Logically We Would Stop LNG Exports

by Duane Nichols on August 28, 2017

Some say these are floating LNG bombs

Manufacturers urge Perry to slow LNG exports

From an Article by James Osborne, Houston Chronicle, August 16, 2017 

A lobbying group representing U.S. manufactures says the Department of Energy’s continued approval of new LNG export terminals could significantly deplete American natural gas supplies within a little more than three decades.

In a letter to Energy Secretary Rick Perry, the Industrial Energy Consumers Alliance asked he stop approving new LNG export terminals that will send American natural gas to countries without which the United States has a free trade agreement – as it does with Mexico and Canada.

“It is time for the U.S. Department of Energy to put American residential and industrial consumers first by establishing a moratorium on further LNG export approvals to non-free trade agreement countries, and put consumer safeguards in place,” ICEA President Paul N. Cicio said.

The Trump administration has described the burgeoning U.S. LNG industry as critical to its plans to grow the domestic energy industry, building on initiaitives taken by former President Barack Obama.

But as gas exports rise, many economists suspect that so too will domestic gas prices – raising energy costs for the nation’s industrial and manufacturing industries.

The ICEA is arguing the Obama administration failed to consider the “cumulative impact” of approving terminals to exports to both countries with and without free trade agreements with the United States. And using federal data, the ICEA claims that at current federal projections for gas exports, the United States will use almost 60 percent of its “technically recoverable” gas reserves by 2050 and likely even more if Trump approves more terminals.

But estimates on domestic reserves are notoriously conservative, and executives in the natural gas industry believe that as they continue to hone hydraulic fracturing techniques and explore more shale deposits they will tap way more gas than the current federal estimate of 2,214 trillion cubic feet of gas reserves.

“In fact, if the 1966 estimate of 600 Tcf had remained static, the U.S. would have run out of natural gas 10 years ago,” reads a report on the topic by the Potential Gas Committee, a research group funded by the American Petroleum Institute and other oil and gas interests.

P.S. No one seems to care about the environmental damages from drilling and fracking, from land disturbances for access roads and pipelines to say nothing about “the elephant in the room,” i.e. global warming & climate change! DGN

See also: www.Marcellus-Shale.us

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CERI by NGI July 14, 2018 at 6:06 am

Canada LNG Exports — Both West and East — Facing Global Cost Pressures, Says CERI

From an update by Gordon Jaremko, NGI Daily Price Index, July 13, 2018

Formidable cost obstacles confront British Columbia (BC) plans to break into global liquefied natural gas (LNG) markets, while Nova Scotia export proposals face even higher hurdles, according to the Canadian Energy Research Institute (CERI).

Supply costs exceed Asian and European spot market prices, a CERI study released Thursday said. The Competitive Analysis of Canadian LNG offers a sobering 125-page statistical portrait of the outlook for projects on the northern Pacific and Atlantic coasts.

Even in long-term contracts that formerly placed high premiums on internationally traded gas, reductions of energy value indexes now make overseas export projects depend on oil price increases to make LNG from Canada profitable, CERI researchers said.

CERI, an industry and government-supported independent agency, painted its Canadian LNG portrait with economic modeling. No inside knowledge is revealed about projects that lately aroused BC and Alberta industry optimism by attracting Asian participation and awarding construction contracts ahead of a final investment decision, LNG Canada and the associated Coastal GasLink pipeline.

In CERI’s model as of May, the cost of landing LNG from BC and Alberta tight gas and shale formations on the benchmark Asian spot market in Japan would have been US$8.35/MMBtu — or US80 cents more than the going price at the time.

Export projects on Canada’s east coast would sink far deeper into the red because bans against tapping unconventional gas with horizontal drilling and hydraulic fracturing in Nova Scotia, New Brunswick and Quebec eliminated potential nearby supplies, said CERI.

The bans force the Atlantic export proposals to rely on gas from BC, Alberta and the United States via long, roundabout delivery paths through multiple pipelines. The European gas market benchmark, the National Balancing Point (NBP) in the United Kingdom, does not cover tolls for shipments across North America.

As of this spring costs of LNG made in Nova Scotia from gas originating in Western Canada or the Marcellus Shale region would have topped US$11.00/MMBtu, exceeding the NBP by $4.00-4.20/MMBtu, CERI estimated.

Long-term LNG contract prices are not much more forgiving. The industry standard index has become leaner because growing supplies enabled buyers to cut the value of 1 MMBtu of gas to 11.5% of 1 bbl of oil, down from 14.5%.

“Western Canada LNG will need an oil price of approximately US$80/bbl or higher over the life of the project to break even under long-term contracts,” researchers said.

As on overseas spot markets, CERI estimated that in long-term sales contracting the Canadian east coast LNG projects are much less sustainable than BC export proposals.

“Eastern Canada LNG will need an oil price of approximately US$100/bbl over the life of the project to break even under long-term contracts, or US$11.60-11.40/MMBtu or higher at European markets. The historical average for the last ten years in the UK is US$6.30.”

CERI “has not found a viable path to reduce an Eastern Canada project landed cost below the European market price,” if the project sources gas from Canada’s AECO Hub or Marcellus, researchers said.

Pacific coast LNG stands a better chance of success thanks to promised government help as well as sponsor work on trimming expenses, said researchers. Costs of landing BC and Alberta gas on Asian markets could be pared down to a potentially profitable US$7.55/MMBtu, according to the institute’s economic model.

Incentive BC and federal tax cuts would lower Western Canadian LNG supply costs by US51 cents/MMBtu, said CERI. Further help could come from a proposed LNG hardware exemption from Canadian anti-dumping import tariffs against Asian machinery, and accelerated capital cost write-offs to match U.S. corporate tax reductions enacted last fall, the research institute added.

Source: http://www.naturalgasintel.com/articles/115049-canada-lng-exports—-both-west-and-east—-facing-global-cost-pressures-says-ceri


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