Tuesday, March 24, 2015

British Columbia LNG Alliance Is Living In The Past, Relying on Old Data To Sell LNG Snake Oil

BCLNGA British Columbia LNG Alliance has been very busy as of late pimping the LNG industry, promoting misleading facts, citing stale old forecasts, basically selling snake oil elixir..
I tweeted the BCLNGA this link....
 In that link, South Korea has announced to the world that Korea is abandoning LNG as a future fuel,...South Korea is the world`s second largest consumer of LNG...not for long, South Korea has just told the world that they are moving away from LNG in favour of cheap coal for electricity generation and even cheaper(in overall cost) nuclear power generation..
Here is the statement from S. Korea..
 "Korea Power Exchange chairman and CEO, Yoo Sang-Hee, believes the country’s LNG demand for power generation will keep dropping due to increased switching to coal as well as the government’s pro-nuclear policies. 
  Yoo Sang-Hee told Platts that high prices of LNG compared to coal and nuclear push the demand for the liquefied natural gas further down in the power generation sector as more gas-fired power plants remain idle.

Operating rates of gas-fired power plants went from 61.3% in 2013 to 50.8% in 2014, and as Yoo said, it is expected that these rates will slip to 23.7% by 2019 and even lower to 16.8% in 2022.

He added that half of the gas-fired power plants were shut during 2014.
Cheaper power generating costs from coal plants mean that as soon as there is enough supply, gas-fired  power plants are taken off the market. Yoo says that LNG-generated power costs around US$0.13-0-15 per kWh or 140-170 Won which is a lot more than the costs of coal or nuclear that stand at Won 35-45 and Won 3-4, respectively, which makes South Korea the country with the widest difference of power generation cost between LNG and coal in the world."



Let me simplify the above earth shattering statement...
LNG electricity generation in S. Korea costs 140 to 170 Korean Won to produce each kWh of power....Electricity generation from coal in S. Korea costs 35 to 45 Korean won to produce each kWh of power..
Nuclear powered electrical generation, which will be greenhouse gas free, no emissions, the cost of nuclear electrical generation in S. Korea will be...3 to 4 Korean Won for every kWh of power... 
In other words, S Korea is saying no to expensive ghg emitting LNG electrical generation...Coal for electricity is 1/3rd the cost of LNG...Nuclear power for producing electricity is 1/40 of the cost of LNG...
S. Korea is a very modern manufacturing country, a country in competition with other nations, including China...How long will it be before China also adopts S Korea`s position on electricity generation, ?
In the above article, look at the timeline announced, S. Korea is forecast by 2022 to be using a mere 1/5th of the LNG they currently use...Even if that number is slightly off, let`s say S. Korea`s use of LNG by 2022 only 30% of their current LNG...
That means Korea alone will create a massive gulch of excess LNG...
The BCLNGA tweeted me back, they offered me a link to peruse, one of their own links, we will come back to BCLNGA`s tweet response and link sent further down this post..
The second largest user of LNG in the world has announced they are abandoning LNG, that is earth shattering news for BC`s proposed LNG industry,...There is more...Japan`s utility providers are ready to restart 2 nuclear plants in either June or July of this year...When this happens, how much longer before more nuclear facilities are restarted?...And how long before Japan decides to abandon LNG for new, clean, emission`s free nuclear power, brand new facilities, after all, Japan is in direct economic competition with S. Korea.....If Japan moves to use massive amounts of LNG for industry, Japan won`t be able to compete with S. Korea`s industry, especially if S. Korea`s electrical power costs their industry a fraction of what Japan will have to charge their industrial customers..

Operator of the a nuclear plant in southern Japan received an approval to launch a reactor in June, the first such precedent after the 2011 Fukushima disaster, the Japan News reported Wednesday, citing the country's Nuclear Regulation Authority (NRA).


The BCLNGA as of late are in full-blown LNG in BC pimping mode....Something is up..
However, the BCLNGA has their heads firmly stuck in the sand, to be precise, their heads are stuck in ancient sands....In response to my tweet to the BCLNGA, they sent me a reply and a link, their link has quotes from various industry groups and economic forecasters, however, the quotes and statements in the article the BCLNGA sent me are old...Statements from 2011...2012....Well, since 2011-2012 the USA is awash in oil and gas, fraccing crazy, everyone is fraccing, the world is awash in natural gas, the world price of LNG has crashed and it is not going to recover to historic highs, not even close, not with green technology and nuclear power being the choice for future electrical power generation..

 Here is the reply and link the BCLNGA sent me...

More Tweets
  StraightGoods @Realmediavoices
BC LNG Alliance @bclnga
  Follow Follow  
@Realmediavoices: There are other markets, and demand is expected to increase 55% by 2035. P. 17 at ow.ly/KKdB6
  04:49 PM - 24 Mar 15
Here is what is written on page 17...

Global demand for energy is expected to increase 35%
by 2035 as economies in both developed and emerging
countries continue to grow and standards of living
improve. Global demand for natural gas specifically is
expected to increase 55% by 2035.
All sources of energy, developed
responsibly, will be needed to meet
growth in global demand.
*Growth from 2009 to 2035, IEA
New Policies scenario

Source: IEA World Energy Outlook 2012 New Policies scenario
Do you see that, forecast from 2012....Before the fraccing boom, before the tight oil recovery boom, before real cheap, real efficient green technology, before the world found natural gas deposits in near every country,...


Below is another page in the link the BCLNGA sent me...
$1.3 billion per year
The B.C. government collects an average $1.3
billion per
year from natural gas and crude oil development in B.C.
through land sales and royalties.
Source: B.C. Government
$180 billion
$180 billion will be directly invested in B.C. as a result of
natural gas development between 2012 and 2035.
Source: Conference Board of Canada, 2012
 The first source, the BC Liberal Government, a government of liars and spinners...LNG royalties have collapsed to a fraction of that advertised number, land sales are flat, that number isn`t even close...Norm Farrell has done exemplary work highlighting how little money flows into BC`s coffers from LNG...
  The second source cited above is from the conference board of Canada, dated 2012....Since 2012 the world of LNG and LNG pricing has changed, the world is now awash in natural gas and the price has collapsed, the USA is fraccing crazy, huge natural gas deposits have been discovered in Africa, Papua New Guinea, ..Israel..Poland..The UK..Australia, ..everywhere is natural gas...
Conference board of Canada, 2012 statement...There has been almost no LNG investment in Canada since that statement....I wonder why the BCLNGA would send me a link with old data, could they not find a 2015 statement from the conference board of Canada, something from 2015..or even 2014...
The BCLNGA also is ignoring these developments...China and Russia have inked massive piped natural gas deals, cheap direct from Russia to China, cheap natural gas, no need for liquefaction plants and regasification plants...
 "After 10 years of negotiations, China and Russia inked a massive natural gas deal during the second day of Russian President Vladimir Putin’s visit to China this week.

Russian state media reports on the parameters of the deal were largely consistent with prior expectations. For example, Russia Today reported that, under the deal, “Russia will supply China [with] 38 billion cubic meters of gas per year via the eastern ‘Power of Siberia’ pipeline, which crosses Siberia and reaches China’s populous northeast regions.”

It also cited Gazprom CEO Aleksey Miller as saying that the total value of the 30-year deal was $400 billion. However, according to the report, Miller refused to disclose the exact price China will pay for the natural gas, which he said was a “commercial secret.”

RT notes that if all of the $400 billion is earmarked for China’s purchase of the gas, Beijing will be paying about $350 per thousand cubic meters of gas. According to Bloomberg News, China currently pays the same rate for natural gas from Turkmenistan, which is about two-thirds of what it costs China to import liquefied natural gas (LNG). It is also significantly less than the $380.50 per thousand cubic meters that Gazprom sold natural gas to Western Europe for last year.

Moreover, it’s unlikely that the entire $400 billion will go toward China’s purchase of the actual natural gas. As noted above, Russia is constructing the so-called “Power of Siberia” pipeline to transport the natural gas to China."
 Here is more stale-dated quotes from that BCLNGA link.... 

591 million
Between 2012 and 2035, $591 million will be invested
in natural gas vehicles and infrastructure in B.C.
Source: Conference Board of Canada, 2012
$116 billion
B.C.’s GDP is expected to grow to $116 billion as a result
of natural gas investment.
Source: Conference Board of Canada, 2012
$47 billion
An investment of $180 billion could generate $47 billion
in tax revenues for B.C.
Source: Conference Board of Canada, 2012
 Three more statements from the conference board of Canada, dated 2012....
BC`s GDP is expected to rise by $116 billion as as result of natural gas investment, no date of when, just a carte blanc statement with no context..
$47 billion in tax revenue for BC....2012 statement by the conference board of Canada...Since 2012 BC has slashed its proposed LNG tax in half..The federal Government has allowed more generous LNG plant writeoffs...The BC Government has offered free electricity and more subsidies to the LNG industry in an attempt to woo the industry to build in B.C.
Yet the conference board of Canada hasn`t changed their numbers, or perhaps the BCLNGA wants to use stale-dated data..
Here is more stale-dated information from that BCLNGA link..
The natural gas and crude oil industry in B.C. is a key
employer in the province and will continue to contribute
to the job market as the industry grows.
An investment of $180 billion in B.C.’s natural gas sector
between 2012 and 2035 could generate 54,000 B.C.
jobs annually.
Source: Conference Board of Canada, 2012
905,000 jobs*
Employment in Canada as a result of new oil sands
investments is expected to grow from 75,000 jobs in 2010 to
905,000 jobs in 2035, with 126,000 jobs in provinces outside
of Alberta.
Source: CERI 2011
*Jobs are direct, indirect and induced.
 Check out the date, BCLNGA is still living in the past, 2011 and 2012....
 54,000 jobs annually in B.C. between 2012 and 2035....
 They better get started, there are less jobs in BC today then there was in 2012...
 "StatCan: BC has 4,400 fewer jobs today than in Sept 2011 when the BC Jobs Plan was announced but the workforce has grown by 143,400.
 Japan and Russia are also working on a piped natural gas deal..
 "Following Russia’s historic $400 billion natural gas supply deal with China last week, Japanese lawmakers are looking to revive efforts to tap into Russian natural gas supplies themselves.
 A Bloomberg report shows that a group of 33 lawmakers in Japan are backing a 1,350 kilometer pipeline that would run between Russia’s Sakhalin Island and Japan’s Ibaraki prefecture, just northeast of Tokyo.
 The project is estimated to cost $5.9 billion and could yield as much as 20 billion cubic meters of natural gas per year (equivalent to 15 million metric tons of liquefied natural gas). The pipeline would make up 17 percent of Japan’s imports."

So, the BCLNGA is sending out links to their own articles, articles that have quotes from various sources, all quotes are 4, 5, and 6 years old, the game has changed, not only is there a glut of natural gas on the market now there is a major oversupply glut forecast, a forecast glut even before S. Korea announced abandoning LNG..
 "Having started last year strongly, the Asian spot market for LNG tanked after it was dragged back by the sharp fall in crude oil, which started to take hold in August. By the third quarter, spot LNG prices in Asia had reached a three-year low and have barely recovered.

However, a bigger concern to the overall health of the LNG market will come from the glut of new supply, which will begin to increase this year and reach a peak by 2017 as major projects in Australia come to fruition. Some experts fear the market for LNG could soon become saturated, despite the steady increases in demand being forecast.

Projects reaching their final phase of construction in Australia will add 58m tonnes of LNG supply to the market by 2019. By then, the country is expected to become the world’s biggest exporter of LNG – overtaking Qatar – with 84m tonnes of total capacity."

I find the BCLNGA group to be sad and pathetic, they are using stale-dated facts, omitting the new data, ignoring the facts on the ground and ignoring simple economics, they are using volumes of old data to hype up a welfare industry that is soon to be a dead industry...Australia has gobs of new supply coming online, new supply without a market to sell to, no customers for this new supply, and now Japan`s market for LNG is set to fall, S. Korea has announced LNG is caput in their country and the Russia/China deal has forever changed the dynamics of the market, the gravy and easy money is gone..
Here is the link the BCLNGA sent me, 


What is extremely amusing, on page 32 of the above link, the three markets they say are BC`s future are..."Japan..S.Korea and China"

Maybe the BCLNGA group will start using the latest data and stop relying on antiquated information...

One thing is clear, the gravy with LNG is done, these energy giants, if they aren`t making gobs of money, if these operations end up running on thin margins who do you think is going to get paid...The industry, the company and its shareholders or the BC and Canadian taxpayer....

We know who will get screwed...

The people.

The Straight Goods

Cheers Eyes Wide Open



Jon Ghun said...

Excellent find!

That information from South Korea is extremely important. By shifting away from LNG to coal, South Korean industry is significantly changing the way the game is to be fueled.

Along with Japan's nukes going back on-line, the demand for LNG in Asia cannot but fall and take prices with it.

The boom is over and done.

Many thanks to you for staying on this story.

Now the pressing question is how the hell a whole party of grifters can manage to get themselves out from underneath this massive BCLNG FAIL?


Anonymous said...

Another information filled post, fantastic work as per usual Grant!

Anonymous said...

Spin this


Anonymous said...

china full


John's aghast said...

And yet Chrispy is still trying to flog LNG through Woodfibre. What gives?
Why isn't she toast, like LNG futures?
What's next Chrispy? Site C?
Maybe if you made cheap energy available to the people of BRITISH COLUMBIA they could be competitive in the world market of manufacturing, ferry operations, transportation, logging and food production.

Hugh said...

BC govt needs to see BC gdp growth, because they project debt/gdp ratio going down in the future.

BC total debt is projected to go up.

They see LNG export as gdp growth.

see p. 35:

Anonymous said...

BC Hydro graph needs updating


2006 to 2014 BC Hydro avg for 9 years is flat at 52,676GWH

15-on march 31 2015 FY end

Anonymous said...

We just had a 4.9 in BC

Foolish to shut down burrard thermal as backup at least for earthquake-transmission lines down
and drought-water for hydro generation, like year 4 in California.

John's aghast said...

Grant, I don't know how you find time to collate all this information. On a daily basis! The MSM with 10 or 100 times the resources can't amass a tenth of what you provide. You truly are amazing.
I notice that my comment yesterday has a little icon beside it that says "Delete Comment". Did you put that there, or was that done by some Lieberal hacker?

Grant G said...

Not sure what you mean John Aghast..

I don`t mess with the comments, when I look at the comments once posted, the garbage can icon appears, think it is there in case I decide to delete them..

Who knows, Blogger is continually tweaking things..

The MSM media is too busy manipulating, fabricating and or not reporting the news..

The head of Bell Canada and CTV comes to mind..

ron wilton said...

The dollars that the companies are 'earning' from our natural gas must be truly staggering.

If these 'robber barons' just gave every man woman child and family pet in BC a million dollars they could just add that to the list of credits our government allows them and then CC's pipedreams would be true on paper at least.

Grant G said...

John Aghast...I believe it to be, blogger gives you the ability to delete your own comment..

Diquis comments, like at The Tyee..Gives you the ability to delete, or edit your own comment..

Hence you can only access your own comment...Couldn`t allow a person to delete another person`s comment.


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