In this issue

 

Canada's National Energy Board (NEB) has awarded its first 40-year LNG export license to the Shell-led LNG Canada Development Inc. Project developers, including PetroChina, were seeking a 6.1% annual tolerance and a maximum annual export quantity of 38.056 Bcm of natural gas. 

Expanding US LNG exports beyond 12 billion cubic feet per day (Bcf/d) would benefit the US economy while maintaining cheap gas prices at home that give the domestic industry a competitive  edge. In disregard of stalling demand in Japan, South Korea and China, analyst project a mid-term 20 Bcf/d of external demand for US LNG and suggest that stepping up exports to 12-20 Bcf/d could reap $7-20 billion annually from 2026 to 2040 in today's prices. 

With the liquefaction process at Cheniere Energy’s Sabine Pass terminal now in full swing, it looks like the first cargo will leave the Louisiana facility as planned in the third week of January. Cheniere officially flipped the switch on December 30, after having invested close to $11 billion in the first US LNG export project. 

Neal Shear, interim chief executive at Cheniere Energy, has been given the green light to continue in his post until June 15, 2016. He succeeded the famed Charif Souki, who was replaced on December 13 because of policy differences with new shareholders, notably the activist investor Carl Icahn. 

US gas prices are likely to stay low for longer, as the Energy Information Administration (EIA) expects gas production to rise by 1.5 Bcf/d in 2016 despite declining rig counts – largely thanks to improved efficiency in shale gas drilling. 

Tuesday, 16 February 2016

Natural gas production across all major US shale regions are seen declining. Substantial drop in rig counts since mid-2014 can no longer be compensated by productivity gains, hence EIA analysts anticipate gas production will decline from 44.3 billion cubic feet per day in December to just over 43.9 Bcf/d in January 2016. 

The U.S. has been using the anti-Russian sentiment in the Baltic countries to foster LNG deals with Lithuania. Next in line might be Turkey, as the country is at the brink of a gas supply shortage, exacerbated by the risk of a cut in Russian supplies. 

EU leaders reckon that Nord Stream-2 contradicts efforts to reduce Europe's energy dependency and undermines Poland and Ukraine’s role as gas transit countries. The pipeline extension is meant to transport another 55 Bcm of Russian gas to Germany, but there is little need for additional volumes as long as CCGT profit margins stay negative. 

Shale gas from the US has been brand marked as ‘a new rival’ by the Gas Exporting Countries Forum (GECF) as it undermines the alliance’s strategy on pricing and production volumes. Leaders of Russia and Iran, whose countries hold 44% of global gas reserves, have forged closer ties at the side-lines of latest Gas OPEC meeting in Tehran to rise by 1.5 Bcf/d in 2016 despite declining rig counts – largely thanks to improved efficiency in shale gas drilling. 

Shale gas from the US has been brand marked as ‘a new rival’ by the Gas Exporting Countries Forum (GECF) as it undermines the alliance’s strategy on pricing and production volumes. Leaders of Russia and Iran, whose countries hold 44% of global gas reserves, have forged closer ties at the side-lines of latest Gas OPEC meeting in Tehran to rise by 1.5 Bcf/d in 2016 despite declining rig counts – largely thanks to improved efficiency in shale gas drilling. 

Pieridae Energy, the developer of the Goldboro LNG project in the Canadian province of Nova Scotia, has forged a shareholder relationship with Orlan of Poland, strengthening its European ties beyond the long-term sales agreement with E.ON Global Commodities. 

Houston-based Targa Resources Partners and Sanchez Energy have committed to invest an intital $125 million and $115m, respectively, to build a LNG processing plant and feed-gas pipelines that will exclusively target resources in the Eagle Ford Shale in southern Texas. 

Two companies involved in $100 billion of takeover transactions, BG Group of the UK and Energy Transfer Equity (ETE) of the US, have received full regulatory approval to proceed with the transformation of the existing Lake Charles LNG import terminal in Louisiana into an export plant. 

Clean Energy Fuels Corp., the US developer of a liquefied natural gas fueling station network welcomed the passage by Congress of an alternative fuel tax credit that will continue to support the use of natural gas as a transportation fuel option. 

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.”