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persistent digging,never say never

Sunday, May 24, 2015

The Beginning of The end for Behemoth Land-Based LNG Export Plants(Petronas`s Achilles Heel, Finding Profit)

 

 (pictured above is Delfin LNG`s floating liquefaction ship)


The Beginning of The end for Behemoth Land-Based LNG Export Plants(Petronas`s Achilles Heel, Finding Profit)

 Written by Grant G

 Hello people of British Columbia......


The USA can build LNG exports 40% cheaper than anything that can be built in British Columbia, ...Let me explain, before the fraccing shale gas boom the United States was gearing up for large volumes of imported LNG...Regasification plants were built in many locations in the USA...But before anyone could blink the fraccing revolution took place, ..


America doesn`t need imported LNG, so....These LNG regasification plants have been converted to LNG liquefaction plants, thus they are now LNG export plants...Built for 50% less than the cost of starting from scratch...


The below article highlights the next revolution in liquefying natural gas into exportable LNG..

Floating liquefaction plants, mobile, versatile, and cheaper to build,...not only cheaper to build but faster to build, these ships can be built in half the time of an on-land facility, ...And what`s even more important, these floating plants don`t have the big environmental footprint..

The below story is more bad news for Petronas and in particular, really bad news for British Columbia....

Let me clarify, there will be a market for LNG and many big players want in on the action, the key to profitability is market share and the ability to deliver LNG at the lowest cost..

The below article states in clear concise words that the days of the big Asian price differential is over...

Delfin LNG will be in operation by 2019....Delfin LNG clearly states that they can be profitable selling LNG at $7 dollars per BTU...

Petronas can`t compete at that price, the bare-bones minimum price Petronas needs to break even is about $11 to $12 dollars per BTU..

 Shell`s prelude, their floating ship/liquefaction LNG plant will be in operation off the Australia coast within the year..

With such fierce competition between the energy majors how long can it be before the other big players...Exxon Mobile..British Gas...Qatar...Chevron follow suit?

 British Columbia missed the boat on LNG...The days of massive onshore LNG export plants are going the way of the dinosaur..

The LNG market is saturated, with 20% more supply coming online over the next 18 months and even more supply coming online before 2020..


The current LNG spot market price for LNG in Asia is $7 per BTU....


I personally believe this new floating LNG liquefaction technology will finish off British Columbia`s proposed big land-based operations..

Delfin LNG is not alone...I reported early this year about another LNG export proposal for British Columbia..

 Newtimes energy has proposed a floating LNG liquefaction ship for British Columbia...

 That story is here..

http://powellriverpersuader.blogspot.ca/2015/02/newtimes-energy-ltd-enters-bcs-lng-game.html

I don`t expect Christy Clark and the BC Liberals to admit that they and Petronas have a problem, really big problems...

The Skeena river watershed destruction, the loss of our wild salmon in BC`s second most productive river...Newtimes energy is proposing a floating plant for Prince Rupert...

Petronas could do the same thing, build a floating plant....The investment dollars for British Columbia doesn`t change much..Because, Petronas`s $11 billion dollar Lelu island project proposal...$9 billion dollars of the project cost was being built overseas, and Petronas was planning on using 80% temporary foreign workers..

Floating LNG export plants merely require a pipeline to the coast and an onshore compressor..

There may be some of you that are skeptical about this new technology, I remind you of the USA experience..

Near $100 billion dollars worth of regasification plants were built in the USA in anticipation of importing LNG...Those brand new regasification facilities were shuttered before they even received one cargo of LNG..

To the winners goes the spoils....With LNG, the winners will be those operations who can deliver LNG on the cheap and still make a profit..

 The days of behemoth land-based LNG plants are going the way of the dinosaur...


Delfin LNG has already applied for export license in the USA, they anticipate that LNG export operations will commence in 2019....That is at least 2 years earlier than the Petronas timeline..

http://www.lngworldnews.com/usa-delfin-files-lng-export-application/

Delfin LNG also has buyers of their gas lined up and ready..


"The facility is expected to start up in 2019 and Deflin has already found a buyer –Litgas, a Lithuanian gas company."

 

 Can`t you envision one of these ships firmly anchored in Kitimat, another in Prince Rupert?

  ____________________

This LNG Player Could Leave Lumbering Competitors In The Dust

 

 US companies have been scrambling over the past few years to build new export terminals for liquefied natural gas (LNG). But just as the first is nearing completion, one company wants to forgo the onshore liquefaction concept altogether and move offshore.

 The US is nearing the point when it will start exporting natural gas, which Bloomberg says will “change the global LNG market forever.” US LNG could undermine the practice – particularly in Asia – where supply deals are sealed with long-term contracts linked to the price of oil. More LNG shipped abroad will bring down LNG prices in Europe and Asia and create more spot trading. The US could become a pivotal player in the LNG market (just don’t tell American consumers, who could face higher domestic natural gas prices as a result).

 

But another company hopes to move beyond Cheniere Energy with a different concept. Delfin LNG is proposing a set of floating LNG vehicles (FLNGV), which will liquefy natural gas on board a ship, cutting out the need to build an onshore export terminal. The company says that will cut construction times by 1 to 2 years, reduce the onshore environmental impact, and most importantly, provide it with flexibility.


Building LNG export terminals require billions of dollars of upfront investment, necessitating some sort of certainty that buyers will be around for the long haul. That is why many companies enter into long-term contracts for the supplies before they put up the cash to build one.


Delfin argues that its FLNGV fleet can be used to liquefy and export natural gas for as long as its customer base sticks around. It can pack up and move somewhere else once its work is done. Delfin’s proposed vehicle could also theoretically be moved out of the Gulf of Mexico in the event of a hurricane.

Specifically, Delfin LNG wants to build a compressor station onshore in Cameron Parish, Louisiana that will become equipped to pipe gas offshore. There is already a natural gas pipeline that runs from the Louisiana coast into the Gulf of Mexico – it was previously used to pipe gas onshore, but the new compressor station will allow Delfin to ship gas from onshore to offshore. There the gas will be liquefied on board the four proposed FLNGVs. Delfin submitted an application to the Coast Guard and the Maritime Administration.

The facility is expected to start up in 2019 and Deflin has already found a buyer –Litgas, a Lithuanian gas company.

 Floating liquefaction is popping up more and more as the technology improves. Royal Dutch Shell is building one of the biggest and most iconic FLNG projects in the world. The Prelude, as it is called, is a ship that will drill for and liquefy natural gas. It will be positioned to drill off the coast of Australia.


Deflin LNG hopes to capitalize on cheap US gas with its project. At the same time, Delfin LNG is entering a market that is getting more and more crowded. Gone are the days of LNG prices in Asia running five or six times as high as US natural gas prices.  

The spot price for LNG in Asia – using the Platts JKM marker – fell to $7.12 per million Btu (MMBtu) for June 2015, less than half of what they were just a few years ago. US natural gas prices have been hovering around $3/MMBtu. After liquefaction and transportation costs, there is not much of a margin left.

A wave of new LNG projects is set to hit the world between now and 2018, with the largest additions ever coming this year and next. Global liquefaction capacity is expected to climb by 20 percent by 2016.

That could stall out a lot of projects that have not already signed up long-term customers. Or it could push developers into building floating LNG vehicles rather than onshore terminals.


By Nick Cunningham of Oilprice.com

_____________

The Tyee is reporting that BC missed the LNG boat as well, that according to a new study...

 http://www.thetyee.ca/News/2015/05/22/BC-LNG-Lost-Opportunity/

PIRA is reporting the same thing...

____________



NYC-based PIRA Energy Group believes that big decisions will emerge and change the course of LNG supply in 2015.

 

 

Terms such as “postponement”, “cancelation”, and “cost cutting” will feature prominently in the 2015 LNG market. The ability of new LNG supply to move forward on the back of higher oil prices appears to be taking an extended holiday. The upstream and downstream implications will be wide ranging. On the upstream side, PIRA sees a world where announced LNG projects will begin to make official statements that moving ahead will no longer be economical.


Last week’s weekly storage update from the EIA revealed a further contraction in withdrawals — on top of last week’s below-expectation pull. The 26 BCF(billion cubic feet of gas) draw, however, again widely missed the consensus expectations centered in the mid-30 BCF(billion cubic feet) area, notwithstanding some polls pointing to a W/W(world wide) decline a bit north of 40 BCF.(billion cubic feet)


The lack of persistent colder-than-normal weather is finally paving the way for lower day-ahead and forward prices. The weak supply/demand gas fundamentals PIRA has been discussing for some time, are playing an increasingly central role in price formation. A cold winter forecast by several weather forecast suppliers still makes us somewhat nervous about the longstanding downward trajectory of PIRA’s day-ahead forecast, but the behavior of the forward curve over the past 30 days has been solidly trending towards PIRA’s view. Forward curve prices have already hit PIRA targets to the downside for the first quarter and are moving into close range for the second and third quarters.

 http://www.lngworldnews.com/pira-foresees-uncertain-2015-for-lng-projects/

 ________________

Let me just add this, I`m against fraccing, LNG is a beggars fuel soon to be replaced by green technology, new modern cleaner emissions free nuclear power and maybe even cold fusion..

 http://www.theglobeandmail.com/news/british-columbia/lng-industry-in-bc-threat-to-environment-and-energy-security-study/article24608485/

Imagine pipelines zigzagging our northeast, roads and drill pads everywhere, ten`s of thousands of drillpads and connecting pipes, all that wasted/spoiled water, caribou, wolves and all the other species will literally become extinct, you can`t remove the animals migratory paths and expect them to survive...and for almost no money..

It`s also my belief that this technology will put to rest all the LNG bluster and hype from the BC Liberals, we won`t get 3 LNG plants, or 5..or 19....With luck we don`t get any, time for British Columbia to become a 21st century modern land, not just raw resource exporters, wasters of water and wildlife killers ...British Columbia`s greatest asset is sustainable forestry and super natural pristine land full of birds and unique species, along with clean water laden with wild salmon and ocean delicacies...

That is what will have real value in the decades, and hopefully centuries to come...



The Straight Goods

Cheers Eyes Wide Open

8 comments:

Jon Ghun said...

You're doing brilliant work on this issue. You're years ahead of the pack with this story. And it's crying shame that you're not a leading part of the official circle of policy makers in this province--then again, maybe you are...

More than that, though, i wholly support the following sentiments: "Imagine pipelines zigzagging our northeast, roads and drill pads everywhere, ten`s of thousands of drillpads and connecting pipes, all that wasted/spoiled water, caribou, wolves and all the other species will literally become extinct, you can`t remove the animals migratory paths and expect them to survive...and for almost no money..

"It`s also my belief that this technology will put to rest all the LNG bluster and hype from the BC Liberals, we won`t get 3 LNG plants, or 5..or 19....With luck we don`t get any, time for British Columbia to become a 21st century modern land, not just raw resource exporters, wasters of water and wildlife killers ...British Columbia`s greatest asset is sustainable forestry and super natural pristine land full of birds and unique species, along with clean water laden with wild salmon and ocean delicacies...

That is what will have real value in the decades, and hopefully centuries to come..."

Bravo.

Thanks for standing up and telling it like it is and ought to be.

G. Barry Stewart said...

Thanks for this, Grant! A portable gasification plant makes good sense (for the buyer) and makes even less sense for BC to get involved in the game.

It sounds an awful lot like raw log exports...

Danneau said...

As you've so ably noted on many occasions, the economics of LNG in BC make no sense, and there is even less of an ecological and social case. The scheme is all about creating value for cronies and their camp followers. In fact, LNG is just wrong and wrong squared, which is precisely it is such a good fit for Clark & Co. Re-bravo, Grant.

John's Aghast said...

Now let me get this straight. This ship would sail into harbour just like any other grain ship, ore carrier or whatever. It doesn't need Kitimat or Prince Rupert - just a place to tether and a gas outlet. So it could be ten or twenty kilometers from anywhere and the 80 to 100 workers required to operate it could be transferred by bullet bus/taxi to and from the site.
The gas line could be located anywhere out of fisheries concerns, FN interests and populated areas. Just like a grain carrier, except its not moored in Burrard Inlet.
Sounds like a winner!
Oh, what's in it for BC? Jobs? 80 to 100, unless they go to TFWs. Royalties? Not so much now that Chrispy has hammered out a deal.
Perhaps a little tourism - grab a BC Ferry and come watch a boat get loaded. So much for our Prosperity Fund!

Grant G said...

Mr. Ghun...Don`t know about any policy makers listening to The Straight Goods but the BC Government definitely knows what is written here..

LNG for the BC Liberals is no longer about profitability for the province, LNG for those clowns has morphed into their re-election gambit, build something, anything at any cost, shovels need to be in the ground before the next election..

So sad, politics before reality, politics before humanity, politics before protecting the earth for future generation.

G Barry Stewart...It`s exactly like shipping out raw logs, only worse, LNG fracked gas isn`t a clean fuel and the accumulative environmental footprint pales in comparison to raw logs..

Danneau...Making sense has never mattered to these BC Liberals, that political party has always thrived on money for favour and who gives a damn about the people or future...They should be renamed to..

BC Liberals, also known as..

Dead Soul Party

John Aghast..

There never was going to be a prosperity fund, look at Alberta, all that environmental damage left by big energy, the province broke and now they squeal like little oinklets at the thought of actually leaving money behind for the Alberta people and for reclamation..

Great comments people

Anonymous said...

http://blogborgcollective.blogspot.ca/2015/05/premier-christy-clark-lng-is-safe-when.html

http://blogborgcollective.blogspot.ca/2015/05/fortis-tilbury-island-lng-turntable.html

lets ask to raise bridge for massey tunnel to let LNG ship go to tilbury
.or was it offered low to start to raise later as implied afterthought?

Anonymous said...

one super ship to float in from asia to condense cng to lng onboard and another to load .
all in ocean.

Anonymous said...

http://www.burnabynewsleader.com/news/port-wants-tall-massey-bridge-for-lng-tankers-1.1943543