Natural Gas Supply

Growing impact of shale gas on petrochemicals industry

20 Oct 2017   Shale Gas

The US exported close to 3 million barrels of ethane in H1 2017, a rise of 83% year-on-year. A majority of these exports were headed to Europe with volumes also headed to Canada, Brazil and India. Ethane from shale gas goes into making ethylene and then subsequently into the polymer polyethylene.  Besides extracting ethane and exporting it, the US has built up large ethylene and PE capacities. About 4 million mt of PE will be surplus in the US during 2017 and this figure will touch 6 million mt in 2018. Starting at the end of 2017, and early 2018, we expect a high volumes of American PE to begin getting imported into Europe.

Analysts See U.S. Natural-Gas Inventories Rising

The EIA is scheduled to release its storage data Thursday at 10:30 a.m. EDT. For the Oct. 13 week, the median estimate is for an increase of 57 bcf. Estimates range from an increase of 44 bcf to an increase of 63 bcf. The estimate compares to 77 bcf added from storage in the same week last year, and a five-year average addition of 78 bcf for that week. If the storage estimate is accurate, inventories as of Oct. 13 totaled 3.652 trillion cubic feet, 4.5% below levels from a year ago and 0.8% below the five-year average for the same week.

The U.S. Shale Play To Watch In 2018

20 Oct 2017   Shale Gas

The original shale gas play, the one that kicked off the shale drilling bonanza a decade ago but then went into decline, is getting a new lease on life. The Haynesville Shale, which straddles the Texas-Louisiana border, has seen a resurgence in natural gas production, after years of neglect. The Haynesville Shale is one of the founding fathers of the modern shale drilling boom. A decade ago, fracking unleashed a wave of natural gas production as hundreds of rigs piled into northwestern Louisiana. But the surge in production pushed down prices, which had been high and relatively volatile for years. The crash in prices meant that shale drillers moved on to greener pastures, and most of them began looking for oil rather than gas because crude fetched $70 to $80 per barrel. By then, the Marcellus Shale was just beginning to ramp up, boasting rock-bottom costs of production. The […]

The Natural Gas Market Is Set To Boom

Lower-for-longer oil prices and the advance of renewable energy and electric vehicles have made Big Oil plan for a gradual shift toward natural gas in their production portfolios. All current projections point to natural gas as the fastest-growing fossil fuel in the energy mix for decades to come. Pitched as the cleanest burning hydrocarbon (compared to coal and oil), natural gas is expected to be the bridge fuel between coal and renewables, until storage solutions allow renewables to become less intermittent. How bright natural gas’s future will be depends on how competitive its prices are, especially in the Asian markets, according to Bloomberg Gadfly columnist Liam Denning . There’s no doubt that natural gas demand will continue to rise. The questions are: By how much? And, will natural gas have the time to assert itself as the cleaner bridge fuel until renewables take over? All of Big Oil’s five […]

Major Energy Importer Bets $10 Billion On Natural Gas

18 Oct 2017   Japan, LNG

Much of the attention in energy markets has been focused on OPEC and oil prices lately. But news this week suggests that a different energy commodity is quietly becoming the hottest story going worldwide. That’s natural gas. With the world’s top importing nation — Japan — saying this week it’s about to embark on a major spending spree in the sector. Japanese press reported over the weekend that government agencies are about to launch a major funding program for international natgas projects — specifically aimed at the liquefied natural gas (LNG) sector. With the government planning to make a full $10 billion available for investment. Those dollars will reportedly come from Japan Bank for International Cooperation and Nippon Export and Investment Insurance. With targets being LNG receiving terminals as well as associated power plant facilities. Here’s the most intriguing part: Japanese papers said the program will be aimed entirely […]

The U.S. LNG Boom Could Be About To Stall

18 Oct 2017   LNG

While speaking before industry executives last June, United States President Donald Trump asserted that he had “ended the war on coal” and that America would be “dominant” in energy. But where does this all stand now? Much of the Trump administration’s hope for achieving dominance requires increasing exports of liquid natural gas (LNG) from six new liquefaction and export facilities. One of these, Cheniere Energy’s Sabine Pass plant in Louisiana, is now being expanded, while the rest are approved and scheduled to be completed in the next three years. When they’re all in service, they’ll be able to export about 9bn cubic feet of gas a day, which is about 12 per cent of U.S. natural gas production. Meanwhile, investors are looking at a second wave of about 20 more proposed U.S.-based LNG plants, backed by large portfolio players including ExxonMobil and Royal Dutch Shell. However, it’s unclear whether […]

Dominion sees Maryland Cove Point LNG export terminal on line in fourth quarter

18 Oct 2017   LNG

Virginia energy company Dominion Energy Inc said Tuesday its $4 billion Cove Point liquefied natural gas export facility in Maryland was about 96 percent complete and was expected to enter service by the end of the year. “We can’t say exactly when it will happen but it is on track to be in service on schedule by the end of the year,” Dominion spokesman Karl Neddenien told Reuters. Once in service the project will be able to produce about 5.25 million tonnes per year (MTPA) of LNG. That is equal to about 0.7 billion cubic feet of gas per day (bcfd). Dominion has sold the project’s capacity for 20 years to a subsidiary of GAIL (India) Ltd and to ST Cove Point, a joint venture between units of Japanese trading company Sumitomo Corp and Tokyo Gas Co Ltd. Some of the LNG going to ST Cove Point […]

Fourth Train Complete At Cheniere’s Sabine Pass LNG Plant

17 Oct 2017   LNG

 Cheniere Energy Partners LP said Friday that the fourth train at its Sabine Pass liquefied natural gas plant was substantially complete, boosting output from the first LNG export terminal in the United States by a third. LNG plants are made up of trains, which are liquefaction facilities used to supercool natural gas for transport on ships. Offtake from the train, which has a 4.5 million tonnes per annum (Mtpa) nameplate capacity, is contracted to GAIL (India) Ltd for a 20-year period, with shipments to commence in March 2018. Until then, LNG produced from the train will be sold by Cheniere into the market, spokesman Eben Burnham-Snyder said. A fifth train is under construction at the facility, which will further boost capacity at the export terminal from 18 Mtpa to 22.5 Mtpa by the second half of 2019. At least five other export terminals are set […]

An Old Fracking Hot Spot Makes a Comeback

17 Oct 2017   Shale Gas

The giant natural-gas field, once one of fracking’s hottest spots, is making a comeback after being sidelined. Gas production from the Haynesville has risen more than 20% so far this year, to more than 7 billion cubic feet a day from less than 6 billion in January, according to the U.S. Energy Department. The number of rigs active in northern Louisiana parishes and the Texas portion of the field has more than tripled in the past year to 44, according to oil field services company Baker Hughes Inc. “The Haynesville is where it began ,” said Frank Patterson, Chesapeake Energy’s vice president of exploration and production. The company has been learning how to get more out of the ground by drilling and fracking longer wells, Mr. Patterson told investors earlier this month. […]

Just How Big Is Oil’s Invisible Friend?

The world’s oil majors, beset by intimations of demand for their favorite product leveling off , seek comfort from an invisible friend. Compared to oil and coal, natural gas looks less fossilized. Long-term outlooks routinely show demand rising while it flattens for oil and falls for coal. This makes sense: Gas is versatile, useful both as a source of energy and a building block for chemicals; plus, when burned, it emits less carbon. In an increasingly electrified world where regulations around pollution are tightening, gas should be a relative winner. Oil majors have adjusted accordingly: However, their enthusiasm has, as so often, resulted in excess supply, especially of liquefied natural gas , expected to last through the early 2020s. And the long-heralded “golden age” of natural gas isn’t a foregone conclusion. In its latest long-term outlook, the Energy Information Administration cut projections for global gas consumption; the annual growth […]

Rosneft To Buy 30% Stake In Giant Zohr Gas Field

Russia’s oil giant Rosneft has closed the deal to buy from Italy’s Eni a 30-percent stake in the offshore concession in Egypt where the giant Zohr gas field is located, for US$1.125 billion, the Russian firm said on Monday. Rosneft also refunded its share in past project costs to the Italian company, which discovered Zohr in 2015 and plans to start production by the end of this year. Zohr has a total potential of 850 billion cubic meters of gas in place and is the largest natural gas field ever discovered in the Mediterranean, according to Eni, which has also divested an additional 10 percent in the concession to supermajor BP. Under the initial terms of Eni’s deal with Rosneft from December last year, the Russian firm would pay US$1.125 billion and the pro-quota reimbursement of past expenditures, which amounted at the time to around US$450 million. In addition, […]

Panama Canal Authority, shippers work to double LNG capacity

5 Oct 2017   LNG, Panama

The Panama Canal Authority is working with LNG shippers towards doubling the capacity set aside for LNG vessels by next October, the PCA said Wednesday. The PCA is working towards allowing two LNG vessels a day to transit the canal, from the single slot currently available. “Currently all LNG transits are limited to daylight hours. We are working towards lifting some transit restrictions by the third quarter of next year,” the PCA said in a statement, adding that there are currently no transit delays. Article continues below… Platts LNG Daily is vital reading as LNG supply dynamics continue to change in big markets like Japan, China, Middle East, India, Australia, South America and the US. This premier independent news and pricing publication for the global LNG industry gives readers information on every aspect of the global market from new LNG supply projects and contracts to gas pricing analysis. Request […]

LNG Can Play ‘Meaningful Role’ Targeting US Trade Imbalance

4 Oct 2017   LNG

US gas exports can improve balance of trade, create jobs and support long-term economic growth. According to the Office of the United States Trade Representative (USTR) , the U.S. goods trade deficit – in which imports exceed exports – with China totaled $347 billion in 2016. During the same period, U.S. goods trade deficits with Japan and South Korea amounted to $68.9 billion and $27.7 billion, respectively, observed USTR. As it continues to ramp up exports of liquefied natural gas (LNG), the United States can tilt that trade imbalance a bit more in its favor by expanding the volumes of LNG it ships to those three countries, Kathleen Eisbrenner, founder and CEO of NextDecade, said Monday during Energy Dialogues LLC’s North American Gas Forum in Washington, D.C. “LNG has a very meaningful role to play,” remarked Eisbrenner, whose company is developing an LNG export facility and related pipeline infrastructure […]

Russia’s Gazprom aims for 10 percent of China gas market after 2025

Russia’s biggest natural gas producer Gazprom aims to take a 10 percent share of the Chinese gas market after 2025, a company executive told an energy conference on Wednesday. Gazprom said earlier this year it planned to begin supplying gas to China through Siberia on Dec. 20, 2019.

Another U.S. LNG Export Project To Come Online In Q4

2 Oct 2017   LNG, USA

Liquefied natural gas, long the domain of foreign producers like Qatar, has come to the U.S., with many LNG projects in the works. In general, these projects are progressing quickly, and several have released recent updates on their operations. Cove Point on schedule to become second U.S. project to begin exports While most planned LNG facilities are located in either Louisiana or Texas, a few will be constructed outside of the Gulf. One of these, Dominion Energy’s (ticker: D) Cove Point in Maryland, is queued to become the second major U.S. LNG export facility to begin shipping cargoes, following Cheniere Energy (ticker: LNG) which in February 2016 became the first LNG export project to begin shipping liquefied U.S. natural gas to international customers. “The Cove Point export project remains on schedule for completion in the fourth quarter of this year,” a spokesman for Dominion Energy told Oil & Gas […]

China’s recoverable shale gas reserves fell by 6 percent in 2016: ministry

23 Sep 2017   China, Shale Gas

China’s technologically recoverable shale gas reserves dropped by 6 percent in 2016, the country’s Ministry of Land and Resources said on Saturday, with no new finds of the unconventional resource recorded last year. Reserves stood at 122.41 billion cubic meters at the end of 2016, down from 130.18 Bcm a year earlier, according to a report released by the ministry. Shale gas was the only one of 22 major minerals listed to add zero newly discovered reserves in 2016, although potash was assigned a negative figure, indicating that some previous reserves were written off. The numbers suggest China’s efforts to replicate the North American shale gas revolution and reduce a hefty reliance on energy imports are running out of steam. Almost all of the country’s shale output comes from Sinopec’s Fuling project near Chonqing. Sinopec said in March it plans to boost Fuling’s annual production capacity […]

U.S. natural gas prices rise as winter stocks look tight

U.S. natural gas stocks look somewhat tight after low prices this summer worked off the excess stocks that built up in the first half of the year. Current stocks are in line with the five-year seasonal average but that may not be enough given the increase in exports and the number of additional combined-cycle power plants that have become operational in 2017. The last two winters have been exceptionally mild; if this winter proves colder, which is likely simply on the basis of probabilities, inventories could come under pressure. To ration power burn this winter the price of gas for delivery at Henry Hub in January 2018 has already risen by 29 cents per million British thermal units or […]

US Haynesville gas production hits 4-year high – Natural Gas

16 Sep 2017   Shale Gas

Natural gas producers in the US Southeast are beginning to yield dividends from a bid to reverse declining production in one of the region’s seemingly forgotten shale plays. Recent data from the Haynesville of Arkansas, Louisiana and Texas show production there at its highest since mid-2013. As output continues to rebound from a record low in August 2016, production from the Haynesville is already up by nearly 15%, Platts Analytics data shows.  That spectacular turnaround comes amid a rapid expansion in drilling activity which has rivaled that of even the Utica or the Marcellus. In just 12 months, rig count in the Haynesville has more than tripled.

Leaseholders’ renewed devotion to the play comes in spite of relatively weak internal rates of return or IRRs there, which have averaged just 11% over the last year. Those returns have paled in comparison to Appalachian plays where IRRs averaged roughly 14%, in both the Utica and the Marcellus, according to data from Platts Well Economics Analyzer.  But with export demand from the Gulf Coast and Texas expected to grow by nearly 7.5 Bcf/d through 2020, a bid to grow production in the Haynesville could be longer-term play by producers seeking access to neighboring markets that are soon likely to trade at a premium.

Agency votes to begin effort to ban fracking, horizontal drilling in US basin

14 Sep 2017   Shale Gas, USA

A joint federal-state commission on Wednesday voted to move ahead with a rulemaking that would prohibit horizontal drilling and hydraulic fracturing across a large swath of eastern Pennsylvania, as well as the states of New York, Delaware and New Jersey. In a meeting of the board of the Delaware Basin River Commission, commissioners voted to publish for public comment a set of revised draft regulations for drilling operations within the river basin, which includes portions of the Marcellus Shale. The vote was 3-1-1, with representatives of Delaware, New York and Pennsylvania voting yes, the Army Corps of Engineers, the federal government’s representative voting no, and the New Jersey representative abstaining, Kate Schmidt, a spokeswoman for the DRBC, said. Since the vote was a procedural resolution, no public hearing on it was required prior to commission consideration, Schmidt said. About 25 people spoke during the meeting’s open public comment session, […]

Hurricane Irma’s Wrath Weighs On Natural Gas

Estimates vary, but some 9 million people lost power during Hurricane Irma, according to the CEO of Florida Power & Light, the state’s largest utility. As of Monday, an additional 1 million people lost power in Georgia and South Carolina as the remains of Irma moved north. Florida Power & Light has already begun restoring power, but as of Monday, there were more than 3.6 million customers still offline. Utilities in other parts of the country are sending legions of workers to Florida in an aggressive effort to rebuild and restore service. The CEO of Southern Company, another crucial utility in the U.S. Southeast, said that the mess will likely require 50,000 to 60,000 additional utility workers from out of state to help in the recovery. It could have been a lot worse, as the track of the hurricane ended up moving west of Miami but east of Tampa […]

Once fringe players, Swiss traders grab $10 billion slice of LNG market

13 Sep 2017   LNG

Swiss trading houses are muscling in on the global market for liquefied natural gas, until now the preserve of energy giants, and expect to grab a $10 billion share of the rapidly growing business this year. Trafigura [TRAFG.UL], Gunvor [GGL.UL], Vitol [VITOLV.UL] and Glencore are all shaking up a decades-old system dominated by Western oil majors and state energy producers which sell LNG directly to large consumers on long-term contracts. They plan 2017 shipments that will be more than triple the 2015 level, according to Reuters calculations based on figures for the four traders provided by trade sources. “The trade houses … are not fringe players any more,” said Trafigura’s head of LNG Hadi Hallouche. “In the next four or five years there will be a significant amount of supply contracts expiring and that will open up the market.” In the short term, the Swiss traders […]

ExxonMobil slashes LNG price to India in bad omen for producers

11 Sep 2017   India, LNG

India has won a price cut on a 20-year liquefied natural gas (LNG) deal with global giant ExxonMobil Corp (XOM.N) in a rare contract renegotiation, a bad sign for producers in a heavily oversupplied global market. In a trade-off for ExxonMobil, India’s Petronet LNG (PLNG.NS) will increase its volumes from the Gorgon LNG project in Australia by an extra 1 million tonnes a year to about 2.5 million tonnes a year, but at cheaper rates than initially agreed in 2009. Long-term contracts are rarely revised in the LNG market, and for a big producer to cave in shows how supply from new plants in Australia and the United States over the past two years has transformed the market, analysts said. “This trend is overall a negative for sellers, as they are forced to provide more flexibility to buyers’ needs to maintain their markets,” said Saul […]

Natural Gas: Production back to near pre-Harvey levels

Offshore US Gulf of Mexico natural gas production continued to return to pre-Hurricane Harvey levels as crews returned to platforms Tuesday, while onshore producers and midstream companies said they were seeing little long-term impact on their operations from the storm that slammed into the Texas coast late August 25. Related content: In its final report on the impacts of Harvey, the US Bureau of Safety and Environmental Enforcement on Monday estimated that about 259.19 MMcf/d, or about 8% of Gulf of Mexico gas production of 3.22 Bcf/d remained shut-in as a result of the storm. BSEE estimates 121,000 b/d of oil remained shut-in, representing about 7% of current US Gulf production of 1.75 million b/d. Based on the data from offshore operator reports submitted as of 11:30 CDT Monday, personnel remained evacuated from 14 production platforms, which represents about 2% of the 737 manned platforms in the Gulf of […]

Gas: About 8.1% of Gulf of Mexico output remains offline

Houston and the Gulf Coast region of Texas continued to dry out Monday following the days of historic flooding that Harvey delivered. The storm made landfall as a hurricane, but did most of its damage to energy infrastructure after it was downgraded to a tropical storm. PRODUCTION About 8.1% of daily Gulf of Mexico natural gas output remained offline Monday, 10 days after Harvey began to wreak havoc to the center of US energy infrastructure. It was a slight improvement from 8.4% offline Sunday. The Bureau of Safety and Environmental Enforcement reported that, based on data from operator reports submitted as of 11:30 am local time, about 259.2 MMcf/d of Gulf gas production of 3.2 Bcf/d was shut in. Personnel remained evacuated from 14 production platforms, or 2% of the 737 manned platforms in the Gulf of Mexico, down from the 30 production platforms that saw evacuations as of […]

Natural gas : Production recovery continues

Gulf of Mexico offshore gas production continued to rebound Sunday in the aftermath of Hurricane Harvey. The Bureau of Safety and Environmental Enforcement said about 271.4 MMcf/d of gas was shut in as of 11:30 am CDT, 8.4% of normal Gulf gas output of 3.2 Bcf/d. That is down from 10.5% Saturday. Personnel remained evacuated from 30 production platforms, or 4.1% of the 737 manned platforms in the Gulf of Mexico. That compares to 43 platforms Saturday. PIPELINES AND PROCESSING * Kinder Morgan, which moves move than one-third of the natural gas consumed in the US, continued to see restrictions on some segments of its Tennessee Gas Pipeline. * Pipeline operator Williams said Sunday about 215 MMcf/d of offshore gas supply was shut in by Gulf producers feeding its Transcontinental Gas Pipe Line system. That is down from 255 MMcf/d Friday and 280 MMcf/d at the height of the […]

Cuomo’s Fracking Opposition Hurts New York

4 Sep 2017   Shale Gas

Governor Andrew Cuomo in New York, January 18. The economic fallout from Gov. Andrew Cuomo’s rejection of the Constitution pipeline should serve as a warning to other states that want to go down the same path as New York (“ Cuomo’s Natural Gas Blockade ,” Review & Outlook, Aug. 24). Radical “keep it in the ground” protesters have their sights on the Mountain Valley and Atlantic Coast pipelines currently under review along the East Coast that will connect millions of American workers, families and businesses to more affordable and cleaner energy. Halting these projects would have a ripple effect across the energy supply chain, denying good-paying jobs to men and women producing steel, equipment and supplies used in pipeline projects across the country. The energy supply chain is interconnected, which means that a steel mill worker’s job in Pennsylvania may depend on a pipeline being built in North Carolina […]

Russia’s Comeback In The LNG Race

1 Sep 2017   LNG, Russia

In a little more than a month’s time, Russia will formalize its claim for a bigger role in the ever-expanding global LNG market. Early October, when the Yamal LNG will see its commissioning and first cargo delivered, expect to hear “Russia” and “LNG” in the same sentence in increasing frequency. Yet in Yamal LNG, Russia’s bid to consolidate its claim as a gas stronghold and to garner at least 10% of the global LNG market, one can discern a quite unconventional project for Russia. Although led by NOVATEK, a non-state-owned company (albeit with multiple connections to the political establishment) and not the usual “suspect” Gazprom, it stands a good chance to propel Russia into the LNG vanguard. This being said, behind the viability of Yamal LNG stand several factors absent which the project would be commercially feasible only with gas prices strictly above $11-12/MMbtu – most importantly, large-scale government […]

U.S. natural gas futures up as Tropical Storm Harvey hits production

U.S. natural gas futures rose more than 1 percent after touching a nearly three-week low on Monday as concerns about a tighter market following Tropical Storm Harvey offset any effects from forecasts of lower cooling demand. Front-month gas futures for September delivery on the New York Mercantile Exchange were up 4.3 cents, or 1.5 percent, at $2.935 per million British thermal units at 11:47 a.m. EDT (1547 GMT). The contract rebounded from $2.849, its lowest since Aug. 9. About 26 percent of natural gas production in the Gulf of Mexico is offline due to Tropical Storm Harvey, the Bureau of Safety and Environmental Enforcement said in a statement on Sunday. “The offline production of gas in the Gulf of Mexico was more than anticipated and surprising,” […]

The (Only) Culprit Of Coal’s Demise

On August 23, the U.S. Department of Energy released a highly anticipated study on the reliability of the U.S. electricity grid, the product of a review ordered by Secretary of Energy Rick Perry back in April. The overarching conclusion from the nearly 200-page report? Cheap and abundant natural gas is the killer of coal plants, not renewables or excessive environmental regulation, as the U.S. President and many coal proponents have claimed. The findings were notable because many energy analysts expected the report to offer a pretext for promoting the coal industry over other sources of generation while also slashing incentives for renewables. But not only did the report not explicitly recommend such a course of action, it laid the blame for the downfall of coal at the feet of natural gas, rather than on renewables or government policy. To take one example, the DOE report concludes that far from […]

First tanker crosses northern sea route without ice breaker

25 Aug 2017   Climate, LNG

A combined ice breaker and LNG tanker has crossed the northern sea route A commercial LNG tanker has sailed across the colder, northern route from Europe to Asia without the protection of an ice-breaker for the first time. The specially-built ship completed the crossing in just six-and-a-half days setting a new record, according to tanker’s Russian owners. The 300-metre-long Sovcomflot ship, the Christophe de Margerie, was carrying gas from Norway to South Korea. Rising Arctic temperatures are boosting commercial shipping across this route. The Christophe de Margerie is the world’s first and, at present, only ice-breaking LNG carrier. The ship, which features a lightweight steel reinforced hull, is the largest commercial ship to receive Arc7 certification, which means it is capable of travelling through ice up to 2.1m thick. On this trip it was able to keep up an average speed of 14 knots despite sailing through ice that […]

NYMEX September gas rises on bullish build to storage stocks

The NYMEX September natural gas futures contract rose 2.1 cents Thursday to settle at $2.949/MMBtu, as the US Energy Information Administration announced a lower-than-expected storage build for the week ended August 18. The EIA estimated 43-Bcf storage build for that week, below the 46 Bcf consensus estimate of analysts surveyed by S&P Global Platts. The build was also below the rolling five-year average injection of 53 Bcf — the sixth time in seven weeks a build has paced below the five-year average, according to EIA data. Stocks currently sit at an estimated 3.125 Tcf, only 1.5% above the 3.08 Tcf averaged over the past five years. Hurricane Harvey, currently in the Gulf Mexico, may also be providing support. The National Hurricane Center in its most recent forecast projected that the storm could reach Category 3 status before making landfall on the Texas coast late Friday or early Saturday morning. […]

Blockade Can’t Stop Qatar From Suppling UK With Gas

24 Aug 2017   LNG, Qatar, United Kingdom

Qatar supplies 20 percent of Britain’s natural gas. Just in the past four weeks, British ports have received one million meters worth of scheduled gas orders, according to the Middle East Monitor. Doha dodged the worst logistical obstacles of the blockade by shifting its main export hub from the United Arab Emirates to Oman when the row first became public. Now, Qatar’s energy leaders are optimistic, feeling the ordeal has made the country’s logistics more robust. In mid-July , diplomats from Bahrain, Egypt, Saudi Arabia and the United Arab Emirates signaled that they no longer wanted Qatar to comply with 13 specific demands levied in June. Instead, they proposed six broad principles that they wanted Qatar to sign onto. The principles included denying safe havens and financing to terrorists, combating terrorism and extremism, stopping incitement of hatred and violence, and refraining from interfering in the internal politics of other […]

Cuomo’s Natural Gas Blockade

24 Aug 2017   Shale Gas, USA

Progressives once hailed natural gas as a “transition fuel” to renewables like solar and wind, but now they are waging a campaign to “keep it in the ground.” New York is ground zero. First, Mr. Cuomo banned hydraulic fracturing (i.e., fracking), and now he’s blocking natural gas pumped in other states from reaching Northeast markets.  The Empire State’s southern tier overlays the rich Marcellus and Utica Shale formations, among the most productive drilling regions in the country. Shale fracking has been an economic boon for Appalachia—and could have lifted upstate New York. Since 2010 natural gas production has surged 520% in West Virginia, 920% in Pennsylvania and 1880% in Ohio. (See chart nearby).  Mr. Cuomo’s predecessor David Paterson imposed a moratorium on fracking in 2010. After winning re-election in 2014, Mr. Cuomo started laying the ground for a White House bid and made the ban permanent. Between 2010 and 2015, New York’s natural gas production plunged by half—which has translated into fewer jobs as well as less royalties for landowners and revenue for local governments.  Last year the Governor compounded the economic damage by blocking the 120-mile Constitution pipeline transporting natural gas from Pennsylvania to upstate New York and New England. Although the Federal Energy Regulatory Commission (FERC) approved the pipeline in 2014, Mr. Cuomo’s Department of Environmental Conservation conducted a separate review and denied a water-quality permit putatively because the developers hadn’t provided sufficient information.  Constitution’s developers challenged the denial in federal court. While the Clean Water Act lets states perform their own environmental reviews, New York appears to have abused its discretion. Last week the Second Circuit Court of Appeals deferred to state regulators while leaving a door open for the pipeline companies to challenge the timeliness of the state review in the D.C. Circuit Court of Appeals.

As U.S. Exports Gas to Europe, Russia Digs In

21 Aug 2017   exports, LNG

U.S. attempts to export natural gas into Europe’s energy market are facing stiff resistance from the region’s dominant player: Russia.  A tanker is scheduled to arrive in Lithuania this week carrying the first shipment of U.S. liquefied natural gas to a former Soviet republic. It follows a handful of other shipments of U.S. gas to Europe and comes in the wake of widespread predictions that American exports would help break Russia’s dominance of the European energy market.  But Russia is moving quickly to contain the new competition to its largest energy market. Its state-run energy companies are lowering prices, changing sales methods and developing their own LNG facilities. Moscow is also pushing ahead with a pipeline opposed by both Washington and Brussels.

While European governments are eager to reduce Russia’s chokehold, and its resulting political leverage, the region’s consumers are looking beyond politics for the lowest prices. That favors Russia. Last year, Russia exported record levels of gas to Europe, helped by lower prices and falling domestic production elsewhere in Europe.  “We are tracking the situation on the global gas market and the growth of U.S. shale gas production,” Russia’s energy minister, Alexander Novak, said in an interview last month. “Recently we have allocated a lot of efforts to boost our presence on the LNG market.”

Climate Change Opens Up Shorter Arctic Passage For LNG

19 Aug 2017   Arctic, LNG

The Cristophe de Margerie, an LNG carrier commissioned by French Total, has become the first tanker to pass the Arctic unaided and is now en route to its destination in Asia, the South Korean port of Boryeong, Total said as quoted by AFP. The route via the Bering Strait in the Arctic is 15 days—or 50 percent—shorter than the traditional route for tankers through the Suez Canal, but until recently it was impossible to make the journey without aid from other vessels. Now, climate change has melted some of the ice, making the shorter journey possible without the need for icebreaker escort. Christophe de Margerie, named after the previous chief executive of the French company, who died in a plane crash three years ago, is the first of a fleet of 15 LNG carriers that will carry gas extracted in Yamal, in northwestern Siberia, to Asia via the Northern […]

China sees apparent natural gas consumption rising by 10 pct in 2017

19 Aug 2017   China, LNG

China expects its apparent natural gas consumption to rise over 10 percent year-on-year to around 230 billion cubic meters (bcm) this year, the official Xinhua news agency said on Saturday citing a report from the National Energy Administration. The country’s apparent natural gas consumption reached 114.6 bcm in the first half of this year, up 15.2 percent from the same period a year earlier.

Clouds developing over U.S. LNG export potential

18 Aug 2017   LNG

A U.S. industrial trade group said Washington’s domestic focus should prioritize the retention of natural gas, rather than target it for the export market. As a candidate, Donald Trump ran under the slogan of “Make America Great Again.” As president, he’s steered efforts to put U.S. national interests first. Paul Cicio, the president of the Industrial Energy Consumers of America, said in a letter to U.S. Energy Secretary Rick Perry that stance should extend to liquefied natural gas. “It is time for the U.S. Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-free trade agreement [NFTA] countries, and put consumer safeguards in place,” he said in a […]

Wrong-Way Gas Bet Fueled Goldman’s Second-Quarter Swoon

18 Aug 2017   Shale Gas

Construction of the 713-mile Rover pipeline ran into trouble this spring. Goldman Sachs Group Inc. GS -1.86% lost more than $100 million in a wrong-way bet on regional natural-gas prices this spring, a setback that played a large role in the New York bank’s subpar second-quarter trading performance. Goldman wagered that gas prices in the Marcellus Shale in Ohio and Pennsylvania would rise with the construction of new pipelines to carry gas out of the region, said people familiar with the matter. Instead, prices there fell sharply in May and June as a key pipeline ran into problems . Goldman said in July that the quarter ended June 30 was the worst ever for its commodities unit, which has been one of the firm’s most consistent profit centers and a training ground for many of its top executives, including Chief Executive Lloyd Blankfein. The setback extended a broader trading […]

America’s Shale Natural Gas Production Is Taking Off – Sort Of

16 Aug 2017   Shale Gas, USA

America’s shale gas production is about to surge 12 percent. Sort of. The Energy Department issued a report Monday estimating that the nation’s prolific shale formations will yield 59.4 billion cubic feet a day in September, a massive jump from the roughly 53 billion projected for August. The difference: The agency began including the more than 6 billion cubic feet a day of gas flowing out of the Anadarko basin of Oklahoma and Texas. The addition of the Anadarko is testament to the flood of gas flowing out of shale formations known better for their oil riches. Almost half of the country’s shale gas is now being produced in crude plays, pulled out of oil wells as a byproduct. These supplies, known as associated gas, threaten to quash any meaningful recovery in an already-glutted market. “This is again telling us why we are in a perpetual bear […]

Cheniere Energy sets up China office to expand sales: sources

15 Aug 2017   China, LNG

U.S. natural gas exporter Cheniere Energy Inc is setting up an office in Beijing to help it clinch long-term supply deals with Chinese buyers, four industry sources said. Cheniere, which held extensive talks with China earlier this year, will be the first operator of a U.S. liquefied natural gas (LNG) export facility to establish a presence in the country. The move follows an agreement in May between the U.S and China to boost trade under the so-called 100-day trade talks that will allow Chinese buyers to purchase long-term supplies from the U.S. directly. World LNG demand is expected to double to about 71 billion cubic feet per day (bcfd) (544 million tonnes a year) by 2040, up from around 32 bcfd in 2015, the U.S. Energy Department estimates, driven by the rapidly growing economies of Asia, particularly China and India. Cheniere is currently the only company […]

U.S. could be world’s No. 3 LNG exporter

10 Aug 2017   LNG, USA

The potential exists for the United States to become the third-largest exporter of liquefied natural gas in a few short years, a federal report finds. Photo courtesy of Cheniere Energy Aug. 9 (UPI) — The United States could be the third-largest exporter of liquefied natural gas in the world by the end of the decade, a short-term federal report found. Thanks in large part to shale operations, the United States in 2009 passed Russia to become the largest natural gas producer in the world. Most of the transport, however, is contained within North America. In 2016, the last full year for which the U.S. government reported data, natural gas made up about 34 percent of total domestic electricity generation, followed by coal with 30 percent. Renewable energy that year accounted for about 15 percent of the total mix, though renewable energy momentum has since accelerated. There’s only one facility […]

Pennsylvania Senate votes to tax natural gas production, consumption

29 Jul 2017   LNG, USA

Pennsylvania’s Senate approved a tax reform bill with provisions to tax both natural gas production and consumption in the state. Oil and gas trade associations there strongly criticized the July 26 action, which passed by a 26-24 vote. The amended bill, which apparently attempts to close a budget deficit, now heads back to the state House, where its prospects are uncertain.  HB 542 would impose an $80-million severance tax on unconventional gas production and a $400-million tax on gas consumption, according to the Pennsylvania Independent Oil & Gas Association. Sales of LPG and for generation of electricity would be exempt. “It is widely accepted that the Marcellus shale is a once-in-a-lifetime economic opportunity for Pennsylvania,” PIOGA Pres. Daniel J. Weaver said. “The development of this enormous resource—drilling and production—is the initial benefit that has already created significant job growth in the commonwealth. The much bigger and longer-term benefit that we are just beginning to realize is from the increased use of this enormous resource.  “The Senate action last night has struck a severe blow to both ends of this benefit spectrum,” Weaver said. Unconventional gas producers tapping Pennsylvania’s portion of the Marcellus shale formation are only beginning to recover from several depressed prices the last 2 years that resulted in significant job cuts and financial losses, he said.

The bill’s gross receipts tax on gas is even more baffling, Weaver said. “Lower prices in Pennsylvania the past 5 years have not only reduced burner tip prices, but have caused massive reductions in the price of electricity across the commonwealth,” he said.  API-Pennsylvania Executive Director Stephanie Catarino Wissman said the bill targets creators and industry to pay more and families to take home less. “This punitive tax hike isn’t about paying one’s fair share or doing one’s part; the natural gas industry alone has paid over $1.2 billion in impact taxes since 2011, the bulk of which goes to local governments,” she said. “The real impact is on families who could be paying much more for living in Pennsylvania if the House doesn’t reject this measure.”  The American Petroleum Institute affiliate’s top official called HB 542 “a backwards approach that ignores economic reality, puts tens of thousands of good family sustaining jobs and money for groceries in peril, while jeopardizing the future prosperity of the commonwealth.  “We can continue to work together by making investments in Pennsylvania, and that begins with smart energy policy so that the benefits of energy development continue to flow,” she said.

Is A Bull Market For Natural Gas Around The Corner?

While the number of drilled but uncompleted wells (DUCs) in the U.S. oil patch is growing as producers wait for higher oil prices, the shale gas plays have seen the number of DUCs decline as drillers take advantage of higher natural gas prices this year compared to last year’s lows. Expectations of additional takeaway capacity coming online—as well as the rebound in natural gas prices—are making drillers more confident that they will be able to sell their production at higher prices. The companies are still cautious after the downturn, but the economics of drilling an oil well and a gas well have diverged since the 2015-2016 price rout. Gas prices have almost doubled since March 2016, and drillers are hoping that a bull market is coming, analysts reckon. However, higher production could also depress natural gas prices once again. The Henry Hub natural gas spot price averaged US$2.98 per […]

Natural gas-fired electricity generation so far this summer is below last year’s level

Source: U.S. Energy Information Administration, based on PointLogic Energy The amount of natural gas used for electricity generation, also known as power burn, reached its highest daily level so far in 2017 during the past week, exceeding 41 billion cubic feet (Bcf) on July 20, according to data from PointLogic Energy. Natural gas-fired electricity generation typically peaks at the end of July or the beginning of August because of high demand for air conditioning during that period. Power burn reached a record daily high on August 11, 2016, surpassing 42 Bcf. Power burn from April 1 through July 25 averaged 27.1 Bcf/d, or 7% lower than last year’s consumption over the same period. Although power burn in 2017 is lower than in 2016, it is still relatively high compared with the previous five-year average for that period. Higher natural gas prices relative to last summer explain part of the […]

Why Are Majors Shying Away From Gazprom?

Despite being the operator of Russia’s only operating LNG project, Sakhalin II, Gazprom has experienced quite a bit of misfortune with its pursuits. Its flagship endeavor, Shtokman LNG , ran aground and has been postponed indefinitely after the United States, the main presumed end market, witnessed an unprecedented surge in gas production on the back of to the shale revolution. Another project, Vladivostok LNG, destined to supply the Asia-Pacific region, was also shelved indefinitely after the Gazprom management prioritized the development of the Power of Siberia gas pipeline project to China. However, its recent initiative, Baltic LNG, might be just the thing Gazprom needed to kickstart its LNG portfolio on the Western front. The clock is ticking, too, as the emergence of a powerful Russian rival, and the general surge in LNG facilities, might sideline Gazprom from a market which it is still yet to conquer. Bolstered by palpable […]

A Worldwide Gas Glut Claims $27 Billion Victim in Canada

27 Jul 2017   Canada, LNG

A $27 billion energy project in Canada just became the latest casualty of a worldwide glut of natural gas. Malaysia’s Petroliam Nasional Bhd abandoned on Tuesday its plans for the Pacific Northwest LNG terminal, a plant that would have liquefied Canada’s gas and sent the fuel by tanker from the western shores of British Columbia to buyers in Asia. Petronas cited market conditions in its decision. Pacific Northwest LNG joins a growing list of projects that have been killed in recent months by plummeting LNG prices, throwing the economics of export terminals from Australia to Russia to Mozambique into question. Prices have crashed as increasing volumes of gas from Australia and America’s shale formations hit the water, inundating the market with so much supply that analysts say demand […]

After LNG project scrapped, TransCanada looks for more export options

27 Jul 2017   Canada, LNG

Canada stills needs to find ways to get its gas assets out of North America, TransCanada says after a project slated for British Columbia was scrapped. File photo by Stephen Shaver/UPI July 26 (UPI) — There’s still a need to get Canadian natural gas out of North America, energy company TransCanada said after an export option for British Columbia was scrapped. Malaysia energy company Petronas said that, as the head of a partnership, it was no longer pursuing a liquefied natural gas project at Port Edward in British Columbia. Anuar Taib, the company’s CEO, said the decision was made because of an “extremely challenging environment” brought on by a weak market. Pipeline and energy company TransCanada, which was involved with a Petronas affiliate on the project, said it was disappointed with the decision, but would be reimbursed for costs associated with the development. “There is still a strong need […]

Is Big Oil Betting On The Wrong Horse?

Many oil majors have steered their strategies and investments into natural gas, aiming to seize the projected global gas demand growth as the world shifts away from coal-fired power generation. Oil and gas supermajors are pitching natural gas as the ‘bridge fuel’ between coal and renewables, with the value proposition that even if it’s a fossil fuel, natural gas burns cleaner than coal and allows for stable power supply until storage solutions paves the way for renewables to become less intermittent. However, the cost of wind and solar is falling and is expected to drop sharply in the long term, and some analysts predict that there is not time enough for natural gas to assert itself as a true transition fuel before renewable energy takes over. Everyone agrees that natural gas demand will grow, but some analysts forecast that the growth may not be as high as it was […]

Gas Everywhere but No Way to Ship It

21 Jul 2017   Shale Gas

Accidents happen, but these were expensive ones by any measure. Energy Transfer Partners had hoped to have the first phase of its massive Rover pipeline up and running by now, transporting natural gas from America’s most prolific natural gas basins to other parts of the country. Rushing to complete construction in a tight regulatory window, the company allegedly spilled drilling fluid into a protected wetland and then…

What If Big Oil’s Bet on Gas Is Wrong?

Global gas-fired generation capacity to decline after 2031 Energy giants plan shift from producing oil toward natural gas Talk to a Big Oil executive these days, and the chances are they’ll steer the conversation toward gas. “In 20 years, we will not be known as oil and gas companies, but as gas and oil companies,” Patrick Pouyanne, chief executive officer of French giant Total SA , told a conference in St. Petersburg last month. Patrick Pouyanne Photographer: Simon Dawson/Bloomberg Pouyanne and his peers have pitched the fuel as a bridge between a fossil-fuel past and a carbon-free future. Gas emits less pollution than oil and can be burned to produce the power that grids will need for electric cars. But with the cost of renewable technologies falling sharply, some are warning that the outlook may not be so rosy. Forecasters are beginning to talk about peak gas demand, spurred […]