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Eventually, Someone Is Going To Profit Off Of This Massive Arbitrage Opportunity

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Joe Weisenthal

This shouldn’t surprise you: Oil prices have held steady, while natural gas prices have gone into total freefall.

Natural gas has been “cheap” for sometime, but the warm winter has really been killing it, and so the relative cost of oil has exploded higher.

Of course, the two aren’t perfect substitutes, and as everyone knows there are major infrastructure challenges associated with using more natural gas in the economy (you can ask T. Boone Pickens about that). But at some point, given the need for cheap energy that doesn’t help fund countries that help fund terrorism, you’d think this might mean revert. Maybe.

Read more: BI

Norwegian LNG on Way to U.S.

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The latest LNG cargo to be loaded at Norway’s Hammerfest terminal has been dispatched to United States, according to shipping data.

The 165,500 m3 Maersk Meridian departed Hammerfest yesterday, and is expected to arrive at U.S. Sabinne Pass terminal on February 17.

Statoil said on January 20 that it has resumed production at the Hammerfest LNG plant following a temporary shutdown due to rupture of a firewater line.

The Hammerfest terminal has a capacity to produce 4.3 million mt/year of LNG.

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Canada: NEB Approves BC LNG Export Licence

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The Canadian National Energy Board (NEB) approved an application by BC LNG Export Co-operative LLC for a licence to export liquefied natural gas from Kitimat, British Columbia primarily to Asian markets.

The export licence authorizes BC LNG to export 36 million tonnes of LNG, which is equivalent to approximately 47.9 billion m³ of natural gas, over a 20 year period. The maximum annual quantity allowed for export will be 1.8 million tonnes of LNG, which amounts to approximately 2.4 billion m³of natural gas.

A co-operative comprised of natural gas producers, marketers and LNG buyers is a central feature of BC LNG’s export proposal, where members of the co-operative will submit bids to provide natural gas to be liquefied or purchase LNG. A committee will review the bids and choose those that will yield the greatest margin to the co-operative.

Membership in the co-operative is currently comprised of thirteen parties, and additional members may join upon request. BC LNG’s export model permits smaller natural gas market participants in Canada to play a part in exporting LNG.

“In approving BC LNG’s application, the Board satisfied itself that the quantity of gas to be exported is in excess of the requirements to meet the foreseeable Canadian demand. The Board also determined that the volumes of natural gas proposed to be exported are not likely to cause Canadians difficulty in meeting their energy requirements at fair market prices,” NEB said in a report.

The Board acknowledged the potential economic benefits associated with BC LNG’s project. In particular, the Board noted the benefits for the Haisla Nation, including an interest in BC LNG, and employment opportunities resulting from the development and operation of the liquefaction facility,” NEB added.

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