EnergyNewsPremium.net - On the record: FLNG fracas on the cards:
The WA state proposal for an LNG hub at James Price Point and the Woodside proposal for an LNG plant within that precinct are now before the minister, awaiting the final green tick.
While environmentalists attack Burke for having a penchant for approvals, a rejection of JPP may be just the poll boost Labor is looking for.
While it has formally ended its alliance with the Greens, the Labor fear is that the Greens could take some of the votes from the Labor left with them. To say Labor would be desperate to secure all the votes it could before the September election would be an understatement.
With Gray now in Burke’s and prime minister Julia Gillard’s ear, even more so than before, the ex-Woodside man may just deliver the final push needed for Woodside and Shell to propose an alternative development plan.
One which involves FLNG.
The, at least publically, the joint venture would be able to say that they did all in their power to get the onshore plant up, and simply shrug their shoulders.
Such a scenario where FLNG is the development choice du jour would set up an interesting time in WA politics.
Photo Damian Kelly
ACTION OF THE DAY
A MAJOR national bank has been forced to remove more than 100 misleading out of order signs from its ATMs after being targeted by anti-coal activists.
A MAJOR national bank has been forced to remove more than 100 misleading out of order signs from its ATMs after being targeted by anti-coal activists.
A score of ANZ Banking Group machines sprawled across six capital cities were plastered with "out of order" signs on Sunday after campaigners launched their latest bid to draw attention to the bank's funding of the coal industry.
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This will have a major effect on plans to mine the Fitzroy Valley and build a massive port at Point Torment.
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http://www.theaustralian.com.au/business/mining-energy/us-shale-gas-boom-rocks-coal-market/story-e6frg9df-1226609209158
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US shale gas boom rocks coal market
THE US shale gas boom has increased the threat to Australian coalmining by freeing up production and infrastructure in North America to be used for exports, one of the world's biggest producers has warned.
The chairman of Anglo American Australia, Graham Bradley, said the switch to gas-fired energy in the US had more than doubled the export capacity of that country, pushing prices down and raising a question over new coalmining developments in Australia.
"Suddenly they have come in and taken significant share and that will be at the expense of . . . if not current mines, it will be certainly at the expense of the next crop of new mines," Mr Bradley told The Weekend Australian.
The new export threat highlights the far-reaching impact of the shale gas boom in the US, where export constraints have kept prices low, fostering a renaissance of energy-intensive manufacturing and a switch by power stations from coal to gas.
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The likely relaxation of US export restrictions on gas has been mooted as a threat to Australia's fast-growing liquefied natural gas industry, where tens of billions of dollars in investment have the country on course to overtake Qatar as the world's biggest exporter by 2017.
Mr Bradley said commodity prices would fare "badly" this year as new capacity in major resources such as coal and iron ore came to market.
"All of the indications are that Australia has encouraged countries like China and Korea to promote the development of mines in other countries," he said.
"So there will be more supply, more competition, and we can expect the price of those commodities to come down much closer to the cost of production."
Data from the US Energy Information Administration shows that US coal exports hit a record 126 million short tons last year, as production and domestic consumption fell.
The export tally was 17 per cent up on the previous year and 12 per cent ahead of the previous high mark, set in 1981. Domestic consumption fell by 114 million tons, or 11 per cent, and production by 7 per cent.
Mr Bradley said the threat to the Australian industry had increased in the past six months as idle coal transport infrastructure was switched to export markets.
"There is a new phenomenon, just happened in the past six months, that America has become a much bigger exporter, more so than we thought it was capable of because we thought they had infrastructure constraints," he said.
US shale gas boom rocks coal market.....cont...
ReplyDelete"We have always thought that America would struggle to export more than 25-30 million tonnes of coal a year but what we have found even in the last six months, the availability of cheap shale gas has meant many power stations have switched to gas or have a dual capability, which means there is a lot less demand for coal, and a lot of free rail cars that used to transport coal to power stations that are now . . . offering significant discount for transport to the coast.
"So America has suddenly become, thanks to shale gas, much more competitive in coal and will be a major competitor with Queensland and NSW coal."
At the same time as the US boosts production, Australia's growth is forecast to slow because of lower prices and cost pressures that have made Australia -- the world's biggest coal exporter -- also one of the world's most expensive places to operate.
Credit Suisse predicts Australia's coal export growth will slow towards 2 per cent next year, down from 11 per cent this year.
In November, American coal giant Alpha Natural Resources credited the carbon and mining taxes and a Queensland royalty grab for boosting the US position in the global coking coal market by raising costs here.
This month, Australia's government forecaster, the Bureau of Resources and Energy Economics, said the US exported 63 million tonnes of coking coal in 2012. This was 12 million tonnes more than the bureau had been expecting when it did its forecasts a year ago. Australia exported 144 million tonnes, up from the previous year but 13 million tonnes less than BREE had forecast.
Still, the bureau expects US exports to decline this year because of infrastructure constraints and high freight costs.
Another factor that may hinder US coal exports is a rise in gas prices in the US to $US4 per million British thermal units, which is seen as the price that US power plants will start using coal again.
Anglo American Australia, a subsidiary of Anglo American, operates five mines in Queensland and one in NSW and is the world's third-biggest producer of metallurgical coal, which is used in steel production.
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Some fear the mining boom will turn to bust
ReplyDeleteRoss Garnaut warns that Australia is facing a sharp downturn, which could end up as a decade of economic weakness like the one we experienced from 1974 to 1983. ''We are likely now to face major adjustments to incomes and living standards'', says the Melbourne University economist and former prime ministerial adviser and ambassador to China.
''If we do not manage the adjustments well, we will face a long period of economic stagnation and uncomfortably high unemployment.''
Former Reserve Bank board member Bob Gregory, of the Australian National University, warns that the economy risks falling off a cliff as minerals prices and future mining investment fall back to normal levels.
What's the problem when Treasury and the Reserve Bank...
Some of their assumptions - insatiable Chinese demand for coal, a long global shortage of iron ore - now appear fragile. And as our graph shows, mining booms rarely end gently
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Garnaut is the most pessimistic. An expert on both China and mining, he argues that China is moving away from resource-intensive growth; in 2012, thermal power generation grew just 0.6 per cent, as China turned to hydro-electricity, wind and nuclear power. Its demand for iron ore imports has slowed, and with increasing competition from other suppliers, he says, some of our key exports could face ''periods of historically low prices despite the continuation of reasonably strong aggregate demand''.
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In Sydney last month, Garnaut also forecast that the US would start exporting LNG at prices that undercut the assumptions on which Australia's LNG boom rests. He predicted that all this would lead to some projects being postponed or abandoned; some existing mines would close, while many others would experience periods when they were barely profitable. Mining would slump, taking Australia with it.
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''We will have to adjust to much lower incomes,'' he warned. ''We will have to adjust to rapidly rising rather than falling prices for tradeable goods and services. We will have to adjust to much lower relative costs.
''Downward adjustments on the scale we will face are immensely difficult.''
Richardson, director of Deloitte Access Economics, is less gloomy. As a long-time consultant to the mining industry, he says the future could hinge on decisions to be made by company boards later this year on whether to go ahead with the next wave of big projects, collectively worth $126 billion.
''Our Investment Monitor suggests the peak of the boom might be nine months away,'' he says. ''My view is that we will have an extended peak. Mining investment will stay at a really high level for some time before it turns. If none of those $126 billion plans go ahead, then we have a bigger problem.''
He expects Australia to slow in 2014, but says activity will then grow as the Reserve holds interest rates low. ''We will have two years of low rates, and that will be positive for the retail and housing sectors,'' he says.
Eslake, now chief economist of Merrill Lynch in Australia, sees the real risks as coming in 2015 and 2016, when the present wave of LNG projects is completed. By then, the US will have decided whether it will export its gas or keep it all to itself. ''The cliff will happen eventually,'' he says. ''This poses a downside risk to growth when it occurs.''
Eslake, like Richardson, is wary of putting an optimistic spin on recent data. He notes that the latest capital expenditure survey in fact showed non-mining business investment plans are lower than a year ago. The persistent strength of the exchange rate remains the central problem, forcing business to focus on lifting productivity, which, with growth low, will lift unemployment, which will restrain confidence, demand and growth.