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Permalink Reply by adubu on February 14, 2011 at 2:05

Is this the way the Chinese will receive the NG they have brought by their JV with CHK, encana,  and other operators?

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Permalink Reply by Les Bamburg on February 14, 2011 at 3:47

Adubu, I believe only the Kitimat Project would provide potential LNG cargos to China due to its location on the Pacific coast and ready access to the Asian market.  This will fit well with the EnCana JV.  The other LNG export projects will target the markets in Europe, South America and the Middle East.

 

The Chinese primarily invested in the North American JV's to make money and gain experience in developing unconventional natural gas plays.

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Permalink Reply by adubu on February 14, 2011 at 5:08

Les B---The Chinese are buying oil & gas assets world wide for they understand the energy demands for future better than Obama

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Permalink Reply by P.G. on February 15, 2011 at 3:28

The Chinese are very, VERY cost conscious.

 

Is that why commodity prices on various metals are so economical?

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Permalink Reply by ALongview on February 15, 2011 at 10:53

2011 Outlook of China Natural Gas

January 4, 2011

Summary

Entering 2011, natural gas consumption will remain extremely strong, and is expected to approach 12.7 billion cubic feet per day, sustaining 20 percent growth. Industrial investment is moving from an early stage witt focuses on resource development and transmission pipelines into a new phase of building gas storages to stabilize gas supply. The industry will see intensifying competition in the downstream market, and heating up activities in unconvential gas development.

Analysis

Sustaining Strong Increases

    Entering 2011, when the market fundamentals remain strong, natural gas demand in China will continue being supported by increasing supplies from both domestic production and more gas import. Natural gas consumption is expected to approach 12.7 billion cubic feet per day, once again displaying around 20 percent growth (see the Chart, China Natural Gas Consumption). Majority of gas consuming sectors will sustain high growth of gas utilization. Being somewhat affected by higher gas costs, gas-fired power including combined power-heat-cool generating and distributed energy systems in urban areas, and gas for chemical in gas producing centers will continue growing rapidly. North, Central, East and South China will all be gaining more momentum in natural gas applications along with increasing deliveries of natural gas from Sichuan and Central Asia, and the operation of the third Shaanxi-Beijing Gas Transmission Pipeline. Calculation shows that natural gas import dependence could go over 16 percent on average in China for 2011.

Gas Storage Construction Bringing More Stable Supply

    Natural gas industrial investment is moving from an early stage with main focuses on gas resource development and transmission pipeline constructions into a new phase of building necessary gas storage facilities to sustain and stabilize gas deliveries to final consumers, and relieve pressures of gas supply shortage in peak demand seasons. More than a dozen of larges gas storage sites with total storage capacity reaching 10 percent of gas consumption are in the state and main state-run oil companies’ plans for the coming five years.

Movements in Policy and Gas Pricing Reform

    A few new taxation initiatives will be developed in 2011 and years ahead. Resource tax that began a trial implementation in Xinjiang Autonomous Region will be gradually extended into other provinces. The Ministry of Finance, General Taxation Administration and the Ministry of Environment Protection have sent an environment tax draft (mainly on industrial pollutions and emissions) to the State Council and related administrations for review. Although it may not be introduced as early as within 2011, levy of environment tax would alter fuel costs and the competitive landscape, potentially tilting favors to clean fuels. In addition, carbon tax is also under intensive discussions.

    With increasing high-cost foreign gas import, pressures on further rationalizing domestic gas pricing mechanism are mounting. However, when the introduction of a new round gas pricing reform is likely, it could be delayed with central government’s cautious economic policy toward pricing reform agendas in other energy sectors and looming inflation threats.

Competition Intensifying in Downstream Market

    Leveraging on their strong gas resource positions, powerful state-run oil giants—CNPC, Sinopec and CNOOC are all aggressively moving into the downstream gas market, through consolidating gas assets and making cooperation deals with local governments and gas operators. CNPC is acting even more excessively ambitious. A new round of industrial consolidation and market competition is well expected in the downstream gas sector for the coming years.

Heating up Unconventional Gas

    Huge unconventional gas resource potentials in China are encouraging gas players and investors. Major state-run oil companies and coal miners are accelerating investment in coal-bed methane and shale gas exploration and development. The first official shale gas block tendering that was originally planned in late 2010 will be held in early 2011. Coal-bed methane extraction is expected to grow rapidly, though the first commercial shale gas output may not be seen until 2013. In addition, many coal-to-gas projects will bring additional gas of a few billion cubic feet per day into the market for the next years.

• GLG Expert Contributor
• China's natural gas demand to exceed supply by over one-third in 2011
• english.peopledaily.com.cn

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Permalink Reply by ALongview on February 16, 2011 at 2:37

It came from Gerson Lehrman Group (GLG).

I agree with you that if China imports LNG from anyone it will likely come from the West Coast.........of Canada.

"Kitimat in British Columbia is exporting to Asia from 2014".

It doesn't say that LNG is MOST likely to be exported to Asia/China from the GOM.

Permalink Reply by essay on February 14, 2011 at 17:27

The new 180ft wide lane of the Panama Canal is scheduled to open in 2014, at which point something like 90% of the world's LNG tanker fleet will be able to pass the isthmus.  I think the size cap is ships carrying under 180,000 cubic meters or so.

 

Long LNG!

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Permalink Reply by Les Bamburg on February 15, 2011 at 3:46

Essay, the widened Panama Canal helps but Australia and Kitimat will still have significant shipping cost advantages over Gulf Coast projects for the Asian markets due to the shorter distances.

 

You are right that ~ 87% of the current LNG tanker fleet can pass thru the new locks currently under construction.  By the way, work appears to be progressing well and on schedule.  

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Permalink Reply by essay on February 15, 2011 at 11:19

Cheniere has already reached tentative agreements with both Japanese and Chinese parties, Sumitomo Corp. and ENN Energy, respectively.  Obviously they're interested in LNG through the expanded canal?

 

edit:  I also do not care where they sell it, just so long as it's a reasonable price.

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Permalink Reply by Les Bamburg on February 15, 2011 at 16:19

Sesport, companies always sign MOU's and other forms of tentative agreements in the early stages of negotiations.  These type agreements do not mean a lot and so we just have to see if there will eventually be enough firm commitments to launch the project. 

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Permalink Reply by ALongview on February 15, 2011 at 17:35

Cheniere signed another MOU recently for power generation in the Dominican Republic.  That seems like a good fit for Gulf coast exports.

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Permalink Reply by essay on February 16, 2011 at 1:30

There you go again sesport, taking something I said not only out of context, but almost two years out of context.  And just when I thought we were getting along too, what with trying to understand and mitigate emerging trends in the obviously biased coverage afforded natural gas in the national media.

 

Anyway, want me to give the link to the actual quote, since you are apparently either too lazy or perhaps even aware that it doesn't support whatever it is you were trying to imply?  As you know, I do like my irony... the quote in question is tangentially relevant to certain Middle Eastern events occurring again as we speak, and I stand behind what I said, then as now.  Unlike others on this site I have no problem with being corrected when I am wrong, and that certainly includes any geopolitical predictions I might make.

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