[sparky]

.
On the keystone pipeline ,I always though that the mealy mouthed concern for the environment was a bare faced lie
the real motive was keeping the price of crude down in part of the US
make sense too , crude is a major input in the economy
might as well get the canuck to subvention the American market.

[ROCKMAN]

sparky - Actually I think a lot of the protestors were sincere but just very ignorant of the dynamics of the inevitable distribution of ff's. While they kept patting themselves on the back for the delays in the border crossing permit the Keystone Pipeline (moving 600,000 bopd across the border since Oct 2011) was ignored as it was tied into the southern leg of Keystone XL earlier this year. Now the system can deliver the same amount of oil directly from Alberta to Texas and bypassing the choke point at Cushing (which did allow low oil costs for mid west refiners as you speculate). One argument against the permit was that it would allow the Canadians to get higher prices and motivate more oil sands development. Which is exactly what the southern leg of Keystone XL has done. The southern leg which the POTUS very publicly supported (told all fed agencies to expedite the process) as critical to the economic health of the US. And at the same time the anti-permit folks were applauding the POTUS delay of the border crossing permit. I've always found it difficult to believe that the anti-permit folks were that ignorant of the big picture. In one way their focus on the permit issue provided a smoke screen while other transport systems were pushed thru almost unnoticed.

Except by me, of course. LOL. Many of them also have a difficult time understanding that 98% of the US oil patch would like nothing better than to see Canadian oil imports banned and the oil sands fields shut down.

[ROCKMAN]

And now the current dynamic movement of NG from well head to storage to consumer: Reuters - "The operator one of the largest natural gas pipeline systems in the United States is urging customers to accelerate the pace of rebuilding stocks to ensure sufficient supply to meet heating demand next winter."

Maybe if we run short next winter our EU cousins might share some of their Russian deliveries with us. Seems only fair since some of our politicians wanted to send some our NG over there to help out the Ukrainians. Unfortunately I haven't heard of any producer not flowing the wells at max rate today.

"Columbia Gas Transmission said gas injections on the system in April and early May trailed historical amounts due to heavy withdrawals during the coldest winter in decades, leaving working gas in the system at half the amount it was a year ago. "This raises concerns about customers expecting to inject at higher rates later in the season," Columbia Gas said in an advisory on May 2. "If the majority of storage customers take this approach, demand for storage injections late in the season may exceed TCO's injection capabilities." Some analysts are concerned that it will be difficult for utilities and others to rebuild the nation's gas stockpile sufficiently before the next heating season to avoid price spikes when cold weather arrives. Others expect rising gas production to allow storage to refill in time. Pipelines commonly post levels of working gas, but Dominion has no plans to issue an advisory similar to Columbia's. "Our customers have indicated they intend to fill storage as they have done in the past," said Dominion spokesman Frank Mack.

STOCKS NEED TO MORE THAN TRIPLE - Utilities will need to inject more than 13 billion cubic feet of gas per day on average over the summer to rebuild the inventory to the five-year average of 3.8 trillion cubic feet, said the American Gas Association. Net gas injections in recent years have averaged just 10 bcfd, AGA said, but weekly injections are more seasonal in nature. "Historically, we always put more gas in storage on a weekly basis in May and June than we do in October or later," said Chris McGill, AGA vice president of policy analysis. "When the balloon is less full at the beginning of the injection season, it's not as hard to push the gas in as it is at the end of injection season," McGill said.

Five weeks into injection season, total gas in storage stands at 1.055 tcf, the U.S. Energy Information Administration said on Thursday, or 48 percent below the five-year average. Analysts polled by Reuters said they expect gas in storage to refill to 3.44 tcf by early November, below the robust 3.8 tcf five-year average due to soaring shale gas production. Utility officials said they do not dwell on the total gas figure tracked by EIA, they know the amount of stored gas available in November will impact the price they will pay when winter hits. "Operationally, all (local distribution companies) are going to put gas in storage to be as prepared for the winter as we can be regardless of the national storage picture," said Gerald Ballinger, president of the Public Energy Authority of Kentucky which has about 22 municipal utility members. Ballinger said having more gas in storage will keep prices lower. "If we don't get to 3.4 tcf it could have quite an impact on where prices go."

[sparky]

.
Not much hope of an exportable excess of NG from Russia
for memory
"Exit for last Shtokman partner "
http://barentsobserver.com/en/energy/20 ... tner-23-09

too hard , too expensive , gas too cheap

[ROCKMAN]

sparky - You never know: last winter NG spot prices were about double the usual price for NG. Some northerner utilities were paying over $25/mcf for a short time. And that was when there was a sufficient supply of NG being pulled from storage. What happens to spot prices this winter if US storage runs out in the middle of a polar blast? Not inconceivable that US utilities could outbid EU buyers for LNG from Russia or other suppliers for a short period of time.

And thus the reason I started this thread: the great and relative uncertain future.

[ROCKMAN]

sparky - You never know: last winter NG spot prices were about double the usual price for NG. Some northerner utilities were paying over $25/mcf for a short time. And that was when there was a sufficient supply of NG being pulled from storage. What happens to spot prices this winter if US storage runs out in the middle of a polar blast? Not inconceivable that US utilities could outbid EU buyers for LNG from Russia or other suppliers for a short period of time. I recall that sometime in the last year an LNG tanker was diverted in mid-Atlantic and rerouted from S. America to the EU (or vice versa) because the seller was offered a better price. Nothing personal...just business.

And thus the reason I started this thread: the great and relative uncertain future.

[Synapsid]

sparky, ROCKMAN,

That article on the pull-out from the Shtokman gas field is from last September, but it's the first I've heard of Total giving up on the project. How about you guys?

[ROCKMAN]

Syn - Actually didn't know about that project. But Total has a big chunk of that other Russia Arctic LNG project so with the ongoing politics maybe they decided to limit their risk. They've already committed many $billions to the play.

[Timo]

Doesn't China want to build a high-speed rail line to the US?

Forget people. Moving coal is much more important.

[ROCKMAN]

This story might not catch much notice but could actually be one of the biggest stories out there when you understand what China is up to. This story would also fit under the thread dealing with future control of oil/NG. Almost all the fossil fuel industry in China is owned by the gov't. This allows absolute control. But it also puts the gov't on the hook for all the capex. The current move is to monetize those huge assets. Collectively these companies are worth hundreds of $billions. But an asset the China cannot afford to let anyone else control. So they are in the process of recovering $billions of that invested capital by essentially going to a more tradition structure of partial public ownership. Similar to the relationships between PEMEX and Petrobra and their respective govts. But China will certain retain control of the operations by retaining enough of the individual companies. This should provide China with more leverage then they already have.

In addition to receiving many $billions consider how much of the divested ownership could end up in various institutions around the world. This would link the health of those foreign investors with the well being of those Chinese companies. Consider the political implications if a big financial institution in Country X owns a significant position in Chinese Company A. It could lead that institution to lobby its gov't to the Chinese company. In the end it seems like a win-win-win for the Chinese: they recover tens of $billions (which they can use to garner more control of fossil fuels around the globe), spread the risk to other investors especially those outside of China and still retain control of the entire process. Which is the same business model ExxonMobil et al have used for many decades.

Reuters - PetroChina Co Ltd, the country's dominant oil and gas producer, said on Monday it plans to sell more multi-billion dollar pipeline projects to raise cash, cut capital spending and promote private investment in energy. In a filing with the Hong Kong stock exchange, PetroChina said it would set up a company called PetroChina Eastern Pipelines Co Ltd to hold natural gas pipelines with an audited net value of $4.7 billion, before selling off the unit through a public tender. The unit will hold China's first and second west-to-east, cross-country gas pipelines, with total assets of $13.2 billion and total liabilities of $8.5 billion 52.7 billion, based on an audit by KPMG Huazhen, the statement said. "The equity transfer will help the company (PetroChina) ... optimize the resource allocation and financing structure and diversify the ownership structure of the company," it said.

PetroChina Co Ltd - which divested part of its pipeline assets last year - said in March it would cut capital spending for the second straight year in 2014 to boost shareholder returns in the midst of a massive corruption probe. In 2013, capital spending fell 9.6 percent to $51.7 billion, the first such decline since the company's 2000 debut on the Hong Kong and New York stock exchanges.PetroChina has vowed to divest more non-core assets such as pipelines to reinforce investment in large upstream projects at home and abroad and boost shareholder returns.

This strategy mirrors the current trend in the global oil industry, and echoes plans by rival Chinese energy firm Sinopec Corp , which plans to sell up to 30 percent of its retail arm to raise up to $20 billion. The asset sale plans by PetroChina and Sinopec can also be seen as a response to Beijing's calls to promote private investment in industries currently dominated by state-owned enterprises, analysts say. Critics say PetroChina has invested too heavily in the downstream business - which includes pipelines, refining and petrochemicals - at the expense of more profitable oil and gas exploration and production. Its runaway spending, combined with rising costs and hefty losses in the refining and natural gas import businesses due to government controls on domestic fuel prices, have eaten into returns and hurt the finances of PetroChina for several years. Total liabilities ballooned to 173.4 billion at the end of 2013 from $56.5 billion in 2008, while return on equity fell to 10 percent in 2012 from a peak of 30 percent in 2005. PetroChina also said on Monday it will incorporate the pipeline unit in Shanghai's Pudong area with registered capital of 10 billion yuan and then auction the subsidiary through an equity exchange.

[sparky]

.
The price of Diesel and gasoline is regulated by the Chinese government ,
during the 2009 price surge , the national oil companies were loosing their shirts and reacted by making less fuel , it led to dramatic shortage and rationning
the price has been adjusted upward but the market is still not free

[ROCKMAN]

sparky - That's exactly what find so interesting. It seems like China maybe evolving into a hybrid between a communistic/totalitarian system and free market economy. But, as you point out, not entirely free. But many folks complain about the problem with our market being so free that it's dominated by the profit motive. That reminds me of a story I heard years ago: an American goes to China to teach some business men about the free market. Thought he would just spend a few hours explaining profit margins. Instead spent days. Simply the Chinese couldn't understand why if a plant spent $10 to make a widget why would they sell for more than $10? The plant employed folks and delivered the widget to the economy at the lowest price. Any profit would go to the gov't which would give the money back to the people...so why charge more?

Imagine if US refineries were owned by the US gov't and sold motor fuel at cost? Not bad but what would the refinery do if it needed capex to expand? But if it were a pubco partially owned/controlled by gov't it could pay an adequate return to the minority shareholders, provide capex but also forego its share of the profit and deliver cheaper fuel. But more important it would have control over the disposition of 100% of the fuel: export it, consume locally, reserve it, flood the market, etc. Basically be able to quickly change the dynamics to suit changing conditions.

Granted a variety of potential holes in such a scenario. I doubt I'll be around to see where the situation goes. Just an interest thought exercise IMHO.

[ROCKMAN]

So let's chat about the dynamics of moving LNG around the globe. Some loud voices in D.C. think the US could help our EU cousins by shipping some of our "excess" NG to them. At the same time some other folks in D.C. are arranging just the opposite movement. Any future LNG imported into New England will come from the Atlantic Basin market...the same market the EU currently receives much of its LNG from.

Reuters - U.S. energy regulators said on Thursday construction of the proposed Downeast project in Maine would pose little harm to the environment. Downeast is a proposed LNG IMPORT terminal. FERC said Downeast LNG would provide about 500 million cubic feet per day of imported natural gas to the New England region.

I wonder what our EU cousins will think if we start importing "their" LNG making them more dependent on Russian NG imports. it wouldn't be personal...just business.

BTW the last number I have for LNG imports to the UK was 500 bcf/year. About half of what they were getting before the Asian market began outbidding them. Just the Downeast terminal represents about 180 bcf/year that will be potentially be taken from the Atlantic Basin market.

[Subjectivist]

So let's chat about the dynamics of moving LNG around the globe. Some loud voices in D.C. think the US could help our EU cousins by shipping some of our "excess" NG to them. At the same time some other folks in D.C. are arranging just the opposite movement. Any future LNG imported into New England will come from the Atlantic Basin market...the same market the EU currently receives much of its LNG from.

Reuters - U.S. energy regulators said on Thursday construction of the proposed Downeast project in Maine would pose little harm to the environment. Downeast is a proposed LNG IMPORT terminal. FERC said Downeast LNG would provide about 500 million cubic feet per day of imported natural gas to the New England region.

I wonder what our EU cousins will think if we start importing "their" LNG making them more dependent on Russian NG imports. it wouldn't be personal...just business.

BTW the last number I have for LNG imports to the UK was 500 bcf/year. About half of what they were getting before the Asian market began outbidding them. Just the Downeast terminal represents about 180 bcf/year that will be potentially be taken from the Atlantic Basin market.

It is worse than that, as it happens the Chinese are very interested in buying the oil and natural gas that Russia currently sells to the west. With China and the US buying up the supplies that leaves the western Europeans in a very difficult position.

[ROCKMAN]

Sub - Which is why I invented another silly acronym some time ago: MADOR...Mutually Assured Distribution Of Resources. Similar to the Cold War's Mutually Assured Destruction. Instead of the nuclear weapon it's the monetary weapon. And in the world of energy importers there are just two super powers IMHO: China and the US. We can't compete very well against China and likewise they can't push us out of the picture. But the rest of the importers...including our supposed "allies "? Some one is going to subjugated when it comes to energy imports. Many importing countries already are. Every country needs every other country. But to different degrees. China exports to a lot of countries...and a lot to the US. And a lot of countries buy US debt...and China buys a lot.

Not sure if it will eventually balance out as such. But if it does then what happens when there's just enough left to sustain just one in the fashion to which they've become accustomed?

[Subjectivist]

China has done a good job of developing relationships with resource exporters in Africa and the middle east, now they are adding Russia. I think they are looking toward the day when those exporters develop import trade for Cinese finished goods and they will need US markets less and less if that shift takes place.

[ROCKMAN]

Sub - Yep and with a shift away from the US petrodollar it will require more on our part to keep importing "our fair share" of those fossil fuels. But as difficult as that competition may be for the US consider how much more difficult for the other global economies. Again consider England's LNG imports. They've already lost half of their supply to higher bidders in Asia. And despite the shale boom the US still has to import 7% of its NG consumption. And there's already talk of a potential shortfall of US NG storage next winter. Last winter some utilities in New England had to pay more than twice on the spot market then what the Brits were paying for their LNG at the time. With increased LNG import capacity on the east coast how much more of their LNG market might the Brits lose to the US in addition to Asia?

[Tanada]

Sub - Yep and with a shift away from the US petrodollar it will require more on our part to keep importing "our fair share" of those fossil fuels. But as difficult as that competition may be for the US consider how much more difficult for the other global economies. Again consider England's LNG imports. They've already lost half of their supply to higher bidders in Asia. And despite the shale boom the US still has to import 7% of its NG consumption. And there's already talk of a potential shortfall of US NG storage next winter. Last winter some utilities in New England had to pay more than twice on the spot market then what the Brits were paying for their LNG at the time. With increased LNG import capacity on the east coast how much more of their LNG market might the Brits lose to the US in addition to Asia?

I dunno ROCKMAN, sounds to me like you are making a case for the motives behind those underground coal gassification projects in the UK. Do you think Her Majesty's Government has seen the future unfolding the same way you have and are trying to forestall the LNG shortfall by replacing that lost supply with Town Gas in the future? A case could be made that they are doing a fair job of staying ahead of the unfolding shortfall if that is the case, though I am loath to give any politician that kind of credit for far sightedness.

[electro-rail]

Speaking of the dynamics of FF movement….

Does anyone out there know how best to visualize the notion of 1,000 barrels per second?

Hint: that's a best selling book from a few years ago…

For the layman I mean.