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      This is your public service 1-stop-shop for Alaskan and Canadian Arctic energy commentary, news, history, projects and people. We update it daily for you. It is the most timely and complete northern energy archive 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 name others existing before 2001.  -dh

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8-26-15 Alaska AGAIN prepares olive branch for visiting federal delegation

26 August 2015 7:27am

Calgary Herald by James Wood: The president of the country’s major oilpatch lobbying group says the energy industry doesn’t want government to put its planned review of Alberta’s energy royalties on hold.


Alaskans Prepare For President Visit

Governor Bill Walker, POTUS visit, federal overreach, Photo by Dave Harbour"We don’t have a lot of presidents who stop here unless they’re low of fuel,” Gov. Bill Walker (NGP Photo) said...."

White House Video/Alaska Public Television: "...the president says he’s coming to Alaska because it’s on the front lines of climate change, with lives and communities already being disrupted.

“What’s happening in Alaska isn’t just a preview of what will happen to the rest of us if we don’t take action. It’s our wake-up call,” Obama says. “The alarm bells are ringing. And as long as I’m president, America will lead the world to meet this threat — before it’s too late.”  (See the video.)

Comment: Your writer suggests that Alaskans better learn that this president and his party and its supporters are determined to:

-STOP development in Alaska.

-Eliminate free enterprise jobs and conservatively voting employees.  

-Replace them with bureaucrats loyal to the regime, supported by armies of environmental and social activists.

In these pages, we have provided ample demonstration of this principle.

We remember treating President Carter and Interior Secretary Cecil Andrus well on their visits to the state.  They burned our olive branch when the two then  created -- with their congressional allies -- the Alaska National Interest Lands Conservation Act.

ANILCA continues to VIOLATE THE STATEHOOD COMPACT and descimate Alaska's economy.

The Obama Climate Change initiatives are only pretext to the accumulation of more partisan power at Alaska's expense and at the expense of every American energy consumer and job seeker and supporter of Arctic Sovereignty and national defense.  

For those still in doubt, read our report, "UN Climate Change Chief, Christiana Figueres: Against Capitalism...."  

To these 'end justifies the means' operatives, it's not about the environment; it's about power.

Lastly, we think all recent presidents have underrated Alaska's importance to North America's Arctic defenses, which should be founded on assuring jurisdiction over and development of Arctic resources.   Without a proper national defense and natural resources to back it up, North America is vulnerable and all other issues then become academic if not irrelevant.       -dh

Report and Commentary: On Monday, a number of well-intended Alaska organizations sent a letter to Barak Obama, in the wake of years of Federal overreach.  

Alaskans have learned that the federal government constantly challenges the sovereignty and constitution of their state.  

The communication was designed to prepare Obama for his trip to the state next week.  It is a very diplomatic letter, very politically correct.

The letter notes the many natural resource wonders of Alaska and the need -- and constitutional mandate -- for Alaskans to develop those resources.  

In part, it says, Alaska depends on the responsible development of its natural resources to expand and support its economy.  Article VIII of our state constitution mandates that we develop our resources to the maximum benefit for all Alaskans. To do that, we need access and responsibility for our own lands.  (See the complete letter here....)

Interior Secretaries (i.e. 1, 2) for this Administration alone have accomplished not one step toward supporting Alaska's best interest -- which parallels the best interest of all Americans: responsible development of Alaska's resources.

Once again, Alaska offers the olive branch and while we respect the 'high road' nature of this letter, we know Alaska's history of federal oppression.

We expect the president and secretary of state have not become more respectful of Alaska's constitutional guarantees and obligations.  We expect them to be greeted by armies of environmental activists, many of them flown in to celebrate a new era of eco-domination over Alaska's Constitution.

...and, as we prepare to welcome the presidential delegation, we also remember memorizing at the school of hard knocks the definition of insanity. 

Salon thinks we're insane for overusing a cliche.  But we always "consider and are often comforted in knowing the source" of criticism.

Peace, dear reader.  -dh


Today's Consumer Energy Alliance relevant energy links:

Alaska Business MonthlyMessage to President Obama from Alaska     On behalf of our organizations and the tens of thousands of jobs we represent, we welcome you and Secretary John Kerry to Alaska. Thank you for coming, and we hope you take the opportunity to learn Alaska's true story and its value to the nation. As you visit our state, often referred to as “The Last Frontier,” you will see firsthand Alaskans’ achievements and the tremendous opportunities that are yet untapped for the United States.
 
Capital Soup:  Officials to Converge in Tampa to Discuss Shared Opportunities and Challenges in Energy at Gulf Coast Energy Forum 
Members of the Gulf Coast’s diverse energy community will gather in Tampa on Wednesday for the annual Gulf Coast Energy Forum, sponsored by Consumer Energy Alliance (CEA) and the Partnership for Affordable Clean Energy (PACE). The Forum will bring together grassroots leaders, elected officials and organizations across the Gulf Coast, as well as thought leaders in the energy field, to discuss shared opportunities and challenges in energy for the region.
 
Consumer Energy AllianceConsumer Energy Alliance Welcomes New Member: Ohio AgriBusiness Association
Consumer Energy Alliance (CEA) is pleased to welcome the Ohio AgriBusiness Association (OABA) as its newest affiliate member. Established in the late 1800s, OABA represents more than 240 companies including manufacturers and suppliers of plant nutrient and protection materials, the grain warehousing and marketing industry, the feed and seed industry, as well as businesses providing equipment, financing, insurance, and consulting, to agribusiness.
 
Consumer Energy AllianceEnergy Day Festival Links Future Generations with Future Prosperity
The U.S. Dept. of Labor announced in October that the number of job openings in the U.S. has reached 4.8 million, the highest since January 2001. In addition, a recent report by Manpower, a worldwide staffing company, predicted that the number of jobs in the energy sector, unquestionably one of the nation’s fastest growing industries, would nearly double to about 3 million by 2020.
 
Consumer Energy Alliance: For President Obama, Responsible Development Should be Job #1 in the Arctic
In National Journal, Consumer Energy Alliance President David Holt responds to the question “Can Arctic Drilling Be Done Safely?” with a resounding yes, outlining how responsible arctic development is paramount in ensuring West Coast energy stability and national energy security.
 
Christian Science MonitorOil prices collapse: Will Arctic drilling survive the crash?
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
 
Business InsiderLow oil prices are making Arctic drilling even tougher
Italian oil group ENI is expected to begin production from the Goliat Field off Norway in a few short weeks. The project, which has cost $5.6 billion, is expected to produce 34 million barrels of oil per year by the second year of production.
 
Alaska Dispatch NewsAlaska Gov. Walker to Obama: Help us put more oil in the pipeline
President Barack Obama is visiting Alaska next week, where he’s expected to argue climate change is an urgent problem that requires international action. The message he’ll hear from Gov. Bill Walker? Walker wants the federal government to help Alaska access more fossil fuels — consumption of which is widely viewed as one of the primary drivers of climate change.
 
Alaska Dispatch NewsObama won't let real Alaska voices disrupt climate change photo-ops on Arctic trip
President Barack Obama is coming to Alaska. So what? He’s not coming to learn. He’s made that perfectly clear in the video he circulated when he announced his trip. He’s coming to use Alaska as a backdrop to further his argument on climate change.
 
E&E NewsObama's Alaska trip will help him present a more dramatic view of climate change
President Obama's summer climate change tour will culminate in the Alaskan Arctic next week, putting him in a setting that has experienced the country's most dramatic climatic changes and one that Obama hopes will help him boost public support.
 
Washington TimesObama accuses Kochs of un-American campaign to undermine green energy
President Obama accused conservative opponents of his climate change agendaMonday night of carrying out an un-American campaign to protect their fossil fuel interests at the expense of the country. “They’re trying to undermine competition in the marketplace and choke off consumer choice and threaten an industry that’s turning out new jobs at a fast pace,” Mr. Obama said at a clean energy summit here.
 
Town HallLas Vegas Review-Journal: Obama’s Clean Power Plan Is ‘Unlawful Overreach’
You know about Obama’s Clean Power Plan that will save all of humanity from the non-threat that is global warming. It aims to reduce carbon emissions by nearly 30 percent from 2005 levels by 2025. In the process, the regulatory costs will soar into the hundreds of billions of dollars, millions of jobs from black and Hispanic communities will be gutted, fixed-income seniors will have their budgets nuked by rising energy costs, and the plan pretty much punishes states that didn’t vote for Obama in 2012.
 
ForbesFracking Is Our Clean Power Plan
As environmental groups gather to strategize maximum mileage from the president’s “Clean Power Plan,” they would do well to remember what they might regard as the greatest environmental triumph of this century: The U.S. already leads the world in carbon emissions reduction, with emissions down 26% since the shale boom hits its stride in 2007.
 
Fierce EnergyBillion dollar injection: Obama shepherding new era of clean energy
President Obama's been busy over the past couple days. In addition to giving the keynote at the National Clean Energy Summit in Las Vegas -- where he announced a robust set of executive actions and private sector commitments to advance the country's transition to cleaner sources of energy and cut energy waste -- he has blessed more than a billion dollars in initiatives to advance innovative clean energy technologies.
 
Heartland InstituteAffordable Energy Summit Counters Obama-Reid Event
A coalition of Republicans, Democrats, and Libertarians rallied today in Las Vegas to call for affordable energy and an end to government favoritism toward so-called “clean” energy sources. Speakers at the Affordable Energy Summit 8.0 explained wind and solar power championed by Barack Obama, Harry Reid, and renewable power activists at the rival Clean Energy Summit 8.0 are prohibitively expensive, yet producing few if any net environmental benefits.
 
Huffington PostEnvironmental Activists Arrested Outside John Kerry's House
Twenty activists protesting an international pipeline expansion project were arrested outside Secretary of State John Kerry’s residence in Washington, D.C., on Tuesday. They were part of a group of about 100 demonstrators organized by the youth environmental group Midwest Unrest. The protesters were calling on Kerry to block Enbridge Energy from expanding its Alberta Clipper oil sands pipeline, which runs from Canada to Superior, Wisconsin.

Associated PressPart of Indiana BP Oil Refinery Reopens; Ohio Gas Prices Could Fall
BP says it has restarted a portion of a large Indiana oil refinery whose unplanned shutdown for repairs caused gasoline prices in the region to spike earlier this month.
 
OilPrice.comFate of U.S. Fracking Could Rest With Colorado Supreme Court
The oil and gas landscape is changing fast these days. And a big item this month suggests the courts may have a major impact on shaping the sector over the coming months. Especially issues like fracking.
 
Lincoln Journal StarBold Nebraska searching for evidence of TransCanada influence
Bold Nebraska has gone fishing. Volunteers for the environmental advocacy group known for its opposition to the Keystone XL pipeline spent hours Tuesday poring over boxes of records from former Gov. Dave Heineman’s administration.
 
BloombergOil plunge has gone too far, Morgan Stanley says
The global oil market is healthier than it looks, signaling that crude’s plunge to six-year lows has probably gone too far. While futures tumbled below $45 a barrel in London for the first time since 2009, Morgan Stanley and Standard Chartered Plc say other measures suggest physical markets for crude have stabilized or even strengthened in recent weeks.
 
BloombergEnergy Companies Cheaper Than Assets after Rout, Oil Search Says
Oil and gas companies are looking more attractive to buy than individual assets following the plunge in share prices, according to Oil Search Ltd., Exxon Mobil Corp.’s partner in Papua New Guinea.
 
Houston ChronicleTough times force companies to cut deeper, innovate
Oil prices recovered slightly Tuesday from the dramatic sell-off a day earlier, but not enough to brighten the dim outlook that's intensifying the industry's drive to find new ways to slash costs and operate more efficiently.
 
Fierce EnergyWhen is enough enough? Energy efficiency in Nevada, California
As the National Clean Energy Summit 8.0 wraps up in Nevada, a new report from the national nonpartisan business group Environmental Entrepreneurs (E2) and the Natural Resources Defense Council (NRDC) identifies energy efficiency as an economically beneficial way for Nevada to meet new carbon pollution limits set by the federal Clean Power Plan -- the cornerstone of President Obama's climate agenda.
 
San Francisco GateTroubled California oil field regulator faces major overhaul
California’s embattled oil field regulatory agency will undergo a sweeping overhaul following revelations that the office for years let petroleum companies dump their waste water into federally protected aquifers.
 
Denver Business JournalPain and gain on the way for oil and gas industry, say experts at COGA energy summit
The pain isn’t over for the oil and gas industry, according to speakers at the Rocky Mountain Energy Summit, the Colorado Oil & Gas Association’s annual industry conference underway this week.
 
Fuel FixOil is falling, but Eagle Ford, Bakken output on the rise
Oil prices are tumbling this year, but production from the Eagle Ford Shale and Bakken formation increased slightly between June and July, according to Bentek Energy. Average oil production in the Eagle Ford in South Texas was 1.6 million barrels per day in July, up by about 10,000 daily barrels over June production.
 
KGBTLow oil prices haven't hurt the Texas economy — yet
Just one short year ago, Texas drilling country rumbled with activity and high expectations that the good times would last a long while. So much for that. Amid a plunge in oil prices, the bonanza has paused at the very least, wiping out thousands of jobs in the oilfields and communities dependent on them.
 
The OklahomanBudgets for oil drilling likely to decline again in 2016, according to experts at Oklahoma conference
The double dip of low oil prices over the past two months likely will lead to more severe cuts in drilling activity next year, speakers said Tuesday at the Pipeline and Energy Expo in Tulsa. "We've been thinking for three or four months that 2016 budgets would be smaller than 2015. Now we think they will be even smaller," said Skip York, vice president of integrated energy at Wood Mackenzie.
 
Monroe News StarRevenue lost: Severance tax gives producers big break
The state of Louisiana may have missed out on some $1.1 billion in severance tax collections over the past five years as the result of a continuing state exemption that provides horizontal well operators substantial breaks or, in some cases, what amounts to a free pass.
 
The AdvocateLegislative Auditor: Louisiana missing out on hundreds of millions of dollars from oil and gas incentive
Louisiana has forgone hundreds of millions of dollars in taxes every year recently to spur the use of an oil and gas drilling technique that was being improved when the subsidy was created two decades ago but is commonplace now, a legislative audit says.
 
The Plain DealerOzone alert: smog battle heats up again, manufacturers say cleaner air will kill them
Another battle about ozone is beginning. The air waves and blogosphere will soon be thick with warnings about lost jobs versus lost lives as the health and manufacturing industries engage in another round of fighting about lowering the amount of ozone in the air you breathe.
 
The VindicatorFrackFree Mahoning Valley hosts town hall meeting on frackingThursday night
FrackFree Mahoning Valley will have a town hall-style meeting from 7 to 9 p.m. Thursday at the First Universalist Church of Youngstown, 1105 Elm St., to discuss the impact of fracking.
 
UPINorth Dakota plans more wind power capacity
In parallel with the White House, North Dakota said it was planning to connect a 43-turbine wind farm to the grid as part of an "all of the above" strategy. North Dakota Lt. Gov. Drew Wrigley was on hand for a ceremony to celebrate the upcoming completion of the Thunder Spirit wind farm, a 43-turbine wind farm with a maximum capacity of 107 megawatts of power.
 
WOWK-TVWest Virginia oil and gas safety panel to meet Wednesday
A panel appointed by Gov. Earl Ray Tomblin is holding its second meeting to study safety within the oil and natural gas industry. The Oil and Natural Gas Industry Safety Commission plans to meet Wednesday at the West Virginia state office building in Fairmont.
 
The Sanford HeraldFracking restrictions challenged
Proposed changes to a local ordinance would restrict hydraulic fracturing and other mining activities in parts of Lee County, but not everyone is convinced they would be legal — namely the former chair of the N.C. Mining and Energy Commission.
 
The Journal PressSupervisors to hold public hearing next week on fracking rules
The King George Board of Supervisors will take public comment at a 6 p.m. meeting onSept. 1 on proposals to tighten rules for oil and gas drilling in the county zoning ordinance and the Comprehensive Plan pertaining to fracking.
 
StateImpact PennsylvaniaMarcellus Shale drillers fined for methane migration
State environmental regulators say three natural gas drillers contaminated 17 separate drinking water wells in north central Pennsylvania and together the companies have paid close to $375,000 in fines. The Department of Environmental Protection blamed well construction for methane migrating into drinking water supplies.
 
Reading Eagle: David Rusk: Gov. Wolf's Property Tax Reform Plan Would Help More than GOP Proposal
At the entrance to the Martin Luther King, Jr. Memorial in Washington, D.C., is carved one of Dr. King's most famous themes: "The arc of the moral universe is long, but it bends toward justice." Gov. Tom Wolf's proposals to reform property taxes and state school funding would bend that arc a bit further toward justice in Pennsylvania.

 

 

 

 

 

 

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8-25-15 Here Is An Alaska LNG "Wake Up Call" From LNG Expert Ray Latchem

25 August 2015 9:47am

An Expert Speaks: "Alaska's In-State LNG Project"

We Urge All Alaskans To Read The In State Natural Gas Opinion Piece Below; It Is Written By One of America's (and Alaska's) Most Experienced Community LNG Operators.  (Normally, we are addressing Alaska's gas export project: Ak-LNG.  Today, we look at an Alaska intrastate project.) 

Vancouver Sun by Vaughn Palmer.  Louisiana beats British Columbia and Alaska on LNG Export Projects

We do not support a government subsidized natural gas utility and believe the model being employed by Alaska to serve Fairbanks is deeply flawed (See archived history by entering into right column "search", "Commentary, Fairbanks Natural Gas​".)  But we also believe that if there is to be a subsidized project, it should minimize making critical mistakes.  And, its formation should not grow from political influence and decision-making.  Furthermore, influence leaders should not be dissolving the independence of the Alaska Industrial Development and Export Authority (AIDEA)​ by giving it political instructions (i.e. where to buy the gas, etc.).

If Alaska decision makers fail to listen to Latchem, some very poor decisions could harm electricity and natural gas consumers from Homer to Anchorage to Mat-Su to Fairbanks.

Lastly, would a prudent investor be considering a multi-hundred-million-dollar government investment at a time of stock market volatility, when the State's investment outlook is negative, when the State is not balancing its budget and when the government has no plan for balancing the budget? 

If it does decide to imprudently pursue the Fairbanks gas utility subsidy, it had better listen to experts like Latchem, then make the decision based on real numbers and sharp pencils...before choosing and pursuing the most economical path.

-dh

Ray Latchem, LNG, Alaska, IEP, Fairbanks, Point McKenzie, Oklahoma, Spectrum, Photo by Dave HarbourADN Op-Ed by Ray Latchem (NGP Photo) All Alaskans should pay attention now to a decision that is about to be made regarding the sources of energy for heating homes and businesses.

In 2013, Gov. Sean Parnell introduced and the Legislature passed SB 23, a measure that would provide a substantial subsidy ($57 million in grants and $200 million in low interest loans and bond funding) for the development of a natural gas liquefaction plant in Prudhoe Bay and a gas distribution system in Fairbanks. My company, Spectrum LNG, began developing a parallel LNG project the year before so we were disappointed that the state of Alaska would try to develop a competing LNG plant. A little over a year later we sold our development to the state's Alaska Industrial Development and Export Authority (AIDEA) and it adopted it as its own. AIDEA selected a different developer to finish the project.

For too many reasons to fit into this commentary, AIDEA terminated its agreement with the chosen developer in 2015. The Legislature also amended SB 23 to permit the funds to be used for an LNG plant in locations other than Prudhoe Bay. This allowed AIDEA to seek new proposals from potential developers that would include Cook Inlet operators.

This brings me to the point of this commentary: Only a small group of special interests will benefit from Fairbanks getting its natural gas from Cook Inlet. The result: Anchorage and Fairbanks will pay a very high price -- too high a price -- and here is why. 

Imagine that the Cook Inlet basin is a glass of iced tea. For years Anchorage, Japan (through the Kenai LNG plant), the fertilizer industry and a very small Fairbanks market, all had straws in this glass. As the level in the tea glass fell, the price began to rise. At some point the fertilizer plant couldn’t compete with other fertilizer plants in the world that were located next to cheaper gas, so it shut down. The next victim was the LNG plant that had been supplying Japan for close to 40 years. Only Southcentral Alaska and a small straw for Fairbanks remained. To its credit, Anchorage developed contingencies that included the importation of fuel for home heating and generation of electricity. The majority of Fairbanks citizens continued to suffer from the run-up in oil prices because they were and continue to be largely reliant on oil.

An expensive new straw

It takes relatively large companies to explore for natural gas in high-expense areas like Cook Inlet. So it costs a lot to develop the glass of iced tea in this analogy. But when the level in the glass nears the bottom, the big guys lose interest and sell their remaining interests to smaller companies. Today, even though Cook Inlet gas prices are two to three times as high as Lower 48 prices, there are no major oil and gas companies exploring or developing. The opposite is occurring. The big players are leaving. Marathon left after the RCA decided it would meddle in their affairs. ConocoPhillips just announced its remaining Cook Inlet assets are for sale. The departure of major Cook Inlet producers has to worry both Enstar and the Southcentral electric utilities responsible for heating and lighting the most populous part of Alaska.

Absence of major producers creates opportunities for second-tier companies like Hilcorp that are proficient and efficient at squeezing more ice tea out of the glass at lower operating costs than the majors. And given the higher prices for gas now -- along with exploration tax credit incentives -- a few smaller, more nimble explorers have arrived. They are pursuing a chance to develop production from small potential reserves that the majors passed over, but which could pay up to three times what they sell gas for in the Lower 48. The majors know that if they developed more Cook Inlet production, it would cause the price to correct and more closely resemble Lower 48 pricing. The second-tier companies take the risk that the prices will remain high long enough for them to make a good return on their investment.

The second-tier companies are now hoping to prolong the high prices by shoring up the demand side of the price equation. If they are successful in getting another straw from Fairbanks into their glass of iced tea, they can continue to enjoy selling gas for two to three times the highest price in North America. The new straw from Fairbanks will be the LNG plant that the state itself is going to pay for.

Wake-up call

This is a wakeup call to the citizens of Southcentral Alaska and their legislative delegations. In the middle of the state’s largest budget deficit, you are considering spending millions of dollars that might lower Fairbanks’ energy price slightly, but will cost Anchorage many times that savings by shoring up already ridiculously high Cook Inlet prices.

There is an attractive alternative. Spend the state’s money tapping a new gas supply that doesn’t compete with Southcentral Alaska. In fact the new supply is not so new, but is proven and developed, and one of the largest reservoirs in the world. And there are no other straws in that huge glass. Even if other straws get added later, they likely will not cause an increase in price since they will have to compete in the world market.

Since before the trans-Alaska oil pipeline was built, many looked for the development of a gas line. While a lot of gas line proponents were looking for short-term construction opportunities, the long-term thinkers were looking for a way to monetize all that stranded gas. Alaska doesn’t have to build a pipeline to get at least some of that ocean of gas to market, for in-state use. The stage is already set for the construction of a small-scale LNG plant in Prudhoe Bay that will bring much cheaper energy to the Interior, as intended by SB 23 (i.e. cheaper than if it were purchased from Cook Inlet).

But there is an effort being made to shift this new straw from Prudhoe Bay to Cook Inlet. If consumers from Fairbanks to Southcentral do not become involved in this issue, special interests will profit at their expense for years to come. If the state had not subsidized this development, the private sector would be hard-pressed to build an LNG plant in Cook Inlet to supply the Interior against a Prudhoe Bay based supply. If Spectrum LNG didn’t believe this, we would have already built on our own Cook Inlet location. But since there is a lot of state money involved that requires no return, special interests only have to steer this investment toward Cook Inlet to accomplish their goal, without putting their own money at risk.

North to the future

By way of disclosure, our company Spectrum LNG is an LNG developer and producer. We are participating in AIDEA’s second effort to secure additional LNG supplies for the Interior energy project. Our principals and investors were the original developers of Fairbanks Natural Gas, LLC and its associated small scale LNG plant at Point Mackenzie. We own another LNG plant site adjacent to the existing plant and can develop a new larger plant at this site, but it would require a Cook Inlet based supply of gas. It would have lower construction and operating costs, as well as a cheaper truck transport to Fairbanks. Though we would benefit from our decades of Alaska LNG experience and ownership of our Cook Inlet site, we urge consumers to look carefully at what they will lose if the politicians and special interests succeed in omitting the North Slope gas option.

The bottom line is that Southcentral consumers would be better served by the state not building an LNG plant at all -- especially in their own Cook Inlet supply area. The people of the Interior will be best served by the state subsidizing a plant being built in Prudhoe Bay where the gas supply is cheap and abundant, in spite of the higher construction and operating cost.

It’s difficult to consider an LNG project absent Golden Valley Electric Association as the largest potential customer. Golden Valley is in a position to expedite the arrival of more natural gas to Fairbanks by simply agreeing to use the fuel for power generation in North Pole. This is not an original idea. GVEA themselves negotiated a 15-year natural gas purchase agreement with BP Alaska contemplating such a plan. Should GVEA decide to implement its plan to take Prudhoe Bay gas south to North Pole, the rest of Alaska will benefit.

From a public policy standpoint, it’s difficult to pass on a project that can finally tap into Alaska’s largest gas reserves and do so in a manner that provides economic benefit to all Alaskans.

Ray Latchem is president of Spectrum LNG, a privately held liquid natural gas producer based in Tulsa, Okla., which has built projects in Alaska from Prudhoe Bay to Point Mackenzie.


PETROLEUM NEWS -- SAExploration seismic programs approved - 08/16/2015 (Login to read Full story) SAExploration has received approval from the Alaska Department of Natural Resources, Division of Oil and Gas, for two seismic surveys, both on state land and waters in the Beaufort Sea, one in the vicinity of the Colville River Delta and one within the Prudhoe Bay area. The permits, both marine-base....

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8-24-15

24 August 2015 3:37pm

TransCanada's Energy East pipeline clears another hurdle

TransCanada Corp. has resolved a dispute with three major Canadian natural gas distributors over its proposed $12-billion Energy East pipeline ...

8-22-15

22 August 2015 2:50pm

ADN by Erica Martinson.  So far, Alaska’s three-member congressional delegation has been relegated to the sidelines when it comes to planning for President Barack Obama’s upcoming visit to the state. 

 

 

8-21-15

21 August 2015 10:36am

U.S. Senator Dan Sullivan, Russia, militarize Arctic, Alaska, oil and gas, Photo by Dave Harbour, Alaska North Slope, ShellPetroleum News: Russian moves highlight Arctic concerns  08/23/2015 (Trouble viewing this article? Click here)  U.S. Sen. Dan Sullivan (NGP Photo) said the Russians are looking to militarize the Arctic, making it all the more important for the U.S. to have a broad Arctic strategy that includes having sufficient troops based in Alaska. Sullivan said Aug. 17 that’s why he has been critical of proposed troop reductions in....

Petroleum News: AGDC board elects officers and gets estimates of off-take facilities costs  08/23/2015 (Trouble viewing this article? Click here)  The Alaska Gasline Development Corp. board of directors met Aug. 13, elected officers, approved confidentiality agreement regulations to go out for public comment and got some specifics on development costs for the off-take facilities for in-state gas access from a gas pipeline from the North Slope.....

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8-20-15

20 August 2015 1:39pm

Please note our June 25 commentary on competitiveness.  

Then, bookmark our April 17 commentary.  -dh

Comment: Critical reading of today's events below demonstrates some good news in the form of COP's new drilling at its CD5 property on the Alaska North Slope (ANS).  Then, we note from our Australian and Ohio analysts the increased difficulty faced by an ANS gas transportation project in a low energy price, high production environment.  

ALASKA DECISION MAKERS: Does this not mean Alaska must become even more competitive to market its natural resources, not less?   See this week's August 18 editorial, "Outrageous Decisions"; here are some reviews.  -dh

 


CD5, ConocoPhillips, BLM, EPA, National Petroleum Reserve Alaska, COP Photo

Wilderness Society vs. Institute for Energy Research

Michael Brune doesn’t believe Dan Kish, should speak for the Native people of the North Slope.  Which he wasn’t doing!  

But Brune apparently was trying to speak for Alaska's Native people.  He also suggested that no new oil and gas areas should be developed because climate change (in his opinion) required all new energy to come from alternative energy sources (i.e. wind, solar, etc., we presume).  This is more evidence that, indeed, to enviro-activists the 'end justifies the means,' and intellectual honesty has no role in their strident advocacy.  -dh

Today ConocoPhillips (NYSE:COP) announced that development drilling has begun at its CD5 drill site on the North Slope. CD5 is the first oil development within the boundaries of the National Petroleum Reserve-Alaska (NPR-A), and first oil is expected in the fourth quarter of 2015. Click here to view the full news release.

 


 

​Today's Consumer Energy Alliance links to issues important to NGP readers

Kenai Peninsula Gas/LNG Links important to our readers


THE ENERGY ANALYSTS SPEAK...AND, YOU READ IT HERE FIRST!

Today we bring you two of our favorite private analysts, whose names shall not be revealed.

One writes from the Mid Atlantic interior state area while the other writes us from far across the Pacific.

Today's Aussie O & G Observer writes:  

  • ...the Alaska LNG Project is....(Read more)  
  • The oil market has been smashed again overnight.... (Read more)

Our Ohio Observer says:

  • The highwater mark for rigs operating in the Bakken during the past two years was October 2014 (see below) at 194. Since that time, the number of rigs has fallen 60%. Yet production is almost at record monthly levels, and (Read more)

 

 

AJOC by Elwood Brehmer.

All Alaska Gasline Development Corp. contracts would be open to the public under a draft regulation proposed Aug. 13 at its board of directors meeting.

A contract submitted for board approval would be posted on the Alaska Gasline Development Corp., or AGDC, website at least 10 days prior to the meeting at which it is to be discussed, the draft regulations state.

Overall, the five pages of proposals limit what types of confidentiality agreements the corporation and its directors can enter into.

“If the regulations are adopted in this form it is simply going to be fairly open going forward,” AGDC attorney Ken Vassar said. “We’re not going to enter into any contracts that by their terms are themselves confidential. That’s just not an agreement that would be available to u

    


​Today's Consumer Energy Alliance links to issues important to NGP readers:

Argus Media: States urge dismissal of Oregon LCFS suit
The federal court lawsuit brought by the American Fuel and Petrochemical Manufacturers Association (AFPM), American Trucking Association and Consumer Energy Alliance echoes arguments they made against the California LCFS. The judge in that case said that the AFPM lawsuit could not go any further because of a 2013 decision by the US Ninth Circuit Court of Appeals that said the California program did not explicitly discriminate against out-of-state products in violation of the US Constitution.
 
Alaska Dispatch NewsWith Obama's visit less than two weeks away, details trickle out
Public officials and residents alike, from Anchorage to the 400-person village of Kivalina on the northwest coast, are watching and waiting for more details about President Barack Obama’s upcoming visit to Alaska.
 
Fox NewsClinton hit for breaking with Obama on Arctic drilling, staying mum on Keystone
Hillary Clinton is taking heat from Republicans for breaking with the Obama administration on Arctic drilling while continuing to hedge on her position on the Keystone XL Pipeline.
 
National PostKelly McParland: Obama’s Arctic drilling rationale doesn’t even convince supporters
Barack Obama is a curious individual. The U.S. president has delayed making a ruling on Canada’s Keystone XL oil pipeline for seven years, seeking to burnish his environmental credentials and please supporters in the green movement. The refusal upset Ottawa no end, but the White House deemed Canada’s vexation less crucial than making a point about the importance of battling climate change.
 
Town Hall: Poll: Americans Think Obama’s Climate Change Plan Will Increase Energy Costs – They’re Right
The Obama administration’s plan to cut carbon dioxide emissions by nearly 30 percent from 2005 levels by 2030 has a majority of Americans feeling their wallets since electrical costs are projected to go up. The increase specifically places fixed-income seniors in the cross hairs. Moreover, the projected job losses are will hit rural America the worst.
 
Real Clear EnergyOne Loser in Obama's Climate Plan? Existing Nuclear
Right now, the biggest source of clean energy in the United States is nuclear power. The country's 99 commercial reactors provide 20 percent of our electricity, all without emitting carbon dioxide. Compare that with wind at 4.9 percent or solar at 0.6 percent.
 
Heartland InstituteHouse Cuts EPA Budget, Would Block Clean Power Plan
The House Appropriations committee cut funding for the Environmental Protection Agency (EPA) by 9 percent, or $718 million, and blocked key Obama administration climate rules when they approved a $30.17 billion Interior and Environment spending bill.
 
Fuel FixCommentary: Fossil Fuels are the Solution, Not the Problem
The George C. Marshall Institute has recently released a study on fossil fuels and the economic well-being. It describes why energy is an essential input to economic activity. Because fossil fuels are such a large part of the world’s energy supply, they play a dominant role in enabling people everywhere to enjoy a higher standard of living and greater personal freedom.
 
ForbesPennsylvania and Truth in the Incidence of a State Severance Tax
Pennsylvania policymakers are nearing a two-month budget stalemate between Governor Tom Wolf and state GOP leadership, at least part of which can be attributed to their divergent views on the implications of a proposed severance tax on the production of unconventional natural gas.
 
Economic TimesOil prices hit 6-1/2-year low as US crude supplies rise
Oil prices in New York sagged to a new six and a half year low Wednesday following data showing an increase in US petroleum stocks. US benchmark West Texas Intermediate for delivery in September dropped $1.82 to $40.80 a barrel on the New York Mercantile Exchange. The contract fell as low as $40.46 a barrel earlier in the session.
 
New York TimesOil Companies Sit on Hands at Auction for Leases
With oil prices collapsing and companies in retrenchment, a federal auction in the Gulf of Mexico on Wednesday attracted the lowest interest from producers since 1986. It was the clearest sign yet that the fortunes of oil companies are skidding so fast that they now need to cut back on plans for production well into the future.
 
San Antonio Express-NewsLow crude prices affect offshore drilling auction
Oil and gas companies are set to pay $22.7 million for drilling rights in the Gulf of Mexico following a lackluster government auction Wednesday that reflected low crude prices. With just five companies participating and only 33 leases sold, the turnout marked the smallest western Gulf of Mexico lease sale since area-wide auctions began in 1983.
 
Fuel FixOil and gas cos. among most profitable per employee, analysis finds
Oil and gas companies were among the best at squeezing the most revenue from a small number of employees last year, according to data collected by a business research website. Researchers from FindTheCompany calculated profits per employee among companies on the S&P 500 in 2014. Among the top 25 companies ranked according to that metric, 15 were oil and gas exploration and production companies.
 
UPIWood Mackenzie: Mexico oil swaps only slight U.S. move
Approval for oil swaps with Mexico opens the spigot for U.S. crude oil, but might not be the export indication supporters are hoping for, an industry analyst said. The U.S. Commerce Department last week granted a request from Mexican energy company Petroleos Mexicanos, known also as Pemex, to swap as much as 100,000 barrels of U.S. crude oil per day for Mexican refining. The deal forbids the re-export to other nations.
 
Houston ChronicleSenators ask SEC to review oil companies' disclosure on offshore risk
A dozen senators are asking the Securities and Exchange Commission to probe whether oil and gas companies are fully disclosing the risks associated with their offshore operations.
 
Alaska Journal of CommercePaper: Cooperate rather than lead on AK LNG
A leading U.S. economist says a large natural gas pipeline project is vital to the state’s economic future and that the state should cooperate with experienced large companies in developing the project rather than attempting a plan for the state to lead the project.
 
Orange County RegisterObama's Clean Power Plan is bad news for California
The White House recently released its Clean Power Plan, which aims to reduce the nation’s carbon dioxide emissions by 32 percent by 2030. Almost immediately, California Gov. Jerry Brown praised the plan, claimed it should be the model for international agreements and touted California’s own statewide plans. But California’s carbon control program should be a warning to the rest of the country, not an endorsement of the president’s plan.
 
The Argus LeaderMy Voice: Getting Washington working again for Americans
When Republicans campaigned for the Senate majority in 2014, we made a simple, yet important pledge to the American people: If you elect Republicans to the majority, we will get the Senate, which has been dysfunctional for years, working again. That was not a half-hearted campaign slogan; it was a commitment on which we intended to deliver.

The City WireArkansas severance tax revenue set fiscal-year record, pace falls in new year
Arkansas severance tax collections tumbled nearly 59% in the first month of the state’s fiscal year 2016 as Fayetteville Shale drillers were unable to sustain production levels due to continued weak natural gas prices, spending cuts and fewer operating rigs.
 
Lincoln Journal StarLocal View: Five seasons Nebraska should reject the EPA’s mandate
The EPA’s “Clean Power Plan” would drastically increase energy costs for all Nebraskans without achieving its stated goal of combating climate change.
 
Milwaukee Journal SentinelEnbridge claim hard to swallow
None of us should be surprised when fossil fuel company executives tell a whopper or two in order to promote their interests, protect their massive government subsidies or avoid regulation of the deadly carbon pollution they freely loose upon Earth's increasingly damaged atmosphere.
 
Chicago TribuneColorado already put methane caps on drillers, and it worked
For an idea of how the U.S. government's proposed methane rules will affect drillers, look no further than Colorado. The state became a test case for similar controls last year when a coalition of energy companies and environmental groups agreed on measures to cut the pollution. In a bid to address smog, regulators there adopted the nation's first requirements for oil and natural gas companies to find and fix methane leaks.
 
Wheeling IntelligencerW. Va Leaders Bash Clean Power Plan
For better or for worse, depending on one's perspective, President Barack Obama's Clean Power Plan will significantly change America by the year 2030 - if its goal of cutting 32 percent of CO2 emissions from electricity plants becomes reality.
 
Andover TownsmanNatural gas pipeline could add $950K to tax coffers
Andover could rake in nearly $1 million in new property tax revenue if a plan by energy giant Kinder Morgan to build a high-pressure natural gas line through town ever comes to fruition. Kinder Morgan officials said last week that Andover would get $950,000 in tax revenue while Methuen would earn $700,000 for being hosts to a portion of the gas pipeline. Dracut, meanwhile, could earn more than $2 million for hosting some of the key infrastructure for the pipeline system.   


Observer #2 (Ohio).  The highwater mark for rigs operating in the Bakken during the past two years was October 2014 (see below) at 194. Since that time, the number of rigs has fallen 60%. Yet production is almost at record monthly levels, and has increased in the past two months. Part of this has to do with the number of uncompleted wells dropping by 77, leaving 848 still in the inventory of uncompleted wells. This volume can apparently be maintained for some time. According to the monthly report from the North Dakota DMR,

At the end of June there were an estimated 848 wells waiting on completion services, 60 less than at the end of May.

The current rig count plus NC well inventory is sufficient to  maintain 1.2 million barrels of oil per day for 24 months

Bottom Line: If this carries over to other oil shales, it is going to be difficult to see any drop in domestic crude oil production in coming months.

 

   


Observer #1 (Australia)  The oil market has been smashed again overnight (more below).   Current sentiments appear to be very bearish, with every piece of bad news being the signal for a sell-off.

A quote from Tudor Pickering Holt's daily note to clients yesterday is set out below.  To my mind this provides a clue as to the source of much of this bear-ishness:

"The snapback in stocks / commodities coming out of the 2008/2009 financial crisis spoiled us…it’s usually not that easy exiting a down cycle."

This to me says that the market is going through the "five phases" of grief after last year's oil price crash - and we are now only at the second phase: anger that the re-bound has not yet come (and is not in sight).  If this cod-psychology is correct, then we have still three phases to go....

Commodity prices

Brent closed down more than 3% at US$47.00, whilst WTI was even harder hit, closing down 4.3% at US$40.55.  The twelve month forward price is now worse than it was during the 2008/09 GFC induced oil price fall.

The numbers du jour which induced this fall was data from the EIA's weekly report, which indicated that US crude inventories increased by 2.6 mmbbls (although net product inventories - gasoline and distillate - fell by 2.1 mmbbls).  The market consensus figure earlier in the week had not anticipated the extent of the build.  The EIA also reported that US daily imports had increased by ~0.5 mmbopd - implying that the US is being used as the global storage site of last resort.

The Henry Hub natural gas price closed down 1c at US$2.71.

LNG

Regular followers will recall that this blog considers that the Alaska LNG project is the tortoise of the LNG world - well placed to beat some of the flashier hares.  However, Alaskan politics is currently bouncing a few rocks off the shell of this plodder.  Readers around the world will recall that Alaskan Governors can often be colourful characters - looking no further than one of the favoured running mates of The Donald, one Ms Sarah Palin.

Not wanting to be beaten by Ms Palin's appetite for socialist oil industry taxes, the latest Governor (Bill Walker) has introduced a concept worthy of Hugo Chavez: taxing gas resources in the ground (a "reserves tax") at the same time as he has signaled he would like the State to takeover 51% of the BP/Exxon/Conoco AKLNG project.

As this is the USA, I expect reason to prevail eventually - but this shows that LNG projects everywhere are subject to politicians mistaking fragile eggs for golden gooses.

Governments and fracking

Victoria's Auditor General released a report yesterday concluding that the State was not as well placed as it should be to manage issues associated with on-shore oil & gas exploration.  This has led the Greens to issue a clarion call for the ban of fracking for the period of "forever" (rather than the usual mealy-mouthed five year moratorium).  The Farmer's Federation wants more "science".  Clearly more than a million safely fracked wells don't provide a statistically valid sample size......

Company news - Armour Energy Ltd (AJQ)

Micro-cap AJQ has announced today that it has signed a non-binding deal with large US private equity firm, American Energy Partners (AEP) under which the latter may farm-into AJQ's Northern Territory acreage.

AEP was founded a few years ago by the colourful ex-CEO of Chesapeake Energy (the second largest US gas producer), Aubrey McClendon.  This is the first deal that it (or Chesapeake, to my knowledge) has done outside the USA - the well costs, etc, will not be familiar!

If the deal is turned into a binding one, it will see AJQ be 25% free-carried through a US$100M program, and receive US$11M cash up-front as well.

AEP's founding investor was another US private equity firm, Energy & Minerals Group (founded by ex-Exxon MD Lee Raymond's son) - who themselves recently entered the Northern Territory through a farm-in with private Australian company, Pangaea Resources.

Company news - A J Lucas Ltd (AJL)

AJL has a 40% stake in the UK's best known shale gas exploration company, Cuadrilla Resources, who were recently awarded further exploration licences in on-shore England.

Company news - Beach Energy Ltd (BPT)

BPT today announced that it had appointed an acting-CEO - Neil Gibbons - as MD Rob Cole was absent for family reasons.

Company news - Santos Ltd (STO)

Tomorrow STO will announce its half-yearly results.  Its full year results in February included a A$1.6B write-down - but using oil price assumptions that are significantly higher than the current forward strip - or indeed than the bearish sentiments on price that came from Woodside's results briefing earlier this week.

STO will have to walk a narrow line between not being seen as being over-optimistic on oil prices versus not wanting to precipitate the equity raising which its leadership has nailed its credibility to not doing.

Quote of the day

Aubrey McClendon's robust views on the fracking debate:

"We frack all the time. What’s the big deal? Where is the mushroom cloud? Where are the dogs with one leg?”

 

 

Gas/LNG links courtesy of Larry Persily, Kenai Peninsula Borough:

Oil and gas news briefs for Aug. 20, 2015

Report says U.S. LNG must be price competitive to succeed
 RBN Energy; Aug. 17) - The U.S. over the next three to five years will become a top exporter of LNG, and may emerge as the world’s leading exporter by the mid-2020s. The 12 liquefaction trains now under construction at five sites in the Lower 48 states together will have the capacity to export up to 54 million metric tons per annum, about 7 billion cubic feet of gas a day. How much more the U.S. LNG export potential can grow is covered in a report released this week by energy analytics firm RBN Energy.
 
The report, “LNG is a Battlefield — The Prospects for U.S. Success in Overseas Markets,” said that despite gas becoming the “hydrocarbon of choice for power generation, heating and many other uses across much of the global energy market … LNG must not be cost-prohibitive.” And until LNG demand grows as expected over the long term, the short-term view looks week. “A lull in demand growth — coupled with new liquefaction capacity — has bloated LNG supplies and slashed prices in the past year.”
 
Even with low oil prices, which have dropped the oil-linked price charged for LNG under traditional long-term supply contracts, “the U.S. should remain a cost-competitive supplier to international markets,” the report said. A lot will come down to price, it said. “Returns on investment in U.S. LNG export infrastructure as well as the extent of future expansion depend on price competitiveness in international markets.”
 
 
Buyers’ market pushes Australia LNG developer to focus on costs
 
(Reuters; Aug. 19) – Australia’s largest independent oil and gas producer Woodside Petroleum said it has stepped up marketing for its proposed Browse floating liquefied natural gas project, but conceded it is facing a buyers' market against a backdrop of weak oil prices. “The project will need to deliver an acceptable return at the current expectations of oil pricing, meaning it needs to break even at the sorts of oil prices we’re seeing in the marketplace today,” CEO Peter Coleman said.
 
Despite some analysts expecting a delay, the company is still targeting a final investment decision on Browse in the second half of 2016, having moved into the front-end engineering and design phase this year. Woodside has been able to cut cost estimates by 20 to 30 percent for the subsea and pipeline pieces of the long-delayed project off Western Australia, which analysts previously estimated at $45 billion when it was planned with a land-based liquefaction plant.
 
The partners are now focused on driving down costs so Browse can be profitable even if oil fails to rebound, and will be marketing the gas aggressively this year. One of those partners, Shell, whose floating LNG technology is the template for Browse, recently said it was far from certain the partners would approve the project. 
 
Gazprom faces serious challenges, including all-time low production
 (Agence France Presse; Aug. 16) - Facing a cold shoulder from Europe and increased competition at home, Gazprom has struggled to assert dominance on the global energy market, prompting speculation the natural gas giant could have no choice but to splinter. With the Russian economy slipping into recession on the back of lower oil prices and Western sanctions over Ukraine, the economy ministry has predicted Gazprom would produce 14.6 trillion cubic feet of gas this year, an all-time low for the company.
 
Gazprom's market capitalization has crashed in recent years. Before the 2008 global financial crisis, the company was worth over $300 billion. Its value now hangs around $50 billion, trailing far behind other major energy companies. "Gazprom is confronted with the greatest challenge in its history," said Chris Weafer, a partner at the Macro Advisory consultancy firm. "What remains to be seen is whether Gazprom becomes an appendage of the foreign ministry or evolves into a global energy company."
 
Gazprom is grappling with a series of issues, including its recent loss of the Ukrainian market, Europe's energy diversification and increased competition at home. And without U.S. technology blocked by sanctions, experts fear that Russia will not be able to exploit its Far East resources that had been destined for LNG exports. "This is bad news for Russia because the production of LNG is a strategic objective in the region," said Valery Nesterov, an analyst at Sberbank Investment. Some analysts have said Gazprom could benefit from dividing into smaller entities that would be more efficient and transparent.
 
 
Gas supply a question for Canada’s East Coast LNG export projects
 
(Globe and Mail; Canada; Aug. 17) - Two proposed liquefied natural gas projects on the Nova Scotia coast have received approval from Canada’s National Energy Board to export LNG, but they are counting on U.S. producers to supply much of the gas. In that case, they likely need new pipeline capacity to move that gas into New England to provide the supply to underpin their ambitious plans. Pieridae Energy and Bear Head LNG each received Canadian approval of their gas export license late last week.
 
The two projects are in addition to two others proposed for Nova Scotia and New Brunswick, all of which count on Canadian and U.S. gas making it north to the proposed liquefaction plants. “The big questions are: Where is the gas going to come from, and how are you going to get it to an LNG facility,” Fred Bergman, senior policy analyst with the Atlantic Provinces Economic Council, said in an interview.
 
Nova Scotia’s offshore fields have supplied gas to Canada’s Maritimes provinces and the U.S. Northeast for years, but will begin a steep decline later this decade unless companies develop new gas reserves. Another option for the LNG plants is Spectra Energy’s plan to build a new gas pipeline from the prolific Marcellus Shale field in Pennsylvania to New England, where it can be moved into Nova Scotia. But that project has run into stiff opposition in Massachusetts. 
 
Oman struggles with growing domestic demand vs. LNG exports
 
(Platts; Aug. 18) - Over the past two years, Oman has quietly expanded the number of countries to which it exports LNG to well beyond those with which it has long-term supply contracts. In a state that needs increasing volumes of gas to fuel its oil and heavy industrial sectors, this raises far-reaching questions about energy strategy and allocation of gas resources to exports vs. domestic needs.
 
Oman’s government two decades ago saw LNG exports as an important means of diversifying the economy and moving state revenues away from a heavy dependence on oil exports. A total of 10.4 million metric tons per year of LNG production and export capacity was developed, with plants commissioned in 2000 and 2005. Oman signed long-term supply contracts with Japanese, South Korean and Spanish buyers, which in some cases were also the project shareholders.
 
Oman planned to negotiate additional contracts with new customers, predominantly in Asia. However, industrial expansion and rampant population growth in Oman, as elsewhere in the Arabian Peninsula, meant that securing domestic gas supply quickly trumped exports as a government priority, leaving the LNG plants significantly underutilized. In 2011, senior government officials suggested that at least one of the plants might be decommissioned once the long-term supply contracts expire.
 
 
 
Top LNG carrier owners join up to market short-term charters
 
(Reuters; Aug. 18) - Three of the world’s top liquefied natural gas carrier owners have decided to market 14 vessels jointly on a spot-charter basis, part of a new pooling arrangement aimed at cutting operating costs in a depressed market. The pool, consisting of eight modern vessels from Norwegian shipper Golar LNG and three each from Gaslog, headquartered in Monaco, and Dynagas, based in Greece, will commence chartering operations in September, a statement from Gaslog said Aug. 18.
 
A glut of newly built LNG vessels emerging from shipyards in Asia has been one factor driving down daily charter rates to around $30,000 per day, compared with $130,000 two years ago. "The LNG Carrier Pool allows the participating owners to optimize the operation of the pool vessels through improved scheduling ability, cost efficiencies and common marketing," the statement said. The vessels will seek employment exclusively for charters of 12 months or less.
 
The move reflects a growing LNG market shift toward short-term trading of cargoes as prices come under pressure and new production from Australia and the United States is expected to add to oversupply. "The real driver primarily is the fact that we are seeing the short-term shipping market growing substantially. In the year to date there have been 97 short-term vessel fixtures versus around 78 in 2014," said Gaslog CEO Paul Wogan. "It's becoming a much more important piece of the (LNG) shipping market.”
 
 
 
LNG spot market in Asia back up to $8
 
(Platts; Aug. 18) - The Platts LNG Japan-Korea Marker for September deliveries averaged $8.007 per million Btu July 16 – Aug. 14, up 8.3 percent from August, the highest month-on-month gain so far this year, on renewed buying interest and waning availability of spot cargoes in Asia. It was the highest monthly average price since February, when it was $9.911. However, it’s the seventh consecutive month that prices have hung around $7 to $8 since falling from the $9-to-$10 level in January-February.
 
With northeast Asian end-user demand still tepid and Indian importers reluctant to pay more than $8, the market appeared to have hit a ceiling. Even with the slight boost to $8, year-on-year the marker for September deliveries was down 25.2 percent compared with the average price a year ago at $10.702.
 
 
B.C. communities want share of energy project revenues
 
(Globe and Mail; Canada; Aug. 17) - The indirect cost of workers commuting to energy-sector jobs has prompted 21 local governments in Northwest B.C. to band together and press the province for a greater share of project revenues. Representatives met in Terrace, B.C., on Aug. 15 to formalize the Resource Benefits Alliance. Stacey Tyers, the group’s chairwoman, said workers used to move their families into northwestern B.C. towns for new projects but now most people fly in and out for a job.
 
“[Workers] use our services, they impact our social systems while they’re here. They use our hospitals … but there’s no contribution to the community in that regard,” said Tyers, who is also chairwoman of the Regional District of Kitimat-Stikine. She said the “unprecedented” agreement between communities empowers them to work on their shared goal of funneling provincial cash from energy projects back to the communities.
 
The alliance wants a commitment based on a percentage of project profits, and they’ve given themselves three months to get the province to start negotiations. The alliance calculated a 3 percent revenue share would produce $1 billion to cover infrastructure, mitigate social impacts and develop a legacy fund. The communities have amassed an infrastructure deficit of $500 million, Tyers said, as workers stretch capacity to the limit for roads, sewers and water but take their wages back to their home communities.
 
 
B.C. LNG hopeful starts site evaluation work
 
(North Coast Review; BC; Aug. 18) – Chinese-owned Nexen Energy has taken another step in the early days of its proposed liquefied natural gas export terminal on Digby Island, in front of Prince Rupert, B.C., with its provincial application to begin evaluating the site for potential development. The Aurora LNG project applied Aug. 5 to the B.C. Ministry of Forests, Lands and Natural Resources for an investigative-use license for geotechnical and geophysical studies.
 
If approved, the first phase of work would occur before the end of September, with the second phase to continue through the end of the year. Nexen would set up a temporary staging area for the work, transporting crews and equipment to the site by water taxi, boat, barge or helicopter.
 
The project has been estimated at about $20 billion to build a plant with capacity of 10 million to 12 million metric tons per year. Nexen has talked of making an investment decision on the project in 2017. The company has started its application process with the B.C. environmental assessment office. In addition to Nexen holding a 60 percent stake, two Japanese companies hold 40 percent of Aurora LNG. The proposal is one of almost 20 LNG hopefuls looking at supplying B.C. gas to overseas markets.
 
 
Oregon community debates LNG project workforce housing camp
 
(The World; Coos Bay, OR; Aug. 17) – The North Bend (Ore.) planning commission has extended the public comment period on Jordan Cove LNG's workforce housing camp application an additional 10 days. Following the commission’s contentious hearing July 20 on the conditional-use permit for the housing camp, city staff received an abnormally large amount of written testimony. They weren't able to get it all online until late Aug. 14, and the commission unanimously agreed Aug. 17 to keep the record open until Aug. 27.
 
After that deadline, Jordan Cove will have until Sept. 3 for its rebuttal. The commission will meet Sept. 21 to issue a decision, which could be appealed to the North Bend City Council. Meanwhile, the community debate continues. Boost Southwest Oregon members turned out Aug. 17 to support the project. “This area was built on industry, not on tourism. And I love tourism, it's really great if we can survive on that, but it's industry that builds this city, so I'd just like to see more of it,” said Bruce Payne, of Coos Bay.
 
The anti-LNG crowd also showed up, ready to make their case against the housing camp for the proposed liquefied natural gas plant and export terminal. Simpson Heights resident Ron Wiggins questioned the city sewer system’s ability to take on the camp with almost 1,900 workers.
 
 
Santos on target for September start-up of Australia LNG plant
 
(Sydney Morning Herald; Aug. 18) - Santos has marked a major milestone at its $18.5 billion liquefied natural gas project in Queensland, Australia, that firms up its start-up target for around the end of September, but its shares softened further as the market remained preoccupied by funding concerns and the weak oil price. Santos reported that it had introduced coal-seam gas into the first LNG production unit at its GLNG project on Curtis Island in Gladstone, signaling the huge project is within weeks of start-up.
 
It will now move to start up the pre-treatment units for the gas, then chill down the liquefaction units to start making LNG. Santos CEO David Knox said the upstream coal-seam gas fields are now "fully operational," while the plant is the final stages of commissioning. Construction at the flagship project has been underway for the past 4½ years. At full production, the plant will be capable of making 7.8 million metric tons of LNG per year. Partners include Malaysia’s Petronas, Korea Gas and France’s Total.
 
 
Israel reaches deal for development of offshore gas field
 
(Reuters; Aug. 16) - Israel's Cabinet Aug. 16 approved a deal with a U.S.-Israeli consortium that would move forward development of the huge Leviathan offshore gas field. The controversial deal reached late last week, which Prime Minister Benjamin Netanyahu believes will bring Israel several billion dollars in the coming years from development of Leviathan and two smaller fields, still needs parliamentary approval.
 
The deal will allow Texas-based Noble Energy and Israel's Delek Group to keep ownership of the largest offshore field, Leviathan, with an estimated 22 trillion cubic feet of gas. In return for retaining their stakes in Leviathan, the two companies are required to sell off other assets, including stakes in another large deposit called Tamar. Critics of the plan said the government gave into most of the companies' demands and left Noble and Delek with too much power by controlling most of Israel's gas reserves.
 
Israel, which has gone from an energy-dependent country to a potential gas exporter, currently receives its gas for electricity generation from Tamar, which began production in 2013. Leviathan is slated to begin production in 2018 or 2019 and expected to supply billions of dollars of gas to Egypt and Jordan in addition to supplying Israel. As part of the deal, the companies agreed to invest $1.5 billion in the next two years toward developing Leviathan, and also agreed to lower domestic gas prices for several years.
 
 
U.K. to open areas for fracking; opponents vow ‘hundreds of battles’
 
(The Guardian; UK; Aug. 18) - Large areas of Yorkshire, the northwest and the east Midlands are to be opened up to fracking after the British government announced it will offer a fresh round of licenses for oil and gas exploration, covering 1,040 square miles. Areas near Leeds, Sheffield, Lincoln and Nottingham are to be offered to companies in an expansion plan that green groups predicted would trigger “hundreds of battles” over the future of the countryside.
 
Ineos, the Anglo-Swiss chemicals group that wants to lead the U.K.’s shale gas industry, was awarded three licenses and said the latest ones could pave the way for gas to be pumped by 2020. The applications are subject to approval by local councils, which will have 16 weeks to decide. The government promised last week to step in if councils fail to keep to the deadline.
 
The government’s promise to fast-track shale gas in the U.K. comes on the back of strong opposition by environmental groups and a decision by the Lancashire county council to reject an application by exploration firm Cuadrilla on the grounds of visual impact and noise. Both Scotland and Wales previously imposed moratoriums on fracking for shale gas.
 
 
EIA lowers its U.S. oil forecast to $49 this year, $54 in 2016
 
(U.S. Energy Information Administration; Aug. 19) - Amid high uncertainty in the global oil market, the U.S. Energy Information Administration has lowered crude oil price forecasts in its Short-Term Energy Outlook, expecting West Texas Intermediate crude to average $49 per barrel in 2015 and $54 in 2016 — $6 and $8 lower than forecast in last month's energy outlook.
 
Concerns over the pace of economic growth in emerging markets, continuing (albeit slowing) supply growth, increases in global oil inventories, and the possibility of increasing volumes of Iranian crude oil entering the market contributed to the changed forecast, the EIA said.
 
 
Pennsylvania looking at more revisions to oil and gas rules
 
(Pittsburgh Post-Gazette; Aug. 18) - Pennsylvania environmental regulators are making a list of items they want to see in another major revision to the state’s oil and gas rules, just as they near the end of a contentious rule-drafting process that will have taken half a decade when it is finished next year. In an Aug. 12 conference call to announce the final rules package for aboveground oil and gas activities, Department of Environmental Protection Secretary John Quigley cast his comments repeatedly toward the future.
 
“This is not the end of the process,” he said. “There is more study needed on additional measures, and there will be more rule-making in a separate process, to ensure responsible drilling and protection of communities, public health and the environment.”
Regulators gave few details about what the next round might hold, but they signaled some areas. Quigley said the agency will release more information about the potential scope of the next regulatory package, probably between October and December.
 
Rules to control noise from well sites — which the department drafted then dropped from the current package, calling them “premature” — might become part of a future regulation after the agency develops a best-practices guide, state officials said. Quigley said the agency is “looking in particular at public health protections” as it compiles a list for the next regulatory package “because that is certainly one of the areas of biggest concern.” One source said air quality issues would be covered in the next round.

 

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