As discussed in last month’s CEEP Report, the United States has five LNG export projects that are already under construction, which could produce 68.4 million tonnes per annum (mtpa) of LNG when all 14 “trains” come online before the end of 2019. (Currently, only two trains are operational.) In this second of our threepart series, we discuss the U.S. LNG export projects which are at or near the end of their U.S. governmental reviews, and thus, can be characterised as “near development.” Elba Island. Kinder Morgan—one of North America’s premiere midstream oil and gas companies—is adding liquefaction capabilities to an existing modest-scale LNG import terminal, located in Savannah, Georgia. This project will have the capacity to create up to 2.5 million tonnes per annum (mtpa) of LNG, and has received initial approval to proceed from the U.S. Federal Energy Regulatory Commission (FERC), one of the U.S. agencies that regulates LNG projects. In a news release (Oct. the 19th, 2016), Kinder Morgan stated that construction on the liquefaction facility would begin on Nov. the 1st, 2016, even though the FERC order remains under appeal, and a licence which has not yet been obtained (but is expected) from the U.S. Department of Energy (DOE), to allow the export of LNG to nations that do not have free trade agreements (FTAs) with the United States. Construction is expected to be complete by the end of 2018, when all 10 of Shell’s Moveable Modular Liquefaction Systems are online. Lake Charles LNG. Another large U.S. midstream player—Energy Transfer—also has plans to convert an existing LNG import terminal to a bi-directional facility by adding three [...]
As the US recently lifted its 40-year ban on the export of crude oil, the first shipment of oil has already reached Europe. The cargo has been sold to Vitol, the commodity trading company based in Switzerland. The light, low-sulfur type of crude, abundant in US shale fields, is favoured by many European refineries that are not equipped to handle heavier grades of oil, so this makes US crude oil all the more attractive to many European buyers. Meanwhile, in a few days, Cheniere Energy Sabine Pass facility on the Gulf coast will be the first to export LNG from US shale fields. When fully operational before 2019, Sabine Pass will be able to export 3.5 Bcf/a day. Cheniere plans to add production trains every six months until mid-2019. The US, after Qatar and Australia could become the third largest global supplier of LNG by 2020, and the US Department of Energy has already approved projects that may send as much as 10 Bcf a day of US gas abroad, whilst it considers further applications. The US gas industry, has it should be remembered, a big advantage over its’ competitors in Europe and North-East Asia, where gas prices have been 2-3 times higher. CEEP, as well as its Chairman of the Board of Directors, Paweł Olechnowicz, had long advocated for the ban on crude oil to be lifted, and an article in the CEEP Report (last November), outlining his speech, as the special guest, to the American Exports Breakfast Seminar, where the US’s top energy representatives were gathered, made it clear that the necessary infrastructure in Central Europe already [...]
On Friday, October the 9th, the United States House of Representatives voted to end the forty-year old ban on the export of crude oil from the United States. The vote on H.R. 702, “an act to adjust to changing crude oil market conditions,” is an important milestone in the effort to lift the export ban. However, the bill faces an uncertain future in the United States Senate, along with the threat of a presidential veto. The House voted 261-159, with 235 Republicans joined by 26 Democrats supporting H.R. 702. Congressman Joe Barton, a Republican from Texas, introduced the bill last February. It is one of several initiatives to end the export ban that has been introduced in recent years, in both chambers of the United States Congress. The export ban was put in place in the 1970s after the Organisation of Petroleum Exporting Countries (OPEC) imposed an oil embargo on the United States and other countries, in retaliation for supporting Israel in the 1973 Arab-Israeli War. The embargo drove the price of gasoline in the United States skyward, forcing its government to impose gasoline rationing. In response, Congress passed the Energy Policy and Conservation Act of 1975. Section 103 of the Act authorises the President to restrict exports of coal, petroleum products, natural gas, and petrochemical feed-stocks. H.R. 702 would repeal Section 103. Advocates of the bill assert that lifting the ban will stimulate more petroleum production, increase American exports, generate jobs, provide international allies and partners with a reliable source of energy, and “dilute the market share of unfriendly countries.” Those who want to keep the oil export [...]
LNG is seen by Brussels as a key alternative to increasing gas supplies in case of serious shortfalls. However, there is no common framework in place for an EU-wide LNG strategy at the moment. A first Europe–US LNG roundtable will take place in Brussels, on the 27th and 28th of May. The aim is to create a platform for an exchange of ideas between partners from the U.S. and Europe, on how expanded trade in natural gas between them could benefit both sides of the Atlantic, and contribute to greater fuel diversity and energy security in Europe. It is a timely and important debate to underline industry’s needs, not least because of the ongoing negotiations of the TTIP agreement. In this context, the co-organisers of the roundtable answered the CEEP Report’s LNG-related questions. Read more. [...]
Since 2010, the United States has been undergoing a second shale revolution with the very rapid development of shale oil or Light Tight Oil (LTO), following the revolution in shale gas. The rapid increase in LTO production from less than 1 Mbbl/d in 2010, to nearly 5 Mbbl/d in 2014, was made possible by high investments in US shale ($129 billion in 2014), the high level of crude oil prices, and continuous technological advances. Thanks to this development, the USA has become the world’s largest producer of crude oil and other liquids, ahead of Saudi Arabia and Russia. The production of LTO, accounts for 55% of US crude oil output now, and has enabled the country to reduce its oil imports and expand its exports of oil products. This has important ramifications for the world oil market, traded oil flows, and the oil price. The decline in oil prices, however, makes continued investment in the sector uncertain, and therefore, the growth in LTO production, too. The LTO business model differs from that of conventional oil As operating costs to produce LTO are limited, production at existing wells is not really called into question. However, LTO output is characterised by very rapid declines in initial production per well (between 60% and 90% in the first year). Therefore, sustained and continuous investment in new wells is necessary to maintain and/or increase output. Such rapid output decline also means that projects are very strongly dependent on the price of oil in their first year of operation. This contrasts with conventional oil production whose economics spans much longer time periods. The fall in [...]
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