Reluctance of buyers to commit to sign firm offtake agreements with project developers due to the abundance of supply has inevitable consequences, with today over 80% of new-build capacity being deferred.
Grappling with opposing signals on gas supply security, the state of California and energy companies are starting to embrace a “new level of resourcefulness,” says Callie Kolbe, analyst at Point Logic.
British Petroleum (BP) agreed to collaborate with Alaska LNG project partners and set out terms for a tolling structure with a view to attract project financing. An accord to that end has been struck between BP and Alaska Gasline Development Corp. (AGDC), the state company now in charge of the Alaska LNG.
Dwindling resources in Trinidad & Tobago – once a stalwart LNG exporter – combined with attacks on Nigeria’s gas export infrastructure, have cut short supply into the Atlantic Basin. This is creating a short-term window of opportunity for American LNG exporters to supply cargoes to South America, not Europe.
Investors fear that a proposed US border adjustment tax could slam earnings of oil and gas companies in the Canadian province of Alberta. Industry leaders are wary about a possible negative impact of President Donald Trump’s proposed tax on energy costs in the United States and future export volumes of oil products and natural gas from Canada.
Spain is expected to take the lion’s share of US LNG in Europe as Gas Natural has started to offtake more cargoes on a regular basis in 2017, according to S&P Global Platts analysis. The Iberian Peninsula, dubbed ‘island market’ due to its poor pipeline interlinks to France and the rest of Europe, has recently imported a number of spot LNG cargoes from the United States – yet the impact on Continental European gas hubs is very limited indeed.
With global LNG markets poised to see around a third in LNG supply growth over the next five years – the next wave of supply will be slowly forthcoming. Spencer Dale, BP Energy Group chief economist sees a “temporary lull” while markets try to absorb the initial wave, then he assumes growth to “resume at a more moderate pace.”
SK E&S, a leading South Korean gas and power company, has become the frontrunner in burning imported shale gas from the United States to generate electricity at its 1,800 MW power plant at Bongam-ri – just a few miles from the border with North Korea.
Global commodities trader Trafigura plans to invest in an LNG regasification and import facility in Teesside in northeast England as expands its UK gas business and seeks an outlet for cargoes from the US Gulf Coast.
Re-load and re-export of LNG cargoes, notably from the US Gulf Coast, is now possible from the AES Dominicana Liquefied Natural Gas reception terminal after the operator modified the terminal accordingly.
Dresser-Rand, now part of Siemens Power and Gas, has commissioned its first micro-scale natural gas liquefaction system at the Ten Man LNG facility in Pennsylvania. The modular, portable LNGo technology enables distributed production of LNG and can be installed in a short period of time to meet local gas demand.
Woodfibre LNG, the privately-held venture firm backed by Indonesian billionaire Sukanto Tanoto and his Pacific Oil and Gas company, has filed for a 40-year export licence to ship cargoes from Canada to Asia. Early works for construction of the 2.1 mpta liquefaction facility are already underway near the town of Squamish, just north of Vancouver.
Egypt and Jordan joined the LNG-buyers’ club by using an FSRU in 2015, which offers a faster, cheaper alternative to land-based regas terminals. In the long run Egypt will develop the Zohr gas field, but in the short-term, it remains reliant on LNG to meet its natural gas demand. At odds, around 82% of the Jordan’s electricity is currently generated via imported LNG and there is still upside – making both countries an outlet for spot LNG cargoes from the United States.
Uncertainty and speculation about US President Donald Trump’s connection with Russia has been fuelled by his appointment of Rex Tillerson, the former ExxonMobil CEO, as Secretary of State. This choice brings public scrutiny to an “exaggerated Russia and ExxonMobil connection”, says Anna Belova, GlobalData’s senior oil & gas analyst.
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.”