"For much of the state of Maine, the environment is the economy"
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US Virgin Islands
Shale Gas is Produced at No Cost
Total US LNG Import Capacity = 19 bcf/d
2012 February 29
Webmaster's comment: Freelance author Peter Morton should be embarrassed by his lack of competency in this article — it is rife with inaccuracies, listed here:
- Downeast LNG is not "the only one left" of three proposals in Passamaquoddy Bay. Two were not "abandoned." Calais LNG is still there, and filed to the FERC docket in February. Quoddy Bay LNG was dismissed (kicked out) by FERC for failing to answer technical questions — it was not "abandoned."
- LNG is not "compressed." It is stored and transported at what is essentially atmospheric pressure.
- Canaport LNG is not operating at about half its capacity. Throughout most of 2011 it operated at around 19%, and more recently has been operating at around 30% capacity.
- Morton misidentifies Robert Godfrey as "head of Save Passamaquoddy Bay 3-Nation Alliance," even though Godfrey is the researcher and webmaster, and indicated his identity to Morton only in those terms.
- Author Morton failed to include in his quote of SPB webmaster/researcher that Maine is expanding its natural gas pipeline distribution system to take advantage of plentiful natural gas supply in the state.
- The US Northeast is not "gas starved," as Morton claims. The two new LNG terminals offshore from Boston have been nearly idle since they went into service, due to lack of need. Canaport LNG has been operating at just a fraction of capacity, for the same reason. Dominion Cove Point LNG in Maryland nearly went out of service in 2011 due to lack of use, and is currently proposing to export LNG supplied from the natural gas-prolific and nearby Marcellus Shale field.
- The "latest energy trend" is not just to export LNG from the West Coast, as claimed — there are far more proposals to export from the US Gulf of Mexico and East Coast than from the West Coast of both the US and Canada.
- Morton malaprops regasification as "regeneration."
BUCKSPORT, Maine — A proposal to expand natural gas lines into downtown may not become reality unless more homeowners and businesses along the planned route sign up for service, a representative for the gas supplier said recently.
…Jon Kunz, marketing and sales manager for Bangor Gas, said only about 30 businesses, homeowners and other buildings along the route have expressed an interest in converting to natural gas. At present, the company is still about $100,000 short of the figure needed to move forward with the project, he said.
Webmaster's comment: Maine has plentiful availability of natural gas in the pipeline. The problem is the lack of distribution pipelines due to the high cost of costruction as compared to the financial return — the lack of profitability.
Martin explained in painstaking detail why natural gas just won’t work for the province’s electricity needs, devoting two-thirds of his speech to the subject as he addressed the St. John’s Board of Trade.
In the early to mid-2000s, he developed a plan to import liquefied natural gas at a terminal in Southwest Louisiana. Then the industry successfully accessed natural gas in shale plays across the nation, resulting in a natural gas boom.
Webmaster's comment: Downeast LNG's Dean Girdis comes close to being "as wrong about a trend."
Corpus Christi Liquefaction, LLC, a subsidiary of Cheniere Energy, Inc., invites all interested parties to attend an open house regarding the proposed Corpus Christi Liquefaction Project. The open house is an informal opportunity for you to learn more about the project. Representatives from Corpus Christi Liquefaction and the Federal Energy Regulatory Commission (FERC), the lead federal agency responsible for authorizing liquefied natural gas (LNG) facilities, will be on hand to answer questions regarding the project.
Webmaster's comment: As with all FERC-required open houses, the project developer is under no obligation to tell the public the truth about the project.
Yesterday, FERC issued a Notice of Intent to Prepare an Environmental Impact Statement (EIS) for Excelerate Energy L.P.'s proposed Aguirre Offshore GasPort project, proposed to serve the existing onshore Puerto Rico Electric Power Authority's Central Aguirre Power Plant.
Trinidad Express reported today that prices of LNG exports from Trinidad and Tobago to the US have fallen below the Henry Hub price level, potentially affecting the country's budget. However, Trinidad's Energy Minister Kevin Ramnarine told the newspaper that impact of relatively low gas prices in the United States on Trinidad's economy should be limited because most of Trinidad's LNG is shipped to customers in other countries around the world where prices are higher.
Webmaster's comment: Trinidad and Tobago's energy minister previously announced that he anticipates LNG exports to the US to drop to zero, due to the burgeoning US domestic natural gas supply.
Primarily due to economic and infrastructure considerations, production has never been attempted from these Alaska North Slope shales, which span most of the North Slope but are largely absent from the environmentally sensitive Arctic National Wildlife Refuge.
There is a large range of uncertainty associated with these assessment numbers, because of the uncertainty associated with estimation of undiscovered, continuous resources in source rocks from which no attempt has been made to produce oil or gas. However, the recent success of shale oil and shale gas development in the lower-48 states demonstrates the technical viability of such resources. Therefore, this new USGS assessment provides an estimate of potential resources that may be technically viable in this frontier region.
Canadian natural gas, “trapped” in the North American market, is currently trading under $3 per million cubic feet (mcf), whereas today’s natural gas price in Japan net of LNG processing and shipping costs is around $13 per mcf. The price-arbitrage potential of up to $10 per mcf to Canadian producers if we had access to Asian markets for our gas would bring billions of dollars of additional income to Canada, given our daily gas production potential.
Canada faces the twin challenges of discounted prices for its oil and gas exports to the U.S. marketplace today, and declining future U.S. demand for our oil and gas exports. In contrast, Canada has the capacity to expand substantially our unconventional oil and gas production over the next several decades, contributing appreciably to real GDP growth and incomes in Canada, provided there is rising demand to purchase our increasing supply. Security of energy demand is a real and present issue for Canada’s long-term economic prospects.
[T]he Coast Guard identifies bulk CDC transits, transfers, and storage as one of the highest daily security risks on U.S. waterways and has embarked on a risk-based approach to CDC security. This strategic and tactical approach considers the reality of limited federal resources against the significant consequences of a successful terrorist to ultimately establish and manage an acceptable CDC security risk. Primary to this approach is developing a national certain dangerous cargoes security strategy and implementation plan that spans the security spectrum from awareness, prevention, and protection to response and recovery.
Certain dangerous cargoes [CDCs] are defined in 33 CFR 160.204 as products having chemical properties such as toxicity, flammability, and reactivity that, if released, could produce devastating consequences on surrounding cities/towns, and/or critical infrastructure and key resources.
While the regulation includes more commodities than the ones specifically noted below, the following are considered the most hazardous (generally when carried in bulk), and are the ones on which the Coast Guard currently focuses to reduce their vulnerability to attack:
RESPONSE: Dynamically assess the potential consequences of intentional attacks and mitigate, through coordinated response, the impact of a successful attack. This goal focuses on the first part of the “consequence” element of the risk equation, allowing the sector commanders to assess USCG and community response preparedness and appropriately allocate USCG resources. [Red & bold emphasis added.]
Webmaster's comment: "Community response preparedness" in Passamaquoddy Bay is impossible to achieve, since Canadian communities will not participate in establishing preparedness, disqualifying Downeast LNG's project from receiving LNG.
Almost 90 percent of the natural gas consumption in the United States in 2010 was produced domestically, according to Energy Information Administration (EIA). Thus, the supply of natural gas is not as dependent on foreign producers as is the supply of crude oil, and the distribution system is less subject to interruption.
[T]hough shale gas reserves will give the US economy a cyclical advantage compared to its current position, the economic incentives for US firms to pursue energy efficiency are likely to be less than they are in those countries with fewer energy resources. [Red & bold emphasis added.]
As you know, new technologies have "unlocked" massive amounts of natural gas right here in the U.S. These resources are so enormous we're now the "Saudi Arabia of natural gas." Within a few short years, we'll be exporting liquefied natural gas (LNG). We'll see thousands of trucks converted to run on natural gas. And hundreds of natural gas-gas stations will pop up all across the U.S. [Red & bold emphasis added.]
2012 February 27
“Given the revised and improved U.S. government seismic model and its implications for construction standards now in use, we believe FERC has the obligation to re-evaluate the plans for truck loading facilities in light of these now better-understood hazards, and to ensure that any proposal meets the requirements dictated by our most current appreciation of risk,” they wrote. “The citizens of Savannah who live in Elba Island’s danger zone deserve no less.”
U.S. producers and liquefied natural gas (LNG) shippers are scrambling to develop export plants after a sudden surge in domestic natural gas production, thanks to shale gas, swamped the market and pushed gas prices way below global levels. [Red & bold emphasis added.]
The facility was built to import natural gas, but huge increases in production of natural gas from shale formations under several states has created a glut of natural gas in the U.S. Prices in the U.S. fell to a 10-year low this winter. Now Cheniere and others are hoping to export natural gas to markets that pay prices up to 5 times higher.
Some lawmakers, environmentalists and industrial customers oppose plans to export natural gas. They say it will raise natural gas prices in the U.S. Environmental groups say the process of liquefying and shipping natural gas wastes too much energy and that exporting natural gas will lead to an increase in the controversial drilling process called hydraulic fracturing in the U.S. [Red & bold emphasis added.]
The investment by the New York-based private equity firm may help convince creditors to lend the rest of the money needed to begin construction of the facility in southwest Louisiana. Cheniere, which has been seeking to add export capacity to its import terminal since 2010, plans to begin construction by the end of June, Chairman and Chief Executive Officer Charif Souki said in a statement.
“The U.S. now has some of the cheapest gas in the world,” Leonard Coburn, president of Washington-based Coburn International Energy Consultants LLC, said in a telephone interview. “The gas glut has got people seriously talking about exporting.” [Red & bold emphasis added.]
The eerie thing to me about our provincial leaders embrace of fossil fuel exports to Asian markets and in particular China is just how much it parallels, in important respects, the push to move more of our low-value forest products into those markets. “Value” of a kind will be added to our natural gas if and when a gas pipeline linking Summit Lake near Prince George to Kitimat is built, and if and when the first of what could be many “liquefied natural gas” processing plants is also constructed.
Essentially, liquefied natural gas exports are the forest product equivalent of raw log exports, with a little Houdini-like sleight of hand thrown into the equation. Both represent exports of commodities in pretty much their rawest form.
It turns out that to build just one liquefied natural gas terminal in Kitimat somewhere between 8 per cent and 10 per cent of all the hydroelectric power currently produced by BC Hydro would be needed. BC Hydro in an assessment of cumulative future hydro demands in the province’s natural gas sector, believes that somewhere between the equivalent of 2 and 3 times the hydropower at the proposed Site C dam may soon have to be found to “power-up” the extraction of our non-renewable natural gas resources. [Red emphasis added.]
Political and land-use fights over liquefied natural gas terminals on the lower Columbia River are merely the JV game when compared to the Rose Bowl-sized commotion starting in earnest over coal export.
Anyone living near sea level should take a jaundiced view of any major expansion in the use of dirty fossil fuels. Despite the magical thinking of climate-change skeptics, there is every reason to trust a legion of leading scientists who warn this century contains a substantial threat of destructive ocean flooding. This factor and regionalized impacts including huge increases in shipping and rail congestion are threshold make-or-break considerations for these terminals.
Oysters are a proxy for opposition to a liquefied natural gas terminal on the North Spit. Opponents hope county leaders will use oysters as an excuse to block the Pacific Connector Pipeline, thereby cutting off Jordan Cove from Oregon's interior.
- Global markets for LNG
In an op-ed posted on The Hill newspaper website on Feb. 22, Weinstein called for the U.S. government to allow liquefied natural gas exports because it will help to drive up natural gas prices here in the United States. “Over the long-term U.S. producers will need higher prices if they are to remain profitable, and selling our [emphasis added] gas abroad offers the best opportunity for boosting demand,” he wrote.
At least Weinstein is honest about why many in the natural gas industry are pushing hard to get the LNG export party started: it will drive up gas prices and, in turn, boost profits for many sectors of the gas industry. Other technocrats, the ones who aren’t straight-shooters like Weinstein, are claiming that LNG exports will not drive up natural gas prices in the U.S. These fabricators understand that advocating for a policy by saying it will drive up gas prices is not a sound formula for winning the LNG export debate. [Red emphasis added.]
2012 February 25
LePage gets questions ranging from a natural gas line to public funding of religious schools.
Webmaster's comment: Natural gas is in ample supply in Maine. Low or negative profit is the inhibitor preventing availability in small rural communities.
The controversial Weaver's Cove LNG terminal project was abandoned over a year ago, in June 2011, but Rhode Island Attorney General Peter F. Kilmartin continues his effort by seeking standards that would help prevent such a project in the future.
..."USDOT has continually failed to establish minimum safety standards for determining the location of LNG facilities and has only established minimum federal safety standards for the design of those facilities. We seek to correct this to prevent another unsuitable proposal like Weaver's Cove in the future."
[Rhode Island Attorney General Peter F. Kilmartin] said that “USDOT has continually failed to establish minimum safety standards for determining the location of LNG facilities and has only established minimum federal safety standards for the design of those facilities. We seek to correct this to prevent another unsuitable proposal like Weaver’s Cove in the future.”
Yesterday, FERC issued an order vacating the authorization and certificate the Commission previously issued for the Crown Landing LNG import and regasification project. This order, available in FERC's eLibrary under Docket No. CP04-411, also vacates the authorization for pipeline infrastructure associated with the Crown Landing LNG project. [Red & bold emphasis added.]
Webmaster's comment: Hess Energy, the owner of the Crown Landing LNG terminal project, had previously withdrawn from the project (see Save Passamaquoddy Bay's January 8th announcement on this topic).
Cheniere is advancing towards making a final investment decision on the first two liquefaction trains, which is subject, but not limited to, obtaining regulatory approval from the Federal Energy Regulatory Commission (FERC) and obtaining financing. Cheniere estimates that the costs to construct the first two liquefaction trains will be approximately $4.5 billion to $5.0 billion, before financing costs. The company expects to finance the first two liquefaction trains with a combination of debt and equity. Construction is expected to commence in the first half of 2012.
Feb. 24 (Bloomberg) -- A fire broke out at the CDM Max LLC natural-gas processing plant in Acadia Parish, Louisiana, after an explosion today, injuring one man, according to a report by KATC Channel 3 in Lafayette.
The fire at the Basile plant is under control and the state police is allowing it to burn out, according to the report. The man suffered burns to his upper body and is in stable condition after being airlifted to a local hospital, according to katc.com, the station’s website.
CDM Max is a subsidiary of Plains All American Pipeline LP in Houston. The Basile plant straddles the Pine Prairie Energy Center header system accessing liquefied natural gas imports and is connected to pipelines serving the region, according to the company’s website. [Red emphasis added.]
Webmaster's comment: Just as with a large LNG-release conflagration, such fires cannot be extinguished.
Problem is, there is no pipeline to get all the gas to markets, either in North America or globally. Asian buyers of liquefied natural gas are paying huge premiums to North American gas prices, with Japan leading the way due to last year’s tsunami that knocked out nuclear power generation (last November, LNG prices in Japan reportedly hit a high of $16.96 per million British thermal units).
The Great Natural Gas Footrace: Where have we seen this before?
In approaching the topic, I concluded that we are still – like it or not – mired in the old economy, especially when one considers our provincial government’s fixation on rushing British Columbia’s finite fossil fuel resources for export to Asian markets. Where have we seen this before?
The need to change how we manage our publicly owned natural assets is obvious when you look at the stresses and strains that our northern forests, water resources and water-derived hydroelectricity sources are under as natural gas developments in the northeast of the province accelerate. The most necessary changes lie in ratcheting down how much we extract and paying a lot more attention to our critically important water resources, which are the foundation of a healthy environment and economy.
Much like Clark and Coleman are doing now with our gas resources, previous premiers and forests ministers have done with our forest resources. Footraces were embraced as the solution to the challenges posed by the mountain pine beetle. The end results were wholesale, quite indiscriminate rushes to “salvage” log as much forest as possible, with little regard for the diversity and complexity of the forests being logged.
On the bright side, what we do know, based on Clark’s earlier statements to the Northern Sentinel and the Energy ministry’s clarifications, is that BC Hydro can meet the power demands of the KM LNG first phase and BC LNG Co-op projects.
The government expects this instalment of the program, which has been in effect since 2004, to foster development of liquefied natural gas plants at Kitimat, and a pipeline opening the gas fields in the province's northeast to new markets in Asia.
[Travis Davies, of the Canadian Association of Petroleum Producers,] said oil and gas activity in B.C. has remained relatively robust because of the potential for a liquefied natural gas pipeline to Kitimat and development of LNG terminals there.
[Canadian LNG export players are] knocking heads with each other in a bid to secure supplies. According to CIBC World Markets, producers have thus far locked up less than a third of the 57 trillion cubic feet (Tcf) of reserves they'll need to support their ambitious export plans.
Of course, exports could ease the U.S. trade deficit and stimulate job growth. But as the science accumulates, concerns grow about fracking’s contribution to water pollution (National Academy of Sciences, Human and Ecological Risk Assessment), air pollution, and earthquakes. If all factors are weighed and not externalized, the cost-benefit analysis of LNG export terminals may turn out to be unfavorable.
The Pipeline and Hazardous Materials Safety Administration issued the new bulletin in response to NTSB's report on the San Bruno, Calif., explosion.
A new advisory bulletin from the Pipeline and Hazardous Materials Safety Administration reminds operators of pipelines and liquefied natural gas (LNG) facilities to conduct post-accident drug and alcohol tests of covered employees. Advisory Bulletin ADB-2012-02 explains who qualifies as "covered employees" and also notes that the term "accident" includes both "incidents" reportable under 49 CFR Part 191 regulations and "accidents" reportable under Part 195. [Red emphasis added.]
2012 February 23
LONDON – European oil majors Royal Dutch Shell PLC, BP PLC and Statoil ASA have had preliminary talks with Dominion Inc. about exporting natural gas from its proposed liquefaction facility at Cove Point, Maryland, industry journal Upstream reports on its website Thursday.
Dominion is among the firms leading efforts to export cheap and abundant U.S. gas to higher value markets in Asia and Europe. The company plans to turn the Cove import facility into a liquification plant and is seeking U.S. government permission to export up to 1 billion cubic feet of natural gas per day for 25 years.
The U.S. Department of Energy (DOE) has set April 23, 2012, as the deadline for public comments and interventions in the Cameron LNG export application proceeding for non-free trade agreement countries.
Let me recap the problem: Our supply of gas in Southcentral Alaska is running down. In a serious cold snap the system is stretched thin and any equipment malfunction, like a compressor failure, could endanger the sole source of our heating and a big part of our power generation.
We've known about this for some time and there have been some narrow escapes in the past, although until recently we had the Kenai natural gas liquefaction or LNG plant as a backup. Several times in years past the plant operator, Conoco Phillips, stopped making LNG for export during cold weather and shifted its gas to the utilities.
Webmaster's comment: This is an example of selling one's energy future; although, Alaska has narrowly escaped a bullet this winter. Plus, more Alaska natural gas supply is coming online — enough, even, that the ConocoPhillips LNG export terminal will be back to exporting again late this year — continuing to export Alaska's energy future.
The Gateway project would bring a total of 250 new vessels a year. Proposed new natural gas terminals could bring that total to 415 “additional oil tankers, liquefied natural gas carriers and bulk carriers calling at Kitimat, or 830 additional transits of the waterways,” Transport Canada found.
With the spotlight on the federal government's aggressive push to export tar sands bitumen via the Enbridge Northern Gateway pipeline to Kitimat, and from there by tanker on to China, the B.C. government reclaimed some attention on the energy file when it released its Natural Gas Strategy last week. With lots of glossy pages, but little detailed content, it is reflective of Premier Clark's signature style. The short of it is that shale gas from B.C.'s Northeast is to be pipelined to Kitimat and loaded onto tankers in liquid form (LNG) to be exported to China. Between LNG and Enbridge, little Kitimat is poised to become an export platform for the two most environmentally controversial practices of the oil and gas industry -- shale gas and tar sands extraction -- all to appease the endless appetite for energy coming from the curious blend of totalitarian police state and unbridled capitalism that is modern China.
US shale gas development – in particular liquid rich plays – are set to enjoy years of growth with production estimated to reach 30 billion cubic feet per day (Bcf/d) by 2020, according to a US energy sector report from EIC Consult, the market research and consultancy arm of the Energy Industries Council (EIC).
According to the report, shale gas development will continue to progress with liquid rich plays the main targets, due to low gas prices and high oil prices. Daily production from shale gas increased from one billion cubic feet per day (Bcf/d) in 2003, to almost 20 Bcf/d by mid-2011 and could reach 30 Bcf/d by 2020, the report estimates.
[W]hile fracking to unlock America’s shale gas reserves poses a near-term threat to the rate of utility-scale renewable energy development, it offers significantly lower risk to growth of domestic renewable energy just a few years out.
That’s in part because natural gas faces significant upward pricing pressure. Increased regulation, long-term underperformance of production wells, and higher-priced drilling leases all should push prices up on the supply side. On the demand side, increased use of compressed natural gas in vehicles, exporting of liquefied natural gas, and, most significantly, increased natural gas demand for electrical generation, replacing coal, also should elevate prices.
A total of 53.4 billion cubic feet (Bcf) were re-exported in 2011, compared to 32.9 Bcf in 2010. Re-exports of foreign-sourced LNG from U.S. LNG terminals exceeded 12 Bcf in January 2011, equivalent to about 30 percent of U.S. LNG import volumes during that month. There are currently three U.S. LNG terminals that have been granted Federal approval to re-export LNG: Freeport in Texas, and Sabine Pass and Cameron in Louisiana.
According to an energy sector report from EIC Consult, the rise in shale gas development has led to a number of Liquefied Natural Gas (LNG) terminals being converted from import to export terminals and LNG exports doubling between 2009 and 2011. By July 2011, imports were down 44 percent year-on-year, according to Reuters, with imports at the lowest monthly level since December 2002. At the same time exports almost doubled from 33.355 Bcf (billion cubic feet) in 2009 to 64.793 Bcf in 2010 - a result of the re-exportation of LNG imports. [Red & bold emphasis added.]
It has come to this: Even though natural-gas spending in North America is estimated to decline by 40% and gas well drilling is set to fall by 50% in North America in 2012, ratings agency Moody’s expects overall natural-gas production to rise over 2011 figures.
The glut has resulted in an embarrassment of riches across North America, bringing natural-gas prices to their lowest point in a decade, but leaving some producers out of the boom. [Red & bold emphasis added.]
The gas industry has promoted shifting to gas as the panacea to cut greenhouse gas emissions. A recent study by climate specialist Tom Wigley has challenged this. Wigley uses a climate model to explore the year-by-year warming effects of replacing half of global coal use with gas by 2050 (phased in at 1.25 per cent additional coal replacement each year to 2050). He includes a range of options for methane leakage from gas production from zero to ten per cent. This provides some interesting insights.
Second is the impact of increasing gas consumption, which depends on how much methane leaks during production, the amount and type(s) of energy used for processing, liquefaction and regasification (if sold as LNG), transport, and the efficiency of gas usage compared with the coal it replaces. Wigley assumes all extra gas is used at 60 per cent efficiency to produce electricity that replaces 32 per cent efficient coal-fired electricity. He ignores LNG (liquified natural gas) production and transport (which, according to the Worley Parsons industry study data adds 22 per cent to gas CO2 emissions). So Wigley’s assumptions are generous to gas.
2012 February 22
FERC announced yesterday that its staff will "examine the proposed [Corpus Christi] liquefied natural gas terminal site and pipeline route" on February 28, 2012, in order to "assist staff in completing its comparative evaluation of environmental impacts of the proposed projects." FERC staff will also attend the open house hosted by Corpus Christi LNG project developers later that evening.
Vanderhoof council meeting February 13, saw presentations to mayor and council. The Apache Corp presentation was by Marc Douglas, describing the Pacific Trail Pipeline. His update was in regards to their proposed underground liquid natural gas (LNG) pipeline that will start north of Prince George and go due west to Kitimat to an LNG holding facility and shipping terminal.
Mitsubishi Corporation told Platts yesterday that it plans to accelerate its feasibility analysis of the proposed Canadian LNG export projects. This statement follows Mitsubishi's investment in Encana Corporation's Cutback Ridge gas play in northern British Columbia.
BC LNG received approval from the National Energy Board for a license to export LNG near Kitimat, British Columbia. The license is the second of its kind, following on the heels of the license granted to Kitimat LNG last year, and will permit the export of 36 million tonnes of LNG over 20 years, with a maximum of up to 1.8 million tonnes of LNG per year. The project, currently comprised of 13 members, will operate as a cooperative made up of LNG buyers, marketers and natural gas producers who will bid to purchase LNG or provide natural gas to be liquefied.
What neither Clark nor Coleman seems [sic] keen to talk about is just how much stress B.C.’s water resources and hydroelectric network will be under to fuel several proposed LNG terminals on our coast.
Six companies or consortiums are eyeing gas exports from B.C., most recently British natural gas giant BG Group PLC, which is kicking the tires in Prince Rupert. Their power demands combined would swallow at least one-quarter of B.C.’s projected hydroelectric supply in 2016.
TOKYO, Feb 22 (Reuters) - Japan is hoping to reach an agreement to import liquefied natural gas (LNG) from U.S. projects in Louisiana and Maryland at a bilateral summit meeting slated for this spring, the Yomiuri newspaper said on Wednesday.
Fujimura said at a news conference that the expansion of shale gas production has lowered prices for natural gas in the U.S. market and he voiced the hope that imports from North America would ensure Japan a "stable supply of natural gas."
"It is true that we are lobbying the U.S. (on our LNG imports) at various levels, and Japan would like to proactively promote imports of natural gas from North America," the chief Cabinet secretary said.
American consumers and businesses are currently reaping a windfall from the lowest natural gas prices in years. Cheap gas has reduced heating and electric bills for millions of households, while industries using natural gas as a feedstock or boiler fuel have realized huge production cost savings. But at the same time $2.50 gas at the wellhead has caused many drilling companies to reduce production and move their rigs to more profitable oil plays. Simply put, the current price for natural gas is too low to sustain the pace of drilling and production that has occurred in recent years.
As with all commodities, the price of natural gas is determined by supply and demand. Today the supply is abundant, a consequence of the shale gas revolution, while demand is muted due to a sluggish economy and relatively mild winter. Because of America’s large and growing reserves of natural gas, potential supply will exceed anticipated domestic demand for many years to come. [Red, brown & bold emphasis added.]
Webmaster's comment: Oil, natural gas, and gasoline prices certainly do not follow the assertion that all commoditiy pricing is a function of supply and demand.
Natural gas production has continued to soar — and is projected to do so for years — despite low prices and low demand. Natural gas is frequently a byproduct of drilling for oil and drilling for "heavy" hydrocarbon fuels such as propane. Sometimes, natural gas is produced at essentially no cost to the driller.
Pricing is frequently a function of the mood of the market — or of market manipulation — not of actual supply and demand.
The combination of shale gas reserves and weak economy has pushed prices to a level approaching the marginal cost of production. We expect the recent low prices for natural gas to continue, as supply should remain high. The U.S. Energy Information Administration projects shale gas production to increase from 5.0 trillion cubic feet in 2010 to 13.6 trillion cubic feet in 2035. We also expect the Department of Energy to continue to grant licenses to construct or reconfigure LNG terminal facilities to increase the volume of exportable resources. However, several risks have been identified in this scenario that could disrupt this expansion and the securities funding them.
Cheniere's latest SpA with KOGAS has once again launched North America into the headlines. Jean Abiteboul, President, Cheniere Supply & Marketing, will be giving a keynote presentation at the LNG Export Forum North America in Houston on the 16 - 18 May 2012, and will also give updates on the Sabine Pass - the launch of the first US LNG export terminal.
2012 February 21
Save Passamaquoddy Bay has again asked FERC to dismiss the application of Calais LNG to construct and operate an LNG import terminal, stating that the project does not have adequate financing nor control over the proposed project site. [Red & bold emphasis added.]
Webmaster's comment: Calais LNG does not have legal standing to remain in the FERC permitting process.
Curtis L. Wagner, Jr., chief administrative law judge (ALJ) for FERC, has granted a request to continue the suspension of the Cove Point LNG rate case to allow the parties to continue their settlement negotiations until March 16, 2012. The parties must file a status report if there is no settlement in writing by the deadline.
Meeting with be Tuesday, Feb. 28 at Portland Community Center
PORTLAND — Cheniere Energy's subsidiary, Corpus Christi Liquefaction, has scheduled an open house to answer community questions about plans to build a liquefied natural gas terminal along the La Quinta Channel in San Patricio County.
Representatives from Corpus Christi Liquefaction and the Federal Energy Regulatory Commission — the chief agency which must authorize the project — will be available between 5 p.m. and 8 p.m. Tuesday, Feb. 28 at the Portland Community Center, 2000 Billy G. Webb Drive, in Portland.
Sabine Pass LNG has filed a supplemental response with FERC regarding the expected air emissions from the company's proposed LNG liquefaction and export project. This filing addresses sulfur removal equipment that is included in the project design.
Separately, FERC Chairman Jon Wellinghoff responded to a letter from U.S. Sen. Mary Landrieu (D-La.) regarding the Sabine Pass LNG export project, stating that "the project is being processed as thoroughly and as expeditiously as possible in order to arrive at a well-reasoned, timely decision."
...JPS has the go-ahead for a natural-gas-powered plant predicated on a top price for liquefied natural gas (LNG) of US$12 per one million British thermal unit (a measure of energy) equivalent, against the US$17 and US$24 the company now pays for oil. Additionally, the new facility - generating nearly half of Jamaica's peak electricity - would use the fuel with far greater efficiency than the existing old plants.
“We know that LNG is a relatively clean, environmentally friendly option that provides tremendous opportunity for efficiency improvement and cost reduction. In this regard, the government is committed to implementing the LNG project, and we are doing everything to ensure that the project is properly structured commercially, and that the appropriate policy and regulatory frameworks are in place,” he explained.
BMI View: Trinidad & Tobago's vital LNG sector faces an uncertain future. The industry was largely developed to deliver gas to the US market, which at the time was expected to be subject to an ever-rising import requirement.
The proliferation of gas production from shale formations across the US, however, has dramatically reduced the need for imports and T&T has been forced to look for new export destinations in an increasingly crowded global LNG market. Oil production is forecast to decline as the country struggles to attract interest in new deepwater exploration.
Experts warn against high expectations for Asian marketplace
As China develops, it is becoming a huge market for natural gas, but the country is also aggressively developing its own reserves and making investments in technology and resources elsewhere, [said Pedro van Meurs, an industry consultant located in the Bahamas].
Encana Corp. has announced that it will sell a 40% ownership stake in the Cutback Ridge shale gas play to Mitsubishi Corp. for $2.9 billion. According to the Vancouver Sun, an official with Mitsubishi said that one reason the company invested in these gas assets was to further its plans for LNG exports from western Canada.
BC LNG’s export proposal is unique because the operating model involves the company liquefying gas for members of a co-operative, which is comprised of natural gas producers, marketers and LNG buyers.
With the potential surge in LNG exports from Kitimat and the problem of a potential shortage of power to run them all, premier Christy Clark announced the Liberal government’s natural gas strategy on February 3.
[T]he current policy which required BC Hydro to have sufficient sources of power to handle a worst case scenario drought year, the utility would now only have to meet average year requirements. ... Clark hedged saying the intention was that the LNG industry would be powered “primarily” by clean sources of power.
No megaproject comes without a cost, and the big one that was stressed last week was that the province would have to abandon its dream of self-sufficiency in electrical energy by 2016, even in the drought years when there is not enough water to run our dams at full capacity.
Feb 6 (Reuters) - A handful of liquefied natural gas export facilities proposed for Canada's Pacific Coast could spark a round of acquisitions and new joint ventures as the projects' backers look to secure sufficient natural gas supplies to fill their facilities, an analyst said on Monday.
The license authorizes BC LNG to export 36 million tonnes of LNG, equivalent to about 47.9 billion cu m of natural gas, over 20 years. The maximum quantity allowed for export will be 1.8 million tonnes/year of LNG, or about 2.4 billion cu m of natural gas.
Faced with the prospect of a long-term glut of gas and low prices in North America, producers in western Canada have more incentive than ever to build liquefied natural gas terminals on the west coast to allow exports into the premium-priced Asian market.
With the current glut of gas expected to persist for the next decade, companies in North America are scrambling to build LNG export terminals, with four proposals in western Canada and eight in the United States. While not all of them will get built, Mr. Potter forecasts LNG exports from North America to overseas markets will hit 8 billion cubic feet per day by 2020 – a figure roughly equivalent to Canada’s current exports to the United States. [Red & bold emphasis added.]
Bill would restrict use of eminent domain on LNG
DeFazio’s proposal would not prohibit LNG exports, or even the construction of terminals such as the proposed Jordan Cove project in Coos Bay. But it could accomplish the same results by allowing property owners to refuse to sell their land to companies building the pipelines that carry gas to LNG export terminals.
DeFazio noted that the U.S. Constitution clearly limits the exercise of the power of eminent domain to serve a public need. He questioned how the public interest would be served by natural gas exports that could drive up domestic gas prices, hurting utilities and industries that have an interest in keeping U.S. gas prices at their current low levels.
The move to LNG exports also underscores the need for Congress to revisit the 2005 federal energy bill that pre-empted state authority for licensing LNG terminals and handed that power to federal energy regulators.
The U.S. Congress rejected an amendment to a bill expanding oil and gas exploration that would restrict exports of natural gas. The amendment, proposed by Rep. Ed Markey (D-Mass.), would have prohibited the export of natural gas produced from leases issued pursuant to the underlying bill. The text of the amendment is available in the Congressional Record on page H825.
Some U.S. manufacturers, utilities and consumer advocates worry exporting gas will drive up electricity prices and deepen reliance on coal.
Energy companies are honing plans to export natural gas faster than President Obama can call the United States the "Saudi Arabia of natural gas," and that's raising new questions about the country's energy policies.
Six years ago, the Department of Energy reckoned that the United States had fewer than 10 years reserves of natural gas. Now it reckons the country has well more than 100 years and the liquefied natural gas terminals that were being built to import the stuff are being re-engineered to export it instead. The first $5 billion contract to export U.S. natural gas (to Britain) has already been signed. [Red & bold emphasis added.]
US shale gas development – in particular liquid rich plays – are set to enjoy years of growth with production estimated to reach 30 billion cubic feet per day (Bcf/d) by 2020, according to a US energy sector report from EIC Consult, the market research and consultancy arm of the Energy Industries Council (EIC). The report also predicts that, despite much publicized opposition, the comprehensive or prohibitive regulation of shale gas in the future remains unlikely, due to the number of jobs created and taxes generated.
Marc Spitzer: Well, there are multiple issues, and of course, my former colleagues at FERC ultimately are called upon to approve, based on an application, export terminals. FERC has approved a number of import terminals. Those are regasification facilities. The process is not as complex for taking LNG that's imported into the U.S. in liquefied form and gasifying it for distribution throughout the United States. The process of what they call liquefaction trains is much more complex, because then take natural gas produced in the United States and liquefy it and then store it for ultimate export, and so the liquefaction process I understand is four to six times as expensive as a regasification terminal. And of course, those import terminals that were built, there's no importing of natural gas because the price, again, has flipped, and the economics are upside down, the economics of these projects are upside down. So the entities are seeking to somehow recapture or monetize their investment by converting the import terminals into export terminals, and that's -- the fascinating aspect of the environmental issue is an interest by some environmentalists in moving away from generation of electricity through coal, which is approximately 48 percent of the power generated in the U.S., through coal-fired generation, to move that more towards natural gas. But then the environmental community is concerned about the environmental impacts of shale production. So it's sort of a catch-22. Similarly, the producers of natural gas, they have a glut of supply. Their processes have become so efficient they've almost become victims of their own success, in a way, and that the efficiency has led to more supply than they can handle. So they're looking for a way to increase demand for natural gas. [Red & bold emphasis added.]
2012 February 18
[Red bold emphasis added.]
The movement to stop the export of domestically produced natural gas in the United States continues to gain momentum, as Rep. Edward Markey, D-Mass., introduced two pieces of legislation this week that would limit the ability of companies to ship liquefied natural gas overseas.
“The administration is trying to have it both ways—arguing that we need to drill everywhere because we don’t have adequate energy supplies, while finding that we have so much energy that big oil companies can export it overseas and keep prices here at home higher than they would otherwise be,” Wyden wrote in a September 2008 letter to then Energy Secretary Samuel Bodman.
Among environmentalists, the Sierra Club has come out strongly against LNG exports. The group has moved away from its pro-natural gas stance and is now aggressively campaigning against LNG exports. The environmental group has come under fire recently in response to the $26 million in donations it accepted from Chesapeake Energy CEO Aubrey McClendon and other people associated with the natural gas producer.
An analysis carried in World Gas Intelligence reports that some LNG suppliers around the world, particularly in Qatar, may re-evaluate their price models for LNG sales to Asian consumers if the United States begins to export LNG to Asia. Specifically, the piece suggests that the LNG suppliers are planning for price structures less strongly linked to the Japanese crude oil index used for traditional LNG contracts. [Subscription required]
Webmaster's comment: ...Meaning, the Asian LNG price will drop, generating lower returns for new or converted US LNG exporter terminals — making US LNG exports less viable.
Favorable margins for US liquefied natural gas (LNG) exports may not be sustainable and could set up long-term risks for infrastructure projects, according to a new report.
Should discoveries of nonconventional natural gas flourish [in nearby China], the combination of low labor costs and small shipping cost due to the proximity of these countries could lessen the traffic at US marine terminals constructed to export natural gas.
Congressman Ed Markey (D-Mass.) introduced two bills yesterday that would limit LNG exports from the United States. The first would require that any natural gas produced from federal lands would have to be sold to domestic consumers. The second would prohibit FERC, until the year 2025, both from approving applications to site, construct, expand, or operate an LNG terminal to export LNG and from amending an existing FERC authorization to permit modification of an existing LNG terminal in a way that would allow the terminal to export LNG.
C. Boyden Gray, a former U.S. ambassador to the European Union, told the Natural Gas Roundtable yesterday that he does not support the bills restricting LNG exports from the United States, suggesting that LNG exports could benefit the United States’ foreign trade deficit. Read more in Platts LNG Daily. [Subscription required]
Webmaster's comment: How about a hefty tax on exporting US LNG, dedicated to subsidizing renewable energy?
Congressman Darrell Issa (R-Cal.) told E&E Daily after a field hearing of the U.S. House Committee on Oversight and Government Reform that he would oppose efforts in Congress to restrict LNG exports from the United States. Also speaking at the hearing, Cheniere Energy CEO Charif Souki argued that federal agencies that regulate LNG exports should coordinate their efforts and adjust their regulations to "keep pace with the growth America is experiencing in its oil and gas fields."
Pipeline capacity in the U.S. also presents an issue for LNG exports, as most pipeline capacity is already contracted to utilities. Pipelines near the Cove Point, Md. LNG facility are already contracted to Marcellus producers, while the Freeport LNG facility in Texas is only connected to intra-state pipelines. Significant infrastructure will be required for most liquefaction projects proposed in the U.S.
Most existing pipeline infrastructure is also set up to move gas north from the Gulf Coast; reversing pipeline flow will be needed to bring gas to Sabine Pass, which will require changes in hydraulics. Multiple LNG export terminals also will be competing for supplies in the U.S.
More than one speaker remarked on the existing outlook for U.S. natural and contrasted it to forecasts made in the mid-2000s that the U.S. would require significant levels of LNG imports to meet domestic gas demand. Even current forecasts for the global LNG market may not be entirely accurate, due not only to known unknowns such as nuclear power demand, but the unknown unknowns, such as the development of hydrates and renewable energy
An analysis produced by the Deloitte Center for Energy Solutions predicts that LNG exports from the United States of 6 Bcf/d could cause the price of gas to rise by $0.12 per million Btu between 2016 and 2035, an increase of approximately 1.7% over the projected natural gas price for this period.
Within the three-train design, the joint venture will develop a fixed-price, fixed-schedule proposal for both a one-train initial development and a two-train initial development. This approach will allow Freeport LNG to choose the optimum size of the initial phase of the project “based upon customer demand and financing considerations,” according to the announcement.
Speaking yesterday in Houston, an analyst with Societe Generale said that he expects that Cheniere will be able to secure adequate financing from banks to build the company's planned LNG liquefaction project at the Sabine Pass LNG terminal. Read more in Platts LNG Daily [subscription required].
Petronet LNG Ltd. (PLNG), India’s biggest importer of liquefied natural gas, is in talks with suppliers in the U.S., including Cheniere Energy Partners LP, which has sold almost 90 percent of the annual export capacity it’s developing.
A TransCanada official said yesterday that his company is interested in building a pipeline that would transport natural gas from Alaska's North Slope to a possible LNG liquefaction facility in southern Alaska. Platts LNG Daily [subscription required] provides further coverage.
The U.S. has overtaken Russia as the largest gas producer, using hydraulic fracturing, or fracking, and horizontal drilling to pump fuel from shale beds. Rising production has driven down prices, cut shipments to the U.S. and prompted owners of import terminals to study switching to liquefied natural gas exports.
Calais LNG Project Company, LLC submitted a response to FERC's information request regarding the project’s financing, site control, and compliance with exclusion zone regulations promulgated by the U.S. Pipeline and Hazardous Materials Safety Administration. The response is available in FERC's eLibrary under Docket No. CP10-32.
Webmaster's comment: Having failed the deadline to provide FERC with a schedule for reestablishing financial capacity and title, right, or interest in its project site, Calais LNG's Arthur Gelber clumsily tapdances around any hope of acquiring that status by making yet one more hollow promise. In addition, Gelber presents a questionable argument that Calais LNG's vapor and thermal radiation exclusion zones comply with regulations.
Calais LNG has been without financial capacity for 19 months (since 2010 July) and without interest in the required property for 17 months (since 2010 September) — and according to Calais LNG’s latest filing, will continue without either one for at least another six months. Even if Calais LNG’s projection were to prove true, and if FERC were to allow Calais LNG to remain in permitting, then Calais LNG would have continuously been without financial capacity for 25 months, and without TRI for 23 months. All the while, Calais LNG would have remained ineligible for permitting. Calais LNG continues to “yank FERC’s chain” in lieu of permitting compliance. Based on past performance, Calais LNG’s latest “projection” for compliance should be disregarded as incredulous.
Calais LNG’s history of noncompliance with state and federal permitting requirements and deadlines is manifested in endless, unfulfilled promises. [Red, yellow & bold emphasis added.]
Webmaster's comment: FERC publishes a brochure indicating where in the permitting process Downeast LNG's proposal resides, and what is next in the permitting process.
Dominion Cove Point LNG, LP submitted a status report to FERC regarding the ongoing rate case addressing changes to the Cove Point LNG terminal tariff. The report states that the parties continue to work towards a settlement amenable to all the affected parties and expects to file a settlement on or before March 16, 2012.
Local opposition group Citizens for a Safe Secure Savannah has filed comments with FERC that highlight recent revisions to seismic hazard guidelines published by the Nuclear Regulatory Commission as applicable to the Elba Island LNG trucking proposal.
Excelerate Energy has submitted additional information to FERC that describes the Aguirre Offshore GasPort Project in significant detail. The preliminary Resource Report 1 describes the location of the project and the facilities proposed to be constructed, including the installation of an offshore FSRU.
The push for a transition to natural gas has been ongoing for some time, and interest has increased since the announcement of the closure of the HOVENSA refinery. During a number of sessions at the V.I. Legislature since HOVENSA's announcement last month, senators have discussed the benefits of natural gas.
The problem facing the territory when it comes to the importation of LNG centers is the fact that the Virgin Islands is a small, relatively isolated market, analysts said. The United States, a leading producer of natural gas, has opened up the exportation of natural gas only recently, after improved technology made previously untouched reserves accessible. That natural gas, however, is heading to massive economies with huge demands, such as Europe and India.
The Jamaica Public Service Company's (JPS) plan to invest US$616 million (J$53 billion) to construct a new liquefied natural gas (LNG) plant in Old Harbour, St Catherine, could be abandoned if the Government fails to guarantee a steady supply of the gas.
WHILE emphasising its readiness to begin work on the multi-billion dollar power-generating plant at Old Harbour, St Catherine, the Jamaica Public Service (JPS) is cautioning that the project will not get off the ground until it is certain that the Government is fully committed to the establishment of an offshore Liquefied Natural Gas (LNG) facility.
2012 February 13
[Red bold emphasis added.]
Baker Hughes reported, for the week ending February 3, that natural gas rig count was down 32 from the previous week to 745 total rigs. Year-over-year, the count is down more than 18%, from 911 gas rigs on February 4, 2011. As has been the case in the last few months, even as rig count sits significantly below the previous year’s corresponding figures, the combination of increased production from shale plays as well as lackluster demand across the nation due to mild weather has brought working gas in storage to record levels.
According to the EIA, stocks as of February 3 were 2,888 Bcf, an astonishing 714 Bcf, or 32.8%, over the five-year average. The EIA forecasts that withdrawals will leave gas in underground storage above 2,000 Bcf for the first time since March 1983. With each rig yielding more on average than has been the case in the past – to overcompensate for decreased rig count – the spot price for natural gas is off just less than $2 from the same time last year.
COVE POINT — — It's quiet these days at Dominion's liquefied natural gas terminal in the Chesapeake Bay. Only five tankers docked last year at the pier a mile off the Calvert County shoreline, and not much traffic is expected this year, either.
Dominion, based in Richmond, Va., has won approval from the Department of Energy to use Cove Point for exporting liquefied natural gas to about 20 nations with which the United States has free-trade agreements. The company is now seeking federal permission to allow shipments to virtually any foreign country, except those barred because of trade embargoes.
The nation is awash in natural gas right now, with production outstripping consumption and a record amount in storage for this time of year, according to the U.S. Energy Information Administration. The prices that gas companies are getting for their product are at the lowest point in a decade, and at least a couple have announced plans to scale back drilling in Appalachia's Marcellus shale deposits, which have played a major role in feeding the current boom.
A recent study by the Energy Information Administration projected that if all the gas export requests pending now were granted, prices of the fuel could soar by 36 percent to 54 percent by 2018, depending on economic conditions and how rapidly natural gas production could be increased to take advantage of higher prices. Electricity prices also would go up between 2 percent and 9 percent, the study forecasted, though it assumed utility bill increases would be more limited because power plants would switch from burning natural gas to coal.
But the Delaware Riverkeeper, Lower Susquehanna Riverkeeper and Potomac Riverkeeper, whose missions are to protect and improve community waterways, recently filed comments with DOE challenging what they call “the next threat to America’s energy independence, environmental health, and family economics,” according to a press release. A handful of other riverkeeper organizations, including the Patuxent Riverkeeper, signed off on the comments as well.
The U.S. Department of Energy (DOE) has set April 13, 2012, as the final deadline for protests, motions to intervene, and written comments for Freeport LNG Expansion, L.P.'s LNG export application. Find further details in today's Federal Register.
The shale gas phenomenon is so new, and the data so thin, that one wonders at the wisdom of making long-term export decisions with perhaps irreversible consequences. The last two energy manias lived and died without a wisp of a memory. This one, if it goes wrong, may not be so benign.
Once upon a time US energy companies decided to build liquid natural gas facilities on the US coastline. These were not export production facilities, they were import receiving facilities. It was believed that while natural gas was in abundant supply in the US, one day demand would outstrip supply and thus imported LNG would be needed. Today there is talk of converting those LNG facilities so that LNG can be exported, not imported. And where to? China of course, and the rest of Asia.
One can understand why LNG receiving facilities were built in the US when one considers US natural gas production has never been as high as it was in 1971. At least, not until now. Production records are being broken once more as the contribution of shale gas moves from 5% of net production five years ago to 25% now. The Wall Street Journal describes current US shale gas production as "relentless".
Asia’s LNG buyers are turning to North America to benefit from a 56 percent drop in benchmark U.S. gas prices over the past two years as production from shale deposits has raised supply. Indonesia is the world’s second-largest exporter of LNG.
Mr Mardjoeki said natural gas imports from the U.S. is cheaper because prices are more stable as it is based on actual production costs, compared with buying from the Asian market which are dependent on the fluctuating global oil prices.
BG Group's CEO Frank Chapman said yesterday that his company is hoping to secure significant benefits as a "first-mover" in the U.S. LNG export sector. According to Platts LNG Daily, Chapman suggested that U.S. LNG exports could reach 5.8 Bcf/d by 2020. [Subscription required]
Webmaster's comment: That export volume would be close to the import capacity of five Canaport LNG terminals.
New techniques to access the natural gas trapped in shale rocks, including the use of hydraulic fracturing and horizontal drilling, have transformed the U.S. into the world’s largest gas producer. Estimates suggest fields in Pennsylvania, Ohio and Texas may contain as much as 862 trillion cubic feet of the fuel, enough to supply the U.S. for over thirty years at current consumption.
Several energy attorneys told Energy Law360 that they are concerned about the U.S. Department of Energy's (DOE) authority to revoke LNG export permits, noting that "DOE gave absolutely no guidance as to what the parameters are as to when the revocation would occur" in its authorization of the Sabine Pass LNG export project last May.
FERC has requested additional environmental information regarding air emissions from the proposed Sabine Pass LNG liquefaction project. Specifically, the Commission has asked for data to "correct the calculations it used to determine the emissions of hydrogen sulfide, volatile organic compounds, carbon dioxide, and methane from the acid vents." In its information request, available in the eLibrary under Docket No. CP11-72, FERC noted "discrepancies" requiring additional evaluation or explanation.
Separately, the Gulf Coast Environmental Labor Coalition (GCELC) raised similar concerns with the U.S. Environmental Protection Agency, requesting that the agency's administrator object to the operating permit issued by the Louisiana Department of Environmental Quality for the Sabine Pass LNG export project.
...If [Puerto Rican Gov. Luis Fortuño's] plan to boost the island's competitiveness by switching electricity generation from oil to natural gas is to succeed, he's going to need relief from the pernicious 1920 Jones Act. It prohibits any ship not made in the U.S. from carrying cargo between U.S. ports. There are no liquefied-natural-gas (LNG) tankers made in the U.S. Unless Puerto Rico gets a Jones Act exemption, it cannot take advantage of the U.S. natural gas bonanza to make itself more competitive.
The planned introduction of the LNG project is already two years behind the initial schedule and Paulwell has announced that a two-month extension of the deadline for infrastructure bids for the proposed project has been granted.
It was said [in 2006] that T&T's gas-production capacity could not accommodate the demand from Jamaica, with the US taking up 90 per cent of its gas exports. Ironically, the American market for Trinidad's natural gas has now plummeted, with the burgeoning production of gas from shale rock in the US.
As the US is currently taking only 19 per cent of T&T's liquefied natural gas (LNG), the twin-island republic is facing serious risks to its markets and must now turn to the Caribbean and Central America as a new outlet. [Red emphasis added.]
Webmaster's comment: Trinidad and Tobago's energy minister has recently announced that he anticipates LNG exports to the US to drop to zero.
Oil fuels the bulk of Jamaica's 884 megawatts of capacity. LNG and coal offer a cheaper fuel source for integration into new power plants, but these options have remained mostly stalled since the 1990s in part due to political indecision.
The CFO for Jamaica Public Service Company told The Gleaner that using LNG to fuel the company's proposed 360-megawatt power project could lower the country's oil import costs by $300 million per year. The power plant is scheduled to come online by 2015.
The Constitution allows the use of eminent domain only for projects serving the public interest. DeFazio argues forcefully that exporting natural gas would damage the public interest by raising domestic gas prices. If he's right about that, then his bill is pointless, because the Pacific Connector Pipeline already is ineligible.
For the Bay Area, the local economic benefit is less ambiguous. But most of us still hedge our opinions with, 'It depends." We're not comfortable benefiting from a gas pipeline that sacrifices our neighbors' property rights.
A new scheme to revive the concept is upon us with one major revision. Rather than importing LNG to supplement our energy grid, the plan, incredibly, is to export our natural gas after liquefaction to other countries.
The possibility of the failed Ventura County area LNG import projects coming back to life as export projects cannot be eliminated. But as of today, our interests should be to help fight the Coos Bay project. California legislators must act now to insure that we do not throw away our present advantage with natural gas supplies.
2012 February 9
[Red bold emphasis added.]
In its February Short-Term Energy Outlook, the EIA said it expected marketed natural gas production in 2012 to rise by 1.5 billion cubic feet per day (bcfd) to a record 67.64 bcfd, up from its January outlook that had output this year at 67.34 bcf daily.
The EIA said marketed production grew by 4.8 bcfd, or 7.8 percent, in 2011 to a record high 66.15 bcfd. The gain last year, the largest year-over-year increase in history, easily eclipsed the previous record of 62.05 bcfd hit in 1973.
In introducing the bill on Tuesday, U.S. Rep. Peter DeFazio, D-Ore., noted the U.S. Constitution limits the use of eminent domain to actions necessary for "public use" but said that pipelines such as the one proposed from Malin to a proposed LNG terminal in Coos Bay fails that test. Instead, it would boost corporate profits while increasing domestic energy costs, he said.
Rep. Peter DeFazio introduced a bill this week to block energy developers from using eminent domain authority to seize private property for pipelines serving export terminals for liquefied natural gas.
With a surge in U.S. shale gas production, Jordan Cove's backers are pursuing plans to convert their previously approved LNG import terminal to a dual use project with export capabilities. They plan to submit an application with the Federal Energy Regulatory Commission this month.
BG, the U.K.’s third-largest gas producer, said the U.S. will have the capacity to export about 45 metric million tons of LNG a year from 2020 as hydraulic fracturing boosts domestic supplies. Global output is seen at about 480 million tons a year by then, based on estimates from Wood Mackenzie.
Increased U.S. gas production from shale formations has helped drive prices to a 10-year low and led owners of LNG import terminals to explore exports. Cheniere’s proposed liquefaction facility at its Sabine Pass terminal is set to be the first new North American export project since 1969.
Here’s the kicker; although the focus of these liquid-rich plays is oil, they still produce natural gas. And because this gas is essentially an incidental by-product (called ‘associated gas’), it is produced at no cost. Yep – it is basically free. So as oil shale plays ramp up to take profits on high-priced oil, increasing volumes of natural gas are coming to the market at no cost to produce. Hence, natural gas prices at decade lows and production at record highs.
This Monday, the Sierra Club filed the first formal objection with the Department of Energy against the export of domestic gas produced from fracking. This objection called the export proposal an unwise plan which would make a dirty fuel even more dangerous. Although Monday’s filing marked a new phase in Sierra Club’s efforts, this is the third liquefied natural gas (LNG) export facility the organization has opposed. Facilities in Coos Bay, OR, Sabine Pass, LA and Cove Point, MD are the first three challenged by the Sierra Club.
“Liquefied natural gas is not only the dirtiest and most polluting form of gas, but it also requires an increase in fracking; a process we know to be unsafe and dangerous,” said Deb Nardone, Director of Sierra Club’s Natural Gas Reform Campaign. “The industry is pushing forward with these export facilities with their profits in mind, not the families who will bear the burden of increased fracking.”
Several years ago the industry was preparing to import LNG to meet U.S. energy demands, but thanks to the sharp increase in domestic shale gas production, companies are now seeking rights to export gas from more than half a dozen terminals, including Cove Point.
The need for [LNG] exports to the United States will be eliminated over the next 20 years as they increase production of shale gas. [— Amy Myers Jaffe, associate director of the Energy Programme at Rice University’s James A Baker III Institute for Public Policy]
...LNG plants are energy pigs, consuming enormous amounts of power to convert natural gas into a liquefied, transportable form to ship by tankers to Asia. The electricity needed for just one plant is equivalent to that needed by three Catalyst Paper mills — BC's largest electricity user.
Chu's suggestion may seem cockeyed to American consumers, who have spent 40 years fretting about the high cost of energy. But the drilling technique known as 'fracking" has turned the energy world upside-down. By fracturing underground rock formations, energy companies have unlocked a phenomenal volume of gas in North America. That's why Coos Bay's Jordan Cove Energy Project has all but given up on importing LNG and now wants to export it.
"We operate under regulations within DOE that are literally decades old and that the market and technology have outgrown," he explained to a Washington meeting of the National Association of Regulatory Utility Commissioners.
“I am honored to be re-nominated by President Obama to serve a five-year term as a Commissioner at FERC. I appreciate the opportunity to continue working with the Commission’s dedicated and professional staff and to further partnerships with state regulators and industry stakeholders, all with the goal of ensuring that consumers have access to reliable and efficient energy services.”
Fereidun Fesharaki, chairman of FACTS Global Energy, has written that he has learned that officials with the Japanese government were surprised that none of their domestic utilities secured LNG volumes from the planned Sabine Pass LNG export project.
...TIME has learned that between 2007 and 2010 the Sierra Club accepted over $25 million in donations from the gas industry, mostly from Aubrey McClendon, CEO of Chesapeake Energy—one of the biggest gas drilling companies in the U.S. and a firm heavily involved in fracking—to help fund the Club’s Beyond Coal campaign. Though the group ended its relationship with Chesapeake in 2010—and the Club says it turned its back on an additional $30 million in promised donations—the news raises concerns about influence industry may have had on the Sierra Club’s independence and its support of natural gas in the past. It’s also sure to anger ordinary members who’ve been uneasy about the Club’s relationship with corporations. “The chapter groups and volunteers depend on the Club to have their back as they fight pollution from any industry, and we need to be unrestrained in our advocacy,” Michael Brune, the Sierra Club’s executive director since 2010, told me. “The first rule of advocacy is that you shouldn’t take money from industries and companies you’re trying to change.” [Red & bold emphasis added.]
Webmaster's comment: Save Passamaquoddy Bay was unable to enlist national Sierra Club support in 2006 against LNG import terminals in Passamaquoddy Bay, due to the Club's official support for natural gas as a "bridge fuel." We did, however, receive support at that time from the Maine Sierra Club.
2012 February 6
[Red bold emphasis added.]
The growth of unconventional energy supplies—including oil and gas from US shales, Canadian oil sands, and Brazilian deepwater production—will make the Western Hemisphere close to completely energy self-sufficient by 2030, BP PLC said in its latest annual outlook. This means that growth in the rest of the world, particularly Asia, will increasingly depend on the Middle East in particular for its oil requirements, it added.
“In fact, according to our 2030 outlook, because of the explosion of gas production in the US and in North America generally, and because of production improvements from oil sands in Canada and shale oil and deepwater in the US, we have North America becoming energy self-sufficient by 2030,” BP Chief Economist Christof Ruhl said.
The surge in shale gas production has transformed the U.S market in recent years, adding decades worth of supply and prompting a string of proposed liquefied natural gas (LNG) export projects that could fetch high prices in Europe and Asia.
With the development of abundant natural gas resources in shale rock deposits from South Texas across Arkansas and Tennessee north to Pennsylvania, Ohio and New York state, the picture has changed dramatically. This country now has economic, accessible reserves estimated to meet our needs for a century or more.
[T]he abundance of domestic natural gas also has led to a glut in the marketplace and depressed prices that could lead to a drop in domestic production over time. As a way to head this off, some are now proposing using the LNG terminals here to export American-produced gas for use in foreign markets.
Platts LNG Daily [subscription required] reports that a company official from Cheniere Energy speaking at an industry conference said that his company will target gas buyers in the Caribbean region as a key market for Cheniere's planned Corpus Christi LNG liquefaction and export facility. The official noted that strengthening Sabine Pass LNG's financial footing would allow the Corpus Christi LNG project to contract with gas buyers with lower credit ratings.
A company spokesperson told World Gas Intelligence [subscription required] that Cheniere Energy will likely conclude financing for the planned Sabine Pass Liquefaction project by the end of March 2012.
Earlier this week, Cheniere Energy submitted its Preliminary Implementation Plan – A to FERC, outlining the company's plans for compliance with a number of conditions contained in FERC Staff's Environmental Assessment (EA) for the Sabine Pass LNG liquefaction project.
Separately, the U.S. Fish and Wildlife Service offered comments on the EA prepared for the Sabine Pass LNG liquefaction project, concluding that no further consultation on threatened or endangered species is necessary, barring any significant change in the project scope or location. The agency recommends, however, that the project developers adjust their mitigation plans to buy credits at mitigation banks within the surrounding region that contain emergent marshland.
Strategically located on the Texas-Mexico border, up a deep-water channel 17 miles from the Gulf Coast and the Intracoastal Waterway, the port turned energy industry heads last week with Gulf Coast LNG Export's lease for what could be the nation's largest export terminal for liquefied natural gas. The agreement came on the heels of a $150 million contract for Keppel AmFELS, a key tenant at the port, to refurbish a Diamond Offshore Drilling Inc. deep-sea drilling rig.
Gulf Coast CEO Michael Smith said his LNG plan includes a new pipeline that would connect Brownsville to the Eagle Ford Shale, where new methods of extracting natural gas have led a number of companies to submit applications to sell it to foreign buyers.
The reason for the massive dredging effort: Coos Bay—a town of about 16,000 people on the remote southern Oregon coast—has been targeted for construction of a coal export terminal and a liquefied natural gas (LNG) export facility.
Earthjustice, representing a coalition of local residents, grassroots environmental, and clean-energy groups, in early January filed an appeal of the Oregon Department of State Lands’ decision to green light the $100 million project. While the “multi-purpose” dredging permit was initially sought to develop an LNG import terminal, the Port of Coos Bay recently entered into a confidential agreement with an undisclosed coal export company seeking to send coal overseas to Asia, and LNG backers have changed their plans to now export domestic gas instead.
John Norris, Nominee for Commissioner, Federal Energy Regulatory Commission
John Norris is a Commissioner at the Federal Energy Regulatory Commission (FERC), a position he has held since December 2009. Over the past 10 years, Mr. Norris has also been involved in numerous local, regional, and national energy related boards and organizations. Before his appointment to FERC, he was Chief of Staff at the U.S. Department of Agriculture. From 2005 to 2009, Mr. Norris served as Chairman of the Iowa Utilities Board (IUB). Prior to joining IUB, he served as Chief of Staff and Energy Advisor to Governor Tom Vilsack, Chief of Staff to U.S. Representative Leonard Boswell, and owned and managed a restaurant in Greenfield, Iowa. Mr. Norris received a B.A. in Political Science from Simpson College and a J.D. from the University of Iowa College of Law.
SOMERSET — The Coalition for Responsible Siting of LNG Facilities will hold its monthly meeting on Thursday, Feb. 9, at 7 p.m. in the Olde Town Hall, on County Street in Somerset. The group will discuss the latest news regarding the HessLNG/Weaver’s Cove site.
Senator Mary Landrieu (D-La.) has requested that FERC act on the Sabine Pass LNG liquefaction and export project at its February Commission meeting. In her letter to FERC Chairman Jon Wellinghoff, Senator Landrieu notes that the comment period for the Environmental Assessment for the project ended last month, so she requests the Commission to provide "an expeditious conclusion in this matter that will enable us to move forward with this critical infrastructure investment."
Webmaster's comment: The Minister of Energy anticipates LNG exports to the US to eventually drop to zero. Already, US LNG exports are beginning to compete with Trinidad and Tobago exports to Caribbean nations.
2012 February 4
[Red bold emphasis added.]
Proponents of liquefied natural gas terminals in North America are poised to buy up gas reserves or ink joint venture deals for development this year, to secure gas supply for future terminals, according to CIBC World Markets.
About 20 billion cubic feet per day of LNG capacity is proposed through a host of separate projects across North America. CIBC expects other projects to be tabled this year, including from Nexen Inc. and partner Inpex Corp., as well as Imperial Oil Ltd. and its majority shareholder, ExxonMobil Corp., and that just eight bcf/d will be actually developed by 2020.
“We believe that by 2020, the United States will become the largest producer of hydrocarbons in the world, surpassing Russia,” said Roger Diwan, partner and head of financial advisory operations at PFC Energy. Now that producers have solved the problem of producing oil and gas from tight shale formations, the nation is on the verge of a golden energy era which is reshaping the industry worldwide, he maintained.
EIA’s initial 2012 AEO also projects that the US will become a net exporter of LNG by 2016, a net exporter of gas by pipeline by 2025, and an overall net exporter of gas by 2021, he said in his written statement. “The outlook reflects increased use of LNG in markets outside of North America, strong domestic gas production, reduced pipeline imports and increased pipeline exports, and relatively low gas prices in the United States compared to other global markets,” Gruenspecht said.
BG Group Chief Executive Sir Frank Chapman said: "The purchase of additional volumes from the Sabine Pass facility builds on the ground-breaking agreement we entered into last year, in which BG Group secured LNG export volumes from the US Gulf Coast.
"The agreement adds further volume to our diversified global LNG supply portfolio and is underpinned by the recent material increases in US gas reserves as well as a favourable long-term outlook for global LNG demand."
...FERC is refusing to analyze the impact of increased LNG exports as part of its review of Sabine Pass’ application to build the liquefaction and export facilities. Instead, FERC is focusing only on the environmental impact of the facilities themselves, not on how the facilities will create greater demand for natural gas production in the United States, with large amounts of that increased production heading overseas in the form of LNG.
According to the Sierra Club, an environmental assessment prepared by FERC’s staff and released in late December “wholly ignores” the indirect effects resulting from the export of LNG. The decision by FERC violates the National Environmental Policy Act and is incompatible with the Department of Energy’s decision to rely on FERC to assess the environmental impacts of export authorization, the Sierra Club said in its filing.
The U.S. Energy Information Administration said in a report that natural gas prices have continued their downward trend this winter as a result of warmer-than-normal temperatures, ample natural gas in storage, and growing production.
Speaking yesterday in Houston, U.S. Secretary of Energy Steven Chu said that the Department of Energy (DOE) will consider U.S. natural gas prices when deciding whether or not to approve LNG export applications, explaining that "[w]e have to consider what is in the best interests of the United States." According to Platts LNG Daily, Sec. Chu also noted a number of potential benefits of U.S. LNG export projects, including job creation. [Subscription required]
The Pipeline and Hazardous Materials Safety Administration (PHMSA) has reaffirmed its prior decision that, despite a challenge submitted by the states of Massachusetts and Rhode Island and the City of Fall River, Mass., in the Weaver's Cove LNG project proceeding, the agency's regulations on the location of LNG facilities "satisfy the applicable statutory provisions."
Liquefied natural gas may not pose the same risk as an oil spill, but it does threaten human safety and the environment — to the point the Canadian government has opposed a U.S. proposal to ship LNG on the East Coast.
Citing safety and environmental concerns, the federal government is officially opposed to proposals for Maine-bound LNG-carrying tankers to transit Canadian waters off New Brunswick. The route narrows to about 600 metres, where high tides, fast-moving currents and fog can make navigation difficult.
A 2010 report by Mark Jaccard and Brad Griffin of the School of Resource and Environmental Management at Simon Fraser University said that the exploitation of natural gas is at odds with the B.C. government’s commitment to reduce provincial greenhouse gas emissions 33 per cent from 2007 levels by 2020, and 80 per cent by 2050. [Red & bold emphasis added.]
The winter heating season is defined as November through March. Underground storage reached record levels in November 2011 at nearly 3.9 trillion cubic feet of stored working gas for the third year in a row. In fact, with the warmer than normal temperatures that have persisted in many regions of the country this winter, robust storage inventories have had the influence of placing additional downward pressure on natural gas acquisition prices. The combination of reduced heating loads and lower prices has meant savings for natural gas consumers. [Red & bold emphasis added.]
Webmaster's comment: Expect this cargo to be re-exported from Sabine Pass.
"T&T goes through these mercurial changes: One day they have reserves and another day they are running out of reserves. So you never know where you are. It's one of the most frustrating situations," said Davis about T&T, which traditionally holds among the highest gas reserves in the hemisphere, from which Jamaica planned to purchase.