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Dynamics of Fossil Fuel Movement

General discussions of the systemic, societal and civilisational effects of depletion.

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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 28 May 2014, 16:40:23

Keith - Outstanding info! Thanks. Amazing how the conversation can change if one steps back and looks at the big picture.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Fri 30 May 2014, 07:47:49

Just another indication of why the EU will have difficulty weaning itself off Russian NG. There's a continuous supply of new LNG coming on to the market. But most is sold on long term contracts...20 to 30 years. So if the EU wants to sub LNG imports for Russia pipeline NG all they need do is begin signing such long term contracts. But the problem is that competition for LNG will require the EU in many cases to pay a lot more for the LNG then they are paying Russia. That has been the reality for number of years now. And the EU has continued to chose cheaper NG over energy security. And now some EU (and US) politicians think the US could be a big source of cheap non-contract LNG...a country that today imports 7X as much LNG as it exports (most of which moves from Alaska to Asia). Nice fantasy, eh?

LONDON, May 29 (Reuters) - Shell has signed a 20-year LNG deal with Japan's Chubu Electric. Under the agreement, Shell Eastern Trading will supply up to 12 cargoes of LNG per year to Chubu Electric. The deal, which will start in October, is the first long-term LNG supply agreement between Shell and Chubu Electric.

And from 18 months ago: BP has signed a 20-year agreement to ship liquefied natural gas processed at a terminal in Freeport, Texas, which is the first of several facilities awaiting federal approvals for natural gas exports, a Freeport LNG executive said Monday. The agreement would commit BP to pay for processing of 4.4 million tons of LNG per year at the Freeport LNG facility, where it would be loaded onto BP tankers and shipped abroad. BP wants to be in one of the first facilities of its kind to be able to export gas. BP marks the third company to sign an agreement to buy LNG exported from the facility, with two Japanese companies, Osaka Gas and Chubu Electric Power, contracting another 4.4 million tons of LNG per year from the facility.

So again if any EU country wanted to buy that BP LNG they needed to sign commitments to do so at least a year and a half ago for a price above what they are paying the Russians due to the competition from Asia. And that LNG export facility hasn't even got its license yet. They don't offer a date when the first shipment will be sent. There's a lot of LNG available to the EU today from a lot of countries besides the US. All they need do is sign long term commitments to probably pay a lot more then what they are giving the Russians today. And then wait at least 1 to 2 years for the first delivery. And there's the predicament for the EU: they apparently don't want to do just that. IMHO the biggest impediment to getting more non-Russian NG is the EU financial interest in itself.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Fri 30 May 2014, 15:30:28

And here's exactly what the future of the EU's LNG import may look like. What the story doesn't explain is the leverage Iberdrola has with regards to shipping LNG into Europe. They are a Spanish private multinational electric utility company based in Bilbao, Basque Country. Iberdrola has a workforce of around 31,000 employees in dozens of countries on four continents serving around 32 million customers. When times were good Spain built a large capability of LNG Regasification. But with their economic slump they now want to be THE portal for LNG imports into the EU via the existing pipeline system. But notice the pricing schedule: it won't be cheap. They'll pay the going rate for US NG + the cost of liquefaction/Regasification + transport cost + profit margin for Iberdrola. The Spaniards could cut the deal because they have multiple markets to deliver to. Folks should understand that these long term LNG contracts requires the buyer to pay for it whether they need it or not. Been typical of most NG contracts even in the US: called "take or pay" clauses. The buyer is guaranteed a volume to be delivered but they also have to guarantee the purchase. If German utilities want to escape Russian NG all they have to do is to financially guarantee the purchase of a fixed volume of LNG for the next 20 years at a price that may average more than what the Russians will be charging. And then wait a year or two to get the first delivery. Easy peazy.

Cheniere announced Friday that its subsidiary, Corpus Christi Liquefaction has entered into an LNG sale and purchase agreement ("SPA") with Iberdrola under which Iberdrola has agreed to purchase approximately 0.4 million tonnes per annum ("mtpa") of LNG upon the commencement of operations of Train 1 of the LNG export facility being developed near Corpus Christi and increasing to approximately 0.8 mtpa of LNG upon the commencement of operations of Train 2. The Corpus Christi Liquefaction Project will have an aggregate design production capacity of 13.5 mtpa of LNG.

Under the SPA, Iberdrola will purchase LNG on an FOB basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component. LNG will be loaded onto Iberdrola's vessels. The term of the SPA will extend for twenty years beyond the date of first commercial delivery of the second train of the Corpus Christi Liquefaction Project, with an extension option of up to ten years. Deliveries from Train 2 are expected to occur in 2019. "Iberdrola is the first foundation customer on Train 2 of our Corpus Christi Liquefaction Project being developed in Texas. Iberdrola is a leading European power generation and distribution company with operations located in several countries around the Atlantic Basin," said Charif Souki, Chairman and CEO. "To date we have entered into SPAs aggregating approximately 3.8 mtpa of LNG volumes. We are in advanced discussions with other counterparties and are working towards finalizing additional agreements. We expect to complete all necessary steps to reach a final investment decision and begin construction by early 2015."
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Sat 31 May 2014, 09:06:02

Another consequence of increased oil production from US shales: half a world away the increased consumption at the largest refining complex on the planet:

Reuters - India's Reliance Industries is boosting crude imports from Africa and cutting its dependence on the Middle East as the owner of the world's biggest refining complex seeks to benefit from shifting global oil flows caused by the U.S. shale boom. African and Latin American crude, which together account for about 56 percent of Reliance's imports now, have become cheaper as the United States slows purchases and increasingly turns to domestic shale oil, while Middle Eastern heavy crude grades are pricier due to demand from regional refinery expansions. Reliance is making the switch as it wants to cut its crude costs to stem a decline in its refining margins.

And the increase in "demand from regional refinery expansions": like the 600,000 bopd capacity of the refinery JV between China and Saudi Arabia which could remove over 2 BILLION BBLS OF OIL from the global market place in just the next 10 years alone.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Thu 05 Jun 2014, 16:13:38

Just one more very small example of how all newly discovered oil won't be moving into the global market:

Reuters - Companies from China, Japan, South Korea and Russia have submitted bids to finance, build and operate Uganda's first oil refinery, the energy ministry said on Wednesday. Uganda's oil reserves were found in 2006 and the country has estimated them at 3.5 billion barrels. But development has been delayed partly by a debate between the government and oil companies about the size and commercial viability of building a refinery in the land-locked country. The planned 60,000 bpd refinery is smaller than originally envisaged by the government, which has said it is keen to maximize returns by adding value rather than simply selling crude oil. Oil production is now expected to begin in 2017.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Thu 05 Jun 2014, 17:37:59

One odd aspect of the effort to move Russian NG to the EU market place. Given the difficulties the EU has faced in the past with Russian NG not making it though to EU countries one would think they would be behind an alternate route that would avoid such a bottleneck. Even more so with recent events. Yet there's a major split developing be the EU commissioners and countries demanding the South Stream. For instance:

"EU Commission authorities have asked Bulgaria to suspend work on Russian energy giant Gazprom’s South Stream natural gas pipeline. It wants the project frozen pending a decision on whether it conforms with EU regulations on a single energy market. The EU’s executive arm says it believes South Stream does not comply with its rules prohibiting gas suppliers from also controlling pipeline access. It has sent the Bulgarian government a letter of formal notice asking for information. Sofia has one month to reply. Depending on how it responds there could be full infringement proceedings and possibly fines. Bulgaria, however, has decided to start construction of South Stream as a national priority. The country is heavily dependent on Russian gas and wants to shore up its gas supplies. On Thursday Serbia said it had no plans to delay the start of construction of its leg of the South Stream pipeline which is scheduled for July."

So the EU doesn't like Russia owning both the pipeline and the NG that flows through it. But are OK with Russian NG flowing thru pipelines owned by the Ukraine. So even if the Russians are willing to sell to the EU the Ukrainians could prevent it's delivery. OTOH if the Russians decide they don't want to sell NG to the EU it doesn't matter who owns the Ukrainian or South Stream pipelines...the gas won't flow. I've read numerous stories about the commissioners' objections to South Stream but other the repeating that it violates the ownership rules no more explanations are given.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Sat 07 Jun 2014, 17:05:15

It would appear there may be much more to China's territorial ambitions than just finding a few more spots to drill wells. "China's Nine Dash Line And The Law Of The Sea". From: http://www.rigzone.com/news/oil_gas/a/1 ... VkgvO.dpuf

"The area is strategically vital. Hagel called the South China Sea "the beating heart of Asia-Pacific and a crossroads of the global economy". The South China Sea contains the world's most important shipping lanes and sits astride supply routes essential to South Korea and Japan as well as China. More than half of the world's merchant shipping tonnage passes through the Straits of Malacca, Sunda and Lombok each year with nearly all of it continuing on through the South China Sea. Almost a third of the world's crude oil trade and half of its liquefied natural gas pass through the sea en route to China, Japan and South Korea."

So a potential modification to "he that owns the gold makes the rules" to "he that can controls the movement of someone's gold might begin making some of the rules".
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Sat 07 Jun 2014, 17:06:17

It would appear there may be much more to China's territorial ambitions than just finding a few more spots to drill wells. "China's Nine Dash Line And The Law Of The Sea". From: http://www.rigzone.com/news/oil_gas/a/1 ... VkgvO.dpuf

"The area is strategically vital. Hagel called the South China Sea "the beating heart of Asia-Pacific and a crossroads of the global economy". The South China Sea contains the world's most important shipping lanes and sits astride supply routes essential to South Korea and Japan as well as China. More than half of the world's merchant shipping tonnage passes through the Straits of Malacca, Sunda and Lombok each year with nearly all of it continuing on through the South China Sea. Almost a third of the world's crude oil trade and half of its liquefied natural gas pass through the sea en route to China, Japan and South Korea."

So a potential modification to "he that owns the gold makes the rules" to "he that can controls the movement of someone's gold might begin making some of the rules".
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Sat 28 Jun 2014, 15:25:05

Perhaps some sobering reality for the LNG cornucopinans out here. The entire story at http://www.downstreamtoday.com/news/art ... a_id=43641

Reuters - The gap between perception and myth in LNG is widening, with both buyers and suppliers appearing to subscribe to views that bear limited resemblance to reality.This dynamic was very much in evidence at this week's Australian Gas Export Outlook (AGEO) conference in Brisbane, where buyers appeared confident that a wave of new projects around the world would leave them spoilt for choice of supply, and at lower prices. Producers labour under the impression that Asian demand, led by China, is a bottomless pit that will suck up all the LNG they can make, while still earning high, oil-linked prices. The outlook for LNG is confused and the industry isn't being well served by the lack of clarity.

It's time to try and debunk some of the myths.

Myth 1: A Wave of LNG is Coming From Global Projects: At the AGEO meeting this week, senior representatives from a major Japanese LNG buyer and an Indian buyer spoke of the increased supply expected from the United States, Canada and East Africa. They spoke as if the projects that have been proposed are all likely to become reality, and within the timeframes mooted. This is extremely unlikely, and what appears to have happened is that project developers have proposed so many new plants that buyers seem convinced they are about to be swamped with offers. The reality is likely to be far more sobering. New projects, and a handful of others now being built, are likely to lead to a small market surplus of LNG around 2018.

But buyers' expectations of a sustained surplus are built on huge new supplies coming on stream in the United States, Canada and the East African nations of Mozambique and Tanzania. Most of these proposed projects don't have committed buyers, or gas supply. Rather many are so-called tolling projects that merely charge for the liquefaction process, with the sourcing of feedstock gas and shipping being buyers' responsibility. This leaves them highly exposed to U.S. Henry Hub gas prices, which are now about $4.58 per million British thermal unit. However, many analysts believe the trend is higher over the coming years, and U.S. gas prices also suffer from seasonal or weather-event-related spikes.

Myth 2: U.S. LNG Will Force LNG Prices in Asia Lower: This myth is based around the wide gap between U.S. natural gas prices and long-term, oil-linked contract prices in Asia, with Japanese buyers typically paying an average of around $15 to $16 per mmBtu, almost four times the Henry Hub price. Since U.S. LNG projects can source gas at U.S. prices, the theory goes that adding in liquefaction and transport costs of around $7 per mmBtu, takes the cost of LNG delivered to Japan from the U.S. Gulf Coast closer to $11 per mmBtu. There are several problems with this, the most obvious being that U.S. producers will sell at a steep discount to Australian and Middle East suppliers. Rather, it's more likely they will sell at a cost just fractionally cheaper than rivals, so allowing them to maximise profits while ensuring market share. This myth also works on the assumption that U.S. gas prices will remain low for decades. However, the risk must be for them to rise as increasing demand from electric utilities, industrial users, transport and residential customers starts to soak up even the huge amounts of available shale gas. Sharply lower prices are not as likely as buyers hope, and even if they were delivered, it would only be for a very short period as new LNG capacity would simply not be built and existing capacity would idle, or run at reduced rates.

Myth 3: China Will Buy Whatever Can be Produced: China has a pollution problem and needs cleaner energy. That's not a myth, but the belief that the Chinese will be prepared to use ever-increasing amounts of expensive LNG is probably about as hopeful as the iron ore miners who saw demand rising for decades to come. Yes, China is building re-gasification terminals at a rapid rate, with 50.2 million tonnes under construction or approved, more than doubling the existing 31.1 million tonnes. There are plans for a further 29.5 million, but even if all this capacity is added, it's by no means certain all will be used. Chinese demand is likely to reach some 60 million tonnes around 2020, but this can easily be met from new supply already being built. Additional demand will be added by new import facilities in Southeast Asian countries such as Singapore, Malaysia, Indonesia and Thailand, but again this is likely to be met.

Myths, if widely believed, distort markets and LNG appears to be in this category. Buyers awaiting cheaper LNG have to realise this is unlikely, unless investors with billions of dollars are prepared to back risky projects in the United States. Project proponents need to do a reality check on the likelihood of finding stable, committed buyers willing to pay prices high enough to justify massive initial investments. This isn't to say more projects won't be built, but only developments in the United States, Canada, East Africa and elsewhere that offer compelling economics will go ahead, and there won't be that many of them.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Sat 28 Jun 2014, 15:48:44

And one more small clue indicating why US NG prices might not stay too low for very long. So instead of shipping LNG to a mill in a foreign country just build the mill in the middle of the Texas oil patch. Also saves the expense of shipping the very heavy finished products half way around the world. BTW a German firm is also moving its exotic steel making plant to south Texas as are several other EU businesses.

"Robust demand for drill pipe, pipe casings and oil pipe – collectively known as oil country tubular goods (OCTG) – has prompted Tianjin Pipe (Group) Corp. to build a $1.1 billion seamless steel pipe mill in the United States. The investment, undertaken by the company's subsidiary TPCO America (TPCOA), represents the largest single U.S. manufacturing investment to date by a Chinese company. The La Quinta Trade Gateway, a 1,100-acre greenfield deepwater terminal that the Port of Corpus Christi recently completed in San Patricio County, Texas, beat out approximately 70 other sites throughout the United States to host the TPCOA pipe rolling and finishing mill. The 1.6 million square foot facility will use an electric arc furnace to convert recycled scrap steel and pig iron into seamless pipe, and the project will support roughly 2,000 construction jobs and as many as 800 permanent jobs during operations. Along with hot-briquetted iron and direct-reduced iron plants that Austrian steelmaker voestalpine is developing nearby, TPCO is helping the "Coastal Bend" region of South Texas – gateway to the Eagle Ford shale play – to become a new center of iron and steel manufacturing."

BTW my engineer, as well as others I know, won't buy imported tubulars no matter how cheap they are offered.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 02 Jul 2014, 12:37:25

The European Union is become less unionly:

AP — Hungary says it will go ahead and build its part of Gazprom's South Stream gas pipeline that bypasses Ukraine to supply Europe, despite U.S. and EU objections to the project. Prime Minister Viktor Orban said Tuesday in Serbia that "those who say we shouldn't build South Stream should make an alternative proposal about how we could live without energy." Orban added that "we are going to build the South Stream."

His comments underscore divisions within the EU over the trans-European pipeline. The standoff over Ukraine has renewed calls for the 28-nation bloc to rethink its energy policies to make it less reliant on Russia. Bulgaria last month had to freeze its South Stream construction work under orders from EU Commission, which said the country breached EU competition rules.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 02 Jul 2014, 12:53:03

And again another report highlighting foolishness of the chatter about the US govt helping out the EU with LNG exports. Again the obvious: the US govt doesn't export LNG...private companies like Cheniere does. And those companies don't build LNG export facilities without having a buyer and pricing committed to upfront. The EU countries have to start signing (and guaranteeing purchase) long term LNG contracts today if they want to avoid Russian NG imports in the future. Otherwise the only LNG they have available will be from the spot market which will almost certainly be priced much higher then Russian pipeline NG at the time. Below is LNG exported from the US that will not go to the EU because the Indonesians just took it off the market FOR THE NEXT 20 YEARS..

Indonesia's state-owned Pertamina has signed a second LNG sales and purchase agreement with US-based Cheniere Energy as it tries to secure volumes to meet an impending gas shortage. In a statement released Wednesday, Pertamina said that it will buy 760,000 mt/year from Cheniere's Corpus Christi LNG plant for 20 years starting 2019. This adds to the 760,000 mt/year that Pertamina has already committed to buy from Cheniere for 20 years starting 2018 -- the SPA for which was signed in December last year -- taking its total LNG imports from Corpus Christi to 1.52 million mt/year, Pertamina said Wednesday. The company had previously said the first LNG deal was for 800,000 mt/year for 20 years. The reason for the discrepancy in volumes was not immediately clear. "The [latest] agreement is consistent with Pertamina's strategy to [keep pace with] Indonesia's [growing] gas demand," Pertamina's gas director, Hari Karyuliarto, said in the statement.

Under the agreement, Pertamina will buy the LNG on a free on board basis for a purchase price indexed to the monthly Henry Hub price plus a fixed component, the company said, adding that Pertamina will use its own vessels to ship the LNG. Indonesia is projected to be short on gas from 2019 when demand -- for domestic use and LNG exports -- is forecast by the energy ministry to reach 9.66 Bcf/d compared with supply of 9.35 Bcf/d, and the country will need to boost LNG imports to supplement domestic supply.
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Re: Dynamics of Fossil Fuel Movement

Unread postby Strummer » Wed 02 Jul 2014, 12:53:47

Not only Hungary, but all involved countries have confirmed recently that they will continue with the project. That includes Bulgaria, Serbia, Austria and Italy.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 02 Jul 2014, 13:08:23

Strummer - And one more reason why those countries are demanding South Stream and aren't holding their breath waiting for the "surge" in US LNG exports. As stated below this is the future of US LNG exports...and it doesn't yet include the EU. At the current pace of the commitment for LNG purchases from the only current US LNG exporter there may little to no LNG available for the EU even if they started the effort today. And those future LNG export facilities that are only in the permitting stage? Not a $ will be spent on construction the until sufficient future purchase are guaranteed. No guarantees...no build out.

Reuters - Australia's Woodside Petroleum Ltd has signed up to buy LNG from Cheniere Energy Inc's export plant in Texas in a move to help it remain a competitive supplier to buyers in Japan, Korea and Taiwan. Proposed exports of LNG from the United States have led the world's biggest gas importers in North Asia to press for changes in pricing of gas from oil-linked terms to prices linked to the U.S. gas benchmark at the Henry Hub delivery point in Louisiana.

"In our opinion, this deal is a portent of the future of the LNG market. Woodside is responding to market forces," JPMorgan analyst Ben Wilson said in a note. Woodside said the deal to buy 850,000 tonnes a year of LNG from Cheniere's proposed Corpus Christi LNG plant over 20 years starting in 2019 was part of a strategy to diversify the company's sources of gas and build its trading capability. The gas from Cheniere will be priced at 115 percent of the monthly Henry Hub price plus $3.50 per million Btu, which Woodside said was in line with contracts with other buyers from the Corpus Christi project.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 02 Jul 2014, 13:20:16

And what about that huge NG field Israel discovered offshore…heading to the EU? Apparently not right now:

AP — One of the developers of a natural gas field off Israel's Mediterranean coast on Sunday said it has signed a letter of intent to provide gas to a facility in Egypt. Delek Drilling said it is negotiating a deal to provide seven billion cubic meters of natural gas from the offshore Leviathan gas field to British company BG's plant in Idku, Egypt, through an underwater pipeline annually for 15 years.

An industry official familiar with the deal said it could be valued at about $30 billion — which would be the largest energy deal in Israel's history. He spoke on condition of anonymity because he was not authorized to comment on the deal Until recently, Egypt provided natural gas to Israel. But following the ouster of President Hosni Mubarak in 2011, supplies were disrupted and eventually halted.
Last month, Houston-based Noble Energy Inc., one of Delek's partners, reached a preliminary deal to sell up to 2.5 trillion cubic feet of gas annually over 15 years to Union Fenosa Gas SA for its liquefied natural gas facility in Egypt. Despite a long history of geopolitical conflict with its Arab neighbors, the discovery of large natural gas deposits off its coast has positioned Israel to become a leading energy exporter in the region.

Earlier this year, Noble Energy and its partners signed a deal with Arab Potash Co. and Jordan Bromine Co. in Jordan, and another deal with a Palestinian power company to supply gas to a power plant to be built in the West Bank. Israel has long relied on imports to meet most of its energy needs. The gas fields are expected to supply Israel's domestic needs for decades and could transform the country into an energy exporter.
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Re: Dynamics of Fossil Fuel Movement

Unread postby Subjectivist » Wed 02 Jul 2014, 14:04:46

Does anyone know what happened to that huge LNG project in Australia near the Great Barrier Reef? They were plannng a huge mobile series of drilling and cooling ships that would extract and store the Natural Gas for shipping in standard LNG freighter.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Wed 02 Jul 2014, 20:50:07

Sub - Looks like it's still somewhat up in the air and, if eventually done, is a good ways off:

LNG plant proponent confident of approval - The company proposing to build a liquefied natural gas (LNG) plant near the Great Barrier Reef world heritage area has rejected speculation the project will never be built. Energy World Corporation lodged an application with the Federal Government earlier this month, to build a gas pipeline from the Cooper Basin in south-east Queensland to an LNG plant and ship loading facility at Abbot Point near Bowen in the state's north. Green groups say Energy World has never built an LNG plant. However, the company's chief executive Stewart Elliot says that is untrue. "We're building in Indonesia, in Sengkang and the construction of the first LNG export terminal is well underway," he said. He says the company will minimise its impact on the Great Barrier Reef. "We're also looking at shallow draft LNG ships which would be virtually no dredging whatsoever," he said. "We believe that we will get approval.

"When we first made the first tentative submission to say that we would like to go to work at Abbot Point we were greeted that this is long overdue, too many people have been moving to Gladstone where dredging channels there are 47 kilometres long. "We chose Abbot Point because the Government said this was the best place." Energy World says it plans to be exporting gas from Abbot Point by mid-2020.
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Re: Dynamics of Fossil Fuel Movement

Unread postby toolpush » Thu 03 Jul 2014, 03:07:27

Rockman/Sub,

You do realize that there are 3 x 2 train plants well into construction at Gladstone. One for Santos/Petronas, one for Origin/Conoco and the other Queensland Gas/British Gas. They are all due on line 2015/16. Each train around 4 million ton per year. These are all coal seam gas/ coal bed methane projects, and they are all struggling for sufficient gas supply. It is expected we will be seeing an increase in the price for gas on the east coast in the next few years due to any shortages. As for piping gas from the Cooper basin, I am not sure where the reserves will come from. The Cooper Basin has been in production since the late 60's to the early 70's, supplying both Adelaide and Sydney. Santos for many years have been using all the tricks in the book to keep production going as it is. The latest being, you guessed it, fraccing shale and tight sand deposits. So any new projects have a lot of competition for the high priced gas, which does not sound a good way to be planning a LNG project, especially with all the unknowns associated with the big promises from the US shale developments, real or not.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Thu 03 Jul 2014, 12:12:34

Thanks pusher. You're on top of it so you're the best source. If I read you correctly the LNG plants might not have all the NG available that they require...correct? That would be very unusual compared to other LNG export projects I've seen. They usually require a guaranteed delivery volume. And that doesn't mean someone just tells them the NG will show up. They want contracts with substantial financial penalties if all the NG doesn't show. In addition they normally require buyers with guaranteed purchase volumes with a locked in pricing structure. And the buyer usually requires a financially backed contract for the volume they agree to buy.

Just a guess but it sounds like those folks are betting on the come to some degree. Very risky approach to the long term global LNG market IMHO.
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Re: Dynamics of Fossil Fuel Movement

Unread postby ROCKMAN » Thu 03 Jul 2014, 15:44:18

And another huge reserve of US NG that will be exported as LNG that WON'T BE GOING TO THE EU:

Reuters - The state of Alaska and four energy firms have signed a joint-venture agreement to begin preliminary work on an 800-mile natural gas pipeline from the North Slope to a LNG export plant, Governor Sean Parnell said Wednesday. The agreement calls for partners to invest millions in so-called front-end engineering and design work over the next 18 months for the project, which could ultimately cost between $45 billion and $65 billion. The agreement comes two months after the state's legislature backed Parnell's plan to work with North Slope leaseholders Exxon Mobil, ConocoPhillips and BP, plus pipeline company TransCanada on a project development contract. That contract will have to be ratified by the legislature and is still forthcoming, likely by the end of 2015.
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