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[the grumpy old men] 02/10/2018 16:24

LONDON--A group led by Royal Dutch Shell PLC is pressing ahead with a major Canadian liquefied natural gas project after years of delay, the company said Tuesday, raising competition for new U.S. developments already under pressure from freshly implemented Chinese tariffs.

The 14-million-ton-a-year project is the biggest LNG development to gain approval in years and the first for Canada. By the mid-2020s, it is expected to be able to deliver massive tankers of supercooled natural gas to demand centers in Asia.

Shell and its partners' commitment to the project, which will cost roughly $14 billion to construct, signals growing confidence in global gas markets, as rising demand diminishes the threat that new supplies entering the market will cause a glut. It marks the end of a seven-year effort, blighted by weak prices that pushed back the final investment decision on the project by two years.

The decision suggests the prospects are positive for other large gas-export projects. A cluster of developments are currently vying for approval in Qatar, Russia, Mozambique and the U.S. Yet in the U.S. the outlook is dimming.

Earlier this month, China imposed a 10% tariff on imports of super-chilled gas from the U.S. in retaliation to levies imposed by the Trump administration. China is the biggest source of new global LNG demand and is expected to be a voracious consumer in the coming years as a result of efforts to move away from smog-inducing coal-fired power. Its demand rose around 50% in 2017.

"Right now, this is not very good for American LNG projects working hard to take final investment," said Morten Frisch, a U.K.-based independent gas industry consultant.

More than a dozen LNG projects are awaiting regulatory approval in the U.S., though analysts say only a few are likely to get the go ahead before the end of next year. If Chinese buyers fall away, those projects could become more difficult to finance.

"When the Chinese decided to put tariffs on U.S. gas the one take away we had from that is that the real losers will be U.S. LNG projects," said Trevor Sikorski, head of natural gas research at consultancy Energy Aspects.

Shell's new development is designed to send gas from Canada, where prices are relatively low, to Asia, where it can fetch a premium. Aside from coming without additional tariffs, the project, called LNG Canada, benefits from its location: The shipping distance from Kitimat, British Columbia, to North Asia is about 50% shorter than from the U.S. Gulf of Mexico and avoids the Panama Canal.

"Lots of people are talking about the emerging LNG deficit in the middle of the next decade but very few projects are being built to feed that deficit. We're encouraged and excited to see companies start to make investment decisions," said Nick Stansbury, head of commodity research at Legal & General Investment Management, which is a shareholder in Shell.

Shell said construction of the project would start immediately, with production expected to begin before the mid-2020s. The first phase of development will consist of two processing units, with the potential to double that in the future.

The oil-and-gas giant is anticipating that the project's startup will align with a shortage in LNG supply, as rapidly growing demand sucks up large volumes of new production. It said the project is expected to generate an internal rate of return of around 13%.

"Total global LNG demand is expected to double by 2035, but new FIDs have been lagging and supply gap is expected to open up in the middle of the next decade," Shell chief financial officer Jessica Uhl said.

Located on Canada's Pacific coast, the massive LNG export facility will receive natural gas from remote fields in British Columbia that currently struggle to find a market. TransCanada Corp. has been contracted to build a 670-kilometer to supply the processing facilities with gas. In total, the building the export facility and pipeline is expected to employ around 10,000 people

Shell holds the largest share of LNG Canada with 40%, alongside partners PetroChina, Mitsubishi Corp., Korea Gas Corp. and Malaysia's Petroliam Nasional Bhd. The presence of such large players has enabled the project to move forward without securing long-term offtake agreements--generally a prerequisite for such large developments to gain financing.

The Anglo-Dutch oil company has bet big on natural gas, anticipating strong demand growth in the coming years. The company's 2016 acquisition of BG Group for roughly $50 billion turned it into the world's largest non-state-backed player in the LNG market.

"This is one of the most significant decisions we've made in recent times," said Ms. Uhl. "It's the right project at the right place at the right time.

Write to Sarah Kent at [e-mail] and Sarah McFarlane at [e-mail]



(END) Dow Jones Newswires

October 02, 2018 10:03 ET (14:03 GMT)

[ariane] 02/10/2018 15:09

Boskalis commences EUR 100 million dredging activities for LNG Canada export facility
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October 02, 2018 09:33 ET | Source: Koninklijke Boskalis Westminster N.V.
multilang-release

Papendrecht, 2 October 2018

Royal Boskalis Westminster N.V. (Boskalis) announces that it will be executing the dredging scope for the development of the first large-scale LNG export facility in Kitimat, Canada (LNG Canada) following the final investment decision by the shareholders earlier today. The contract value is approximately EUR 100 million.

The dredging scope includes the removal and remediation of contaminated and non-contaminated sediments at the site of the future facility in order to provide the required physical space and marine access for the construction of LNG Canada. For these activities Boskalis will deploy a medium-sized trailing suction hopper dredger, cutter suction dredger, backhoe dredger and a crane barge. Boskalis was involved from the early stages of this development illustrating the early cyclical exposure dredging has on green field LNG developments. The dredging activities are expected to continue into 2020.

LNG Canada is a joint venture comprised of Royal Dutch Shell, Petronas, PetroChina, Mitsubishi and Korea Gas Corporation. The liquefied natural gas (LNG) export facility will initially consist of two LNG processing units with the first LNG expected to be processed before the middle of the next decade.

Boskalis' strategy is aimed at benefitting from key macro-economic factors which drive worldwide demand in our markets: expansion of the global economy, increase in energy consumption, global population growth and the challenges that go hand in hand with climate change. This contract award is closely related to the increase in energy consumption.

For further information

Investor relations:
Martijn L.D. Schuttevâer
[e-mail]

Press:
Arno Schikker
[e-mail]

T [phone]

Royal Boskalis Westminster N.V. is a leading global services provider operating in the dredging, maritime infrastructure and maritime services sectors. The company provides creative and innovative all-round solutions to infrastructural challenges in the maritime, coastal and delta regions of the world with services including the construction and maintenance of ports and waterways, land reclamation, coastal defense and riverbank protection. In addition, Boskalis offers a wide variety of marine services and contracting for the oil and gas sector and offshore wind industry as well as salvage solutions. Furthermore, Boskalis has a number of strategic partnerships in harbor towage and terminal services (Kotug Smit Towage, Keppel Smit Towage, Saam Smit Towage and Smit Lamnalco). With a versatile fleet of more than 900 vessels and floating equipment and 10,700 employees, including associated companies, Boskalis operates in 90 countries across six continents.

This press release can also be found on our website www.boskalis.com.

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[la forge] 28/9/2018 08:28

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Photographer: Tomohiro Ohsumi/Bloomberg
hyperdrive
A Dirty Industry Is Cleaning Up Using LNG

Niche LNG-powered fleets set to surge as pollution rules for cruise liners to container vessels get stricter
By Anna Shiryaevskaya
28 septembre 2018 à 06:00 UTC+2 Updated on 28 septembre 2018 à 08:23 UTC+2

Number of LNG ships to surge as marine pollution rules bite
Norway has most gas-powered vessels to keep its fjords clean

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The sleek cruise-ferry idling at the harbor in western Norway while picking up passengers spews none of the dirty black smoke typical of ships at busy ports elsewhere.

With a capacity of 1,500 passengers and 600 cars, the MS Bergensfjord is one of the growing number of vessels running on liquefied natural gas, which emits a fraction of the pollutants of the heavy oil and diesel typically used in ships. It’s an example of how one of the dirtiest industries is responding to demands for cleaner air and pristine coastlines.
The LNG cruise liner Bergensfjord sails into the harbour besides LNG Skangas in Risavika, Norway, on Sept. 6.
Photographer: Ilja C. Hendel/Ilja C. Hendel for Zukunft Erdgas

It’s also the latest opportunity for the gas industry, which is quickly expanding along with demand for greener forms of energy. That demand may spur a five-fold surge in LNG vessel production over the next eight years. Carnival Corp., the world’s biggest cruise line operator, just added the first of 11 LNG-powered vessels to its fleet, and competitors have their eyes on buying more.

“We are already seeing cruise ships using LNG fuel,” said Paul Wogan, chief executive officer of GasLog Ltd., an LNG tanker owner and operator whose whole fleet can run on the fuel it carries. “You don’t want see the big black plumes of smoke at the beautiful locations that they go to. LNG as a bunker fuel will continue to grow in demand.”

Diesel and ship oil are blamed for harming human health and the environment, creating sooty black carbon when they burn. These tiny particles settle in the lungs and on land and ice, where they speed melting by absorbing rather than reflecting the sun’s rays.
Expanding Fleet

Confirmed LNG-powered ships

Source: DNV GL

Updated Aug. 1 2018. Excluding LNG carriers and inland waterway vessels

Norway, determined to protect is pristine coastal scenery and chalky-white glaciers, has become the biggest operating area of ships using LNG as an alternative. It has become an early mover on international rules starting in 2020 that are designed to combat shipping pollution.

The advantage of LNG is that it’s abundant and available. Production from Qatar and Russia to the U.S. is forecast to increase by 30 percent in the six years to 2023, according to the International Energy Agency, which advises most major economies on energy policy.

LNG emits about 25 percent less carbon dioxide than conventional shipping fuels. It contains virtually no sulphur, 85 percent less nitrogen oxide, and 99 percent less particulates, exposure to which has been linked to cancer. That’s key to reducing emissions from the 90,000-strong global shipping fleet, which consumes about 5% of the world’s oil demand every day, according to Bloomberg NEF.

The gas-powered vessels’ share of the world’s commercial shipping fleet is minuscule, but growing. There’s 261 in service and on order with another 111 considered LNG-ready, according to DNV GL, which certifies ships for safety. That can reach 1,500 by 2026, according to Finnish engineer Wartsila Oyj, which provides marine LNG fuel systems.

Rules mandated by the International Maritime Organization in October 2016 cap sulfur levels in ships’ fuel from 2020. To comply, shipowners can install costly pollution-reducing scrubbers, use higher-grade fuel oils or even reduce their speed. But these are short-term measures compared with converting to LNG, said GasLog’s Wogan.

Still, hurdles remain. LNG bunkering, or refuelling, facilities aren’t widespread, and the lack of them is a big obstacle for shipowners to commit to converting to the fuel, according to Jeff Miers, a managing director in Accenture’s Energy practice.

New ships “are more likely to be built to operate on natural gas if their expected routes already have LNG bunkering infrastructure,̶1; he said. “But for ships that don’t ply fixed routes, the flexibility to refuel anywhere can outweigh the financial benefit of operating on LNG.”
The engine room inside LNG Ferry Bergensfjord ​​​;​
Photographer: Ilja C. Hendel/Ilja C. Hendel for Zukunft Erdgas

LNG isn’t the only clean-energy option, either. Battery technology is moving beyond just providing top-up energy and making short journeys. Shipowners are also looking into hydrogen power, a technology that, unlike LNG, has zero carbon dioxide emissions. Even so-called rotor sails are being tried by merchant shippers to supplement battery and conventional power.

Back at the port of Risavika, Norway, Gunnar Helmen, a sales manager at Skangas AS, a small-scale LNG plant that fuels the Bergensfjord cruise ferry, sees LNG and LNG-battery hybrids as the future. Ships consume so much fuel that natural gas is one of the only practical replacements for heavy fuel oil available, he said.

“We don’t let cruise liners that are polluting black smoke enter our fjords to look at the nice nature, it just doesn’t make sense,” Helmen said. “We see more and more shipowners tending to go for the green fuel.”
(331221311
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[waldron] 26/9/2018 08:17

Natural Gas Surges Past $3 As Traders Focus On Low Storage Levels
Sep. 25, 2018 4:04 PM ET|
22 comments
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Includes: BOIL, DGAZ, KOLD, UGAZ, UNG, UNL
HFIR Energy
HFIR Energy
Contrarian, hedge fund manager, commodities, oil & gas
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HFI Research Natural Gas
(3,357 followers)
Summary

We expect a +62 Bcf change in the storage report for the week ended September 21.

A storage report of +62 Bcf would compare with +58 Bcf last year and +81 Bcf for the five-year average.

We were stopped out of our DGAZ long position yesterday at the open at $19.24.

Traders are focusing on the low storage and as one trader said, "It doesn't matter until it does."

EOS is now at 3.27 Tcf with Lower 48 production at ~84.8 Bcf/d.

Looking for a community to discuss ideas with? HFI Research Natural Gas features a chat room of like-minded investors sharing investing ideas and strategies. Get started today »

Welcome to the new focus edition of Natural Gas Daily!

Housekeeping item first.

We expect a +62 Bcf change in the storage report for the week ended September 21. A storage report of +62 Bcf would compare with +58 Bcf last year and +81 Bcf for the five-year average.

Update on trading position

We were stopped out of our DGAZ long at the open yesterday at $19.24.

We do not have an active position on at the moment.
Natural gas marches into new price range as traders focus on low storage levels

It doesn't matter until it matters. That's how one trader described the current natural gas set-up to us.

For the natural gas bulls, the breakout above $3/MMBtu came on the heels of lower and lower injection estimates that pushed the natural gas storage forecast for the start of winter heating season to 3.27 Tcf.

For the most part of the summer gas trading period, natural gas traders ignore the low EOS as elevated production levels kept the market amply supplied, but as one trader quipped to us this week, "It doesn't matter until it matters."

Now that the injection season is just six weeks away from ending, natural gas traders are once again reassessing what the low storage means for natural gas fundamentals. For us, the increase in lower 48 production presented a bear case on fundamentals, but following our exit yesterday at the open due to a stop-loss being triggered, traders warned that the market may be re-pricing the trading band once again before the start of heating season.

This comes at a time where natural gas storage is expected to finish at 3.27 Tcf at the start of November. And even though lower 48 production is just inches away from breaking above ~85 Bcf/d, the market does not care about that at the moment.

Source: HFI Research

Looking ahead, the market is going to become very volatile again with the weather models dominating a large part of the daily moves. For the time being, the ECMWF-EPS long-range outlook shows cooler than normal temperatures across lower 48 by the third week of October. This would give heating demand an early start and suppress natural gas storage builds even more.

For now, we are not trading the market and will be waiting on the sidelines. Our current winter gas band is $2.50 to $3.50/MMBtu.

For readers who are interested in receiving real-time trade alerts along with our exclusive natural gas fundamental, weather, and trader positioning updates, we highly recommend you to give HFI Research Natural Gas a try. You can see here for more info.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[ariane] 06/9/2018 16:00

RWE (RWE.XE) and German LNG Terminal GmbH said Thursday they reached a capacity agreement for a planned liquefied-natural-gas terminal in Germany.

Under the contract, German utility company RWE would receive access to a substantial part of terminal's 5 billion cubic meters capacity, the companies said in a joint statement.

The agreement would allow the companies to deliver gas and LNG to customers in Germany and across Europe, said Andree Stracke, chief commercial officer for gas supply and origination of RWE's German supply and trading subsidiary.

The final investment decision for the construction of the terminal is expected for late 2019, if the market shows enough interest and all permit approvals have been obtained, the companies said.

Negotiations with other interested parties are ongoing, they said.

The LNG terminal would be the first in Germany, according to the companies.

German LNG Terminal GmbH is a joint venture of Gasunie LNG Holding BV and Vopak LNG Holding BV, together with Marquard & Bahls AG subsidiary Oiltanking GmbH.



Write to Olivia Bugault at [e-mail]



(END) Dow Jones Newswires

September 06, 2018 10:23 ET (14:23 GMT)

[adrian j boris] 02/9/2018 10:21

Melting Arctic Creates New Opportunities For LNG
By Tsvetana Paraskova - Sep 01, 2018, 2:00 PM CDT LNG vessel

Ice caps in the Arctic Circle are melting at an alarming pace, scientists and environmentalists warn. Global warming leads to larger amounts of ice caps retreating, opening more sea waters in the Arctic to ship navigation.

Waters navigable in more days in a year are an opportunity for energy buyers and sellers, especially in liquefied natural gas (LNG), to use the so-called Northern Sea Route that cuts the travel days from the Yamal LNG project in Russia to Asia in half compared to the Southern Sea Route via the Suez Canal.

This year, record temperatures in the northern hemisphere have contributed to more ice melting and the minimum extent of sea ice is expected to be among the top 10 lowest in four decades—since satellite records began.

This year volumes transported via the Northern Sea Route have increased, the reason being a rise in LNG exports from Russia, Sergei Balmasov, head of Murmansk-based consultancy Arctic Logistics Information Office, told Bloomberg.

According to Balmasov, while the number of voyages via the Northern Sea Route so far this year has been roughly the same as last year, the main difference compared to 2017 is LNG traffic out of the port of Sabetta, the port that Russia’s gas producer Novatek uses to ship the Yamal LNG cargoes to Europe and to Asia.

Arctic Logistics data compiled by Bloomberg shows that by early July, a total of 34 tankers made the voyage from Sabetta to Europe, and one to the east. Since early July, another two LNG tankers have shipped the fuel to Asia.

The Northern Sea Route enables vessels to reach Asia in 15 days via the Bering Strait, compared to 30 days via the conventional route through the Suez Canal, one of the minority partners in the Yamal LNG project, France’s Total, says.
Related: Oil Prices Inch Lower As Rig Count Rises

In mid-July, Novatek said that it had shipped its first LNG cargoes from Yamal LNG to China via the Northern Sea Route, with the voyage from Sabetta completed in 19 days, compared to 35 days for the traditional eastern route via the Suez Canal and the Strait of Malacca.
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“The Northern Sea Route ensures shorter transportation time and lower costs, which plays a key role in developing our hydrocarbon fields on the Yamal and Gydan peninsulas,” Leonid Mickhelson, chairman of Novatek’s Management Board, said.

With more ice caps melting in the Arctic in the summer, the shipping season in northern waters could start earlier and end later than in previous years, opening more days or weeks for ships to voyage on that route, cutting costs and reducing transportation time.

According to the Colorado-based National Snow & Ice Data Center (NSIDC), after declining rapidly in July, the decline of sea ice extent slowed in the first two weeks of August.

“Our 2018 projection for the sea ice minimum extent falls between the fourth and ninth lowest in the 39-year satellite record,” NSIDC says.

This summer, a heat wave swept across most of the northern hemisphere, and temperatures in northern Norway stayed well above average for weeks in July and early August. In Banak, in Norway’s far north, temperatures hit records of 90 degrees Fahrenheit, compared to its average maximum summer temperature of 62 degrees Fahrenheit.

Scientists attribute the faster Arctic ice melting and the heat waves to global warming and climate change. Environmentalists warn that more traffic on the Arctic shipping lanes will additionally contribute to the ice caps retreat because of the black carbon emissions whose warming effect is at least three times higher in the Arctic, says environmental group Clean Arctic Alliance. When ships burn fuel, especially heavy fuel oil, they emit the so-called black carbon, which absorbs heat and settles down on the ice and snow, speeding their melting. The International Maritime Organization (IMO) will be discussing banning the use of heavy fuel oil in the Arctic, while under its Polar Code, currently ships are encouraged not to use or carry heavy fuel oil in the Arctic.

At any rate, the retreat of the ice caps in the Arctic is opening a wider shipping lane for energy trade.

By Tsvetana Paraskova for Oilprice.com

[waldron] 28/8/2018 18:15

‘Europe has to play its trump cards’: German energy giant says Russian gas vital for continent
Published time: 28 Aug, 2018 14:56
Edited time: 28 Aug, 2018 15:24
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‘Europe has to play its trump cards’: German energy giant says Russian gas vital for continent


12

Russian natural gas that will run through the Nord Stream 2 pipeline is critical for Europe amid increasing demand and decreasing production in the region, according to CEO of Germany's energy company Wintershall, Mario Mehren.

“Demand in the EU is rising, but domestic production is declining – which in short means that the import demand is increasing,” Mehren said, as quoted by the company’s press-service.

“In 2030, for example, the EU will have to import around 400 billion cubic meters of natural gas. In order to meet this increasing import demand, we need reliable partners, especially in pipeline distance.
Read more
FILE PHOTO European leaders at the opening of the North Sea gas pipeline on Germany's Baltic coast in Lubmin, 2011© Tobias Schwarz Pass the peace pipe: US promises Germany to leave Russian gas pipeline alone

“Nord Stream 2, for example, will provide an additional capacity of 55 billion cubic meters of natural gas when it is completed. This is natural gas that Europe needs,” the CEO stressed.

Mehren noted that crucial importance of Russia as a major partner in European energy projects is set to increase in the future. The head of the German energy major also highlighted the importance of cooperation with Norway.

According to the CEO, natural gas is also making a significant contribution to Germany's and Europe's energy transition and to reducing CO2 emissions. The region won’t reportedly achieve its climate goals without natural gas as the most environmentally-friendly fossil fuel.

“Europe has the advantage of being able to use its geographical proximity and direct connection to the large energy reserves in Norway and Russia in pipeline distance,” Mehren said.

“Our well-established and reliable partnerships in particular with these two countries are essential for achieving the climate targets. Europe has to play its trump cards.”

The Nord Stream pipeline project, led by the subsidiary of Russian energy giant Gazprom, is being implemented in cooperation with German energy firms Wintershall and Uniper, French multinational Engie, British-Dutch oil and gas giant Royal Dutch Shell and Austrian energy company OMV. The future pipeline, which is set to run from Russia to Germany under the Baltic Sea, is expected to double the existing pipeline’s capacity of 55 billion cubic meters annually.

For more stories on economy & finance visit RT's business section

[adrian j boris] 27/8/2018 15:54

ABB Says It Will Deliver Fastest Upstream Start-up For Aasta Hansteen’s First Gas
Hart Energy Staff
Monday, August 27, 2018 - 8:45am

1

ABB is set to deliver what it believes to be the world’s fastest start-up when Equinor’s Aasta Hansteen gas field begins operating and produces its first gas later this year.

ABB is in the final phase of providing a suite of innovative ABB Ability digital technologies for Aasta Hansteen, which is located in 1,300 m of water in the Vøring area of the Norwegian Sea, 300 km from land.

Part of the challenge for ABB was to make the first gas start-up process as quick and efficient as possible. For this, ABB needed to reduce a sequence of over 1,000 manual interventions to as few as possible. The outcome is a series of buttons that are as simple as starting a car.

“Our teams went through the start-up steps, identified and defined obstacles that needed to be improved, then used our ABB Ability System 800xA simulator to do a virtual start-up of the plant,” said Per Erik Holsten, managing director for ABB Oil, Gas and Chemicals. “At this stage we made a lot of improvements for starting up and operating the plant. Through automating much of the process we managed to reduce a complex set of manual interventions to just 20, which means we are all set to deliver what we believe to be the world’s fastest start-up at first gas.”

The company estimates it saved about 40 days in the commissioning phase of the project, or nearly 2,700 man-hours by using the ABB Ability System 800xA simulator to identify and improve 57 areas in the start-up.

The ABB Ability System 800xA simulator is a solution that minimizes risk and reduces the occurrence of unplanned shutdowns, while improving safety, productivity and energy savings. It has a control system that is disconnected from the physical process and is instead simulated by a dynamic process model. By seamlessly extending the Distributed Control System (DCS), the ABB Ability System 800xA provides the same look and feel as the core functional areas. It is a scalable solution in system size, functionality and control system connectivity and is available in three editions: Basic, Premium and Professional.

“In the operation of oil and gas projects there are lots of different automation and instrument competencies and disciplines required for the project to run smoothly,” Holsten said. “In upstream greenfield sites such as Aasta Hansteen, ABB is one of the few companies that is sufficiently skilled and resourced to connect the different parts of the jigsaw together to provide a truly connected plant. Aasta Hansteen is a great example of how it is possible to do just that, while making the start-up and operation of the plant more efficient.”

[sarkasm] 27/8/2018 11:14

PARIS (Agefi-Dow Jones) - Energy giant Total announced on Monday that it will sell Shell its stake in a liquefied natural gas regasification terminal in western India, and that it will signed an agreement to supply LNG to the oil and gas company in the region.

"Total has signed a binding letter of intent with Shell to sell its 26% minority stake" in the Hazira terminal in India, Total said in a statement. This transaction, the amount of which has not been specified, remains subject to approval by the competent authorities.

The LNG supply contract to Shell is 0.5 million tonnes a year for a five-year period and is destined for the Indian market and neighboring countries, Total said. This gas will come from Total's global portfolio for a start of delivery in 2019, said Total without providing financial details.

-Alice Doré, Agefi-Dow Jones; [phone]; [e-mail] ed: LBO

Agefi-Dow Jones The financial newswire

[florenceorbis] 26/8/2018 21:17

Europe’s Natural Gas Prices Surge To Record For Summer Season
By Tsvetana Paraskova - Aug 26, 2018, 2:00 PM CDT NatGas

Europe’s natural gas market is the most bullish it has been in years, as higher-than-expected summer demand and a tighter market drive natural gas price futures to levels last seen during this past winter’s supply crunch and to the highest for a summer season.

Natural gas prices are expected to stay strong and may still have room to rally, ahead of the next winter heating season in Europe that begins in October, analysts and traders tell Bloomberg.

Contrary to the typical summer lull in Europe’s gas prices, this year the front-month gas price in the UK—Europe̵7;s biggest gas market—for example, is nearing the winter price from December 2017 when a deadly explosion in Austria’s gas hub at Baumgarten squeezed supplies throughout Europe. Immediately after the explosion, the price of gas for immediate delivery in the UK reached its highest level since 2013.

The past winter season in Europe was one of the coldest this decade, sending gas demand soaring and the level of natural gas stored in tanks across Europe dropping to below average levels.

Russia—which already supplies around one-third of Europe’s gas—boosted deliveries in the winter, and continued to ship higher volumes even after that, as gas importing countries were replenishing gas storage supplies that had been drained amid the cold snaps.

Come spring, demand in Europe stayed high. First, because gas storage levels were low, and second—because some of Europe’s other traditional gas-supplying countries decreased supplies over issues or maintenance at facilities.

Related: Venezuela Takes Unprecedented Action To Stabilize Currency
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Then summer came and with it a prolonged scorching heat wave across most of Europe for most of July and August. Demand for gas jumped again amid a tighter market and spot cargoes of liquefied natural gas (LNG) going mostly to Asia—China in particular—as sellers profit from selling their LNG on the Asian market where prices are higher than Europe’s.

China’s LNG demand is attracting LNG cargoes and Northwest Europe these days serves as a terminal for transfer of LNG for re-export to the Asian markets. Although the UK benchmark gas price is at its highest for this time of the year, Asian spot prices are even higher, so LNG spot cargoes go to the higher bidder. Spot prices in Asia are also pushed up by a heat wave there—record high temperatures in Japan have led to strengthened East Asia spot LNG prices over the past month as Japanese and South Korean utilities were back on the market looking for spot September and October cargoes to refill storage before winter comes, Alex Froley, LNG Analyst at ICIS, said in a note this week.

With Asia snapping up LNG supplies, European gas markets stay tight, with demand high and natural gas storage levels low and in need of replenishing before winter comes. Further boosting gas demand is utilities across Europe seeking more gas-fired power generation because the prices of EU carbon dioxide (CO2) emissions allowances under the EU Emissions Trading System surged to a 10-year high, so utilities prefer to use more gas-fired power generation at the expense of the more emission-intensive and polluting coal.

Related: The Next Major Challenge For Norway’s Oil Industry

Another side effect of the heat wave across Europe also helped boost gas demand. In France—which depends on nuclear power for around 75 percent of its electricity demand—EDF had to halt for some time four nuclear reactors at three power plants because of high temperatures of the Rhone and Rhine rivers whose waters are used by the nuclear facilities for cooling.

The hot summer in Europe has also been hot for natural gas prices that have never been so high for this time of the year. According to traders and analysts surveyed and briefed by Bloomberg, the gas price rally will likely continue in view of the coming winter, unless there is unexpected lower demand in the winter or an oversupply of natural gas.

By Tsvetana Paraskova for Oilprice.com

[florenceorbis] 26/8/2018 21:17

Europe’s Natural Gas Prices Surge To Record For Summer Season
By Tsvetana Paraskova - Aug 26, 2018, 2:00 PM CDT NatGas

Europe’s natural gas market is the most bullish it has been in years, as higher-than-expected summer demand and a tighter market drive natural gas price futures to levels last seen during this past winter’s supply crunch and to the highest for a summer season.

Natural gas prices are expected to stay strong and may still have room to rally, ahead of the next winter heating season in Europe that begins in October, analysts and traders tell Bloomberg.

Contrary to the typical summer lull in Europe’s gas prices, this year the front-month gas price in the UK—Europe̵7;s biggest gas market—for example, is nearing the winter price from December 2017 when a deadly explosion in Austria’s gas hub at Baumgarten squeezed supplies throughout Europe. Immediately after the explosion, the price of gas for immediate delivery in the UK reached its highest level since 2013.

The past winter season in Europe was one of the coldest this decade, sending gas demand soaring and the level of natural gas stored in tanks across Europe dropping to below average levels.

Russia—which already supplies around one-third of Europe’s gas—boosted deliveries in the winter, and continued to ship higher volumes even after that, as gas importing countries were replenishing gas storage supplies that had been drained amid the cold snaps.

Come spring, demand in Europe stayed high. First, because gas storage levels were low, and second—because some of Europe’s other traditional gas-supplying countries decreased supplies over issues or maintenance at facilities.

Related: Venezuela Takes Unprecedented Action To Stabilize Currency
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Then summer came and with it a prolonged scorching heat wave across most of Europe for most of July and August. Demand for gas jumped again amid a tighter market and spot cargoes of liquefied natural gas (LNG) going mostly to Asia—China in particular—as sellers profit from selling their LNG on the Asian market where prices are higher than Europe’s.

China’s LNG demand is attracting LNG cargoes and Northwest Europe these days serves as a terminal for transfer of LNG for re-export to the Asian markets. Although the UK benchmark gas price is at its highest for this time of the year, Asian spot prices are even higher, so LNG spot cargoes go to the higher bidder. Spot prices in Asia are also pushed up by a heat wave there—record high temperatures in Japan have led to strengthened East Asia spot LNG prices over the past month as Japanese and South Korean utilities were back on the market looking for spot September and October cargoes to refill storage before winter comes, Alex Froley, LNG Analyst at ICIS, said in a note this week.

With Asia snapping up LNG supplies, European gas markets stay tight, with demand high and natural gas storage levels low and in need of replenishing before winter comes. Further boosting gas demand is utilities across Europe seeking more gas-fired power generation because the prices of EU carbon dioxide (CO2) emissions allowances under the EU Emissions Trading System surged to a 10-year high, so utilities prefer to use more gas-fired power generation at the expense of the more emission-intensive and polluting coal.

Related: The Next Major Challenge For Norway’s Oil Industry

Another side effect of the heat wave across Europe also helped boost gas demand. In France—which depends on nuclear power for around 75 percent of its electricity demand—EDF had to halt for some time four nuclear reactors at three power plants because of high temperatures of the Rhone and Rhine rivers whose waters are used by the nuclear facilities for cooling.

The hot summer in Europe has also been hot for natural gas prices that have never been so high for this time of the year. According to traders and analysts surveyed and briefed by Bloomberg, the gas price rally will likely continue in view of the coming winter, unless there is unexpected lower demand in the winter or an oversupply of natural gas.

By Tsvetana Paraskova for Oilprice.com

[ariane] 25/8/2018 22:51

Natural Gas Inventories “Dangerously Low"
By Ag Metal Miner - Aug 25, 2018, 2:00 PM CDT NatGas

Futures markets are suggesting the currently benign level of natural gas price volatility may not remain through the winter months.

According to the Financial Times, market volatility this year has been the lowest on record despite inventory levels falling 19.5 percent below average and by the time winter starts are set to be at their lowest in more than a decade.

(Click to enlarge)

Source: Bloomberg (via Financial Times)

The Financial Times puts this down to investors being lulled into complacency by a seemingly unstoppable wave of new supply from the shale market rising inexorably to meet rising demand. The government last week forecast 81.1 billion cubic feet per day in dry gas production for 2018 — a record high — and up by 7.5 billion cu ft/d from 2017, the Financial Times reports.

But is the market safe to assume shale gas will supply regardless of demand?

Natural gas producers are systematically hedging their sales throughout next year, often a sign they plan to continue an aggressive policy of drilling and expansion. That activity has contributed to a dipping of forward prices, as there are more sellers in the futures market than buyers.

But inventory levels are low — some would suggest dangerously low — after a high summer demand due to hot weather increasing demand for air conditioning. Natural gas “power burn” surged to a record 37.7 billion cubic feet per day during July, the Financial Times reports.
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Related: A Saudi-Iran Oil War Could Break Up OPEC

Such strong demand comes after a cold winter depleting stocks to unusually low levels. Inventory levels were low at the end of the summer and have not managed to be replaced during the normally slacker summer months. High demand is not helped by exports of natural gas and distillates running at record levels, aided by strong international demand and low U.S. domestic prices relative to global markets.

(Click to enlarge)

Forward market spreads suggest there is already competition between companies buying gas for anticipated stronger winter-month demand are meeting power companies also trying to hedge their requirements.

Volatility is traditionally lower in the slacker summer months and rises as demand ramps up in the winter. If inventory levels are high, investors are less prone to panic, rightly seeing ample supply.

But when inventory levels are low, volatility is placing complete faith in the shale producers to meet rising demand — a faith that may yet prove misplaced.

By AG Metal Miner

More Top Reads From Oilprice.com:

[waldron] 23/8/2018 16:55

The global shipping industry could become a new market for liquefied natural gas, thanks to a drastic change in maritime law that aims to curb air pollution.

Major cruise liners and the world's biggest freight companies have ordered 125 new LNG-powered vessels and another 119 are already in operation, according to current figures from maritime consultancy DNV GL. That is partly because new regulations taking effect in 2020 will reduce the maximum amount of sulfur permitted in the oil used by ships from 3.5% to 0.5%.

LNG is gas that is supercooled until it turns into liquid. While LNG use as a shipping fuel is still too small to affect its prices, the projected uptake is supporting the outlook of companies like Royal Dutch Shell PLC that LNG demand will continue to grow.

The shipping industry currently consumes about 5 million barrels a day of oil, and most of the industry is expected to meet the new obligations by either switching to more expensive low-sulfur fuels or installing "scrubbers" that clean sulfur out of exhaust fumes.

But the rule changes will make LNG a cost-competitive option for shipping fuel. Analysts say that just converting 5% of the global fleet to run on LNG would create a new market equivalent to the fifth-largest in the world, behind major consumers Japan, China, Korea and India.

Carnival Corp.'s AIDAnova is currently under construction at a shipyard in Papenburg, Germany. When the 1,106-foot vessel launches later this year, it will be the first cruise ship fully powered by LNG. Carnival, the world's largest cruise company, plans to take delivery of 11 new LNG-powered ships between now and 2025.

Cruise passengers will be able to enjoy the difference of journeying under LNG power, Steve Hill, a vice president at Shell, said in an interview earlier this year.

"If your customer proposition is to have people lying on the deck and enjoying the sun, it's much nicer to not have pollution from fuel oil being spread all over them all day," he said.

Carnival isn't alone: Swiss-based MSC Cruises said in June it ordered what will be its fifth LNG-powered vessel. Royal Caribbean also said this year that it has two LNG-powered cruise liners on order.

In freight, Siem Industries is building LNG-fueled car carriers for Volkswagen AG. France's CMA CGM SA has ordered nine new ultra-large LNG-powered container ships and has struck a 10-year LNG supply deal with French oil and gas producer Total. Teekay Corp., one of the biggest shipowners, and Sovcomflot, Russia's largest shipping company, also have LNG vessels in order.

LNG does faces challenges in the maritime industry. Credit Suisse oil and gas analyst Saul Kavonic said many shipping companies would meet the emissions rules by fitting their vessels with scrubbers. Carnival, for example, will use scrubbers on 69 of its 103 ships.

"Only a very small percentage of the international shipping fleet will adopt LNG as a fuel over the next five years," Mr. Kavonic said.

The lack of "bunkering" -- the infrastructure for storing and refueling LNG -- is likely the biggest hurdle. LNG requires dedicated facilities to store the fuel at the temperatures needed to maintain its liquid form and load it onto vessels.

LNG fuel tanks also take up almost twice as much space as their oil equivalents, which would impact the design of new vessels. Ships powered by LNG are also more expensive than traditional vessels. Introducing LNG to a fleet requires retraining of engineers and crews.

Shipping companies are also used to working in the highly liquid oil market, where supply is easy to source and deep futures and hedging markets help manage their exposure. In contrast, until recently LNG has been dominated by decadeslong contracts and its futures market is still nascent.

But short-term, more flexible LNG sales are becoming more common. Producers are increasingly willing to trade single LNG cargoes. The percentage of LNG cargoes sold on the spot market has grown from just over 10% in 2010 to almost 25% in 2017, according to Shell.

Tom Strang, who has been leading Carnival's LNG strategy, said the nature of the LNG market requires longer-term contracting and planning.

Still, LNG producers are eyeing the industry as a promising new source of demand. Shell's Mr. Hill said the energy giant is betting LNG will grow at a faster pace than oil. Shell is working with Carnival to source LNG and developing bunkering facilities for its cruise ships.

"Historically LNG has struggled to compete with heavy fuel oil which is cheap," said Mr. Hill. "But in this new world, where the costs of the alternatives are a lot more expensive, LNG will be a lot more competitive. We're starting to see a lot of interest and a lot of activity."

Write to Paul Garvey at [e-mail]



(END) Dow Jones Newswires

August 23, 2018 08:14 ET (12:14 GMT)

[grupo] 19/8/2018 08:02

August 19 2018 01:57 AM
Business Eco./Bus. News
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GAS
LNG spot prices in Northeast Asia are averaging the highest since 2014
Text Size: A A A

Bloomberg/Tokyo

Some of the world’s biggest buyers of liquefied natural gas are signing mid-term supply deals, a move seen as protection against a further rise in prices that are already at the highest in four years.
A unit of BP signed a three-year supply agreement with Exxon Mobil Corp’s Papua New Guinea LNG project on Friday, following a similar deal by PetroChina International last month. Japan’s Jera Co, one of the world’s biggest buyers of gas, inked an agreement for the same duration with Abu Dhabi Gas Liquefaction Co’s LNG project last week.
“Buyers have been concerned about the strength of prices this summer and coming winter and may have expectations of further increases,” Wood Mackenzie Ltd analyst Nicholas Browne said in an e-mail. “For a portfolio player like BP, it gives them additional supply and optionality close to key Asian markets over this period.”
LNG spot prices in Northeast Asia are averaging the highest since 2014 at around $9.50 per million British thermal units through the first seven months of this year, according to World Gas Intelligence. Prices last year surged on the back of China’s soaring consumption growth and this year’s rally comes before winter, when use across the region typically peaks.
Exxon Mobil is negotiating another mid-term LNG deal from the PNG LNG facility in lieu of spot sales, partner Oil Search Ltd said on Friday when it announced the deal with BP. More mid-term deals are likely at least until 2023 or 2024, when the next round of major LNG supply projects come online, according to Wood Mackenzie’s Browne.
“The uptick in demand and spot prices over the last year has brought home the risks to buyers of being exposed to the spot market too much,” said Saul Kavonic, Credit Suisse Group AG’s director of energy research in Asia. That has created “more deal space for buyers and sellers to agree on mid-term contracts.”

[grupo] 18/8/2018 22:49

Overlooked Gas Project Could Be Biggest Winner In Trade War
By Tim Daiss - Aug 18, 2018, 4:00 PM CDT Gas storage

After several months of what can only be only called bad PR and troubling news coming out of the ExxonMobil-led $19 bn Papua New Guinea (PNG) LNG project, finally some good news has broken. Project partner Oil Search, which holds a 29 percent stake, said the project had agreed to a deal to supply LNG to a unit of British oil giant BP.

The agreement will start this month and provide BP with about 450,000 tonnes of LNG per annum over an initial three-year period, then rising to about 900,000 tonnes for the following two years, Oil Search said in a statement without giving any financial details of the deal.

"(The move) takes the total contracted volumes from the project to approximately 7.5 million tonnes per annum (mtpa)," Oil Search Managing Director Peter Botten said. The agreement comes a month after Oil Search announced a similar deal with PetroChina, the publically listed arm of state-run oil major Sinopec, for 6.6 mtpa. ExxonMobil is also reportedly in negotiations with several other parties over an additional 450,000 tonnes per year of LNG supply.

These developments come after several tense months for PNG LNG project partners. On February 26, 7.5 magnitude earth quake triggered landslides and flattened buildings in the country, and left at least 100 dead, forcing the government to declare a state of emergency.

However, the fallout from the quake caused anger among many locals that either directly attributed the natural disaster to gas drilling in the mountain region of the country, or at the very least claimed it was a contributing factor. Project partners, along with geologists, disputed the claims, but to no avail. Most locals still blame the PNG project for the devastating earthquake.

That anger then spilled over into local communities complaining that the PNG project consortium had taken advantage of both federal and provincial government leaders as well as land owners when it first reached deals to build the project around ten years ago.

After minor repairs to the facility and passing safety checks, the PNG project resumed operations by mid-April but by then it had a public relations fiasco on its hands. In lock step, the PNG government joined in the fray, claiming it they had given away too much in the initial round of negotiations that allowed the project to be built, and vowed that for any future negotiations for additional projects the country will not away concessions so easily.

Then on July 5, Exxon reported that it had stopped construction on its Angore gas pipeline in the country’s strife-hit highlands after building sites were vandalized. Two weeks later, the U.S.-based oil major said that it, along with PNG security forces, were investigation the vandalism. The 11-km (7-mile) Angore pipeline is being built to connect the Angore gas field to the Hides gas conditioning plant.
Related: WTI Set For Longest Weekly Losing Streak Since 2015

However, according to reports coming out of the country highlands region rioters and landowners have not yet received payments due from the government out of royalties paid by the project which shipped its first LNG four years ago.
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All of this unrest would have been hard to imagine just a year ago when the PNG project was the envy of the LNG industry. Unlike most of Australia's massive CAPEX LNG projects that have fallen behind schedule and suffered exorbitant cost and budget blowouts, the PNG project was the envy of the industry. Not only had it been completed ahead of schedule but also delivered its first LNG ahead of schedule in 2014.

Moreover, if Exxon and its project partners can address what appears to be legitimate government and local land owner concerns, the project should be able to capitalize on the ongoing trade dispute between the U.S. and China. Chinese end LNG users told global commodities data provider S&P Global Platts last week that, if implemented, the pending Chinese tariffs would push the cost of U.S. LNG above what companies could afford for spot cargoes in the near term.

"[A] 25% [tariff] is not something we can absorb even if domestic demand is strong," said a source at a state-owned Chinese company. "So while this uncertainty persists, I doubt buyers will be buying a lot of spot US LNG."
Related: The One Oil Industry That Isn’t Under Threat

If Beijing pushes through with the 25 percent retaliatory tariff against U.S. sourced LNG, the PNG project can offload uncommitted cargoes on the spot market in Asia to replace U.S. LNG. To date, China has been a consistent customer of U.S.-based Cheniere Energy’s cargoes sold on the spot market in Asia.

PNG can capitalize on Cheniere's loss, even if PNG’s volume of uncommitted production is narrowing.

In 2017, the PNG project shipped a total of 110 LNG cargoes with 23 ending on the spot market. The total figures since the start of exports in mid-2014 have reached 370 cargoes.

Moreover, major PNG project partners, Exxon, Oil Search and French oil major Total, have been discussing expanding the project. If an expansion is agreed upon and approved by the PNG government, it will be underpinned by the more than 10 tcf of discovered undeveloped gas resource in the Elk-Antelope and P’nyang fields and potentially gas from the foundation project fields - stiff competition for both U.S.-based and Australian LNG projects.

By Tim Daiss for Oilprice.com

[grupo] 18/8/2018 22:49

Overlooked Gas Project Could Be Biggest Winner In Trade War
By Tim Daiss - Aug 18, 2018, 4:00 PM CDT Gas storage

After several months of what can only be only called bad PR and troubling news coming out of the ExxonMobil-led $19 bn Papua New Guinea (PNG) LNG project, finally some good news has broken. Project partner Oil Search, which holds a 29 percent stake, said the project had agreed to a deal to supply LNG to a unit of British oil giant BP.

The agreement will start this month and provide BP with about 450,000 tonnes of LNG per annum over an initial three-year period, then rising to about 900,000 tonnes for the following two years, Oil Search said in a statement without giving any financial details of the deal.

"(The move) takes the total contracted volumes from the project to approximately 7.5 million tonnes per annum (mtpa)," Oil Search Managing Director Peter Botten said. The agreement comes a month after Oil Search announced a similar deal with PetroChina, the publically listed arm of state-run oil major Sinopec, for 6.6 mtpa. ExxonMobil is also reportedly in negotiations with several other parties over an additional 450,000 tonnes per year of LNG supply.

These developments come after several tense months for PNG LNG project partners. On February 26, 7.5 magnitude earth quake triggered landslides and flattened buildings in the country, and left at least 100 dead, forcing the government to declare a state of emergency.

However, the fallout from the quake caused anger among many locals that either directly attributed the natural disaster to gas drilling in the mountain region of the country, or at the very least claimed it was a contributing factor. Project partners, along with geologists, disputed the claims, but to no avail. Most locals still blame the PNG project for the devastating earthquake.

That anger then spilled over into local communities complaining that the PNG project consortium had taken advantage of both federal and provincial government leaders as well as land owners when it first reached deals to build the project around ten years ago.

After minor repairs to the facility and passing safety checks, the PNG project resumed operations by mid-April but by then it had a public relations fiasco on its hands. In lock step, the PNG government joined in the fray, claiming it they had given away too much in the initial round of negotiations that allowed the project to be built, and vowed that for any future negotiations for additional projects the country will not away concessions so easily.

Then on July 5, Exxon reported that it had stopped construction on its Angore gas pipeline in the country’s strife-hit highlands after building sites were vandalized. Two weeks later, the U.S.-based oil major said that it, along with PNG security forces, were investigation the vandalism. The 11-km (7-mile) Angore pipeline is being built to connect the Angore gas field to the Hides gas conditioning plant.
Related: WTI Set For Longest Weekly Losing Streak Since 2015

However, according to reports coming out of the country highlands region rioters and landowners have not yet received payments due from the government out of royalties paid by the project which shipped its first LNG four years ago.
Oilprice.com
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with over 10,000+ members

Learn, Share, and Discuss on the OilPrice Community
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All of this unrest would have been hard to imagine just a year ago when the PNG project was the envy of the LNG industry. Unlike most of Australia's massive CAPEX LNG projects that have fallen behind schedule and suffered exorbitant cost and budget blowouts, the PNG project was the envy of the industry. Not only had it been completed ahead of schedule but also delivered its first LNG ahead of schedule in 2014.

Moreover, if Exxon and its project partners can address what appears to be legitimate government and local land owner concerns, the project should be able to capitalize on the ongoing trade dispute between the U.S. and China. Chinese end LNG users told global commodities data provider S&P Global Platts last week that, if implemented, the pending Chinese tariffs would push the cost of U.S. LNG above what companies could afford for spot cargoes in the near term.

"[A] 25% [tariff] is not something we can absorb even if domestic demand is strong," said a source at a state-owned Chinese company. "So while this uncertainty persists, I doubt buyers will be buying a lot of spot US LNG."
Related: The One Oil Industry That Isn’t Under Threat

If Beijing pushes through with the 25 percent retaliatory tariff against U.S. sourced LNG, the PNG project can offload uncommitted cargoes on the spot market in Asia to replace U.S. LNG. To date, China has been a consistent customer of U.S.-based Cheniere Energy’s cargoes sold on the spot market in Asia.

PNG can capitalize on Cheniere's loss, even if PNG’s volume of uncommitted production is narrowing.

In 2017, the PNG project shipped a total of 110 LNG cargoes with 23 ending on the spot market. The total figures since the start of exports in mid-2014 have reached 370 cargoes.

Moreover, major PNG project partners, Exxon, Oil Search and French oil major Total, have been discussing expanding the project. If an expansion is agreed upon and approved by the PNG government, it will be underpinned by the more than 10 tcf of discovered undeveloped gas resource in the Elk-Antelope and P’nyang fields and potentially gas from the foundation project fields - stiff competition for both U.S.-based and Australian LNG projects.

By Tim Daiss for Oilprice.com