Energy Department approves Gulf Coast LNG export plant

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Latest Oil and Gas News: 
May 23, 2011

Energy Department approves Gulf Coast LNG export plant

Reuters article

Bloomberg article

(Reuters and Bloomberg) - The Department of Energy May 20 approved Cheniere Energy's application to export U.S. natural gas overseas. The company also needs FERC approval to build its liquefaction plant on the Louisiana coast, at the site of a shipping terminal and regasification plant that Cheniere wants to turn bi-directional.

Cheniere received authorization to export up to an average of 2.2 billion cubic feet of gas per day to major LNG importers across the globe. "With the unprecedented growth in unconventional reserves, the supply of natural gas (in the United States) continues to

outpace demand dramatically," said Cheniere CEO Charif Souki.

The company said its $6 billion LNG plant could come online by 2015. Cheniere, which has lost money for 13 consecutive years and earlier this month warned it may have to sell assets and restructure debt to avoid running out of cash, has yet to say how it intends to finance the project.

Koch, Pickens battle over federal subsidies for natural gas vehicles

(Washington Post) - Two titans of the energy industry are battling over a measure aimed at providing federal tax incentives for vehicles powered by natural gas.

The public sparring underscores an increasing debate over H.R. 1380, the New Alternative Transportation to Give Americans Solutions Act, or NAT GAS Act.

The latest salvo in the natural gas fight came May 20 when Koch Industries, the billionaire energy-and-manufacturing conglomerate, fired back at oil and gas tycoon T. Boone Pickens, who has been lobbying heavily for the bill and has accused Koch of attempting to defeat the measure.

Pickens charged that Koch is rounding up opposition to the bill among tea-party-backed conservatives to protect its own stake in the oil industry. Koch Executive Vice President Rich Fink said that wasn't the case - and that the company opposes the NAT GAS Act for the same policy reasons that conservative lawmakers have come out in opposition to the bill. "Koch has consistently opposed subsidies that distort markets," Fink said.

Conference speaker warns of shale gas euphoria

(Oil & Gas Journal) - Attendees at Deloitte 2011 Energy Conference were urged not to get caught up in the euphoria over shale gas supply potential. Much more is involved than simply recovering it, said Marc S. Lipschultz, global head of energy and infrastructure at Kohlberg, Kravis, Roberts & Co.

"Public perceptions absolutely are the front-end problem of this industry," he observed, adding that it's the industry's responsibility to work with all stakeholders to assure that the considerable potential of shale gas is realized.

Meanwhile, depressed prices are hurting many producers' cash flow, Lipschultz said. "Private financing can help bridge the gap and allow production from leases which otherwise might be deferred or formation of joint ventures to consolidate resources to improve economics," he said.

Bill would block municipal limits on drilling operations

(Pocono Record, PA) - Protesters May 21 voiced their opposition to a Pennsylvania Senate bill that proposes a fee on natural gas drilling but also would tie the hands of municipalities that may want to prevent drilling in their communities.

The West End Organizers, a local service club, organized the event in front of legislative offices. Displaying signs with sayings like, "Stop FracGas" and "No Gasation without Representation," the group drew cheers and honking horns from passing motorists.

In addition to a one-time drilling fee - but no production tax - the bill also calls for a statewide "model municipal ordinance." The ordinance would authorize gas drilling in all zoning districts, except residential districts where it would be permitted only as a conditional use or special exception. The ordinance also would block municipalities from imposing limits on the hours drilling can take place or on access roads leading to wells.

Drillers critical of multiple municipal zoning laws

(The Daily Local News, West Chester, PA) - Natural gas industry officials are asking Pennsylvania officials to provide clarity and consistency in municipal zoning ordinances that make drilling inconvenient or even impossible in certain parts of the state. But an environmental group claims the industry is trying to undermine the right of self-government.

That issue is one of many Gov. Tom Corbett's Marcellus Shale Advisory Commission will address before submitting a final report to the governor July 22. The commission consists of 30 members representing state and local government, the drilling industry, environmental groups and academia.

Kathryn Klaber, president of the Marcellus Shale Coalition, an industry group, told the commission May 20 that drilling firms are having difficulty navigating the 779 zoning ordinances in the 1,491 municipalities in the Marcellus Shale region. "Some have expressly banned natural gas extraction altogether; others banned stages of development," Klaber said.

Chevron adds to acreage in Marcellus Shale

(The Intelligencer / Wheeling News-Register, W.Va.) - Chevron is becoming more of a player in the vast Marcellus Shale natural gas field that stretches through Pennsylvania, West Virginia and eastern Ohio, as well as New York and Maryland.

"Chevron recently signed an agreement to acquire about 228,000 high-quality net acres in the Marcellus Shale, mostly in southern Pennsylvania," said Nathan Calvert, Chevron spokesman. The acreage will give Chevron an estimated 5 trillion cubic feet of additional natural gas resource in its Marcellus Shale operations, he said.

Natural gas is a growing segment of Chevron's energy portfolio. Chevron has a net production of more than 5 billion cubic feet of natural gas per day, including equity shares in affiliates, and expects to substantially increase this volume over the next decade.

North Dakota looks to reduce gas flaring

(The Associated Press) - North Dakota regulators hope construction of new processing plants will help cut down on natural gas waste. The state Department of Mineral Resources reports that about 27% of the state's natural gas output is being burned off.

The gas is flared because the region doesn't have the capacity to process all of the gas that comes up with the state's growing oil production.

The state Public Service Commission approved plans last week to build two natural gas processing plants about 16 miles northwest of Williston. Commissioner Kevin Cramer says the Bear Paw Energy plants will handle 200 million cubic feet of gas per day.

Air quality an issue in Wyoming natural gas development

(The Billings Gazette, MT) - State, federal and company officials admit they don't fully understand how to restore air quality and avoid further exceeding federal Clean Air Act standards in the once-pristine airshed of Wyoming's Upper Green River Basin.

Yet the U.S. Bureau of Land Management has already begun analyzing proposals for major natural gas field expansions that would add up to 4,338 new wells in the area. Despite significant reductions in the volume of emissions from the Pinedale Anticline and Jonah natural gas fields in recent years, the area remains prone to ozone spikes -- a human health risk.

BLM officials are guardedly optimistic. In addition to advanced low-emission technology and consolidating facilities, BLM officials say gains can be made by cutting emissions from existing oil and gas facilities. Others doubt Wyoming can adequately resolve air quality issues while expanding gas development. "Where I come from, if you have a problem you fix the problem before you move on down the road," said Laramie resident Pete Gosart.

Most drilling-related bills stalled out in Texas Legislature

(Fort Worth Star-Telegram) - With just a week left in the legislative session, most proposed drilling-related bills appear dead but a handful still have a chance of becoming state law.

Lawmakers filed more than three dozen bills this session that would have affected natural gas drilling operations in the Barnett Shale against a backdrop of increasing environmental concerns. For the most part, only bills not opposed by industry have moved forward. Drilling critics and environmentalists agree that, as in past sessions, industry has called the shots.

Gov. Rick Perry recently signed a bill allocating funding for air monitors in the Dallas-Fort Worth area. There are also other bills still in play, including one that would require drillers to disclose most of the chemicals they use in the controversial hydraulic fracturing process.

Air quality sampling near drilling rigs finds no health risk

(Star-Gazette, Elmira, NY) - Air quality sampling conducted by the Pennsylvania Department of Environmental Conservation found natural gas-related pollutants near drilling and production operations, but the levels detected do not pose a health threat.

The agency's testing focused on the concentrations of volatile organic compounds -- benzene, toluene and xylene - that are typically found in petroleum products. DEP also sampled for other pollutants, such as carbon monoxide and nitrogen dioxide, near natural gas extraction and processing sites.

"The results show there are no emission levels that would be of concern to the health of residents living and working near these operations," DEP Secretary Mike Krancer said in a statement.

Exxon forecasts huge growth in natural gas for power generation

(Gulf-Times, Qatar) - Expanding prosperity around the world for a growing population will drive an increase in global energy demand of about 35% by 2030 compared to 2005, ExxonMobil said in its annual worldwide energy outlook.
Power generation is the largest and fastest growing major energy-demand sector. The demand for natural gas for power generation is expected to rise by about 85% from 2005 to 2030, when natural gas will provide more than a quarter of the world's electricity needs, the report said.
"The forecasts also show a shift toward natural gas as businesses and governments look for reliable, affordable and cleaner ways to meet energy needs," the report said.

Report says U.S. shale gas could compete in LNG market

(The Australian) - Australia, with 13 LNG projects at various stages of development, is set to become the world's top producer by 2020, with Asia the No 1 export destination.

But the U.S. shale gas industry is shaping up as a strong competitor, and after 2015 the U.S. could be a major exporter of LNG, according to a Standard Chartered Bank report.

The report, LNG: The Second Coming, says in the short term most of Asia's LNG will come from the Middle East and Australia, but Singapore-based analyst Han Pin Hsi estimated the U.S. would be a net LNG exporter of up to 2 billion cubic feet of gas per day to the Pacific Basin by 2015-2016.

Some energy experts have warned that U.S. shale gas could compete with Australian LNG exports in the long term, as technological advances in shale gas extraction technology unlock previously unavailable resources.

Qatar supplies half of Japanese utility's additional LNG needs

(Reuters) - Chubu Electric Power Co. said it has secured half its additional LNG needs for the next year, mainly from Qatar, and that it is negotiating with a number of sellers for the rest, after it halted its sole nuclear plant this month amid safety concerns.

Japan's third-biggest power company earlier this month said it would require an additional 400 million cubic feet of gas per day in 2011/2012 to make up for the loss of its Hamaoka nuclear plant.

Of the LNG it has purchased in the past 12 months, 52% came from Qatar, 31% from Indonesia and 11%

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