LNG in BC fantasy or reality

[bob vernon]

Unfortunately when you sign contracts with the suppliers of the gas, who drill the wells, and guarantee them a price, and then sign another contract with a utility in south Asia for whatever the world price is at delivery time...... and the world price falls, the difference comes out of the BC government's share. The Alberta government fell into this trap with oil and now the government royalties have shrunk to almost nothing. It's why Alberta's provincial government is racking up between 3 and 4 billion in added debt this year, despite cutting government services wherever they can.

The oil and gas companies are happy, they make money. The buyers and distributors of the oil and gas are happy, they make money. The owners of the resource get almost nothing out of the deal. It's easy to understand. The province owns the resource. They sell the rights to the resource, and if they include price guarantees they accept risk. If they guarantee the buyer a price, they accept even more risk.

[twobits]

Unfortunately when you sign contracts with the suppliers of the gas, who drill the wells, and guarantee them a price, and then sign another contract with a utility in south Asia for whatever the world price is at delivery time...... and the world price falls, the difference comes out of the BC government's share. The Alberta government fell into this trap with oil and now the government royalties have shrunk to almost nothing. It's why Alberta's provincial government is racking up between 3 and 4 billion in added debt this year, despite cutting government services wherever they can.

The oil and gas companies are happy, they make money. The buyers and distributors of the oil and gas are happy, they make money. The owners of the resource get almost nothing out of the deal. It's easy to understand. The province owns the resource. They sell the rights to the resource, and if they include price guarantees they accept risk. If they guarantee the buyer a price, they accept even more risk.

Could you please provide links to where the province of BC guarantees a supplier a certain price for the gas?

[flamingfingers]

..seemed like a good idea at the time, but.....

• HEARD ON THE STREET
• October 13, 2013, 4:45 p.m. ET
Shale Storm Hits Canadian Gas
U.S. Gas Production Threatens Its Neighbor to the North

"We hate it when our friends become successful," lamented Morrissey.

Canada's energy industry likely shares the gloomy British singer's sentiment.

Canada sits just across the border from the world's largest oil and gas market, and its biggest ally. But successful development of U.S. shale resources is spoiling it all. Alberta's oil firms suffer steep discounts already as they try to sell into a glutted U.S. market, not helped by opposition to the Keystone XL export pipeline.

Now, Canada's natural-gas sector is getting squeezed by its neighbor's newfound riches.

Historically, the northeastern U.S. sucked in gas from the Gulf Coast and Canada, especially during winter. For example, New York state imported a net 892 billion cubic feet from Canada in 2007, according to the Department of Energy. But the region's Marcellus and Utica shale basins are upending this. In 2011, the last year for which data are available, New York state took just 286 billion cubic feet from Canada.

Tudor, Pickering, Holt & Co. projects that by 2020, the Marcellus shale will produce 20 billion cubic feet a day—equivalent to about 30% of the entire country's gas output last year. With normal weather, TPH estimates the Marcellus can meet the Northeast's gas demand for one-third of the year. By 2016, that will rise to 70%; by 2020, more than 90%. And that doesn't count gas coming from the Utica shale.

In the past, gas heading into New York City might cost a multiple of the benchmark Henry Hub price on days of very high demand. The growing glut increasingly will push northeastern prices below the benchmark. This is akin to the persistent, if volatile, discount at which West Texas Intermediate and Western Canadian Select oil, trapped in the Midwest or further north, trade versus Brent crude these days. And, similarly, producers suffer while consumers benefit.

With oil, the benefits flow to those building pipelines and refiners processing cheap oil into gasoline sold at world prices. With northeastern gas, some pipeline operators will again benefit. So will gas-fired power-plant owners able to burn cheap fuel and sell electricity at a decent profit. Private-equity firm Panda Power Fund's purchase in August of the Liberty project in Pennsylvania was predicated on this. The gas glut also should benefit local households.

Producers in the Northeast, though, will want to sell as much gas as they can in other markets. Sending it overseas as liquefied natural gas is one option, but that remains years off. The likelier option: "Export" gas to the Midwest and southern U.S.—and Canada. That would push Canadian gas out of its traditional U.S. export markets and bring U.S. gas north to compete across the border.

Alberta accounts for two-thirds of Canadian gas production. Gordon Pickering, a director at Navigant Consulting, says the situation for western Canadian energy producers is "very dire."

In a report he prepared supporting the proposed Jordan Cove project in Oregon to export Canadian gas as LNG, Navigant projects net exports of gas from the country by pipeline to drop to less than 3.5 billion cubic feet by the end of the decade, from about five billion a day now.

Shale is often touted as the key to energy independence for North America. That won't stop rivalry within it, though—and Canada's best customer is rapidly gaining the upper hand.

Write to Liam Denning at [email protected]
http://online.wsj.com/article_email/SB1 ... ttop_email

[hobbyguy]

I agree that in the short term, natural gas markets have been completely disrupted by the advent of fracked shale gas. That's why we are paying such cheap rates for NG heating.

Longer term, the prospects for exporting NG to Asia are immense. I've posted it before, but this report gives a nice overview: http://www.exxonmobil.com/Corporate/files/news_pub_eo.pdf

Not only does natural gas replace a lot of coal for electrical (a very good thing) and account for most new electrical generation, but at least half, if not more, of the increase in energy demand is residential, which will add home heating into the mix.

Think about it - Exxon's forecast is that by 2040 world energy demand will rise by 60%, and natural gas (including LNG) will be the biggest component. Quadrillions of btu's in new demand. Meanwhile, energy demands in North America and Europe will decline or flatline.

If you don't find a way to be in the export to Asia market - you will be stuck in the bargain basement backwater. That's why the proposal to export Canadian natural gas out of Oregon.

That's the reality. If we don't find a way to be players in the LNG market, we will not be able to stop the rise in MSP and Tuition posted above.

[maple leaf]

An interesting documentary on hydraulic fracking in the USA.

Gasland ,watch it on line for free.

http://putlocker.bz/watch-gasland-onlin ... ocker.html

[bob vernon]

We're all gonna be rich. Yay!!!

Except for one thing. The first deal we've signed with that Indonesian utility sounds really good. Except if the world price of natural gas goes down, and most people think that it will. In that case, the decrease in what the utility can charge in Indonesia comes from where??? Why it comes out of the royalties that BC is getting. You know, the money that is supposed to pay for all our future social programs, according to Christy. The further that the price falls, the less BC gets. Even to the point that the province will have to SUBSIDIZE the Indonesian utility. Alberta has gone down this path with their resources and it is the reason that they are running a $3.5 BILLION deficit this year, and have for several years. Don't be so quick to say that gas ensures our futures. It might cost us instead.

[maple leaf]

Are the BC's Governments claims reality or bogus,I have my doubts that this government is being straight with us on LNG.

Reality Check: The B.C. LNG Hyperbole
Posted: 11/12/2013 1:48 pm

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In what has to be one of the most bizarre and misleading press releases I have ever seen, the B.C. government issued a report in reference to the province's Montney Formation, that claimed: "this potential [natural gas] supply can support development and LNG export operations for more than 150 years".

Let's take a closer look at this 150 year number.

As noted by Metro News, the 150 year number comes from "domestic rather than global consumption" numbers. That is, it is obtained by taking the hypothetical resource volume in B.C. and dividing it by the current Canadian annual volume consumption of natural gas. In other words, it tells us how many years it would last Canadians for their domestic needs assuming no increase or decrease in national consumption rates.

But here's the problem... Almost by definition, LNG is for export not domestic consumption.

So let's do a reality check:

Every year BP undertakes a Statistical review of World Energy. As noted by BP, global natural gas proven reserves would supply current global production rates for 55.7 years. Canada contained (at the end of 2012) 1.1 per cent of global reserves. Doubling B.C.'s (not even Canada's proven reserves) would have a very small effect on global resource lifetime.

In other words, the 150 year number, and in particular, the statement by a B.C. government official that, "B.C. is very confident that the natural gas supply in the province can support long-term operations for 150 years or more," is utter nonsense and, in my opinion, irresponsible hype that is misleading British Columbians.

There is no doubt that the Montney Formation is an important natural resource for our province. This is largely because the shale gas formation contains condensates (liquids) in addition to the natural gas. These can be sold in addition to the natural gas. This is quite different from the dry gas fields in the Horn River shales near Fort Nelson, B.C. which require a North American natural gas price of around $5.00/million BTU to be economical. With natural gas trading at about $3.38/million BTU in North America, the Horn River play is not economical.

The analysis above is validated by a Nov. 4 news release from Canadian natural gas giant Encana noting that it was going to lay off 20 per cent of its staff in North America as well as dramatically reduce its shareholder dividend. This does not bode well at all for Encana's interests in the Horn River region of B.C.

Instead of chasing the falling fossil fuel economy of yesterday, B.C. should be heading towards a prosperous future by developing its clean tech sector -- the sector involved in the generation, transmission, storage and end use of renewable energy.
Andrew Weaver
Andrew WeaverGreen Party of BC MLA for Oak Bay-Gordon Head and Lansdowne Professor, University of Victoria

http://www.huffingtonpost.ca/andrew-wea ... 33484.html

[Atomoa]

There is a massive surplus of NG, worldwide.

http://www.cbc.ca/news/business/encana- ... -1.2415070

This isn't the golden goose they are making it out to be.

Why get it in BC when you can get it in some sketchy 3rd world country without saftey concerns and labour costs - especially when the supply side is overflowing?

If one looks at the technology surrounding the consumption of NG (engine conversion technology for example), the whole industry is projecting low, low prices far into the future. "Bad for producers - good for transport and fleet operation businesses"

[maple leaf]

Is what this government telling us in the best interest of our beautiful province,or are they attempting to pull the wool over everyones eyes ,for corporate interests?

Canada's Largest Private Sector Union Calls For Fracking Moratorium
Unifor worried about 'frightening' pollution, worker safety, First Nations rights.
By Andrew Nikiforuk, Yesterday, TheTyee.ca

Natural gas image
Unifor worries fracking will lead to safety issues for workers 'toiling under haphazard, gold-rush-like conditions.' Photo via Shutterstock.

Related
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'I have no choice but to appeal', says plaintiff Jessica Ernst, who alleges industry polluted her water.
Read more: Energy, Labour + Industry,
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Canada's largest private sector union has called for a national moratorium on hydraulic fracturing, a brute force technology that has opened up shale formations for mining across North America and the world.

Unifor, which has 300,000 members in the country, said the technology has raised substantive environmental and economic concerns across the country and needs greater scrutiny.

Hydraulic fracking uses millions of gallons of water, tonnes of sand and toxic chemicals to blast open concrete like shale rock one to two kilometres below the ground. It has been the subject of intense protests in Australia, Ireland, England, South Africa and much of the United States.

Unifor came into existence earliest this year after the merger of two of Canada's most powerful and largest unions: the Canadian Auto Workers Union and the Communications, Energy and Paperworkers Union of Canada.

In a Nov. 14 press release, the union cited concerns about "frightening" groundwater pollution, methane leaks, "unpredictable impacts" on rock formations, "destruction of surface land" as well as safety issues for workers "toiling under haphazard, gold-rush-like conditions."

The union was also disturbed by the fracking industry's impact on First Nations and unresolved treaty claims, a major issue in British Columbia and Atlantic Canada.



"First Nations activists in New Brunswick and elsewhere are highlighting, with determination and passion, their insistence that no resource exploration or extraction can occur on their lands without full informed consent and a generous sharing of the economic benefits."

A national moratorium should remain in place "until such time as the safety and environmental risks associated with fracking have been adequately addressed, and until First Nations communities have given full informed consent for fracking activity on their traditional lands."

In step with US municipalities

More than 100 U.S. municipalities have now passed laws banning hydraulic fracturing in their jurisdiction because of concerns about water usage, groundwater contamination, air pollution and the industrialization of farmland. In early November, voters in three major cities in Colorado, an oil and gas state, approved bans on fracking. Voters in Boulder, Fort Collins and Lafayette all approved moratoriums by a wide margin.

The government of British Columbia has banked its economic future on the development shale gas in Peace River region. These deposits, among the costliest and most water intensive in the world, would require the drilling of more than 50,000 wells.

By some rough estimates, this level of shale gas drilling could use as much water as annual water requirements for bitumen mining in Alberta or enough water to support a city of two million people a year.

To date, the government has performed no cumulative impact assessment on the industry's heavy footprint on water and land, nor a financial risk analysis.

This week, several environmental groups filed a court action against B.C.'s Oil and Gas Commission for allegedly violating the Water Act by repeatedly rolling over short-term water licenses to some of the world's wealthiest companies.

Environment Canada and Health Canada told the Auditor General in 2012 that they did not have a good understanding of the 800 chemicals and substances used for hydraulic fracturing fluid. Nor had they investigated the risks associated with the hydraulic fracturing process. [Tyee]

Read more: Energy, Labour + Industry,

[LoneWolf_53]

More biased agenda reporting from the Tyee. Big shocker.

[maple leaf]

More biased agenda reporting from the Tyee. Big shocker.

At least it is not the biased Liberal blathering usually posted on these treads.Big shocker of a reply,or non reply.

[bob vernon]

We're all gonna be rich!!!

[GrooveTunes]

http://youtu.be/35BUwQ_BHsI

[flamingfingers]

Here we go again. What did Christy bring back from her Asian trip a year ago? NADA. And this year she is touring an LNG plant in China. Hmm... where is this plant getting the NG to turn into LNG now? Coals to Newcastle anyone?

Clark heads to Asia; hopes to sell LNG
by The Canadian Press - Story: 103188
Nov 21, 2013 / 2:25 pm

Premier Christy Clark is leaving for her fourth international trade mission to Asia in an attempt to sell liquefied natural gas.
Clark and International Trade Minister Teresa Wat will be visiting China, Korea and Japan, countries that Clark says are hungering for clean energy like LNG.

The Premier says she hopes to move the yardstick a little closer to securing some proposed LNG projects that are worth billions of dollars for the province.

Clark is expected to tour an LNG facility in China, meet with government officials and senior business executives, and attend a B.C.-Canada-Korea Natural Gas Forum.

The premier has repeatedly said that LNG development would lead to a trillion-dollar windfall that could wipe out the province's debt and create 100,000 jobs for British Columbians.

Last year, Clark went on a trade mission to Japan, Korea and the Philippines after having also travelled to China and India.

http://www.castanet.net/edition/news-st ... htm#103188

[maryjane48]

she prolly went buy cheap clothes