Daily Archives: January 16, 2012

Estrella shuts down rigs in Colombia because of unrest


Coat of arms of Republic of Colombia.

Estrella shuts down rigs in Colombia because of unrest – Oil | Platts News Article & Story.

Turkey: Tersan Shipyard Splashes Multipurpose Offshore Construction Vessel Grand Canyon


Tersan Shipyard launched Multipurpose Offshore Construction Vessel, Grand Canyon with the honorable presences of Norway Prime Minister Mr. Jens Stoltenberg and Turkey Minister of Transportation, Maritime Affairs and Communication Mr. Binali Yıldırım.

Grand Canyon is a cooperation of Tersan Shipyard with Bergen Fosen in order to build a very high standard Offshore Construction Vessel for the Owner, Volstad Maritime. Grand Canyon is a 125m long, 25 m width, electric propulsion offshore vessel with Helicopter deck, DP III notation, 6 pcs of Side Maneuvering Thrusters and accommodation for 108 persons.

During the ceremony, Mr. Stoltenberg pointed out that it was no coincidence that the launch was on his itinerary during his visit to Turkey.

Norway and Turkey have a long tradition of business cooperation in the maritime sector. Tersan shipyard alone now has a total of eight ships on order for Norwegian interests, worth a total of almost NOK 2 billion,” Mr Stoltenberg said.

Mr Stoltenberg was also able to see the M/S Høydal, a Norwegian ship which is being built at the yard on behalf of the company NSK Shipping, based in North Norway. The M/S Høydal is a specially designed cargo ship that will be assigned to the fish feed manufacturer BioMar in Norway. This will be the world’s first LNG-powered coaster, and the vessel should be ready to load her first cargo in Norway in May 2012. The M/S Høydal will have a cargo capacity of 2200 tonnes of fish feed, making her the world’s largest operational fish feed cargo vessel. Natural gas (LNG) propulsion will make the vessel environmentally friendly and reduce emissions of NOx (nitrogen oxides) by over 90 %.

Tersan Shipyard Splashes Multipurpose Offshore Construction Vessel Grand Canyon
Tersan Shipyard Splashes Multipurpose Offshore Construction Vessel Grand Canyon
Tersan Shipyard Splashes Multipurpose Offshore Construction Vessel Grand Canyon
Tersan Shipyard Splashes Multipurpose Offshore Construction Vessel Grand Canyon

Mr. Binali pointed out the increased capacities of Turkish Shipyards, highlighted that he had attended to another launching ceremony in Tersan Shipyard just 4 months ago, this represents Tersan Shipyards and Turkey’s achieved high level of Ship production as well as quality; “When I was the General Manager of IDO, Turkey used to import ships from Norway just 10 years ago now we are exporting vessel to Norway” said Mr. Yildirim.


Oil in, gasoline out, and U.S. benefits


Posted on January 16, 2012 at 6:38 am by Loren Steffy

For the first time in six decades, the U.S. is exporting more gasoline and diesel fuel than it imports.

That, if you believe the critics, shows that the Keystone XL pipeline, which would ship crude oil from Canada to Gulf Coast refiners, is an export scam. In other words, the oil that Keystone would bring in will simply be refined and shipped out again, so the whole project is nothing more than a ploy in which U.S. refiners boost profits by tapping lucrative foreign markets.

Gasoline exports, though, have little to do with the Keystone pipeline and America’s long-term energy needs. Exports of refined products have indeed surged in the past three years as domestic demand slipped because of the weak economy. The U.S. exported more than 600,000 barrels a day of refined products, mostly gasoline and diesel fuel, in 2010, up from 100,000 barrels in 2003, according to the U.S. Energy Information Administration.

Refiners have a couple of ways they can respond to lower demand for their products: cut production or seek new markets. Sunoco, for example, said in September it was selling its refining business because weak demand and higher crude prices have eroded profits.

But those that want to stay in the business can lay off workers and weather the slump or keep people employed by selling fuel elsewhere.

And where do they sell it?

As of mid-October, about 60 percent of U.S. gasoline exports went to Mexico, according to Energy Information Administration data. The next two biggest recipients were Canada and Brazil.

Canada, meanwhile, is our biggest source of foreign oil, even without the Keystone pipeline, and Mexico supplied about 12 percent of our monthly imports as of October. Brazil supplied about 2 percent.

So U.S. companies are taking the oil supplied by these countries, refining it, and selling it back to them at a higher price, supporting thousands of refining jobs in the process. They also avoid shutting down and later restarting all or part of their refineries, which can be expensive and dangerous.

It may not be a great deal for Canada and Mexico, but it’s a better alternative for a struggling U.S. economy than idling more workers.

We could, of course, curtail our crude imports from Mexico and Canada, and cut off the exports of refined products. That wouldn’t make much sense because gasoline is more expensive than crude. In other words, we benefit from the added value of U.S. manufacturing.

As for the Keystone pipeline, U.S. gasoline demand probably will have returned to pre-recession levels by the time it gets built, if it does. As domestic demand returns, exports of refined products will decline to what they were a decade ago.

The purpose for the pipeline, though, isn’t to respond to short-term issues of demand. The pipeline is about securing access to long-term supply, not about short-term market reactions.

As I’ve argued for years now, our energy strategy, if we ever decide to adopt one, has to focus on oil supply, not just price. As the available pool of crude in the world market gets divided among more countries with increasing demand, controlling supply is going to be vital for the United States.

The U.S. will remain energy interdependent, not independent. We may be, at the moment, a net exporter of gasoline, but we remain a net consumer of crude oil, and we will for decades to come.

Having the capacity to buy oil from friendly neighbors like Canada makes a lot of sense, and if in the meantime we get to sell back a higher-value product that we make from their raw materials, so much the better.


LETTER: ‘Career Politicians Like Markey are Holding Our Economy Back’


By Susan Petroni

In a move that further exemplifies why we must redirect our government in order to restore our economy, U.S. Rep. Ed Markey has decided to fight the law of supply & demand. His consistent failure to understand basic economics damages our economy – in this instance, by stifling job creation and energy independence.
In a letter to Energy Secretary Steven Chu, Markey questioned the impact of allowing U.S. companies to export liquefied natural gas with the following statement:

‘I am worried that exporting America’s natural gas would raise energy costs for American consumers, reduce the global competitiveness of U.S. businesses, make us more dependent on foreign sources of energy, and slow our transition away from dirtier fuels.’

This statement is another example of how career politicians like Markey are holding our economy back. Recent advances in natural gas exploration have brought us to the point of oversupply in the U.S. market. This situation provides a unique opportunity to be a net energy exporter for LNG (liquefied natural gas). Being at a point of oversupply means that we have reached our capacity to consume LNG domestically. Mr. Markey’s proposal to artificially inhibit exports  will yield the precise outcome that he allegedly wants to avoid;  namely, reducing the global competitiveness of U.S. businesses.

Last year, in an $8 billion 20-year deal,  the Energy Department approved the first application by Cheniere Energy to export LNG to the UK.  This is a step in the right direction. Other countries will start sending their money to us instead of us sending our money overseas.

Natural gas is cleaner than oil. It is also more abundant than oil in the United States and it provides an excellent vehicle for job creation. As we speak, many LNG import sites across the U.S. largely sit idle as exporters (to the U.S.) shift their LNG supplies to emerging markets that will pay a premium for natural gas. Among the sites built on the anticipation of large LNG imports is SUEZ Energy North America located in Everett.

SUEZ is a natural gas importer and large contributor to Mr. Markey’s campaign.

Now imagine if the Everett LNG import site became an export site. Imagine hundreds of workers becoming employed in the conversion process from importer to exporter. Imagine job growth in and around Boston if it became a hub for energy exports, with every tanker that passes through Boston harbor another reminder of economic growth here in America. This isn’t a far fetched concept.
Right now, Dominion Resources Inc (D.N) is considering plans to build a liquefied natural gas export plant on the site of its existing import terminal at Cove Point, Maryland, by 2015. Southern Union Co. is launching similar plans at their Lake Charles, La., LNG import terminal as well.

What is standing in the way? Rep. Markey.

Career politicians like Markey (who was elected in 1976, the year I was born) are fundamentally incapable of grasping the negative effects of blocking incredible opportunities such as these.
In addition to his myopic view of energy development here in the U.S., Markey is engaged in a serious conflict of interest by sitting on both  the House Energy and Commerce Committee and the Natural Resources Committee, attempting to regulate the energy industry while accepting campaign contributions from its lobbyists.
Besides SUEZ Energy, Markey has accepted contributions from Chesapeake Energy, Interstate Natural Gas Assn of America, Spectra Energy and Washington Gas Light Co., all companies within the natural gas sector.

Accepting contributions from these companies is not illegal, but threatening them with adverse legislation, application delays or public scorn is tantamount to a shakedown. This is just the latest demonstration of Markey’s questionable ethics. There are numerous others, including examples relating to the solar and telecommunications industries.

For the sake of our national economy, and to help  the hard working men and women who are struggling to find a job in Massachusetts’ 5th District and across the country, it is high time that we voted Markey out of office. I look forward to being the candidate to make it happen.

Semon (pronounced Simone) is a candidate for Congress in 5th Congressional District. A graduate of the University of Massachusetts, Amherst – School of Management, Semon is a senior business analyst. He and his wife Nicole live in Lexington and recently had their first child Eleanor in  December.


Gas Exports Ignite a Feud

Seal of the United States Department of Energy.

Energy Firms Promote Exports, but Manufacturers Fear Their Costs Will Climb


U.S. officials will soon weigh in on a fight between companies that want to export some of America’s fast-growing supply of natural gas and big manufacturers that oppose the exports because they rely on cheap domestic gas.

In the next few weeks, Washington’s number-crunchers are set to estimate whether exports would cause U.S. prices to swell—a finding they will use in deciding the fate of more than a half-dozen projects across the nation.

The battle, which pits manufacturers such as Dow Chemical Co. against energy producers like ConocoPhillips, shows how the boom in U.S. fossil-fuel production is upending markets and forcing policy makers into decisions they didn’t imagine facing just a few years ago.



Associated Press

Natural gas is pumped at a hydraulic fracturing operation in Pennsylvania’s Marcellus Shale in July.

Once seen as a likely significant importer of natural gas—before the boom in domestic shale-gas production provided enough to meet demand—the U.S. is now emerging as a potential supplier of the fuel to nations overseas thanks to the newly tapped sources in shale.

Companies are setting their sights on markets in Europe and Asia where natural gas fetches three to four times the price in the U.S. According to Platt’s, natural gas in Japan and South Korea fetches more than $16 per million British thermal units, compared with a benchmark price of a little more than $3 per million BTUs in the U.S. The companies are looking to spend billions of dollars on new terminals that could ship out about 17% of U.S. daily production, or about 11 billion cubic feet per day, according to the Energy Department. But Dow Chemical and others say allowing exports will crimp the supply available to U.S. users and drive up prices here.

To send natural gas across the oceans, companies must supercool the fuel to minus 260 degrees and convert it to liquid form so it can be loaded onto tankers. Building massive coastal facilities to make liquefied natural gas requires multiple permits from Washington.

The Energy Department is looking at whether exports will drain U.S. supplies and inflate domestic prices. The Energy Information Administration, part of the department, is expected to deliver its analysis in a few weeks.

If the department finds export terminals will raise the domestic price of natural gas and fail to serve the country’s best interests, it could block applicants from exporting to most nations except those with free-trade agreements with the U.S. That could doom the projects.



Sen. Ron Wyden (D., Ore.), whose state includes one of the proposed terminals, says he is concerned U.S. consumers and businesses will get “short shrift” if natural gas supplies are shipped abroad.

“If you see natural gas prices go into the stratosphere, it would make it difficult for other industries to create jobs in the United States,” Mr. Wyden said in an interview.

Among those taking a hit would be chemical companies, which use natural gas as a raw material in car parts, bottles, cleaners, mattresses and other products. Dow Chemical, one of the most outspoken critics of the export proposals, says the U.S. would be better off using its cheap natural gas for domestic manufacturing instead of exports.

“When natural gas is used as a chemical raw material, it creates eight times the value compared to other uses, and fuels higher-paying jobs, exports of finished goods and the vitality of the manufacturing sector,” Dow spokeswoman Kasey Anderson said.

Energy companies say there is plenty of natural gas in the U.S. to meet domestic demand and support exports at the same time. They say building the giant export facilities would create construction jobs and boost long-term employment by encouraging a faster rise in U.S. natural-gas output.

“American consumers are best served when markets rather than regulators determine outcomes,” said Cheniere Energy Inc. spokesman Andrew Ware.

While concern over price increases “gets the most airplay,” the Energy Department is also examining potential benefits of exports, such as creating jobs and offsetting the large U.S. trade deficit, said Chris Smith, the department’s assistant secretary for oil and gas.

Cheniere, which wants to start construction in 2012 on an export facility in Louisiana, is the only company to have cleared the Energy Department hurdle on exports. It got approval to export to most nations in May, before opponents had fully geared up to resist such plans. Cheniere has already signed long-term contracts to supply natural gas to the U.K.’s BG Group PLC, Spain’s Gas Natural Fenosa and GAIL (India) Ltd.

Many companies that are seeking permission to export natural gas had planned to import it just a few years ago. Then U.S. production rose 18% between 2005 and 2010, with the bulk of the increase coming from gas trapped in rock formations known as shale.

Import terminals are now gathering dust. Earlier this year, a terminal owned by Dominion Resources Inc. south of Baltimore had to buy a shipment of natural gas from overseas just to keep its equipment running.

With natural gas prices in the U.S. at multiyear lows, power companies can generate electricity more cheaply and pass the savings to consumers.

A study by Navigant Consulting Inc. found three of the export projects the government is studying could together increase domestic prices by 17% in 2020, with the impact declining over time as more natural gas is produced.

Deloitte, which looked at a separate set of three projects, said the long-term rise in prices would be much smaller.

Charles Ebinger of the Brookings Institution says the impact of exports on prices is “virtually an impossible question” because there are so many hard-to-measure variables. One is whether the popular drilling technique known as hydraulic fracturing continues to grow—boosting natural-gas supply and keeping prices down—or gets bogged down in safety questions.

Write to Tennille Tracy at tennille.tracy@dowjones.com


Macquarie Vies To Sell U.S. LNG To India


For all the hubbub over the competitive threat posed by U.S. gas exports to Australia’s rapidly growing liquefied natural gas sector, Macquarie clearly smells an opportunity.

Indian energy company GAIL expects to sign a deal within a month with Macquarie Energy to buy 2 million tons of liquefied natural gas annually for 20 years from the Freeport LNG project in the U.S.

“We are in advanced discussions with Macquarie. I think we will be able to sign the deal in a month’s time,” a senior executive with India’s largest gas distributor told Deal Journal Australia’s colleague Rakesh Sharma in New Delhi.

Macquarie Group’s North American energy marketing and trading arm, Macquarie Energy, and Freeport LNG Expansion LP, are jointly developing and marketing liquefaction capacity at the LNG terminal in Freeport, Texas.

Macquarie’s corporate communications team weren’t immediately available for comment on the talks with GAIL.

The U.S. shale-oil and natural-gas boom has transformed the gas market, made the country a net exporter, depressed gas prices and has prompted several players to set up LNG export operations with an eye on rapidly-expanding Asian markets.

GAIL in December agreed to buy 3.5 million tons per year of LNG for over 20 years from Sabine Pass Liquefaction LLC, a unit of the U.S.-based Cheniere Energy Partners LP, at a free-on-board price indexed to the Henry Hub price, the main international benchmark for natural gas prices in North America.

The executive said the deal with Macquarie will also be linked to Henry Hub, instead of crude-oil prices. This will help GAIL get LNG at competitive rates as its end-customers in India are price sensitive, he added.

GAIL projects its gas import needs to grow seven times to 187 million standard cubic meters a day by 2015 from end-2010. The share of imported gas in its total gas use is set to rise to around 48% from 15% during the same time period, IHS Global Insight said in a note last month.

The gas pipeline utility is pushing hard to line up supplies. In September, it took a 20% stake in Houston-based Carrizo Oil & Gas Inc.’s Eagle Shale Ford acreage and in November set up a unit in Singapore for LNG trading.

“The deal [with Macquarie] is a part of company strategy to assure long-term supplies,” Bhavesh Chauhan, an analyst with Mumbai-based Angel Broking, said.

Another analyst, who didn’t wish to be named, said the deal will be a big positive as a fall in domestic Indian gas production has reduced GAIL’s transmission volumes and its pipeline network is facing low utilization.

Last month, the head of global gas at UK-based energy consultancy Wood Mackenzie said the U.S. could emerge as a major competitor to Australia’s burgeoning gas-export market, challenging the viability or expansion plans of close to a dozen Australian liquefied natural gas projects.

“We’re of the view that North America will have 20 million tons of LNG capacity maybe as early as 2018,” Woodmac’s Noel Tomnay said. “Consequently, that will remove potential market share for Australian LNG projects.”

Investment totaling over A$175 billion has been earmarked for new Australian LNG terminals focused mainly on Asia since 2007, which could catapult Australia ahead of Qatar as the world’s largest LNG exporter within a decade. Friday, Japan’s Inpex and France’s Total formally approved construction of their $34 billion Ichthys gas-export facility in the Northern Territory.


Military warns gas imports at risk


By Carola Hoyos, Defence Correspondent

UK military leaders have raised concerns that more than 80 per cent of the UK’s liquefied natural gas imports would be halted if Iran made good its threat to block the Strait of Hormuz.

Ministers and senior military figures have been warned that almost half the UK’s gas imports, and 84 per cent of its LNG imports, use the waterway, say people within the Ministry of Defence and the Department of Energy and Climate Change.

Since December, Iran has repeatedly threatened it would block the critical shipping lane at the mouth of the Gulf if its oil exports were blocked. One-fifth of the world’s oil and one-third of its LNG passes through the strait.

Lord West, former head of the Royal Navy and security adviser to Gordon Brown when the latter was prime minister, told the Financial Times that, if the strait were blockaded, the sharp fall in the UK’s gas supplies would be the country’s single most critical issue.

“I have no doubt at all that this would be the biggest problem for us,” Lord West told the Financial Times, adding that the UK would also have to weather the economic fall-out from higher global oil and gas energy prices if shipping through the strait was interrupted.

The risk has risen as refiners have stopped buying Iranian oil ahead of the expected decision to enforce sanctions in response to Tehran’s attempts to develop a nuclear arms programme.

Furthermore, Iran’s upcoming presidential elections are adding to Tehran’s need to posture, said Christopher Parry, the MoD’s former director-general of development, concepts and doctrine.

“In strategic terms, the issue with the Iranians is not so much about nuclear, it’s about the fact that they have an election in 2013. What they are trying to do is create a state of crisis and emergency, which I think will lead them to defer the election because they know they are going to get hammered unless they are able to rig it,” he said. Mr Parry said in an interview.

For the UK, that would mean an interruption of gas supplies from Qatar, which has no viable export alternative to the strait.

Since 2010, the UK’s gas imports from Qatar have risen 67 per cent, while those from Norway are down 17 per cent and the UK’s North Sea supplies have continued to dwindle. From August to October last year, the most recent period for which the DECC has data, all the UK’s LNG imports – or 46 per cent of its total gas demand – came from Qatar.

Less than 1 per cent of the UK’s oil imports travel through the strait.

The DECC said: “We are aware of the importance of Hormuz, both in terms of oil and LNG imports to the UK. We are therefore working across Whitehall on this issue. Relevant ministers have been briefed.”

Other countries are far less vulnerable than the UK, in large part because they have a more diverse pool of suppliers and more storage capacity.

Frank Harris, analyst at Wood Mackenzie, the energy consultancy, said the UK’s storage levels were high thanks to the mild winter, but he warned that the country was far behind others, such as Japan, in minimising its energy vulnerability.

“There is a lesson for UK plc here: unless you are going to start buying contractual gas on a firm basis from a diverse portfolio of suppliers, you are going to risk ending up in this situation again.”


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