In this issue

 

‘Hope dies last’, they say, and the International Energy Agency’s Fatih Birol has helped the LNG industry in British Columbia to keep up just that. “I am sure and our numbers show,” he stressed “that there is room for Canadian LNG after 2020. Especially, if pressure continues to keep the cost of production low. 

Another blow has been dealt to British Columbia’s LNG ambitions by AltaGas’ decision to halt works for its 0.55 mtpa liquefaction project on the Douglas Channel.

Short-cycle and flexible nature of US shale gas operations has made its economics more competitive than many conventional assets. In the face of depressed oil and gas prices, wildcat drillers from North Dakota to Texas have emerged as the swing producer. Fresh rumours of OPEC production cuts give some respite. 

US LNG exports, pushed back to early March, will come more dearly for European buyers than purchasing the gas on the spot market, Gazprom claimed, insisting that import volumes to the EU would be “limited”. 

Keen to maintain market share in oversupplied LNG markets with record low prices, Qatar now lures leading buyers by offering short duration cheap ‘teaser deals’ as it seeks to open opportunities for more strategic 20-year sales. After RasGas conceded to contract renegotiations with Petronet, Asian buyers are now mounting pressure on Woodside Petroleum which will see major long-term supply contracts expiring over the next few years. 

As the first LNG tanker set sail from Sabine Pass in the last week of February, Charif Souki should have been celebrating his bellwether project. Instead, he is gearing up to compete with his old employer, Cheniere Energy. 

Nuclear restarts are gathering speed in Japan with three reactors now back on the grid; hence the world’s biggest LNG buyer reported the steepest plunge in gas imports in more than six years.  By the end of March, five nuclear are set to be back operational, further depressing gas demand in the power sector. 

Two-thirds of the growth in fuel demand will take place before 2025, thereafter efficiency gains in installed generating capacity in the OECD32 countries, notably through the switch from coal-to-gas generation, is forecast to significantly reduce fuel-burn. 

Blind-sighted by the US shale gas revolution, a flurry of developers have been seeking to export LNG from the lower 48 states even though much of this capacity is not needed. On the flip-side, idled US regas facilities look like ‘sunk costs – but not quite: Cheniere Energy still gets paid for contracted regas slots, even if customers do not actually use it. 

This year, 2016, should see the much-awaited Final Investment Decision (FID) on the Shell-led LNG Canada project. It’s tipped as the front-runner after NorthWest LNG is beset by quarrels over fishing rights and financing woes. 

Several US firms have submitted proposals in a USTDA tender for a Feasibility Study to assess and plan the development of LNG-related projects in Panama. The tender closed on January 29. 

Oblivious, and seemingly unfazed by the forthcoming glut in global LNG supply, an array of new liquefaction and export projects have been speedily sanctioned by US regulators the first half of the past year, in what Wood Mackenzie calls a “blistering pace”. Faced with demand destruction and a plunge in the price of contracted LNG in line with oil, US project developers started to court buyers in emerging markets as they sniff out opportunities in the Middle East/Africa [and northwest Europe.]  

Tuesday, 16 February 2016

Societe Generale recommends to go ‘long’ on the Mar-17 US natural gas contact, anticipating a March 2017 price to rally next year as the market becomes much less oversupplied. Bank analysts see scope for the price to eventually reach $3.50.

US spot gas prices at Henry Hub are forecast to rise through much of 2016, spurred by rising industrial consumption and moderate supply growth due to falling rig counts. Starting into 2016 near $2/MMBtu, Henry Hub spot prices will rebound to $2.65/MWh, according to EIA estimates. 

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.”