Friday, June 7, 2013

Christy Clark`s Ministry Of LNG, Welcome To Wonderland

At times I feel life really is like a magical ride on the magic mushroom express, a one-way ticket down the rabbit hole, especially here in British Columbia....Let`s talk natural gas, particularly LNG..

Maybe, just maybe The Straight Goods has finally caught the attention of the mainstream media, however, they would never admit it..

Justine Hunter and Vaughn Palmer have both weighed in on British Columbia`s LNG future prospects in the last couple of days, unfortunately they both offered up very thin gruel on the topic..Justine Hunter muses about Site C dam not being online(if built at all) until 2023, as in how will Site C power assist an industry contemplating projects when it`s so far off in the future, she then talks about a major Alberta utility contemplating filling the need by sending power to northeast British Columbia to power the industry, either she doesn`t know what she`s talking about or she`s deliberately trying to confuse, I can say that because the massive amounts of power required to liquify natural gas are not needed in the gas fields of northeast B.C...The power is required where the gas freezing plants are being proposed built, that being Kitimat and Prince Rupert, as west as you can get without leaving Canada, electrical power is not needed in northeast British Columbia..

Vaughn Palmer weighs in on all aspects of the difficulty of kick-starting British Columbia`s fantasy LNG super-power dreams, but just like Justine Hunter, Vaughn Palmer leaves the reader in the dark when it comes to many of the needling little details and facts, details and facts that are destined to sink Christy Clark`s energy ship..

Let`s start with the Site C dam debate, let`s be clear, Site C dam is not the answer to succeeding in LNG, as the BG Group(British Gas) stated earlier this year, their one operation if built would take almost every bit of Site C`s power generation, meaning Site C has enough power to drive but one large LNG project, so let`s remove Site C from the equation, Christy Clark has talked about 6...8..10..12 LNG plants operating in B.C., are we to build ten Site C size dams, all at a taxpayer cost of between $10 and $12 billion dollars each..?


 The scope of the project is huge: All three trains would consume about 3.3 billion cubic feet of gas a day, which is the equivalent of B.C.’s current natural gas production. The plant will require 800 megawatts of energy to run refrigeration compressors and to run the facility. By comparison, the Site C dam would produce 1,100 megawatts.

 The bottom line on LNG power requirements, if many large LNG projects were to be built they would be burning natural gas to freeze the export product...This scenario creates another problem, maybe not to climate change deniers but it does create issues, 6 large LNG plants burning natural gas would more than double British Columbia`s entire green-house-gas emissions, these companies wouldn`t pay a carbon tax, in fact Christy Clark has already deemed that natural gas burned to make LNG will not be considered a greenhouse gas in British Columbia, in other words, BC Liberals have given energy companies a free pass on pollution, Clark has single mindedly declared that the physical law of thermal dynamics do not exist in our province..

Also, if one industry is going to be permitted to more than double our greenhouse gas emissions then why should we have a consumer carbon tax, the revolt would come soon after, that hypocrisy would enrage, all that gobbily goop spoken about the environment by Gordon Campbell and the BC Liberals, all that carbon tax paid by average BCers for naught, and in a blink of an eye our GHG emissions more than can`t have your cake and eat it too...Well, maybe Christy Clark can.


"In Lewis Carroll’s Through the Looking Glass, a bewildered Alice encounters Humpty Dumpty spouting nonsense. When she asks for clarification, Humpty Dumpty scornfully responds, “When I use a word, it means just what I choose it to mean — neither more nor less.”

British Columbia voters could be forgiven for feeling like Alice in Wonderland after learning of premier Christy Clark’s proposal to revise B.C.’s definition of “clean energy” to allow burning of natural gas to power LNG exports. What was once dirty has been declared clean.

Lurking behind B.C.’s “clean energy” plan is a reversal of two internationally-applauded climate policies. At issue is the plan to triple B.C.’s production of natural gas, via hydraulic fracturing (“fracking”) in unconventional gas reservoirs. The gas will then be shipped through pipelines to the north coast, where it will be liquefied and exported to Asia.

Combustion of natural gas, with the resulting greenhouse gas emissions, directly conflicts with B.C.’s commitment, adopted in 2008, to zero-emissions electricity.

 The premier asserts that only gas burned for the purposes of LNG exports will be exempted, on the grounds that B.C.’s natural gas will displace Asian customers’ reliance on even dirtier fuels.
However, that does not necessarily follow. 

Depending on relative demand and prices, B.C.’s gas may substitute for emissions-free electricity, including renewables and Japanese nuclear power, or simply increase energy use. In fact, this is what academic energy analysts, including SFU’s Mark Jaccard, predict will happen. The strong implication is that B.C.’s gas exports will increase, not decrease, global emissions.


So if LNG plants get built, if they burn natural gas, if they double our BC emissions means we BCers were suckered by the BC Liberals and robbed blindly through a useless throw-away carbon tax...

We need more data Vaughn, Justine, not thin gruel devoid of facts, if you are going to talk LNG then spill it, tell the whole story, not dribs and drabs..., first off, right now in the world there are no countries that are without LNG, there is supply, there is more than ample supply, there are many countries supplying the gas now, Russia supplies Europe, Qatar and the Stan countries supply China, ...And there are literally dozens of LNG super plants coming online this year and many more in each of the next 6 years, not proposals but LNG plants actually under construction, $hundreds of billions spent on are but a few of those projects..


Have a look at those projects, the large Kitimat proposal is tiny in scale in comparison to Australia or East Africa, everyone of the above projects are either under construction and or producing, except for the massive east Africa project, it too is still in proposal mode, and it`s further along than Canada`s west coast proposals by far, and East Africa is a place where labour costs are a fraction of Australia or Canada`s labour rates..

Everyone of those projects are needing customers, everyone of those countries are having difficulty signing long-term energy buying customers, in fact the only one with long-term contracts is the USA project in Sabine pass(Cheniere Energy), and that contract to Japan is not at the Asian premium price, those contracts have been linked to whatever the Henry Hub price is..Plus a 15% premium, Cheniere Energy state they can deliver LNG to China at $10.00 or less and still be profitable, at that price nothing will get built in Canada, that price won`t pay for the price of the build, financing and royalties..

So here we are, behind so many countries and everyday another country discovers that they too possess huge natural gas reserves, in recent days Britain has discovered they have decades of domestic supply, and today Australia is reporting new found vast offshore supplies of gas, this comes at a time when $85 billion dollars in floating LNG plants have been proposed for Australia, floating LNG plants, built in South Korea(for cost-cutting purposes), mobile, cheaper, versatile..


"Britain’s long-simmering debate about the future of shale gas has been shaken up by a new report indicating that one large deposit could contain enough natural gas to make the country self-sufficient for decades.

The announcement came Monday from IGas Energy PLC, one of a handful of companies exploring Britain for shale gas."


Mozambique has discovered gargantuan amounts of natural gas too..


Israel has found massive supplies of gas as well, they too are contemplating going for the export game too.


Karish field could hold 2 tcf of natural gas

* Argument over gas export rages in Israel
By Ari Rabinovitch

JERUSALEM, May 16 (Reuters) - A U.S.-Israeli group drilling in the eastern Mediterranean has discovered positive signs of another natural gas field off Israel's coast, potentially boosting the country's reserves as it drafts its export policy.

Texas-based Noble Energy and its Israeli partners, Avner Oil Exploration and Delek Drilling, said on Thursday they found "significant signs" of gas at an exploratory well at the Karish prospect, about 75 km (46 miles) from the coastal port of Haifa.

Karish could hold 2 trillion cubic feet (tcf) of gas, Delek Drilling said, citing a preliminary estimate, making it much smaller than the two massive Tamar and Leviathan fields recently discovered in Israeli waters.

But it is still a commercial quantity and, if proven, strengthens the case for energy companies who are lobbying the government to allow large levels of exports.


India has just signed energy buying contracts for USA LNG linked to Henry Hub pricing


"India's natural-gas importers are fast sealing deals to secure supplies as demand far exceeds domestic output. The nation currently produces about three-quarters of its natural-gas requirements, but will need to import nearly half of its requirements within a few years due to dwindling production. Several gas-fired power plants are already shuttered or operating below capacity due to a shortage of gas. 

In a statement, Petronet LNG said it expects to finalize the agreement by the end of this year. Supplies could begin sometime in 2017-18, R.K. Garg, Petronet LNG's director of finance, told television channel CNBC TV18. 

Buyers in Asia are looking to the U.S. to meet their increasing energy requirements as the shale revolution has left North America with a huge surplus of gas and prices that are far below those in Asia or Europe. LNG prices in Asia are often several times higher than in the U.S. because of a regional supply deficit. 

Japan, the world's biggest importer of LNG, pays about $18 per million British thermal units, versus $4 in the U.S......

 Petronet LNG said United LNG would supply the super-cooled gas through the Main Pass Energy Hub based off the Louisiana coast in the southern U.S."


I could go on and on with how many countries are chasing LNG export deals, including one of the newest entrants, that being the state of Alaska, Alaska is offering huge incentives to producers, the Alaska Government is musing between collecting royalties or being paid in actual natural gas supplies, supplies which they can sell domestically, Alaska, a very rich state, a state with export facilities, pipeline routes and infrastructure, and money to offer up incentives, they also have the logistics of being closest to Asia, this operation will proceed before any of BC`s projects get off the ground, more American deals linked to the Henry Hub pricing..

in fact there are rumours swirling that northeast BC gas deposits can be shipped south to either Cheniere in Louisiana or northwest to Alaska, feedstock gas supplies, the gas will be sold by someone else, thus removing the costs to build massive, expensive LNG export plants..


So, here we have a dozen huge LNG export projects on the go, many near completion, we have a glut of supply, many already established natural gas/ LNG exporters are seeing falling export volumes, those countries, Qatar and Russia are trying to shore up customers and ink new multi-year deals, we have massive Australian projects coming online, we have Australia moving to the next phase in LNG exporting, that being South Korean built mobile floating LNG operations, mobile, portable and cost effective..

We also have Japan and Korea going headlong in developing ocean hydrates, those two countries have a 300 year supply.

"News that Japan has become the world's first country to successfully extract gas from a deposit of methane hydrates buried beneath the sea poses a threat to Australia's massive liquefied natural gas (LNG) export industry, according to The Australian.
Japan's Ministry of Economy, Trade and Industry hopes to begin commercial extraction from the methane hydrate fields within five years, which could prove to be a game-changer for the global gas sector that has come to pursue and rely on strong gas prices and robust demand from Japan.
The prospect of a decline in LNG demand from Japan could threaten Australia's $175 billion worth of LNG development plans.

Japan has been seeking means to reduce its reliance on LNG imports from Australia and elsewhere.

Currently, Japan buys 70 per cent of Australia's entire LNG exports, which were worth $11 billion in total in 2010/11, with forecasts of rising to $30 billion by 2016/17, The Australian reported.

Forecaster Wood Mackenzie warned that if Japanese methane hydrate production is achieved by 2018 it would result in a fall in gas imports that would “severely disrupt the global LNG market, and question the viability of projects in Australia, Malaysia and Papua New Guinea”, the newspaper added."
"TOKYO — Japan said Tuesday that it had extracted gas from offshore deposits of methane hydrate — sometimes called “flammable ice” — a breakthrough that officials and experts said could be a step toward tapping a promising but still little-understood energy source. 

The gas, whose extraction from the undersea hydrate reservoir was thought to be a world first, could provide an alternative source of energy to known oil and gas reserves. That could be crucial especially for Japan, which is the world’s biggest importer of liquefied natural gas and is engaged in a public debate about whether to resume the country’s heavy reliance on nuclear power. 

Experts estimate that the carbon found in gas hydrates worldwide totals at least twice the amount of carbon in all of the earth’s other fossil fuels, making it a potential game-changer for energy-poor countries like Japan. Researchers had already successfully extracted gas from onshore methane hydrate reservoirs, but not from beneath the seabed, where much of the world’s deposits are thought to lie. 


China also has recently discovered hundreds of years of supply of domestic natural gas, in mainland China..Check out page 6 of the below PDF file, China has an estimated 55 TCM...That would be 55 Trillion Cubic Meters of natural gas...Enough natural gas to supply themselves for 400 years..

China is aslo building dozens of new generation, cleaner, no waste materials produced nuclear plants....25 nuke plants up and running by 2020 and another 42 by 2030..

Those nuke plants will produce electricity for pennies per kilowatt hour, and we still have coal in the mix, as LNG glut hits the markets, when LNG prices drop coal will be displaced, unless LNG suppliers try and hold up Asian buyers to high premium prices, to shake them down for big dollars, Asia will simply go back to coal, that being a new cheaper priced coal..

Supply and demand.

Spot prices are already in decline/have declined, declined 17% year over year and another 4% this month, there is currently ample supply, and there are still dozens of monster sized LNG plants that haven`t even come online yet, who will not be selling LNG, as supply outstrips demand, who will lower prices first, and how low will they drop prices to achieve market share, and when prices do decline, who will go without profits first?..giant energy companies who spent $billions or Governments?..If Governments squeeze monies from thin margins energy companies will shut off the tap, and as witnessed in the Alberta oil patch and in B.C with reduced/slashed royalty regimes, Canadian Governments always cave to big energy companies..


Platts: Asia Spot LNG Prices for June Delivery Fall 5.8% on Weak Demand

On a year-over-year basis, June prices were down 16.4% versus 2012

Singapore - May 20, 2013

Prices of liquefied natural gas (LNG) for June delivery to Asia fell 5.8% to $14.565 per million British thermal units (/MMBtu), as spot demand has failed to rebound in the past few months, according to the latest monthly Platts Japan/Korea Marker (JKM) for month-ahead delivery. The monthly average Platts JKM for delivery in June was assessed over the period of April 16 to May 15.

The June-delivery price decline followed a 12.3% price drop from May delivery and marked the third consecutive month-over-month drop in spot LNG price. Despite the approach of the traditionally strong summer demand season, spot demand showed little sign of recovering, given ample stockpiles and North Asian buyers’ increased reliance on inventory from long-term contracts to cover their requirements.

On a year-on-year basis, the June Platts JKM was down 16.4% from the 2012 June-delivery level of $17.423/MMBtu.

“The bearish mood was also weighed down by the robust supply situation, with spot cargoes offered out of both the Pacific and Atlantic Basins, alongside European reload activity,” said Sarah Cottle, global editorial director of power, for Platts, a leading global energy, petrochemicals and metals information provider and a premier source of benchmark price references. “Cargo availability was further boosted by Nigeria LNG and Norway's Hammerfest LNG resuming normal operations. In addition, power-saving measures in Japan will continue to limit LNG consumption

Also of note, energy buying contracts are literally being shredded, Asian buyers are saying no, they are demanding better pricing, $60 billion in energy buying contracts recently ripped up..


LNG costs in focus as $60bn gas deals shelved

"AUSTRALIA'S high-cost liquefied natural gas projects - the investment backbone of the nation's economy - are under increasing pressure from Asian buyers demanding steeper discounts amid evidence at least $60 billion worth of gas supply deals have fallen over.

As burgeoning supply centres emerge in the US and east Africa, operators of Australia's $200bn project pipeline of LNG plants on the northwest coast of Western Australia and in Gladstone in Queensland will find keener pricing on supply deals, industry leaders warn."

All these giant natural gas freezing plants coming online, years and years before anything is built in British Columbia, how does British Columbia get market share, how does British Columbia lure Asia to dump other suppliers and adopt us?...How indeed, does the movie tax-credit scheme ring a bell, an aggressive film industry that actively pits countries against each other, each one in turn lowering the taxation bar, countries vying for market share, the movie industry where loyalties last until the next one-upped tax-credit, LNG will be no different..

Here are some more links on LNG, on natural gas, on Chinese tigers playing with Canadian sheep..

This next link is about massive cost overruns on Australian LNG projects, all of them 20..30..40...60...100% over budget

The below link, a perfect storm for Asian energy buyers.

The myth of big employment numbers coming to British Columbia from LNG projects is debunked in the next below link, meet the new generation South Korean built LNG plants, barged around the world, and the new cost effective wave coming forward, floating LNG plants, and yes, built and 90% constructed in South Korea..

And a little bit more, Japan working all ends against the middle, Mozambique has been given preferred country status for LNG development, cheaper labour, cheaper taxes and no pesky First Nation communities, no needling environmental concerns..


So here`s the wrap up, we have no power to run any LNG plants, if they burn natural gas our domestic greenhouse gas emissions double or more, both Prince Rupert and Kitimat, with offshore winds that funnel emissions inland and up the valleys, families won`t want to live there, it will also make our carbon tax meaningless, it turns all of BC`s climate change actions of the past 5 years to dust, all the money stolen from hospitals and schools for carbon offsets wasted, for naught!

We are years behind many countries, dozens of giant LNG exporting plants are near completion, there is a glut of supply, everyday more countries are discovering vast domestic supplies, the big energy companies operating in Australia, Mozambique, East Africa, Alaska, the USA south are the same enery companies twiddling their thumbs in British Columbia, do we really expect Chevron to create excessive supplies of gas in multiple countries when they have a $60 billion dollar Gorgon facility coming online in Australia, ...We also have low productivity in Canada(code word for wages too high for industry)..Australia and other countries, including Alaska are offering massive taxbreaks and capital cost allowances, taxbreaks the Federal Government refused to match, taxbreaks B.C. can`t afford, and we have Christy Clark who has opened her fat mouth about creating a new LNG tax, a tax that will pay off  BC`s debt, eliminate BC Hydro`s debt, eliminate BC Ferries`s debt, eliminate tolls, eliminate sale tax and provide $hundreds of billions in a prosperity fund for future generations, all that largess being shaken out of Asian buyers, buyers who have thus so far refused to sign any long term energy buying contracts that aren`t linked to the North America Henry Hub pricing.

A price that doesn`t afford anything being built or created in B.C...Except imaginary fantasies..

Hash brownies and peyote buttons, purple blotter and frogs worth a lick.

Christy Clark`s LNG dreams....

When hell freezes over..Welcome to British Columbia`s own rabbit hole.

The Straight Goods

Cheers Eyes Wide Open


Anonymous said...

Grant, could you forward a copy of this to Christy Clark.
I'd hate to see her go off half cocked on this issue.
Maybe she should use it to fuel the Ferry system.

What do you think of the idea of Ben Stewart running as an Independent in Kelowna?
John's Aghast

Grant G said...

Ben Stewart would beat Christy Clark..

However...Ben Stewart is a wealthy man, he didn`t quit as MLA to run in a by election..

It doesn`t matter John..

The NDP couldn`t beat a rented mule at this point in time, they have no leadership, they still have Adrian Scofflaw Dix speaking for the party.

Adrian Who..NDP what?

Christy Clark`s advisers read these stories, as does the MSM..

They have no courage to acknowledge it.


kootcoot said...

" are we to build ten Site C size dams, all at a taxpayer cost of between $10 and $12 billion dollars each..?"

I'm sure you realize that there is more than the cost that makes this improbable - namely ten potential sites to build this size hydroelectric facilities.

The sensible energy answer for everywhere is NO LNG. Apparently damn near everywhere on earth has massive reserves, so just pump it out and use it locally (commonly known as natural gas) - or at least until all the aquifers are fucked and no one can live in the areas anymore due to lack of potable water. (I guess they could use nat gas to desalinize sea water or purify fucked frack waste).

Creating LNG and transporting it uses twice (or more) the energy with the resulting increase in emissions so using it in place only makes sense. It is time to re-think these silly energy projects that use as much or more energy than they produce (think Tarry Goo Sands) but put money in the "right" pockets.

Elwood said...

Grant, New Green MLA Weaver tweeted that he is impressed with your ongoing analysis with the lng pipedream. Are you now helping out the Greens?

Grant G said...

Elwood....I`m not supporting any political party(provincially), I am in support of good Governance, as I said, the BC NDP is dead under Adrian Dix, the by-election already over under Adrian Dix`s leadership, or should I say, by Adrian Dix clinging to a nameplate.!

Andrew Weaver Andrew Weaver ‏@AJWVictoriaBC 15h

@StrategicThghts Here's another good read: … for the @bcliberals #pipedream of #bcpoli #lng

1 Retweet
1 Favorite
Jeremy Reid Larry Norman

12:19 AM - 9 Jun 13 · Details
David Schreck David Schreck ‏@StrategicThghts 6h

@AJWVictoriaBC On Site C see … Lots of environmental assessments to keep on top of! #bcpoli #LNG
Andrew Weaver Andrew Weaver ‏@AJWVictoriaBC 5h

@StrategicThghts David, I'm quite impressed with this fellows ongoing analysis: …

As for my analysis on LNG..

There is no one in Canada doing more on the topic from a financial future prospect angle.

That future prospect is few jobs, water resources damaged, and next to nothing in royalties to Government, in fact..

After the freebies and environmental damage caused, the higher cost for domestic gas users, it will be a net negative.

Good Day

Anonymous said...

The only reason to go ahead with LNG is to keep up the media PR and to funnel money into corporate hacks bank accounts, while fucking the taxpayer again. I just want to move to a nicely run province and leave my portion of the debt behind. That would not be Quebec or Ontario at this point.