Tuesday, March 19, 2013

Broome 'tired' of gas project uncertainty - ABC News (Australian Broadcasting Corporation)

Broome 'tired' of gas project uncertainty - ABC News (Australian Broadcasting Corporation):
Shire president Graeme Campbell says that polarised opinion seems to have been replaced by impatience.

"The feeling I'm getting, and I'm getting it said very loudly, people are saying, 'I don't support that oil and gas and I'm over it', 'I support the oil and gas, why the heck don't they get on and make a decision one way or the other?'" he said.

"I think people are tired of it and they just want a decision one way or the other.

"This hanging on, hanging on, hanging on isn't good for the community."

Meanwhile, a local real estate agent says uncertainty over the project is having a mixed effect on the local housing market.


  1. BHP's shale gas division faces claims

    BHP Billiton's controversial shale division is set to be dragged back into the US court system as two new legal claims target damages payments that could run into the millions of dollars.

    The two claims were lodged in the Arkansas court system this month, and focus on contentious issues surrounding royalty payments to landowners and a series of seismic events that coincided with fracking activities on assets BHP would later acquire from Chesapeake.

    BHP has previously been taken to court in Arkansas by other plaintiffs raising similar complaints, and the two claims - lodged separately on March 6 and March 11 - suggest both issues could continue to plague the company.

    The more financially significant claim, which seeks more than $US5 million in damages, is a class action that alleges landowners have been underpaid royalties for hosting shale wells. The claim says a group of companies that both produce and market gas - namely BHP, Chesapeake, BP and Arkansas Midstream - entered into sales arrangements that resulted in ''a fraudulent scheme'' that reduced the amount of royalties paid to landowners.


    The plaintiffs claim this was done by a variety of methods, including intentionally reporting false information around the quantities of gas sold, deduction of fees, taking gas from wells that was never reported and several other ''improper deductions''.

    A similar claim was lodged in Arkansas courts last July, when plaintiffs Denny and Diane Brown claimed BHP and XTO Energy ''wilfully withheld'' royalty payments.


    The second new claim, lodged in the Little Rock division of the US District Court, involves a claim for at least $US75,000 damages from two married couples living in the Arkansas town of Greenbrier. Both couples live about 1½ kilometres from the epicentre of an earthquake that registered 4.7 on the Richter scale in February 2011, and the claim links disposal wells in the fracking process to seismic activity in the area.

    That link has not been definitively proven, but fracking has been deemed to cause seismic activity elsewhere, including Britain.

    The couples claim they have suffered physical damage to their homes, losses in the value of their real estate and emotional distress.

    The distress was claimed to be ''so severe … no reasonable person could be expected to endure it''.

  2. Testimony | March 19, 2013

    The Department of Energy’s Strategy for Exporting Liquefied Natural Gas

    By: Charles K. Ebinger

    Mr. Chairman, Ranking Member Speier, and distinguished Subcommittee members:

    Thank you for inviting me here to share my views on U.S. LNG export policy. My name is Charles Ebinger and I am Director of the Energy Security Initiative at the Brookings Institution. These views are mine alone and do not reflect the views of the Brookings Institution, which does not take institutional positions on any policy issue.

    The Energy Security Initiative at Brookings has been studying this issue for the past two years, having published an assessment of the case for LNG exports in May 2012 in our report, Liquid Markets: Assessing the Case for Exports of Liquefied Natural Gas from the United States


    The North American natural gas market is competitive and prices are traded in a transparent and open market. The Atlantic Basin is dominated by European LNG consumers such as the United Kingdom, Spain, France, and Italy, and is a hybrid of a competitive U.K. market that was liberalized in the mid-1990s and a Continental European market that is partially dependent on oil-linked, take-or-pay contracts. In recent years, the U.K. hub, the National Balancing Point (NBP), has traded at a premium to the U.S. hub, known as the Henry Hub. The Pacific Basin is a more rigid market that depends heavily on oil-indexed contracts that are more expensive than those used in the Atlantic Basin. While they have no central trading hub, the Pacific Basin consumers such as Japan and South Korea currently import LNG based on a pricing formula known informally as the Japan Crude Cocktail, the average price of custom-cleared oil imports into Tokyo. Many Pacific Basin contracts have a built-in price floor and price ceiling depending on the price of oil.


    Without exporting any natural gas, the U.S. shale gas “revolution” has already had a positive impact on the liquidity of global LNG markets. Many LNG cargoes that were previously destined for gas-thirsty U.S. markets were diverted and served spot demand in both the Atlantic and Pacific Basins. The increased availability of LNG cargoes has helped create a more competitive LNG market for other consumers. This in turn has helped apply downward pressure to the terms of oil-linked contracts resulting in the renegotiation of some contracts.


    ....This last point about LNG market equilibrium is critical. Our forecast suggests that from 2015 to 2020, the global LNG market will swing to a surplus, mostly aided by the nine Australian projects that already have or are close to reaching final investment decision (see Figure 3) as well as other new supplies from East and West Africa.

    Further, pipeline gas (particularly into China), and a stubborn coal market will also compete with gas in global energy markets, particularly those in Asia.

    Furthermore, as we move beyond 2025, the possibility of other countries—again, China in particular—developing their own shale gas reserves could begin to have an impact on international gas trade.


  3. cont...

    The one factor that has been working to the advantage of advocates of greater European gas diversity has been the increased liquidity of the global LNG market, discussed above.

    Russia’s dominant position in the European gas market is being eroded by the increased availability of LNG. Qatar’s massive expansion in LNG production in 2008, coupled with the rise in unconventional gas production in the United States as well as a drop in global energy demand due to the global recession, produced a global LNG glut that saw many cargoes intended for the U.S. market diverted into Europe.

    As mentioned previously, with an abundant source of alternative supply, some European consumers, mainly Gazprom’s closest partners, were able to renegotiate their oil-linked, take-or-pay contracts with Gazprom.


    Increased LNG exports will provide similar assistance to strategic U.S. allies in the Pacific Basin. By adding supply volumes to the global LNG market, the U.S. will help Japan, Korea, India, and other import-dependent countries in South and East Asia to meet their energy needs. The desire on the part of Pacific Basin countries for the U.S. to become a gas supplier to the region has been underlined by the efforts of the Japanese government, which has attempted to secure a free-trade agreement waiver from the United States to allow exports


    ......additional volumes of LNG on the world market will benefit all consumers. Further still, even if the volumes exported from the United States aren’t large, there is an ideological geopolitical benefit to U.S. LNG exports. Exports will provide certainty to allies and economic partners around the world that the United States is a steadfast advocate for free trade.


    In that context, I believe a prudent policy is to continue to allow exports. However, there will be a need to reform the existing rules pertaining to LNG exports in order to reduce the risk and uncertainty that is hurting both producers and consumers.


    One final consideration is to have an audit of natural gas export policy every five years. This would be an important information-gathering exercise. Such an audit would identify what happened to domestic natural gas supply, demand, and prices, and international markets during each five-year period.

    I would like to thank the Subcommittee for giving me the opportunity to provide my views on this important issue, particularly in helping move the debate forward. I look forward to taking the Committee’s questions.


    One thing he didn't mention is that it costs many tens of billions of dollars to build an LNG plant in Australia,compared to just a few billion in the US.

    This is mainly due to the US being able to convert import terminals,mothballed because of the shale boom,to export.

    No dredging,few environmental hurdles,just build the trains and reverse the flow in the pipes.

    Also it seems Canada and Alaska have many more sheltered bays with natural deep water,so no dredging and no need for expensive breakwaters.

    And according to KBR it costs less than half the money in the US to hire a tradie than in Australia.
    (about $50 compared to $110)


  4. Rosneft wants Asia for Arctic, LNG liberalization

    March 19, 2013Olga Senina, special to RBTH

    The Russian oil giant Rosneft is seeking Asian partners to jointly develop the country's Arctic Shelf. In a parallel development, the company is eager to enlist foreign support in its ongoing battle with Gazprom for the liberalization of Russian liquefied natural gas exports.

    .....As it happened, oil was not the most important topic on the agenda of Sechin's Asian tour. The trip turned out to be largely about advertising shelf projects in the Russian Arctic and promoting international cooperation in the liquefied natural gas (LNG) industry. These two topics dominated the discussions in each of the three countries on Sechin's itinerary.

    In South Korea, the Rosneft CEO showcased the Russian market opportunities to LNG specialist KOGAS and world-leading shipbuilder STX, which specializes in shelf equipment. His audiences in China included CNPC, SINOPEC and China National Offshore Oil Corporation (CNOOC).

    In Japan, Sechin made presentations for the oil and gas producer Inpex, the petroleum exploration company Japex, the Sakhalin Oil & Gas Development Co. (SODECO), and Rosneft's current Sakhalin-1 partners, Itochu and Marubeni.

    Between the two, Rosneft and Gazprom hold 80 percent of all licenses for Russia's Arctic shelf. Under Russian law, private companies can only compete for those licenses which have been given up by the two state-controlled majors, which originally obtained them without going through the tender-based bidding process.

    .....according to Sechin, the Rosneft-controlled structures have been found to hold 21 trillion cubic meters (741 trillion cubic feet) of gas, and those structures already being developed in Kara Sea hold 11 trillion cubic meters of gas.

    Shelf hydrocarbons are expensive to extract and will be impossible to sell domestically. The Russian Economics Ministry forecasts that gas prices on the Russian domestic market will not rise to $150 per 1,000 cubic meters until 2015, although the world prices currently stand at $350. In Europe, which currently consumes 70 percent of all Gazprom exports, demand for natural gas is declining steadily.

    According to a forecast by the Institute of Communications and Computer Systems of the National Technical Institute of Athens (commissioned by an EC Directorate-General), by the year 2030, annual natural gas consumption in Europe will have dropped to 545 billion cubic meters — down from almost 570 billion in 2010.


    Adnoc Selects Shell to Operate Bab Gas Field

    DUBAI - State-run Abu Dhabi National Oil Co., or Adnoc, has selected Royal Dutch Shell PLC to operate the strategically important Bab sour-gas field, the International Oil Daily reported Tuesday, citing industry sources.

    The company had shortlisted Shell and French major Total SA for the estimated $10 billion deal, but Shell won the bid, according to the report in the daily, which is run by Energy Intelligence Group.

    Both Shell and Total had put forward competitive offers, but the main difference was their approach in handling the massive amounts of sulfur produced at the field.

    The Bab field, once developed, will produce 500 million-800 million cubic feet of gas per day, but expertise is required to handle the large amounts of sulfur generated from the estimated 15% hydrogen sulfide content of the gas.

    Shell recommended exporting the sulfur, while Total submitted a proposal to reinject the sulfur back into the reservoir, the report said.

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