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WASHINGTON, November 10, 2011 – The American Petroleum Institute blasted the White House for delaying the approval of the Keystone XL pipeline, putting an indefinite hold on the creation of 20,000 new jobs next year:
“This decision is deeply disappointing and troubling. Whether it will help the president retain his job is unclear, but it will cost thousands of shovel-ready opportunities for American workers,” said API President and CEO Jack Gerard. “There is no real issue about the environment that requires further investigation, as the president’s own State Department has recently concluded after extensive project reviews that go back more than three years. This is about politics and keeping a radical constituency opposed to any and all oil and gas development in the president’s camp in November 2012.
“Besides creating thousands of jobs almost immediately for Americans, this project would also have helped strengthen our energy partnership with Canada and helped reduce America’s reliance on oil from less stable sources,” he said.
A recent poll found that nearly 80 percent of Americans favor more oil from Canada, already our number one supplier of foreign oil, according to API.
The Keystone XL pipeline has the support of organized labor, business, mayors and veterans groups from across the country as well as many members of Congress from both sides of the aisle.
API represents more than 480 oil and natural gas companies, leaders of a technology-driven industry that supplies most of America’s energy, supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers more than $86 million a day in revenue to our government, and, since 2000, has invested more than $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.
Published 4:26 PM, 21 Apr 2011
Oil giant Sinopec on has signed China’s second-largest gas purchase agreement, worth around $US85 billion ($A80.7 billion) over 20 years by one estimate, in a deal that also gives it 15 per cent of the Australia Pacific liquefied natural gas (LNG) project.
ConocoPhillips and Origin announced the deal at a joint news conference overseen by Resources Minister Martin Ferguson.
“Australia very shortly become the second-largest exporter of LNG in the world and we have effectively now got a very important new industry in Queensland,” Mr Ferguson said, referring to the northern state where the project is to be built.
“Deals like this one put Australia on track to be one of the world’s largest suppliers of LNG in coming years.”
“The APLNG project has the potential to significantly expand the burgeoning coal seam gas to LNG industry on Australia’s east coast and cement Gladstone’s place as a key LNG hub.”
Australia has around $US200 billion in LNG projects on the drawing board. Much of their exports are destined for China, which is looking to lock in supplies to feed its rapid growth and cut its reliance on polluting coal energy.
Australia Pacific LNG will have initial capacity of 4.5 million tonnes per annum (mtpa) of LNG, eventually ramping up to 18 mtpa, and is expected to come online at the end of 2015.
Sinopec’s deal to take at least 4.3 million mtpa could be worth around $85 billion if pricing is similar to that of recent coal seam gas supply deals done by Australian gas firm Santos, said CLSA analyst Mark Samter.
The price of $US1.5 billion for the 15 per cent stake is also well above similar deals made recently – state-run Korea Gas Corp (KOGAS) paid just over $US600 million in cash to buy a 15 per cent stake from Santos Ltf and Malaysia’s Petronas .
“That price reflects their view of the value of the project…APLNG is dramatically stronger I think than other projects, and that’s what reflects in that price,” Origin managing director Grant King said.
“It’s a full price… they’ve extracted a decent amount of value for the equity,” Mr Samter said.
The project holdings of Conoco and Origin are now 42.5 per cent each following Sinopec’s equity investment, and the joint venture partners are still aiming to make a final investment decision by mid-2011.
Origin Energy shares were placed on a trading halt on Thursday. Sinopec shares were up 0.9 per cent in Hong Kong.
Mr King in February said the company may sell down more of its stake in the project to future LNG buyers.
He said the joint venture would not give a running commentary on current gas marketing efforts.
But ConocoPhillips senior vice president exploration and production Ryan Lance said APLNG was largely targeting the Asian region.
“The large buyers in Japan and Korea down through China to India as well,” Mr Lance said.
Mr Ferguson said China was Australia’s second-largest LNG customer and the Sinopec deal brought new and existing LNG contracts with the Asian superpower to more than 15 million tonnes per annum.
The APLNG project will involve the progressive development of coal seam gas fields in south central Queensland over a 30-year period and a 450 kilomtre transmission pipeline from the gas fields to Curtis Island near Gladstone, where an LNG facility will be built.
Federal Environment Minister Tony Burke gave the project the green light on February 22.
Welcoming the project, Queensland’s Finance Minister Rachel Nolan said Australia Pacific LNG estimates the annual contribution to the economy of the Darling Downs and Southwest region at up to $900 million during operation.
Ms Nolan said the economy of the Mackay-Fitzroy-Central West region could see an increase of up to $770 million a year during construction.
“On a state level, Australia Pacific LNG estimates the project could stimulate an increase in Queensland’s Gross State Product of approximately $2 billion per annum,” Ms Nolan said.
Chinese demand ramps up
China aims to boost gas consumption to 10 per cent of its total energy use by 2020 as it tries to reduce greenhouse gas emissions by cutting the use of dirtier burning coal. It has spent tens of billions of dollars buying into energy resources from Africa to Latin America.
Energy consultancy Wood Mackenzie has forecast China’s LNG imports to rise five fold to 46 million tonnes by 2020.
Sinopec’s deal will be second only to China’s first LNG import deal sealed in 2002 when China National Offshore Oil Corp (CNOOC) secured 3.7 mtpa of gas from Australia’s Northwest Shelf project for 25 years.
CNOOC, parent of CNOOC Ltd , is the leading Chinese LNG developer with three receiving terminals in operation and another two under construction.
PetroChina‘s two terminals were scheduled to begin operation from April.
The deal will also be Sinopec’s first venture into foreign unconventional gas assets and moves Australia Pacific LNG one step closer to meeting its target of making a final investment decision this year.
Sinopec is building its first terminal in eastern Shandong, which will be fed from ExxonMobil‘s Papua New Guinea LNG project.
The latest deal will enable Sinopec to accelerate work at the proposed 17 billion yuan ($A2.46 billion) terminal in the southern coastal city of Beihai in the Guangxi region, which is expected to open in 2014.
The Beihai terminal will have an initial capacity of three million tonnes per year, expandable to five mtpa by around 2015 when Australia Pacific LNG comes online.
The deal has environmentalists fearing for the future of the Great Artesian Basin.
Friends of the Earth spokesman Drew Hutton said the agreement was bad news for the environment, the Great Artesian Basin and for landowners.
“The federal government water group and Geoscience Australia believe there are going to be dramatic draw-downs (of the water table) in sections of the Great Artesian Basin and the damage could last for hundreds of years,” Mr Hutton told AAP.
The basin is a major source of water for farmers and communities in inland Queensland.
Origin Energy managing director Grant King says he’s confident the project would not harm the basin.
“Our project has done an enormous amount of work in understanding the impact the project will have on water, acquifers and the Great Artesian Basin,” Mr King said.
“The technical work, the engineering and scientific work done by our teams gives us the confidence there won’t be any adverse impacts.”
Mr King said trials were underway to understand issues surrounding water management.
He also said they were treating the unwanted water that comes up during the gas extraction.
“That water is treated and applied for a number of beneficial uses and one of the uses could be reinjection (into acquifers),” Mr King said.
Mr Hutton said CSG companies don’t know what to do with the unwanted water.
“They don’t know how to treat it to an acceptable level at an acceptable cost,” he said.
“They don’t know what to do with the one million tonnes of salt a year that comes to the surface except to wack it into landfill.
“Is it worth disrupting and sometimes destroying the farms that provide our food and fibre?
“The cost of this industry is far too great.”
According to Australia Pacific LNG, at its peak this project will create about 6000 direct jobs in construction, and about 1000 direct jobs in the operational phase of the project.
Overview: The Department of State (DOS) launched the Global Shale Gas Initiative (GSGI) in April 2010 in order to help countries seeking to utilize their unconventional natural gas resources to identify and develop them safely and economically. Shale gas is one of the most rapidly expanding trends in onshore U.S. oil and gas exploration and production. According to the U.S. Energy Information Administration (EIA), during the last decade, U.S. shale gas production has increased fourteen-fold; it now accounts for 22% of U.S. gas production and 32% of total remaining recoverable gas resources in the United States. By 2030, EIA projects that shale gas will represent 14% of total global gas supplies, providing the reserve base necessary for expanded consumption in a business as usual scenario. Future climate policies could increase demand for shale gas since it is a lower-carbon “bridge fuel” to reduce CO2 emissions. Although the U.S. shale gas experience cannot be precisely duplicated, its application through GSGI can be instrumental in helping governments understand the complexities of shale gas development. Governments often have limited capability to assess their own country’s shale resource potential or are unclear about how to develop shale gas in a safe and environmentally sustainable manner through establishing the right regulatory policy and fiscal structures. The ultimate goals of GSGI are to achieve greater energy security, meet environmental objectives and further U.S. economic and commercial interests.
Country Participation: Countries have been selected to participate in GSGI based in part on the known presence of natural gas-bearing shale within their borders, market potential, business climates, geopolitical synergies, and host government interest. Within GSGI, priority countries have the greatest potential for benefiting from GSGI opportunities. Other, non-priority, GSGI participants include those countries that have expressed interest and meet GSGI criteria. To date, partnerships under GSGI have been announced with China, India, Jordan and Poland, with bilateral agreements possible with several other additional countries.
Government-to-Government: The GSGI uses government-to-government policy engagement to bring the U.S. federal and state governments’ technical expertise, regulatory experience and diplomatic capabilities to help selected countries understand their shale gas potential. U.S. government agencies that partner with the Department of State under GSGI include: the U.S. Agency for International Development (USAID); the Department of Interior’s U.S. Geological Survey (USGS); Department of Interior’s Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE); the Department of Commerce’s Commercial Law Development Program (CLDP); the Environmental Protection Agency (EPA), and the Department of Energy’s Office of Fossil Energy (DOE/FE). A benefit of this government-to-government cooperation is the potential for establishing and strengthening long-term working relationships at the technical and ministerial levels.
Sample Activities: GSGI activities are tailored to each country’s specific needs and availability of funding. Examples of GSGI activities in priority countries include: shale gas resource assessments; technical guidance to evaluate the production capability, economics and investment potential of shale gas resources; and workshops and seminars on technical, environmental, business and regulatory challenges related to shale gas development. Engagement with non-priority countries focuses on regulatory policies and fiscal structures challenges. At the request of these countries, DOS organizes conferences, meetings, training and public-private sector events in the United States. They are also invited to participate in select multilateral GSGI events.