In this issue

 

The February 2018 futures contract for natural gas on the New York Mercantile Exchange (NYMEX) is trading at a discount to the current spot price. This pricing pattern provides economic incentives to withdraw natural gas from storage to avoid exposure to the spot market. 

Mexico, the largest offtaker of US pipeline gas and LNG importer from Peru, Nigeria and the US, is getting ready to launch an online gas trading platform by the summer of this year, at the latest. The Federal Electricity Commission (CFE), Mexico’s state-owned grid operator, also plans to set up several gas pricing points. “We'll have Henry Hub, too, as that's what we now have,” said Javier Gutierrez Becerril, director of operations at CFE Energy. 

Spurred by rising gas demand from the electric power sector, industry and LNG exporters, US dry natural gas production is forecast to rise by an average of 80.4 billion cubic feet per day (Bcf/d) in 2018, up 6.9 Bcf/d or 9.3% on the 2017 level which would be the highest increase on record, according to figures by the Energy Information Administration (EIA). A more moderate 3.2% rise of 2.6 Bcf/d is expected for 2019.

Conflicting agendas add to the confusion on the future role of LNG in South America, and even the direction of LNG trades”, given that three countries – Argentina, Brazil and Chile – were importing LNG while “in parallel, some countries harbour future ambitions to join Peru as LNG exporters when (or if) their national production permits.” 

Global coal demand is facing a “decade of stagnation” and should remain nearly flat between 2017 and 2022, the International Energy Agency (IEA) forecasts. Lower gas prices, a surge in renewables and improvements in energy efficiency have caused a 1.9% fall in global coal consumption last year to 5,357 million tonnes of coal equivalent (Mtce) - the second year of decline. 

LNG tanker transport natural gas liquefied at -161°C which is subsequently supplied to an import terminal where the LNG gets regasified by using heat exchangers (ambient and combustion vaporisers). During this regas process much cold energy gets set free which can be utilised, and monetized, shows an analysis from Ranjan Saxena and Rohit Nayek, Department of Oil and Gas, University of Petroleum and Energy Studies, Dehradun, India. 

Cheniere Energy has told regulators that Train-1 of its Corpus Christi LNG export project in Texas will reach substantial completion in March 2019, followed by completion of Train-2 in September 2019.

Prumo Logística has said that its subsidiary, Gás Natural Açu (GNA), has hired a consortium formed by Siemens and Andrade Gutierrez to build a 1,238-MW thermal power plant, based on imported LNG, in the Port of Açu in the Brazilian state of Rio de Janeiro. Construction is expected to start in Q1-2018. 

The US oil major ExxonMobil has joined a group of eight International Oil Companies (IOCs), led by the European majors Shell and BP, to jointly put forward proposals to curb methane emissions from upstream operations, notably shale gas fracking. For Exxon, this is the first time the company joins an environmental initiative alongside industry peers. 

Gravitating away from importing LNG on a take-or-pay contract basis, China’s exceptional gas demand growth in winter 2017/18 not only increased incremental supply from longterm contracts by nearly 40% but also propelled up imports of spot LNG cargoes. Indirectly, this puts China into a position of soaking up excess US gas exports shipped to AsiaPacific – if the price is right. 

Strong seasonal gas demand this winter for power generation and heating, along with high spot LNG prices in Asia and Europe, are forecast to push up US LNG export volumes. Utilization at Sabine Pass is projected to remain well above 90% in winter 2017–2018, the US Energy Information Administration (EIA) anticipates.

China’s new '2+26' cities policy – a pledge to cut emission in the country’s 28 northern cities by 15% year-on-year in the winter months – is limiting the use of coal for power generation and in industries. As an alternative to coal, gas demand could rise by 23 bcm in winter 2017/18 compared to previous winters, according to WoodMackenzie projections. In fact, Chinese LNG imports almost doubled last month, surging 95.7% compared to October 2016, to reach 3.57 million tonnes, according to data from the General Administration of Customs. 

Speedy approval of new mines in China has the potential to lower demand for seaborne coal imports by up to 50 million tons (Mt), sending down coal prices from levels above 80$/t towards to just 60$/t in 2018. EnergyAspects cautions, however, that such a dramatic fall in prices, caused by replacing higher-priced imported coal with cheap domestic production, is highly unlikely given that the government in Beijing had been content with higher prices as a driver for electric utilities to replace coal with cleaner-burning natural gas. 

Global petrochemical manufacturer INEOS has struck a long-term supply agreement with SP Chemicals which will see ethane, derived from US shale gas, being shipped to China for the first time. The deal also stipulates the construction of a 95,000cbm Very Large Ethane Carrier (VLEC) which is expected to be delivered in 2019.

News Nudges

FERC ends plans for Puerto Rico LNG expansion

“Aguirre Offshore GasPort requests that FERC vacate its 2015 order authorizing the construction and operation of LNG import terminal facilities along the southern shore of the Commonwealth of Puerto Rico near the municipality of Salinas,” FERC said, adding: “In its request to vacate, Aguirre stated that it no longer intends to proceed with the project, that no construction has been undertaken, and that no facilities are in service.” The Aguirre project company filed its last status report in June 2018 to the regulator to keep its permit process up to date, but later gave notice that the venture was not proceeding. The FERC notice has finally pulls the curtain down for now on plans for LNG expansion in Puerto Rico. Excelerate Energy had previously agreed to provide a floating storage and regasification unit (FSRU) for the Aguirre project in 2019, but was forced to cancel its contract with the bankrupt Puerto Rico Electric Power Authority. The FSRU was to have been deployed offshore Salinas and would also have had a 6.4 kilometres pipeline to provide regasified LNG to the Aguirre power station.