Tag Archives: LNG

Natural Gas Makes Largest Gains Since June

Natural gas prices burst back above $4 with their largest day of gains since mid-June as a rush of early winter cold has traders expecting rising demand for the fuel.

Cool Canadian air is likely to spill over everything east of the Rockies by week’s end, creating the first jolt of heating demand for what had been a tepid market, weather forecasters and analysts said.

Traders responded to updated weather forecasts by buying up contracts as soon as off-hours trading began Sunday evening.

“What that tells me is people were freaked out,” said Todd Gross, chief investment officer at QERI LLC.

Natural gas is a notoriously volatile market, heightened now by competing pressure from record supply and winter worries. An onslaught of gas from U.S. shale drilling has pushed the fuel’s price low enough to make it competitive with coal and has several bank analysts expecting a glut by the spring. But with winter only weeks away, many traders are thinking of last winter’s record cold and demand spikes that pushed prices above $6 a million British thermal units.

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Time to seize a prosperous future fuelled by natural gas

Compared with coal, natural gas produces half the carbon dioxide, less than a third of the nitrogen oxide and just one per cent of the sulphur dioxide, with virtually no particulates. That China is looking to import LNG from B.C.’s shale gas is good news for both Canada and for the Earth’s atmosphere. But LNG will only slow China’s massive coal-fired power growth. Here’s the really good news. According to the U.S. Energy Information Administration (EIA), China possesses the world’s largest technically recoverable shale gas reserves that, at 1,115 trillion cubic feet, are almost twice as large as Canada’s. These vast resources remain undeveloped due to the early stage of Chinese recovery technology. That’s why the University of Calgary’s announcement of a new Canadian/Chinese Research Centre aimed at unlocking that potential is so newsworthy. At the signing ceremony in Beijing on October 23, U of C President Elizabeth Cannon stated that the project “will help China move from a coal economy over to gas.”

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‘No LNG exports, no growth’ in Western Canada

Experts warn that without a LNG export market on the British Columbia’s west coast, there will be no growth in the industry.

Forecasts have Western Canada’s natural gas production growing by 5 billion cubic feet (Bcf) per day by 2022. However, the forecast includes that amount as being attributed to LNG exports. Without the exports there will simply be now growth in market where competition is growing on a global basis. With no LNG export terminal, Canada’s only customer would be the USA who is now the largest producer of natural gas on the planet.

In a recent report, Simon Mauger, Director of Natural Gas & Economics at Ziff Energy:

“Growth in Western Canada will depend on market growth, first and foremost. So no LNG exports, no growth. With the LNG exports, we expect to see quite some growth — from about 14 bcf a day today up to 19 bcf a day in 2022.”

Recently Apache Energy dropped out of the Kitimat LNG project in BC. Kitimat LNG is considered by many as being the most advanced of the 15 LNG projects under consideration. Likely only two, perhaps three we be built. Chevron Canada the remaining partner in the project is looking for another suitable partner to replace Apache.

Read More:“No LNG exports, no growth’ in Western Canada’s natural gas industry: expert”

Read More: “Apache Energy, under investor pressure, exiting Kitimat LNG project”

 

National Energy Board approves four more LNG licenses in British Columbia – no time to waste

Four more proposed liquefied natural gas (“LNG”) projects in British Columbia have received approvals for export licences from the National Energy Board, bringing the total number of licenced projects to seven. Three of the four projects have major backers and include These four projects include: BG Group’s Prince Rupert LNG Exports Ltd., the Petronas-led Pacific NorthWest LNG Ltd. and Exxon Mobil Corp.’s West Coast Canada LNG Ltd. The fourth project is a smaller venture called Woodfibre LNG Export, planned for the Squamish area north of Vancouver. The NEB is reportedly reviewing an additional four applications on top of these seven granted licences.

None of the approved projects, however, are in the terminal construction stage because the proponents say they first need to learn details of the B.C. government’s plans for taxation of the LNG industry and internal assessments still must be conducted on the economics of proceeding.

Apparently none of the approved projects are in the construction stage. One of the reasons construction has not started is that the various proponents need to understand the BC governments taxation plans for the LNG industry. With the NEB doing their part the BC government can ill afford to delay the process as perhaps the entire Canadian natural gas industry is in jeopardy.

Just the day before the NEB announced their license approvals, the Energy Information Administration released their Annual Energy Outlook that forecasts the frack induced boom in natural gas and oil production will continue through to 2040. Natural gas production is forecast to rise a staggering 56% from 2012 to 2040 and will reach 37.6 trillion cubic feet (Tcf) and the report also predicts that the U.S. surpass Saudi Arabia as the world’s biggest oil-producer in 2015. Truly an amazing turn of events. So it is quite clear that the U.S. will not be needing Canadian natural gas any time soon, and Canada better move fast to save the Canadian natural gas industry.

If Canadians want to retain the billions of dollars generated and the thousand of jobs created by the Canadian natural gas industry, it is absolutely imperative that the pipelines to carry gas to the BC coast, and LNG facilities to process it for export must be approved and built as soon as possible. There is no time to waste. The U.S. once our largest customer is now our largest competitor and will not revert back to being a customer till at sometime after 2040. By 2040, a robust global LNG distribution network will be in place making LNG distribution worldwide efficient and cost effective. In order for Canada to compete effectively it is apparent a domestic distribution system that plugs into the global network must be in place.

While Ottawa reviews the licenses, BC debates tax schemes, and Canadians debate about pipelines and LNG distribution systems, other countries around the world are building out their distribution facilities and moving forward in being first to market, and first to service the energy hungry markets in Asia. The opportunity is there for Canada to seize but there is no time to waste.

Update: Today, the Northern Gateway Pipeline review will be released.

Read more @ The Globe & Mail: NEB Approves four more LNG license in BC, but await Ottawa’s blessing

The geographic proliferation of shale gas and tight oil is inevitable

This article in the Globe & Mail is worth a quick read. Though the proliferation of technologies for shale gas and tight oil will spread around the world, it take more then just technology to make the process of extracting these resources work. Mainly, water. For example, China may have more shale gas then that found in all of the USA, but its in the dry arid eastern regions where water is scarce. But with time, this too is changing with the evolution of new technologies that recover and recycle 99% of the fluids used in the fracking process. Time will tell but history has shown that opportunities are created by providing solutions to problems.

The geographic proliferation of shale gas and tight oil is inevitable

Globe & Mail (Source) This question keeps getting repeated: “Will shale gas and tight oil technologies proliferate beyond North America?”

Of course they will. There is no precedent for game-changing innovations in any business to respect territorial boundaries. So some remaining questions are, under what conditions will shale gas and tight oil be developed in other countries, how long will it take, and where first?

With respect to necessary conditions, it seems Texas has the right stuff. At a major conference in Dallas last week, a few thousand exuberant U.S. oil and gas executives were gushing over recent production growth from unconventional resources. North Dakota’s Bakken seems like yesterday’s news as attention now shines on the productive oil potential of the legendary Texas Permian Basin.

The stock, U.S. oil man’s answer to what drives such domestic exploration frenzy is the American principle of landowners’ mineral rights – if you own the land on the surface you also have title to the oil and gas beneath your feet. This alignment of financial interests between private landowners and oil companies lubricates the wheels of capitalism like nowhere else. Ergo, the converse argument goes, we are unlikely to see meaningful shale gas or tight oil development in other parts of the world, where no such subsurface benefits accrue to the landowner. But there are flaws in this line of thinking.

Read more.

Shell applies for 25-year natural gas export licence

(Source: Globe & Mail) Royal Dutch Shell plc and its three Asian partners have applied to export an enormous volume of natural gas from the British Columbia coast, as global attention begins to focus on the movement of Canadian energy to Japan, China and other markets.

On Friday, Shell said it had applied to the National Energy Board for a licence to export up to 24-million tonnes per year of natural gas. That is equivalent to 3.4-billion cubic feet per day, fully a quarter of Canada’s entire output in 2011.

Shell, which has partnered with Korea Gas Corp., Mitsubishi Corp. and PetroChina on an export terminal slated for Kitimat, B.C., is asking for approval to export gas for 25 years.

The partners intend to build their initial terminal to half the capacity they are requesting, “with an option to expand the project to a total of four units or 24 million tonnes,” spokesman David Williams said in a statement.

“The application is an important milestone in the regulatory process and assures that there are sufficient natural gas reserves in Canada to meet domestic needs and exports.”

Outside of export possibilities, Canada’s natural gas industry faces tremendous challenges. The discovery of large new supplies of natural gas in the U.S. have raised concerns that Canadian gas will, over the course of the next decade, no longer be needed south of the border.

At the same time, northeastern British Columbia has proven to possess enormous gas reserves. In June, for example, Apache Corp. said it had drilled a well in the province’s far northern Liard play that was the most prolific shale gas test in the world. Apache is leading a separate project to build an LNG export terminal in Kitimat.

Shell has declined to estimate the cost of its terminal. On Friday, however, TransCanada Corp. chief executive Russ Girling pegged it at $12-billion, plus a $4-billion pipeline to deliver gas from the B.C. northeast.

Natural gas exports offer the possibility of selling gas into international markets, where gas prices are linked to oil prices, and are much higher as a result.

Apache calls new discovery in northeastern BC “best shale gas reservoir in North America.”

One of the energy companies planning a liquefied natural gas terminal at Kitimat announced Thursday “an outstanding” new shale gas discovery, the best in North America, in British Columbia’s remote and largely unexplored Liard Basin.

The find by Apache Corp., one of three partners in the $4.5-billion Kitimat LNG terminal and pipeline proposal, is estimated to contain enough gas in itself to justify doubling the size of the Kitimat terminal. The company is calling it the best and highest quality shale gas reservoir in North America and says its wells are the most prolific in the world, based on the volume of gas three test wells are producing.

Based on the production from those wells, Apache announced it has 48 trillion cubic feet of marketable gas within its Liard Basin properties. By way of comparison, all companies active in the Horn River Basin, one of three other major shale gas basins in B.C., have marketable gas of 78 trillion cubic feet, giving one company alone a natural gas find that is two-thirds the size of the entire Horn Basin.

One well alone produced 21 million cubic feet of gas a day over a 30-day test period.

“This is enormous,” said Gordon Currie, senior oil and gas analyst at Salman Partners. “Those are big, big numbers.”

Based on Apache’s results alone, the Liard should provide B.C. with enough gas to export “for many, many years to come,” Currie said.

Bill Mintz, director of public affairs at Apache, said the Liard discovery provides the company with enough gas to meet the needs of any future expansion at its proposed LNG terminal. Apache and its partners plan a five-million-tonne-a-year LNG plant which, if supply and demand warrant it, could be doubled to 10 million tonnes a year. The Liard alone could provide that additional five million tonnes of LNG.

Mintz said gas from the Liard wells is already being sold through a pipeline connecting them to Fort Nelson. The Liard find is not only large, but the Apache test wells are producing more gas from fewer hydraulic fractures, six per well as opposed to 20 in the nearby Horn River Basin.

One of the Apache wells, D-34-K, “is one of the best shale wells we have seen in any play. Our analysis indicates that the formation characteristics are remarkably consistent across this large basin,” Apache president Steven Farris said in making the announcement at the company’s annual investors day in Houston, Texas.

A slide presentation on the find says the drilling in the Liard is “believed to be the most prolific shale gas resource test in the world.”

Full Story, Vancouver Sun: Apache calls new discovery in northeastern BC “best shale gas reservoir in North America.”

China Shale Gas Discovery May Kill Canadian Pipeline and LNG Plans

Royal Dutch Shell has discovered shale gas in China – a market that North American producers hope will drive demand for their export plans to Asia.

Shell has not made any public confirmation of the discovery, but their local partner PetroChina has indicated positive progress. Professor Yuzhang Liu, Vice president of Petrochina’s Research Institute of Petroleum Exploration and Development is quoted by Reuters as stating:

“Shell has two vertical wells and they got very good primary production. It’s good news for shale gas.”

And while shale gas has been a boon in the United States, a similar revolution in China would be at the expense of North American (and others) producers hoping to export natural gas to China. Canada is also is looking towards Asia as the US has increased domestic production and Canadian exports to the US have fallen. Two separate groups have formulated plans for an Liquified Natural Gas (“LNG”) export facility in Kitimat, BC. To get the natural gas to the coast, a major pipeline is required. Considerable investment considerations that now might be seeing the market they were targeting for sales, starting to diminish.

The U.S. Energy Information Administration estimates that  China has 1,275 trillion cubic feet (tcf) of technically recoverable shale gas resources. That would make it the largest in the world followed by an estimated 862 tcf in the US. And given their long term energy demands, China will invest heavily in proving up the potential of this major energy source. Its cleaner then coal, and its domestic exploration, extraction and production would be a major job creator.

But not all is lost for Canada’s export of natural gas. The three major target markets in Asia are China, Japan and Korea. And the latter two, are still desperate of natural gas, and have no known shale gas deposits of any commercially viable size. In fact, it’s Royal Dutch Shell that is leading one of the two LNG export facilities being contemplated for Kitimat, BC.  Shell along with Korea Gas Corp (“Korgas”), China National Petroleum Co. and Mitsubishi Corp., are considering a plant that would produce and load 1.8 billion cubic feet of natural gas per day onto LNG tankers heading for Asia. The other plan is for a 1.4-billion cubic feet a day facility proposed by Kitimat LNG, which is owned and backed by Apache Corp. , EOG Resources Inc. and Encana Corp.

If Shell and PetroChina do determine that shale gas deposits in China are economically viable, and they are able to recover the amounts suggested by the EIA it will have an impact on pipeline and export facility plans in Canada. Worse case it may merely delay the plans as other Asian markets will and have made long term commitments to buying Canadian natural gas.

Regardless, the shale gas revolution that HRN predicted would have a significant impact on the global energy market and global geopolitical is well underway and may happen faster then we all expect. Keep an eye on Shell’s progress in China as their drilling activities are expected to be concluded by the end of the year.

Reuters: Shell strikes shale gas in China

China Plans Subsidies to Tap Shale Gas Reserves Larger Than U.S.

As Americans debate about shale gas, China is moving forward to tap its own massive reserves of shale gas. And when they do and if they offset a good percentage of coal power generation  with natural gas power generation, the world will witness first hand the positive environmental impact this transition will have on the air people breath in Beijing.

According to Zhang Dawei, deputy head of the Strategic Research Center at the Ministry of Land and Resources, China will produce 6.5 billion cubic meters of annual output by 2015 and 80 billion cubic meters by 2020. China currently does not commercially produce any shale gas.

The U.S. Energy Information Administration (“EIA”) stated in April that there may be as much as 1,275 trillion cubic feet (36 trillion cubic meters) of shale gas in China. That is 12 times the country’s conventional natural gas deposits. The EIA estimates that China’s “technically recoverable” reserves are almost 50 percent more than the 862 trillion cubic feet held by the U.S. – the largest producer in the world.
Bloomberg News via the Sanfrancisco Chronicle:

Shale gas part of BC economic growth solution

For years the Horn River News has been covering the benefits of natural gas, its new found abundance in shale gas and huge opportunity for British Columbia has from shale gas assets and its advantageous proximity to the Asian market.

The last three years have been since dramatic changes in the North American natural gas market. Low prices, abundant resources, lower demand have all contributed in changing the North American market for good. The US is the largest producer in the world and no longer imports the vast amount of natural gas from Canada as it once did and the Canadian natural gas industry is suffering from it as they have no other distribution channel for selling natural gas.

As the Canadian natural gas enters a new era, the world is once again facing the possibility of  a global recession. Canada will fare better then others but the Canadian economy will not grow as once projected with nearly all analyst reducing their growth projections for Canada by a half to full percentage point.

When shale gas was discovered in northern British Columbia the Province of BC filled provincial coffers with billions of dollars from selling exploration licenses to energy companies large and small eager to tap into the Horn River and Montney basin. The money was welcomed as the global financial markets were about to be shaken. The Province committed hundreds of millions for infrastructure to support the shale gas industry of northern BC. But much more needs to be done; to save and grow the natural gas industry in Canada and BC

With both the EU and USA now stumbling again. The world is holding its collective breath again. Markets are shaking, data is suggesting economies are contracting and people have lost confidence in the market, the economy and their politicians.

Canada has been incredibly fortunate. The Federal Government of Canada has guided the country through the global recession without bankrupting the the country. Canada is likely to stave off a recession but growth will remain very sluggish.

In BC, and Canada the time for natural gas is now. Soft economic markets present opportunities to make long term capital investments that will create needed jobs immediately, and provide immediate and long term economic growth. The Province of British Columbia has been quite supportive of the natural gas industry over the last couple years. Accelerating and increasing this support now would reap needed economic benefits and finally put BC in the international energy market as a provider and export hub.

A recent article in the Vancouver Sun has finally caught up and recognized the importance not only of BC’s shale gas resources as a resource but as an economic driver at a time when the Provincial economy is forecast to soften.

Its simple. Due to our technical ability to economically extract natural gas from shale rock has made natural gas one of the most abundant energy cources in North America. Nearly 90% of Canada’s natural gas was exported to the USA. But the USA has their own shale gas and is the largest producer of natural gas in the world. In fact, plans are underway for the US to start exporting natural gas to energy hungry Asia.

However, the only way the natural gas industry can remain competitive – and worse case stay alive – is to be connected to the international gas market. And herein lies the economic boom opportunity. In order to connect to the international market, pipelines and export terminals are required. A good portion of this infrastructure is underway but more can be done in order to ensure that BC is the preferred export terminal for Asia.

Asia needs energy and demand there is going to increase. Public sentiment for nuclear power in Japan has fallen so in the interim alternative power options will be required and natural gas is a likely contributor.

If you are a reader of the Horn River News, you likely know all the benefits of natural gas as an affordable, cleaner energy alternative to oil and coal. Technology brought the gas out of the shale; technology is squashing environmental concerns for water pollution.