In this issue

 

Expansion of the Panama Canal – a strategic shortcut for sea voyages between the Atlantic and Pacific oceans – has so far not sparked a significant rise in LNG tanker traffic. Less than 20 carries are understood to have transited the waterway by the end of October 2016.

Crowley LNG Alaska, a unit of the shipping company Crowley Maritime, has won a contract to supply the fuel to a small dual-fuel power plant near Fairbanks in Alaska. The LNG will be procured from the Point Mackenzie small-scale liquefaction facility and transported by road to the power plant in the remote town of Tok.

Completing its LNG trucking fuel chain along the US Pacific Coast, Clean Energy Fuels Corp has opened its first public liquefied natural gas station in Washington State. The fuel supply is aimed at the trucking industry from southern California, through Oregon to the Canadian border.

Anticipating that South Africa’s proposed LNG-to-power projects will cost up to $3.7 billion, the Department of Energy (DoE) announced it will reveal a list of preferred bidders for the projects by the end of March 2017. DoE had issued an Independent Power Producer (IPP) program as the basis for the procurement of two projects totalling 3,000 MW.

Wednesday, 02 November 2016

Cheniere’s Sabine Pass LNG facility, the first new US export facility, has been given the regulatory green light to start commercial operations on the second liquefaction train. FERC authorized the commencement of service for liquefaction and export activities from Train-2 at the plant, located in Cameron Parish.

Driftwood LNG has applied to the US Department of Energy for authorization to export up to 26 mtpa from a proposed plant on the Gulf Coast of Louisiana. Driftwood has asked the DoE for a long-term, multi-contract permit to export up to the equivalent of 1,496.5 Bcf/y for 30 years of domestically produced natural gas to nations with and without a Free Trade Agreement with the US.

Kuwait became LNG importer in 2009 by adding an FSRU and new onshore LNG terminal is on its way; Bahrain is all set to join LNG importers group in 2018, with an FSRU as their first import terminal. Gulf Region is buying LNG from well beyond the region, with the US entering a brave new world, delivering LNG cargoes from Sabine Pass to Kuwait and the UAE; more expected to come amid surging local demand.

Over four years of regulatory review and quarrels about environmental credentials of the Pacific NorthWest LNG project have now ended in a conditional approval. Now, Petronas – the main project sponsor – has to decide on whether to take FID.

Much-delayed Alaska LNG, a 20 mtpa project pushed by the state’s Governor Bill Walker, has received support from North Slope gas producer BP. Together with project partner ConocoPhillips, BP has given assurances for the state to take the lead on the project in the coming months.

An LNG futures market could be created in the US on the back of the increased movement of shale gas.

Even though thermal coal prices increased by nearly 50% this year, the effect on fuel switching is not enough to make the use of LNG economically viable for power generators. For coal-to-gas switching in Asia, analysts say that LNG would have to fall by another third from its recent lows around $6/mmBtu.

Looking ahead to the autumn and winter season, the State Energy Commission, California’s Public Utility Commission (CPUC) and the system operator CASIO have agreed contingency measures to cap gas-burn in the power sector. Propping up gas storage with spot LNG purchases is being evaluated as an emergency option. Regasified LNG could be delivered into the SDGE system from Sempra’s Costa Azul regas terminal in Mexico, using the Otay Mesa receipt point. Sempra, the operator of the 7.6 mtpa Costa Azul facility has expressed interest – the Energy Commission and CPUC are in talks to sort out issues raise over affiliate rules.

The world’s largest lithium-ion battery power storage – a 20 MW/80 MWh Tesla Powerpack – will be put in place at SoCal Edison’s Mira Loma substation in an effort to better harness renewable energy sources. California Public Utilities Commission (CPUC) had mandated an accelerated procurement of power storage to counteract energy shortages following the Aliso Canyon gas leak.

Short-term oversupply of global LNG markets will – beyond 2020 – gradually get absorbed and make way for, new liquefaction projects on the east coast of Africa (Mozambique, Tanzania). Yet, sub-Saharan Africa is also likely to evolve as a niche market for US LNG supply, notably via flexible floating LNG storage and regasification units (FSRUs).

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.”