LNG

This too shall pass.
AzariLoveIran

Re: LNG

Post by AzariLoveIran »

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2nd UPDATE: Exxon CEO: 'Losing Our Shirts' on Natural Gas Prices

Jun 27, 2012 16:11:37 (ET)

--Making "no money" on U.S. natural gas

--Prices have fallen below cost of production

--Current prices aren't sustainable

(Adds analyst comments and background throughout.)


By Jerry A. DiColo and Tom Fowler


NEW YORK--Even energy titan Exxon Mobil Corp. (XOM) is showing signs of strain from low natural gas prices.

On Wednesday Exxon Chief Executive Rex Tillerson broke from the previous company line that it wasn't being hurt by natural gas prices, admitting that the Irving, Texas-based firm is among those hurting from the price slump.

"We are all losing our shirts today." Mr. Tillerson said in a talk before the Council on Foreign Relations in New York City. "We're making no money. It's all in the red."

His comments mark a departure from remarks made earlier this year on how lower natural gas prices hadn't yet hurt the company because of its operational efficie2ncy and low production costs.

The comments from Exxon's chief come amid a massive U.S. gas supply glut that has kept prices depressed and helped to reduce energy costs for many consumers and businesses. In recent months, demand for natural gas from utilities has surged as firms turn to gas instead of more expensive coal to supply electricity. Just as Mr. Tillerson was speaking, however, natural gas prices rallied to a 5 1/2-month high, with the July contract settling at $2.774 per million British thermal units, the fifth straight day of gains.

Exxon's $26 billion acquisition of XTO Energy in 2010 made the company the largest producer of natural gas in the U.S.; among U.S. integrated oil companies, it's the one that's bet the most on the value of unconventional natural gas production.

Mr. Tillerson said last month during Exxon's shareholders' meeting that he had "no regrets" on the timing of the XTO purchase, which occurred just before the most recent slump in U.S. gas prices. At the company's annual analysts' meeting in March, Exxon said production costs varied greatly from project to project, but it wasn't losing money on its natural gas production.

But the executive acknowledged Wednesday that Exxon and most of the industry had "grossly underestimated" the speed of the U.S. natural gas boom, as the technology to unlock gas trapped in shale rock formations, known as hydraulic fracturing, advanced faster than expected.

"It shows even Exxon can feel the pain from low natural gas prices," said Fadel Gheit, an analyst with Oppenheimer & Co.

In April the company said the average price at which it sold its natural-gas production in the first quarter was $2.74 per million British thermal units, down 20% from the same period a year earlier. That price reflects a combination of spot prices and long-term contracted sales, but analysts expect that figure to drop.

Market prices have averaged about $2.20 per million British thermal units in the second quarter, down from $2.70 in the first quarter, said Guy Baber, an analyst with Simmons & Co. International. Even during the worst days of 2011, prices averaged more than $3.50.

"The message from Tillerson is candid and maybe a bit different than in the past, but I think this is largely because natural gas prices are so much weaker now than they have been," Mr. Baber said.

That doesn't mean Exxon Mobil will necessarily stop drilling for natural gas, however.

The company has started to shift its drilling toward sites with greater potential for oil and natural gas liquids, but it has said repeatedly it believes natural gas will grow significantly in the coming decades. The company is designing drilling programs on most of its U.S. gas fields to better assess the long-term prospects of the assets, not capture short term production and revenue gains.

With first-quarter earnings of $9.45 billion and cash reserves of $19.1 billion, Exxon Mobil has the balance sheet and financial strength to be patient and keep drilling gas wells, unlike many smaller oil companies, Mr. Baber said.

In his talk, Mr. Tillerson said energy companies won't be able to continue drilling unless prices rise.

More recently, Exxon has been studying the possibility of exporting natural gas from the U.S. Gulf Coast and from Canada as shale drilling has unlocked natural-gas reserves to allow exports.

Exxon is following the trend of smaller companies, such as Cheniere Energy Inc. (LNG), that have already pursued the necessary permits to export gas from the U.S.

On Wednesday, he said there are enough U.S. oil and gas reserves to provide the domestic economy with fuel through the rest of the century if public policy encourages the industry.

"To say the U.S. is energy poor is simply not accurate," Mr. Tillerson said. He added U.S. energy security is "a matter of policy choices" and could be achieved "within the visible future."

North America has become an important area for the development of new energy resources in recent years, with surging production in both Canada and the U.S. Mr. Tillerson said he was "hopeful" that reforms in Mexico would make possible further collaboration between Exxon and Mexico's state-owned oil company, Petroleos Mexicanos, or Pemex.

(END) Dow Jones Newswires

June 27, 2012 16:11 ET (20:11 GMT)

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Last edited by AzariLoveIran on Wed Jun 27, 2012 9:25 pm, edited 1 time in total.
Milo
Posts: 206
Joined: Sat Jan 28, 2012 4:24 am

Re: LNG

Post by Milo »

The hydrocarbon industry is supported by the biggest price fixing cartel in history, so obviously their press releases are totally reliable!
anderson
Posts: 195
Joined: Thu Dec 22, 2011 3:09 pm

Re: LNG

Post by anderson »

Re: Azari's last post - price will probably inch back up to a level that is still low, but profitable, as demand continues to ramp up - both foreign and domestic.
AzariLoveIran

Re: LNG

Post by AzariLoveIran »

anderson wrote:.

Re: Azari's last post - price will probably inch back up to a level that is still low, but profitable, as demand continues to ramp up - both foreign and domestic.

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prices will not inch higher .. more and more gas is produced and flared or burned

and

conversion to gas is slow

and

economy shrinking

only chance gas producers have

is

export

and

one company has monopoly of gas export from US : Cheniere Energy, Inc. (LNG)


and


Poland dreams of energy independence — through fracking

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Eager to end reliance on Russian natural gas, and largely untroubled by environmentalists, Polish officials are embracing hydraulic fracturing to unlock potentially huge deposits beneath their soil.
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GDANSK, Poland — Dreams of freedom from Soviet oppression were nurtured and realized in the shipyards of this seaside city, where the Solidarity movement that helped tear down the Iron Curtain was born.

Now, Poles are having new fantasies of throwing off Russian domination. But this time the road to independence lies more than a mile beneath their feet.

If geologists are right, up to 768 billion cubic meters of natural gas sits trapped in shale deposits deep beneath the surface in Poland, enough to meet the country's needs for the next 50 years and more. The estimates have tantalized Poles with visions of ending their reliance on Russian gas, which warms them through harsh winters but puts them at the mercy of their former masters far more than they would like.

Exploiting these underground resources, though, will mean a lot of noisy, water-intensive and potentially harmful "fracking," or hydraulic fracturing, the process of shooting chemical solutions mixed with sand into the shale to prize it open and release the gas. It's a controversial practice: Concern about ill effects such as groundwater contamination has led to a ban on fracking in countries such as France and Bulgaria and in the state of Vermont.

But here in Poland, officials excited by the prospect of energy independence and largely untroubled by environmentalists are embracing it with a passion.

So are the foreign companies that have stampeded into Poland to stake claims in what one American participant happily describes as a "land grab."

"We only need one of these things to work, and it could be a company-maker," said John Buggenhagen of San Leon Energy, sitting amid rolls of geologic and scientific maps in his Warsaw office. The multinational firm owns the rights to explore 14 "concessions" in Poland, each covering nearly 400 square miles.

Even if all that gas is there — by no means a certainty — it will take years for this fast-growing Eastern European nation to develop production on a scale necessary for achieving self-sufficiency.

Poles consume 14.5 billion cubic meters of gas a year, about 30% of which comes from domestic sources. Nearly all the rest is imported from Gazprom, the state-owned Russian energy giant, which has been known to play hardball with its customers.

In early 2009, at the height of winter, Gazprom withheld gas from Ukraine in a dispute over prices and payment, a shutoff lasting for days that also affected delivery to more than a dozen other shivering European nations. On at least one day in February of this year, Poland detected a sudden 7% drop in supply from Gazprom; some suspect Russia was holding back some of its gas for itself to combat a nasty cold spell.

Such incidents have turned shale gas into something of a mantra for the Polish government.

"Every cubic meter of gas that … doesn't have to be imported is good news," said Michal Golebiowski of Poland's Treasury Ministry. (Overall, the country is still heavily reliant on coal for its energy needs.)

Polish officials have made frequent visits to the U.S. to learn from American successes — and failures — in places such as Pennsylvania and Texas, where hundreds of drilling rigs have proliferated in just the last few years.

But Poland faces particular difficulties. Support services and infrastructure are lacking. More daunting is the fact that the shale deposits, believed to stretch in a wide belt from northwest Poland down to the southeast, lie much farther underground than in the United States, as deep as 2 1/2 miles below in some cases.

That will make drilling much more expensive than in the U.S. Officials contend that Poles would still come out ahead, because they pay about five times more for natural gas than Americans do.

"Any activity that will make for a chance of cheaper energy will be supported by citizens," Golebiowski said.

Not quite all of them.

Marek Kryda, an environmental activist here in Gdansk, is worried that his country is running headlong toward an illusory goal without really counting the cost.

Fracking generates massive volumes of toxic water and huge piles of debris. In the U.S., federal regulators have linked the process to tainted water supplies in Wyoming. A panel of lawmakers in New Jersey approved a bill in June to bar fracking waste from entering the state from neighboring Pennsylvania.

Drilling for shale gas has also been blamed for triggering two tiny earthquakes in northwest England last year, a region not known for seismic unrest. Worried Britons are demanding a fracking moratorium.

In Poland, a recent study of a drilling site by the Polish Geological Institute deemed it environmentally safe. But Kryda is skeptical, saying that the institute is under heavy political pressure to support Warsaw's agenda of weaning the country from Gazprom.

"To say that Poland is dependent on Russian gas is a lie.... Poland is dependent on the price of Russian gas," Kryda said. "We can cut off Russian gas tonight and buy 40% or 50% more expensive gas from Qatar. But Poland is not doing this."

In the Pomerania region, which includes Gdansk, authorities have issued exploration permits for 22 concessions, spread out over an area famed for its beauty, with lakes, forests, verdant farmland, medieval castles and inviting white beaches hugging the Baltic Sea.

Malgorzata Maria Klawiter, a regional official who promotes the hunt for shale gas, said companies could maintain environmental safety, reduce noise and keep the drilling rigs from spoiling the rustic landscape.

"We can hide the facilities so that they look like little houses maintained in the local architectural style," she said. "Our current goal is to determine if shale gas occurs in commercial amounts, and if so, will the extraction bring a reasonable profit. It may turn out either way."

Critics believe the estimates are exaggerated. Energy giant Exxon Mobil announced in June that it was abandoning its exploration efforts in Poland after two of its wells yielded disappointing results.

Buggenhagen of San Leon Energy said some players barreled in with inflated hopes, especially after a U.S. government study suggested that Poland's shale gas reserves could amount to 5.3 trillion cubic meters. The Polish Geological Institute's recent estimate of 768 billion cubic meters is a fraction of that.

"There was an unrealistic expectation in the financial markets that we were going to drill a few wells and this was going to be the next Barnett Shale," said Buggenhagen, referring to a massive reserve discovered in Texas.

The initial hype has tapered. But many remain convinced of Poland's promise.

"I think there's outstanding potential," said Buggenhagen, who considers Poland his No. 1 priority. "It's the heartbeat of our company."
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looks to me , oil headed below 80 for long long time


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AzariLoveIran

Re: LNG

Post by AzariLoveIran »

AzariLoveIran

Re: LNG

Post by AzariLoveIran »

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Mitsui & Co Chairman: Cautious Over US LNG Reducing High Fuel Costs



TOKYO--Mitsui & Co. (8031.TO) chairman Shoei Utsuda cautioned Wednesday over optimism that Japan would be able to import liquefied natural gas from the U.S. to mitigate its high fossil fuel costs.

"We have to remain cautious" about the prospect of the U.S. government's approval, Mr. Utsuda said during a press conference as chairman of the Japan Foreign Trade Council.

"The U.S. has kept its strict policy about strategic resources. You may be wrong to expect it to easily allow exports," he said.

He also warned about expectations of cheaper prices, pointing out that U.S. benchmark Henry Hub natural gas prices are constantly changing and even if they are currently cheaper than Japan's LNG import prices, it doesn't mean this will always be the case.

Mitsui & Co. in April signed a preliminary agreement with Cameron LNG, a unit of Sempra Energy (SRE), to jointly develop liquefaction facilities at Sempra's Cameron LNG terminal in Louisiana and offtake 4 million metric tons a year.

Based on the preliminary agreement, Mitsui & Co. plans to source U.S. natural gas, which Cameron LNG would process into LNG, and Mitsui would sell it to customers, preferably in Japan.

Asked about the company's U.S. LNG import plans, Utsuda said the "hosting country's approval is the premise in any business."

A number of Japanese companies have announced plans to invest in U.S. shale gas projects and LNG plants since the March 11, 2011 earthquake and tsunami and subsequent nuclear power outage, which has boosted Japan's LNG demand to make up for the idle nuclear power capacity.

Japan's Ministry of Economy, Trade and Industry recently said that Japan would import as much as 15 million tons a year of LNG from North America.

But none of the companies that have announced plans to import U.S. LNG have so far obtained the necessary licences from the U.S. government, while South Korea's Korea Gas Corp. (036460.SE) committed in January to receiving LNG to be produced at Cheniere Energy Inc.'s (LNG) Sabine Pass export terminal, also proposed to be located in Louisiana.

South Korea has a free trade agreement with the U.S. but Japan does not.

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Jnalum Persicum

Re: LNG

Post by Jnalum Persicum »

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“We Europeans are currently paying up to four or five times more for natural gas than the Americans ... Of course that means increased competition for all the European manufacturing sites.”


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Europe’s ability to compete against the US as a manufacturing centre is being damaged by rising energy costs as North America benefits from cheap natural shale gas, Germany’s biggest companies have warned.

[..]

Some executives fear a growing divide between European and US energy costs could see energy-intensive manufacturers divert investments that might have gone into Europe to the US instead.
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Crocus sativus

Re: LNG

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Crocus sativus

Re: LNG

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VY34PQUiwOQ
Crocus sativus

Re: LNG

Post by Crocus sativus »

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An "Arbitrage" dream

Natural Gas Prices.JPG
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Heracleum Persicum
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