Natural Gas Supply

China’s CNPC Considers Taking Over South Pars Gas Field

China National Petroleum Corporation (CNPC) is mulling the taking over of the majority stake in an Iranian gas project from Total if the French company walks out of Iran to comply with possible new U.S. sanctions, Reuters reported on Friday, citing industry sources. In July this year Total signed a contract to develop phase 11 of the South Pars gas field in Iran—the world’s biggest gas field—marking the first Iranian Petroleum Contract (IPC) with a Western major since most sanctions on Iran were lifted. Total holds a 50.1-percent interest and is the operator of the South Pars 11 (SP11) project, while CNPC has 30 percent, and Petropars, a wholly owned subsidiary of the National Iranian Oil Company (NIOC), owns the remaining 19.9 percent. However, after U.S. President did not certify in October that Iran was complying with the terms of the nuclear deal, now the U.S. Congress has to […]

The Uncertain Future Of Natural Gas

Its green credentials are not whiter than white, but relative to coal, modern combined cycle gas turbine power plants (CCGT) are highly efficient, emit low levels of pollution and crucially can be turned on and off quickly to provide intermittent or peak power demands, in addition to balancing more variable sources (such as renewables). The Non-Nuclear Option? After Fukushima, many major economies have moved away from nuclear. In addition to Japan’s near complete shutdown of its nuclear generating capacity, Germany followed suit. Even France, long a champion of nuclear power, has said less of its generating capacity will be met by nuclear in the future. The expectation was that natural gas would be the natural successor to nuclear power, as countries took an increasingly responsible view to reducing carbon emissions. But despite a surge of investment in natural gas liquefaction facilities and the construction of new liquefied natural gas […]

It’s As If the Craziest Week in European Gas Never Happened

It’s like the craziest week in European gas markets for as long as anyone can remember never happened. U.K. prices are almost back where they ended last week as a halt to the most important pipeline cluster in the North Sea, an explosion at a key facility for Russian gas in Austria and the unexpected shutdown of Europe’s biggest offshore field sent rates surging as much as 46 percent on Tuesday. But as the fire after the blast at the Baumgarten site was extinguished, gas flows restored and Norway’s Troll field began pumping again, rates are now down more than 20 percent in the past two days. The whipsaw of prices in one of Europe’s key markets show just how much the loss of Centrica Plc’s Rough gas store means at times of peak demand. The depleted oil and gas field off England east coast kept more than 70 […]

Putin Pleased As Desperate UK Turns To Russian Natural Gas

We said two days ago that it’s been a tough week for anybody who needs to heat their home or put gasoline in their cars in Britain. The litany of negative events and mishaps includes extremely low temperatures, the shutdown of the Forties pipeline due to a hairline crack and an explosion at one of the Europe’s biggest gas hubs in Austria, which further tightened UK supplies. As we noted, the price of gas futures surged by the most in 8 years. The timing of the gas hub explosion, as we head into Winter, couldn’t have been worse either. (Click to enlarge) However, adding insult to injury, the UK lacks gas storage capacity and the web of interconnections that link markets across Continental Europe. And…Centrica is closing the nation’s biggest storage site after more than 30 years. The question was, where could the UK secure alternative supplies. It takes […]

Russia Wins in Arctic After U.S. Fails to Kill Giant Gas Project

14 Dec 2017   LNG, Russia

Sanctions created ‘deadlock’ for Yamal LNG, says Total Novatek plans new projects to challenge Qatar for scale Building the $27 billion Yamal liquefied natural gas project meant shipping more than 5 million tons of materials to construct a forest of concrete and steel 600 kilometers north of the Arctic circle, where temperatures can drop to -50 degrees celsius and the sun disappears for two months straight. Yet those challenges weren’t as tough as the U.S. sanctions imposed in 2014, forcing a complete refinancing just as construction was about to start. Jacques de Boisseson, head of the Moscow office of French energy giant Total SA, which has a 20 percent stake in Yamal LNG, said there were “various moments” when he thought the project may never happen. “We were too much advanced to stop. We were in a deadlock: we had to go ahead and we didn’t know how,” de […]

Panama Canal Can’t Handle U.S. LNG Boom

12 Dec 2017   LNG, Panama

The International Energy Agency recently predicted that the United States could become the world’s top LNG exporter within ten years. This prediction, however, is far from a certain one. The U.S. LNG boom is fraught with challenges, the latest among them, apparently, the Panama Canal . LNG producers and the Panama Canal Authority are locked in an argument about whose fault it is that not enough LNG tankers are using the freshly expanded channel that saves 11 days from the journey to Asia, which has become a key market for U.S. LNG. According to the producers, the canal has expanded the access of cargo vessels at the expense of LNG tankers. According to the authority, LNG producers can’t comply with timetables. The facts are as follows: the expansion of the Panama Canal has been going more slowly than initially planned. To date, only one LNG tanker a day can […]

Are NatGas Prices About To Explode?

As I write this, Henry Hub (the primary confluence of pipelines in northern Louisiana at which the NYSE daily futures contract price is pegged) is off 11 cents to $2.79 per thousand cubic feet (or million BTUs), having lost 8.8 percent in value for the week and 12 percent for the month. The reason is simple: overall demand is coming in lower than this time last year. But that’s not going to last for much longer. You see, there is a major catalyst in the natural gas market that could soon send prices through the roof in 2018. Here’s how… Natural Gas Price Squeeze The reason why American natural gas prices have plummeted boils down to two things: • An excess of supply; • And unusually warm weather. Most of the retreat is tied to the supply side. Expectations by year-end indicate that natural gas demand will be down […]

Russia Aims To Challenge Qatar LNG Dominance

12 Dec 2017   LNG, Qatar, Russia

Vladimir Putin officially launched on Friday the Yamal LNG project in the Arctic—Russia’s second LNG plant and its push to challenge the dominance of Qatar and Australia, and the U.S. in the future, on the global LNG market. The first tanker from the US$27-billion project will be shipped to China’s CNPC, in what the majority holder of the project, Russia’s Novatek, said in October is “in recognition for their overall contribution to the project and the importance the Asian Pacific market represents as a key-consuming region.” Novatek is the majority shareholder of Yamal LNG with 50.1 percent, France’s oil and gas supermajor Total has 20 percent, CNPC holds another 20 percent, and China’s Silk Road Fund owns the remaining 9.9 percent. All LNG production will be sold to customers in Europe and Asia under 15- to 20-year contracts, Total says. Novatek, which has been on the U.S. list of […]

The Super Basin Behind U.S. NatGas Dominance

11 Dec 2017   LNG

Natural gas production in the United States has skyrocketed over the past five years, making the carbon-light fossil fuel cheaper to access and plentiful for export, according to a new report by the Energy Information Administration. Production in the Appalachia region alone has seen a jump of 14 billion cubic feet per day since 2012, driving the bulk of output growth in recent years and giving the region a 2016 output of 22.1 billion cubic feet per day. National output soared to 72.3 billion cubic feet per day last year– that’s more than Russia, Africa, Iran and Qatar – the latter being the world’s most prolific liquefied natural gas exporter. The Appalachian basin alone produced more natural gas than any nation except for Russia. But a decline is on the horizon, according to data emerging from new wells. The average production from freshly drilled sites has fallen in the […]

Pennsylvania gas output remains focused in northeastern, southwestern corners

9 Dec 2017   Shale Gas

Pennsylvania natural gas production continues to be concentrated in counties in the northeastern and southwestern corners of the state, according to a report by the state’s Independent Fiscal Office. Four counties — Susquehanna and Bradford, in the dry gas northeastern region, and Washington and Greene in the liquids-rich southwestern region — comprised two-thirds of statewide production in the first three quarters of 2017, the IFO report said. Susquehanna in the northeastern corner of the Commonwealth was the leading gas producer, with output of 966.1 Bcf through September, comprising almost one quarter of the total gas production in the state. Coming in at second place with production of 679.2 Bcf, about 17% of the state’s total, was Washington County. Bradford County, one county to the east of Susquehanna, came in as the No. 3 producer, with production through September of 583.3 representing almost 14% of the state’s production. Rounding out […]

First LNG cargo ready to leave the Russian Arctic

9 Dec 2017   LNG, Russia

French supermajor Total said Friday the first cargo of liquefied natural gas is leaving an Arctic facility in Russia, one of the largest in the world. The French company holds a 20 percent stake in the Yamal liquefied natural gas project, alongside China National Petroleum Corp., with a 20 percent stake, and Novatek, Russia’s largest independent gas company and the majority stakeholder. Total said the first cargo of LNG was ready for shipment as of early Friday. “Together we managed to build from scratch a world-class LNG project in extreme conditions to exploit the vast gas resources of the Yamal peninsula,” Total Chairman and CEO Patrick Pouyanné said in a statement . The Yamal LNG project has the capacity to produce about 16.5 […]

Russia Skirts U.S. Sanctions With $27 Billion Arctic Gas Plant

9 Dec 2017   LNG, Russia

The Yamal LNG plant on the Yamal Peninsula in the Arctic circle. The project took years to find financing from China that didn’t violate U.S. sanctions on Russia over Ukraine. MOSCOW—Russian President Vladimir Putin launched a giant Arctic gas project that is a symbol of its efforts to overcome Western sanctions and strengthen ties with China. The $27-billion Yamal LNG facility on Friday started loading its first tanker, which will take liquefied-natural gas from an icy Arctic peninsula to the Asian market. The project took years to find financing from China that didn’t violate U.S. sanctions on Russia over Ukraine. Yamal marks a departure for Russia’s gas exports, which have long focused on state-owned PAO Gazprom delivering fuel via pipeline into Europe. Mr. Putin granted special permission to export gas to Yamal, which will use ice-breaking ships to transport LNG along the northern coast of Siberia during the summer […]

Gazprom’s natural gas exports to Europe, Turkey move past 2016 levels to fresh record

Russia’s Gazprom is set to exceed on Friday the level of exports to Europe and Turkey that was recorded in 2016 as demand for Russian natural ss and cold weather across the continent. Sales to Europe, Turkey to reach 179.8 Bcm Friday CEO points to ‘unconditional reliability’ of supplies Nord Stream set for 87% utilization rate in 2017 Taking into account the nominated volume for Friday, Gazprom will have exported 179.8 Bcm to what it calls the Far Abroad — Europe and Turkey, but not the countries of the former Soviet Union — higher than last year’s then record high of 179.3 Bcm. Russian gas has been in strong demand through 2017, with a prolonged cold snap in January and February seeing supplies peak, while deliveries remained robust through the summer as European buyers looked to refill heavily depleted storage stocks. Cold weather in Europe in late November and […]

China’s CNOOC Spends Big In Panic Hoard of LNG

8 Dec 2017   China, LNG

Chinese state-owned company CNOOC, the country’s largest importer of liquefied natural gas (LNG), has leased two tankers to store emergency LNG supplies offshore, spending US$10 million on the plan, as China’s massive coal-to-gas switch leads to an unprecedented soaring gas demand and concerns of fuel shortages this winter. “It’s like buying insurance to cover winter demand spikes,” a trading source with knowledge of CNOOC’s tanker lease deal told Reuters. Last year, CNOOC hired one tanker to hoard LNG supply, the source said, but noted that this year it is the first time that two tankers have been hired. “CNOOC arranged [to lease the two tankers] months ago anticipating the shortage will be severe this year,” the source told Reuters. The lease of an LNG tanker is very expensive, as is keeping the gas cooled, so the cost of holding such tanker is much higher than keeping crude oil in […]

U.S. liquefied natural gas exports have increased as new facilities come online

8 Dec 2017   LNG, USA

Natural Gas Monthly (data for October and November 2017 are EIA estimates based on tanker loads) In August 2017, total U.S. natural gas liquefaction capacity in the Lower 48 states increased to 2.8 billion cubic feet per day (Bcf/d) following the completion of the fourth liquefaction unit at the Sabine Pass liquefied natural gas (LNG) terminal in Louisiana. With increasing liquefaction capacity and utilization, U.S. LNG exports averaged 1.9 Bcf/d, and capacity utilization averaged 80% this year, based on data through November. Sabine Pass, located on the U.S. Gulf Coast near the Louisiana-Texas border, consists of four existing natural gas liquefaction units, or trains, with a fifth train currently under construction. When complete, Sabine Pass will have a total liquefaction capacity of 3.5 Bcf/d. Five additional LNG projects are currently under construction in the United States, and they are expected to increase total U.S. […]

Next foreign influence target of U.S. LNG is Venezuela

7 Dec 2017   LNG, USA, Venezuela

Liquefied natural gas is a way to extend influence over the horizon to Europe, though similar gains are possible for Latin America, a U.S. senator said. Polish Oil and Gas Co., known commonly as PGNiG, signed a five-year contract in November to secure LNG from the Sabine Pass terminal in Louisiana, the first mid-term contract of its kind. U.S. Sen. Bill Cassidy, R-La., a member of the Senate Committee on Energy and Natural Resources, said the agreement would reduce “Russian President Vladimir Putin’s ability to bully Europe.” European leaders have said LNG sourced from U.S. shale basins could present a source of diversity with the right infrastructure in place. Some countries in Eastern Europe like Poland rely almost exclusively on […]

Appalachian Basin Produces More Natural Gas Than Any OPEC Country

7 Dec 2017   Shale Gas

This week in one of their daily Today In Energy columns, the Energy Information Administration highlighted the tremendous growth of natural gas production in the Appalachian Basin:

Shale gas production in the Appalachia region has increased rapidly since 2012, driving an overall increase in U.S. natural gas production. According to EIA’s Drilling Productivity Report, natural gas production in the Appalachia region—namely the Marcellus and Utica shale plays—has increased by more than 14 billion cubic feet per day (Bcf/d) since 2012. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017.

This 200% increase in Appalachian natural gas production since 2012 has had significant implications in the U.S. market. It has driven down costs for consumers, is fueling a renaissance in the chemical manufacturing industry, and has helped push coal-fired power plants out of business.

Report: LNG Project Sanction Uptick in 2018

6 Dec 2017   LNG, Prices

There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, according to a new report. There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, as improving market conditions, tighter fiscal management and the need to invest to meet long term demand support final investment decisions. That is the view of BMI research, which made the statement in a new LNG project outlook report sent to Rigzone. “Given the delay to a number of projects over the last two years, there is now a backlog of developments that are close to FID [final investment decision] and are awaiting better energy market conditions to move ahead,” the report states. “Despite a weak outlook for LNG prices in 2018 and 2019…both strengthening oil prices and better fiscal management by companies will support capital allocation to enable final investment decisions…to […]

More interest from Asian economies in Alaskan LNG

6 Dec 2017   Arctic, LNG, USA

A Japanese company becomes the second possible Asian consumer to express interest in Alaskan LNG in less than a month. Map courtesy of Alaska Gasline Development Corp. Dec. 5 (UPI) — A letter of intent was signed with a Japanese company to secure liquefied natural gas from a possible development in Alaska, a state pipeline company said. The Alaska Gasline Development Corp. signed a letter of intent with Tokyo Gas Co. on the possible sale and purchase of liquefied natural gas from the Alaskan company’s portfolio. “The letter of intent signed today signifies the continuation of this decades-long relationship between Alaska and Tokyo Gas Co., Ltd. and helps round out the sales volumes from the Alaska LNG project,” the Alaskan company’s president, Keith Meyer, said in a statement . The Japanese handshake is the second Asian nod for Alaskan LNG in less than a month. China Petrochemical Corp., known […]

Russia’s Novatek now a world player with Yamal LNG

6 Dec 2017   LNG, Russia

Russian energy company Novatek said a new era for one of the world’s largest gas suppliers has begun with the start of LNG operations on the Yamal Peninsula. Novatek said production of liquefied natural gas started at the Arctic facility, which has a design capacity of about 5.5 million tons of LNG per year. The first cargo for delivery is already scheduled for Friday. “This event marks a milestone accomplishment for the Yamal LNG project,” Novatek Chairman Leonid Mikhelson said in a statement . “The commencement of LNG production begins a new chapter in our corporate history.” Novatek, one of the largest gas producers in Russia, apart from Gazprom, signed a memorandum of understanding with the China Development Bank to cooperate on steering […]

LNG is the fuel of choice, maritime shipper says

5 Dec 2017   LNG

Two French companies, supermajor Total and maritime shipper CMA CGM, agree on LNG as a fuel source with deliveries slated for 2020. Photo courtesy of Total Dec. 4 (UPI) — After reaching a supply agreement with French supermajor Total, shipping group CMA CGM said that liquefied natural gas is the maritime fuel of the future. French container shipping company CMA CGM and Total announced in a joint statement Monday an agreement spanning 10 years will begin at the start of the new decade. An “unprecedented” volume of 300,000 tons of liquefied natural gas will fuel nine of CMA’s vessels from 2020 onward. “LNG is the fuel of the future for shipping,” Rodolphe Saadé, the shipping company’s chairman and CEO, said in a statement . The shipper added that, by its account, it’s the first company of its kind to outfit its vessels with LNG propulsion. Total in July said […]

China Orders Regions To ‘Regulate’ Surging Natural Gas Prices

China’s state planning commission has ordered eight Chinese regions to “regulate” surging gas prices amid winter heating demand and the switch to gas from coal, by meeting on Monday with natural gas producers, LNG terminal operators, and traders, Reuters reports, quoting an official at the National Development and Reform Commission (NDRC). The eight regions are the leading natural gas producing regions Shaanxi, Inner Mongolia, Xinjiang, and Sichuan, as well as the biggest gas-consuming regions Hebei, Jiangsu, Liaoning, and Beijing, according to the NDRC official who spoke to Reuters. The meetings to ‘regulate’ the prices should be a warning that the Chinese government could punish any market participants and companies that could be found to have manipulated the market or the prices, the official told Reuters. Ahead of the winter season, Chinese buyers of LNG had already pushed LNG prices higher as millions of Chinese households make the switch from […]

Can We Skip Straight to Renewable Energy Without Natural Gas?

A protest this weekend at the site of a proposed natural gas power generator on the Cape Cod Canal highlights the controversy surrounding the rise of natural gas. Some say it’s an improvement over other fossil fuels, and a necessary bridge to a more renewable energy system. Others say it’s still a fossil fuel, and we should be investing in solar instead. The director of research at MIT’s Energy Initiative , Francis O’Sullivan, says neither side is completely right – or wrong. In a 2011 report on the Future of Natural Gas , O’Sullivan and colleagues predicted that natural gas would play an increasing role in energy generation and could provide deep cuts in greenhouse gas emissions, compared to coal. Then, in a 2015 report on the Future of Solar Energy , the same group called for a massive scale-up of solar power. O’Sullivan doesn’t see a conflict there. […]

Report: LNG Project Sanction Uptick in 2018

5 Dec 2017   LNG

There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, according to a new report. There will be an uptick in the number and capacity of LNG projects sanctioned in 2018, as improving market conditions, tighter fiscal management and the need to invest to meet long-term demand support final investment decisions. That is the view of BMI research, which made the statement in a new LNG project outlook report sent to Rigzone. “Given the delay to a number of projects over the last two years, there is now a backlog of developments that are close to FID [final investment decision] and are awaiting better energy market conditions to move ahead,” the report states. “Despite a weak outlook for LNG prices in 2018 and 2019…both strengthening oil prices and better fiscal management by companies will support capital allocation to enable final investment decisions…to […]

Big gas exporter countries blast unilateral sanctions in dig at U.S

25 Nov 2017   LNG, USA

 Representatives from a group of major energy-exporting nations on Friday said they oppose the use of unilateral sanctions on any of their members – an apparent dig at the United States for its moves against Russia, Iran and Venezuela.  The Gas Exporting Countries Forum, which also includes members like Libya, Equatorial Guinea and Nigeria, expressed their “profound concern” about sanctions affecting the gas sector that are not authorized by the United Nations, according to a communique signed by GECF’s 12 members after the group’s summit in Bolivia this week. Sponsored The U.S. Congress has imposed economic sanctions on a number of GECF’s members, including recent measures against Russia that – among other things – seek to prevent companies from participating in Russian pipeline […]

Russia warns global gas oversupply could trigger price ‘crisis’

Global gas supplies currently exceed demand, a situation that could lead to a “crisis” drop in prices similar to what occurred in the crude oil market, Russian energy minister Alexander Novak said on Friday.  “The current excess supply of natural gas brings risks… of entering into the same crisis that affected oil prices,” Novak said at the Gas Exporting Countries Forum (GECF) in Bolivia, where top officials of major gas-producing countries have been meeting this week. Gas prices have plunged more than 80 percent in the last decade and remain under pressure due to growing supplies of shale gas and increased availability of liquefied natural gas (LNG) that can be shipped overseas. Novak said the threats to global gas prices underscore the importance […]

Is The LNG Glut Real?

21 Nov 2017   LNG

LNG prices have tanked over the past few years after a wave of new natural gas export capacity has come online in places like Australia and the U.S. However, despite fears that the LNG market would collapse under a massive glut of gas, the supply/demand balance for LNG is a lot tighter than expected. A new report from Columbia University’s Global Center on Energy Policy argues that a group of about a dozen relatively small countries have popped up to buy some of those LNG cargoes, relieving the market of its expected glut. On their own, each individual country is a bit player in the global market for LNG. Collectively, they only accounted for 3.3 percent of total LNG imports in the world in 2014, but they have taken on a majority of the growth in imports since then, accounting for 57 percent of the total increase in imports […]

Growing Gas Glut Threatens West Texas Oil Boom

21 Nov 2017   Shale Gas

Natural gas is gushing out of West Texas, a byproduct of frenzied drilling for oil . That is a problem for energy producers, who are running out of places to send it all. Pipelines running from the region’s Permian Basin to the Gulf Coast’s chemical plants, cities and export terminals are essentially full. Drillers in the Rockies and Canada already supply markets in the north and west. There is plenty of room on pipelines running south to Mexico, which has emerged as a major market for U.S. producers, but there is a catch: much of the gas distribution infrastructure and power plants there that would buy the fuel haven’t been built yet. The growing gas glut is already weighing on regional prices. Natural gas prices at the Waha trading hub in West Texas have fallen to much as 57 […]

Russia reviews LNG options with Japan

21 Nov 2017   Japan, LNG, Russia

Russian energy company Gazprom said it was reviewing the opportunity to expand its only operational liquefied natural gas plant with its Japanese partner. Gazprom Chairman Alexei Miller hosted a delegation from Mitsubishi Corp. to review LNG opportunities in the Far East market. “The parties reviewed issues related to joint efforts under the Sakhalin II project, including the construction of the third train of the LNG plant,” the Russian energy company stated. The so-called train is the facility that turns natural gas into the super-cooled liquid form. Economies in the Asia-Pacific region are expanding faster than developed nations and taking on more oil and gas resources as a consequence. Island nations like Japan, meanwhile, have few resources of their own and rely on imports from major producers […]

EU natural gas demand to stay at current levels despite likely boost from power: IEA

EU natural gas demand is unlikely to rise from current levels in the coming years despite an expected boost in consumption from the power sector, the International Energy Agency said in its latest World Energy Outlook published Tuesday. At the same time, the EU is set to become increasingly import-dependent as domestic production slides by as much as 50% from current levels. “The power sector remains central to the long-term prospects of gas in the EU,” the IEA said, adding that the estimated 7% increase in EU consumption last year to more than 460 Bcm was driven by power generation. The IEA said that with many coal plants in the EU being retired in the coming decade and a more downbeat outlook for nuclear power, gas stands to benefit alongside renewables. “As a result, gas use in the power sector expands slightly in the period to 2040, and over […]

A U.S. Natural Gas Bonanza In China Isn’t A Done Deal

13 Nov 2017   China, LNG

Building liquefied natural gas (LNG) plants is a notoriously expensive and lengthy proposition: one reason a 2012 study found the cost of the Alaskan project might actually be as high as $65 billion. And because the Asian gas market is forecast to be oversupplied until the early-2020s at least, and LNG projects are so risky, companies have a strong incentive to make splashy announcements with big partners, to frighten off other potential suppliers. The global LNG business resembles a giant game of chicken, with every player trying to convince the competition that they are poised to throw tons of money at scary, game-changing projects . If the Alaskan project goes through it will compete with Cheniere, which in turn might […]

Paradise Papers Reveal U.S. Selling Russian LNG In Europe

11 Nov 2017   LNG, Russia, USA

The new massive data leak that has been making headlines for several days now has revealed that a company with U.S. ownership has been buying Russian gas and selling it in Europe at higher prices. According to a report in Belgian daily Le Soir, taken up by other media outlets, such as The Guardian and Eurasia Review, Wilbur Ross holds a 35-percent interest in Navigator Holdings, a shipping company registered in the Marshall Islands. According to the leaked documents, four cargo carriers owned by Navigator Holdings were used to load Russian natural gas at the port of Ust Luga before heading to the Anwerp LNG terminal in Belgium. The documents suggest that a company with U.S. ownership is buying Russian gas from petrochemical giant Sibur, and then selling it—at a profit, of course—to the European Union, which is in a rush to build as many LNG terminals as it […]

US House Republicans plan repeal of oil, gas tax credit, without opposition

The US tax code overhaul being pushed by House Republicans calls for eliminating a credit for producing oil and natural gas from marginal wells, but the industry group that originally lobbied for the creation of the credit about 13 years ago is not pushing to keep it place. “As sound of a philosophical structure as it has, it’s just not something that’s been active enough to have the necessity we thought it would have,” said Lee Fuller, vice president of government relations with the Independent Petroleum Association of America. The credit, which was enacted in 2004 after a campaign by IPAA, allows producers of marginal oil and gas wells to claim a maximum of $3/b or 50 cents/Mcf on a small portion of daily production if prices fall below $15/b or $1.67/Mcf, based on the average price from the previous year, according to IPAA. Marginal wells are defined as […]

Carnival Cruise Line signs agreement with Shell to fuel North America’s first LNG-powered cruise ships

10 Nov 2017   LNG

Carnival Cruise Line, a unit of Carnival Corporation, signed an agreement with Shell NA LNG, LLC (Shell) to be its supplier of marine liquefied natural gas (LNG) to power North America’s first fully LNG-powered cruise ships. Under this framework agreement, Shell will supply Carnival Cruise Line with fuel for its two new LNG-powered ships expected to launch in 2020 and 2022 and to be homeported in North America. As part of the agreement, the two ships, built with a next-generation “green cruising” ship design, will be fueled through Shell’s LNG Bunker Barge (LBB)—part of Shell’s strategic plan to develop a global LNG bunkering network. The ocean-going LBB, which is designed to support growing cruise line demand for LNG as a marine fuel […]

U.S. LNG faces headwinds in Asian markets

9 Nov 2017   LNG, USA

U.S. energy ambitions to tap into the growing demand in the Asian market could face a challenge from established Russian programs, analysts said. U.S. President Donald Trump left the 12-nation Trans-Pacific Partnership trade agreement, brokered by his predecessor, during his first week in office. In May, however, the Commerce Department announced advancements with China under a 100-day action plan. Among the agreements steered in part by U.S. Commerce Secretary Wilbur Ross was a decision to allow China, which doesn’t have a free-trade agreement with the United States, to receive liquefied natural gas sourced from U.S. basins. Trump this week starts the Beijing leg of an Asian tour that marks his first visit to the region as president. A pro-oil and gas president, the tour offers an opportunity to broker more one-on-one energy trade agreements. “The fact that Trump will arrive in Beijing with a large […]

US Cuts Natgas 2017 Output Growth Forecast, Raises 2018 Outlook

U.S. natural gas production growth is expected to surge in 2018, after rising more modestly in 2017, the U.S. Energy Information Administration (EIA) said in a monthly report Tuesday. U.S. dry natural gas production was forecast to rise to 73.45 billion cubic feet per day (bcfd) in 2017 from 72.85 bcfd in 2016, according to the EIA’s Short Term Energy Outlook (STEO). The latest November output projection was a little lower than EIA’s 73.63-bcfd forecast in October and falls short of the record high 74.14 bcfd produced on average in 2015. The EIA also projected natural gas production would rise to 78.90 bcfd in 2018, up from a forecast of 78.49 bcfd issued in October. Total gas consumption in the U.S. is likely to […]

Influx of LNG Seen Benefiting European Gas Producers

4 Nov 2017   Europe, LNG

Surging imports to Europe of liquefied natural gas (LNG) are driving down prices. Surging imports to Europe of liquefied natural gas (LNG) are driving down prices, but in the long run that is seen as a benefit to gas producers in the region. For years Europe has been considered the market of last resort for LNG shipments, which has led to an active spot market and a wide variety of physical and financial hedging systems. “The price of gas at European hubs continues to drive LNG price formation globally,” according to a global LNG analysis released at the end of October by S&P Global Platts. It noted further that competition is increasing between the two major trading hubs in Europe, the UK gas trading market, the National Balancing Point, and the Title Transfer Facility in the Netherlands. “Meanwhile, Europe’s LNG import infrastructure remains severely underused,” stated the S&P Global […]

Views from the Crest of LNG’s Second Wave:

3 Nov 2017   LNG

US offers ‘critical combination of price and certainty’ for LNG, exec tells Rigzone. From a liquefied natural gas (LNG) exporting perspective, the proverbial stars are aligned for North America, according to an executive with a company that counts itself among the leading edge of the “second wave” of LNG liquefaction terminal developers “LNG is going to be very important to North America overall and the United States in particular,” said John Baguley, chief operating officer with LNG Limited (LNGL), which is pursuing export terminal projects in Louisiana and Nova Scotia. “Even more so, U.S. and North American LNG is going to be extremely important to the world energy market.” Calling the U.S. a “stable, long-term, reliable” supplier of highly competitively priced LNG, Baguley said that it enjoys a unique position among LNG-exporting countries. “It is not possible today to identify another place in the world that provides this critical […]

If Mexico Goes MIA, Permian Gas Could Flame Out

25 Oct 2017   Mexico, Shale Gas

Three pipelines connecting the Permian Basin to Mexico came online with total capacity of 3 billion cubic feet per day or bcfd early 2017, but flows have been at a paltry 0.2 bcfd, says Bernstein analyst Jean Ann Salisbury . The firm expected 1.5 bcfd. She thinks that delays in Mexico build-outs “will most negatively impact Permian producers.” Salisbury wrote: We continue to assume that the Mexico demand will come in time to keep shut ins from happening, but do forecast Permian differentials rising above $1/mmbtu by mid 2018, set by the 60c-$1.1/mbtu max interruptible rate to the Midcontinent area, which we think itself could trade up to 40 cents below Henry Hub as the Marcellus pushes westward. This is 40c worse than the Waha forward strip, which we believe is pricing in the best case scenario on Mexico and new pipelines. Best case […]

2 Red Flags For The World’s Top Shale Play

21 Oct 2017   Shale Gas

A lot of activity the past few days in Pennsylvania: home of the Marcellus shale, arguably the world’s best-performing unconventional natural gas and liquids play right now. And it looks like things could get more complicated for drillers here going forward. Partly on the financial front. With a special committee of the Pennsylvania House passing a bill Wednesday to impose a new tax on natgas production in the state. Under the legislation, producers would be charged 2 cents tax on every mcf of gas produced — when prices are below $3/mcf. With that rate escalating to as much as 3.5 cents per mcf if the gas price exceeds $5.99/mcf. The bill comes after much debate about a new shale tax aimed at Marcellus production. And the proposed rates were significantly reduced during discussions amongst legislators drafting the new rules. Still the new bill would impose a notable jump in […]

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 […]