Russia-China Liquified Natural Gas Deal Limits BC’s LNG Market and Economic Appeal

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The new Russia-China gas deal “could squeeze the economics” of proposed LNG projects, according to a new report by Toronto-Dominion Bank

Duane Tilden‘s insight:

>"Russia recently clinched a US$400-billion deal to feed China around 38 billion cubic metres of natural gas via pipelines at a chummy price of $10-$11 per million cubic feet, shaking up an industry that is used to fetching $14-$18 per mcf from Asian markets.

The deal, along with a new trend of setting prices linked to gas prices rather than the traditional crude oil benchmarks, could upset British Columbia’s dream of launching a liquefied natural gas export industry.

“Clearly with so much LNG supply capacity set to come on stream, Asian buyers have more power to bargain for lower prices in LNG contracts, lowering the potential prices Canadian producers would receive, and could squeeze the economics of certain LNG projects,” TD said in a note published Thursday.

The deal has already created ripples across LNG-dependent markets such as Japan. This week, 38 Japanese lawmakers said they plan to lobby Prime Minister Shinzo Abe to revive a stalled Russia-Japan natural gas pipeline."<


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Fracking linked to BC’s liquefied natural gas gambit

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A surplus of natural gas in North America explains why the B.C. government is so desperate to launch a new industry

Duane Tilden‘s insight:

>“The prices that the [B.C.] government is looking at in paving the roads with gold is basically based on these short-term factors that are not likely to persist,” Lee said.

Natural Gas Development Minister Rich Coleman did not make himself available for an interview to respond to Lee’s comments.

B.C. misread U.S. energy revolution

The B.C. government missed the mark with its earlier forecasts on royalties because it failed to predict an explosion in U.S. energy production.

This largely came about through hydraulic fracturing, otherwise known as “fracking”, and horizontal drilling. Technological innovations in fracking generated huge new supplies, causing North American natural-gas prices to plummet.

The falling prices resulted in fewer royalties flowing into the B.C. government treasury.

Fracking involves pumping huge amounts of water along with sand and chemicals into shale-rock formations to free trapped gas.

Horizontal drilling enables companies to retrieve locked supplies by moving the drill bit across a deposit rather than going straight down.

A single platform can send horizontal drills in a multitude of directions, enhancing efficiency and saving money.

In his 2013 book, The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters (Penguin), Gregory Zuckerman chronicled how a handful of U.S. energy-industry outcasts refined these techniques and caused an American energy revolution.

“To me, it’s fascinating that this resurgence started in 2007 and 2008, which is right when America was sort of on its back,” he told the Straight by phone.

Zuckerman, a Wall Street Journal reporter, said that the United States is now producing about eight million barrels of oil per day, up from five million barrels per day in 2008.

In addition, U.S. natural-gas production rose more than 21 percent between 2008 and 2013.

ExxonMobil CEO Rex Tillerson has predicted that the U.S. will be energy self-sufficient by 2020.

The Frackers reveals that the people who spearheaded this sharp increase in energy production were not working for major oil companies like ExxonMobil, Shell, BP, or Chevron.

Rather, they were an assortment of little-known wildcatters from Texas and Oklahoma—George Mitchell, Aubrey McClendon, Tom Ward, and Harold Hamm—who became billionaires as a result.

They crisscrossed areas with shale reserves, buying drilling rights from property owners. Although there has been a lot of howling from environmentalists about the contamination of water supplies with fracking chemicals, the industry continues to grow.

“Everyone focuses on fracking—and fracking is key, as is horizontal drilling—but the most important thing is that innovators like Mitchell got it to work in shale, which everyone kind of ignored, especially the big guys and the experts,” Zuckerman said.

By targeting shale, Zuckerman maintained, Mitchell changed the country and the world.

That’s because manufacturers with high natural-gas input costs—such as makers of chemicals, tires, cement, and aluminum—are basing operations in the United States because of the low natural-gas prices. And Zuckerman said that this will give the U.S. a competitive advantage against other countries for years to come.

“Some economists say as many as two million jobs are going to be created,” he stated.<

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BC Premier Christy Clark confronted by Aboriginal leaders torn over LNG plans

See on Scoop.itGreen Energy Technologies & Development

Treaty 8 Chiefs had a hard time delivering a scathing letter to the Premier at a Vancouver LNG summit.

Duane Tilden‘s insight:

>The northeast First Nations have lived with oil and gas for 60 years, and understand the economic opportunities that could flow LNG.  But they also worry just how much more the region can take.  

Site C Dam and LNG together would cause massive disruption of the land, air and water.  Their polling shows 50% of their members are uncertain about LNG in particular, and 20% are vehemently opposed. 

Many fear an Alberta-Tar-Sands-scale industrialization coming to their territories.

“That’s what we’re afraid of.  If LNG goes through, they’re predicting upwards of 50,000 to 60,000 new frack wells… and all the associated infrastructure that goes with it: roads, pipelines, seismic, drilling.  It’s scary,” said Tribal Chief Logan.

“We’re not opposed to creating a good economy for everybody, but there has to be some type of sustainable development.  We can’t drink the water up there any more.”

“There’s more and more moose, rabbit and beaver organs that we’re finding that have [puss-like] abscesses on them.  Sometimes we open an animal and it smells almost rotten.”<

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DOE Announces $10 million Funding for Wave Energy Demonstration at US Navy’s Hawaii Test Site

See on Scoop.itGreen Energy Technologies & Development

will help develop reliable wave energy options and collect important performance and cost data for wave energy conversion (WEC) devices.

Duane Tilden‘s insight:

"The U.S. Energy Department  announced $10 million to test prototypes designed to generate clean, renewable electricity from ocean waves and help diversify America’s energy portfolio. The Energy Department-supported demonstrations at the U.S. Navy’s wave energy test site off Hawaii’s island of Oahu will help develop reliable wave energy options and collect important performance and cost data for wave energy conversion (WEC) devices.

The Energy Department plans to test two WEC devices at depths of 60 and 80 meters at the open-water site offshore from Marine Corps Base Hawaii in Kaneohe Bay. These projects will enable the Energy Department to evaluate technology performance, reliability and cost of energy to achieve cost-competitive wave energy deployments in the future.

The two-phase demonstration projects will focus on WEC devices in the late stages of technology development–those ready to be tested at close to full-scale in the open-ocean environment. The first phase of this fundingopportunity will optimize designs and plan for the deployment and testing of WEC systems. The second phase will support permitting, fabrication, deployment, retrieval, and decommissioning of these systems after 12 months of testing and data collection."

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Lack of centralised EU regulation ‘major headache’ for frackers

The International Bar Association Blog

Europe urgently needs to draft centralised hydraulic fracturing (fracking) regulations to reduce confusion for businesses and close loopholes for potentially damaging practices, leading environmental lawyers from both the NGO and corporate spheres have told IBA Global Insight.

There are currently no European Union (EU) laws directly addressing fracking. Instead, the process is controlled by a series of environmental rules already in place, including those tackling water pollution, hazardous waste and emissions.

Matthew Townsend, head of the London Environmental and Regulatory Law Group at Allen & Overy, says the current system generates perplexing compliance issues for both clients and regulators, creating a strong barrier for entry. ‘We have myriad regimes potentially applicable to onshore fracking activities and shale gas exploration, none of which were designed with those activities in mind,’ he tells IBA Global Insight. ‘It’s a major headache for developers to navigate their way through what can only…

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