Bitumen or no bitumen? That is the question in the pipeline


On Thursday, Enbridge CEO Patrick Daniel told Reuters that the company “would prefer to supply natural gas to the Kitimat liquefied natural gas plant in British Columbia over any other export project in western Canada.”

That immediately raised a question in the northwest is Enbridge thinking of replacing the Northern Gateway bitumen pipeline with a natural gas pipeline? Or is it planning two pipelines?

So far Enbridge has not responded to a request from  Northwest Coast Energy news for clarification.

This afternoon, Jeff Lewis writing on Alberta Oil’s website in Another suitor sidles up to Kitimat LNG says:

No word yet on whether Tim Wall, the CEO of Apache Canada Ltd., is keen to take on another partner for the massive development. (The Reuters report has Enbridge building a natural gas line in conjunction with its proposed Northern Gateway line, which is to be twinned with a pipe for importing bitumen-thinning condensate from the coast; there’s no mention of sending natural gas west on the Gateway website).

But the question still remains. The Reuters report actually isn’t that clear on whether it will be a bitumen pipeline twinned with a natural gas pipeline or a natural gas pipeline substituted for the bitumen pipeline.

Here is what Reuters said.

Enbridge plans to build a natural gas pipeline along the route of the proposed Gateway oil line, which would transport natural gas from Horn River and other natural gas fields to the coast by 2016, Daniel said.

There is already speculation and rumour in Kitimat about the Enbridge announcement. Environmental activists have long feared that there would be a twinning of the two projects, while many people sitting on the fence were willing to accept liquified natural gas but not bitumen.

If there is any truth to the rumours circulating in Kitimat, there may be more corporate announcements after the Thanksgiving holiday weekend that will make the situation a little clearer.

A window of opportunity opens in Japan for Canadian LNG: Alberta Oil


Alberta Oil magazine says in A window of opportunity opens in Japan for Canadian LNG

Nuclear outages in Japan continue to stoke demand for delivering Canadian gas to the Far East. Look for oil- and natural gas-fired generation to offset a precipitous drop in atomic capacity as maintenance work at plants, combined with public safety pressures, keeps a fleet of 54 reactors from running at full capacity, the International Energy Agency (IEA) says. Japan’s nuclear reactors normally account for 27 per cent of the country’s electricity demand, but only 16 were online in August, five months after a massive earthquake rocked the coastal city of Sendai and sent officials scrambling in search of alternatives to the atom.

The country is one of several potential sales destinations for a suite of liquefied natural gas (LNG) terminals taking shape on Canada’s West Coast at Kitimat, British Columbia. Two of the most advanced proposals, including a 10-million-tonne capacity project led by Apache Canada Ltd. and another, smaller co-operative that would ship 1.8 million tonnes abroad annually, are both seeking 20-year export licenses from the National Energy Board….

Will propane be added to the Kitimat’s “hot” energy scene?

Energy Link

The energy industry monitor Argus Media speculated Tuesday that propane could be added to Kitimat’s energy scene, as an ingredient to upgrade the natural gas that will be exported to Asia.

In Propane market ponders ‘hot’ LNG potential of Kitimat  Argus says propane traders are keeping a close eye on the proposed liguified natural gas projects in Kitimat.

Argus says;

Many Asian countries that buy LNG –
including Japan – have higher Btu standards for their gas, which can be
achieved by adding propane to create so-called “hot” LNG.

Propane can be added to the LNG either at the import facility to
enrich supply to the country’s Btu standard or at the export facility
before the LNG goes to market.

Depending on supply contracts and pricing, it could make sense to add
propane to LNG produced at Kitimat, and such a move might impact the
long-term NGL market in western Canada, traders said.

BTU, or British Thermal Units is a way of measuring the energy out put of the natural gas.

Apache spokesman Bill Mintz  told Argus that the ideas about propane being added to the Kitimat energy mix was premature speculation.

Japan seeking LNG from US: Reports

Energy Links

Japan wants to buy more liquified natural gas from the United States, according to reports in the business and energy media.

Bloomberg reported Japan to Boost LNG Imports From U.S. as Nuclear Power Declines

Japan, the world’s largest importer of liquefied natural gas, plans to seek more U.S. cargoes to ensure adequate power supplies after its use of nuclear reactors fell to an all-time low.

Japan’s senior vice minister of trade and industry, Seishu Makino, asked U.S. Energy Secretary Steven Chu at a meeting yesterday in San Francisco to increase LNG exports, Akinobu Yoshikawa, deputy manager for the Petroleum and Natural Gas Division, told reporters today in Tokyo.

Reuters reported Japan to start buying LNG from U.S. by 2015-Nikkei

Japan plans to start importing liquefied natural gas (LNG) from the United States as early as 2015 to secure a steady supply amid growing demand for the fuel, Nikkei business daily reported…

Japanese power and gas utilities would initially import 2-3 million tons of LNG a year, the daily said. Gas extracted from shale rock formations will be liquefied in Texas and Louisiana. The LNG will then be shipped to Japan via the Panama Canal, Nikkei said.

Liquified natural gas from fields in Alberta and British Columbia sold to Japan is a major reason for LNG developments at the port of Kitimat. Testimony at last June’s NEB hearings on the KM LNG export licence application warned of increasing competition from the US for Canadian LNG.

“Front End Engineering” begins for BC LNG


The Hart Energy  E&P (exploration and production) newsletter is reporting that an Overland,  Kansas based company, Black & Veatch,  a multi-billion dollar, employee-owned engineering firm founded in 1915,  is beginning front end engineering (FEED) for the second proposed Kitimat liquified natural gas facility, BC LNG.

Although no information appears on the Black & Veatch website, the newsletter quotes Tom Tatham, the managing director of  Douglas Channel Gas Services Ltd, the company which will contract with energy firms wanting to export through the BC LNG facility as saying:  We are looking to build the majority of the LNG export facility on a standard Panamax barge to minimize the physical and environmental impact in this scenic area.”

(The name Panamax derives from the maximum size that a barge or ship can be to pass through the Panama Canal, which means the LNG from the port of Kitimat could be shipped to anywhere in the world, not just to the projected Asian market)

 Black & Veatch has developed a process called PRICO which Tatham says  is ideal for this type of application because of its smaller footprint and flexible operations.

Black & Veatch’s engineering planning is scheduled to be complete by January 2012 and will provide a “definitive estimate” that will be used for costing  engineering, procurement, construction, testing and commissioning of the facility.

The newsletter quotes  says Dean Oskvig, president and CEO of Black & Veatch “The global LNG export market is extremely cost-competitive,” and  Oskvig says the company`s process will be scalable and thus allow the partnership to bring liquified natural gas to market at a competitive price.

The Black & Veatch website briefly promotes  the PRICO process as simple, flexible, reliable and economic but gives few details.

The company has an Edmonton based Canadian subsidiary.


Enhanced by Zemanta

Japan Quake Is Causing Costly Shift to Fossil Fuels: New York Times

Energy Link

New York Times
Japan Quake Is Causing Costly Shift to Fossil Fuels

Japan, the world’s third-largest user of electricity behind China and the United States, had counted on an expansion of nuclear power to contain energy costs and greenhouse gas emissions. Instead, its nuclear program is in retreat, as the public and government officials urge a sharp reduction in the nation’s reliance on nuclear power and perhaps an end to it altogether.

As its nuclear program implodes, Japan is grappling with a jump in fuel costs, making an economic recovery from the March earthquake and tsunami all the more difficult. Annual fuel expenses could rise by more than 3 trillion yen, or about $39 billion, the government says….

Prime Minister Naoto Kan has called for a gradual move away from nuclear energy, and proposed a goal of generating 20 percent of Japan’s electricity from renewable sources, including hydroelectric plants, by the early 2020s. The Parliament is debating legislation to spur that change…

Japan’s liquefied natural gas imports have jumped for three consecutive months, squeezing global supplies amid strong demand from China and other emerging economies…

NEB gets ready for BC LNG hearings, first step for second Kitimat project


The National Energy Board has announced it will hold hearings on the second proposed liquified natural gas project, saying, the hearings will “consider an application submitted by BC LNG Export Co-operative LLC (BC LNG) for a 20-year licence to export liquefied natural gas (LNG)
from Canada to Pacific Rim markets.”

Once again under the NEB’s rules of procedure, the hearings will be limited to granting the export licence, with or without conditions and will follow the so-called “market-based procedure” set up for the NEB after deregulation of the oil and gas industry in the late 1980s.

This application is based on projections that the demand for natural gas in Pacific Rim markets will continue to increase substantially over the next 20 years. In its application, BC LNG is requesting authorization to export up to 1.8 million tonnes of LNG annually.

The Board will consider, among other issues, the export markets and natural gas supply, the transportation arrangements, and the status of regulatory authorizations.

However in an apparent departure from the KM LNG hearings where energy lawyers challenged environmental and social issues as not included in the mandate for those hearings, these ground rules say they are now”

The Board will also consider the potential environmental effects of the proposed exportation, and any social effects directly related to those environmental effects.

The public has until Sept. 11, 2011 to register with the board for full intervenor status, request to make an oral statement or to submit a letter of comment.

Letter from NEB to BC LNG (pdf)

KM LNG final arguments set for Thursday in Calgary

The National Energy Board panel hearing KM LNG’s (also known as Kitimat LNG) application for an natural gas export licence will hear final arguments from the lawyers for the various parties at the NEB offices in Calgary beginning at 9:30 a.m. MT Thursday.

The hearings which began in Kitimat in June, resumed Wednesday in Calgary.  Most of the day was spent with testimony and discussion about how various regulations in a number of countries could affect the Kitimat project.   Some witnesses testified that the Asian countries which could be the prime market for any liquified natural gas exported through Kitimat are nervous about the reporting and disclosure requirements required by some Canadian regulations.  There could be conflicts between those regulations and the customers desire to keep some information proprietary and confidential or, in cases where the LNG is purchased by a national government that government’s national security practices may also prevent some disclosure.  Some witnesses worried that the Canadian requirements just might be a deal breaker for some Asian customers who want ease of access as well as security of supply and thus would not want to be tangled in red tape.

 There was also some discussion of the need to reconcile the Canadian reporting requirements with those the US Securities and Exchange Commission.

Enhanced by Zemanta

Kitimat LNG hearings to resume in Calgary July 13

The KM LNG (also known as Kitimat LNG) hearings for an export licence will resume before a National Energy Board panel in Calgary on Wednesday July 13, and run to Friday,  July 15, the NEB has announced on its website.

This phase of the hearing will consider “the potential environmental effects of the proposed exportation and any social effects that would be directly related to those environmental effects, including any such effects to aboriginal interests”, and “consultation with the public and aboriginal peoples.” 
 But it appears that the NEB is using its procedures to block consultation with some “aboriginal peoples,” the Coast First Nations. In a letter on its website, the NEB says that an early June submission from Art Sterritt,the Executive Director of the Coast First Nations came too late, since the deadline for submissions was April 26. That means the First Nations group must present a motion before the board panel asking to be heard.

Australia, Canada rivals in “new frontier” of liquified natural gas

Canada and Australia are rivals in the “new frontier” of liquified natural gas export sales to Asia, a panel of energy marketing executives told the National Energy Board Tuesday at hearings into the KM LNG in Kitimat.

The “marketing panel” testifying before the board included Kenny Patterson, Vice President LNG Marketing and Shipping for Apache Energy, Sean Bolks, Apache Director of Corporate Risk Management, Jamie Bowman, Vice President of Marketing for EOG and David Thorn,Vice President, Canadian marketing for Encana and two consultants.

Patterson told the NEB at more than one point during his testimony that Canada was the “new frontier” for liquified natural gas, and so was attracting a good deal of interest from countries across East Asia who need more natural gas supplies.

Patterson and the other executives on the panel refused to be specific on who the customers actually are, despite cross-examination from NEB counsel Parvez Khan and additional questions from the NEB presiding member Lynn Mercier.

Patterson said Apache couldn’t go into individual buyers, so Khan asked: “How many different buyers n a general sense?” to which Patterson replied that in Asia, the KM LNG partners, which include Apache, EOG and Encana, were general discussions with seven to eight major Asian LNG companies as well as other smaller players.

That answer came despite the fact that earlier in the day in Kuala Lumpur at the Asia Oil and Gas Conference, Mate’ Parentich, general manager of LNG marketing at Apache, said the company would soon conclude talks on the sale of 85 percent of liquefied natural gas from the Kitimat terminal.

Asked for specifics by Bloomberg News, a Houston based Apache spokesman Bill Mintz then said that no binding contracts had yet been signed for the Kitimat project.  

Bloomberg later moved a corrected and updated version of the story, including the statement that no contracts have yet been signed.

Khan asked about one Memorandum of Understanding signed with KM LNG. Again the panel refused to be specific. Bowman said the MOU had been signed with the previous partnership in KM LNG and while the MOU had not yet expired, it was subject to further negotiations. 

Khan and Mercier were both aware that any agreements with potential buyers were “subject to regulatory approval,” which, of course, is the National Energy Board’s role, but again they were unable to drag any specifics out of the executives on the marketing panel.

The panel members told the NEB members that Korea and Taiwan are already well established LNG markets and China was beginning to be more aggressive as an LNG buyer. Japan, which was devastated by the earthquake in March and lost of a lot nuclear powered electrical generation capacity is now scrambling to catch up with its Asian neighbors. The executives told the NEB panel that both Indonesia and Malaysia will also become more important buyers for LNG in the Canadian market as their domestic demand grows.

Noting that Patterson is based in Perth, Australia, Mercier asked the executives about the recent announcement by Shell that it would build a floating LNG platform off Australia.

Panel members replied that the Asian markets want long term, secure sources of supply, with multi-billion dollar contracts for between 10 and 20 years. As stable, market-driven countries with ample supplies of natural gas, both Canada and Australia could fulfill those needs, panel members said. Companies operating in both countries would require those multi-billion, multi-year contracts to justify the investment in natural gas extraction and transportation.

Jamie Bowman, Vice President of Marketing for EOG  listens as fellow panel members testify before the NEB. (Robin Rowland/Northwest Coast Energy News)