In this issue

 

Wednesday, 06 July 2016

Eying to export LNG from the US Gulf Coast, Houston-headquartered Eos Investment Group has started the permitting process in Chile for a Floating Storage and Regasification Unit (FSRU) to be deployed as an import terminal. Meant to become Chile’s fourth such facility, the GNL Talcahuano FSRU will be located at a port in the Biobio region.

Commissioning of the newest European import terminal at the French Channel port of Dunkirk is set to start in the first week of July with the first cargo to be delivered by July 8, followed by a second cargo in August. The $1.13 billion regas terminal, managed by Dunkerque LNG on behalf of EDF, Total and Fluxys, is set to be fully operational by September.

Norwegian LNG transport firm Golar has launched a proposal to the Brazilian government, featuring a regasification terminal in the state of Para in the lower Amazon basin. If build, the LNG regas facility would supply new power generation plants and local industries that currently have no access to natural gas.

AG&P is looking to partner with private developers in building small-scale LNG facilities that can deliver 5 to 20 MW of decentralised power. Commenting on average investment needs, AG&P President Albert D. Altura said: “The rule-of-thumb for LNG, and this is highly dependent on the area, is about $1 million per megawatt for small-scale projects.”

China National Petroleum Corporation (CNPC) and Russia’s Gazprom have agreed to form a joint venture for gas-fired power generation and underground gas storage in China. The MoU was signed on Saturday after detailed discussions on Russian gas supplies via the western route – the so-called ‘Power of Siberia’ pipeline is already under construction.

Japan's Jera Co, a joint venture of Tepco and Chubu Electric, has started to sell excess contracted LNG to EDF Trading under a deal sealed in late May to divest up to 1.5 mtpa to the London-based trading arm of the French utility. Sluggish gas demand in Japan makes utility buyers seek to offload over-contracted volumes.

Dominion has filed a report to FERC on the progress of construction work at its 5.25 mtpa Cove Point LNG terminal in Maryland, stating the regas project was now 38% complete and would be on track to start operation in late 2017.

Overstating its optimism, Gazprom has suggested China’s gas demand will exceed 260 Bcm in 2016 and edge close to 300 Bcm/year by 2020. Actual figures show a cautious recovery, with demand up 0.3 million tons, or 27%, to 1.43 million tons y-o-y in May. South Korea, in contrast, saw a 5.8% decline in LNG imports last month – the fifth month in a row of y/y declines.

An oversupply in global gas markets is here to stay until the end of the decade, as the LNG glut is unlikely to be soaked up by utility buyers. IEA Executive Director Fatih Birol explained that cheaper coal and continued strong renewables growth were blocking gas from expanding more rapidly in the power sector.

Nova Scotia-based Goldboro LNG and Woodfibre LNG in Squamish, BC, are seeking to take a financial investment decision by the end of this year. Woodfibre’s prospects just got boosted by signing-up a major Chinese buyer, while the offtake of Goldboro’s entire Train 1 is underpinned by a firm commitment from Germany’s Uniper.

While the US is aggressively ramping up its liquefaction and export capacity, Canada is still facing difficulties of getting its huge land-locked gas bounty in Alberta to the market. “Our former biggest market – the US – has become our biggest competitor,” industry executives agreed at a conference in Vancouver.

Four commissioning cargoes from Sabine Pass have been shipped to customers in Brazil, India and the United Arab Emirates. The US Department of Energy has published data on liquefied natural gas exports for the first quarter of 2016, showing prices of LNG sold from the Cheniere’s facility at Sabine Pass ranging from $3.35 per million British thermal units to $3.77/mmBtu. 

Philippine’s major power and gas utility, First Gen, is in talks with LNG suppliers as it seeks to secure a long-term import contract over 0.5-1 mtpa to help fuel new gas power projects in Luzon. “Over the past year, we’ve been speaking with over 20 suppliers but terms vary greatly,” Jose Aldon, CEO, AXI LNGas, senior advisor to First Gen told LNG North America.

Hawaiian Electric Company (HECO) has filed for regulatory approval for a 20-year LNG import contract with Fortis that would help supply gas to power plants on O’ahu, Hawai’i Island and Maui starting from 2021. Shifting from fuel oil to natural gas is estimated to lead to up to $3.7 billion in customer savings.

News Nudges

US to stay ‘net exporter’ past 2018

The United States’ status as a net exporter is expected to continue for the rest of this year and past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing LNG exports the US Energy Administration (EIA) forecasts. Meanwhile, Wood Mackenzie principal analyst, Patrick Kirby forecasts oil pricing dynamics will increase, through near-term $50-60 range.


Texas oil and gas boost

The Texas Alliance of Energy Producers said natural gas prices in July averaged $2.84 per thousand feet, increasing the value of Texas-produced gas by 2.3 percent to nearly $1.9 billion. Sizeable year-on-year improvements in the rig count, drilling permits and the value of Texas-produced crude oil and natural gas combined to push the Texas Petro Index up in July to 176.9, the eighth straight monthly increase. However, it is in oil where Texas and the US are excelling. “OPEC production curtailments did not achieve the desired price outcome,” said spokesman Karr Ingham. “Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel (US) oil market provides more incentive than in the past,” added Ingham, referring to the West Texas Intermediate (WTI) US benchmark oil price.


Florida LNG bunkering

Jax LNG, the port bunkering project in Jacksonville in Florida, has received a Letter of Acceptance (LOA) for the facility from the United States Coast Guard and approval to conduct ship-to-ship LNG fuel operations with the LNG barge “Clean Jacksonville”. The expectation is that ship-to-ship LNG bunkering will start in early 2018. Jax LNG already supplies fuel for the LNG-fueled container ships of US shipping line TOTE Maritime. The fuel is supplied by Pivotal LNG.