Strange ancient hippo-like Pacific coast mammal “vacuumed” shoreline plant life

Scientists have identified a new species of a strange marine mammal group that lived on the Pacific Coast between 33 million years ago and 10 million years ago. The new specimens — from at least four individuals — were recovered from Unalaska, in theAleutians.

The Desmostylians, unlike other marine mammals species alive today — such as whales, seals and sea cows –are extinct. The researchers call them “desmos” for short. Unlike whales and seals, but like manatees, desmos were vegetarians

The desmos are found from Baja, California, up along the west coast of North America, around the Alaska Peninsula, the storm-battered Aleutian Islands, to Russia’s Kamchatka Peninsula and Sakhalin Island, to the Japanese islands

Their strange columnar teeth and odd style of eating don’t occur in any other mammal. They rooted around coastlines, ripping up vegetation, such as marine algae, sea grass and other near-shore plants.

The new species, 23 million years old was a big, hippo-sized animal with a long snout and tusks, It has a unique tooth and jaw structure that indicates it was not only a vegetarian, but literally sucked vegetation from shorelines like a vacuum cleaner, said vertebrate paleontologist and study co-author Louis L. Jacobs, Southern Methodist University, Dallas.

They probably swam like polar bears, using their strong front limbs to power along. On land, they would have had the lumbering gait of a sloth.

A large, stocky-limbed mammal, desmos’ modern relatives remain a mystery. Scientists have previously linked the animals perhaps to manatees, horses or elephants. Adult desmostylians were large enough to be relatively safe from predators.

The identification of a new species belonging to Desmostylia has intensified the rare animal’s brief mysterious journey through prehistoric time, according to the new study.

While alive, the newly discovered creatures lived in what is now Unalaska’s Dutch Harbor.

“The new animal — when compared to one of a different species from Japan — made us realize that desmos do not chew like any other animal,” said Jacobs, a professor of earth sciences. “They clench their teeth, root up plants and suck them in.”

To eat, the animals buttressed their lower jaw with their teeth against the upper jaw, and used the powerful muscles that attached there, along with the shape of the roof of their mouth, to suction-feed vegetation from coastal bottoms. Big muscles in the neck would help to power their tusks, and big muscles in the throat would help with suction.

Discovery of the new genus and species that resembled a hippo and swam like a bear, from Unalaska indicates the desmostylian group was a successful group that was larger and more diverse than previously known. (Artist: Ray Troll)
Discovery of the new genus and species that resembled a hippo and swam like a bear, from Unalaska indicates the desmostylian group was a successful group that was larger and more diverse than previously known. (Artist: Ray Troll)

“No other mammal eats like that,” Jacobs said. “The enamel rings on the teeth show wear and polish, but they don’t reveal consistent patterns related to habitual chewing motions.”

The new specimens also represent a new genus — meaning desmostylians in the same family diverged from one anoher in key physical characteristics, particularly the tooth and jaw structure, said Jacobs, who is one of 10 scientists collaborating on the research.

Discovery of a new genus and species indicates the desmostylian group was larger and more diverse than previously known, said paleontologist and co-author Anthony Fiorillo, vice president of research and collections and chief curator at the Perot Museum of Nature and Science, Dallas, and an adjunct research professor at SMU.

“Our new study shows that though this group of strange and extinct mammals was short-lived, it was a successful group with greater biodiversity than had been previously realized,” Fiorillo said.

Compared to other mammals, desmos were latecomers and didn’t appear on earth until fairly recently — 33 million years ago. Also unusual for mammals, they survived a mere 23 million years, dying out 10 million years ago.
The research was funded by the Perot Museum of Nature and Science, U.S. National Park Service – Alaska Region Office, and SMU’s Institute for the Study of Earth and Man.

The newest desmo made its home on Unalaska Island, the farthest north of any occurrence of the group, which only lived along the shores of the North Pacific.

“That’s the only place they’re known in the world,” Jacobs said. The Unalaska fossils represent at least four individuals, and one is a baby.

“The baby tells us they had a breeding population up there,” Jacobs said. “They must have stayed in sheltered areas to protect the young from surf and currents.”

In addition, “the baby also tells us that this area along the Alaska coast was biologically productive enough to make it a good place for raising a family,” said Fiorillo.

Just as cattle assemble in a herd, and a group of fish is a school, multiple desmostylians constitute a “troll” — a designation selected by Jacobs to honor Alaskan Ray Troll, the artist who has depicted desmos most.

The first Unalaska fossils were discovered in the 1950s in a rock quarry during U.S. Geological Survey mapping.

Others found more recently were on display at the Ounalashka Corporation headquarters. Those specimens were offered to Fiorillo and Jacobs for study after Fiorillo gave a public presentation to the community on his work in Alaska.

“The fruits of that lecture were that it started the networking with the community, which in turn led us to a small, but very important collection of fossils that had been unearthed in the town when they built a school a few years earlier,” Fiorillo said. “The fossils were shipped to the Perot Museum of Nature and Science for preparation in our lab and those fossils are the basis for our work now.”

From there, the researchers discovered that the fossils were a new genus and species.

The authors report their discoveries in a special volume of the international paleobiology journal, Historical Biology. The article published online Oct. 1 at http://bit.ly/1PQAHZJ

The researchers named the new mammal Ounalashkastylus tomidai. “Ounalashka,” means “near the peninsula” in the Aleut language of the indigenous people of the Aleutian Islands.

“Stylus” is from the Latin for “column” and refers to the shape of cusps in the teeth.

“Tomida” honors distinguished Japanese vertebrate paleontologist Yukimitsu Tomida.

The article appears in a special volume of Historical Biology to honor the career accomplishments of Tomida upon his retirement from the Department of Geology and Paleontology in Tokyo’s National Museum of Nature and Science.
In addition to Jacobs, Fiorillo and Polcyn, other authors were Yosuke Nishida, SMU; Yuri Kimura, Smithsonian Institution and the Tokyo Museum; Kentaro Chiba, University of Toronto; Yoshitsugu Kobayashi, Hokkaido University Museum, Naoki Kohno, National Museum of Nature and Science; and Kohei Tanaka, University of Calgary.

The Historical Biology article is titled “A new desmostylian mammal from Unalaska (USA) and the robust Sanjussen jaw from Hokkaido (Japan), with comments on feeding in derived desmostylids” and appears in the special issue “Contributions to vertebrate palaeontology in honour of Yukimitsu Tomida.”

Kitimat’s unknown role in the First World War

Ninety-seven years ago, long before the townsite was founded in the 1950s,  Kitimat was to play a short, now forgotten and unlucky role in the First World War with the launch of a vessel in New Westminster called the  War Kitimat as one of the many emergency new ships commissioned by the British government to replace vessels lost to Germany’s unrestricted submarine warfare that was sinking convoys taking vital supplies across the Atlantic.

(Note: The ship may not have been the Valley’s only role in the First World War. I have been told by Haisla members that it is believed that a couple of men from the Haisla Nation may have served in the armed forces during WWI. However, no one I have contacted, so far, has been able to confirm that information. If anyone can confirm, this story will be updated).

During the First World War, over nine million gross tons of British ships were lost due to enemy action, both submarines and surface raiders. The worst losses came in the three months ending June 1917 when over 1.4 million gross tons were sunk.

In December, 1916, the Prime Minister David  Lloyd George’s British Government appointed a “shipping controller” to manage a worldwide shipbuilding program to replace the lost vessels, to be built quickly, efficiently and to a series of standard designs. Although the vessels were often different, they were called “standard ships.” It was the Great War’s equivalent of the Liberty Ships built during the Second World War.

Many of the orders were placed with Canadian companies, others with the Japanese shipyards and British owned or controlled shipyards in Hong Kong and Shanghai. Canada created or contracted 19 emergency shipbuilders which built 137 cargo ships and 15 trawler/minesweepers. Some of these yards were purpose-built, others were repair yards that were converted to construction yards; seven were in BC, nine were in Ontario and Quebec, and three were in the Maritimes.

Orders were also placed with shipyards in the United States, but when the Americans entered the war in 1917, those ships were requisitioned by the U.S. Government.

All the ships’ names were given the prefix “War” no matter where they were built in the world.

The Canadians built both steel hulled and wooden hulled cargo vessels, including the War Kitimat, as well as yachts and sailing yachts (which likely became the war time “trawlers”). The British built 12 different types of “dry cargo” vessels, five types of “coasters” plus tankers.  The United States also built wooden hulled cargo vessels (slightly larger than the Canadian versions) and various types of steel hull cargo ships.

The government of France also contracted Canadian shipyards for its own vessel building program.

In Canada, the BC Marine Railway Company was one of the prime contractors, and the job of building four ships was awarded to the New Westminster Shipbuilding & Engineering on Poplar Island, which can be seen today from New West’s Esplanade at Westminster Quay.

The First Nations of the area had used the island for generations and in 1871 the island was designated an Indian Reserve. During the small pox epidemic of 1889, with many members of the Vancouver area First Nations struck down by the disease, a hospital was built on the island. It is believed that many of those who died of smallpox were buried there. Because of the association with disease and death the island was abandoned until 1917, when the war time necessity meant a shipyard was built on the island.

The War Kitimat under construction in New Westminster (Canadian War Museum)
The War Kitimat under construction in New Westminster (Canadian War Museum)

New Westminster Shipbuilding had the job of constructing four “war” class wooden hulled freighters, 2300 gross tonnes, 3300 dead weight tonnes, 250 feet long with a beam of 43.5 feet, with 322 nominal horse power triple reciprocating steam engines powered by two water tube boilers, turning a single screw capable of ten knots.

The company built four ships, the War Comox, War Edensaw, War Kitimat and War Ewen. The War Comox was first launched in April, 1918, but completion was held up as the shipyard waited for equipment from suppliers. That led to pressure to build, launch and complete the War Edensaw, which was launched in June 1918, and the War Kitimat, which was launched on  Sunday, August 18, 1918.

The War Kitimat immediately ran into trouble. According to the Times Colonist, right after launch the War Kitimat ran aground off New Westminster and had to be lifted off the Fraser  river bed by using jacks until was raised enough so that tugs could attach lines and tow it to deep water.  About a week later, the War Kitimat was  towed to Victoria for repairs and further fitting out (possibly to the Foundation Company shipyard which was also building five of the war class vessels. Foundation is now Seaspan’s Point Hope Marine)

The War Kitimat did make at least one voyage to Great Britain, but by the time it arrived, the war was coming to a close. After the Armistice on November 11, 1918, the ships were no longer needed and the British government sold most of them to shipping companies. (All the ships were UK registry, not Canadian)

Flag for Lloyd Belge line
Flag for Lloyd  RoyalBelge line

In 1919, the War Kitimat was sold to the Lloyd Royal Belge S.A. line of Antwerp, Belgium and renamed the Serbier.

On January 12, 1920, the Serbier, on a  voyage from Cartagena and Oran to Antwerp with zinc ore and general cargo on board, sprang a leak in her engine room during a “raging gale” in the Bay of Biscay and sank  80 nautical miles (150 km) off Penmarc’h, Finistère, France at 47°38′N 6°10′W. Her Capt. A. Canfrère and the crew were rescued by the French ship SS Docteur Pierre Benoit.

How the ship came to be named War Kitimat isn’t certain. It was probably named after the Kitimat River since other vessels in the War category were named Skeena, Stikine, Babine, Niagara, Ottawa (others were named for cities like Halifax or Toronto).

The Belgian shipping company did not give up on the name Serbier. It purchased another US-built War cargo ship, first named the War Hound by the British. After the US entered WWI in 1917 and took over the building there it became the Lake Huron, a US Navy Transportation Service mine carrier. From later in 1920, Royal Belge operated the new Serbier until 1924, when it passed through French, Norwegian, Danish and then as the Advance,  Finnish ownership. The Advance was seized in Panama by the United States in 1941 and renamed the Trojan. After the Second World War, the US returned the ship to Finland. It sailed as the Advance until it was sold a Greek shipping company in 1965 and scrapped at Piraeus in 1966.

Of the ships under British control, 821 ships were ordered by the UK shipping board and 416 were completed. Fourteen were lost to enemy action. The remaining orders were cancelled but often completed by the shipyards.

Many of the “war” or “standard” ships passed through various owners.

During the Second World War many played their original role and took part in the convoys that crossed the Atlantic.  Many were sunk during those crossings. Others, sold to growing Japanese shipping interests in the 1920s and 1930s, were sunk by US destroyers and submarines. Others like the War Hound /Serbier survived to the 1950s and 1960s.

Of the War Kitimat’s sister ships built in New Westminster, the War Comox was sold to an Italian company, renamed the Guidatta and scrapped at Genoa in 1925, The War Ewen was sold to a German company, renamed the Etienne Marcel and scrapped in Germany in 1925. The War Edensaw, under the original name, was carrying Admiralty stores from Constantinople to Malta,  when it caught fire on June 25, 1919 and sank 94 nautical miles east of the St. Elmo Lighthouse on Malta.

As for Poplar Island, it was zoned for industrial use but no one could come up with ideas for how to use the island.   New Westminster sold the island to Rayonier Canada in 1945, where it became an anchorage for log booms on the Fraser River. The successor company, Western Forest Products sold it back to New Westminster in 1995,  The island is still a wilderness area in the middle of urban Vancouver and subject to treaty and land claims negotiations with the area’s First Nations.

Related links
Poplar Island: A History as Thick and Colorful as the Trees

Emergency Shipbuilders of World War I

World War One Standard Built Ships

World War One Standard Built Ships (this is a different site to the one above)

Vessels Built by B.C. Marine Railway Co

The Ship’s List (database of ships, link is to Lloyd Royal Belege entry)

 

Editor’s Note:   Up until now Kitimat has not had a reason, unlike other communities, to mark Canada’s role in the First World War.  We suggest that should the District of Kitimat choose to do so either this year or in the next three years, August 18, the date of the launch of the War Kitimat might be an appropriate date, in addition to Remembrance Day on November 11.

No FID on Kitimat LNG in 2015, Chevron tells investors

Chevron will not be making a final investment decision on the Kitimat LNG project in 2015, Pat Yarrington, the company’s vice president and chief financial officer told the first quarter earnings conference call Friday, May 1.

All FIDs for Chevron projects around the world, with one exception, are on hold for this year Yarrington said.

“In terms of other FID projects, part of the reduction that we took in our capital spending from 2014 to 2015 really did relate to the pacing of other major capital projects,” Yarrington said.  “Kitimat is a primary one there, we moved spending on that out considerably.  We are only limiting ourself to appraisal work and continuing to look at the design and the cost structure. “

Overall, in all aspects of the company’s operations, Yarrington said Chevron is “aggressively pursuing cost reductions” by reopening contracts with suppliers, resulting in $900 million in agreed reductions around the world.

Chevron Gorgon LNG project
Chevron says Gorgon Project  in Western Australia is  now 90 per cent complete. All Train 1 modules and 13 of 17 Train 2 modules are on their foundations. (Chevron)

Meanwhile, two of Chevron’s LNG projects in Australia have reached “key milestones,” she said. As for the Gorgon project  in Western Australia, she said. “We’re on schedule for Gorgon startup in the third quarter of this year and first commercial cargo before the end of the year.”

The Gorgon Project is a joint venture between the Australian subsidiaries of Chevron (47.3 percent), ExxonMobil (25 percent), Shell (25 percent), Osaka Gas (1.25 percent), Tokyo Gas (1 percent) and Chubu Electric Power (0.417 percent) supplied by the Greater Gorgon Area gas fields. It includes the construction of a 15.6 million tonne per annum (MTPA) liquefied natural gas (LNG) plant on Barrow Island and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.

“We’re on schedule for Wheatstone,” Yarrington said. “We’ve had seven of 24 major process modules delivered on site, the trunk line is installed and hydro tested, the dredging is complete, the piling has been completed, the roofs are on both of the LNG tanks. We continue to make good processs both on shore and off shore.”

The Wheatstone Project  is an LNG and domestic gas operation near Onslow, in the West Pilbara region of Western Australia. The project’s initial capacity is expected to be 8.9 million metric tons per year of LNG.

Chevron promotional video showing Gorgon is one of the world’s largest natural gas projects and the largest single resource development in Australia’s history. (Kitimat residents note the cruise ship docked at the project)

As well, Chevron in Australia has announced new gas discoveries as a result of further drilling success in the Greater Gorgon Area located in the Carnarvon Basin, a premier hydrocarbon basin offshore northwest Australia.

In a news release, Chevron said:

The Isosceles-1 exploration discovery well encountered approximately 134 metres (440 feet) of net gas pay in the Triassic Mungaroo Sands in 968 metres of water (3,175 feet). The well fulfilled the second year work commitment in the exploration program. It is located in the WA-392-P permit area approximately 95 kilometres (60 miles) northwest of Barrow Island, off the coast of Western Australia.
“This discovery is a continuation of our exploration success and further positions our company as a key supplier for future liquefied natural gas (LNG) demand in the Asia-Pacific region,” said Melody Meyer, president, Chevron Asia Pacific Exploration and Production Company

Overall Chevron (NYSE: CVX) reported earnings of $2.6 billion ($1.37 per share – diluted) for first quarter 2015, compared with $4.5 billion ($2.36 per share – diluted) in the 2014 first quarter. Foreign currency effects increased earnings in the 2015 quarter by $580 million, compared with a decrease of $79 million a year earlier.

Sales and other operating revenues in first quarter 2015 were $32 billion, compared to $51 billion in the year-ago period.

Woodside, new Kitimat LNG partner, borrows $1 billion in new bonds

Woodside PetroleumWoodside Petroleum, the new partner with Chevron in the Kitimat LNG project is raising US$1 billion through the issue of corporate bonds into the U.S. market “to fund its capital and exploration expenditure program.”

A news release from Woodside says “the bonds will be issued by Woodside Finance Ltd, a wholly owned subsidiary of Woodside Petroleum Ltd, and will consist of US$1 billion of 10 year bonds with a coupon of 3.65 per cent. The bonds will be guaranteed by Woodside Petroleum Ltd and its wholly owned subsidiary, Woodside Energy Ltd.”

Bloomberg notes that Woodside paid $2.75 billion to Apache for its stakes in the Kitimat LNG and the Australian Wheatstone LNG project.

Woodside agreed in December to pay $2.75 billion to Apache Corp. for stakes in two natural gas projects, and it expects to spend about $6.2 billion in 2015.

Even after its agreement with Apache, Woodside has a strong balance sheet that may allow the company to make another acquisition and take advantage of low crude oil prices, according to a Feb. 18 report from Goldman Sachs Group Inc. Woodside has $6.8 billion in cash and available debt facilities, the energy producer said in a presentation that same day.

Woodside said last week that full-year net income rose 38 percent to $2.41 billion, helped by its Pluto project. Brent crude oil prices have tumbled 44 percent over the past 12 months.

In January, Australian Mining reported that Woodside had reached an “non-binding contract…  as an agreement between Woodside Petroleum and Adani Enterprises to cooperate in developing commercial initiatives for long-term supply of gas to the Indian market.”

Long term outlook good for North American LNG, consultant predicts


A US-based engineering and consulting firm, Black & Veatch has issued an optimistic outlook for liquified natural gas exports from both Canada and the United States.

Black & VeatchLooking at the the number of LNG export licenses issued to projects “that are likely to proceed,” Black & Veatch  raised its forecast for LNG exports by 2020 from the U.S. and Canada to 10 to 14 billion cubic feet per day (Bcf/d).

The report mainly concerns the United States, where the race for LNG exports is as fierce as it is in Canada.

“Tens of billions of dollars in capital are targeted for the seven LNG export terminals currently granted licenses by the U.S. Department of Energy (DOE),” said Deepa Poduval, Principal Consultant with Black & Veatch’s management consulting business. “Infrastructure construction, real estate transactions and other services associated with these projects are expected to spur significant levels of economic activity throughout the value chain.”

As far as Canada is concerned, Poduval said, “proposed projects continue to suffer from regulatory and environmental delays, high costs and fiscal uncertainty that have hindered development on all but a couple of frontrunners.”

The report was based on experts surveyed by the company. Respondents were asked to select their expectation of the volume of natural gas that will be exported from the United States and Canada as LNG by 2020.

Nearly 37 percent of respondents said they believed exports would total more than 6 Bcf/d by 2020. In 2013, less than 25 percent of respondents expected exports at this level. In 2014, 60 percent of respondents said they expected LNG exports to be less than 10 Bcf/d by 2020. Less than 7 percent of respondents put the figure at more than 10 Bcf/d.

Poduval  said that as less expensive U.S. gas becomes more viable, Asian buyers are increasingly pushing back on higher cost supplies from their suppliers in Asia, Australia and the Middle East, Poduval said.

This pushback is stalling some of the more expensive LNG projects in Canada, Australia and East Africa, with Asian buyers holding back on long-term purchase commitments from these projects in pursuit of more favorable price terms… One of the dangers for U.S. LNG exports continues to be that they could shrink the very price spread that makes them attractive.

Poduval said the first trains at Sabine Pass in Louisiana are expected to go online starting in the fourth quarter of 2015.

Poduval noted the announcement of  the 30-year $400 billion agreement for Russia to supply natural gas to China via a new pipeline was considered by some as the “Holy Grail” of international natural gas agreements following stalemated negotiations for more than 10 years between the two countries.

The deal could provide much-needed market diversity for Russia, which exports 80 percent of its natural gas to an increasingly unfriendly Europe that is pursuing other sources of supply. In addition, Russia would potentially supplant some LNG demand from China by supplying about 3.5 Bcf/d of natural gas under this agreement.

Her report also says that an Alaska LNG pipeline project that has been on and off for the past 30 years is now in a pre-FEED (Front End Engineering and Design) stage.

If it goes ahead, the project, which would be the largest in North America, with a capital cost estimate of $45 billion to $65 billion, will bring gas from the North Slope along an 800-mile pipeline to south-central Alaska, where it will be liquefied for shipping to Asian markets.

“But the marketplace continues to be subject to geopolitical events and regional economics,”  Poduval said.

RELATED REPORTS

The Sydney Morning Herald is reporting Shell shelves Arrow LNG project in Queensland with North American projects “a priority.”

Royal Dutch Shell has finally ditched plans for a new $US20 billion-plus liquefied natural gas project in Queensland,making it the latest casualty of the oil price slump.

Global chief executive Ben van Beurden said the proposed greenfield Arrow LNG project with PetroChina was “off the table”, while other ventures would be slowed as priority was given instead to Shell’s North American LNG projects.

“We are prioiritising North America LNG options in that timeframe, LNG Canada and Elba,” he explained, referring to Shell’s LNG export projects in western Canada and the US state of Georgia.

Shell logoShell is also a partner in  the Woodside Petroleum-led Browse floating LNG project, the Sydney Morning Herald reported.   Woodside recently announced it will buy Apache’s stake in the Chevron-led Kitimat LNG project.  Shell says:

the timing for starting engineering and design had already been deferred by six months to mid-2015. While the Shell chief executive’s words place some uncertainty whether the oil major wants to proceed in that timeframe, the company has still listed Browse among final investment decision “choices” for the 2015-16 period.

There are new owners for the Douglas Channel LNG project, according to this news release.

The Douglas Channel project, which contemplates a floating LNG project at the old log sort half way between Kitimat harbour and the Chevron-led Kitimat LNG project at Bish Cove is a now partnership between EXMAR, “an independent Belgium-based company with 35 years’ experience in LNG shipping,” EDF Trading (“EDFT”) a subsidiary and wholesale market operator of Electricite de France S.A., an international energy company with over 39 million customers and AIJVLP, “a limited partnership between AltaGas Ltd. (“AltaGas”) and Idemitsu Kosan Co.,Ltd. (“Idemitsu”). Idemitsu is a Japan-based global leader in the supply of energy and petroleum. AltaGas is the parent company of Pacific Northern Gas which supplies consumers in Kitimat.

The news release says the  “Consortium has also executed long-term lease agreements with the Haisla Nation regarding land and water tenure, and with Pacific Northern Gas Ltd. (PNG) for long-term pipeline capacity to supply gas.”

 

 

Mongolia to hold text message referendum on future of Rio Tinto copper mine

Rio TintoMongolia will hold a reality television style text message referendum on the future of Rio Tinto’s troubled Oyu Tolgoi copper mine project, the Financial Times reports.

The FT says Mongolian prime minister Saikhanbileg Chimed will ask voters whether their country should develop more of its mineral resources or resort to austerity to support the faltering economy.

Mongolian voters will have four days, beginning Saturday, to text their vote on the future of Rio Tinto’s plans for the  $6 billion project.

Oyu Tolgoi
Shaft at the Rio Tinto Oyu Tolgoi copper and gold mine in the southern Gobi, Mongolia (Brücke-Osteuropa via Wikipedia)

Economists say the copper mine project, which is stalled because Rio Tinto has been unable to reach an agreement with Mongolia over project financing and revenue sharing could generate about a third of the country’s gross domestic product. The lack of an agreement, in concert with current instabilty on financial markets has sent Mongolia’s currency plunging.

Like Kitimat’s plebiscite on the Northern Gateway, the vote will be non-binding. The FT says the vote “could help Mr Saikhanbileg broker a consensus in favour of allowing OT to proceed, cutting through the arguments of critics who say Mongolia is not getting its fair share of the mine’s earnings.”

The FT reports: “The prime minister, who explained the referendum this week on television, was trying to appeal to the general public ‘over the heads of squabbling factions in parliament and break the logjam.'”

Full story at Mongolia holds text message vote on mining v austerity
(registration required)

Aussie energy company eyeing Apache stake in Kitimat: media reports

The Australian Business Review is reporting that Woodside Petroleum, a cash rich Australian energy company, has its eye on Apache’s 50 per cent stake in the Kitimat LNG project. As part of any deal, Woodside would probably also have to buy Apache’s stake in the Australian Wheatstone LNG project, which is also up for sale.

The months-long process by Apache to find a new home for its West Australian domestic gas business and its stake in the under-construction Wheatstone LNG project — as well as its stake in the Kitimat LNG project in Canada — has drawn plenty of interest from parties in that neck of the woods.

The cashed-up, project-hungry Woodside Petroleum has been interested from the outset in the Kitimat stake, but is also said to be prepared to make an offer on Wheatstone if Apache is determined to sell the assets together


WoodsideEarlier,  another Australian newspaper, The Age reported that Woodside’s petroleum and LNG operations had “revenue of $US5.3 billion for the first nine months of 2014. Compared with the corresponding period in 2013, revenue was 28.7 per cent higher for the 2014 period.”Part of the money came from selling natural gas assets in the United States.

According to The Age:

Woodside’s LNG production rose to a record 5.1 million tonnes for the first nine months of Woodside’s fiscal 2014. The record production represents a rise of 17.6 per cent on the same period for 2013. Behind the result was the operational performance of the Pluto LNG facility (Woodside’s interest is 90 per cent). Pluto lifted LNG production by 24.3 per cent on the corresponding period in 2013, to 3.1 million tonnes. Pluto also produced 2.2 million barrels of condensate for the first nine months of 2014. Oil production rose by a mammoth 33.3 per cent on the same period in 2013, to 8.8 million barrels.

On November 6, according to the Sydney Morning Herald, Woodside’s CEO Peter Coleman warned that the Asian customers for LNG who are holding out for cheaper prices could face a  “supply crunch” and “By holding out for a cheaper price, customers are potentially exacerbating project FID [final investment decision] delays and may unwittingly help bring on a supply crunch.”

He called on suppliers and customers to work together to  ensure supply projects went ahead.

The Woodside website describes the company as  “Australia’s largest independent dedicated oil and gas company and one of the world’s leading producers of liquefied natural gas.​​​​​​”

It goes on to say

As we aspire to become a global leader in upstream oil and gas, we are guided by the Woodside Compass. The Compass links Woodside’s core values – respect, integrity, working sustainably, working together, discipline and excellence – with our vision, mission and strategic direction.

Woodside has an extensive portfolio of facilities which we operate on behalf of some of the world’s major oil and gas companies.
We have been operating the landmark Australian project, the North West Shelf, since 1984 and it remains one of the world’s premier liquefied natural gas (LNG) facilities.

With the successful start-up of the Pluto LNG Plant in 2012, Woodside now operates six of the seven LNG processing trains in Australia.

Chevron sells 30% of Canadian Duvernay shale gas assets to Kuwait

Chevron LogoChevron Corporation says its wholly-owned subsidiary, Chevron Canada Limited, has reached agreement to sell a 30 per cent interest in its Duvernay shale gas  play to Kuwait Foreign Petroleum Exploration Company’s wholly-owned subsidiary, KUFPEC Canada Inc., for $1.5 billion.

The total purchase price includes cash paid at closing as well as a carry of a portion of Chevron Canada’s share of the joint venture’s future capital costs. The Duvernay is located in west-central Alberta, and is believed to be among the most promising shale opportunities in North America.

The agreement creates a partnership for appraisal and development of liquids-rich shale resources in approximately 330,000 net acres in the Kaybob area of the Duvernay.

“This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy,” said Jay Johnson, senior vice president, Upstream, Chevron Corporation. “The transaction provides us an expanded relationship with a valued partner. It also recognizes the outstanding asset base we have assembled.”

Following the closing of the transaction, Chevron Canada will hold a 70 percent interest in the joint venture Duvernay acreage and will remain the operator. The transaction is expected to close in November 2014.

“We remain encouraged by the early results of our exploration program and view the Kaybob Duvernay as an exciting growth opportunity for the company,” said Jeff Shellebarger, president of Chevron North America Exploration and Production Company.

Chevron Canada has drilled 16 wells since beginning its exploration program, with initial well production rates of up to 7.5 million cubic feet of natural gas and 1,300 barrels of condensate per day. A pad drilling program recently commenced which is intended to further evaluate and optimize reservoir performance as well as reduce execution costs and cycle time.

Chevron is developing the liquified natural gas facility at Bish Cove, south of Kitimat.  Chevron’s partner in the venture, Apache, is looking to sell its stake in Kitimat LNG after a hedge fund with significant Apache stock holdings decided to change the company’s focus to U.S. operations.

 

Apache to “completely exit” from Kitimat LNG as company refocuses

Apache will “completely exit” the Kitimat LNG project, company CEO Steven Farris told investors Thursday as the company reported its second quarter results.

The pull out from Kitimat is part of a plan by Apache to spin off assets that are not part of its “base business” so it can concentrate on its “North American onshore assets.”

“We have said for some time that Canada is part of our North American onshore portfolio,” Farris told analysts in a conference call.

“Certainly we have two businesses up there. [in Canada]  We have a business which is a base business with respect to the Duverney Shale and Monteny shale and some of the other things we working on there. We also have the Kitimat-Horn River- Liard. Kitimat -Horn River -Liard is part of our LNG project which we reindicated today that we intend to exit.”

Bish Cove Kitiamt
A long view of the Kitimat LNG project at Bish Cove, Sept. 14, 2013. (Robin Rowland/Northwest Coast Energy News)

The Horn River and Liard natural gas fields would have served the LNG project. The divesture could either be as a complete package or sold separately perhaps through the capital markets.  The Duverney Shale and Monteny shale plays are considered North American assets, while the Horn RIver Liard plays are considered international because the product from there would be sold in Asia via an LNG terminal.

Chevron, the 50 per cent partner with Apache in Kitimat LNG, said it would have no comment on the Apache move until its own investor conference call Friday morning.

Apache also intends to divest its stake in the Australian Wheatstone LNG project, where Chevron is also a partner.

It was about 18 months ago,  Farris said, that Apache changed its focus to “enhancing its North American onshore resource base… We’ve also made it clear that there are no sacred cows as our efforts continue.”

Change in company strategy

Steven Farris
Apache CEO Steven Farris. (Apache)

Farris and other executives repeatedly emphasized on the call that the Kitimat and Wheatstone sales were part of an overall change in company strategy.

“I have to honestly say that the complete exit by Apache will not have an impact on Kitimat going forward one way or another,” Farris said.

“Whether we’re in it or not, they will contact with world class reserves and frankly Chevron and Apache are way a head of anybody else in that arena. We’ve always been in a position that we felt we could not be in these LNG projects. I think it’s important that we state that.”

Apache has been under pressure from a giant New York based hedge fund called Jana to get out of the international market and concentrate on proven North American markets.

Some other financial analysts on the call seemed a little skeptical about the move, with a couple of questions focused on whether Apache was giving up long term investments.

“In terms of business and priority of capital and time frame of LNG specifically Kitimat it make sense for someone to own it who has a different timeline,”  Farris said.

As for the timing of the sale, both Farris and Chief Financial Officer, Alfonso Leon, would not give specifics. “We haven’t decided on a specific timeline, we are working on a number of different opportunities,” Leon said. “Each of them has a different timeline associated with it. So we will make decisions as we reach decision points. Specificaly on the separation work flow…it is not something that will be executed on an imminent basis. Work has been underway but there is still significant work ahead of us.”

The executives would not say how much Apache has spent on Kitimat LNG so far, but it has been estimated at $2 billion just this year.Upgrading the old forest service road to a modern highway capable of supporting heavy truck traffic was estimated to cost $25 million Kitimat LNG officials said late last year.

Fair price Apache Corporation

As for the selling price, Farris said that company will hold out for the best deal, saying that Apache has got a “fair price” for international assets that is has already sold, adding that when it comes to Kitimat and Wheatstone. “We won’t sell at prices that don’t make sense,” whether that comes from a package deal with the northeast BC shale assets or through the capital markets.

Overall, Apache Corporation is making money, announcing second-quarter 2014 earnings of $505 million Net cash provided by operating activities totaled approximately $2.3 billion in second-quarter 2014, compared with $2.8 billion in the prior year, with cash from operations before changes in operating assets and liabilities totaling $2.2 billion, compared with $2.6 billion in second-quarter 2013.

In the quarterly report news release, Farris said, “Record-setting performance by our Permian Region continues to drive strong results for the company… Apache’s onshore North American liquids production increased 18 percent on a pro forma basis in the second-quarter 2014 compared with the same period a year ago”

Although some enviromental groups and First Nations are claiming victory in the Apache divestiture, it is clear that those activities had negiligble impact on the decision, which was driven in part by the demands of a New York hedge fund and by the growing uncertainty in the LNG market as Asian countries seek natural gas at much lower North American prices. As the old Godfather movies often said, “It’s not personal, it’s business.”

Apache’s exit, however, does increase the uncertainty in both the short term and long term development of LNG export terminals in northwestern BC, and clearly shows that Premier Christy Clark made a mistake in promising that the provincial economy will boom thanks to LNG.

Both Premier Clark and LNG Minister Rich Coleman were unavailable to the media Thursday. Coleman’s office did send an e-mail tothe media saying, “With 16 LNG proposals involving over 30 partners, we recognize partnerships will change over time, as companies make decisions that make commercial sense for their business. It’s the nature of the business and the energy sector.”

Shell reports

Little noticed in the media attention over Apache, was the fact Royal Dutch Shell also issued its quarterly report early Thursday. Unlike Apache, Shell is still investing in LNG projects around the world, and getting returns from existing LNG projects, while divesting under performing natural gas assets both upstream and downstream. There is no mention of LNG Canada and Kitimat in the report. In a statement issued with the quarterly report Royal Dutch Shell Chief Executive Officer Ben van Beurden commented in part:

I am determined to get a tighter grip on business performance management in the company, and improve thebalance between growth and returns. Our financial performance for the second quarter of 2014 was more robust than year-ago levels but I want tosee stronger, more competitive results right across the company, particularly in Oil Products and NorthAmerica resources plays….

Sharper accountability in the company means that we are targeting our growth investment more effectively,focusing on areas of the business where performance improvement is most needed, and driving asset sales innon-strategic positions….

We see attractive growth opportunities there such as natural gas integration and liquids-rich shales. We are taking firm actions to improve Shell’s capital efficiency by selling selected assets and making tougher project decisions. We have completed some $8 billion of asset sales so far in 2014. This represents good progress towards our targets to focus the portfolio, and to maintain the financial framework in robust health.

Tropical fish, climate change migration growing threat to seagrass, kelp beds, study says

Tropical fish are migrating into  what were once temperate water as a result of ocean warming and that poses a serious threat to the areas they invade, because they overgraze on kelp forests and seagrass meadows, according to  a new study from the University of New South Wales in Australia

The  study says the harmful impact of tropical fish is most evident in southern Japanese waters and the eastern Mediterranean, where there have been dramatic declines in kelps.

Tropical fish
A school of tropical plant-eating fish including various species that are shifting their distribution towards temperate waters. (Adriana Verges/UNSW)

There is also emerging evidence in Australia and the US that the spread of tropical fish towards the poles is causing damage in the areas they enter.

“The tropicalisation of temperate marine areas is a new phenomenon of global significance that has arisen because of climate change,” according to the study lead author, Dr. Adriana Verges, of  the University of New South Wales.

“Increases in the number of plant-eating tropical fish can profoundly alter ecosystems and lead to barren reefs, affecting the biodiversity of these regions, with significant economic and management impacts.”

The study is published in the journal Proceedings of the Royal Society B.

As the oceans have warmed and the climate has changed, hotspots are developing in regions where the currents that transport warm tropical waters towards the poles are strengthening.

Increased flow of the East Australian Current, for example, has meant waters south-east of the continent are warming at two to three times the global average.
Tropical fish are now common in Sydney Harbour during the summer months.

Japan, the east coast of the US, northern Brazil and south eastern Africa are also strongly influenced by coastal currents that transport warm tropical waters.

“In tropical regions, a wide diversity of plant-eating fish perform the vital role of keeping reefs free of large seaweeds, allowing corals to flourish. But when they intrude into temperate waters they pose a significant threat to these habitats. They can directly overgraze algal forests as well as prevent the recovery of algae that have been damaged for other reasons,”  Dr Verges said.

Tropical fish expanding their ranges into temperate areas include unicornfish, parrotfish, and rabbitfish.

The study authors include researchers from Australia, the US, Spain, Singapore, the UK and Japan.

Kelp disappears in southern Japan

The study reports that more than 40 per cent of the kelp and algal beds have disappeared since the 1990s, a phenomenon known in Japan as isoyake.

Tropical species including rabbitfish and parrotfish appear to be mainly responsible.

Although these fish have been present for a long time, their annual grazing rates have increased dramatically as ocean temperatures in winter have risen.  Corals now dominate the ecosystem in many locations. The changes have led to the collapse of the abalone fishery.

Rabbit fish expand in eastern Mediterranean

Tropical fish moved into the eastern Mediterranean from the Red Sea after the opening of the Suez Canal. In recent decades, rabbitfish numbers have increased, resulting in hundreds of kilometres of deforested areas and a 40 per cent decrease in the variety of marine species.

As the Mediterranean warms the rabbitfish are expanding their range westward, putting other shallow ecosystems at risk.

Gulf of Mexico

There has been a more than 20-fold increase in the number of parrotfish in the Gulf of Mexico – a species which consumes seagrass at five times the rate of native grazers. The number of plant-eating green turtles and manatees has also increased.

Australia

In Western Australia, emerging evidence suggests that increases in the number of tropical fish are preventing the recovery of kelp forest damaged by a heat wave in 2011.

In eastern Australia, kelp has disappeared from numerous reefs in the past five years and Dr Verges’ research suggests intense grazing by tropical fish on the kelp preceded this.