Sunday, May 26, 2013

Christy Clark Heads West To Sell LNG Powered Unicorns





Well well well, unelected Christy Clark is planning another most excellent adventure to Asia, Mz Clark is heading to the orient to identify and lock in long-term energy buying contracts..
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"In a meeting with reporters later, Clark said she will lead a trade mission to Asia soon to identify and lock in markets for LNG. She said much as Bennett used hydro power to open up B.C, she sees LNG as the industry that will build B.C.’s new economy.
The Liberals are banking on revenues from LNG sales to pay down B.C.’s debt within 15 years."

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Of course that does present a wee bit of a problem, we haven`t got any LNG for sale, three export licenses have been granted to these prospective builders of LNG plants, but none, I repeat none of these companies have actually committed to build one..

Australia has 2 LNG plants coming on line next year and 4 more by 2016....And there are many other monkey wrenches being thrown into the mix..

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CHENIERE Energy, the Houston-based company that is the frontrunner among potential North American LNG exporters, has reaffirmed its operating target date of late 2015 for the export terminal it is building at Sabine Pass on Louisiana’s Gulf coast.

Reporting its first quarter results, Cheniere said in early May that the first two gas processing trains, each of 4.5 million tonnes per annum (mtpa) capacity, are on track for commissioning in 2015-16, with first gas from Train 1 in “late 2015.” 


Cheniere plans to build up to six trains at Sabine Pass for a total capacity of 27 million tonnes. It has signed 20-year sales agreements with five big customers – BG Group, Gas Natural Fenosa of Spain, Korea Gas, GAIL India and Total Gas and Power, covering most of the output from the first four trains, but will also have about 2 mtpa left over for spot sales. In addition, it signed a 20-year agreement in March with UK-based energy utility Centrica covering deliveries from the fifth train.




Cheniere is also proposing to build a separate LNG export terminal at Corpus Christi in Texas by 2017, and has received US government approval to export up to 15 mtpa from this facility.

Cheniere’s emergence as the first new North American LNG exporter will pit it squarely against Qatar and the wave of Australian production coming from the three LNG export plants now under construction at Gladstone on the Queensland coast, and expansions and additions to various North West Shelf gas projects.

Along with potential new suppliers in Africa and Russia, this means Asia’s big gas buyers – essentially Japan, South Korea, China, Taiwan and India – will have more choice and the chance of more competitive prices.

In the wake of the 2011 tsunami and the shutdown of Japan’s nuclear power industry, gas demand has soared in North Asia.

 Some energy utilities have had to pay spot rates as high as $20 per million metric British thermal units (mmbtu), though the average import price in Japan last month fell to about $14.50/mmbtu. Cheniere anticipates it can land gas in Asia for $10.60/mmbtu based on a Henry Hub price of $4.


The cost of LNG is usually linked to a percentage of the world oil price, but the potential for North America to liquefy its abundant and cheap shale gas and ship it to Asia has raised the tantalising prospect of LNG linked to the much lower US Henry Hub gas prices.

Before Sabine Pass or any of the Gladstone projects come onstream, the $19 billion ExxonMobil-Oil Search venture in Papua New Guinea is expected to begin first LNG exports from its 6.6 mtpa Port Moresby facility in 2014. All of its output is committed to buyers in China (Sinopec), Japan (Osaka Gas, Tokyo Electric Power Co) and Taiwan’s Chinese Petroleum Corp.
This time last year, the expectation was that the first new LNG exporter to enter the market in the 2012-14 period would be the Sonangol-Chevron 5.2 mmtpa Angola LNG plant at Soyo on the west coast of Africa, with first shipments planned for the second half of 2012. But a series of technical issues has pushed back its starting date, with Chevron now saying shipments will begin “in the second quarter of 2013.”

In Algeria, state-run oil and gas company Sonatrach aims to have its expanded LNG export plants at Skikda and Arzew ready in late 2013, mainly to supply Europe. At Skikda, Sonatrach is building a new 4.5 mtpa processing train to replace facilities destroyed in a 2004 explosion, while at Arzew it is adding a 4.7 mtpa train. Another Sonatrach gas project in Algeria, Gassi Touil, may begin shipments in the second half of 2014 – well behind schedule.

Originally, it was to be completed in 2009 under a since-terminated joint venture with Spanish companies Repsol and Gas Natural Fenosa.
Sonatrach also supplies gas to Europe via three pipelines linking Algeria to Spain and Italy.

China, the world’s biggest energy user, takes LNG from Australia and the Middle East, but also relies heavily on pipelines. This month, a new 770 km gas pipeline from Myanmar’s Kyaukpyu port in the Bay of Bengal to Kunming in Yunnan province is expected to become operational, while in July, Turkmenistan will be able to supply more gas into the double-pipe 1830 km Central Asian Gas Pipeline (CAGP) that runs from Turkmenistan to China via Uzbekistan and Kazakhstan.

Russia sends vast quantities of gas to Europe through an extensive pipeline network, and is keen to expand pipeline gas sales to China. Russian state-owned gas giant Gazprom also plans to build an LNG export terminal at Vladivostok by 2018, with Japanese customers in mind.

 http://www.theaustralian.com.au/business/mining-energy/cheniere-reaffirms-lng-export-date/story-e6frg9ef-1226641319855
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Where was I, oh yea, Christy Clark is heading east to sell energy buying contracts when not one energy company has green-lighted any British Columbia project, not even one has even decided to build, several proposed LNG plants are waiting until sometime in next two years before even deciding to go ahead and build, I might not be an economist, however, when LNG plants are coming on stream everywhere, when Cheniere has already signed long-term energy contracts with Japan at 1/2 the price Christy Clark claimed we would get during the election..

Does Christy Clark have permission to match those prices Cheniere has offered?...Can any LNG plants even be built in B.C when the price is now linked to Henry Hub, not linked to oil...What exactly will Christy Clark say?...Will she tell Japan and China that B.C.`s proposed LNG projects might get the nod to start building in 2014 or 2015...Or they may not?

Seems to me it would be a very difficult sell to get anyone to ink a long-term deal for energy buying when there isn`t even a shovel in the ground, and won`t be for years..

We have the BG group proposing to build, but they haven`t made a final decision yet, they have tentatively scheduled a start build date of ..2016 with completion in 2021...

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"BG intends to build a facility on Ridley Island capable of producing 21 million tonnes of LNG a year. Called Prince Rupert LNG, it would be built overseas in modules and shipped to Prince Rupert for assembly.

 Even so, the plant would create 3,500 jobs during construction,

 250 permanent direct jobs and another 250 spinoff jobs.

 BG says it is planning to build it in two phases, beginning in 2016.
The first phase — two seven-million-tonne-a-year processing units, or trains — is to be completed by 2021" 

http://www.vancouversun.com/technology/Group+takes+first+step+building+massive+Prince+Rupert+plant/8351636/story.html#ixzz2SgT5qfkm

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2021 as a proposed start shipping date, that is if they even build the damn thing...That does sound like a tough sale considering more than a dozen LNG plants around the world will be online within 3 years, several this year and several more in 2014...Yet Christy believes she has some clout..ahem..

There is also Petronas...They too are proposing a LNG plant in BC...

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?Malaysian energy giant Petronas has begun early engineering work for a massive British Columbia natural gas export project, and is weeks away from applying to send energy offshore and build a pipeline to the West Coast.

On Tuesday, Petronas said it had contracted three engineering consortia for front-end engineering and design of its Pacific NorthWest LNG project, which the company hopes to build in Prince Rupert, B.C.........



Petronas is one of a large group of giant energy companies pursuing hugely expensive plans to liquefy Canadian natural gas and load it on tankers bound for Asia. The company got its start later than some of its rivals, but said Tuesday it is pressing forward on several fronts.

 It expects to apply to the National Energy Board for a natural gas export permit in the next month; TransCanada Corp., which has agreed to build a pipeline to the coast, expects to submit an application for that project by the end of next week.
Petronas also continues to talk with other potential partners about selling off up to half of its project, in deals expected to be similar to one that saw it give up 10 per cent to Japan Petroleum Exploration last month, for an undisclosed sum.

“We have all the pieces coming together to have a successful project,” Mr. Kist said. Petronas hopes to make a final investment decision by late 2014, and begin exports by 2018.

However, many observers expect only a minority of planned LNG projects to be built. Those interested in the Prince Rupert area, like Petronas, face First Nations hurdles, with numerous overlapping claims to federal port lands there. Cost and complexity are also major issues in designing facilities that could cost tens of billions of dollars. Australia’s booming LNG industry has seen enormous cost overruns, for example.

 http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/petronas-launches-engineering-work-for-bc-lng-project/article12048767/

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Ok, you see the highlighted parts, first off, Petronas isn`t even planning on making a final decision on building this project until late 2014 with completion by 2018...They also use the phrase..

"hugely expensive plans to liquefy Canadian natural gas" 

Can any of these projects go-ahead when the new price structure is now linked to the Henry Hub price...At best these plants need over $10 dollars per unit to break even, yet you can`t pay for the construction of, and the financial carrying costs of these very expensive projects by breaking even, they need a premium price, a premium price for decades, and ..

Christy Clark has mused about a B.C. LNG tax and $trillions going into a massive prosperity fund that will pay off our debt, eliminate tolls, pay off BC Hydro`s debt, BC ferries debt, eliminate tolls and all sales tax..Blathering about all this money coming from an industry that has yet to commit to building anything in BC, with a dozen LNG plants around the world all coming on line and the price already dropping, as highlighted by Japan and Cheniere agreeing to a price of $10.50 per unit, that would be $10.50 delivered, the numbers don`t work at that price, that my friends is the reason why no one is building any LNG plants..

Of course there is the other glaring reality on LNG, the industry is in flux, the industry is divesting themselves of both upstream and downstream assets, they are doing this to recoup their investment...Case in point..

This from the horse`s mouth..

"Petronas also continues to talk with other potential partners about selling off up to half of its project, in deals expected to be similar to one that saw it give up 10 per cent to Japan Petroleum Exploration last month, for an undisclosed sum."

A person needs to ask themselves some important questions, if this industry has such potential, a potential for $trillions of dollars why would Petronas be looking to sell their assets? And Petronas isn`t alone in dumping assets........That answer is simple, it`s called Wall Street LNG bears that promoted this fiction to Governments around the world, massive outlays of cash from bankers and hedge funds, $billions invested by suckers in this pipe dream and they want their money back, everyone is wheeling and dealing to get out their commitments without bursting the LNG fantasy bubble..

Andrew Nikiforuk authored some Straight Goods raw data...

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"A former investment banker says the explosion in shale gas development, such as frenzied activity in northern B.C., was a financial mania largely driven by Wall Street bankers intent on capitalizing upon a record $46-billion worth of mergers and acquisitions that shook up the troubled industry in 2011.

In an attempt to meet unrealistic financial production targets (and please Wall Street), the industry drove natural gas prices to uneconomic lows in recent years, throwing the entire industry and its backers into panic mode, says Deborah Rogers in a startling new report for the Energy Policy Forum.
Rogers, who once worked as a financial consultant for Merrill Lynch and is a member of the U.S. Extractive Industries Transparency Initiative (USEITI), adds that shale gas reserves have been vastly overestimated and overhyped. 
for resource owners such as the people of British Columbia.

Moreover, new data confirms rapid decline rates and poor recovery levels, which means limited revenue"

 http://thetyee.ca/News/2013/02/20/Natural-Gas-Gluts/

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What we are witnessing, or should I say witnessed is Wall Street fraud again, screwing investors and countries alike with a scheme very reminiscent of the mortgage-backed securities fraud that damn near sunk the world, Wall Street is at it again..!

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 "The controversial technology, which is more capital and energy intensive than conventional gas, allowed firms to access previously uneconomic deposits of gas and blast them apart with high-pressured volumes of chemicals, water and sand. 

An investment frenzy then drove the price of natural gas to record highs and bid land parcels up to outrageous prices. Investment banks promoted the mania even though industry had at the time little or no data on the life, quality and productivity of shale wells over time.
Intense drilling resulted in a massive glut of natural gas that dropped natural gas prices to all-time lows, forcing highly indebted companies such as Encana and Chesapeake to sell off assets and do merger deals with foreign firms.
Opening door for global deals

"It is highly unlikely that market-savvy bankers did not recognize that by overproducing natural gas a glut would occur with a concomitant severe price decline," explains Rogers.

"This price decline, however, opened the door for significant transactional deals worth billions of dollars and thereby secured further large fees for the investment banks involved."

 http://thetyee.ca/News/2013/02/20/Natural-Gas-Gluts/

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Can`t you see what has happened, remember the record profits for land leases the province of British Columbia received in 2006-2007-2008, $billions per year in land leases, that was the only time in the last 12 years that the BC Liberals ran surpluses, it was exactly what was discussed above, now BC`s land sales are virtually nothing, companies have millions of acres of land that they aren`t even drilling on now..

Let me refresh your memory, let`s go back to 2008, let`s talk land sales for oil n gas in northeatern B.C.

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"In the Energy Plan we stated that we would make B.C. among the most competitive oil and gas
jurisdictions in North America. We’ve delivered. Since 2001, the oil and gas industry in B.C. has seen
unprecedented growth and investment.
 In 2008, oil and gas rights sales hit a record high of $2.66
billion. Additionally, B.C.’s established natural gas reserves have increased for the tenth straight year.
The Province has introduced programs to attract new investment into northeastern B.C. and its rich natural gas plays, including incentives to companies that drill outside the traditional winter drilling season,
funding for upgrades to the Sierra Yoyo Desan road, and improvements to our existing royalty programs." 
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 Now let`s jump to 2011/2012/2013...Let`s examine those land sales, the numbers, how puny they are,....You will see that everything discussed above about Wall Street and bankers playing everybody as pawns is true, what Andrew nikiforuk and Mmr. Rogers discussed was true...Check out these land sale numbers..

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"Oil and gas rights sales netted the B.C. government $115 million for the fiscal year just ending, which is about half of what they were in 2011 and 2012.

Revenue generated through bonus bids for March was $41 million through the sale of leases for 25 land parcels in Northeast B.C., according to the Ministry of Energy, Mines and Natural Gas.

Nineteen parcels were sold with an average price of approximately $3,550 per hectare.

That's up compared with March 2012, but down by more than half on an annual basis. In March 2012, sales generated just $24.3 million. But sales were much higher for the 2011-2012 fiscal year at $287 million.


Energy Minister Rich Coleman said, "This month's land sale is another sign that our natural gas is stimulating interest from both Canadian and international investors."

That interest has, in fact, been tailing off in recent years, for two reasons: much of the most productive shale gas lands have already been locked up, and low natural gas prices have meant gas producers have been cutting back on investments.

The revenue generated from land sales in B.C.'s gas fields have fallen dramatically since 2008, a bonanza year that generated $2.66 billion for the province through land sales.
In 2011, sales had fallen to $222 million."

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So what we are witnessing is British Columbia and the energy companies getting caught up in another Wall Street fraud, now these energy companies are making lots of noise but doing nothing, all that is happening is mergers and acquisitions as everyone is trying to cut their losses, and this scam was perpetuated by a compliant Christy Clark and BC Liberal Government, an election ruse, there will be no prosperity fund, no elimination of the debt through LNG..The future generations are going to be very disappointed, those who voted for this fantasy are in for a very rude awakening..
The big winner in this scam?..You guessed it, Wall Street and da bankers..
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 "As soon as operators realized the short life span of shale wells, they began to download assets in 2009. The primary players in one of the first shale gas booms, the Barnett play in Texas, including Encana, Range Resources, Chesapeake and Quicksilver Resources, sold off most of their assets by 2011.
In recent years Wall Street banks helped a wave of foreign energy companies including Chinese, Norwegian and Japanese firms buy up shale oil and gas leases across North America, even though too few wells had been drilled to assess their longevity and quality.


"Shale gas accounted for $46.5 billion in deals in the U.S. alone in 2011," explains Rogers. "The mergers and acquisitions market for shale assets exploded in the prior two years directly in sync with the downward descent of natural gas prices. In much the same way as mortgage backed securities bolstered the banks' profits before the downturn, energy M&A had now become the new profit centre within these banks."

Meanwhile, a variety of shale gas companies are beginning to post write-downs and losses while other firms have not renewed their leases or slowed down drilling altogether. Most firms switched to exploiting natural gas liquids in shale plays and then drove down the price of that resource too."

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Where was I, Christy Clark is heading to the orient to ink energy buying contracts for LNG operations that don`t exist today, and won`t exist for  least 6 to 8 years, or more likely never, and even if one or two LNG plants get built it`s very unlikely that any of the advertised largesse will come to fruition..

Natural gas is everywhere, Russia has increased natural gas pipeline capacity directly into China, east Africa is swimming in gas, China has a 300 year domestic supply, and British Columbia is years behind a myriad of countries like Australia, Qtar, Russia, East Africa in LNG export plant development, in fact not only are there no shovels in the ground in British Columbia nobody has even said yes to building a plant....Those building commitments are years off, who is going to finance these ventures, what bankers are willing to put their money on the line, especially when British Columbia is so many years behind a dozen plus other operations coming online..And with the new price linked to the Henry Hub rate?

And just in case you haven`t heard...Japan and Korea are sitting on a 300 year brand new energy source...And they have tapped it...

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Japanese gas extraction threatens Australian LNG outlook

"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."

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"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. 


Jogmec estimates that the surrounding area in the Nankai submarine trough holds at least 1.1 trillion cubic meters, or 39 trillion cubic feet, of methane hydrate, enough to meet 11 years’ worth of gas imports to Japan.
A separate rough estimate by the National Institute of Advanced Industrial Science and Technology has put the total amount of methane hydrate in the waters surrounding Japan at more than 7 trillion cubic meters, or what researchers have long said is closer to 100 years’ worth of Japan’s natural gas needs." 


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Well, this definitely looks like a problem for Christy Clark, ....Japan, those industrious Japanese people have a hundred plus year supply of their own energy..And Christy Clark thinks she can go overseas and sell long-term energy contracts?.... Perhaps somebody might want to tell Christy Clark we don`t actually have any LNG for sale, we don`t actually have any shovels in the ground, and we don`t actually have any projects scheduled to even be built...

Good luck with that Christy...

Too-bad our mainstream media is gutless, incompetent, and useless...

I wonder when they will tell the voters the bad news?







The Straight Goods

Cheers Eyes Wide Open

9 comments:

Anonymous said...

This Liberal government can wear this LNG boondoggle and won't they look fucked in it. I wonder who will defend them and their outrageous campaign promises?
If the public just stopped looking at their TeeVee's and smartphones for more than an hour a day they might know what the fuck is going on in this province.

Hugh said...

"New Democrats should announce they recognize the will of the people and that they won’t be opposing Clark when the byelection is called."

http://www.vancouversun.com/opinion/editorials/Premier+should+free+pass+legislature/8421498/story.html

Grant G said...

The Vancouver Sun can go fuck themselves..

The opposition duty is to oppose..

The Vancouver Sun doesn`t have the balls or any talented journalists to report the real facts.

All they have are sell-outs like the scab Vaughn Palmer..Vancouver Sun`s Yin to The Province`s Yang ..That being Michael knee pads Smyth.

Neither of those clowns can hold a candle The Straight Goods..Or Laila, or Ross K...

Hugh...This whole LNG scam is very soon gonna blow up on the BC Liberals..

Picture this..the year is 2017 and no LNG plants are even under construction yet.

As written here..How come nothing is under construction, how come final decisions as to build are years out?

Riddle me that


Cheers

Anonymous said...

Taxpayers made it clear that CC is poison. She is unelectable, period.
But if she convinces one of her mla's, this would be another $800K wast of taxpayers money.
It's a joke and she's a joke! A really bad joke.

Hugh said...

Gasoline in my town just jumped to $1.41/L.

If BC has lots of natural gas, why not convert cars and trucks to run on it?

Nat-gas is already delivered to most houses.

e.a.f. said...

Christie off to Asia to sell natural gas. Is she having beans before she goes? Some of the players you mention in the article are big time players with years of experience in doing these types of deals. Just how the hell does Christie Clark go about all of this business. She simply doesn't have the background or expertise. This should be funny.

With so much natural gas coming on line, contracts and deals have already been made. No one is going to wait for some distant date with a government which may not be there in 4 yrs and has no record of doing anything properly. If the corporations/countries do make deals with B.C., we will be at the loosing end of those deals. These people know how to do business, not Christie and Pammie.

What many have not considered, if christie and pammie really fuck up, there could be recall caimpaigns. Then no christie, no lieberals, hi NDP or Conservative or Green.

All of this reminds me of back in the day when coal was king and then Australia and others got into the game. The next thing we knew, Japan wanted lower prices from B.C. if they were going to continue to purchase coal from B.C. LNG won't be any different.

On the bright side of things, you and the other bloggers will not want for material to work with.

kootcoot said...

"What many have not considered, if christie and pammie really fuck up, there could be recall caimpaigns."

I really doubt it, if the public couldn't understand and grasp the criminal nature of the Rape of the River IPPs or the theft of BC Rail enough to not RE-effing-ELECT these assholes with an increased majority, the idea of the public not believing anything Christ says about sparkle pony natural flatulence is laughable.

Grow a garden, get out of the city and arm thyself (to protect your garden from city carpetbaggers after the collapse)..........bad times are coming!

G.W. Andrew said...

This is a very comprehensive piece of journalism. i appreciate it and offer my thanks. The problem is, you're right: We've been fooled again.

i Also wanted to add that a new premier invariably has to go over and grovel at the feet of the foreign financiers who buy/own most of the mountains of bcgov debt/bonds. They liked to be assured that all of their capital is safe, with interest.

After that, the austerity train's a-comin' round the corner i'm afraid.

Cheers.

Anonymous said...

It amazes me that #faucetonfire has not been created yet. OR HAS IT?