely bucolic road, and "Where Energy Meets Victory" shows a team of five bicyclists racing serenely along a long stretch of prairie highway. [Red bold emphasis added.]

Issue Jordan Cove opinion, FERC tells agency (Aug 13) — The World, Coos Bay, OR

The Federal Energy Regulatory Commission, which oversees the permitting process for the Jordan Cove liquefied natural gas terminal, last week reiterated a request to the U.S. Fish and Wildlife Service to issue a Biological Opinion on the terminal.

Paul Henson, Oregon state supervisor for FWS, had told FERC in January that his agency didn't have enough information about the proposed Jordan Cove project to issue an opinion, which is part of the permitting process for the project. He said the Forest Service and Bureau of Land Management were still revising forest and wildlife management plans pertaining to the area, so it wasn't clear what requirements would apply to the project. He also said the Biological Analysis submitted by Jordan Cove didn't adequately assess the short-term and localized impacts of the project.

Webmaster’s Comments: In predictable style, FERC's heavy hand is pushing the big energy agenda, rather than allow the agency responsible for the environment to determine what is best for the environment.

FERC needs to face reality — it has no authority over the US Fish and Wildlife Service.

Jordan Cove confirms support for World LNG Series: Asia Pacific Summit 2011 (Aug 18) — OilVoice

It is widely known that Asian demand for LNG is set to continue to grow, and the US is now providing a new potential supply to Asia Pacific. With the recent discovery of shale gas in North America, some US LNG terminals are now considering converting their projects into dual-use terminals as economics could allow US producers to double or triple their net by exporting to Asia rather than selling domestically.

Jordan Cove is one such company that is engaged in this process and Joe B'Oris, Vice President Commercial of the Jordan Cove Energy Project, will be telling the story at the World LNG Series: Asia Pacific Summit 2011. B’Oris states, “I am honored to present the Jordan Cove Energy Project, which provides the most cost effective method for delivering LNG from North America to the Pacific Basin, at such an esteemed event”. [Red & bold emphasis added.]


2011 August 16

Northeast Access to Booming Natural Gas Supply Mushrooms

[Red bold emphasis added.]

Marcellus Shale sees pipelines mushroom — Power Industry News

The Marcellus Shale stretching across Pennsylvania and New York state is increasingly becoming busy for pipeline companies in the United States in order to connect newly found shale gas riches to markets in the north-eastern US and potentially even Canada. Since the beginning of last year, more than 50% of the interstate pipeline projects before the Federal Energy Regulatory Commission (FERC) have involved the Marcellus Shale. They include mostly extensions or upgrades to the larger existing pipeline network that spans the region and are estimated to be worth about USD2 billion. These projects could have a combined capacity to ship another 4 bcf/d on top of the 3 bcf/d currently leaving the Marcellus Shale.

Chamber hears of drilling growth (Aug 14) — The Indiana Gazette, Indiana, PA

xThrough July of this year, there were 1,015 wells drilled in Pennsylvania, an increase of 11 percent over 2010 and 386 percent over 2009. This shows that the Marcellus shale play is still gaining momentum.

"There is minimal LNG coming into the U.S., and we are seeing LNG terminals being converted to export LNG. The local gas price is $4 a gallon (sic) and Europe and Asia are paying $10 to $12 a gallon (sic).

"We should continue to see additional growth in our area. There will continue to be a push to be energy independent in the next decade with all of the natural gas available."

Dominion applies for LNG re-exports (Aug 15) — Petroleum Economist

High liquefied natural gas (LNG) prices are forcing Dominion to seek re-export permission at its little-used Cove Point import terminal in Maryland, US.

If Dominion is granted re-export approval, it will join the Sabine Pass, Freeport, and Cameron terminals. It is seeking blanket authority from the Department of Energy (DOE) to re-export foreign-sourced LNG up to a cumulative total of 150 billion cf (3.2 million tonnes) over a two-year period.

Natural gas technical analysis for August 16, 2011 — Daily Markets

The Americas are awash with massive amounts of natural gas, and the switch from petroleum to LNG seems to be years away still. With this in mind, anytime you buy NG, you have to be thinking short-term. We are looking for exhaustive candles to sell presently.

PHMSA issues Draft Decision approving FLACS Vapor Dispersion Model — LNG Law Blog

Yesterday, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a Draft Decision approving use of the FLACS vapor gas dispersion model to determine exclusion zones around LNG facilities. PHMSA will accept public comments on its Draft Decision for 30 days.

Bethel eyes what it takes to tap natural gas line (Aug 14) — The Morning Sentinel, Waterville, ME

Five miles from Bethel, a natural gas line that connects a Rumford power plant with the Portland Natural Gas Transmission System crosses under Route 26.

Some businesses in Bethel would like to tap into that line to burn natural gas, which is roughly one-third less expensive than heating oil these days.

It's part of a growing desire in Maine to diversify the state's energy supply with more natural gas. But as residents are learning, to bridge even a five-mile gap will take money and commitment.

In the Kennebec Valley, developers want to build a 56-mile line connecting the Maritimes & Northeast Pipeline in Richmond with communities including Gardiner, Augusta, Waterville and Skowhegan. But first they have to secure paper mills and other anchor customers for the $80 million project, and find the financial tools -- perhaps in the form of municipal tax breaks -- to make it viable.

In Washington County, the new owners of the pulp mill in Baileyville are spending $12 million this year to switch from oil and hook in to the Maritimes & Northeast Pipeline, four miles away. The Woodland Pulp LLC mill burned 10 million barrels of oil last year and expects a one-year payback. The deal has local bank financing, aided by loan insurance from the Finance Authority of Maine. [Red bold emphasis added.]

Webmaster’s Comments: This article again demonstrates that there is no shortage of natural gas in Maine. The shortage is in distribution infrastructure. Downeast LNG is an unneeded project with no prospect for economic viability.

Calypso abandons gas pipeline project off Florida coast — Platts

Calypso US Pipeline is surrendering its authorization and presidential permit to build an offshore pipeline to ship regasified LNG to Florida, according to a filing released Tuesday.

Calypso originally planned to build a pipeline to Florida from a planned LNG import terminal in the Bahamas. But that facility was delayed, so FERC in 2007 approved a separate plan to also interconnect with a deepwater LNG terminal 10 miles off the coast of Florida proposed by Calypso affiliate SUEZ Calypso.

[I]n its letter to FERC released Tuesday, Calypso said: "In the intervening time, Calypso has decided to abandon the project. Accordingly, by this submission, Calypso is surrendering its authorization and its presidential permit." [Red & bold emphasis added.]

China moves in on TT gas (Aug 14) — Newsday, Port-of-Spain, Trinidad & Tobago

IN A MOVE that arguably underlines the shifting of economic and political power in the region away from the US, China will this year acquire a substantial ten percent stake in the crucial Atlantic LNG plant at Point Fortin in a $5.5 billion deal.

Atlantic LNG is the largest supplier of LNG to the US, providing an estimated 70 percent of US natural gas import needs in 2008. The plant is on a US State Department list of worldwide facilities among “critical infrastructure and key resources” in relation to US interests.

Conoco postpones LNG unit closure [Blog] (Aug 15) — Zacks

ConocoPhillips (COP - Analyst Report) plans to continue operations in its Kenai liquefied natural gas (LNG) plant in Alaska until October. The company has changed its long-standing plan to shut the plant in order to fulfill additional orders. But its original plan to abandon all operations in the plant remains unchanged.

The plant may be restarted later, depending on further gas availability in Cook Inlet or if it is made part of regional LNG import facilities, which are under consideration by local utilities. But even after operations are stopped at the plant in the coming months, contracts to supply gas to Alaskan utilities will be honored.

With billions at stake, in-state gas line study prompts 54 good questions (Aug 15) — Daily News-Miner, Fairbanks, AK

26. The report contrasts these costs with the cost of liquefied natural gas (LNG), which it estimates to be $16-$21/MMBtu. Is this cost estimate for LNG inflated or uninflated? What is it based on? What does the U.S. Energy Information Administration predict will be the spot market prices for gas in 2019? How does the cost of LNG compare with the inflated consumer cost in Anchorage of gas from the proposed ASAP?

The LNG cost estimate in uninflated, and compares to the $9.63/MMBtu estimated consumer cost of gas from ASAP. The bottom number of this range is based on the result of the Greenfield Liquefied Natural Gas Economic Feasibility Study conducted by SAIC (“LNG Feasibility Study”), which estimated a cost of imported LNG at $14/MMBtu in 2011 dollars, tied to a WTI price of $80/barrel, plus $2/MMBtu for local distribution. In order to compare the price of imported LNG to ASAP, SAIC assumed that the project would supply enough gas to fill the entire Southcentral demand for 20 years. The more realistic case would be imported LNG on a smaller scale, increasing over time as Cook Inlet supply decreased, which would not realize the same economies of scale in re-gasification facilities, shipping, or the LNG market. Hence, the ASAP Project Plan provides a range for the cost of LNG imports.
The Henry Hub spot market price predicted by the U.S. Energy Information Administration for 2019 is $5/mcf (2009$). The Energy Information Administration does not issue price predictions for Pacific Rim LNG.

Abandon AGPA, not AGIA: Port authority should support TransCanada [Op-ed column] (Aug 14) — Daily News-Miner, Fairbanks, AK

Of the options to proposed, we can summarily dismiss Bill Walker’s recommendation to abandon the Alaska Gasline Inducement Act process, especially if we think a large diameter pipeline to a liquefied natural gas terminal in Valdez is the way to go.

Walker’s Alaska Gasline Port Authority has not announced that they have lined up specific credible suppliers, customers or contractors for their “All Alaska Gasline” project. So AGPA is already 22 months behind TransCanada, even without considering the time that it would take to arbitrate the settlement should the state try to pull out of the AGIA contract, as Walker recommends. But he does a further disservice to the very project he promotes by advocating for Alaska to pull out of the AGIA process, because if he is correct that the AGIA process is doomed to fail, then AGPA’s project is also doomed to fail, because it is fundamentally the same project and faces the same commercial hurdles as the “Valdez option” that TransCanada is developing within that AGIA process.

Alaska, Exxon Mobil to settle Point Thomson lawsuit (Aug 15) — Alaska Dispatch, Anchorage, AK

Sullivan also addressed questions about whether the state is seeking markets in Asia for its gas and said that while it has talked to Mitsubishi in Japan about that company's interest in switching from nuclear to liquefied natural gas, it is really the balliwick of the gas owners -- the major North Slope companies -- to be having those discussions.

"We haven't gone overseas to any of these markets," he said, adding that whether it companies in the Lower 48 or Asia that might be interested in Alaska's LNG "we certainly take all meetings."

Senators hear Railbelt pipeline plan (Aug 15) — Juneau Empire, Juneau, AK

Monday, he told the Senate Resources Committee a key condition would be finding an industrial customer, such as a liquefied natural gas export plant, which could use much of the pipeline’s capacity and provide the needed economies of scale.

Without an industrial anchor tenant to use about 250 million cubic feet per day of gas, pipeline costs get much higher, Fauske warned.

Private sector can address energy needs (Aug 13) — Anchorage Daily News, Anchorage, AK

The Cook Inlet natural gas storage facility in Kenai is in progress and scheduled to begin gas injection next fall. This facility should get us by a near-term cold winter crisis. Gas utility and power companies are moving forward to import liquefied natural gas (LNG) by 2014.

The Alaska Gasline Port Authority has just released a Wood Mackenzie analysis of the economics of a large diameter pipeline to Valdez, with a spur to Anchorage, compared to other LNG projects being proposed and/or developed around the world. This project would also take a huge public subsidy. Yet if Alaska gas can compete on the Pacific Rim LNG market, the all-Alaska line may have an economic argument in its favor and previous work on a spur line will be very valuable.


2011 August 12

LNG Imports To Fall, Exports to Grow

[Red bold emphasis added.]

Update 2-Dominion seeks to re-export LNG from idle Cove Point — Reuters

  • Dominion hope to re-export from Dec 1
  • Follows number of other terminals already re-exporting
  • Company brings in cargo for $8 per mmBtu (Adds detail, background)

NEW YORK, Aug 12 (Reuters) - Dominion Resources (D.N) has applied for a license to re-export liquefied natural gas from its idle Cove Point terminal in Maryland, according to the DOE website.

Cove Point has not received a cargo since February, thanks to low U.S. natural gas prices, and re-export could allow customers more flexibility and potentially increase imports.

Dominion was forced to pay a dear price for an August cargo just to keep the terminal's empty tanks cold.

Other terminals in the U.S., which also receive only occasional deliveries, have already begun re-exporting LNG, mainly to Asia where spot prices have hit $15 per mmBtu this year. Deliveries to those terminals have picked up slightly as a result.

Dominion, which is also mulling plans to build an LNG production and export plant at Cove Point, is looking for ways to ensure the Cove Point terminal remains operational, for now. The company has asked its customers to deliver at least one cargo each a year, but they are reluctant. In a letter to the federal regulator last month, Shell said it wanted to retain its flexibility by sending gas to the best-paying markets overseas.

Webmaster’s Comments: US natural gas is in great abundance — so much so that Dominion Cove Point LNG is exploring converting exclusively to exporting US-source LNG. The writing is clearly on the wall — no new US LNG import terminals are needed, so why is Downeast LNG still wasting time, money, and effort on a useless project?

U.S. energy companies eye exporting natural gas — MarketWatch

The Cove Point facility, which imports liquefied natural gas, is suffering from a steep decline in imports in the wake of a boom in U.S. gas production. With the equipment not getting used on a regular basis, Dominion is having to take the special step of importing LNG just to keep the terminal operating.

A recent increase in U.S. natural gas production, fueled by advances in drilling technology for shale gas, has nearly squashed the market for gas imports. Just a few years ago, this market was bracing for a considerable rise in activity.

Struggling to come to grips with a new reality, companies that recently planned to build new import terminals are quickly ditching their proposals. Others, like Dominion, are having to take steps to stay open for business or expand their terminals to handle exports. (Please see the related story "Companies Seek To Export U.S. Gas In Wake Of Production Boom".)

LNG terminals that were built in anticipation of higher imports are doing much less business than they planned. Of 11 terminals operating in the U.S., only seven received shipments in the first quarter of 2011. In this environment, other LNG terminal owners might have to follow Dominion's lead and import gas just to keep their tanks and pipes cool and operational.

Meanwhile, energy companies that once planned to build new LNG import terminals are also ditching their plans.

Companies seek to export U.S. gas in wake of production boom — The Wall Street Journal [Paid subscription required]

At least three companies, including a consortium involving ConocoPhillips, are seeking permission from the U.S. government to build export terminals that would liquefy natural gas, making it easier to transport, and ship it abroad.

Sempra mulls LNG exports from Cameron terminal (USA) — LNG World News

Adding a liquefaction facility to Sempra’s Cameron liquefied natural gas facility “is a possibility if we can get long-term contracts with a counterparty,” Sempra Chief Executive Debbie Reed said in a conference call with analysts.

Jason Wangler: Williston Basin stocks are hot — Seeking Alpha

TER: It's interesting how the whole gas situation has turned around because there was all this talk a few years ago about building ports to import liquefied natural gas (LNG) and now we're talking about exporting LNG.

JW: It is amazing. The "shale revolution" has really changed the dynamic for a fuel that was very hard to come by but can't be easily transported. You have to build these very large, expensive ship-loading facilities. Some people looked at the market in the U.S at the time and wanted to build import facilities because we would need them and we've leaned on Canada and Mexico for quite a few years to supply us with natural gas. Now we have so much at $4/Mcf, we wish those countries would need some of ours. Exporting LNG could start to balance out how much oil we have to import.

Liquefied natural gas: Target Asia (Aug 11) — Bloomberg Businessweek

U.S. and Canadian gas producers are hoping LNG exports will help boost prices at home. North American prices are about half what they were in 2008, largely the result of a boom in extracting gas from shale rock formations. That glut has slashed prices for U.S. supplies to less than one-third those paid by utilities and chemical makers in nations such as Japan. The investors in North American facilities such as Kitimat are betting they can profit from that price arbitrage by transporting their cheap gas to energy-hungry Asian markets.

Cheniere is among companies that built U.S. gas import terminals during the past decade that then languished as new drilling techniques unlocked domestic supplies, pushing gas prices too low to justify costlier imports. The company has lost money for 13 consecutive years and in May warned it may have to sell assets and restructure debt to avoid running out of cash.

Cooling weather and weak economic news push down US gas prices — Industrial Fuels and Power

The EIA expects production by the end of the year to show a 5.9% [year-over-year] increase to 65.5bft3d, with growth mainly in onshore areas offsetting projected falls in the Gulf of Mexico. As a result, pipeline imports are forecast to decrease by 4.3% to 8.7bft3d and LNG imports to 1.0bft3d as a rise in LNG prices worldwide is drawing tonnages away from the US. Pipeline exports, the EIA reports, are envisaged to rise from 3.1bft3d to 4.3bft3d.

New natural gas infrastructure: How much and where? (Aug 1) — Oil & Gas Financial Journal

In the Marcellus shale area there have been two distinct phases of infrastructure development. The first saw a number of announcements with in-service dates of 2012 to 2014. Many of these were developed essentially to pick up incremental supply in the Pennsylvania area and with minimal looping and/or compression deliver to traditional Mid-Atlantic and Northeast markets. These projects also included additional interconnects to allow hop-scotching across under-utilized sections of other area pipelines to reach New Jersey or New York markets. As Marcellus producers and liquid processors connect gas to the mainline faster than originally expected, many of these projects are being pushed up to 2010 to 2013.

There has been some concern recently that lack of mobility in the Marcellus shale area will adversely influence the basis spread in the mid-term (2 to 5 years out). The [28] projects listed in the table are proof that pipeline developers are ready and willing to prevent bottlenecks in getting this supply to market.…

Is there a correction in the cards for unconventional shale plays? (Aug 1) — Oil & Gas Financial Journal

As a consequence of the heated-up development, the US extended its gas resources in a big way. The Potential Gas Committee reported earlier that the total potential gas resources in the US grew from 1,317 trillion cubic feet (tcf) in 2006 to 1,898 tcf in 2010. That big increase was largely due to gas shale drilling and development during those four years. Even with the supply overhang gas production is still sizable. For example, in January 2009 average gas production in the US was 64 BCFD, but three years later in January 2012, average production rose to 70 BCFD. Certainly we have a world of gas and will for some time.

Shale and deepwater investments spur Anadarko to record volumes (Aug 1) — Oil & Gas Financial Journal

OGFJ: Anadarko has firmly established itself as one of the leading players in North American shale development. Would you give our readers your thoughts on the impact shale gas and oil will have on the United States?

HACKETT: This is one of the most exciting things that has happened in my career. And particularly being an American, it's terrific. We have a domestic source of oil and gas that has allowed us for the first time in recent memory to really grow domestic oil and gas production. Now we had a brief period in the late '70s where that occurred for oil, but it was very short in duration. On the natural gas side, this is an incredible time. It's happening at the very time we need it. Natural gas is an abundant, very reasonably priced resource both for industrial demand, for power generation, for its traditional uses for cooking and heating, and for transportation. And further, this is all occurring during a time when we are most at risk from a security standpoint and need a clean-burning alternative fuel for the environment. So you've got this wonderful resource that is being developed, and I see an opportunity for us to actually increase the market demand for natural gas. If you had asked me four years ago if we should be targeting the transportation sector as a potential market for natural gas, I would have said no because we would be crazy to use up a precious fuel in that way. And I would have also told you that the baseload fuel supply for natural gas would be LNG. Today, the situation is completely different. LNG will be a peaking fuel that will help moderate prices for consumers, and that's a wonderful set of circumstances for our country in that we won't have to rely on foreign sources for this fuel. This has been so beneficial because a steady and reliable domestic supply takes the price peaks out of natural gas. And it's not just coming from one region like the Gulf of Mexico where you can have hurricanes and other disruptions in supply. All the major utilities are now talking about increasing natural gas in their portfolios, and this is good for our industry and good for the United States. Natural gas is a better environmental answer and is also a huge job creator. I mean – how much better can it get?

Expert: Unconventional gas has “huge” potential (Aug 11) — EurActiv

A decade ago the United States was expected to become a vast gas importer through LNG and this is why a lot of important infrastructure was built in the last decades. Now, with the not only plentiful, but also cheap, gas shale gas present in the whole of North America, the picture changed first of all in the North American markets, but then other markets were affected too, because the LNG supplies originally destined for the US had to find a new home.

US fracking industry reserves overstated by at least 100%: Report (Aug 9) — TreeHugger, New York, NY

The marketing of the shale gas phenomenon has been so effective that important policy and strategic decisions are being made based on [yet] unproven assumptions about the abundance and low cost of these plays. The "Pickens Plan" seeks to get Congressional approval for natural gas subsidies that might eventually lead to conversion of large parts of our vehicle fleet to run on natural gas. Similarly, companies have gotten permits from the government to transform liquefied natural gas import terminals into export facilities that would commit the U.S. to decades of large, fixed export volumes. This might commit the U.S. to decades of natural gas exports at fixed prices in the face of scarcity and increasing prices in the domestic market. If reserves are less and cost is more than many assume, these could be disastrous decisions.

Update 1-EIA slightly lifts US natgas output growth estimate (Aug 9) — Reuters

Production growth in 2012 was expected to increase at a much slower pace, gaining 0.61 bcf per day, or 0.9 percent.

Total domestic gas 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 still 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 Asia LNG prices, the EIA said. The forecast is unchanged from last month's report.

Gov. Chris Christie stops by Manasquan on shore tour, discusses economy, environment and Port Authority toll hikes (Aug 11) — The Star-Ledger, Newark, NJ

"When you balance the economic benefit versus the environmental risk, at least in New Jersey you have to say 'not right for us,'" [New Jersey Gov. Chris Christie] said to a smattering of applause.

"Liquefied natural gas. I’m against it. And I’m against it because we have to protect and keep this water clean. There’s other places where maybe it can work better, but not here."

Webmaster’s Comments: Even New Jersey doesn't want an LNG import terminal.

LNG pipe dream? (Aug 7) — Jamaica Observer, Kingston, Jamaica, West Indies

However, while acknowledging the importance of identifying alternatives to oil, energy consultant and former Director General of the Office of Utilities Regulation Winston Hay is expressing concerns regarding the floating station regasification project.

"It's a relatively new technology, we know virtually nothing about what is being proposed, we don't know where it's going to be located, don't know where the power stations are going to be located, there needs to be more information," Hay told the Sunday Observer.

Trinidad's 2010 proved gas reserves down 7% from 2009: Ryder Scott (Aug 11) — Platts

The report confirms a relatively bleak picture of Trinidad and Tobago's gas reserves, which have been declining for years.

Based on Trinidad and Tobago's current demand of about 4.0 Bcf/d, the Caribbean country has just over nine years of natural gas reserves left, according to the latest proved reserve estimates.

Trinidad keeps looking to boost gas reserves (Aug 11) — LNG World News

New data released on Wednesday showed Trinidad’s proved gas reserves fell for a fourth straight year in 2010, slipping to 13.4 trillion cubic feet (tcf) from 14.4 tcf in 2009.

Trinidad is also grappling with reduced demand and lower prices in the United States, the top export market for its liquefied natural gas.

GDF Suez nears $4 billion deal with Chinese sovereign wealth fund (Aug 10) — The New York Times

Under the partnership, the wealth fund China Investment Corp. will pay €2.3 billion, or $3.3 billion, for a 30 percent stake in GDF’s exploration and production unit. The Chinese fund will also purchase the French group’s 10 percent stake in a natural gas liquefaction plant in Trinidad and Tobago for €600 million, a joint statement said.

State: Additional Cook Inlet investments could find new gas — Alaska Journal of Commerce, Anchorage, AK

An investment of $1 billion to $2 billion by natural gas producers in additional drilling in gas fields in Southcentral Alaska could meet projected gas supply shortages in the region until 2018 or 2020, possibly eliminating the need for local utilities to import liquefied natural gas.

The region's utilities, however, are skeptical that investments by producers will actually be made, and are proceeding with plans to have imported LNG available in Cook Inlet within three years.

ConocoPhillips set to delay closure of Kenai LNG plant until October — GasMatters [Paid subscription required]

ConocoPhillips is to delay the closure of the Kenai liquefaction in Alaska plant until October because of four additional supply agreements (three with Japan and one with China) made this spring, according to reports on Thursday.

Conoco says Kenai LNG plant to operate into October (Aug 9) — Reuters

ConocoPhillips (COP.N) on Tuesday said it would continue to produce liquefied natural gas at its Kenai LNG export plant in Alaska and operate into October, but long-term plans to mothball the plant remain unchanged.

Wood Mackenzie: Economics attractive for exporting LNG from Alaska's North Slope (Aug 10) — LNG Law Blog

Energy consultancy Wood Mackenzie has issued a study that concludes that LNG exports from Alaska's North Slope to Asian customers make economic sense. The study, prepared for the Alaska Gasline Port Authority, compared LNG exports with transportation to Canadian and U.S. Lower 48 customers via pipeline.

Regulators plan to begin Alaska pipeline review (Aug 5) — Forbes

TransCanada is proceeding with the promise of up to $500 million in cost reimbursements from the state under terms of the Alaska Gasline Inducement Act. It has proposed two routes: one leading from the North Slope into Alberta, Canada, where gas could be moved on existing systems to North American markets; the other, shorter, cheaper option leading to Valdez, where gas would be liquefied at a facility constructed by other and then shipped to market.

In a notice of intent, published Friday, FERC said it is focusing on the Alberta route for now because it has received "very little information" about the other Valdez option.

Federal regulators begin environmental review for pipeline (Aug 6) — KTUU-TV, Anchorage, AK

But supporters of a liquefied natural gas line from the North Slope to Valdez say they’re troubled by what they found in the August 6th edition of the Federal Register. In FERC’s announcement, there’s a small footnote that says the environmental review won’t include the LNG route, because it does not have enough information to proceed.

To meet FERC’s timetable, TransCanada and its partner, Exxon Mobile, will have to submit eleven detailed studies by December, reporting on resources that might be affected by the pipeline -- from the soil and water to the socio-economic consequences.

Remove the AGIA handcuffs: A larger-scale line to Valdez is best option [Op-ed column] (Aug 7) — Daily News-Miner, Fairbanks, AK

We cannot continue to imperil our own economic and energy security while handcuffed to the doomed AGIA process. The Legislature should authorize Fauske’s team to expand and redirect its focus using the same ownership structure and financing model in its report to develop the larger-scale pipeline and LNG export project. The line should use the existing permitted federal gas line route parallel to the trans-Alaska oil pipeline from Prudhoe Bay to Valdez, with a spur line from Glennallen to the existing gas grid. The deep water port at Valdez is capable of receiving the massive Q Max tankers on which LNG is shipped, has an existing U.S. Coast Guard vessel traffic system and previously received an export license for LNG.

Industry researcher: Manzanillo LNG terminal likely to operate near capacity within two years of startup (Aug 10) — LNG Law Blog

Rafael Ch, a researcher with Mexican think tank Cidac, told World Gas Intelligence [subscription required] that he expects the Manzanillo LNG import terminal to operate at or near capacity within two years of the facility’s planned November 2011 startup.


2011 August 5

US Has Decades-Long Natgas Surplus

[Red bold emphasis added.]

News Roundup for August 3 (Aug 3) — Electric Co-op Today, Arlington, VA

There’s a geopolitical dimension to rising U.S. shale gas production, according to a report from Rice University’s Baker Institute. The prospective quadrupling of production by 2040, to more than 40 billion cubic feet per day, could affect Russia’s ability to wield an “energy weapon” over Europe, the study said. Venezuelan and Iranian petro-power could also be affected, it added. On the domestic front, the study said, timely development of shale gas resources would limit U.S. need to import liquefied natural gas for at least two to three decades.

A long-term play on the LNG boom [Opinion column] (Aug 3) —

Over the last two years, we’ve added hundreds of trillions of cubic feet to our reserves. They now stand north of 2,000 trillion cubic feet. That’s more than a 100-year supply.

Energy costs and energy policy: Advantage USA (Aug 3) — NASDAQ

The US is the world's largest producer of natural gas, producing almost as much natural gas as the entire Middle East and Africa combined. This resource wealth stems largely from the development and commercialization of a number of unconventional shale gas fields such as the Haynesville Shale of Louisiana and the Marcellus Shale in Appalachia. In fact, the Haynesville is now the largest gas field in the US, overtaking the Barnett Shale in early 2011.

With the US producing all-time record quantities of gas, the oversupply has depressed prices. The US has no real need to import natural gas in the form of liquefied natural gas ( LNG ). In fact, the country is regarded as a market of last resort for LNG cargoes because North America has more capacity to store gas than most other gas-consuming regions of the world. In total, the US imports less than 10 percent of the gas it consumes, with virtually all of those imports coming from Canada.

Coming soon to a terminal near you — The Economist

“The power of the shale-gas revolution has surprised everyone,” says Christof Rühl, chief economist at BP. In 2003 America’s National Petroleum Council estimated that North America (including Canada and Mexico) might have 1.1 trillion cubic metres (tcm) of recoverable shale gas. This year America’s Advanced Resources International reckoned there might be 50 times as much.

Nor is shale gas the only new sort of reserve: “tight gas” in sandstones and coal-bed methane (the sort of gas that used to kill canaries down mines) are also promising. Farther in the future, and more speculatively, there’s the gas frozen into hydrates on the planet’s continental shelves, which might offer more than 1,000tcm if a way can be found to exploit it. The cornucopian belief that human ingenuity will always find ways to increase the availability of resources is not a sure bet (see article). With gas, though, the odds look pretty good for decades to come.

Natural gas outlook: Price points subside as heat wave passes (Aug 4) — Drovers CattleNetwork

The week’s slight production gain was offset somewhat by a 7.9 percent decrease in Canadian imports which averaged 6.7 Bcf per day. Canadian imports remain 7.3 percent below year-ago volumes. Supply again abated for liquefied natural gas (LNG) where imports slid to just over 0.4 Bcf per day during the week, and remain 44.0 percent below year-ago levels.

More good news about the shale gas revolution (Aug 4) — Daily Markets

Specifically, the study concludes that shale gas will diminish the petro-power of major natural gas producers in the Middle East, Russia and Venezuela, and it will be a major factor limiting global dependence on natural gas supplies from the same unstable regions that are currently uncertain sources of the global supply of oil. In addition, the timely development of U.S. shale gas resources will limit the need for the United States to import liquefied natural gas for at least two decades, thereby reducing negative energy-related stress on the U.S. trade deficit and economy.”

Analysis: Cash-rich shale drillers boost output, cap prices (Aug 3) — Reuters

After some $40 billion of foreign investment in the sector in the last two years, including BHP Billiton's record $15.1 billion plunge last month, that limitation is no longer a factor, analysts say. And as a result, production may grow even faster than previously expected, putting an ever firmer cap on prices.

USCG determines current WSA and LOR adequate for proposed Cove Point LNG re-export project — LNG Law Blog

The U.S. Coast Guard has determined that its previously issued Waterway Suitability Assessment (WSA) and Letter of Recommendation (LOR) adequately address the marine operations associated with the proposed Cove Point LNG re-export project.

BP submits comments on Cove Point LNG technical conference (Aug 3) — LNG Law Blog

BP Energy Company has filed its initial comments in response to terminal operator, Dominion Cove Point LNG, LP's, proposed changes to the Cove Point LNG terminal tariff. The comments, which follow FERC's technical conference convened last month, generally oppose Dominion Cove Point LNG, LP's changes, arguing that the tariff revisions would negatively affect terminal shippers' rights under tariff rate schedule LTD-1.

Shell, Statoil, and Dominion submit comments to FERC following Cove Point LNG technical conference (Aug 4) — LNG Law Blog

Shell NA LNG LLC and Statoil Natural Gas LLC have submitted initial comments to FERC following a technical conference convened to address proposed tariff revisions and operational matters at the Cove Point LNG facility. In addition, Dominion Cove Point LNG, LP submitted comments supporting its proposed tariff revisions.

Southern LNG requests FERC vacate its authorization for Phase B of terminal expansion (Aug 3) — LNG Law Blog

Yesterday, Southern LNG requested that FERC vacate its previous authorization for Phase B of the Elba III Terminal Expansion Project at the Elba Island LNG facility. Southern LNG's filing states that BG LNG, the anticipated subscriber to the regasification and transportation capacity associated with the Phase B expansion, informed Southern LNG that it would no longer need the Phase B capacity, so the expansion would not be necessary.

USA: Lake Charles terminal wins approval for LNG exports — LNG World News

Cheniere has been approved for exports to countries with and without free-trade agreements with the United States.

DOE approves LNG export applications for Carib Energy, Lake Charles Exports (Aug 2) — LNG Law Blog

The U.S. Department of Energy's (DOE) Office of Fossil Energy has approved LNG exports by Carib Energy (USA) LLC and Lake Charles Exports, LLC. The authorizations allow export of U.S. natural gas as LNG to countries with which the United States has entered or will enter into a free trade agreement. Carib Energy will be permitted to export up to 11.53 Bcf per year over a 25-year period and Lake Charles Exports is authorized to export 2 Bcf/d of LNG for a 25-year term.

Jamaica set to re-tender disputed FSRU contract (Aug 4) — ICIS Heren, London, England, UK

Jamaica is set to re-open bidding for the construction and supply of a proposed LNG floating storage and regasification unit (FSRU), a government source said on Wednesday.

Wood Mac: LNG could pay at $75 oil with state-owned pipeline (Week of Aug 7) — Petroleum News, Anchorage, AK

AGPA said it sought the analysis by Wood Mackenzie to help Alaskans, the administration and the Legislature, “understand the difference between the rising demand for LNG in the world marketplace as opposed to the oversaturation of the natural gas markets in Canada and the Lower 48 in light of abundant supplies of shale gas.

Progress signs $1B LNG deal (Aug 3) — Calgary Herald, Calgary, AB

A feasibility study into building a West Coast liquefied natural gas export facility will begin in September after a $1.07-billion partnership deal was signed early Tuesday by Calgary-based Progress Energy Resources Corp. and the Malaysian national oil company, Petronas.

B.C.'s liquefied natural gas leaves Oregon lovestruck [Opinion] (Aug 3) — The Vancouver Sun, Vancouver, BC

Never mind that Oregon produces "no meaningful quantities of natural gas," nor has it any untapped reserves. Rather, reporter Ted Sickinger envisioned the state as a middleman: "It sits on the Pacific Rim between three major supply basins and Asia, the world's most lucrative gas market."

One of those basins is in Wyoming, soon to be linked to Oregon by a convenient new pipeline. But the other two, both already linked, are on this side of the border, one in Alberta, the other in B.C.

Energy board to hold hearing on LNG export application (Aug 3) —, BC

The National Energy Board has announced it will hold a public hearing on the BC LNG Co-op’s application for a gas export licence.

Analysis: Opponents of U.S. LNG exports focus on price concerns (Aug 3) — LNG Law Blog

An analysis carried by World Gas Intelligence concludes that much of the opposition to U.S. LNG export projects has focused on the relative price of North American natural gas compared to natural gas supplies around the world. The piece notes the considerable concern that U.S. gas prices may not support LNG exports in the long term. [Subscription required]

Shale gas investors could be in SEC hot seat (Aug 3) — Houston Business Journal, Houston, TX

The Securities and Exchange Commission won't confirm or deny it is investigating shale gas companies for overestimating their reserves, but those in the industry say it would help after news reports questioned company reserves.

The news of a possible investigation follows a Houston-based Rice University study that said the development of shale gas could limit the nation’s need to import liquefied natural gas for decades.

DOE Official: U.S. LNG exports not likely to raise domestic gas prices (Aug 4) — LNG Law Blog

According to Platts LNG Daily [subscription required], U.S. Deputy Assistant Secretary for Oil and Natural Gas Chris Smith said at an event in Denver that he does not expect U.S. LNG exports to cause significant increases in domestic gas prices.

"United States LNG Export and Import Markets (2010)- Outlook of Demand, Capacity, Trades, Prices, Contracts and Market Structures to 2020" - new market research report (Aug 4) — TransWorldNews

The report provides profound analysis and complete data on each segment of United States LNG value chain and forecasts production, demand, major trends and challenges of investing in the market. Historical and forecasted information on regasification plant, storage tanks, jetty and LNG carriers is provided for each of the existing and planned LNG terminals in United States.

Webmaster’s Comments: …and it's only £1,533.00 ($2,499.00).


2011 August 2

FERC determines pre-filing process not required for Cove Point LNG's re-export project — LNG Law Blog

Yesterday, FERC announced its determination that it will not require Dominion Cove Point LNG, LP to go through the Commission's pre-filing process for the Cove Point LNG re-export project.


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