In this issue

 

Vivek Chandra and Langtry Meyer, co-founders of the Texas LNG Brownsville project have selected Samsung Engineering and KBR to provide a detailed engineering report – as the basis for deciding whether to take a final investment decision (FID).

Monday, 03 April 2017

Cleveland-based Chart Industries Inc. is about to carry out a series of management changes as part of a wider succession plan that will also see its corporate headquarters move to existing Canton, Georgia facility from Garfield Heights, Ohio.

A bipartisan bill, launched by US Congressman John Garamendi (D – CA), calls for up to 30 percent of exports for liquefied natural gas and crude oil to be transported on ships that are flagged under the law of the United States. 

‘Vaca Muerta’, Spanish for ‘Dead Cow’, is the name of a pilot shale gas project in Argentina’s Neuquen province that Shell agreed to develop together with the state energy company, Yacimientos Petroleiferos Fiscales (YPF). Once onstream the project could alter the LNG supply/demand balance in South America, limiting the potential of US LNG exports to the region. 

Reversing last year’s slight drop, the production of US dry natural gas is seen average 73.7 billion cubic feet per day (Bcf/d) in 2017, a rise of 1.4 Bcf/d year-on-year (yoy), the Energy Information Administration (EIA) forecasts. The average Henry Hub spot price fell by $0.45/mmBtu during February to a level as low as $2.85/mmBtu. 

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. 

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.