Original Story: nytimes.com
Every columnist has his or her “go to” sources, people we rely on for their deep understanding of a particular subject, and a mode of thinking about that subject we find persuasive. For me, one such person is Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations. An Austin energy lawyer is following this story closely.
Levi believes in the power of facts. Though sensitive to the importance of dealing with climate change, he doesn’t indulge in the hyperbole that you sometimes hear from environmentalists. And while he appreciates the economic import of fracking and shale gas, he isn’t afraid to call out the industry on its problems. Early in the fracking boom, he went to Pennsylvania to observe what drilling for shale gas was doing to communities — and came away believing that “it was going to stir up much more local controversy than many were assuming.” Which is exactly what happened.
For the latest issue of Democracy, a quarterly magazine focused on progressive ideas, Levi has written an article titled “Fracking and the Climate Debate,” which he described to me the other day as a kind of summing up of his views about the role of cheap natural gas and fracking in the fight against climate change. A Tulsa energy lawyer represent clients in energy matters including drilling contracts, fracking, mineral rights, and renewable energy disputes.
There are many people, of course, who believe that natural gas shouldn’t have any role at all in the climate change fight; while it may emit half the carbon dioxide of coal, it is still a fossil fuel that will keep us from going all-in on renewable energy. And the methane that can leak from fracked wells is a potent greenhouse gas that can negate natural gas’s advantage over coal.
There are others who see natural gas as a panacea. They believe that so long as we keep increasing production of inexpensive natural gas — mooting the need to build more coal-fired power plants, and even making it possible to shut some down — then we will be doing more than enough to control carbon emissions. In his article, Levi says, in effect: You’re both wrong. A Baton Rouge energy lawyer provides professional legal counsel and extensive experience in many aspects of energy law.
After recounting a little history — was it really only a half dozen years ago that environmentalists like Robert F. Kennedy Jr. were promoting natural gas as a “step towards saving our planet”? — Levi delves into the three rationales behind their abrupt change of heart. One is the disruption that fracking imposes on communities. The second is the methane problem. The third is the “rapid progress” being made by renewable energy, which many environmentalists believe makes further reliance on natural gas unnecessary.
Levi believes that appropriate rules by both state and federal governments can mitigate the first two problems. Indeed, he believes that the industry needs to be better regulated for its own sake; otherwise, people will continue to fear the worst. As for renewables, the hard truth is that if the country were to move away from natural gas, the big winner would be coal, not solar or wind.
But that doesn’t mean that those who cling to the “free-market fundamentalist dream that a thriving shale gas industry will make climate policy unnecessary” have got it right. On the contrary, writes Levi, “merely making natural gas more abundant may do little, if anything, to curb carbon dioxide emissions.” How can this be? The answer is that, although cheap natural gas is helpful in that it “shoves aside coal,” it also boosts economic growth (which means more emissions), and “gives an edge to industries that are heavy energy users and big emitters.” These two conflicting forces effectively cancel each other out.
The best way to maximize the good that shale gas can do, concludes Levi, is to make it a key component of an overall energy policy that is bent on driving down carbon emissions. The government could promote policies to move the country away from coal, “which accounts for three-quarters of carbon dioxide produced in U.S. electricity generation.” A San Antonio energy lawyer represents clients in fee mineral and royalty transactions, in negotiating the terms of seismic permits, option agreements, oil and gas leases, easements, and surface and subsurface use agreements, as well as in uranium leasing transactions.
And while he doesn’t say so explicitly, he does seem to see shale gas as a potential bridge to renewables: If the government enacted policies that “reward emission cuts” no matter what technology achieves that goal, then coal users would gravitate to natural gas, while natural gas users might well move toward renewables. Government would also have to encourage policies that “drive down the cost of zero-based emissions.”
My own belief is that shale gas has been a blessing for all kinds of reasons: It has given us a degree of energy security that we haven’t seen in many decades, and has been a key source of economic growth. And, no matter how much environmentalists gnash their teeth, it is here to stay. That’s why the responsible approach is not to wish it away, but to exploit its benefits while straightforwardly addressing its problems. Ideologues will never get that done. That’s why Michael Levi’s realism — and his pragmatism — are so critical to hear.
Showing posts with label natural gas. Show all posts
Showing posts with label natural gas. Show all posts
Tuesday, July 14, 2015
Wednesday, February 20, 2013
China's Shale Gas Revolution: Stalled Before Leaving The Drive
Story first appeared on Bloomberg News -
China, consuming energy at the fastest pace among major economies, has set ambitious targets to exploit its reservoirs of shale gas, the same fuel the U.S. touts as the means to energy independence. It won’t meet them.
China is producing no commercial quantities of shale gas, yet has set a target of 80 billion cubic meters by 2020, or 23 percent of total expected demand. Output in 2020 will likely be 18 billion cubic meters, according to the average estimate of seven analysts surveyed by Bloomberg. That’s more pessimistic than a year ago when the forecast was 23 billion cubic meters.
“China’s production targets are not realistic,” Chris Faulkner, chief executive officer of Dallas-based shale driller Breitling Oil and Gas Corp., which is in talks in China, said in an e-mail. “The only way China is going to be able to meet its output goals is for the government to pour money into exploration and development and ease up on the price controls.”
By dictating fuel prices in a centrally controlled economy, China has discouraged investment in shale because drillers risk losing money. The result: China National Petroleum Corp. and China Petrochemical Corp., the two largest gas producers, didn’t win exploration blocks in the last auction while companies with zero gas-drilling experience did.
Missing targets to develop the world’s biggest reserves of shale means China’s imports from foreign gas markets will be greater than anticipated. Such purchases might benefit suppliers of liquefied natural gas from Exxon Mobil Corp. to Woodside Petroleum Ltd., while bolstering supply from nations like Turkmenistan that pipe gas to China.
China is spending $17 billion a year on natural gas imports, about half in the form of liquefied natural gas. The country will open a record number of LNG receiving terminals this year, proving a boon for more than $100 billion of projects being built by companies such as Exxon Mobil and Chevron Corp. in Australia and Papua New Guinea.
The lack of shale enthusiasm was evident in December at the government’s latest and biggest auction of blocks of land containing natural gas trapped in shale rock strata. Coal miners and provincial government investment firms with no experience of shale drilling were among winning bidders. The bids by the big two gas producers and China National Offshore Oil Corp., the largest offshore oil producer, failed.
Awarding shale gas prospects to inexperienced companies in the second auction and government price controls on natural gas are likely to ensure imports continue to rise.
China imported $8.3 billion worth of liquefied natural gas last year, up 41 percent from 2011. Piped gas comes mainly from Turkmenistan.
“If you want to kick start this industry quickly from zero now, you need to either introduce a massive subsidy or allow free market forces to prevail,” James Hubbard, an analyst at Macquarie Group, said. “You’ve got 20 blocks that have just been awarded to companies no one has ever heard of.”
The government would need to increase the subsidy to 1.5 yuan (24 U.S. cents) a cubic meter from the current 0.4 yuan to effectively spur growth, Hubbard said. The 0.4 yuan subsidy is 17.5 percent of the current 2.28 yuan price that Beijing residents pay for piped gas.
“More incentives need to be introduced,” Wang Guoqiang, chairman of China-based oilfield service provider SPT Energy Group Inc., said in an interview on Jan. 29. Wang is investing more in Central Asia and the Middle East to hedge the prospect that China’s shale industry doesn’t take off.
Natural gas in New York has declined 4.9 percent this year. The fuel fell to a decade low of $1.91 per million British thermal units in April last year from a record of $13.92 per million Btu in Sept. 2005 as the U.S. ramped up commercial production of shale gas. The U.S. ousted Russia as the world’s biggest gas producer in 2009.
Futures rose 1.1 percent to $3.19 per million Btu on the New York Mercantile Exchange as of 11:52 a.m. Singapore time.
Drillers in China have yet to produce shale gas commercially, with Royal Dutch Shell Plc helping CNPC to sink the nation’s first horizontal well in 2011. Total SA, Europe’s third-largest oil company, said last week it was in “advanced talks” with a Chinese partner to explore for shale gas.
Cnooc Ltd. and China Petrochemical, also known as Sinopec Group, have invested more than $5.7 billion in so-called unconventional oil and gas assets overseas, yet they find their technology lacking at home.
“None of these companies have the below-ground experience of oil producers,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said in an interview. “They need to partner with other companies to even come close to the targets.”
Two phone calls each to Sinopec and CNPC’s offices today seeking comment were not answered and no voicemail was available to leave messages.
Without unlocking shale gas reserves, China’s only option is to import more LNG.
This year, China may add five LNG terminals with an annual capacity of 15.7 billion cubic meters, the highest in a single year, the Paris-based International Energy Agency said in report last year.
Those terminals, being built by companies including Cnooc and China Petroleum & Chemical Corp., would increase the nation’s LNG import capacity by 54 percent from the current 29 billion cubic meters a year, according to the report. Another 7.5 billion cubic meters a year is under construction and will be completed by 2015. The first plant started in 2006.
China, consuming energy at the fastest pace among major economies, has set ambitious targets to exploit its reservoirs of shale gas, the same fuel the U.S. touts as the means to energy independence. It won’t meet them.
China is producing no commercial quantities of shale gas, yet has set a target of 80 billion cubic meters by 2020, or 23 percent of total expected demand. Output in 2020 will likely be 18 billion cubic meters, according to the average estimate of seven analysts surveyed by Bloomberg. That’s more pessimistic than a year ago when the forecast was 23 billion cubic meters.
“China’s production targets are not realistic,” Chris Faulkner, chief executive officer of Dallas-based shale driller Breitling Oil and Gas Corp., which is in talks in China, said in an e-mail. “The only way China is going to be able to meet its output goals is for the government to pour money into exploration and development and ease up on the price controls.”
By dictating fuel prices in a centrally controlled economy, China has discouraged investment in shale because drillers risk losing money. The result: China National Petroleum Corp. and China Petrochemical Corp., the two largest gas producers, didn’t win exploration blocks in the last auction while companies with zero gas-drilling experience did.
Missing targets to develop the world’s biggest reserves of shale means China’s imports from foreign gas markets will be greater than anticipated. Such purchases might benefit suppliers of liquefied natural gas from Exxon Mobil Corp. to Woodside Petroleum Ltd., while bolstering supply from nations like Turkmenistan that pipe gas to China.
China is spending $17 billion a year on natural gas imports, about half in the form of liquefied natural gas. The country will open a record number of LNG receiving terminals this year, proving a boon for more than $100 billion of projects being built by companies such as Exxon Mobil and Chevron Corp. in Australia and Papua New Guinea.
The lack of shale enthusiasm was evident in December at the government’s latest and biggest auction of blocks of land containing natural gas trapped in shale rock strata. Coal miners and provincial government investment firms with no experience of shale drilling were among winning bidders. The bids by the big two gas producers and China National Offshore Oil Corp., the largest offshore oil producer, failed.
Awarding shale gas prospects to inexperienced companies in the second auction and government price controls on natural gas are likely to ensure imports continue to rise.
China imported $8.3 billion worth of liquefied natural gas last year, up 41 percent from 2011. Piped gas comes mainly from Turkmenistan.
“If you want to kick start this industry quickly from zero now, you need to either introduce a massive subsidy or allow free market forces to prevail,” James Hubbard, an analyst at Macquarie Group, said. “You’ve got 20 blocks that have just been awarded to companies no one has ever heard of.”
The government would need to increase the subsidy to 1.5 yuan (24 U.S. cents) a cubic meter from the current 0.4 yuan to effectively spur growth, Hubbard said. The 0.4 yuan subsidy is 17.5 percent of the current 2.28 yuan price that Beijing residents pay for piped gas.
“More incentives need to be introduced,” Wang Guoqiang, chairman of China-based oilfield service provider SPT Energy Group Inc., said in an interview on Jan. 29. Wang is investing more in Central Asia and the Middle East to hedge the prospect that China’s shale industry doesn’t take off.
Natural gas in New York has declined 4.9 percent this year. The fuel fell to a decade low of $1.91 per million British thermal units in April last year from a record of $13.92 per million Btu in Sept. 2005 as the U.S. ramped up commercial production of shale gas. The U.S. ousted Russia as the world’s biggest gas producer in 2009.
Futures rose 1.1 percent to $3.19 per million Btu on the New York Mercantile Exchange as of 11:52 a.m. Singapore time.
Drillers in China have yet to produce shale gas commercially, with Royal Dutch Shell Plc helping CNPC to sink the nation’s first horizontal well in 2011. Total SA, Europe’s third-largest oil company, said last week it was in “advanced talks” with a Chinese partner to explore for shale gas.
Cnooc Ltd. and China Petrochemical, also known as Sinopec Group, have invested more than $5.7 billion in so-called unconventional oil and gas assets overseas, yet they find their technology lacking at home.
“None of these companies have the below-ground experience of oil producers,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said in an interview. “They need to partner with other companies to even come close to the targets.”
Two phone calls each to Sinopec and CNPC’s offices today seeking comment were not answered and no voicemail was available to leave messages.
Without unlocking shale gas reserves, China’s only option is to import more LNG.
This year, China may add five LNG terminals with an annual capacity of 15.7 billion cubic meters, the highest in a single year, the Paris-based International Energy Agency said in report last year.
Those terminals, being built by companies including Cnooc and China Petroleum & Chemical Corp., would increase the nation’s LNG import capacity by 54 percent from the current 29 billion cubic meters a year, according to the report. Another 7.5 billion cubic meters a year is under construction and will be completed by 2015. The first plant started in 2006.
Monday, January 7, 2013
Exports of U.S. Gas May Fall Short of High Hopes
originally appeared in The New York Times:
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Wednesday, November 28, 2012
Strip Club Blown Away in Natural Gas Explosion
story first appeared in Lost Angeles Times
A natural gas explosion that tore through a strip club in western Massachusetts on Friday night scattered brick and glass for blocks, injured more than a dozen people and displaced dozens of apartment dwellers.
About 40 apartment units have been condemned, at least one neighboring building will have to be demolished and others will be inspected Saturday morning after what Springfield Police Commissioner William Fitchet called the most devastating gas explosion in his 40 years in the city. Despite the destruction, it appeared no one was killed.
About an hour before the 5:25 p.m. explosion, the local utility company, Columbia Gas of Massachusetts, started receiving calls from people who smelled gas in downtown Springfield. Crews arrived within 30 minutes and determined the odor was coming from Scores Gentlemen's Club.
By then, State Fire Marshal Stephen Coan said, gas had accumulated to an explosive level inside the building. Customers, employees and dancers were soon rushing to safety.
Debbie, a dancer at Scores who didn't want her last name used, told the Republican, a local newspaper, that she was performing on stage when she was told to evacuate.
As she gathered her clothes, Debbie told the newspaper, the manager told her to get out.
The manager hurried people over to the Mardi Gras Champagne Room across the street, the Republican reported. After barely half an hour, the building exploded.
The blast was heard for miles, rattling the community and sending glass shards flying.
Coan credited local firefighters with saving lives.
Most of those injured were first responders trying to stop the gas leak or others urging people to take cover. City officials said at least 18 people were injured: nine firefighters, four Columbia Gas workers, two Springfield police officers, one city water and sewer maintenance worker and two civilians. Firefighters suffered cuts and back injuries, and one was injured falling into a sewer after the blast, Springfield Fire Commissioner Joseph Conant said.
Stephanie Simmons, a waitress working two blocks away from the explosion, described the blast to the Republican newspaper. She said it felt like an earthquake or a large explosion.
Springfield building, electrical, plumbing and housing workers are scheduled to go building to building Saturday morning to assess the damage around the blast. At least three buildings around the club were severely damaged. Officials said they were considering controlled demolitions Friday night.
Tenants in nearby apartments will have to find somewhere else to sleep while building officials determine whether the buildings can be declared safe.
The Massachusetts Emergency Management Agency was activated after the explosion, and workers will help find shelter for displaced residents, Lt. Gov. Tim Murray said.
Over the next two days, Columbia Gas crews will spread across downtown to drill holes in the streets and take measurements for gas leaks. Tests Friday night didn't reveal any other leaks, company spokeswoman Sheila Doiron said.
She said the company had no records of gas leaks in the Scores club or elsewhere in the area for the last 10 years.
On Nov. 10, a natural gas explosion in Indianapolis killed a married couple and left more than 30 houses uninhabitable. Authorities have opened a homicide investigation into that blast.
A natural gas explosion that tore through a strip club in western Massachusetts on Friday night scattered brick and glass for blocks, injured more than a dozen people and displaced dozens of apartment dwellers.
About 40 apartment units have been condemned, at least one neighboring building will have to be demolished and others will be inspected Saturday morning after what Springfield Police Commissioner William Fitchet called the most devastating gas explosion in his 40 years in the city. Despite the destruction, it appeared no one was killed.
About an hour before the 5:25 p.m. explosion, the local utility company, Columbia Gas of Massachusetts, started receiving calls from people who smelled gas in downtown Springfield. Crews arrived within 30 minutes and determined the odor was coming from Scores Gentlemen's Club.
By then, State Fire Marshal Stephen Coan said, gas had accumulated to an explosive level inside the building. Customers, employees and dancers were soon rushing to safety.
Debbie, a dancer at Scores who didn't want her last name used, told the Republican, a local newspaper, that she was performing on stage when she was told to evacuate.
As she gathered her clothes, Debbie told the newspaper, the manager told her to get out.
The manager hurried people over to the Mardi Gras Champagne Room across the street, the Republican reported. After barely half an hour, the building exploded.
The blast was heard for miles, rattling the community and sending glass shards flying.
Coan credited local firefighters with saving lives.
Most of those injured were first responders trying to stop the gas leak or others urging people to take cover. City officials said at least 18 people were injured: nine firefighters, four Columbia Gas workers, two Springfield police officers, one city water and sewer maintenance worker and two civilians. Firefighters suffered cuts and back injuries, and one was injured falling into a sewer after the blast, Springfield Fire Commissioner Joseph Conant said.
Stephanie Simmons, a waitress working two blocks away from the explosion, described the blast to the Republican newspaper. She said it felt like an earthquake or a large explosion.
Springfield building, electrical, plumbing and housing workers are scheduled to go building to building Saturday morning to assess the damage around the blast. At least three buildings around the club were severely damaged. Officials said they were considering controlled demolitions Friday night.
Tenants in nearby apartments will have to find somewhere else to sleep while building officials determine whether the buildings can be declared safe.
The Massachusetts Emergency Management Agency was activated after the explosion, and workers will help find shelter for displaced residents, Lt. Gov. Tim Murray said.
Over the next two days, Columbia Gas crews will spread across downtown to drill holes in the streets and take measurements for gas leaks. Tests Friday night didn't reveal any other leaks, company spokeswoman Sheila Doiron said.
She said the company had no records of gas leaks in the Scores club or elsewhere in the area for the last 10 years.
On Nov. 10, a natural gas explosion in Indianapolis killed a married couple and left more than 30 houses uninhabitable. Authorities have opened a homicide investigation into that blast.
Tuesday, May 29, 2012
Shale Gas Boom at Risk
Story first appeared in The Wall Street Journal.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
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Wednesday, May 16, 2012
Total Finally Stopped Gas Leak
Story first appeared in The Wall Street Journal.
French oil major Total SA said Wednesday it has stopped the natural-gas leak at its North Sea Elgin platform by pumping heavy mud into the leaking well there. They stated that their absolute priority was to stop the gas leak safely and as quickly as possible, and will learn from the accident. However, the leak has been going on for approximately 3 weeks.
News of the swift resolution—the operation began Tuesday—is a boost for Total, which has suffered many blows to its production in this year. Attacks on its pipeline in Yemen and instability in Syria have added to the Elgin incident, which has cost the company some $2 million a day and prompted questions about the safety of offshore drilling.
Total didn't say when output would resume from Elgin, which has been out of action since the leak was discovered March 25.
A Cheuvreux analyst said that once Total regains control of the well, it will have to properly kill it—an operation likely to last an additional two months.
Total will only be allowed to restart production once U.K. authorities give their green light, a process that cannot be completed until the causes of the incident are known. The ramp-up will only be gradual, and forecasts no production from the Elgin-Franklin field complex in the second and the third quarter and only half-capacity in the fourth quarter.
The intervention operation began Tuesday at 8:20 a.m. GMT and the leak stopped 12 hours later, the French company said.
The leak was detected during operations to seal the G4 well that had encountered several incidents over the past year. It forced the group to power down the platform and remove its 238 employees, and raised fears there could be a massive explosion and pollution comparable to that of the Macondo oil spill in the Gulf of Mexico that cost BP PLC several billion dollars.
The Elgin leak is expected to result in the loss of some 6% of U.K. summer gas supply, according to the U.K.'s National Grid.
Total is also preparing to drill two relief wells in case the operation to definitively seal the leaking well wasn't successful.
French oil major Total SA said Wednesday it has stopped the natural-gas leak at its North Sea Elgin platform by pumping heavy mud into the leaking well there. They stated that their absolute priority was to stop the gas leak safely and as quickly as possible, and will learn from the accident. However, the leak has been going on for approximately 3 weeks.
News of the swift resolution—the operation began Tuesday—is a boost for Total, which has suffered many blows to its production in this year. Attacks on its pipeline in Yemen and instability in Syria have added to the Elgin incident, which has cost the company some $2 million a day and prompted questions about the safety of offshore drilling.
Total didn't say when output would resume from Elgin, which has been out of action since the leak was discovered March 25.
A Cheuvreux analyst said that once Total regains control of the well, it will have to properly kill it—an operation likely to last an additional two months.
Total will only be allowed to restart production once U.K. authorities give their green light, a process that cannot be completed until the causes of the incident are known. The ramp-up will only be gradual, and forecasts no production from the Elgin-Franklin field complex in the second and the third quarter and only half-capacity in the fourth quarter.
The intervention operation began Tuesday at 8:20 a.m. GMT and the leak stopped 12 hours later, the French company said.
The leak was detected during operations to seal the G4 well that had encountered several incidents over the past year. It forced the group to power down the platform and remove its 238 employees, and raised fears there could be a massive explosion and pollution comparable to that of the Macondo oil spill in the Gulf of Mexico that cost BP PLC several billion dollars.
The Elgin leak is expected to result in the loss of some 6% of U.K. summer gas supply, according to the U.K.'s National Grid.
Total is also preparing to drill two relief wells in case the operation to definitively seal the leaking well wasn't successful.
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Small PA Town on the Map for Natural Gas Reserves
Story first appeared in USA Today.
Williamsport, Pa., used to be celebrated for its past — as the 1938 birthplace of Little League Baseball, which still plays its annual World Series nearby. Then natural gas was found.
Now this once-sleepy chunk of north-central Pennsylvania is a star on the map of an emerging national energy rush. Six hotels are new or being built, and about 100 companies have moved to town, sometimes so fast that the head of the local Chamber of Commerce has told executives wanting guided tours to wait.
Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's. As Americans heave a sigh of relief at gasoline prices falling back from near $4 a gallon, big new discoveries of domestic oil and natural gas hold the promise of more substantial benefits for the U.S. economy for decades to come — even the possibility of energy independence.
There are however, the environmental risks that come with the new natural gas boom.
Williamsport, Pa., used to be celebrated for its past — as the 1938 birthplace of Little League Baseball, which still plays its annual World Series nearby. Then natural gas was found.
Now this once-sleepy chunk of north-central Pennsylvania is a star on the map of an emerging national energy rush. Six hotels are new or being built, and about 100 companies have moved to town, sometimes so fast that the head of the local Chamber of Commerce has told executives wanting guided tours to wait.
Much of Wall Street and Washington is seized by the hope that the U.S.'s energy future will be as bright as Williamsport's. As Americans heave a sigh of relief at gasoline prices falling back from near $4 a gallon, big new discoveries of domestic oil and natural gas hold the promise of more substantial benefits for the U.S. economy for decades to come — even the possibility of energy independence.
There are however, the environmental risks that come with the new natural gas boom.
For more Environmental News,
visit the Environmental Responsibility News blog.
For more national and worldwide Business News, visit the Peak News
Room blog.
For more local and state of Michigan Business News, visit
the Michigan Business News blog.
For more Health News, visit the
Healthcare and Medical News blog.
For more Electronics
News, visit the Electronics America blog.
For more Real Estate News,
visit the Commercial and Residential Real Estate blog.
For more Law News,
visit the Nation of Law blog.
For more Advertising
News, visit the Advertising, Marketing and Media blog.
For information on website optimization or for the latest SEO News, visit the SEO Done Right
blog.
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