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LNG & Natural Gas Opinions
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Small-Scale Liquefaction Gains Traction In China
March 31, 2013 |
| Small-scale liquefaction in China has experienced exponential growth in recent years as Beijing attempts to integrate gas into the country’s energy matrix. Unlike conventional LNG plants that require large economies of scale to pay back hefty capital expenditures, these lower-cost and flexible units require less equipment, energy consumption and upfront investment. As a result, they are thriving in China. Modularization of hardware also allows speedy and efficient manufacture, installation and startup. China already has more than 35 small onshore LNG plants that were producing a combined 2.64 MMt/y at the beginning of 2012. Another 30 or so small-sized liquefaction plants are under construction or in the planning phase, potentially boosting output capacity to around 8.5 MMt/y. |
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Decision Point Looms In US (LNG) Export Debate
January 31, 2013 |
| The white-knuckle ride for proposed liquefaction projects in the Lower-48 states is almost over as the Department of Energy prepares to act on the first applicants queued up for permission to export LNG to countries without Free Trade Agreements with the US. More than 380 public comments signed by over 30,000 people came into the DOE’s office by January 24 in response to the controversial NERA Economic Consulting report favoring LNG exports. The agency even had to grant an extension until January 27 to accommodate the overflow of interest. A follow-up period for rebuttal is underway and will close on February 25, clearing the way for the DOE to start issuing non-FTA licenses as early as March. The divisions on the issue are evidenced in the relatively equal split of comments for and against exports. |
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Golar Proposes First Floating LNG Conversion
November 30, 2012 |
| Norway’s Golar LNG, owned by shipping magnate John Fredriksen, announced this month that it planned to convert up to three of its first generation Moss vessels to floating LNG production units. The firm joins a growing list of companies pursuing FLNG projects. This represents the first time an owner has attempted to convert a vessel for this technically-demanding use. Other FLNG proponents say they have considered and rejected the concept in the past. Golar has already converted several of its existing LNG ships into floating storage and regasification units, employing four of these FSRU conversions in Brazil, Dubai and Indonesia to considerable success. The technical and commercial challenges associated with FLNG are far more daunting, however. If Golar is successful in this effort, and many in the industry doubt it will be, the Norwegian ship owner will have found a way to diversify its business and move further up the value chain. |
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King Coal: A Revived Threat To Europe’s Gas Market
October 31, 2012 |
| The impact of the shale gas revolution in the US is rippling across international energy markets. Its direct effect on LNG is well known: the shale boom flooded the country with gas, effectively putting a stop to imports into the US and supporting a raft of new export schemes. These projects promise to introduce LNG linked to Henry Hub, the North American benchmark set in Louisiana, in competition to the more expensive oil-indexed product that has heretofore dominated global trade. What is less well known is how burgeoning gas supplies have pushed out more expensive fuels – coal, in particular – from the domestic energy mix. Much of this surplus coal is being exported to Europe, putting even further strain on gas-fired power plants, which can now barely compete with coal on cost. Pipeline gas buyers are still scraping the bottom of their minimum purchase obligations in order to curb losses on every molecule sold, while LNG imports into Europe are dropping – third quarter import volumes were just 11.4 MMt this year. Gas imports into Europe’s five biggest markets − the UK, Germany, Spain, France and Italy − reached a five-year low in August, and coal is taking up the slack. |
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British Columbia Frontrunner Cedes Mantle to Rivals
September 30, 2012 |
| British Columbia Premier Christy Clark predicted during an economic summit held in China this month that the Kitimat LNG project grouping Apache, EOG and Encana would be the first of three liquefaction schemes in the Canadian province to get off the ground by 2020, perhaps as early as 2016. But the premier’s rosy prognosis belies serious troubles at KM LNG, which has lost its frontrunner status and may even be about to implode. |
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Japan’s Anti-Nuclear Drive Gains Momentum
August 31, 2012 |
| Despite the restart of two units at Kansai Electric’s Ohi facility last month, prospects for Japan’s other 48 nuclear reactors, all of which remain idle, are still clouded by political uncertainty. Recent polls suggest the government greatly under estimated anti-nuclear sentiment and this could presage adjustments to the country’s longterm energy planning. These changes threaten to delay release of the country’s updated Basic Energy Plan, which will set out what role nuclear will play in the power generation mix by 2030. Three options are under consideration ranging from a low of zero coverage to a high of 25% (see LNGWM, Jun ’12). Further complicating the process, Prime Minister Yoshihiko Noda is likely to call a snap election for November. According to the polls, Noda’s Democratic Party of Japan may not fare well in this contest, potentially setting the stage for Japan to get its seventh premier in five years. |
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European Terminal Operators Rethink Strategies
July 31, 2012 |
| European terminal operators are looking for new service offerings as utilization rates slide across their import facilities. Service diversification, mothballing and boil off reduction programs are all options on the table for operators searching to boost falling revenues. Total import capacity in Europe, including Turkey, equates to 151 MMt/y, or 204 Bcm/y. But utilization rates dropped to just 31% in the second quarter of this year, down from 50% to 60% in the first half of 2011. |
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New Finds Boost Anadarko’s Mozambique Advantage
June 30, 2012 |
| As drill bits continue to hit gas in East African waters with exciting regularity, Anadarko Petroleum is fast laying claim to a first-mover advantage offshore Mozambique. Reserve estimates for the region as a whole, which also includes Tanzania, have climbed above the 100 Tcf mark. This is comparable in size to the prolific Carnarvon basin off Western Australia, where two LNG projects are operating and two more are under construction. In a development that is sure to enhance its maneuvering room, Anadarko’s new Atum-1 and Golfinho discoveries have opened up a separate structure in Area 1 that may contain sufficient reserves to launch a two-train project. This would avoid having to wait for the conclusion of unitization talks to combine the US firm’s Prosperidade fields with Eni’s adjoining Area 4 finds. Until now, most of Anadarko’s discoveries were in Prosperidade, which are thought to be in the same structure as the Mamba finds made by Eni in Area 4. It could also give Anadarko the upper hand in the contest for operatorship of the unitized fields and the LNG project, although the Italian firm has by no means conceded victory to its rival. |
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Cyprus Deems Second Bid Round A Success
May 31, 2012 |
| Despite saber-rattling from Turkey, a host of bidders responded to the recent offshore licensing round held in Cyprus. Nicosia said offers exceeded expectations, with the blocks attracting some big name players including Total, Eni, Petronas and Woodside Petroleum. Even Gazprom, a major gas supplier to Turkey, made an appearance through Gazprom Bank in a link-up with fellow Russian firm Novatek and Total. Noble Energy’s Aphrodite find in block 12 has already yielded between 5 and 8 Tcf of estimated recoverable reserves, and this discovery was the principal reason for the heightened interest. Nearly 30 firms, some on their own but most banded together in consortia, put their names in the hat for the country’s 12 remaining marine blocks. Blocks 9 and 2 were the most popular – bidders hope the same gas structure in block 12 will extend into these two permits. Only blocks 1, 4 and 13 failed to attract bids. Allowing for time to examine the bids, the winners are likely to be announced late this year or early next.The bidders have their eyes firmly set on LNG exports, since Aphrodite will likely cover domestic needs for years to come while also supporting a single train LNG project. |
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Brazil Hikes LNG Imports On Southern Drought
May 01, 2012 |
| Brazil is back in the spot market after a relatively quiet 2011, with recent buying activity from state-owned Petrobras helping to drive cargo prices to their highest levels in nearly a year. Although overall Brazilian demand for power is up 6% in 2012, it is mainly short-term factors like drought and power exports that are behind the country’s surging LNG imports (see related article above). These totaled 0.3 MMt/y across five cargoes this month, up from three shipments in March, one in February and none in January. Brazil has significantly increased its electricity exports to neighboring Uruguay recently, a country struggling to meet domestic power needs. Additionally, Brazil’s southern region is suffering under a severe drought that has resulted in much lower hydro electricity output. The central-west region has started exporting large amounts of power to the south to make up the shortfall, with electricity exports quadrupling from last year. |
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