In this issue

 

Third-party access (TPA) to regasification terminals is offered for over 420 mtpa, or 54% of global regas capacity, but in practice such access still rarely happens outside Europe. In Japan, for example, TPA exists on paper notably on the basis of ‘bilateral negotiations’ – in practice, however, incumbents do often not respond to any query of a third party. Regulators would need to enforce full or partial TPA, analysts argue, to help aspirations of creating an Asian gas trading hub become a reality. 

Aspiring to one day develop an LNG industry, the Canadian province of British Columbia is supporting plans by TransCanada to ship its gas via pipeline to border towns like Toronto to compete in the US market instead of shipping LNG cargoes to Seoul, Tokyo and Shanghai. Conclusion of the tender fills up most of TransCanada’s idle pipeline capacity – a move seen to improve the competitiveness of Canadian natural gas which had lost out on price compared to US shale gas. 

Demand for LNG keeps rising globally, as the super-chilled gas becomes a fuel of choice in new markets such as shipping, transport and heavy-horsepower machinery. In its annual World LNG Report, the International Gas Union (IGU) pointed out the fast rise of LNG-powered tankers, with 31 newbuilds delivered in 2016 from shipyards to the LNG shipping fleet. 

The Administration of President Donald Trump is taking an interest in the Alaska LNG project with US Vice-President Mike Pence meeting Alaska Governor Bill Walker and officials during a stop-over. The venture itself on April 17 filed for regulatory permits. 

Demand and market need will decide whether US LNG developer Excelerate Energy will take delivery of all seven floating storage and regasification units (FSRUs) that it has ordered from Daewoo Shipbuilding and Marine Engineering of South Korea. It has the option to order the first FSRU as early as Q2-2017. 

Working gas storage in the United States as of March 31 stood at 2,051 billion cubic feet (Bcf), ending the most recent gas year around 15% above the five-year average. Responding to slightly higher prices, gas consumed in electric power generation fell 2.1 Bcf from the 2015–2016 heating season, but the drop was almost entirely offset by a 2.0 Bcf increase in US gas exports, according to data from PointLogic. 

As an array of LNG export projects is coming onstream; the Oxford Institute of Energy Studies (OIES) has been evaluating ‘clearing mechanisms’ to reduce the oversupply in global gas markets. Coal-to-gas switching in Europe is being seen as an option, as is US LNG curtailment. 

The International Energy Agency (IEA) has warned of risks to global gas security, even if the liquidity of spot and near-term markets has increased substantially in recent years. “LNG markets are less flexible than is commonly believed” and consequently security of gas supply at a global level is now seen as “less solid” than earlier perceived. 

Egypt is positioning itself as a prominent gas importer during the northern hemisphere summer while becoming a winter exporter. Wood Mackenzie points out that “a pragmatic approach to pricing” by the Petroleum Ministry has secured over US$28 billion in new gas field investment since 2015, so “this could be just the start of Egypt's second gas boom.” 

Bogged down by persistent gas shortages, Ghana is fast-tracking alternative options to energise the country: importing LNG via two Floating Storage and Regasification Units (FSRUs) as well as generating electricity on barge-based gas power ships. In January, construction started on the $1.5 billion container terminal at Tema Port – groundbreaking for Quantum Power’s adjacent 3.4 mtpa Tema LNG import terminal took place in early March. Snapping up attractively-priced spot cargoes, including US LNG, seems the operators’ ultimate aim. 

In a world awash with LNG, the UK’s Brexit negotiations do not specifically focus on energy security, however “as the LNG supply and demand balance is forecast to tighten during the 2020s, the UK and Irish agendas should then be concentrated on security of supply,” warns Thierry Bros, senior research fellow at the Oxford Institute of Energy Studies (OIES). 

Gail India, the state-run gas supplier, has bought a second shipment of LNG from Cheniere Energy that has set sail from Sabine Pass in Louisiana and is due to reach India by the middle of April. The spot cargo is heading for the Dabhol regasification termial on India’s western coast. 

Canada’s first export of LNG is understood to be soon heading overseas from a port in Louisiana. Cheniere Energy is considering the liquefaction and export of natural gas sources as far off as the Montney shale play, straddling Canada’s Alberta and British Columbia provinces. 

Vivek Chandra and Langtry Meyer, co-founders of the Texas LNG Brownsville project have selected Samsung Engineering and KBR to provide a detailed engineering report – as the basis for deciding whether to take a final investment decision (FID).

News Nudges

LNG Ltd remains to standby to ship US cargoes to India and the UK

LNG Ltd. has substantially reduced its net losses as it is waiting in the wings to start building two fully-approved liquefaction plants amid preliminary agreements to ship cargoes to the UK and India. The Australian developer of two North American LNG export projects has fully approved plans to build the Magnolia LNG plant at Lake Charles in the US state of Louisiana and at Point Tupper in Richmond County in the Canadian Atlantic Coast province of Nova Scotia. The company recently posted a consolidated half-year net loss of$13.6 million, down substantially compared with $80.2 million in H1-2015. CEO Roger Whelan pointed out that “Project development expenditure decreased from $68.4M (2015) to just under $7M in the 2016 period, reflecting the company’s liquidity management plan and sole focus on completing the marketing of Magnolia LNG’s offtake capacity.”


British Columbia courts utilities to invest into LNG fuel use

The Canadian province of British Columbia is calling for investments by Canadian utilities and others to build liquefied natural gas fuel infrastructure to help establish BC as a marine bunkering centre on the Pacific Coast capable of providing LNG to an increasing number of vessels. “Amendments to the Clean Energy Act will enable utilities to increase incentives provided to shipping companies for the conversion of vessels to run on LNG, invest in LNG bunkering infrastructure and increase the supply and use of renewable natural gas (RNG),” Energy and Mines Minister Bill Bennet said referring to bio-methane and made from waste.”