In this issue

 

Attending the inauguration of Novatek’s landmark $27-billion Yamal LNG plant on December 8, the Saudi Arabian Energy Minister Khalid Al-Falih confirmed the Middle East oil nation is considering investing in future LNG projects in the Russian Arctic. Talks are being held about setting up a $1 billion energy fund, aimed at fostering future supply of Russian LNG as part of a Saudi government plan to use more gas for power generation. 

Shale gas production in the Appalachia region has been increasing rapidly for the past five years, growing by more than 14 billion cubic feet per day (Bcf/d) since 2012, according to EIA’s Drilling Productivity Report. Overall Appalachian natural gas production grew from 7.8 Bcf/d in 2012 to 22.1 Bcf/d in 2016 and was 23.8 Bcf/d in 2017, based on EIA data through October 2017.

Economically speaking, the North American shale industry had yet to turn a profit, Gazprom claims which added to the debt burden of shale producers. “Canada’s shale-gas sector continues to develop at a very slow rate due to limited possibilities for monetizing gas and the availability of other, cheaper gas resources,” the Russian gas exporter stated.

The gas-oil ratio in North Dakota’s Bakken region, one of the most prolific US shale plays comprising the Bakken and Three Forks formations, has been gradually shifting towards natural gas. While oil production slowed over the past three years, gas production continues to rise and reached a record high of 1.94 Bcf/d in August 2017, or the energy equivalent of about 334,000 b/d of crude oil. 

With world energy demand growing at 1.1% per year, the Gas Exporting Countries Forum (GECF) anticipates a 53% rise in global gas consumption between 2017 and 2040. Non-OECD Asia is seen as the main growth driver, followed by the Middle East and Africa. 

The State of Alaska has approved ExxonMobil’s plan for the engineering and construction to expand the Point Thomson project on the North Slope oil and gas fields to increase future production and the prospects for the Alaska LNG project.

Kinder Morgan, the US pipeline and energy company, has taken the final investment decision (FID) with partners to proceed with the $1.7-billion Gulf Coast Express Pipeline Project that will boost natural gas supplies from the Permian Basin for LNG export plants and domestic users after having secured sufficient firm transportation agreements with shippers.

Consumption of natural gas in China is anticipated to triple to reach 57 billion cubic feet per day (Bcf/d) by 2040 and bullish analyst houses like Sanford C. Bernstein expect the country’s demand to surpass that of the United States, the current No.1 gas consumer, “sometime between 2040 and 2050.” In the first seven month of this year, the worth of US LNG exports exceeded $139 million, already 2% more than the 2016 total, according to figures by the US-China Economic and Security Review Commission. 

Rising exports of “abundant US natural gas” is estimated to support up to 452,000 new jobs and give a $73 billion boost to the economy by 2040 – at a “minimal impact on the natural gas prices,” according to a study by the American Petroleum Institute (API). The resource base is now seen as “larger, less expensive and more price responsive,“ API Chief Strategy Officer Marty Durbin commented. 

American government representatives have been reaching out to Japanese officials in the hope to find informal avenues of increasing the volume of US LNG exports to the Asia-Pacific region. The topic dominated the latest US-Japan economic dialogue meeting in Washington, and the deal-making continued at the LNG Producer-Consumer Conference in Tokyo. 

Mitsui OSK Lines, the Japanese ship owner with a LNG fleet of 70 vessels, has given the name “Energy Liberty” to a new-build vessel with a rarely used storage tank. The new-build tanker will transport LNG from the Cove Point liquefaction plant in Maryland, U.S., all the way to Tokyo Bay in Japan. 

Electrifying remote Indonesian islands through ships, or barges, that generated electricity using LNG, is at the centre of a research plan supported by the governments of Indonesia and Japan. Tokyo hopes to export the new technology to other island nations in Asia Pacific. 

Demand for natural gas is forecast to outpace the increase in domestic supply. India's gas market is expected to grow at compounded annual growth rate of 7% by 2020, driven by new gas infrastructure and increasing domestic production, according to Wood Mackenzie figures. 

Integrating North America’s abundant shale gas resources into global markets keeps prices subdued: NBP averaged at $10/mmBtu in 2011-14 and by 2016 lost more than half of its value, hovering around $4.63/mmBtu. According to Societe Generale analysis, natural gas is now in a unique position to help regions transition away from coal- and oil-fuelled power generation.

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.