Daily Archives: April 16, 2012

Feds approve Cheniere’s plan to export natural gas

imageApril 16, 2012 at 6:01 pm
by Jennifer A. Dlouhy

Houston-based Cheniere Energy on Monday cleared the final major hurdle to exporting natural gas when federal regulators approved the firm’s plan to build a plant in southwest Louisiana for liquefying the fuel.

The decision by the Federal Energy Regulatory Commission puts Cheniere on track to convert its existing Sabine Pass terminal for receiving liquefied natural gas by 2015 — a timeline that would make it the first LNG export facility in the lower 48 states. One operates now in Alaska.

The company aims to export up to 3.5 million tons per year from the facility in Lake Charles, La. Cheniere plans to build the liquefaction plant in two stages, adding 191 acres to the existing terminal’s space. The facility would still be able to receive liquefied natural gas from tankers.

“Obtaining approval from the FERC is one more milestone for our liquefaction project,” said Cheniere CEO Charif Souki. “We will now finalize the financing arrangements in order to commence construction.”

About half a dozen other companies, including Texas-based Freeport LNG, also are pursuing exports to take advantage of the glut of natural gas produced in the U.S. using horizontal drilling and hydraulic fracturing techniques that free hydrocarbons from dense shale rock formations.

Exports would allow natural gas producers and processors to capitalize on higher prices globally compared to the United States. In the U.S. Monday, natural gas futures settled just over $2 per million British thermal units after hitting 10-year lows last week.

In Cheniere’s case, the strategy is a bid to put its receiving terminal to work. The Sabine Pass terminal went online in 2009, just as U.S. natural gas production surged and killed the need for LNG imports.

When natural gas is cooled to 256 degrees below zero it becomes a liquid that tanker ships can transport. At its destination it is converted back into gas. Cheniere’s Sabine Pass terminal is outfitted with regassification and storage equipment now.

In approving Cheniere’s liquefaction plant plans, FERC also could also give a boost to U.S. producers with big natural gas portfolios.

But a rise in natural gas prices would increase consumers’ monthly bills and also would be bad news for chemical manufacturers that use natural gas as a building block to create other products.

Congressional Democrats have proposed legislation that would ban new LNG exports. Rep. Ed Markey, D-Mass., who is pushing a ban, said the expert terminals would mean sending U.S. natural gas to China and Europe 00 and “exporting our manufacturing jobs abroad along with the fuel.”

“America should exploit her competitive advantage with lower natural gas prices to create jobs in the United States, not export natural gas to create more profits for oil and gas companies,” Markey said.

And environmentalists have asked top Obama administration officials to require a broader review of the consequences of the surge in natural gas drilling that probably would result from selling the fuel overseas.

Critics fear hydraulic fracturing can contaminate water supplies and cause localized earthquakes. Sierra Club Executive Director Michael Brune said in a statement Monday that exports would increase production and hydraulic fracturing, “making a dirty fuel more dangerous and putting more American families in at risk.”

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The Obama Administration Wants You to Stop Worrying and Love the Bailouts

imageBy Nick Baumann
Mon Apr. 16, 2012 3:30 AM PDT

The Obama administration wants Americans to realize what a good job it and the Bush administration did saving the economy from a second Great Depression. But they’d prefer not to make this case directly. They want journalists to do it for them.

On Friday, the Treasury Department convened one of its semi-regular, invitation-only background press briefings for journalists. Senior Treasury officials spoke to us, answered our questions, and showed us a “deck,” which is annoying industry jargon for a PowerPoint presentation. “I just know this is going to be a fucking waste of time—another dog-and-pony show,” another journalist told me on our way into the meeting. The central message of the dog-and-pony show was that the US response to the 2008 financial collapse was pretty effective, especially when compared to how other countries reacted to different crises. The PowerPoint presentation used terms like “bank investment programs,” but what the Treasury gang was talking about was the highly unpopular financial bailouts (as opposed to the auto bailouts, which the Obama team views as a political winner).

The Treasury officials said many true things. It’s certainly possible that if the government hadn’t acted quickly, the 2008 financial crisis could have been as disastrous as the Great Depression. Many of the bailouts—or “rescues,” as Treasury calls them—have resulted in net gains for the taxpayers. (The current value of the government’s shares in AIG, for example, exceed the amount of money it has yet to recover from that bailout.) The Treasury is right that countries confront major economic crises frequently and that the United States will probably face one again. And it’s legitimate for the Obama administration to worry that its successors will look at the interventions made in the markets in 2008 and fear that such action is not worth the immense political costs. Consequently, they discern the need to get good press for these bailouts.

The journalists in the room justifiably focused their questions on things that the Obama administration and the Treasury Department have not done well enough: helping struggling homeowners, lowering unemployment, and moving towards a financial order where these sorts of crises are no longer inevitable. The Treasury folks mostly wanted to talk about how successful the bailouts were. But they made that argument in a no-direct-quotes, no-television, you-can’t-even-say-our-names briefing for 20 or so journalists on a Friday afternoon. In other words, in a manner that would not associate them too closely with this argument. They did it in this fashion because they want to influence our future reporting (a fair-enough desire). But they don’t want to take on the political challenge of directly defending their massively unpopular actions in the public eye.

Senior Treasury officials clearly believe that the financial sector bailouts were a brave choice that worked out as well as anyone could have hoped, and they said as much on Friday. I’m bound by the agreement not to quote any of them directly.

But when asked about the bank bailouts in public, Obama and top administration officials usually mention that the Bush administration launched the bailouts, talk about them as something America “had” to do, and change the subject as quickly as possible. One example is Obama’s 2010 State of the Union address. “If there’s one thing that has unified Democrats and Republicans, and everybody in between, it’s that we all hated the bank bailout,” Obama said. “I hated it. I hated it. You hated it. It was about as popular as a root canal.” He went on to describe the bailout as a “necessary” step taken by “the last administration,” arguing that “if we had allowed the meltdown of the financial system, unemployment might be double what it is today,” with more businesses closed and more homes lost.

In that speech, the bailout was the equivalent of cutting off your hand when it’s caught under a bolder and you’re dying of thirst: a terrible thing to which there was no alternative. That’s a bit at odds with how senior Treasury officials spoke about the bailouts on Friday: a wise choice that worked out better than anyone could have anticipated, and a program that makes the administration proud. That appraisal is not on the record.

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IMF Exploits Euro-Crisis to Create Global Money Power

imageMonday, April 16, 201
by Staff Report

Euro Area Seeks Bigger IMF War Chest on Spanish Concerns … European officials travel to Washington this week seeking a bigger global war chest to combat the debt crisis as Spain’s government battles to quell renewed market turmoil over its finances. Three weeks after European leaders unveiled emergency euro- area funding exceeding the symbolic $1 trillion mark, concerns about Spain’s position have ratcheted the nation’s borrowing costs to the highest levels this year. Crisis-fighting resources will dominate talks at the International Monetary Fund’s spring meeting in Washington from April 20-22. – Bloomberg

Dominant Social Theme: Austerity would work if Europe would just cooperate.

Free-Market Analysis: Almost unnoticed, the world’s leaders now speak in terms of trillions rather than billions (or millions) as they used to, and the IMF and central banks are leaders in this trend (see above excerpt).

The goal of the elites running these facilities is world government and the European Union is a stepping-stone to this consolidation. Austerity, the program that is supposedly stabilizing European finances, is actually an elite dominant theme that does the opposite of its stated intent.

As part of this globalist thrust, the power elite seeks to empower certain international facilities with additional funding and authority. Out of chaos … order, as the article excerpted above once again illustrates:

Bowing to international pressure to do more while stopping short of a bolder proposal, European governments agreed last month that 500 billion euros ($654 billion) in fresh money would be placed aside 300 billion euros already committed to create an 800 billion-euro defense against contagion.

By also offering to give the IMF 150 billion euros, “European governments have done their part,” ECB Executive Board Member Joerg Asmussen said April 13. “I would now expect our non-European friends and partners to contribute their part to IMF resources.”

This kind of problem/solution formula is easy to understand for anyone who wants to look. The elites pursue their goals via dominant social themes, fear-based promotions that frighten people into giving up power and wealth to globalist facilities. In this case the mechanism is the “sovereign debt crisis” and the solution is to puff up the IMF with more resources.

The longer the so-called sovereign debt crisis goes on, the more the globalists utilize it to expand the power of their chosen institutions. We wrote about this phenomenon just the other day in an article entitled, “Debt Crisis Plotted to Deliver the Euro to the IMF?” Here’s how we explained the genesis:

One has to keep in mind the artificiality of the current economic construct. The economy of the world is run via monopoly fiat/paper money printed by central banks. It is this system that has seemingly crashed half of the world’s economy and is well on the way to delivering China into the same situation …

The EU crisis itself, as we have often pointed out, started when certain poorer countries were given large amounts of money by Brussels to “equalize” the economy. These funds were supposed to allow the bureaucracies to address native imbalances and create fiscal health.

Of course, this money was nothing but a kind of bribe. The elites of the given nation pocketed the funds and then made sure their countries entered the EU. After this occurred, further lending took place via the elite’s top, European commercial banks.

After the 2008 crash, it became clear that the EU’s PIGS couldn’t repay the loans. This was likely the plan all along. After this realization set in, the power elite that orchestrates this sort of thing ensured that the solution to this manipulated dilemma was “austerity.”

The idea is evidently and obviously to make people so miserable that they will eventually welcome world government and world money. The power elite orchestrating this has been using what we call directed history for at least a century and probably closer to three – within the context of the modern globalist conspiracy.

The article we are analyzing today from Bloomberg suggests an expanded IMF based on the Euro crisis. But the IMF is also promoting a US$500 billion expansion via developing countries.

The justification is that the European crisis might spill over into other continents and nations. The IMF has to be prepared for via a half billion-dollar transfer from the very countries it claims to be protecting. Reuters reports the following:

Euro Area Seeks Bigger IMF War Chest on Spanish Concerns … International Monetary Fund (IMF) Managing Director Christine Lagarde said that she is hoping to make “real progress” at this week’s meetings …

In January, the IMF said it would need $600 billion in new resources to help “innocent bystanders” who might be affected by economic and financial spillovers from Europe … On Friday, officials from the Group of 20 nations told Reuters the world’s major economies were likely to agree to provide the IMF with somewhere between $400 billion and $500 billion.

A G20 official said the fundraising effort would likely raise about $50 billion from Japan and a similar amount from China and Saudi Arabia, in addition to the $250-300 billion already committed by EU countries. Smaller amounts will likely come from countries such as Russia, Mexico and Brazil.

Thus it is that the IMF expands. It is receiving at least US$150 billion from Europe and hundreds of billions from mostly “developing” countries. It is interesting that the Reuters article and the Bloomberg article don’t quite match up on the European contributions. What’s a few hundred billion among friends?

In fact, nobody REALLY knows how much money is flowing at the top, or where it is headed. The point of the reports is promotional and has little to do with accuracy. The idea is to throw vast sums around as to imbue government officials with godlike powers.

Often, we discover the announcements made about funds prove not to be true. The European sovereign debt crisis was supposed to have been solved years ago, when the first announcements were made that funds had been delegated to “fix” the problem by leading European sponsors.

In fact, we have come to realize this crisis – like other crises around the world – are often manufactured ones. This is no doubt why they often last so long. The longer the crisis lasts, the more possibilities for a transformative effect.

In this case it seems obvious to us that the intent is to make citizens of the West so miserable (via “austerity”) that they will welcome virtually any change, even globalism, that promises to make their lives better.

Seen through this admittedly cynical lens, the 20th century with all its “isms” and arguments for expanding government via socialism, etc., was the first part of a promotion that is now nearing its latter stages. Having successfully made people dependent on government, the powers-that-be are now removing those props in order to further their internationalist aims.

No doubt global governance will be sold the same way as were the initial governmental solutions of the 20th century – as a panacea that will somehow reduce the world’s afflictions and rectify the wrongs of the “market.”

Conclusion: We are not yet sure the IMF is destined to become the world’s central bank – complete with an SDR global currency – but the IMF is continually showing up at the center of things as world economic chaos blossoms. More that the Bank for International Settlements or even the World Bank, it appears to be the Chosen One.

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Cuban well progressing slowly

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News Wires ,
16 April 2012 01:36 GMT

Drilling of the first well in the long-awaited exploration of Cuba‘s offshore oilfields has gone slower than expected, but should be completed by mid-May, according to reports.

Reuters quoted sources close to the project as saying drillers had encountered harder rock beneath the sea bed than expected, which combined with other minor problems, had slowed progress.

When drilling began on 1 February Spanish oil giant Repsol YPF said drilling of the deep-water well was anticipated to take about 60 days to complete.

A Repsol spokesman could not confirm on Friday the projected mid-May completion date, when contacted by Reuters.

This well, which is in 1706 metres of water off the communist-run island’s north-west coast, is the first of five currently planned, Cuban officials say.

Cuba has said it could have 20 billion barrels in its offshore fields. It needs the oil to end its dependence on Venezuela, which ships it 114,000 barrels a day.

Cancer-stricken Venezuelan President Hugo Chavez is Cuba’s top ally, but island leaders worry that the oil flow could stop if he dies or loses his bid for re-election later this year, Reuters reported.

The US Geological Survey estimated Cuba may have 5 billion barrels of oil and 10 trillion cubic feet of natural gas offshore, but its study covered only part of the Cuban zone.

Reuters cited various unnamed sources as saying Repsol had been encouraged by its findings thus far, but the company has said results will not be known until the well is finished and studies are conducted.

Oil experts say it will take three years or more to bring the Cuban oil on line, if enough is found to justify production, according to Reuters.

After Repsol completes its well, it will hand the Scarabeo 9 drilling rig over to Malaysia’s state-owned Petronas and its Russian partner Gazprom Neft for a second well.

Then it will go back to Repsol, which has a consortium with Norway’s Statoil and ONGC Videsh, a unit of India’s ONGC, for another well, Reuters reported.

The massive Chinese-built rig, which is more than 32 kilometres offshore but visible from Havana, is being leased from owner Saipem, a unit of Italian oil company Eni.

Due to the longstanding US trade embargo against Cuba, no American oil companies are involved in the project.

Repsol drilled a well in Cuban waters in 2004 and found oil, but said it was not commercially viable. Technological limitations imposed by the embargo made it difficult to find another rig for work in Cuba, industry sources have said.

The project has raised environmental concerns in the US, particularly in Florida, which is 145 kilometres north of Cuba and fears its shores could be damaged if there is an accident similar to the BP oil spill in the Gulf of Mexico in 2010.

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USA: Cheniere to Raise Up to USD 4 Billion in Debt for Sabine Pass Liquefaction Project

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Cheniere Energy Partners said today that it has engaged eight financial institutions to act as Joint Lead Arrangers to assist in the structuring and arranging of up to $4 billion of debt facilities.

The proceeds will be used to pay for costs of development and construction of the liquefaction project at the Sabine Pass LNG terminal, to fund the acquisition of the Creole Trail Pipeline from Cheniere Energy, and for general business purposes. As previously disclosed, estimated capital costs before financing for the first two trains of the liquefaction project of $4.5 billion to $5.0 billion are expected to be funded from a combination of debt and equity financings.

The eight Arrangers are The Bank of Tokyo-Mitsubishi UFJ, Ltd., Credit Agricole Corporate and Investment Bank, Credit Suisse Securities (USA) LLC, HSBC, J.P. Morgan Securities LLC, Morgan Stanley, RBC Capital Markets, and SG Americas Securities, LLC.

Obtaining financing is one of the last steps to complete before proceeding with the construction of the first two liquefaction trains being developed at the Sabine Pass LNG terminal,” said Charif Souki, Chairman and CEO. “We have engaged an experienced group of financial institutions as our core banking group and look forward to completing the financing for the project in due course.”

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