Natural Gas Supply

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 […]

U.S. on track to be world’s No.2 LNG exporter by end-2022: IEA

13 Jul 2017   LNG, USA

LONDON (Reuters) – The United States is on track to have capacity to become the world’s second largest exporter of liquefied natural gas (LNG) by the end of 2022, just behind Australia and ahead of Qatar, the International Energy Agency (IEA) said. Overall, global LNG export capacity would reach 650 billion cubic meters (bcm) a year by the end of 2022, compared to less than 452 bcm a year in 2016, the IEA said in its annual report on gas markets. Of that amount, Australia would have capacity to export 117.8 bcm a year of LNG, followed by the United States with 106.7 bcm a year and Qatar with 104.9 bcm a year, it said. Australia would stay top by adding 30 bcm a year of capacity by the end of 2022 to its existing capacity, but the United States, which has seen shale gas output surge, would add […]

US Shale Gas Booming Despite Global Glut

7 Jul 2017   Shale Gas, USA

The United States has led the pack in the shale revolution, profiting more than any other nation . The U.S. enjoys the benefit of having the majority of its wells located domestically, thanks to vast natural shale formations, allowing the nation to keep all profits for themselves without any negotiations or diplomatic gymnastics. Due to the up rise of fracking and other technological advances, the production of natural gas and shale oil in the U.S. had been increasing steadily for years. Last year marked a sharp decline as a gas glut led to a dramatic plunge in pricing. But now, just as shale gas prices are finally rebounding from last year’s all-time-lows, the United States’ two biggest shale gas deposits are producing record amounts of fuel , threatening to push gas prices back down. As the Appalachian Marcellus shale basin and the Texas-based Permian basin rush to conquer a […]

The Shale Gas Revolution Is A Media Myth

6 Jul 2017   Shale Gas

The marginal cost of shale gas production is $4/mmBtu despite popular but incorrect narratives that it is lower. The average spot price of gas has been $3.77 since shale gas became the sustaining factor in U.S. supply (2009-2017). Medium-term prices should logically average about $4/mmBtu. A crucial consideration going forward, however, will be the availability of capital. Credit markets have been willing to support unprofitable shale gas drilling since the 2008 Financial Collapse. If that support continues, medium-term prices for gas may be lower, perhaps in the $3.25/mmBtu range. The average spot price for the last 7 months has been $3.13. Gas supply models over the last 50 years have been consistently wrong. Over that period, experts all agreed that existing conditions of abundance or scarcity would define the foreseeable future. That led to billions of dollars of wasted investment on LNG import facilities. Today, most experts assume that […]

Germany Is Addicted to Russian Gas

New pipeline would cut costs of shipping gas to western Europe Hearing on local objections scheduled for later this month Hidden by pine forests near the deserted site of what was once East Germany’s biggest nuclear reactor, two shiny pipelines emerge from the Baltic Sea to mark the spot where Chancellor Angela Merkel is trying to secure the country’s energy future. Not far from the Hanseatic town of Greifswald — an area Merkel represents in parliament — the chancellor wants a $10 billion pipeline expansion built to increase the amount of Russian natural gas imported from Siberia, more than 3,000 kilometers (1,864 miles) away. Nord Stream 1 pipelines near Lubmin. The project, led by Russia’s state-run Gazprom PJSC , is intended to bolster German confidence that it has enough gas to underpin an unprecedented transition from the coal and nuclear plants, which are being closed, to a future dominated […]

Doha ends moratorium on North Field development in face of new competition from Tehran

Qatar’s development of its giant North Field, which began more than 20 years ago, propelled the small Gulf state into the position as the world’s largest exporter of liquefied natural gas. It also provided Doha with the substantial wealth and political clout to stand independently from its Gulf Arab neighbors on geopo­litical issues, including interaction with Iran. Doha’s distinctive stance toward Tehran has contributed to the crisis with other Gulf states.  However, Qatar’s announcement that it has lifted a 12-year morato­rium on new projects in the North Field, which it shares with Iran, is setting the stage for fierce competi­tion between Doha and Tehran for global gas market share. That com­petition could strain diplomatic re­lations that the two Gulf countries carefully cultivated.  Iran is moving quickly to expand its own gas potential now that it is free from the most stringent inter­national sanctions and is expected to surpass Doha’s production lev­els from their shared gas field this year. Since the easing of sanctions in January 2016, Iran has prioritized developing its portion of the North Field, known as South Pars, be­cause it badly needs more gas to meet domestic power demand and for re-injection into ageing crude reservoirs. In November 2016, Iran signed a deal with French energy giant Total to develop its South Pars II project.

Is BP Shifting Its Focus To Natural Gas?

BP announced highlights of its Q2 2017 exploration activities today, collecting the results of several different projects. Four discoveries representing 17+ Tcf of gas BP reports that it has made four gas discoveries so far in 2017. Two separate discoveries were made near Trinidad and Tobago. The Savannah exploration well was drilled into an untested fault block in 500 feet of water, and encountered about 650 feet of net pay. The strong results from this well mean BP expects to develop the fault block using a tieback to the nearby Juniper platform. The Macadamia well, also offshore from Trinidad, recently drilled below the existing SEQB discovery. The well found seven intervals of pay, with a total of 600 feet net pay. The success of this well, and the previously-established SEQB discovery, mean BP will likely develop the area using a new platform in the future. According to BP, Savannah […]

The World’s Largest LNG Buyer Just Completely Reshaped The Market

1 Jul 2017   Japan, LNG

That’s Japan — home to some of the world’s biggest buyers of liquefied natural gas (LNG), including the world’s #1 consuming firm, Jera. And authorities here aren’t happy about the way LNG contracts have been run up until now. Here’s the crux: historically, many LNG purchase agreements included so-called “destination clauses”. Stipulating that LNG buyers had to use the supply in a single, stated export destination. That meant that LNG purchasers in Japan had to use their cargos in Japan. Even if it turned out they had too much supply, they couldn’t re-sell their LNG on the global market to reduce the surplus. But the Japanese Fair Trade Commission said Wednesday that won’t fly anymore. With the trade body saying destination clauses probably violate anti-monopoly rules — and therefore will be outlawed in any future purchasing contracts for Japanese buyers. Japanese firms are now bound by this ruling. Meaning […]

Russia’s Rosneft set for global gas tussle with Gazprom

1 Jul 2017   LNG, Russia

Russia’s Rosneft, the world’s top listed oil producer, wants to supply gas in parts of Europe where Gazprom is not present to avoid the risk of losing those markets to U.S. liquefied natural gas (LNG), a Rosneft executive said. Gazprom, the leading global gas producer, enjoys monopoly rights on gas pipeline exports from Russia. It has lost its exclusive rights to ship seaborne LNG overseas to Rosneft and Novatek, Russia’s largest non-state gas producer. Rosneft, headed by Igor Sechin, an ally of President Vladimir Putin, has long been vying for pipeline gas exports as it strives to grow globally. It has a memorandum with BP, which owns a 19.75 stake in the Russian company, to trade up to 20 billion cubic meters (bcm) of gas annually […]

Largest floating LNG facility sets sail for home field in Australia

30 Jun 2017   LNG

A floating production facility that will be used to tap into the natural gas reserves off the coast of Australia has left the shipyard, Shell said Thursday.  Shell’s aviation subsidiary in Australia sold in March to independent Viva Energy Australia for $250 million, in line with the Dutch supermajor’s efforts to streamline its portfolio. Shell keeps its brand name visible in the aviation refueling sector, as Viva Energy remains the licensee of its fuels.  Shell’s presence in Australia extends into the natural gas market, operating in the Browse reservoir in Western Australia. Its Prelude floating liquefied natural gas production facility is the largest vessel of its kind and can process an amount equivalent to Hong Kong’s entire demand for natural gas.  “The facility, constructed by Technip Samsung Consortium, is being towed to North West Australia, where the next phase of the project will begin,” Shell said in a statement.

The keel for the floating liquefied natural gas facility was laid in 2013. The vessel will allow Shell to pull natural gas from the Prelude field off the coast of Western Australia, process it into LNG and transport it on to its customers.  Large for a floating facility, it’s one-quarter the size of an equivalent inland plant. With LNG emerging in market share because of its diverse deliverability options, Shell said the Prelude FLNG vessel opens up new doors in new countries.  “Once secure, the hook-up and commissioning process will begin,” the company said.

Iran sees gas deal with Total within weeks: minister

Iran expects to sign a long-delayed gas deal with French oil major Total ( TOTF.PA ) in the next few weeks, Iranian Oil Minister Bijan Zanganeh was quoted as saying on Saturday. “Iran and Total are summing up the discussions on signing the contract for the development of phase 11 of South Pars, and this is almost in the final stages,” said Zanganeh, quoted by the oil ministry’s news website SHANA. “The contract … will be signed before the end of the (current) government,” Zanganeh said. Re-elected in May, President Hassan Rouhani is expected to form his new cabinet in August. Total’s chief executive Patrick Pouyanne said in late May that the company planned to conclude the South Pars gas deal before […]

Are Russia And The Saudis Planning A Natural Gas Cartel?

The fledgling production cut strategy of OPEC (Saudi Arabia) and non-OPEC (Russia and the FSU) shows that a new strategy is needed to counter the ongoing doubts in the markets. At the same time, Russia and Saudi continue to give indications of a possible OPEC 2.0 scenario, in which a possible Russian membership is on the table. This would confront the market with a renewed and stronger oil cartel, although the overall strategies need to be adjusted. At the same time, Saudi Arabia, via its oil giant Aramco has openly stated to be interested in global gas investment opportunities, starting in Russia’s Siberian region. While the media still looks at the current discussions as a pure crude oil cooperation strategy, some see another development on the horizon. The real power of OPEC, non-OPEC cooperation would increase if they would not only include a crude oil production cut, but also […]

Can U.S. LNG Challenge Gazprom In Europe?

13 Jun 2017   LNG

The first cargo of U.S. liquefied natural gas last week reached its destination in Poland. The country’s Prime Minister called this “a historical moment,” that brought the Central European country a step closer to breaking its energy dependence on Russian gas. At the same time, the Netherlands also received its first LNG delivery from Cheniere Energy, the only U.S. exporter so far. The U.S. gas industry has been quick to take advantage of growing LNG demand and abundant shale gas output to join the global LNG trade. Europe is a natural focus, not just because of stable demand, but because of the European Union’s energetic drive to diversify its sources of energy away from Russia. Gazprom holds a third of the EU gas market, which the EU sees as a dominant position. This is especially true for Poland, which has historical reasons to want to be as independent as […]

Bearish News For Natural Gas As Inventories Continue To Rise

Natural gas storage inventories increased by 106 Bcf for the week ended June 2, per EIA. The report is bearish with the build coming above market expectations, which were calling for a 98-Bcf increase in stocks. The full range of forecasts was between 80 Bcf and 111 Bcf. The Henry Hub prompt contract (July 2017) traded as low as $2.93 on Monday, but it went back above $3.00 on Tuesday and Wednesday with warmer temperatures in the forecast. However, the larger-than-expected build pushed gas prices below the $3.00 mark again, but only temporarily. The July 2017 gas price is up 1-2 cents following the EIA report and currently trading at $3.04 per MMBtu. Working gas storage inventories increased to 2.631 Tcf, level 332 Bcf below last year but 237 above the 5-year average. See Drillinginfo EIA’s chart below. This graphic shows projections for end-of-season inventories as of Nov 1. […]

Long Promised, the Global Market for Natural Gas Has Finally Arrived

7 Jun 2017   LNG

One day in March, the Rioja Knutsen tanker, filled with liquefied natural gas, was traveling from the U.S. to Portugal. Suddenly, Mexico’s power company lobbed in a higher bid for its cargo. At the Bahamas, the ship abruptly made a starboard turn and headed south. How natural gas is bought and sold in the world’s scattered regional markets for the fuel is changing rapidly. Ships such as the Rioja Knutsen are stitching those regions…

Higher US natural gas prices positive for production gains in ’17, ’18: EIA

7 Jun 2017   Prices, Shale Gas

While projections for higher natural gas prices are expected to reduce gas’ share in the generation mix, the subsequent increase in cash flow to gas producers is seen boosting gas production, reversing last year’s drop in output, the first annual decline the industry had seen in 11 years, the US Energy Information Administration said Tuesday in its monthly outlook. The agency, in its June Short-Term Energy Outlook, put second-quarter Henry Hub natural gas spot prices at $3.14/MMBtu, down 2 cents from its May estimate. The Q3 forecast dipped 1 cent from the prior month to $3.20/MMBtu. The agency put gas prices for full-year 2017 at an average $3.16/MMBtu, a 1-cent drop from the prior month’s estimate, and forecast 2018 prices to average $3.41/MMBtu, lowering its estimate from May by 2 cents. By comparison, prices averaged $2.51/MMBtu in 2016. “The amount of US electricity supplies from natural-gas fired generation is […]

America’s Unstoppable LNG Boom

7 Jun 2017   LNG, USA

Since Cheniere sent America’s first LNG cargo abroad in early 2016, U.S. gas exports have reached buyers in Latin America, Europe, Asia, and even the Middle East. The shale gas boom allowed the U.S. to send cargoes overseas, easing some of the domestic glut, with exports hitting a new monthly record in May. Last month, 18 cargoes departed from Sabine Pass—so far the only LNG export facility in the U.S.—totaling approximately 61 Bcf, a new monthly record, the EIA said in its Natural Gas Weekly Update for the week ending May 31. America’s LNG has reached the world fastest-growing LNG import market, Asia, and markets in the Middle East. In a few days, cargoes from Sabine Pass will call at Rotterdam for a first Northwest Europe destination, and to Poland—a first delivery to a country in Central and Eastern Europe, where Russia’s Gazprom reigns supreme. Since February 2016, U.S. […]

LNG traders evaluate impact of Saudi-led diplomatic blockade of Qatar

5 Jun 2017   LNG, Qatar

LNG traders are bracing for potential trade disruptions following moves from Saudi Arabia, Bahrain, Egypt and the UAE to cut diplomatic ties with Qatar, the world’s largest LNG supplier. Saudi Arabia’s decision Monday to break diplomatic ties, consular relations as well as land, air and sea contacts with Qatar over terrorism and extremism funding claims were followed by similar moves from Bahrain, the UAE and Egypt, according to media reports. Qatar is the world’s largest LNG supplier, having exported 78.8 million mt of LNG in 2016, more than 30% of a total global supply of 257.8 million mt, according to S&P Global Platts Analytics, and an increasing share of its production is being delivered to emerging Middle Eastern buyers, including Egypt, Jordan and the UAE. Any disruptions in Qatari LNG supply could have a significant impact on pricing, regional trade flows and energy security in Egypt, which imports most […]

5 Arab States Break Ties With Qatar, Complicating U.S. Coalition-Building

5 Jun 2017   LNG, Qatar

Hours after five Arab countries broke diplomatic relations with Qatar , a crucial United States ally, Secretary of State Rex W. Tillerson offered on Monday to broker the impasse in hopes of preserving the Trump administration’s efforts to create broad coalitions against Iran and terrorist groups in the Middle East. “We certainly would encourage the parties to sit down together and address these differences,” Mr. Tillerson said. “If there’s any role that we can play in terms of helping them address those, we think it is important that the G.C.C. remain unified,” he said, adding a reference to the Gulf Cooperation Council, a group of Persian Gulf countries. The remarks by Mr. Tillerson, who is in Australia with Defense Secretary Jim Mattis, came on the heels of dramatic announcements by Bahrain , Egypt , Saudi Arabia , the United Arab Emirates and Yemen that they were […]

Why U.S. Natural Gas Demand Is Closer to Tipping the Market

Just a decade or so ago, energy traders believed that using natural gas to generate electricity instead of coal was akin to bringing Dom Pérignon to a party where Budweiser would do. Natural gas had certain environmental and compliance benefits, of course, and it was the best option for “peaker plants” that could be switched on to meet surges in demand on hot summer afternoons. But gas’s cost per unit of energy was significantly…

Natural gas has displaced coal in the Northeast’s generation mix over the past 10 years

12 May 2017   Climate, Coal, Shale Gas

Source: U.S. Energy Information Administration, Power Plant Operations Report The generation fuel mix of electricity in the Northeast Census division of the United States has shifted dramatically over the past 10 years. In the nine Northeast states, natural gas nearly doubled its share of the region’s total generation to 41% in 2016, up from 23% in 2006. Coal-fired generation fell from 31% to 11% of generation over the same period. Nuclear-powered generation as a share of total generation remained relatively constant near 34%. Despite more than doubling over the same period, the share of nonhydro renewables remains relatively small. Overall, total generation in the region declined by 3% between 2006 and 2016. Increased access to low-cost natural gas from the Marcellus Shale and other regional shale plays has driven the switch away from coal in the Northeast United States. Environmental policies at the federal and regional level, such as […]

More Rigs Don’t Mean More U.S. Gas

Gas rigs have doubled since August; output falls 1.2% Average Marcellus well produces 51% of what it did a year ago U.S. natural gas producers are running hard to stand still. The number of rigs drilling for gas has almost doubled since August, but output continues to fall. Even accounting for a lag between the start of drilling and first production, the drop in output is striking — a well in the Marcellus Shale, America’s most prolific reservoir of the fuel, is producing about half of what it yielded a year ago, according to Bloomberg Intelligence. Companies are struggling to overcome steep decline rates — the natural decrease in production — from shale formations that were the source of huge added supplies in years past. The slowdown could signal an end to a glut that’s sent prices down 12 percent since the beginning of the year, making gas one […]

Range Recalls ‘Incredibly Creative Solution’ for Marcellus/Utica ‘Problem’

27 Apr 2017   Shale Gas

‘Dragon-class’ and VLEC vessels facilitate transoceanic trade of surplus US ethane. On March 9, 1776, the Scottish economist Adam Smith published his influential book The Wealth of Nations , which has left an indelible mark on international trade ever since. Interestingly, exactly 240 years later a pioneering liquefied natural gas (LNG) carrier departed a Philadelphia-area terminal bound for Europe and opened a new chapter in the global gas business. Laden with more than 27,000 cubic meters of ethane, the Ineos Intrepid – a new class of LNG vessel – embarked on a nearly 4,000-mile voyage across the Atlantic Ocean to Ineos’ ethane cracker in Rafnes, Norway. As Ineos noted at the time , never before had shale gas produced in the United States been shipped to Europe. Previously ethane had only been transported in small vessels on short routes, according to ship designer Evergas . The Ineos Intrepid is […]

Ohio and Pennsylvania increased natural gas production more than other states in 2016

26 Apr 2017   Shale Gas

After reaching a record high of 79 billion cubic feet per day (Bcf/d) in 2015, U.S. marketed natural gas production fell to 77 Bcf/d in 2016, the first annual decline since 2005. Texas, the state with the most natural gas production, fell by 2.5 Bcf/d, while Ohio and Pennsylvania each increased by about 1.2 Bcf/d. EIA measures natural gas production in three different ways. Gross withdrawals are the full volume of compounds extracted at the wellhead, which includes all natural gas plant liquids and nonhydrocarbon gases after oil, lease condensate, and water have been removed. Marketed natural gas production excludes natural gas used for repressuring the well, vented and flared gas, and any nonhydrocarbon gases. Dry natural gas production is marketed production minus natural gas plant liquids. Source: U.S. Energy Information Administration, Natural Gas Monthly Note: Natural gas production in 2016 […]

Massive Natural Gas Deposit Discovered In The Gulf Coast Basin

22 Apr 2017   Shale Gas, USA

Technological advancements have just pushed the boundaries of recoverable oil and gas in the U.S. further, according to an announcement by the U.S. Geological Survey. The agency reported that two formations in the Gulf Coast Basin may contain as much as 304.4 trillion cubic feet of natural gas plus 1.9 billion barrels of natural gas liquids, making the area the largest untapped continuous gas deposit in the country. The two formations—Haynesville and Bossier—also contain some 4 billion barrels of crude, according to mean estimates, the USGS also said in a press release. (Click to enlarge) Most of the newly recoverable gas is in the Haynesville formation, which contains around 195.8 trillion cubic feet. It also holds 900 million barrels of natural gas liquids and some 1.1 billion barrels of oil. The rest is in the Bossier formation. The USGS has been reassessing a lot of oil and gas deposits […]

EIA expects natural gas to be largest source of U.S. electricity generation this summer

Short-Term Energy Outlook (STEO) expects that electricity generation fueled by natural gas this summer (June, July, and August) will be lower than last summer, but it will continue to exceed that of any other fuel, including coal-fired generation, for the third summer in a row. The projected share of total U.S. generation for natural gas is expected to average 34%, which is down from 37% last summer but still exceeds coal’s generation share of 32%. Based on data from the National Oceanic and Atmospheric Administration (NOAA), EIA estimates that average U.S. population-weighted cooling degree days in the summer of 2016 reached the highest level on record. NOAA projections for this summer indicate cooling degree days will be 11% lower than last year. These milder expected temperatures lead to forecast U.S. summer electricity generation of 1.16 billion […]

New U.S. pipelines to drive natural gas boom as exports surge

13 Apr 2017   Pipelines, Shale Gas

U.S. energy firms are scrambling to finish a slew of pipelines that will unleash rich reserves of shale gas in Pennsylvania, West Virginia and Ohio as the nation prepares to become one of the world’s top natural gas exporters. The pipelines are expected to boost output from shale fields in the three states by giving producers access to new domestic and international markets. Those states could supply about a third of all U.S. natural gas once the pipeline expansion is complete, up from about 25 percent now, according to projections from the U.S. Energy Information Administration (EIA). The network will bring cheaper fuel supplies for power generation and industry being built in the eastern half of Canada and the United States, especially along the U.S. Gulf Coast. It would also transport the huge volumes needed to feed facilities that chill the gas to liquid so it can be shipped […]

Three US-based LNG terminal projects report delays to operational start dates

8 Apr 2017   LNG

Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy’s website. LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports. April updates published on the department’s website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG’s Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom’s Crystal River, Florida, facility, with export capacity of 80 MMcf/d. Lake Charles now anticipates that the first of its three trains will be operational in 2022. Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April […]

Is Natural Gas In The Midst Of A Boom-Bust Cycle?

5 Apr 2017   LNG, Shale Gas

After six decades of relying on outside sources, the United States is poised to become a consistent net exporter of natural gas . The shale boom and the rush to embrace LNG has fueled the shift, one that will have significant consequences for natural gas prices around the world. In 2016, total U.S. natural gas imports reached 3 trillion cubic feet, the bulk of which came via pipeline from Canada. Month to month, natural gas imports hovered around 250 billion cf, according to data from the EIA . Exports, however, have been shooting up from less than 60 million cf in 2006 to 269 million in January 2017. The ratio of imports to exports has been falling for years, and 2017 will be the year that exports officially exceed imports for the first time since 1957. That date is significant, as it was the year the United States imposed […]

Gas Giants Share OPEC’s Shale Pain as U.S. Supply Flows East

4 Apr 2017   Shale Gas

OPEC isn’t the only decades-old energy hegemony being turned on its head by U.S. shale. Liquefied natural gas sellers from Qatar to Malaysia that dominated gas sales to Asia for years are facing the prospect of rising American exports. While less than 30 U.S. cargoes have landed in Asia, their effect was felt even before they arrived. LNG trade in 2016 jumped the most in five years, contract lengths were sliced in half in the past decade, and spot prices slumped more than 60 percent in the past three years. That means the global LNG titans gathering in Tokyo this week for Gastech are in the midst of the biggest shakeup since the industry was founded in the 1960s. Just as American crude is increasingly making its way to Asia, the world’s biggest oil market, the burgeoning armada of gas cargoes from the U.S. and elsewhere are poking holes […]

U.S. lower 48 natgas output down for second straight month: EIA

1 Apr 2017   Shale Gas, USA

U.S. natural gas output in the lower 48 states declined for a second month in a row to 78.3 billion cubic feet per day (bcfd) in January, the U.S. Energy Information Administration (EIA) said on Friday in its monthly 914 production report. That compared with 78.7 bcfd in December. Production peaked at 82.6 bcfd in February 2016. Output declined in two of the three biggest producing states in the lower 48, Texas and Oklahoma, but held at a record high in Pennsylvania. In Texas, the country’s largest gas-producing state, output declined for a ninth month in a row, down 0.2 percent to 20.6 bcfd in January from December. That was the state’s lowest level of monthly output since February 2011. Production in Oklahoma declined for a fifth month in a row, down 0.8 percent to 6.4 bcfd in January, its lowest monthly output since June 2014. In Pennsylvania, output […]

Putin Exploits Europe’s Divisions in Bid to Dominate Gas Supply

This small port town offers a textbook case of how Russian President Vladimir Putin has thwarted U.S. and European efforts to rein in Moscow’s most powerful source of leverage and cash: energy. Karlshamn’s local leaders in January opened its port to Russia’s state-owned energy company, PAO Gazprom, in defiance of Swedish national authorities alarmed by a growing Russian military presence in the Baltic Sea. A subcontractor for a Gazprom subsidiary is now allowed to store pipes here for an $11 billion…

Natural Gas Prices Pare Losses After Data

Natural-gas prices fell Thursday as investors began to contemplate how much natural gas will be added to storage as spring begins. Futures for May delivery settled down 4 cents, or 1.24%, at $3.191 a million British thermal units on the New York Mercantile Exchange, snapping a two-session winning street. The U.S. Energy Information Administration reported that natural-gas supplies fell by 43 billion cubic feet last week. That…

Is Haynesville About To Make A Comeback?

31 Mar 2017   Shale Gas

Back in early 2011, the Haynesville shale play in east Texas, northwest Louisiana, and southwest Arkansas surpassed the Barnett Shale in Texas as the highest-producing shale gas play in the U.S., according to reported pipeline flows. Since 2013, however, Haynesville production has been falling amid low gas prices, and the shale play has been outrun by the lower-cost Marcellus and Utica basins in the Northeast. The Haynesville may have been down, but it is not yet out. Recent production forecasts and Haynesville’s geographical proximity to the Sabine Pass LNG terminal and other planned LNG export facilities, as well as its proximity to planned additional pipeline capacity to Mexico, may help Haynesville come back to life again. The uncertainty and downside, as always, are the price of natural gas and concerns that a glut would keep prices low, at least in the short to medium term. But many producers have […]

Chevron makes LNG headway

30 Mar 2017   Australia, LNG

The third production facility at the Gorgon liquefied natural gas facility off the Australian coast is now in service, the regional subsidiary of Chevron said. “This is a key milestone for the Gorgon joint venture participants, our workforce, customers, government and all those associated with the project over its lifetime should be extremely proud,” Nigel Hearne, Chevron’s regional managing director, said in a statement . “We are committed to being a safe and reliable supplier and look forward to supplying cleaner-burning natural gas for decades to come.” Bringing the third production facility, or train, online means Chevron’s flagship LNG project in Australia is in full service. The first shipments of LNG left Gorgon in March 2016. The project will eventually produce 15.6 million tons of LNG […]