Monday, July 8, 2013

Who's Intimidating Who? - Unconventional Gas, CSG


  1. Title, Real Estate Top List of US Shale Challenges

    Title and real estate issues top the list of issues faced by oil and gas companies in shale production, according to a new study commissioned by the law firm Steptoe & Johnson.

    Ninety-four percent of respondents reported that title and real estate matters presented the greatest challenge to shale activity, in a survey conducted for Steptoe & Johnson by The Brand Research Company. Survey results also found that:
    •77 percent of respondents said transactions presented the next high volume of challenges
    •72 percent found litigation posed the highest volume of challenges
    •70 percent cited regulatory issues
    •60 percent cited environmental issues
    •45 percent said government relations posed a high-volume challenge
    •39 percent cited private financing and related securities
    •26 labor and employment

    The survey findings were gathered in 101 interviews from January through March 2013 with 96 legal service buyers at 56 companies that are involved in U.S. shale plays, and five industry experts, including the University of Texas Center for Community and Business Research.

    The survey respondents are mostly landmen, in-house counsel and executives with an average of 15.3 years selecting outside counsel for their companies, which include Anadarko Petroleum Corporation, Shell Oil Company, and Devon Energy Corporation.

    Ninety percent of survey respondents reported using outside counsel more than half the time for litigation, 85 percent reported using outside counsel for half the time for real estate matters, and 76 percent turned to outside counsel for private financing and related securities.

    It's no surprise a range of legal challenges confront decision makers in shale activity, which has grown significantly in recent years, according to the study. In 2012, $54 billion was invested in U.S. shale plays.

    "It's not just shale gas or oil production that keeps shale developers busy," Steptoe & Johnson noted. "Half reported facing a steady flow of lawsuits at least quarterly, some as often as monthly or even weekly. And the pace looks to remain steady."

    Nearly all of those working in U.S. shale expect the number of legal disputes to increase or remain the same in the coming year, Steptoe & Johnson noted.

    "Methods of defense vary, but practical settlements appear to make the most business sense."

    Landowner disputes, title issues, lease disputes, contract issues and property rights were the top five reasons cited by survey respondents for lawsuits.

    "Environmental lawsuits are the most concerning to shale developers," said Steptoe & Johnson. "This concern is likely related to unpredictability, cost complexity and public relations."

  2. Five People Injured During Explosion at West Virginia Well

    Five contract workers were injured, four seriously, following a blast near a gas drilling site in Doddridge County, West Virginia, early Sunday morning. All five were transported to the West Penn Burn Center in Pittsburgh, PA.

    The explosion occurred during flow back operations about 50 feet away from the drilling rig, which is owned by Antero Resources. The rig was undamaged.

    Antero hired two outside firms to investigate the cause, Alvyn Schopp, a vice-president at Antero, told Rigzone.

    The explosion is also being investigated by the Department of Environmental Protection (DEP) and the Occupational Safety and Health Administration (OSHA), Schopp said, adding that it might have been a methane explosion.

    A tank pump appeared to have malfunctioned, although it was too early to say for certain, Kathy Cosco, a spokeswoman for DEP, said in a statement to Reuters.

  3. GOM workers flee platform

    Wednesday, 10 July 2013

    WORKERS have been evacuated from an offshore platform in the Gulf of Mexico off the coast of Louisiana after the operator lost control of the well.

    The US Coast Guard responded to a report from Energy Resources Technology stating it had lost control of production at the Ship Shoal block 225 platform B.

    Two wells had been shut in while work to temporarily plug well B2 was ongoing at the time of the leak.

    Bureau of Safety and Environmental Enforcement and USCG officers did a site assessment and found natural gas flowing from the well.

    There was a rainbow sheen on the surface of the water estimated to be about 6.4km wide.

    Authorities have started an investigation into the cause of the leak.


    No word on progress of Browse retention lease renewal talks

    The state and federal governments are remaining tight-lipped about the progress of negotiations over the renewal of Browse Basin retention leases.

    The lease conditions covering three gasfields are being reviewed, after Woodside's decision that the State Governments' preferred option of onshore processing on the Kimberley coast was not viable.

    The Premier maintains the gas should be processed onshore to maximise the economic return for WA but the federal Resources Minister has indicated he is open to offshore processing.

    Both have declined to comment on how discussions are going.

    Environs Kimberley director Martin Pritchard says it is time for Colin Barnett to give up the fight.

    "Mr Barnett seems to be unable to let go of the James Price Point option," he said.

    "He seems to be the only person now who thinks it's still a viable option.

    "Everyone else has moved on and it's time he did as well."


    Closures looming for nation's high-cost aluminium plants

    AUSTRALIA'S high-cost aluminium production is in the firing line amid sliding prices, with global giant Alcoa for the first time confirming its Victorian smelters are prime targets for capacity closures and Rio Tinto being urged to cut production from local assets.

    Alcoa, which kicked off the US reporting season with a second-quarter net loss of $US119 million ($130m) this week, said it was committed to closing high-cost production as part of a review of 460,000 tonnes, or 11 per cent, of annual capacity.

  4. After the last big contract cancellation - now this :

    Gorgon gas pricing under pressure

    REPORTS from India suggest that GAIL is putting pressure on ExxonMobil by way of Petronet demanding the gas price for exports from the Gorgon project be cut in wake of North American supply.

    According to the Economic Times, utility GAIL will demand that buyer Petronet LNG try to alter the Gorgon deal signed with ExxonMobil for 1.44 million tonnes of LNG per year.

    It signed the deal with Exxon – for 20 years pegged to 14.5% of the prevailing oil price – in 2009.

    With oil prices hovering about $US100 ($A109.1) per barrel, the deal would work out at $14.5 per million British thermal units. With shipping and taxes, the LNG will land at Kochi port at something approaching 17.MMbtu.

    But with gas at the Henry Hub hovering at $4/MMbtu, GAIL is wondering whether it is worth putting the squeeze on ExxonMobil to renegotiate the deal with Petronet.

    “I would like to bring to your kind attention that the circumstances under which the price provisions (at higher slope linked to Japanese crude) were signed in the sale purchase agreement (for Gorgon) have changed significantly and have the same long-term implications for Petronet and R-LNG off-takers viz GAIL, IOC, and BPLC,” GAIL’s marketing director Prabhat Singh wrote to Petronet.

    GAIL, Indian Oil, Bharat Petroleum, and Oil and Natural Gas Corp hold about 12.5% each in Petronet.

    Petronet has confirmed that it received the letter from GAIL and was investigating whether re-negotiation was possible. It also said that it might write to ExxonMobil to try and get the terms changed.

    Petronet is set to start receiving LNG from the project in the second half of 2015.

    The latest rumblings from India are part of a wider movement from buyers to de-link contracts from the prevailing oil price.

    In Europe, the International Court of Arbitration recently ruled that Gazprom must de-link its contracts from oil as part of its dealings with German utility RWE.

    The International Court of Arbitration ruling is the first to impose spot-pricing on Gazprom, which has favoured oil-linked pricing.

    It must also pay back costs to RWE, which may end up at about €300 million ($A421.4 million) by some estimates, but the ruling could have wider implications for Gazprom’s relationship with European gas buyers.

    “Clients will continue to demand this in court. This is a certain precedent, although I am not sure it will lead to a flood of lawsuits, because there is already a spot element in many contracts,” UBS analyst Konstantin Cherepanov was quoted by Reutersas saying at the time.

    “It is another sign that the balance of power between Gazprom and its consumers is shifting in favour of the consumers and Gazprom is not ready for that.”


  5. Price pressure for Woodside too.

    Closer to home, there have been rumblings that Japanese buyers are eyeing up North American gas and are seeking to re-negotiate pricing with Australian suppliers.

    While the Australian suppliers have remained somewhat tight-lipped about the legal ability to re-negotiate supply contracts, Woodside has let slip a clue.

    In February, chief executive Peter Coleman told an earnings call that there were renegotiation clauses built into their supply contracts.

    It chose to look at the upside, flagging a boost to prices received as a result of such negotiations until 2014 due to tightness in the LNG market.

    However, Coleman played down the prospects of competing sources of supply into Asian markets.

    “The general view is that US exports of LNG are expected to make up less than 10% of global supply by 2025, compared to approximately 25% from Australia and 20% from Qatar,” it said.

    “East Africa is also emerging as a new supply region following recent large offshore gas discoveries, but will likely face a range of greenfield development risks and other country specific challenges.”

    It said it was backing pricing in Asia to remain about 85-90% oil-linked, despite the threat of Henry-Hub-linked pricing emerging from North America.

    “It is expected that Asian buyers will initially limit the amount of US supply in their portfolios, with its volatile alternative price index and exposure to different contractual risks,” it said.

    ExxonMobil has been contacted for comment.

  6. Reef health downgraded to poor

    THE health of the Great Barrier Reef has officially declined from moderate to poor, having lost half its coral in the past quarter of a century, mainly because of cyclones and chemical runoff from farms on the coast beside the reef.

    The Reef Water Quality Protection Plan, released yesterday by the Queensland and federal governments, also found farmers had greatly improved runoff control in the past decade.

    The report found that of the loss of coral cover in the past 27 years, 48 per cent was caused by storm damage, 42 per cent by crown-of-thorns starfish, and 10 per cent by bleaching, primarily linked to climate change.

    The reef has been badly hit by storms in recent years, particularly Cyclone Yasi in 2011 and Cyclone Larry in 2007. The main reason for the spread of the crown-of-thorns is that fertiliser used by farmers runs off into the water system and flows to the reef where it fertilises algae, the main food source of baby crown-of-thorns. The resulting adult starfish then eat coral.

    The report found seagrass on the reef was in very poor condition overall, as were inshore coral reefs.

    A scientific consensus statement accompanying the plan found that the coral cover in the northern part of the Great Barrier Reef -- lying mostly off Cape York -- "has not shown the consistent downward trend seen along the developed coast of the central and Southern Great Barrier Reef".

    The report notes this is largely because there is hardly any agricultural activity on land beside this part of the reef, while conversely, the area where coral cover has been most affected, the central and southern reef, is where most of the sugar industry in particular is situated.


    Anti-CSG activists unfurl banner in Qld

    Anti-coal seam gas protesters have scaled a 200m high plant in southern Queensland to display a banner calling for an end to the controversial industry.

    The banner, attached on Thursday to a reverse osmosis plant under construction at QGC's Kenya project at Tara, reads: Lock the Gate Against Coal and Gas.

    Stop CSG president Dayne Pratzy says the action is in opposition to the dangers of CSG operations on water.

    "The immediate and legitimate concerns of the residents living next to this toxic infrastructure are going unheeded by both government and the industry itself, so we intend to escalate to point where we can no longer be ignored," he said in a statement.

    The action is part of a campaign of blockades and protests that began at the site on Thursday and will culminate in a concert on Saturday.
    QGC has been contacted for comment.

  7. Clive Palmer to lose right to operate port

    CLIVE Palmer is being confidentially put on notice that Deputy Prime Minister Anthony Albanese's department is taking legal steps to strip his company, Mineralogy, of its lucrative rights to operate the major new port for China's $7 billion-plus iron ore project in Western Australia.

    An internal review of sensitive information has led to a high-level decision in the Department of Infrastructure and Transport to start the process of removing Mineralogy as operator of the security regulated port of Cape Preston, near Karratha, government sources told The Australian.

    The West Australian government of Premier Colin Barnett has pressed Mr Albanese's department to revoke the operator approvals of Mineralogy, owned by prime ministerial aspirant Mr Palmer, amid concerns about the company's credentials and ability to operate the new port, government sources revealed.

    But senior government figures warned that the policy reversal was likely to trigger a new legal row with Mr Palmer's company as it stood to control the port and make tens of millions of dollars in payments on exports through the port, built by Chinese company CITIC Pacific to handle the delivery of magnetite iron ore being mined in the Pilbara.

    Insiders said Mineralogy had a handful of staff in a temporary building on the site and should never have been handed the legal control of the port. Mr Albanese's department expects to be accused of not doing proper due diligence on Mineralogy's ability to operate the port.

    The Cape Preston port's sole user is CITIC Pacific, which formed another company to manage shipping operations and develop plans for the export of magnetite concentrate. Mr Palmer and CITIC Pacific are embroiled in Supreme Court legal action in Perth over a royalties dispute on the iron ore project, which is yet to export after massive budget blowouts and missed deadlines for completion.

    The move against Mr Palmer's company as operator is a significant reversal after the federal government's regional head of transport security operations, Steven Rowson, gave formal approval to Mineralogy in January.

    Federal Resources Minister Gary Gray is understood to have supported the West Australian government's view that Mineralogy should be removed as operator.

    "We are aware of the issue and there is a process in place," Vivienne Ryan, a spokeswoman for the WA Department of Premier and Cabinet, said last night. "We have nothing further to add."

    Mr Albanese's spokesman, Jeff Singleton, declined to comment, as did Mr Gray's office.

    The West Australian government, which owns the port, sought to remove recognition of Mineralogy as port operator in February, while CITIC Pacific has demanded reasons to justify the appointment. Mr Palmer started legal action in the Federal Court in April in a bid to prevent CITIC Pacific, which built the port, from having access to the port. Mr Palmer did not return calls. CITIC Pacific declined to comment.


    Clive Palmer in doubt to run Pilbara port

    The port has been built to ship iron ore from a $7 billion mine being developed by the Chinese company CITIC Pacific.

    The ABC has been told the West Australian Government of Premier Colin Barnett has pressured the Federal Government to revoke the licence on the grounds Mineralogy does not have the credentials to operate the port.

    The move is understood to have the support of CITIC Pacific, which built the port.....

  8. IMF rings alarm bells as the China dragon runs out of puff

    THE International Monetary Fund has warned that China is at risk of a serious fall in growth as the country's foreign trade volumes, including its iron ore imports, drop below last year's level.

    China's exports dipped 3.1 per cent in June from a year ago -- the first such fall since late 2009 -- while imports were down 1.8 per cent following a smaller drop in May.

    China's imports from Australia are still up by 11.9 per cent over the year, but its global imports of iron ore fell sharply and are 7 per cent below levels of a year earlier.

    The challenging outlook for Australia's principal trading partner comes as the latest Westpac consumer sentiment survey shows households are increasingly upbeat about the long-term economic outlook but pessimistic about their own finances.

    Westpac senior economist Matthew Hassan suggested consumer views on the economic outlook were shaped by the improved prospects for the US and the fall in the Australian dollar.

    The disappointing Chinese trade figures follow a fall in the benchmark manufacturing index and a bank credit squeeze, and throw doubt on whether the country's growth target will be achieved. IMF chief economist Olivier Blanchard said that while the latest downgrade in its growth forecast for China to 7.8 per cent was in line with the government's objectives, there was a danger of a much worse result.

    "The country where there is the largest risk in terms of large decrease in growth is China," Mr Blanchard said.

    He said the Chinese authorities were aware of the need to boost domestic consumption and rely less on business investment to fuel growth.

    "The risk is the slowdown in investment comes first and there is not the increase in consumption which is fast enough to compensate."


    Quakes trigger tremors at US gas sites

    LARGE earthquakes around the world have been found to trigger tremors at US sites where wastewater from gas drilling operations is injected into the ground, a US study says.

    For instance, the massive 9.0 magnitude earthquake in Japan in 2011 set off a swarm of earthquakes in the western Texas town of Snyder near the Cogdell oil field, culminating in a 4.5 magnitude quake there about six months later, said the research in the journal Science.

    Similarly, small to mid-sized quakes were observed near active injection wells in Prague, Oklahoma following an 8.8 magnitude quake in Chile in 2010.

    Uncommon seismic activity stirred that region 16 hours after the Chile quake with a 4.1 magnitude tremor, and it continued until a 5.7 magnitude quake in November 2011, said researchers at Columbia University's Lamont-Doherty Earth Observatory.

    The 2010 Chile quake also led to heightened seismic activity in Trinidad, Colorado, including a 5.3 magnitude quake in August 2011, in an area where methane is extracted from the coal bed and wastewater is reinjected into the Earth.

    "We weren't really confident until we found the same pattern of little bursts of seismicity following the passage of seismic waves from several of these big earthquakes," lead author Nicholas van der Elst of Columbia University told AFP.

    "Any individual case could be a coincidence but once you start observing it systematically, then you can have more confidence that you are really looking at a physical relationship."

    The study helps explain a surge in earthquakes in the central United States, which in recent years has seen a more than six-fold increase in earthquakes over 20th century levels.

    An accompanying study in Science said there were 300 3.0-magnitude or higher earthquakes in the central United States from 2010 to 2012, after an average of 21 such quakes a year from 1967 to 2000.

    The change coincides with a growing natural gas boom that is based on using large amounts of fluids to crack open rocks for natural gas, known as hydro-fracturing or fracking.

    Then, once gas and oil have been extracted from deep within the Earth, companies often inject the wastewater back below the surface.

    The US Department of the Interior last year also acknowledged an uptick in seismic activity - predominantly in Texas, Colorado, Arkansas, Oklahoma and Ohio - where disposal of wastewater through injection wells has "increased significantly," it said.

    Scientists have long known it is possible for quakes to stir up regions of the Earth far away, even in natural circumstances such as hydrothermal fields where there is already high fluid pressure.

    But the new research raises questions about how to manage the risks of causing quakes associated with oil and gas extraction and disposal of wastewater in underground wells.

    "These passing seismic waves are like a stress test," said co-author Heather Savage, a physicist at Lamont-Doherty.

    "If the number of small earthquakes increases, it could indicate that faults are becoming critically stressed and might soon host a larger earthquake."


    It appears increasingly likely that Woodside will have to develop just 80% of its Browse resource after WA Premier Colin Barnett put his intention not to sign any retention lease variations on the public record.

    Speaking with the Australian Financial Review, Barnett said he was in no rush to sign any variations in Browse retention leases and would not do so unless a deal could be cut with the state.

    “They don’t expire til the end of next year, so you may ask ‘why the rush?’,” Barnett was quoted as saying.

    “We don’t intend relaxing them unless we have a new arrangement that is satisfactory to the state. The key condition is that the gas is developed for James Price Point.”

    Given that the state controls 20% of the Browse resource, Woodside will either have to swing a deal with the state or face developing 80% of the resource, which may throw out project economics.

    However, he did open the door to a supply base for any FLNG project being based at James Price Point as a way to sate the state’s demands.

    “At a minimum we want to see the supply base at James Price Point.”

  11. PetroChina Gets Nod for Stake in South Canning Project

    New Standard Energy Ltd announced that China’s largest energy company, PetroChina Company Limited (PetroChina), has received Chinese and Australian federal government approval to proceed with acquiring a 29 percent interest from ConocoPhillips in New Standard’s joint venture in the Southern Canning Basin in Western Australia. The deal between PetroChina and ConocoPhillips has been closed by a cash payment, and PetroChina’s full participation only awaits approval and registration by Western Australia’s Department of Mines and Petroleum.

    The value of the cash transaction implies a current value in excess of $102 million (AUD 110 million) for the Canning Basin assets, valuing New Standard’s retained 25 percent interest at approximately $26 million (AUD 28 million) or $0.08 (AUD 0.09) per share. The conclusion of this cash transaction complements New Standard’s current cash balance of approximately $38 million (AUD 41 million) or $0.12 (AUD 0.13) per share.

    New Standard Managing Director Phil Thick said the receipt of national government approvals and settlement of the cash payment to join the Joint Venture paved the way for PetroChina to meet its desire to partner ConocoPhillips and New Standard in the Canning Basin.

    “New Standard now has two truly world class partners in the Southern Canning Basin,” Thick said.

    “The addition of PetroChina provides further international validation of the Southern Canning Basin’s potential. The combined partnership gives New Standard access to funding, technical expertise, development experience and potential offtake capacity and creates a formidable global partnership to help progress the Joint Venture.”

    PetroChina’s interest in the Joint Venture follows its recent investments in other Australian LNG projects and its participation highlights the continued reshaping of global gas markets by strong demand from Asia, particularly China.

    The resultant equity percentages in the Southern Canning Project are ConocoPhillips 46 percent, PetroChina 29 percent and New Standard 25 percent. New Standard’s equity position has not changed and it will remain as operator of the joint venture. Apart from the revised equity percentages, the existing farm-in agreement remains unchanged.

  12. Mining & Energy

    Poseidon confirms sackings, halt in drilling

    THE Andrew Forrest-chaired Poseidon Nickel has confirmed it suspended drilling work and laid off contractors at its historic Windarra nickel project amid speculation it was struggling to raise $200 million in debt needed to restart the mine.

    Poseidon's share price plummeted 15 per cent in early trading yesterday after The Australian revealed the company had laid off 45 contractors at the Windarra site, in the West Australian Goldfields.


    Santos trading boom reheats takeover talk

    STRONG trading in Santos shares has renewed speculation the gas company is in the sights of US oil majors Chevron or ExxonMobil, who are becoming increasingly focused on the region's gas resources.

    Adelaide-based Santos has been seen as a potential target for one of the majors keen to tap the company's gas resources since a 15 per cent shareholder cap was removed in 2007 but suitors have so far not emerged.


    InterOil's names ex-Woodside exec for key PNG appointment

    FORMER Woodside Petroleum executive Michael Hession has been named new chief executive of Canada's Papua New Guinea-focused oil and gas company InterOil.

    The appointment of Mr Hession, who was the executive in charge of the controversial Browse LNG project that Woodside has now decided not to build onshore near Broome, comes as Interoil holds talks with Exxon Mobil to develop onshore gas fields in Papua New Guinea.


    Iron shortage looms with Rio tipped to delay plans

    RIO Tinto appears increasingly likely to delay a $5.4 billion iron ore mine expansion in Western Australia, possibly leaving global iron ore markets under-supplied and backing up claims by new Arrium chief Andrew Roberts that pundits predicting price slumps are factoring in too much new supply.

    After a detailed review of Rio's plans to ramp up the final 70 million tonnes of annual iron ore production in its expansion plans, JPMorgan has predicted the miner will delay its iron ore ramp-up by three years from its current 2016 target. Rio has started building the port and rail capacity but not yet committed to mine expansion.


  13. Rail documents kept secret

    The State Government has declared West Australians do not have the right to know how it came to decide to commit $3.7 billion of public money to its election-defining rail projects.

    The West Australian has been blocked from accessing correspondence to, from and within Premier Colin Barnett's office on the MAX and airport rail links on the grounds the documents were created for the Liberal Party - not the Government.

    Carmen Lawrence, the premier who ushered in the Freedom of Information Act in 1992, said yesterday the stance was "extraordinary" and WA's first information commissioner said she had never heard of a similar argument.

    In a decision this week, the Department of Premier and Cabinet claimed documents captured by the FOI request between January 26 and March 9 should be kept secret because they were created during the caretaker period. "The caretaker period is an exceptional period during which different norms of administration apply," the department wrote in its decision.

    "The policies held in the documents are not government policy decisions, but rather are party political policy commitments."

    Caretaker conventions are designed to stop governments of the day using the public service to gain unfair advantage. They contain provisions for ministerial officers to undertake party political work but other public servants cannot.

    Dr Lawrence said given the projects' detailed nature, it was highly likely some documents captured by the request would have been created by public servants - a practice "highly questionable" under caretaker conventions.

    "It seems extraordinary that that (party political) claim should be made as grounds for exemption from the Act and it wasn't envisaged that such a justification could be made," she said.

    Bronwyn Keighley-Gerardy, information commissioner for a decade until 2003, said she had not heard that argument before.

    Mr Barnett and Treasurer Troy Buswell announced the northern suburbs MAX light rail system in September, well before the election campaign.

    Their joint press release revealed $16 million in State and Federal funds had been committed to pre-planning. It was reannounced during the poll campaign.

    MAX featured in the publicly funded "Bigger Picture" advertisements last year, which Mr Barnett claimed were not political advertising but public information.
    _The West _ will appeal against the decision.

  14. S&P issues capex warning

    A cut in mining investment will leave Australia with a steeper capital expenditure downturn than during the global financial crisis, Standard & Poor's says.

    Terry Chan, a credit analyst with the international ratings agency, says Australia's strong investment spending growth is set to end, as global capex contracts in 2013 and 2014.

    Australian capex is tipped to fall by 12 per cent in 2013 and more than 20 per cent in 2014, reversing a 20 per cent growth pace during the preceding two years.

    "The scaling back of mining-related investment is projected to bring an abrupt reversal of the very strong capex growth seen in the past two years," Mr Chan said in a note.

    "The estimated decline in spending, if realised, would be the worst capex growth figures for Australia in the 10-year period we have data for, exceeding the downturn that followed the global financial crisis."

    The prediction comes as mining giants BHP Billiton and Rio Tinto scale back on capital expenditure amid a downturn in commodity prices.

    S&P's survey of 2,000 global non-financial companies found investment was likely to shrink in coming years.

    "Despite a modest post-financial crisis recovery, real-terms capital expenditure growth slowed in 2012 and is expected to turn negative in 2013," Mr Chan said.
    "Early indications for 2014 are even more pessimistic, suggesting a five per cent contraction."