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Northern Gas Pipelines is your public service 1-stop-shop for Alaska and Canadian Arctic energy commentary, news, history, projects and people. It is informal and rich with new information, updated daily. Here is the most timely and complete Arctic gas pipeline and northern energy archive available anywhere—used by media, academia, government and industry officials throughout the world. Northern Gas Pipelines may be the oldest Alaska blog; we invite readers to suggest others existing before 2001.  -dh

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5-22-15 EPA Broke The Law When It Preemptively Attacked the Pebble Project.

22 May 2015 6:31am

Many friends of
"Alaska's Diplomat", Chuck Becker, have commented on the important life he led, including his energy industry understanding.  (Note: we will remove or edit any comments at the request of commenters.  -dh)

Canada's Fraser Institute analyzes how US loss of freedom affects economic recovery...and wonders how Alberta's new government will affect energy industry vitality.

 EPA's Pebble Blame Game

Wall Street Journal
(Write "Pebble" and/or "Federal Overreach" and/or "Rule of Law" in our NGP Google search engine, upper right.  You will find our many references, like this one, to the Pebble project.  We are grateful to the Wall Street Journal and Ms. Strassel for these excerpts and for airing this matter so well in today's issue.  We also appreciate alert readers like Dan Kish in Washington D.C. for alerting us first thing.  -dh)



May 21, 2015 7:24 p.m. ET

Government agencies have a certain descending order of excuses....  (Subscribe and read full WSJ article here.)

The EPA has a problem: its pre-emptive veto of the Pebble Mine, a proposed project in southwest Alaska. The law says that Pebble gets to apply for permits, and the Army Corps of Engineers gets to give thumbs up or down. The EPA, a law unto itself, instead last year blocked the proposal before applications were even filed. The agency claims .... (More....)

This column reported a week ago on EPA documents that tell a very different story. They reveal the existence of an internal EPA “options paper” that make clear the agency opposed the mine on ideological grounds and had already decided to veto it in the spring of 2010—well before it did any “science.” Emails showed an EPA biologist, Phil North..., (More....)

None of this looks good, and in a nearby letter EPA Region 10 Administrator Dennis McLerran is already bringing up semantics. According to the EPA—and other environmental groups now picking up the same line—the agency didn’t “veto” the project, but ....

In a conversation with me last week, Mr. McLerran also turned to the “underlings did it” excuse. Asked about the options paper ....  It is a preliminary document, done by lower level staff.”

On June 7, 2010, Michael Szerlog, manager in the EPA region’s aquatics resources unit.... The message mentions Mr. McLerran....  (More....)

On June 15Kendra Tyler, special assistant in Mr. McLerran’s office, wrote to EPA staff: “I know that Dennis would like a briefing on the options paper soon . . .” On June 30, Mr. North emailed colleagues to explain that: “The only time the RA [Regional Administrator] is available to discuss the options paper before he visits Bristol Bay is Thursday . . . ” Later that day, Matthew Magorrian, also in the regional office, told a big group of EPA employees that “DM already has draft of options paper.”

...the list of EPA employees who make up the core group discussing the options paper are not a bunch of low-level chemists and permit writers. ...Mike Bussell, then the director of the EPA’s Office of Water and Watersheds in Seattle; David Allnutt, then acting regional counsel; Linda Anderson-Carnahan, then acting associate director of environmental cleanup; Tami Fordham, then policy adviser. Mr. McLerran says no “key decision makers” saw the options paper. ... (More....)

Several of those included in these email chains would go on to take active roles in performing the EPA’s “watershed assessment” of the mine project. Ms. Fordham is listed as a contributor, as is an EPA officer named Richard Parkin. ... Mr. McLerran says “key decision makers” decided to perform three years of “science” on Pebble. But it turns out those doing the science were those who had already decided to block the mine.

The EPA offered this statement on Thursday: “It is a normal part of EPA’s deliberative decision making....” (More....)

The EPA is worried because it is getting blowback that goes beyond public disapproval of its abuse of power. In November a court ordered ....  The agency is right to be worried; its Pebble veto is a scandal.  (More....)

Fraser Institute lends understanding to Canadian and US economies and energy industries.  Here are recent reports:


Here is how we memorialized the passing yesterday morning of our great friend, Chuck Becker.  Because of his work ethic, kindness, patience, diligence and patriotic labor in support of Alaska and the nation, we discovered the breadth and depth of the public comments made on various web pages.  We are delighted to assemble these for the convenience of friends and family so that they might live on in our Northern Gas Pipeline archives:


5-21-15 In Memoriam: Chuck Becker; Our Recent Commentary Reverberates

21 May 2015 6:35am

Today's News and Commentary

In Memoriam

Point of personal privilege: Our great friend, Chuck Chuck Becker, In Memoriam, Photo by Dave Harbour, Alaska Support Industry Alliance, World Trade Center, World Affairs CouncilBecker, passed away this morning (Photos).  Today, family and countless friends are mourning his passing.  We will attempt to provide more official information as the family makes it available.

Chuck and I met in the mid-1970s in Washington D.C.  Another dear friend, the late Anchorage Mayor George Sullivan was his client and I was representing the first North Slope gas project, the Arctic Gas Consortium, with Washington and Anchorage offices.

After Chuck had moved to Anchorage and completed his economic development assignment with the Sullivan administration, and I had joined Atlantic Richfield Company, he and I worked on some communication projects.  He soon became a respected communications consultant to some of the most important businesses in the 49th state.

Chuck was deeply involved in support of reasonable development of Alaska's resources through leadership positions with the Alaska Support Industry Alliance and after years of service was named "Director Emeritus".

A veteran of the United States Department of Commerce, he served as the long-time director of the Alaska Export Assistance Center, revered for his accomplishments by the Alaska World Affairs Council which he also served as a director and past president.

Indeed, I have always considered Chuck to be deserving of the title, "Alaska's Diplomat"; for his every mission at home or abroad uniquely reflected great credit upon the United States, Alaska, his personal integrity and his own considerable abilities.

I believe the world, the country and the State of Alaska are better for having hosted the life of this dedicated man.

I believe that Chuck's friends and family will remember him as much for his patient, gentle and principled nature as for his professional accomplishments.  

I also believe those memories will be enduring: multiplied and cherished many times over in the hearts of family and friends as their own years of service continue.  




ISER Publication: The Path to a Fiscal Solution: Use Earnings from All Our AssetsScott Goldsmith, ISER, Alaska Permanent Fund, Fiscal Crisis, Photo by Dave Harbour

By: Scott Goldsmith, NGP Photo

Our Commentary Last Week Continues to Reverberate  

One of our commentaries last week was edited and reprinted by the national, Master Resource Blog, and concluded with a number of interesting reader comments.  (It was followed by a more heavily researched piece dealing with the environmental strategy to defeat capitalism.)

From Master Resource, it was adopted into an Austrian Economics Addict editorial: "In this article by Dave Harbour titled, Seattle Hearing On Shell’s Arctic Rig Docking: A Clash Of Visions, he talks about the differences between the two sides in this battle. Here are some excerpts from the article.

“If our civilization is to continue, our well-grounded public and private leaders need to wake up and undertake communication programs designed to better articulate...."

*     *     *

Would we like to see your reaction?  Yes we would, and we will reprint or link selected submissions.

Readers wishing for a more in-depth look at the role of environmental armies in securing their avowed goal of 'the destruction of capitalism' may be interested in our less politically correct editorial last week, "Useful Idiots".


Calgary Herald Editorial:  Everyone seems to agree that more pipelines are needed to carry Alberta bitumen to new markets, so let’s hope premier-designate Rachel Notley puts a lid on any further talk that could endanger approval of Enbridge’s Northern Gateway project.

Today's Energy Links by Larry Persily:

B.C. agrees to fiscal terms with Petronas for LNG project
(Wall Street Journal; May 20) - The province of British Columbia and Malaysia’s state-owned energy company Petronas on May 20 said they had agreed on fiscal terms to promote construction of a liquefied natural gas export terminal near Prince Rupert.  
First Nation opposition presents legal question for LNG project
(Business in Vancouver; May 19) – The decision by the Lax Kw’alaams First Nation in British Columbia not to accept an offer from Pacific NorthWest LNG raises a number of questions, such as whether Petronas, which has yet to make an investment decision, might cut its losses if First Nations mount an all-out battle. 
Companies deny Wood Mackenzie report of delays for Australia LNG
(Bloomberg; May 19) - Chevron and Japan’s Inpex Corp. face potential delays in starting liquefied natural gas projects in Australia, according to consulting firm Wood Mackenzie. Chevron’s Wheatstone and Inpex’s Ichthys ventures could start output in mid-2017, later than the companies forecast, Angus Rodger, Asia-Pacific analyst at Wood Mackenzie, said in an interview....
U.S. exports could help push LNG market toward more spot sales
(Bloomberg; May 19) - The U.S. is about to change the global LNG market. When the first tanker carrying liquefied natural gas leaves Cheniere Energy’s Sabine Pass terminal in Louisiana in December, it will turn traditional consumers into new traders with more bargaining power. 
Cheniere says it is talking with LNG buyers in China
(Reuters; May 19) - Chinese buyers are eyeing long-term supplies of liquefied natural gas from Cheniere Energy’s U.S. export operations....
Tokyo Gas looks to invest in more U.S. production as price hedge
(Reuters; May 18) - Tokyo Gas, Japan's biggest gas utility, is looking to invest in more U.S. shale gas production ....
GAIL signs preliminary deal to sell some of its U.S. LNG to Shell
(Reuters; May 20) – GAIL, India's largest state-owned natural gas distributor, has signed a preliminary deal to sell some of its contracted volumes of liquefied natural gas to Shell....
Proposed Nova Scotia LNG project gains provincial permit
(The Chronicle Herald; Halifax, Nova Scotia; May 19) - After an environmental assessment, Nova Scotia’s provincial environment minister has granted Bear Head LNG approval to build an 8-million-tons-per-year liquefied natural gas plant. 
Australia’s LNG industry has its share of worries, survey says  
(Sydney Morning Herald; May 18) - A lack of competitiveness, unwieldy regulations and inflexible industrial relations threaten to derail a bonanza from the liquefied natural gas sector in Australia as it transitions from a $250 billion investment phase into production. 
BHP says Australia LNG project ‘falls lower’ on its list of priorities
(Bloomberg; May 17) - BHP Billiton is lowering the priority of its proposed $10 billion Scarborough liquefied natural gas project with partner ExxonMobil in Australia amid a fall in prices and ....  
Natural gas industry faces increasing opposition to pipelines
(USA Today; May 17) - The U.S. is producing record amounts of natural gas.... But building the infrastructure necessary to bring that fuel to market is increasingly difficult.  
North Dakota farmers, ranchers frustrated over salty wastewater spills
(Wall Street Journal; May 16) - For most of the years since wildcatters began tapping the North Dakota prairies for oil, energy companies have existed peacefully with the farmers and ranchers ....
State legislatures act to protect drilling from local restrictions
(Wall Street Journal; May 19) – A Texas city last year banned fracking; state lawmakers want to make sure that never happens .... 
Yukon Territory gold mine would consider using LNG for power
(CBC News; May 16) - Kaminak Gold Corp. is aiming to finish a feasibility study for its Coffee Gold project near Dawson City....
Yukon First Nation will invest in LNG-fueled power plant
(Yukon News; Whitehorse, Yukon Territory; May 15) - The decision to invest in Yukon Energy’s liquefied natural gas-fueled power plant in Whitehorse, the Canadian territory’s capital city, is supported by the Kwanlin Dun First Nation community, according to ... Chief Doris Bill.... 
Oil exports to Canada help ease pressure on U.S. storage capacity
(Wall Street Journal; May 19) – Crude oil exports to Canada provided a crucial relief valve for U.S. producers this year, according to a new report from ...



20 May 2015 5:40am

Gone fishing today..., with your approval!  :-)


More Alaska Oil Industry Angst Approaches

19 May 2015 6:33am

Attend the Annual Alaska Oil & Gas Association Luncheon!  Show support for a sustainable future!

Our Instinct: Conservatives Must Seize Opportunity To Save Alaska's Economy 


Dave Harbour

Please read news items below

Lisa Murkowski, 75% chance of arctic oil spill, myth, Dave Harbour PhotoWe admire Senator Lisa Murkowski's vigilance on Arctic exploration issues -- and the initiative of her committee's Communication Director, Robert Dillon.  See TODAY'S COMMUNICATION AND VIDEO HERE.

Many moons will come before Shell Oil and other producers, under the most agreeable circumstances, can find and commercially produce oil and natural gas from Alaska's Arctic reservoirs in the Chukchi and Beaufort Seas.

Any Arctic discovery and production may not likely come in time to ameliorate diminishing Alaska production that funds 90% of state government and over 1/3 of the state economy.

The impressive but modestly increased production within the onshore National Petroleum Reserve-Alaska (NPR-A) is clouded by the Bureau of Land Management's decision to lock up half of its remaining potential and continuous/agenda driven EPA and Corps of Engineers efforts to deny and/or delay permits.  

The federal bureaucracy opposes the 1980 intent of Congress and is acting illegally to manage a Refuge like a Wilderness.  The Alaska National Interest Lands Conservation Act (ANILCA) re-categorized  the Arctic National Wildlife Range (into a more restrictive "refuge"), but allowed a future Congress to approve oil exploration and production in a small sliver of the coastal plain of ANWR.

We know that even existing, high cost projects can be lost overnight with imposition of new or increased taxes.

Meanwhile, Alaska's North Slope oil production continues its slide downward exacerbating negative impact on Alaska state government revenue during this low oil price era.

This week we observe that (below) the Governor's reaction to an austere budget is not using his bully pulpit to convince democrats to join the republicans in voting to access billions stored in the 'Constitutional Budget Reserve' (CBR) savings account to balance the budget.

Instead, he is joining the democrats, browbeating the republican leadership to agree to increasing democrat-desired government spending as a quid pro quo to democrats agreeing on a super majority CBR vote.

Together, the Governor and democrats are pressing for more spending, not less, in today's austere fiscal environment.

And, they know exactly what they are doing.  They are together trying to assemble popular support for increasing oil taxes during next year's legislative session, because 1) that would minimize the need for large spending cuts, and 2) THAT IS WHERE THE MONEY IS.  

The problem with increasing the already high Alaska oil tax burden, is that it would discourage if not devastate oil industry investment that could otherwise produce a sustainable amount of future production and financial support for a moderate spending taxing authority.

Our instincts all point to the need for more effective communication.

Conservatives better become better communicators if they hope to explain why their tough approach on the budget is best for Alaska now and for future generations.

They could start by requesting editorial board meetings and giving reporters their personal cell phone numbers.

If they don't quit dodging reporters and don't become superior communicators quickly they will find that the current name calling will escalate.  The Governor and democrats will likely initiate a summer program of constituent meetings around the state.  They will probably ask folks how they think Alaska will solve its fiscal shortfalls.

Renewed demonization of industry and the legislature's republican leadership can easily be reignited; as could a new voters referendum.

And community organizers can produce crowds for constituent meetings and listening sessions that will demand, "Increase oil taxes"!!!!   

Compelling conservative spokesmen need to articulate -- soon and often -- the wiser, approach to dealing with:

But making silk purses out of sows ears requires a miracle.  Our instinct further advises us that it is unlikely the republicans will successfully make the case for tax stability and fiscal restraint. If they wanted to or had the ability to, they would have been doing so every day and twice on Sunday for the last month.

While there are several very noteworthy exceptions, as a group the republican legislators are uncharismatic, unenergetic, unimaginative, uncompetive and rely on demographic majorities for reelection and support.  

While there are many noteworthy exceptions, their democrat opponents are aggressive, young, seek out the media, and have fire in the belly.  

As a group, democrats have the further advantage, as we've said, of believing and acting on the precept that, "The end justifies the means".

Political instinct teaches that democrats see a day ahead, when with aggressive and effective communications, they can seduce the entitlement generation into putting them into power throughout Alaska...and, indeed, the country.  They've already done so within Anchorage city government.

And, for republicans with memory, that will have been an opportunity mis-handled THIS YEAR and countless opportunities lost for the remnants of future generations.

How we hope our instincts are wrong!

ADN, by Dermot Cole.  

A state plan aimed at speeding the transition to natural gas in Fairbanks reaches a key decision point Tuesday, with the Alaska Industrial Development and Export Authority scheduled to consider a $54 million investment to move the project forward.

The AIDEA board, set to meet in Anchorage, is to hear a report recommending the agency buy Pentex Natural Gas Company LLC, the parent company of the Fairbanks Natural Gas utility, for $54 million, with a closing expected by the end of July. The sale price would be reduced by about $15 million through the spinoff of the company’s Point MacKenzie liquefaction plant and other assets to Hillcorp later this year.

ADN by Dermot Cole.  An annual multibillion-dollar debate between oil companies and local municipalities about differences in the taxable value of the trans-Alaska pipeline resumed in Anchorage Monday.

The oil companies argue the 38-year-old pipeline is worth $2.6 billion, while the municipal governments of the North Slope, Valdez and Fairbanks say it is worth about six times that much, in large part because billions of barrels of profitable oil remain to be pumped to Valdez in the decades ahead. The state is arguing for a value three times higher than that favored by the companies.

Bill Walker, Dave Harbour PhotoNews Miner.  Gov. Bill Walker on Monday vetoed much of the underfunded operating budget sent to him by the Alaska Legislature and warned state employees that 15,000 of them could be without a job on July 1 if the Legislature can't come up a fully funded budget.

Peninsula Clarion by Phuong Le.  (Note our extensive coverage by scrolling down through last week's postings.  -dh)

Neither a protest by hundreds of demonstrators nor a permit violation notice from the city will halt Royal Dutch Shell's use of a Seattle seaport terminal as it prepares for exploratory oil drilling in the Arctic Ocean, spokesmen say.

The violation notice issued Monday by the Seattle Department of Planning and Development said use of Terminal 5 by a massive floating drill rig was in violation of the site's permitted use as a cargo terminal. The 400-foot Polar Pioneer and its support tug Aiviq must be removed from the terminal or Shell's host, Foss Maritime, must obtain an appropriate permit, the city indicated. 

Robert Dillon, US Senate Committee on Natural Resources and Energy, Murkowski, Photo by Dave HarbourToday's Note From Robert Dillon (NGP Photo), Communication Director, U.S. Senate Committee on Energy and Natural Resources:

There’s been lots of misinformation out there about what the Bureau of Ocean Energy Management (BOEM) has said about the safety of offshore Arctic development in Alaska. Let the attached fact sheet from BOEM set the record straight – it is not accurate to say there is a 75 percent chance of an oil spill from Shell’s Arctic exploration. Period.

The fact is that Alaska has a long history of safe and responsible oil and natural gas production in the Arctic. Some 35 wells have been drilled in Alaska’s Arctic waters since the 1980s. But you wouldn’t know that by listening to the opponents of oil production who claim Arctic drilling can’t be done safely. Hogwash.   

To date, Alaska has produced and shipped more than 17 billion barrels of Arctic oil through the trans-Alaska oil pipeline. We’re already producing oil from federal waters at the Northstar field, which was discovered in 1984 and has produced more than 150 million barrels of oil since 2001.

And our state – with an estimated 46 billion barrels of conventional oil reserves and 430 trillion cubic feet of natural gas reserves – has much more to offer the nation. Studies suggest that increased leasing and development in Alaska’s Beaufort and Chukchi seas and in Cook Inlet could, by 2035, create nearly 840,000 jobs, raise more than $200 billion in revenue for the government and increase U.S. energy production by 3.5 million barrels.

Even President Obama agrees that Alaska production is good for America: “I would rather us – with all the safeguards and standards that we have – be producing our oil and gas, rather than importing it, which is bad for our people, but is also potentially purchased from places that have much lower environmental standards than we do.” – President Obama, May 14, 2015.


Our friend, Julie Hasquet offers this heads up about the upcoming luncheon of the Alaska Oil & Gas Association (AOGA).

"This annual event is the best place to learn all of the latest information, facts & figures about what is happening in Alaska’s oil and gas industry.  This year’s opening remarks are from U.S. Sen. Lisa Murkowski,  and the keynote speaker is Adam Sierninski, Administrator of the U.S. Energy Information Administration.

The 2015 luncheon is Thursday, May 28 at 11:30 am at the Dena’ina Center in Anchorage. If you haven’t already, please take the opportunity to  consider buying a table for you and clients...or individual tickets. You can register at www.aoga.org.



5-18-15 New EIA INTERNATIONAL Portal; LNG Links Courtesy of Larry Persily

18 May 2015 7:30am

EIA launches redesigned International Energy Portal

Today, the U.S. Energy Information Administration (EIA) launched a redesigned International Energy Portal to improve access to international energy data and trends in global energy markets.

"With most of the future growth in energy consumption expected to occur outside of the United States and with increasingly interconnected world energy markets, a clear perspective on the international energy landscape is critically important, and EIA's redesigned International Energy Portal makes it easier to gain insight into global energy developments," said EIA Administrator Adam Sieminski.

From our Energy Information Agency mail TODAY: 

Earlier we commented that the 'Usefull Idiots' motivated by idealism are used by manipulators desiring power would use any means to attain their end.  Here is TODAY'S Seattle Times report of how the illegal protesters are violating laws and trespassing.  We await word of who funds and organizes the Seattle community of organizers, most of whom slink under the "broad tent" of democrats though in similar organized protests like "occupy" they have more specifically identified themselves as anarchists, liberals, socialists, communists, community activists, etc.

Is a major manipulator and funder of the Ferguson riots, George Soros, also behind Seattle?  We'll undoubtedly find out as the dust settles. 


LNG Links Courtesy of Larry Persily:

Larry Persily, LNG, Alaska, Federal Coordinator, ADN, DOR, Photo by Dave Harbour

First Nation rejection forces Petronas to find Plan B for LNG terminal
(Globe and Mail; Canada; May 13) - Pacific NorthWest LNG is scrambling to come up with a Plan B after the Lax Kw’alaams First Nation soundly rejected the Malaysian-led project’s $1 billion offer aimed at securing support for a liquefied natural gas terminal proposed near Prince Rupert, B.C. The company said project leader Petronas and its five Asian partners are willing to make changes. A key option is to relocate a planned suspension bridge and trestle the First Nation said was too close to the environmentally sensitive salmon habitat in Flora Bank, part of the Lax Kw’alaams’ traditional territory.
“It’s about doing the right thing,” Pacific NorthWest LNG president Michael Culbert said May 13. The overwhelming opposition by Lax Kw’alaams members in three rounds of voting illustrates the many hurdles — from aboriginal criticisms to environmental concerns — that even the most prominent project among 19 LNG proposals in British Columbia must clear before becoming reality. The lure of the money, which would have been spread over 40 years, was not enough to overcome the Native group’s concerns.
One possible change for Pacific NorthWest is to move the planned suspension bridge and trestle farther away from Flora Bank. The bridge would support pipelines moving LNG from the onshore plant to a deep-water berthing site for carriers to load up. While the Petronas-led group’s defeat does not sound the death knell for B.C.’s fledgling LNG industry, it is a warning that aboriginal people will vigorously defend their traditional territory against projects that they believe would place fish stocks at risk.
First Nation chief says environmental protection must be guaranteed
(Globe and Mail; Canada; May 17) – An aboriginal leader in British Columbia said First Nations will continue to oppose oil and gas developments even if it means rejecting billion-dollar pay-outs — until environmental protections are guaranteed. Setting a high — if not impossible — bar for corporations such as Pacific NorthWest LNG, which is trying to move ahead with a liquefied natural gas terminal, Grand Chief Stewart Phillip said a community vote to reject the development was a clear sign that both business and government must reject their “gold rush mentality” for a more sustainable approach.
“Our elders remind us that money is like so much dust that is quickly blown away in the wind,” said Chief Phillip, “but the land is forever.” Last week, the Lax Kw’alaams First Nation members overwhelmingly rejected an offer of more than $1 billion in cash, plus more than $100 million in Crown land, in exchange for supporting the Pacific NorthWest LNG terminal near Prince Rupert. The First Nation contends the project would endanger the habitat of juvenile salmon in Flora Bank, which falls in their traditional territory.
“The traditional way of life of the Lax Kw’alaams people and, most importantly, the delicate marine ecosystem that upholds and has upheld their culture for thousands of years, is not for sale,” the chief said. First Nations are also speaking, he said, for “British Columbians who are not willing to accept any unnecessary risks for the interests of transnational corporations and their profits.”
Delays will keep Australia LNG off the market, says Wood Mackenzie
(Wood Mackenzie; May 14) - The first cargo from the world's inaugural coal-seam gas-to-LNG train was delivered at Queensland Curtis LNG in January 2015 and much more capacity is under construction around Australia, but delays in several liquefied natural gas export projects in the country will mean that 11 million metric tons less LNG than expected (about 520 billion cubic feet of gas) will be produced between 2015 and 2019, according to global energy consultancy Wood Mackenzie.
The coal-seam gas projects in particular will soon be tested, Wood Mackenzie said, and of particular concern is how each operator will ramp up a significant volume of gas in a very short time. “The most productive wells will supply the first train of each project, but risk remains around the deliverability and consistency of the following supply tiers that will feed the second trains.”
BG has managed the first train at its Queensland project well so far but a key uncertainty is the speed and consistency of the ramp-up of the gas supply to the second liquefaction train, Wood Mackenzie said. “About 1,000 wells will need to be drilled each year to maintain momentum, but the ability of operators to manage this activity as well as operate an LNG plant has not yet been tried.”
Australia’s Woodside signs up to buy LNG from Corpus Christi plant
(The Australian Business Review; May 14) - Woodside Petroleum will proceed with a 20-year deal to purchase 850,000 metric tons a year of liquefied natural gas (about 40 billion cubic feet of gas) from Corpus Christi Liquefaction, a subsidiary of Cheniere Energy. The deal was first announced last year, but was dependent on a series of conditions including construction of two production units at the Corpus Christi project in Texas. Cheniere has given the go-ahead to start construction of the first unit.
The plant is planned to include up to three LNG trains and produce 13.5 million tons of LNG annually. Despite a sharp fall in oil prices since the deal was first flagged in mid-2014, Woodside said there are no changes to the terms outlined at that time. Woodside will pay Cheniere 115 percent of the monthly Henry Hub price for gas acquired to fulfill its contract (the 15 percent add-on is to cover gas used in the liquefaction process), plus $3.50 per million Btu for liquefaction, storage and loading. (That equates to $4.35 Australian at May 15 exchange rates). Woodside will handle shipping.
The terms are in line with contracts signed by other Corpus Christi customers. The 20-year agreement includes an extension option of up to an additional 10 years and a mechanism that gives Woodside the option to forgo deliveries with sufficient notice, though it would be required to pay Cheniere the $3.50 per million Btu charge even if it doesn’t use its reserved plant capacity. Cheniere expects Corpus Christi to start up its first train in 2018. Cargoes to Woodside from the second train are expected in 2019.
Texas LNG developer denies he was advised against sales to Chinese
(Reuters; May 15) - The head of Freeport LNG said May 15 that the U.S. Department of Energy had not advised against inviting Chinese investment in the company's export plant under development in Texas, a contradiction of claims that he made a day earlier. Michael Smith, CEO of privately owned Freeport LNG, which plans to open its Texas plant in 2018, said he misspoke May 14 in an interview with Reuters when he said the department had warned against Chinese investment for political reasons.
The department "in no way" advised Freeport LNG on what customers, or sources of foreign investment, it should choose, Smith said. "I regret having inaccurately described the DOE as having advised us as such," he said. Smith said May 14 the advice had lead him to turn down Chinese buyers of LNG. "We were advised by the DOE to be careful who our customers were, because this is very political," he said then, calling the prospect of Chinese interest in a major U.S. export project "a political hot potato.”
Smith was not available for further comment May 15. A department spokeswoman said May 15 it did not advise Freeport against sending LNG to Chinese customers or inviting Chinese investment. Customers from across the world have signed up to buy future shipments of U.S. LNG. However, despite growing gas demand in China, no Chinese companies have signed up for U.S. exports directly. Some cargoes of U.S. LNG could end up on China’s shores, but only through secondary deals.
Spot-market LNG price in Japan averaged $7.60 in April
(Reuters; May 14) – Average liquefied natural gas spot prices for buyers in Japan fell to a two-month low in April, trade ministry data showed May 14, in another sign of slack global demand. Spot LNG contracted in April for delivery to Japan averaged $7.60 per million Btu, down from $8 a month earlier, less than half the level of a year ago, the Ministry of Economy, Trade and Industry said.
Tokyo started surveying spot LNG prices in March 2014 to add transparency to the market amid concerns over rising fuel costs in the wake of the shutdown of nuclear plants in 2011. The average spot price is calculated on about 10 percent of the nation's LNG purchases. The trade ministry survey looks at samples of fixed prices for LNG sold to power companies and utilities among others, and excludes spot deals linked to benchmark prices such as the U.S. natural gas Henry Hub index.
Texas LNG hopeful contracts for FEED work
(Houston Chronicle; May 16) - Even though the first federal permitting request was just submitted in late March, NextDecade is already moving forward with early contracts to build its $8 billion Rio Grande LNG export project in Brownsville, Texas, near the Mexico border. NextDecade has contracted with CB&I (formerly Chicago Bridge & Iron) for the front-end engineering and design and to determine the project’s engineering, procurement and construction terms. The terms of the deal are not being released.
NextDecade’s Rio Grande liquefied natural gas project includes building as many as six liquefaction trains and two marine jetties. NextDecade also would build a 130-mile pipeline from Brownsville to a pipeline hub near Corpus Christi. Shaun Davison, NextDecade project director for North America, said the front-end engineering and design is conducted in part to provide the Federal Energy Regulatory Commission with “extremely detailed” project plans.
The FEED work goes in conjunction with NextDecade entering the pre-filing process with FERC in March, he said. The goal is to submit the draft plan to FERC in October and then submit the final report and plans in January 2016, he said. The venture is being primarily sponsored thus far by Jamie Dinan-founded York Capital Management. Other financing is in the works, but NextDecade executives are remaining mum for now.
U.S. will likely need to review gas exported through Canada, Mexico
(Platts; May 13) – U.S. gas exports to North American Free-Trade Act countries Canada and Mexico intended for commercial re-export as liquefied natural gas to countries that lack a free-trade agreement with the United States will likely require approval from the U.S. Department of Energy, a department official said. Deputy Assistant Secretary Paula Gant of the Office of Oil and Natural Gas spoke at an LNG conference May 12 in Austin, Texas.
Responding to questions from a panel moderator, Gant declined to elaborate, citing the agency's policy on public comments regarding commercial applications for U.S. gas exports that are under review. Gant's comments bear directly on several LNG export projects currently under consideration for Eastern Canada and Mexico’s Baja Peninsula. The export terminals would likely rely on U.S. natural gas delivered by pipeline across the border to feed the LNG plants.
Japanese shipyard will build LNG carriers to serve Louisiana project
(TradeArabia News Service; May 14) - Mitsubishi Heavy Industries has won an order for two next-generation liquefied natural gas carriers to be built in a Japanese shipyard for delivery to Nippon Yusen Kabushiki Kaisha (NYK Line). The vessels are scheduled for completion and delivery in 2018. They will be put into service for transporting LNG from Sempra Energy’s Cameron LNG project under construction in Hackberry, La. Mitsubishi Corp. is a partner in the Cameron project, as is NYK.
The carriers on order feature a new design of a dual-fuel (diesel or natural gas) engine that will power a steam turbine to drive an electric propulsion motor, also capturing and utilizing waste heat in the power system. The vessels will measure almost 965 feet long, 160 wide, with a draft of 36 feet. Each will be capable of carrying almost 3.5 billion cubic feet of gas as LNG. The new ships will be capable of passing through the expanded Panama Canal that is expected to open for traffic early in 2016.
Anadarko selects engineering contractors for Mozambique LNG
(Bloomberg; May 17) - Anadarko Petroleum has selected a group of engineering contractors including Chicago Bridge & Iron for a potential $15 billion liquefied natural gas project in Mozambique. CBI’s joint venture with Japan’s Chiyoda and Italy’s Saipem will work on the onshore project that includes two liquefaction trains with 6 million metric tons of annual capacity each, Anadarko said May 17. The decision is a significant step toward reaching a final investment decision, Anadarko CEO Al Walker said.
Anadarko said it will make a final investment decision by the end of 2015. Construction plans also include LNG storage tanks, condensate storage, a multi-berth marine jetty and associated utilities and infrastructure. The company has secured non-binding long-term off-take agreements for more than 8 million tons a year of LNG from potential customers and is making progress in turning these into binding sales-and-purchase deals, Walker said. It’s also getting letters of intent from lenders for project financing.
Anadarko will work on a development plan to submit to the government in the coming months, Walker said. As much as 75 trillion cubic feet of gas may lie in the Area 1 prospect off Mozambique’s shores, according to Anadarko and its partners developing the discovery. Anadarko and Eni are operators in Areas 1 and 4 of Mozambique’s Rovuma Basin, home of the world’s largest gas find of the past decade.
India offers power generators subsidy to use more LNG
(The Financial Express; India; May 13) - The lowest subsidy requested by India’s power generators to use more imported liquefied natural gas in their power plants was about 3 cents per kilowatt hour. A government auction ended May 13 to determine the subsidy required to entice generators to use more LNG and help ease electricity shortages. Eight power generators bid in the tender, representing almost 4,900 megawatts of generation capacity that is running far below capacity because of domestic gas scarcity.
According to a senior Power Ministry official, this round of bidding was for more than 300 million cubic feet of gas per day that would be needed to fuel the stranded gas-fired plants during June-September this year. Overall, 31 power stations in India with a combined capacity of 14,305 megawatts are languishing because of a lack of gas.
Power companies seeking the least financial support to reach an electricity tariff of about 8.5 cents per kilowatt hour won the auction. The government also is asking LNG importers and transporters to reduce their marketing and operational costs.
India may look to renegotiate sales price of Qatari LNG contract
(Interfax Global Energy; May 15) - India’s largest liquefied natural gas importer could seek to renegotiate the terms of its long-term supply deal with Qatar this year. Petronet LNG’s 25-year, 7.5-million-tons-per-year contract with Qatar’s RasGas has provided the bulk of volumes delivered to India since 2004, and has typically been competitive with alternative fuels and cheaper than spot LNG — but not lately.
The free-on-board price for RasGas contract volumes to India was fixed at $2.50 per million Btu from 2004 to 2008, before oil indexation was gradually introduced between 2009 and 2013. Oil indexation of 12.67 percent (meaning a Japan Crude Cocktail price of $100 a barrel would produce an LNG price of $12.67 per million Btu) took effect from the beginning of 2014, with prices peaking at $13.60 toward the end of the year. Since then, the RasGas contract has been slow to reflect the sharp drop in global oil prices.
The contract includes a price ceiling and floor based on a 60-month average of oil prices, effectively preventing any significant downward adjustments in the short term to reflect the recent decline in crude oil prices and reducing the competitiveness of Qatari LNG under the contract. Spot LNG prices as low as $7 have reduced India’s appetite for its contract volumes, with a significant decline in demand for Qatari LNG and deferral of at least 10 contracted cargoes from RasGas during the first quarter of this year.
Takeover of BG Group puts Shell in middle of East Africa LNG
(Bloomberg; May 12) - Shell’s $70 billion takeover of BG Group will put Europe’s largest energy company in the middle of East Africa’s race to export natural gas and is set to boost the chances of Tanzania becoming a major LNG supplier. Shell’s acquisition would include BG’s stakes in three blocks off the coast that contain one-third of Tanzania’s estimated resource, and may give the East African nation an edge in the race to export liquefied natural gas from the region over neighboring Mozambique.
Shell has “strong expertise in working with governments and has also displayed strong appetite for risk, deploying new technologies,” said Dolapo Oni, head of energy research for Ecobank Group. “These attributes could benefit the Tanzania LNG project and give Mozambique much-needed competition for the limited investment dollars available globally for these sort of projects.” Statoil and partner ExxonMobil also have blocks in Tanzania, while Eni and Anadarko plan developments in Mozambique.
Producers holding leases in the two countries are working out whether to invest amid indications of the start of a worldwide LNG glut. New export projects in Australia and Papua New Guinea are starting to push out proposed projects as demand weakens, Genscape, which provides energy- and commodity-market data, said last month. In addition, Tanzania and Mozambique have yet to finish regulations for gas development and production, which are needed before any final investment decisions are taken.
Pennsylvania company plans second LNG plant for local market
(Philadelphia Inquirer; May 15) - UGI Energy Services is doubling its capacity to produce liquefied natural gas in Pennsylvania, aiming to capture a bigger share of an alternative-fuel market. UGIES, a subsidiary of UGI Corp. of Valley Forge, Pa., announced May 15 it plans to build a $60 million plant in northeastern Pennsylvania to produce up to 120,000 gallons of LNG a day from 10 million cubic feet of Marcellus gas.
It will be the company’s second LNG production plant. UGIES also plans to build storage tanks with a total capacity of about 280,000 gallons, said Matthew Dutzman, vice president of business development. Traditionally, utilities have used LNG as a means to store gas for high-demand winter days, known as "peak-shaving." LNG is now experiencing growth in demand as a cleaner-burning, less costly alternative to diesel.
UGI, which operates three Pennsylvania gas utilities, has operated an LNG plant in Temple, Pa., since 1972. That plant was recently expanded to produce up to 120,000 gallons a day.
Vancouver regional council will oppose oil pipeline expansion
(Mission City Record; Mission, BC; May 15) - The Metro Vancouver regional district will formally oppose Kinder Morgan's proposed twinning (capacity expansion) of its Trans Mountain oil pipeline after a vote of the board May 15. The decision came after the release of a new projection of the environmental impact of an oil spill and a report from the City of Burnaby warning it could not contain a major fire at the tank farm near the pipeline terminal.
"If there is a serious or catastrophic incident at the tank farm we are incapable of being able to control that," Burnaby Mayor Derek Corrigan told the board. "The more we learn about it the riskier it gets," Vancouver Mayor Gregor Robertson said of Kinder Morgan’s proposal to expand its pipeline for moving Alberta oil sands production to the West Coast for shipment overseas. Other directors cited the Coast Guard's deficient response to the relatively small spill of fuel oil in April from a freighter in Vancouver harbor.
Not all directors supported the motion. Belcarra Mayor Ralph Drew and Langley Township Council Charlie Fox both opposed it, warning that if Kinder Morgan's pipeline push is stymied, large volumes of oil may end up rolling through B.C. on trains, at much greater risk to the environment and communities. "The oil is going to come to the coast one way or another," Drew said. "If it doesn't come by pipeline, it's going to come by rail car. And nothing scares me more than unit rail cars coming down the Fraser Canyon."
New York protests continue against offshore LNG import terminal
(Newsday; May 16) - A long line of opponents to a proposed offshore liquefied natural gas import project off Long Beach, New York, joined hands at the water's edge May 16 to symbolize their determination to keep the ocean unspoiled. "It's just the idea of a natural gas port in this beautiful, pristine place," said Johanna Mathieson of Long Beach. LNG carriers would connect to an offshore buoy and pipeline system to deliver their cargos.
Federal officials are reviewing plans for the Port Ambrose terminal sought by Liberty Natural Gas. The governors of New York and New Jersey both hold veto power. Company officials have said the terminal would curb seasonal spikes in fuel prices in the region. "Port Ambrose is needed, is safe and will reduce energy costs for New York consumers," company chief executive Roger Whelan said in a statement.
Opponents counter that renewable energy such as an offshore wind farm proposed in the same area is far less polluting and will not speed global warming. Finn Hinke, 43, of Long Beach cited the need to protect "our coastlines and our environment and all the waters." The protesters’ column stretched about 200 yards. Several protestors raised concerns about safety. "How could you ever think of putting a port out there with the storms we have?" asked Judy Weitz, 65, of Long Beach.


5-16-15 Useful Idiots Drive Miles to Paddle Kayaks to Protest Oil

16 May 2015 1:35pm

Commentary: Earlier this week we gave credit to the useful idiots of the country by respecting their devotion as true believers in however climate change is defined today.  We also pointed out that one of the world's most respected climate change leaders admitted that her work was not so much about the environment as about destroying capitalism.  The story below describes the thought process, or lack thereof, of a graduate student from Olympia who drove to Seattle to protest the world's reliance on oil.  And he brought others with him.  -dh

Seattle Times by .  Conrad Ely brought a kayak and canoe with three of his friends from Olympia. He is pursuing a master’s degree in environmental studies program at The Evergreen State College in Olympia and drove up Saturday to join the demonstration and show his opposition to oil dependency.

“I think our resources should be spent on finding alternatives rather than on finding oil,” he said after unloading his supplies and signing a waiver upon arrival at Seacrest Park.

(Comment: We believe an interesting environmental studies masters thesis could focus on the fossil fuels and mined minerals that compose Mr. Ely's Kayak, clothing and the car/fuel that carried him from Olympia to Seattle; then, using scientific methodology, determine how he would maintain his lifestyle and future career without them.  -dh)

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