In this issue

 

LNG-to-energy solutions, notably for distributed power, have made Wärtsilä one of the biggest supplier of gas- and liquid fuel-fired power stations in the 5 - 600 MW range. Such baseload and/or grid stability plants are used predominately as ‘wind chasers’ and ‘sunset balancers’, compensating for intermittent supply of renewable energy – soon also on the island of Aruba. 

LNG development in British Columbia has created a paradox: people want investment in their communities, however, there is uncertainty associated with long-term environmental and social effects. These non-technical risks, if not managed, can stop a project in its tracks. To manage these uncertainties, Environmental Assessment (EA) processes are followed; these were developed to identify and predict both positive and negative effects of a project on the environment and society and are required for projects above a certain size and complexity. 

South America’s demand for natural gas is forecast to grow by some 50 Bcm to reach 191 Bcm by 2030, as overall energy demand increases and more gas-fired plants are being installed to balance renewable power supply. However, the region’s potential to develop its LNG market remains largely uncertain, and is very much linked to local weather scenarios. 

Shell, Total and others are advancing small-scale LNG-to-power projects across Southeast Asia. An ultra-shallow draft LNG carrier by Philippines-based Atlantic, Gulf & Pacific Co. (AG&P) will be a key driver for executing such projects. 

Electricity will make up about 25% of final energy consumption by 2040, as estimated by the International Energy Agency (IEA). Brushing climate concerns aside, Richard Zhang, technology executive at GE’s Power Conversion business says electrification would not just help reduce emissions, but also offer significant cost and efficiency savings. 

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.” 

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.