Thursday, July 30, 2015

British Columbia`s LNG Balloon Goes Pop, Christy Clark`s Rhetoric IS Contrary To Facts on the Ground and the Reality of the New LNG Industry

Written by Grant G

A massive energy shift is under way, and it is a good shift for the world as a whole but another deadly blow to Christy Clark and the BC Liberals`s too-late LNG superpower fantasy....

I wrote how recently how experts are saying that near $300 billion in proposed/planned LNG liquefaction construction is surplus to the needs of the world...


 Study Reveals Surplus of Future LNG Projects

A new global gas study published by the London-based Carbon Tracker Initiative, identifies $283 billion of possible liquefied natural gas projects to 2025 that are likely to be surplus to requirements in a low demand scenario.

A transition to a low carbon economy indicates there is some room for gas demand growth to 2040, unlike coal and oil use that must peak and decline. But if the world is to stay within a carbon budget that limits global warming to the 2⁰C U.N. target, energy companies will need to be selective over which gas projects they develop. This is also the case in a low demand scenario.
The study finds that over the next ten years $82 billion of potential capex in LNG plants will not be needed in Canada, $71 billion in the United States and $68 billion in Australia in the lower demand scenario. The value of unneeded LNG projects rises to $379 billion by 2035, according to the study.
“Investors should scrutinise the true potential for growth of LNG businesses over the next decade. The current oversupply of LNG means there is already a pipeline of projects waiting to come on stream. It is not clear whether these will be needed and generate value for shareholders,” said James Leaton, Carbon Tracker’s head of research.


Also...Iraq, and Iran have massive conventional natural gas reserves, no need to frack for this gas, those Nations, because of war, infighting and sanctions have been shut out of the natural gas game, but not for long, not anymore..

You can add Turkmenistan to that group now too...

Those Nations are busy as beavers constructing natural gas pipelines to China, Pakistan and ultimately India...Thus those countries will have plenty of cheap piped natural gas, no need for vast distant ocean crossings, think about this, LNG carrier tanker vessels have to cross the Pacific Ocean twice for each and every single Asian delivery, not once but twice...

Fresh off the newswire...


Turkmenistan is currently implementing several major projects aimed at increasing the production and export of natural gas, as well as the projects for deep processing of gas, the country’s Ministry of Oil and Gas Industry and Mineral Resources said July 23.

The total cost of these projects is $20 billion. Moreover, these projects include the second stage of Galkynysh field’s development, construction of Turkmen sector of the fourth branch of Turkmenistan-China gas pipeline with the total capacity of 30-bcm of natural gas, a plant for polyethylene and polypropylene production in Balkan province, as well as a plant for producing synthetic gasoline from natural gas in Ahal province.


So, we have Turkmenistan getting serious about supplying natural gas, pipeline direct to China...

We also have China and Russia joining hands with a massive $400 billion(to start) pipeline natural gas arrangement, and we must remember, China and Russia are very good allies, despite Stephen Harper`s saber rattling towards Vladimir Putin...China and Russia are much friendlier on nation to nation relations....


BEIJING — China and Russia signed off on a huge gas deal worth as much as $400 billion Wednesday that heralds a pivot east for Russian business amid ongoing tensions with the West over Ukraine, though few details of the deal were made public.

The 30-year gas-export contract, seen as a move by Russian President Vladimir Putin to aggressively shift the country's commercial interests east amid mounting sanctions from the United States and Europe, was signed as the Russian leader has enjoyed a warm welcome in China, where the two countries have inked a raft of agreements during his ongoing, two-day visit.

The price China is paying for Russia's gas was not disclosed but the value of the agreement is thought to be somewhere near $400 billion. The deal, which will see Gazprom gas flow to China from a pipeline in Siberia, was confirmed by China's state-owned China National Petroleum Corporation.


It just keeps getting worse and worse for British Columbia and Petronas...More pipelines are being built to supply Asian gas demand, not LNG but cheap piped natural gas..


China to Build Pipeline From Iran to Pakistan

 Dubbed the “Peace Pipeline,” the project will further bolster improving ties between Pakistan and Iran, uneasy neighbors for decades as a result of Pakistan’s ties to Iran’s long-term adversaries, Saudi Arabia and the U.S.

The pipeline will bring much-needed gas to Pakistan, which suffers from a crippling electricity deficit because of a shortage of fuel for its power-generation plants. Pakistan has been negotiating for months behind the scenes for China to build the Pakistani portion of the pipeline, which will cost up to $2 billion.

Tehran says that its 560-mile (900-kilometer) part of the pipeline from an Iranian gas field is complete and has long pressed Pakistan to build its part of the scheme.

 Pakistan is negotiating with China Petroleum Pipeline Bureau, a subsidiary of Chinese energy giant China National Petroleum Corporation, to build 435 miles (700 kilometers) of pipeline from the western Pakistani port of Gwadar to Nawabshah in the southern province of Sindh, where it will connect to Pakistan’s existing gas-distribution pipeline network.....

 Islamabad believes the Iranian gas is the cheapest and simplest energy supply option for Pakistan. Pakistan will also start to take liquefied natural gas from Qatar, and it remains in protracted multicountry negotiations over a pipeline that would bring gas from Turkmenistan through Afghanistan to supply Pakistan and India


 Not just a Russia/China natural gas pipeline, not just a pipeline from Turkmenistan, not just a pipeline from Iran to Pakistan, but also a pipeline from Iraq to Pakistan..



Construction of a pipeline that would enable Pakistan to import liquefied natural gas from China has kicked off, Pakistan’s Minister of Petroleum and Natural Resources Shahid Khaqan Abbasi said. 

China and Pakistan will jointly fund the construction of the 700 km long pipeline, Press Trust of India reports.

Minister added that Chinese funds will help the energy-starved Pakistan complete the Iraq-Pakistan gas pipeline.

The central hub for the China Pakistan economic corridor, that aims to link Gwadar to the rest of Pakistan, will be the Gwadar port.

Pakistan recently started LNG imports through Engro Elengy operated terminal in a push to cut reliance on conventional fuels for its power generation. Engro Elengy chartered Excelerate Energy’s 150,900 cbm FSRU Exquisite which is docked at Port Qasim where Pakistan’s first LNG import facilities with a regasification capacity of 4.5 mtpa, are located.


So China and Russia, China and Iraq..China and Iran..China and Turkmenistan,...Joined at the hip with Pakistan and ultimately India....

All those pipelines being built, cheap conventional natural gas pipeline direct to where the gas is needed, no need for expensive LNG liquefaction plants, no need for LNG warming regasification plants, all the while big energy and foolish governments like the BC Liberals talk about massive LNG returns and a growing industry...Well BC Liberals, the LNG industry even before these pipelines are built, even before all the latest Australian LNG plants already under construction have come online...

  Where does British Columbia think Petronas or any other LNG proponent is going to sell LNG, to whom, and what price...Japan?..I don`t think so, Japan`s major industrial sector, and electrical generating sector have been getting hammered financially with expensive LNG imports...Shinzo Abe has vowed to bring back nuclear power for two reason, to save Japan money, and to reduce greenhouse gasses, as nuclear is a clean energy, at least in terms of greenhouse gasses...Sendai 1 nuclear plant should be online by August 10th/2015, in a matter of weeks with four more nuclear plants following suit..


Fuel Loaded at Japan’s Sendai in Advance of Restart

July 16, 2015—Fuel loading has been completed at the Sendai 1 nuclear plant, which is expected to be the first reactor in Japan to restart since new regulatory standards were implemented after the 2011 Fukushima Daiichi accident.

The 846-megawatt pressurized water reactor also underwent a pre-service inspection and assessments of emergency scenarios. Operator Kyushu Electric Power Co. has planned emergency training sessions for the end of July before the plant’s restart in mid-August.

Also this week, Japan’s Nuclear Regulatory Authority approved the restart of Shikoku Electric Power Co.’s Ikata 3.The reactor is the fifth to receive approval to restart


What about South Korea as a LNG buyer...Again, that answer is a big fat no! South Korea is switching off natural gas in favour of coal, but mainly in favour of new, cleaner, greenhouse gas free nuclear power,...And boy oh boy are those South Koreans industrious...They aren`t fools, LNG is a dirty word in South Korea, also, the Koreans refuse to be held hostage by the likes of Petronas and the BC Liberals...Indeed, Christy Clark while campaigning in 2013, her big LNG lies, Christy Clark told the world, including our Asian neighbors that British Columbia was going to become filthy rich, no debt, a sales tax free province, debt free province with a $100 billion dollar prosperity fund, a $trillion dollars according to BC Liberal pom pom girl Pamela Martin, all off the back of our hard working Asian friends.....Japan is saying no, South Korea is saying HELL NO!..


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  which translates to $1.40-1.70 Won which is a lot more than the costs of coal at $0.35 to $0.45 won and nuclear power at  $0.3 to $0.4 won respectively, which makes South Korea the country with the widest difference of power generation cost between LNG and coal in the world.


So who the hell is Petronas going to sell expensive British Columbia greenfield LNG to at a profit..?

Not China, not Japan, not Pakistan, not South Korea, who damn it who?

So, like I said, the LNG market is changing rapidly, and besides all of that bad news for Petronas and British Columbia...The news gets even worse, ....Good news for the planet earth...LNG is being displaced and consumption is on the decline due to another factor...Efficiency of gas use and renewables...clean green renewables are outpacing LNG as an energy source by far...



NYC-based PIRA Energy Group said it believes that liquefied natural gas supply/demand balances continue to tilt toward a major supply overhang.

While the length in the market has not led to lower spot prices in the past 30 days, the methods required to dispose of incremental LNG supply are becoming more creative, according to PIRA.

European Gas Price Scorecard

PIRA said it has argued for some time that this year’s leisurely attitude toward storage accumulation is based on three principles and it believes these principles are still holding in place.
One is that at least 15 years of gas demand has been lost to a combination of power sector deterioration (renewables), industrial migration to North America (lower gas prices), and efficiency gains (E.U. policy mandates) in the R/C sector.

These losses have made higher storage injections somewhat superfluous for a market that is not growing and has shown over consecutive winters that the amount of incremental gas demand per heating degree day is dropping.


Here is a much more detailed explanation as to what is happening in the renewable energy market, and where the market is going....If the BC Liberals want to get involved in a real $trillion dollar industry, renewable, clean green energy is where the action is at, and where the action is expanding exponentially..


The renewable-energy boom is here. Trillions of dollars will be invested over the next 25 years, driving some of the most profound changes yet in how humans get their electricity. That's according to a new forecast by Bloomberg New Energy Finance that plots out global power markets to 2040. 
Here are six massive shifts coming soon to power markets near you:

1. Solar Prices Keep Crashing

The price of solar power will continue to fall, until it becomes the cheapest form of power in a rapidly expanding number of national markets. By 2026, utility-scale solar will be competitive for the majority of the world, according to BNEF. The lifetime cost of a photovoltaic solar-power plant will drop by almost half over the next 25 years, even as the prices of fossil fuels creep higher.
Solar power will eventually get so cheap that it will outcompete new fossil-fuel plants and even start to supplant some existing coal and gas plants, potentially stranding billions in fossil-fuel infrastructure. The industrial age was built on coal. The next 25 years will be the end of its dominance. 

2. Solar Billions Become Solar Trillions

With solar power so cheap, investments will surge. Expect $3.7 trillion in solar investments between now and 2040, according to BNEF. Solar alone will account for more than a third of new power capacity worldwide. Here's how that looks on a chart, with solar appropriately dressed in yellow and fossil fuels in pernicious gray:

© BNEF Expect $3.7 trillion in solar investments between now and 2040, according to BNEF. Solar alone will account for more than a third of new power capacity worldwide.

3. The Revolution Will Be Decentralized

The biggest solar revolution will take place on rooftops. High electricity prices and cheap residential battery storage will make small-scale rooftop solar ever more attractive, driving a 17-fold increase in installations. By 2040, rooftop solar will be cheaper than electricity from the grid in every major economy, and almost 13 percent of electricity worldwide will be generated from small-scale solar systems.

4. Global Demand Slows

Yes, the world is inundated with mobile phones, flat screen TVs, and air conditioners. But growth in demand for electricity is slowing. The reason: efficiency. To cram huge amounts of processing power into pocket-sized gadgets, engineers have had to focus on how to keep those gadgets from overheating. That's meant huge advances in energy efficiency. Switching to an LED light bulb, for example, can reduce electricity consumption by more than 80 percent. 

So even as people rise from poverty to middle class faster than ever, BNEF predicts that global electricity consumption will remain relatively flat. In the next 25 years, global demand will grow about 1.8 percent a year, compared with 3 percent a year from 1990 to 2012. In wealthy OECD countries, power demand will actually decline.  

5. Natural Gas Burns Briefly

Natural gas won't become the oft-idealized "bridge fuel" that transitions the world from coal to renewable energy, according to BNEF. The U.S. fracking boom will help bring global prices down some, but few countries outside the U.S. will replace coal plants with natural gas. Instead, developing countries will often opt for some combination of coal, gas, and renewables.  
Even in the fracking-rich U.S., wind power will be cheaper than building new gas plants by 2023, and utility-scale solar will be cheaper than gas by 2036.
Fossil fuels aren't going to suddenly disappear. They'll retain a 44 percent share of total electricity generation in 2040 (down from two thirds today), much of which will come from legacy plants that are cheaper to run than shut down.


That above article is the good news for planet earth and it`s human inhabitants..

Lastly, ....I wrote in the not too distant past about the NEB, how they keep granting export licenses, even to bankrupt broke-ass companies...I also wrote how the future LNG is market is turning to floating mobile operations, Petronas has just signed a deal to have South Korea build their second floating facility, and the NEB just last week granted yet another 25 year LNG export license, this one to the proponent ORCA LNG, ...This project would consist of 6 LNG liquefaction ocean vessels, each one capable of liquefying natural gas, then once their LNG holding containers are full they sail off and deliver the gas to their customers...

This project, if it goes ahead would mean almost no employment for British Columbia, all this company would need is a pipeline from northeast B.C. to the west coast...

Unfortunately for British Columbia this is where the LNG industry is heading, rumors are abuzz as of late...Petronas is in no big hurry to build their B.C. proposed land-based LNG liquefaction terminal..In fact Petronas is on the verge of completely scrubbing their proposed Prince Rupert land-based project for a floating mobile project for Prince Rupert...Thus even the scant employment numbers offered to British Columbia would become even scanter..

Here are the details on Petronas`s awarding of the newest floating LNG facility..


French LNG engineer Technip informed it has been awarded an engineering, procurement, construction, installation and commissioning contract by Malaysia’s Petronas for the tie-in of PFLNG1 facility to KAKG-A platform in Kanowit field.

The field is located 200 kilometers offshore Bintulu, East Malaysia, at a water depth of approximately 80 meters.
According to Technip, the contract covers the procurement and installation of a 3.2 kilometers flexible flowline between the existing KAKG-A central processing platform in Kanowit field to the PFLNG1 riser. It also includes modification and tie-in works at KAKG-A.

Technip’s operating center in Kuala Lumpur, Malaysia, will execute the contract.  The flexible flowline will be manufactured in Asiaflex Products, Technip’s manufacturing facility in Tanjung Langsat, Johor, Malaysia. It will then be installed by the Group’s multipurpose vessel, the Deep Orient.

The installation campaign is scheduled for completion in late 2015.

Petronas’ first floating LNG production unit, PFLNG Satu, will produce 1.2 million tonnes of the chilled gas per year.  It is currently being built at the DSME shipyard in Okpo, South Korea.

The company also held in June a steel cutting ceremony for its second floating LNG facility at the Samsung Heavy Industries shipyard in Geoje Island.


And here are the details on the latest National Energy Board awarding of a 25 year natural gas export license, ..on a project that would be completely built overseas,a project that would provide almost no British Columbia jobs..


 Canada’s National Energy Board (NEB) has approved the application of Orca LNG for a 25 year natural gas export licence with a maximum term quantity of 901 billion cubic metres.

The issuance of this licence is subject to the approval of the Governor in Council, NEB said on Monday.

According to NEB, the quantity of gas proposed to be exported by Orca LNG is surplus to Canadian needs.

“The NEB is satisfied that Canada’s gas resource base, and the overall gas resource base in North America, is large and can accommodate reasonably foreseeable Canadian demand.

This demand would include the LNG exports proposed by Orca LNG as well as a plausible potential increase in Canadian demand,” NEB added.

Orca LNG is proposing to develop an LNG terminal in the vicinity of Prince Rupert, British Columbia.

The Orca Energy Hub would be a gas gathering and liquefaction facility that would consist of 6 floating liquefaction storage and offloading vessels, permanently moored near-shore.
Each vessel will be able to liquefy approximately 4-5 million tonnes per annum of LNG.


Have a look at the above article, they call it a an energy hub, a gas gathering energy hub, 6 vessels each liquefying their own gas, all these vessels require is a dock and access to BC`s natural gas, thus creating very very few jobs...

Remember the yoga-bridge debacle, one of the sponsors was ALTAGAS...They too are proposing a floating facility for British Columbia, ALTAGAS wants to just hook-up their floating facility to an existing natural gas line in Kitimat, again, requiring almost no British Columbia employment...


A consortium including Calgary-based midstream and energy firm Altagas Ltd. has taken possession of the proposed Douglas Channel LNG project through a plan of arrangement that ends a Companies’ Creditors Arrangement Act process.

The Douglas Channel LNG Consortium includes AltaGas and partner Japanese energy marketer Idemitsu Kosan Co., Ltd. with one-third ownership, along with EDF Trading Ltd., a subsidiary and wholesale market operator of Electricite de France S.A., and Belgium-based liquefied natural gas shipper EXMAR NV.

The partners propose a barge-based LNG facility near Kitimat, B.C., to supercool and liquefy western Canadian natural gas for export. The project site is secured by a long-term lease with the Haisla Nation and initial nameplate capacity is to be 550,000 tonnes per year.

“The consortium is excited to advance this small-scale floating LNG project and is looking forward to a long and mutually beneficial relationship with the Haisla Nation, building on the newly signed long-term land and water lot leases,” said David Harris, president and chief operating officer of AltaGas, in a news release Wednesday.


Another proposed floating LNG project, another project built entirely overseas, another project providing almost no employment to British Columbia workers..

Another project, like all the rest that have been granted the ability to write off the entire cost of the build against Canadian owed taxes, writing off $billions of dollars spent in a foreign country, South Korea , Japan, and China..

 The LNG market is being hammered by pipeline direct natural gas, ..gas energy that doesn`t need $billions and $billions in infrastructure cost...The LNG industry is also being whittled away by the real $trillion dollar industry, clean, green renewable energy and new, clean green greenhouse gas free nuclear power..

The days of behemoth land-based LNG plants are quickly coming to an end, and that`s a good thing for the planet...As for the BC Liberal LNG riches, the big bonanza and oversold LNG lies, that game is over, so are the promised riches...Our biggest fear today in British Columbia is a desperate BC Liberal Government and a bought and sold legislative media....The great LNG jobs report by Marc Lee didn`t get one line of press in the Vancouver Sun or Province, they all but ignored his wonderfully accurate report..

The BC Liberal Christy Clark Government is so desperate to get a deal before 2017 election I fear there will be even more financial incentives offered to Petronas and others, to the point that we BCers actually pay these companies to take our gas..

"What a tangled web we weave when first we practice to deceive"

Close To The Edge

The Straight Goods

Cheers Eyes Wide Open


North Van's Grumps said...

So who the hell is Petronas going to sell expensive British Columbia greenfield LNG to at a profit..?

BC Hydro? They've already got a track record proving they'll pay the highest prices to IPPs compared to in-house production. No problem-o! British Columbia ratepayers will pick up the tab

John's aghast said...

Probably BC after Chrispy finds she's given away more than we got!
If even half the money she's wasted on advertising and fancy LNG trips had been directed to worthy causes we'd likely be out of debt. Well, closer to a balanced budget.

Anonymous said...

Anonymous said...

I like your style Grant. I will be a regular reader from now on. This will be in my top 5 reads. Thank you for the analysis and completing the picture. We have much in common in terms of logical thinking, reading between the lines and just plain knowing bull when we see it.

Anonymous said...

Thanks for the detailed breakdown, I figured as much with this whole LNG fiscal. Funny how their are no customers for our LNG, but we could use it to help make BCers more competitive (cheaper energy, jobs created). Will be a regular reader, like minded styles of research and deduction. An eye for spotting bull shit.

Grant G said...

@Ng Weng Hoong....By the way..You are welcome to the information..