Statoil may expand Arctic LNG plant

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July 15, 2011

(Reuters) - Norway's Statoil is considering building a second processing train at its Arctic LNG plant in 2018 to treat gas from recent discoveries in the Barents Sea. Statoil's Melkoeya Island plant, perched on Europe's northernmost tip, is Europe's only LNG processing plant. It treats gas from the offshore Snoehvit field for loading aboard tankers.

Statoil had long been considering a second processing train at the plant but had not given a timeline or other details until now. "We expect that by the fourth quarter of 2012 we will have a recommendation on the concept," said Statoil spokesman Jannik Lindbaek.

He said an investment decision and submission of a development plan to Norway's authorities could happen at the earliest in the fourth quarter of 2013. "We would expect production (to start) at the earliest toward the end of 2018," he added. Lindbaek said it is too early to say how much gas the second train would be able to process. Currently, the plant has an average daily output of about 550 million cubic feet per day.


Chevron awards Gorgon LNG construction contract

(Offshore) - The Gorgon LNG project took another step forward as operator Chevron Australia awarded CB&I (a global engineering and construction company) the mechanical, electrical and instrumentation work for the three onshore LNG trains to be built on Barrow Island, Western Australia.

Gas for the LNG facility (2 billion cubic feet per day capacity) will come from the Greater Gorgon gas fields found between 81 and 124 miles offshore. The contract value is pegged at $2.3 billion and work is scheduled for completion in 2015. CB&I in 2009 won the contract for engineering and construction of the LNG tanks and other facilities.

The Gorgon project is a joint venture of the Australian subsidiaries of Chevron (approximately 47%), ExxonMobil (25%) and Shell (25%), Osaka Gas (1.25%), Tokyo Gas (1%) and Chubu Electric Power (0.42%).


Kitimat LNG agrees to buy former pulp mill property

(Vancouver Sun) - Kitimat LNG has reached an agreement to buy the site of West Fraser Timber Co.'s dormant pulp and paper mill in the northwest B.C. community, the companies said July 14. No price was disclosed.

Kitimat LNG president Janine McArdle said the partnership plans to use the neighboring linerboard mill industrial site as a work camp and lay-down and storage area as it prepares to start clearing and grading the location for its LNG export plant. West Fraser permanently closed the pulp and paper mill at the end of January 2010.

Kitimat LNG, which includes Apache, EOG Resources and Encana, is aiming to start deliveries from its $4 billion project by 2015. The National Energy Board is reviewing the application for a 20-year export license. In addition, the consortium is negotiating with potential Asia Pacific customers for firm purchase commitments before making a final investment decision. The plant is being designed to liquefy up to 700 million cubic feet of natural gas per day.


Germany to cooperate with Nigeria for LNG

(Reuters) - Germany will increase its involvement in Nigeria's LNG industry, Chancellor Angela Merkel said July 14, as Africa's most populous nation looks to take advantage of its vast gas reserves. Nigeria, with the world's eighth-largest gas reserves, has one of the world's biggest LNG plants in the onshore wetland creeks of the Niger Delta.

Nigeria's long delayed Brass LNG project reopened bids for engineering, procurement and construction contracts this week. Brass LNG shareholders include energy firms Eni, ConocoPhillips and Total.

"Our effort is to intensify cooperation with respect to liquefied natural gas ... technical and development cooperation are areas we intend to do more," Merkel said. The German government announced plans in May to keep offline permanently eight nuclear power plants, which contribute around 40% of its nuclear capacity, and to shut all remaining plants by 2022 -- a move that will increase its demand for gas.


Japanese utilities boost LNG imports

(Reuters) - Japan's 10 utilities consumed 31% more LNG in June than a year earlier to generate electricity, reflecting their need to offset a 32-year low in nuclear plant usage by burning fossil fuels, especially LNG, industry data showed.

The utilities used an average 6.45 billion cubic feet of gas per day last month compared with 4.93 bcf per day a year earlier, data from the Federation of Electric Power Companies of Japan showed. Consumption of fuel oil and crude oil also has jumped to cover the loss of nuclear power.

Northeast Japan was hit by a massive earthquake and tsunami on March 11 that knocked out reactor cooling systems at Tokyo Electric Power's Fukushima Daiichi plant.


Chesapeake will spend $1 billion to boost natural gas demand

(Dow Jones Newswires) - Chesapeake Energy said July 11 it would spend $1 billion in hopes of boosting U.S. natural gas demand, the latest private-sector initiative aimed at fostering consumption of domestic fuel supplies that are expected to jump in coming years.

The oil-and-gas company said it will spend at least $1 billion over the next 10 years on a new venture-capital fund dedicated to boosting demand for natural gas, particularly as a clean-burning transportation fuel. The fund will invest in companies and technologies that spur demand for domestically produced oil, natural gas and natural-gas-to-liquids instead of other oil and diesel fuels.

Chesapeake and other independent producers have unlocked vast reserves of natural gas in recent years by combining hydraulic fracturing with horizontal drilling. The resulting gas glut has depressed prices. "It became clear to me having been part of a supply revolution that we also needed to kick start a demand revolution," said Chesapeake CEO Aubrey McClendon.


Industry titans continue fighting over natural gas incentives

(Bloomberg) - T. Boone Pickens, who's been saying for more than a year that Congress was poised to pass his plan to subsidize natural gas vehicles, may not have been expecting opposition led by fellow billionaire Charles Koch. Pickens, 83, the chairman and chief executive officer of a Dallas-based energy investment fund, has spent $82 million since July 2008 promoting the use of domestically produced natural gas to power cars and trucks.

Koch Industries, Dow Chemical and the American Conservative Union all have weighed in since May against the Pickens-backed bill that would provide tax breaks to purchase natural gas-fueled trucks. Critics say it would provide unwarranted subsidies to companies such as Clean Energy Fuels Corp., a builder of natural gas fueling stations in which Pickens is the biggest shareholder.

Charles Koch, 75, is chairman and chief executive officer of Wichita, Kansas-based Koch Industries, which calls itself one of the world's largest closely held companies. He is also a co-founder of Americans for Prosperity, a group that says it advocates limited government and opposes the natural gas legislation.


W.Va. governor imposes new drilling rules

(Platts) - West Virginia Gov. Earl Ray Tomblin issued an executive order July 12 implementing several major changes in the state's natural gas drilling rules, including a new rule on water withdrawal. Gas producers who take more than 210,000 gallons a month from West Virginia waters now must file a water-management plan with the Department of Environmental Protection, Tomblin said.

The order mandates operators that want to develop in the Marcellus Shale formation within the boundaries of a municipality must file a public notice of intent to drill. A registered profession engineer must certify drilling plans that call for the disturbance of three or more acres and those plans must be filed with the DEP.

Before hydraulic fracturing begins in any gas-bearing formation, drillers must provide a list of additives that will be used in the fracking fluid, Tomblin said. Also, when using water from a public stream, a company must identify the designated and existing uses of that stream. The governor called the new rules the first step in a long-term plan to ensure responsible development of gas resources.


Texas gas industry argues against proposed air quality rules

(Fort Worth Star-Telegram) - State officials are "grossly overstating" the natural gas industry's air pollution in the Dallas-Fort Worth area, an industry representative said at a hearing on the state's plans to meet federal ozone limits. The Texas Commission on Environmental Quality's proposed rules would require the industry to install vapor recovery systems, flares or other controls to keep volatile organic compounds from escaping their large storage tanks.

But Ed Ireland with the Barnett Shale Energy Education Council disputed the amount of emissions that the state commission has calculated the oil and gas industry will generate next year. "All the cars and trucks in the Dallas/Fort Worth Metroplex emit six times more volatile organic compounds than all the Barnett Shale natural gas wells," Ireland said. "No further restrictions are needed."

David Brymer, TCEQ's air quality division director, said the state may have overestimated emissions but the energy industry can do more to control one of its top sources of volatile emissions -- storage tanks holding crude oil, gasoline, condensate from natural gas wells or other chemicals.


Fort Worth study finds emissions at Barnett Shale well sites

(Bloomberg) - Five natural gas sites in Forth Worth last year produced air pollution that exceeded state regulations, according to a study on the effects of Barnett Shale drilling and production in the city.  Eastern Research Group, a consultant hired by the Fort Worth City Council, also found visible emissions at 296 of 388 gas well sites it examined.

It's the first study to test for emissions during all phases of gas development, including drilling, hydraulic fracturing, well completion, pipeline operations and compression, said Jason Lamers, city spokesman. Eastern Research used infrared cameras that can detect air pollution to inspect sites. The company took air samples at sites where it found emissions and tested the samples for pollutants.

Most of the emissions were found to be gas. The tests also found volatile organic compounds such as benzene, along with carbon monoxide and formaldehyde, according to the study. In most cases, the pollutants dispersed quickly and posed no health risk for surrounding residents, the study said.


Both sides find likes, dislikes in proposed N.Y. fracking rules

(The New York Times) - New York State's recently proposed rules for regulating hydraulic fracturing are drawing expressions of guarded optimism from the natural gas industry but objections from some environmentalists, who say they do not go far enough in protecting water supplies.

Environmental groups say that the state has moved toward a safer plan in its latest draft rules, especially by banning fracking in state parks, wildlife preserves, and watersheds and aquifers that supply drinking water to New York residents. But it is still coming up short, some say, on issues like mapping buffer zones where drilling would be banned.

Jim Smith, spokesman for the Independent Oil and Gas Association of New York, said the watershed bans are not particularly troubling because the areas are not considered "the sweet spot" of the Marcellus Shale. Eliminating the watersheds still leaves more than 80% of the shale available for drilling. Dennis Holbrook, an executive at Norse Energy, a gas driller, said one concern is the requirement that drilling sites comply with local zoning laws, opening the possibility that some towns could prohibit drilling.


Idaho neighbors concerned with natural gas plant

(KTVB-TV, Boise) - More than 100 people in Idaho's Payette County turned up at a planning and zoning meeting July 14, mostly concerned about the next step in a plan to collect more natural gas in their county.

Bridge Resources Corporation has drilled and installed pumps, and now must build a natural gas collection site and dehydrator plant to produce and ship gas. The company needs a land-use permit for the facility, but neighboring homeowners and farmers say they are concerned about drinking water, irrigation water and air quality.

Travis Fisher, who lives next door to the site, says he moved to a rural area to be in a quite environment. Fisher is worried about his property value declining. Fisher's neighbor, Jerry Stelling, a firefighter and farmer, says the local fire department isn't properly funded or trained to respond to large fires involving natural gas.


Gas producer gives up on children's coloring book

(Pittsburgh Post-Gazette) - Talisman Terry, the "friendly Fracosaurus" star of a coloring book published by Talisman Energy, will no longer explain the natural gas drilling process to youngsters after the company announced plans July 14 to stop distribution of the controversial children's book.

"Talisman Terry's Energy Adventure" was a 24-page booklet that explained natural gas drilling in kid-friendly fashion and could be downloaded from the Calgary-based energy company's website. It had been distributed at community fairs in northeastern Pennsylvania through the company's Good Neighbor program.

Critics had lambasted as propaganda the book's rosy view of the controversial industry. Rep. Ed Markey, D-Mass., referenced the Fracosaurus in remarks critical of the natural gas industry's environmental record. And Terry was treated to a vicious lampooning by comedian Stephen Colbert on Comedy Central's "The Colbert Report," which showed a doctored page with a depressed Fracosaurus lighting himself on fire in the shower.


EPA questions 39-mile natural gas pipeline in Marcellus

(The Associated Press) - The EPA is questioning a proposed 39-mile natural gas pipeline that opponents say would damage 600 acres of pristine forests and streams in northern Pennsylvania's Endless Mountains region. Central New York Oil and Gas Co. is seeking regulatory approval to use eminent domain, if necessary, to acquire land for its pipeline, which could open new areas to drilling and connect with three existing lines to take Marcellus Shale gas to market.

The EPA said it's not clear why the line needs to be built at all, given existing pipeline infrastructure. The EPA added that New York Oil and Gas itself has said that other pipelines are capable of transporting the gas. The agency noted the pipeline would cross more than 100 waterways, result in the loss of more than 200,000 mature trees, and possibly harm "water quality, aquatic resources, air quality, wildlife and their habitat and forested landscapes" in the area popular with tourists.

The EPA submitted its comments to the Federal Energy Regulatory Commission, which must decide on the pipeline project. FERC staff have already found the pipeline would have "no significant impact" on the environment and recommended that it be allowed to go forward, with a final decision up to the commission.


Illinois governor signs law for coal-to-gas conversion plant

(The Associated Press) - Illinois Gov. Pat Quinn signed legislation July 13 that could lead to construction of a new plant in Chicago that converts coal to natural gas. Quinn signed the legislation at a former steel mill site where New York-based Leucadia National Corp. wants to build the $3 billion plant.

The Sierra Club wasn't happy with Quinn's decision to sign the law. "Creating synthetic natural gas is a very dirty way of getting our natural gas," said Becki Clayborn, a representative for the Sierra Club's Midwest Clean Energy Campaign. Clayborn said the law will saddle consumers with expensive natural gas for decades to come.

There are several hurdles before the new plant can open. Leucadia still has to get permission to add pollution to the crowded industrial area of Chicago where it wants to build. And the company needs a buyer for its carbon dioxide emissions.


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