Friday, June 21, 2013

BC Liberals Play Voters As Fools, Energy Companies Play The BC Government As Fools

Written by Grant G

Natural Gas...Yes I am aware that many of you want me to discuss other issues, and I will, however right now everything in British Columbia, health, education, debts, deficits, Government spending, tolls, utilities and our entire future has been placed in this one basket by the BC Liberals..

So for now, we must fully explore the topic, I have been racking my brain on these LNG announcements coming fast and furious, for years we have been hearing about mergers and acquisitions, hearing about $trillions of dollars and the need to act fast, yet every announcement is just that, an announcement announcing that several years from now a financial decision will be made on building facilities in British Columbia..

The Petronas proposal has been announced at least 6 times, yesterday The Vancouver Sun played foot loose and fancy free with the Exxon Mobile announcement, that paper omitted the timeline of 2021 to 2023 from the original Jeff Lewis article..

This morning I read an article about Andrew Weaver and LNG(sortta) in the Georgia Straight paper, it offered nothing new, very thin on details, a worthless read in fact, but there was one comment below the article that got me to thinking about these LNG announcements in a different way...

The article was devoid of facts, but this comment got me to thinking..


Setting aside all the current arguments fail, the permits are obtained and the petronus LNG terminal is in operation...
Why would Malaysia pay world prices for a product they own from well head to consumer. There are no laws to prevent them from running at a loss to avoid taxes and likely most royalties.
It sounds terrific, well all be rich by 2020 but in fact its just a be happy ad so don't worry about the $62B and climbing public debt."


Poppavox is exactly right, Petronas is the Malaysian Government, theoretically they could ink energy buying/selling contracts to subsidiary companies at rock bottom prices,  prices so low that the BC Government receives next to nothing in royalties, maybe even operate at a loss, let the subsidiary company make the wink wink nod nod profits, there would be nothing the BC Government could do about it...If Petronas owns the gas at the wellhead, the pipeline, the LNG plant, and has subsidiary companies with the customers, there is literally no way to stop them...In other words B.C. would be used like a rented mule...

I wasn`t done thinking about different angles, as discussed here, there is more than ample supply coming on-line in many countries, more supply coming on-line in Russia, in Qatar, tons in Australia, Papau New Guinea, East Africa, and the USA....And guess what, the companies operating LNG plants, and or building LNG plants in other countries are the same companies making announcements here in British Columbia.

There is also Japan re-starting all their nuclear facilities and proposing building more new cleaner nuke facilities, China has plan for 25 nuclear facilities by 2020  plus another 42 more nuclear facilities built by 2030...We have newer energy efficient technology coming on line around the world, we have China with vast domestic reserves of LNG, Russia has tons, we have Japan and South Korea looking to develop hundreds of years of supply of ocean hydrates...China is already served in their south and east by Russia, with China sitting on 400 hundred years of domestic natural gas, with China moving towards nuclear plants the realistic outlook for China is not un-ending growth in consumption of natural gas..Japan is forecast to consume much less LNG in the future, if ocean hydrates turns out to be successful the entire LNG industry will be thrown on its ear...massive LNG cups will runeth over..

I want you readers to imagine this, take a stadium that holds 100,000 people, there are 20 hotdog vendors in the stadium and they can handle the volume and service the 100,000 people...Would it make any sense to have 20 more hotdog vendors enter the stadium, the stadium still has 100,000 hotdog eaters, instead of 20 vendors serving those people hotdogs 40 vendors are serving hotdogs, now these vendors only sell half the amount they did before, and guess what, the vendors are owned by the same company, company X has spent extra monies to build 20 more hotdog vendor facilities, ..Think about adding that expense only to receive the same sales dollars?....
The very same thing is happening in British Columbia with LNG, I am getting the feeling that the energy companies are using the BC Government and the BC Government is using the energy companies, both zooming each other to achieve their goal...That goal being propaganda and spin...
If Exxon Mobile, the world`s largest and most profitable energy company in the world thought, and or believed there was enough LNG capacity coming on line to service the needs of all countries, why would they expend $tens of billions of dollars to create excess capacity?...That is indeed an important question, the answer is equally important..
Wouldn`t you as the world`s largest energy company try and secure competition`s potential gas fields, as a company with hundreds of billions of extra dollars, as a company who is presently spending $tens of billions in new LNG capacity wouldn`t you want to buy up and secure gas fields that could possibly go into competition against you?

Just think about that for a moment, so yesterday Exxon Mobile announced they were filing an application for a BC project, a project that they admit won`t be on line for at least a decade, maybe more, a project they admit may not be built at all, yet in theory this application ties up trillions of cubic feet of gas, it prevents this gas from getting into the hands of competitors..

So, I did a very quick cursory look at what else Exxon Mobile is involved in, and the answers came fast and furious..You would think a filing is a big deal, it isn`t, not with Exxon Mobile...What I learned is Exxon is involved in The Gorgon Chevron LNG plant in Australia, a $60 billion dollar LNG plant...And more, Exxon Mobile besides being involved in that Australian operation have proposed building the world`s largest floating LNG plant in the world, it too will be operating in Australia..They filed with the Australian Government in  April/2013


"Exxon Mobil Corp. and BHP Billiton Ltd. are planning to build the world’s largest floating liquefied natural gas (LNG) processing and export plant off the northwestern shore of Australia, despite growing concerns about the cost competitiveness of the country’s LNG projects.

At around half a kilometre long, the vessel would be nearly as long as five football fields laid end-to-end and would be the largest floating facility in the world.".....

 The plant would bump up Australia’s current LNG production by nearly 30 per cent, producing 6 million to 7 million tonnes per annum (mtpa), enough to fuel the LNG needs of Japan, the world’s largest importer of the gas,....

 Exxon, which detailed the plan in a filing with Australia’s environment department on Tuesday, did not give a cost estimate for the plant.
Australia currently has $190-billion (U.S.) worth of LNG projects underway and is on track to replace Qatar as the world’s largest LNG exporter by the end of the decade......

 Royal Dutch Shell, considered the industry leader in floating LNG, has touted floating technology as a way to circumvent Australia’s rising costs and reduce construction time.....

 An added advantage of floating LNG vessels is that they can be redeployed to another location once a gas field is depleted.
The Scarborough LNG plant would start production in 2020-2021 and be moored 220 kilometres from the Australian coast, Exxon said in the government filing.

If the Scarborough gas field were developed using floating LNG, the plant would be about double the capacity of Shell’s Prelude LNG, also off the cost of Australia, which will have a capacity of 3.6 mtpa when it comes online in 2017 and be the world’s first floating LNG plant.

Shell indicated that its Prelude LNG project was expected to cost in the range of $10.8-billion to $12.6-billion. With a similar cost structure, Scarborough LNG would cost $18-billion to $24.5-billion, according to Reuters’ calculations.

The Scarborough floating LNG plant would be built offshore, likely in South Korea, which is already in talks to build similar facilities.
Exxon and BHP, which are 50-50 joint venture partners in the Scarborough development, expect to make a final investment decision on the plant in 2014-2015, Exxon said."


Do you see, Exxon Mobile already is part of Chevron`s Gorgon LNG plant(coming on line next year/2014)..)It has also filed with Australia to have a cheaper, versatile, floating LNG plant operating in Australia`s offshore Scarborugh gas fields...

Again, how much capacity is one company going to create, in my opinion some projects are real and other proposals are merely proposed to tie up gas reserves and prevent serious competition from cutting into their action..Exxon Mobile isn`t finished, Exxon has also teamed up with the largest LNG exporter in the world, that being Qatar and are working on a joint venture in the USA, in fact, the US operation was originally built as an LNG import plant, but with fracking technology those import facilities were never used, they were built but shelved quickly thereafter, so Exxon Mobile has tweaked this import facility and turned it into an LNG export facility and they have filed in the USA to export huge volumes of LNG from that already built facility..That story and filing is from May/2013...


"Exxon Mobil Corp. (XOM), the largest energy company by market value, signed an agreement with Qatar Petroleum International to move forward with construction of a $10 billion natural gas export terminal in Texas

The project will involve installing liquefaction equipment at an existing import facility in Sabine Pass, Texas, according to an e-mailed statement today from Golden Pass Products LLC, a subsidiary formed by the two companies. It won permission last year to export the fuel to nations with free-trade agreements with the U.S. and is awaiting approval to send the fuel to all other countries. 

Exxon, based in Irving, Texas, and state-owned Qatar Petroleum plan to ship as much as 15.6 million metric tons of gas annually from the Golden Pass facility, according to the statement. A boom in U.S. production has spurred several proposals to export the fuel, which is cooled to liquid form at -260 degrees Fahrenheit (-162 Celsius) to reduce volume and allow for transportation by ship. 

“This agreement sets out a highly competitive commercial blueprint for Golden Pass Products, with a commitment that builds on the unique combined strengths of QPI and Exxon Mobil through the the global downstream LNG value chain,” Bill Collins, president of Golden Pass, said in the statement. 

Exxon has been expanding its worldwide gas portfolio with acquisitions such as the 2010 purchase of XTO Energy in the U.S. and investments in projects that include the A$52 billion ($52 billion) Gorgon LNG complex in Australia. Gas accounted for half of Exxon’s global production during the first three months of this year. 

U.S. liquefied natural gas import facilities have been operating below capacity as a glut of domestic gas from shale formations erased demand for foreign supplies. The import terminal at Golden Pass began operations in 2010."


Do you see that, Exxon Mobile are proposing a cost saving mobile floating LNG plant for Australia, one that could be moved to service any natural gas supply, including a pipeline to the port of Kitimat or Prince Rupert, Exxon doesn`t need a land facility to export LNG gas from BC, a floating facility would suffice...Cost saving cost saving cost saving...Exxon Mobile is also taking advantage of an existing facility in the USA...I have discussed this fact in other LNG posts, a decade ago in the USA many companies started building IMPORT LNG terminals ...What happened next, about the time these facilities were completed or near completion the fracking revolution hit the USA and all of a sudden they were/are awash in gas, these import LNG terminal were shuttered, they are still shuttered, except now there are energy companies, Cheniere energy for one and Exxon Mobile, the largest energy company in the world are taking full advantage of these shuttered terminals, spend a little money and shazaaam..They are now LNG export facilities...cost saving measures, cost saving measures and more cost saving measures..There are approximately 10 of these under-used, or not used at all LNG import facilities that are being converted to LNG export facilities..!

So my question is...Who is zooming who, the BC Government we know is zooming us, and the more I study this topic, the more I believe both the energy companies and the BC Government are zooming each other...Christy Clark`s fantasy LNG super-power dream and the worldwide energy companies teasing British Columbia on project PROPOSALS while all they are really doing is shutting out competition...

Remember the hotdog vendor story, if existing vendors can service existing and future customers why flood the market, why cut into their own pie?

We hear all these names in British Columbia, we hear about Shell, about Exxon, about BG(British Gas)....These energy companies, those energy companies making no decisions to build anything in British Columbia are actually building and planning even more massive LNG plants in East Africa...A location close to India and China....

British Columbia Government has a big problem, they have already sold the gas field rights in northeast British Columbia, they can`t force anyone to build or produce LNG, ...If British Columbia is serious about LNG facilities they must be built, and or start construction today,...However, I am now of the belief that nothing will be built in British Columbia, except maybe, in time the Petronas project, however, Petronas will operate on scant margins leaving the BC Government with empty pockets..

The Straight Goods

Cheers Eyes Wide Open


Anonymous said...

Yes I see it!
Thanks -- looking with eyes wide open.

Anonymous said...

For what it is worth, thanks tons, there is nobody doing indepth natural gas lng stories in our province.
Georgia Strait, Rebel clause, big daily newspapers, no one comes close to explaining what the fuck is going but you grant! stay strong,you have no idea the big players that read Straight Goods articles, be careful and stay safe

istvan said...

Ben Parfitt mast be reading your blog. He pretty much repeats what you have been saying for months. Not a bad article, but parsed in a way that makes it look like it is his story. Take care Grant

Grant G said...

Istvan..Where is his article, haven`t seen it, what publication?

Bill said...

Hi Grant, yes a very good article that echoes and affirms your many posts on LNG.

Go to Ross K's blog crawl and click on Policy Note (CCPA) for the article. Thanks and keep the posts coming.

Hugh said...

New, higher cost of NW transmission line: $736 million to BC Hydro.

Then BCH can buy more un-needed overpriced IPP power from Altagas.

Smart Grid $ 1 billion
Site C proposal $8 billion

Ben Parfitt article:

robert smith said...

Thanks for the read.
I can say for certain few believe LNG will make BCers gazillionairs by 2020.

Spurred by the news pollution is 9 times more toxic than 2nd hand cigsmoke Alberta and BC governments have agreed to push dumping raw resources.

Here's the full update.

"There was no explanation as to how multiplying GHG by moving it half way around the world to unregulated industries is better than regulated value added industry right next to the source and the best customers in the world."

robert smith said...

It would appear the reason the BC gov is so eager to give away the future of BC is because,,, we have no future.
Legitimate investment wont invest here due to the management of BC that has doubled the child poverty rate in a decade with a top G7 economy and 90% of child support paid.
With this for a future would you drop $100M or even $10M on a long term investment?