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  • tucksox1 tucksox1 Jun 20, 2012 2:31 PM Flag

    Kitimat vs Sabine Pass

    Thanks for your response. I'm curious as to why you think RDSA is a long shot as a long-term nat gas play given that it's global and only the U.S. is experiencing low prices and a glut of supply. The below article is what I found extremely intriguing.

    Shell Races Apache to Export LNG From Kitimat to Asia: Energy
    2012-06-12 14:21:10.548 GMT

    By Jeremy van Loon and Edward Klump
    June 12 (Bloomberg) -- Royal Dutch Shell Plc is pushing ahead of competitors in the race to be the first exporter of Canadian liquefied natural gas to Asia.
    Europe’s largest oil company last week selected Calgary- based TransCanada Corp. to build a $4 billion pipeline to carry gas from northeast British Columbia to the Pacific coast.
    Shell’s partners in the project are Mitsubishi Corp., Korea Gas Corp. and PetroChina Co., which are based in the world’s three largest LNG importing markets.
    Companies in Canada, the third-largest gas producer, are seeking new markets as North American output climbs and prices trade near 10-year lows. About 62 percent of Canadian gas was exported to the U.S. in 2010, according to the Canadian Association of Petroleum Producers, an industry group. Shell is proposing one of at least four facilities that would liquefy gas for shipment overseas by tanker.
    The TransCanada tie-up makes The Hague-based Shell the likely front-runner among the four, said Bob Schulz, a business professor at the University of Calgary who specializes in the Canadian oil and gas industry.
    “Shell’s proposal is much stronger now with the pipeline,” Schulz said last week in a telephone interview.
    “What we’ll see is that Shell gets this up and running fast.
    The first-mover advantage is really important.”

    Four Groups

    Joining Shell in the Canadian LNG race are groups including those led by Houston-based Apache Corp., the U.K.’s BG Group Plc and Haisla Nation, an aboriginal group centered in Kitimat, British Columbia, the coastal base for many of the proposed LNG terminals.
    If three of the proposed LNG facilities were built in Canada, they would use about 1.3 trillion cubic feet a year of gas at full capacity, the U.S. Energy Information Administration estimated in September. At yesterday’s closing gas price in New York, the output would be valued at about $2.96 billion, according to a Bloomberg calculation.
    At stake is early access to the Asian markets, where the International Energy Agency projects gas demand will surge 50 percent in the next five years, driven by China’s expanding economy.
    Chinese consumption of the fuel has increased an average of about 16 percent annually from 2000 to 2010 and will continue expanding as much as 12 percent a year through 2020, according to Bloomberg New Energy Finance estimates. Japan is looking to import more gas after idling its nuclear power plants following the March 2011 earthquake and meltdown at the Fukushima Dai-Ichi nuclear power plant.

    Australia Rising

    “You’ve got a situation of low gas prices and sluggish demand in North America,” John Stephenson, who helps manage
    C$2.7 billion ($2.6 billion) at First Asset Investment Management Inc. in Toronto, said by telephone. “It begs the question why we aren’t doing more to get it out the door.”
    As the Canadian LNG projects inch forward, competition is expanding abroad. Asian demand underpins $180 billion of Australian ventures led by companies such as Chevron Corp. and Woodside Petroleum Ltd., putting Australia on course to overtake Qatar as the largest LNG exporter by the end of the decade.
    The U.S., meanwhile, is considering how much of its gas it will allow to be exported. Companies may ship about 40 million tons of LNG from the U.S. by 2022 as low-cost gas supplies from shale deposits encourage sales to Asia, Jen Snyder, a Boston- based analyst at consultant Wood Mackenzie Ltd. said May 22.

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