Pieridae to buy Shell Canada oil and gas assets for C$190 mn
Canada’s Pieridae Energy will buy oil and gas assets in Alberta from Royal Dutch Shell for C$190 million ($144.77 million), Pieridae said on Wednesday, securing supply for its planned liquefied natural gas plant in eastern Canada. The deal will consist of all of Shell’s midstream and upstream assets in the southern Alberta Foothills area, which produce 29,000 barrels of oil equivalent per day, including 119 million cubic feet per day of gas. It will enable Pieridae to secure the remaining supply needed for the first phase of its proposed Goldboro LNG plant in Nova Scotia. If it goes ahead Goldboro will be Canada’s first east coast LNG project, producing 10 million tonnes per annum. “Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry,” said Pieridae Chief Executive Alfred Sorensen. Shell and its partners are building Canada’s first LNG export terminal in northern British Columbia, but the company has scaled back operations elsewhere in the country, including in Alberta’s oil sands.
Canadian LNG terminal Woodfibre signs up BP as its first customer
Woodfibre LNG, a liquefied natural gas (LNG) project in Canada, said it had signed a unit of BP as its first customer, a crucial step towards developing the export facility. Woodfibre said on Wednesday BP Gas Marketing Limited had agreed to buy 0.75 million tonnes per year (mtpa) of LNG for 15 years starting in 2023, when the project in British Columbia is expected to come onstream. The facility’s capacity is expected to be 2.1 mtpa. It said it was also working on an agreement “for BP Canada to provide gas transportation and balancing services ensuring a reliable delivery of gas to the Woodfibre LNG export facility over the 15-year term”. Dozens of companies are planning LNG export terminals in North America to capitalise on gas made accessible from shale drilling technology. Signing up committed, long-term buyers is vital for financing and building such projects. Royal Dutch Shell approved its 14 mtpa project in Kitimat, northern British Columbia, in October, triggering a new cycle of projects to be built to meet an anticipated LNG shortage in mid-2020s. But the LNG Canada project is the only one in Canada to have progressed to construction stage. Woodfibre LNG is a subsidiary of Pacific Oil & Gas, part of the Singaporean conglomerate RGE. Pacific Oil & Gas operates two LNG import terminals in China, as well as other upstream and midstream oil and gas assets. LNG produced on the west coast of Canada is likely to be sold in Asia which accounts for about 75 percent of global demand. There are at least half a dozen LNG export terminal projects planned in Canada, and more in the United States.
Polls ignite petrol, diesel sales
Demand for petrol and diesel jumped while that for bitumen slowed during April-May when an intense election campaign boosted sales of transportation fuel but slowed road construction work. Oil demand shrank 0.3% in the first two months of the current fiscal year on lower consumption of polluting pet coke, fuel oil, kerosene and bitumen. India consumed 36.3 million metric tonnes (mmt) of petroleum products in April-May, compared to 36.4 mmt in the year-ago period. The country produced 43 mmt of petroleum products in April-May, 1.3% higher than a year ago. Sale of petrol and diesel jumped 10.7% and 2.7%, respectively, on the increased use of vehicles in election campaigning. But a decline in sales of vehicles hurt demand for diesel and to a lesser extent that of petrol. Car buyers seem to prefer petrol-driven cars as diesel deregulation has made diesel-driven cars less attractive these days. “Elections in various states leading to sealing of borders and grant of special leave to drivers for casting votes resulted in low movement of heavy vehicular traffic and thereby negatively affected diesel sales,” the oil ministry’s Petroleum Planning and Analysis Cell (PPAC) said in its monthly report. “No new infrastructure related works were initiated due to model code of conduct,” it further said. This hurt sale of diesel as well as that of bitumen, mainly used in building roads. Demand for naphtha shrank due to lower demand by the petrochemical and fertilizer industry. A ban on fuel oil in Delhi, Uttar Pradesh, Rajasthan and Haryana cut its demand, according to PPAC. A ban on the use of petcoke as fuel has sharply cut its consumption. Its use as feedstock in some industries such as cement, lime kiln and calcium carbide and gasification industries is still allowed. Indian refiners processed 21.6 mmt of crude oil in May, 2.7% lower than in the year-ago period, due to shutdowns at some refineries. Mangalore Refinery and Petrochemical processed 0.7 mmt of crude in May, down from 1.2 mmt a year earlier as freshwater shortage hit its operations. Indian Oil’s Koyali refinery and Hindustan Petroleum’s Mumbai refinery also performed below capacity.
Texas court rejects challenge to $2 bn Kinder Morgan gas pipeline
Kinder Morgan Inc can begin work on a $2 billion natural gas pipeline without having the Texas energy regulator approve its proposed route, a state judge ruled on Tuesday. The decision removes a challenge to the state’s licensing process that lets gas pipeline companies determine their own route and acquire land without a landowner’s consent. Texas is in the midst of a pipeline-construction boom with multibillion-dollar projects under way to bring shale oil and gas to market. A Travis County District court ruled the Texas Railroad Commission, the state’s oil and gas regulator, is not required to set standards for routing the pipelines or private land-takings, Judge Lora Livingston wrote on Tuesday. The state allows gas pipeline operators that qualify as utilities to use eminent domain to take land for the public good. “The court finds no authority for the proposition that the legislature has granted authority to the Commission to oversee the rights granted,” she wrote. She also granted Kinder Morgan’s request to dismiss it from the suit. The ruling was in response to a suit brought by a group that included Texas landowners and Hays County, Texas, that said the oil and gas regulator failed to seek public input or properly supervise the routing of Kinder Morgan’s Permian Highway Pipeline, which will carry 2 billion cubic feet per day of natural gas roughly 400 miles from West Texas to the U.S. Gulf Coast. Kinder Morgan had asked the court to throw out the landowners’ lawsuit, arguing it was up to the state legislature, not the court, change the pipeline permitting process. “The court’s finding validates the process established in Texas for the development of natural gas utility projects,” Tom Martin, president of Natural Gas Pipelines for Kinder Morgan, said in a statement on Tuesday, applauding the decision. U.S. shale gas production in July is projected to hit a record 81.4 billion cubic feet per day, which would be an 18th consecutive monthly increase. Shale oil could hit 8.52 million barrels per day that same month, according to the U.S. Energy Information Administration. Plaintiffs in the case argued that the pipeline will cross “sensitive environmental features in Central Texas,” such as endangered species habitats, sites of historical significance and residential subdivisions, according to a filing. A spokeswoman for the Railroad Commission of Texas declined to comment. Representatives for the plaintiffs did not immediately respond to a request for comment.
Gujarat High Court upholds rise in gas transmission charges
The Gujarat high court has lifted its stay on the Petroleum and Natural Gas Regulatory Board’s decision to hike gas transmission charges and ordered Torrent Power Ltd to pay the charges accordingly since 2012. A part payment was made by the power company, but with the revision of gas transmission tariff in December 2018, the HC stayed the recovery by the state owned Gujarat State Petronet Ltd (GSPL) as well as payment of increased rate for gas transportation. With the interim order by the HC upholding the Board’s decision to raise transmission charge to Rs 34 per Million British Thermal Units (MMBTU), the GSPL can recover the pending amount from Torrent and levy increased charges. GSPL’s advocate Aspi Kapadia said that the power company may pass over the burden to end consumer by raising electricity charges, but it will first have to obtain mandatory permission from the Gujarat Electricity Regulatory Commission to increase power tariff for consumers, though there could be a marginal rise in tariff. The HC has also lifted a stay on the Board’s tariff order with regard to South Gujarat Small Gas Consumers Association, which draws gas from GAIL (India) Ltd. Torrent has challenged the Board’s decision to increase gas transportation charges through its December 2018 tariff order by contending that the Board cannot raise charges at its whims, but this exercise can be done only through regulations.
Linde plans $1.4 bn Singapore expansion, signs Exxon supply deal
Industrial gases group Linde said on Tuesday it will spend $1.4 billion to boost its Singapore gasification facilities to support the planned expansion of Exxon Mobil Corp’s nearby integrated refining complex. The investment will enable Linde’s facility on Jurong Island to supply additional hydrogen and synthesis gas to Exxon’s Singapore refinery, the company said in a statement. Exxon’s expansion project, which is expected to come online in 2023, would convert fuel oil and other residual crude products into higher-value lube base stocks and distillates to help meet stricter emissions rules. The International Maritime Organisation (IMO) is introducing new rules on marine fuels from 2020, limiting the sulphur content to 0.5 percent from 3.5 percent, to curb pollution from ships. Linde’s project will include building and operating four additional gasifiers, a 1,200 metric tonne per day air separation plant and downstream gas processing units and sulphur recovery plants, the company said. When completed, Linde will also be able to supply hydrogen, carbon monoxide and synthesis gas to other customers on Jurong Island, it said. Construction is expected to begin in the second half of 2019, with start-up due in 2023. Linde Plc was created from the merger of Linde AG and rival Praxair.
Thailand’s PTT CEO: No rush to lock in new LNG purchase contracts
Thailand’s largest energy firm PTT Pcl is in no hurry to lock in new long-term liquefied natural gas (LNG) contracts as it monitors domestic gas output and the growth of renewables over the next 2-3 years, its chief executive said. The country is expected to become more reliant on LNG imports because of falling output in the Gulf of Thailand, but natural gas demand growth has slowed to about 1% or less in the past 3-4 years because of increases in solar power, said PTT President and Chief Executive Officer Chansin Treenuchagron. “Thailand is good in terms of power plan development and we have good alternative energy,” Chansin told Reuters on the sidelines of the Asia Oil and Gas Conference. Renewable energy sources are gaining ground as the cost of solar panels and wind turbines have dropped sharply, while climate change initiatives have also accelerated non-fossil fuel use. Thailand currently consumes 4.7 billion cubic feet per day of natural gas, of which 3 billion cubic feet is from domestic production, 1 billion cubic feet is piped from Myanmar and the rest is imported LNG, Chansin said. He expects natural gas demand growth in Thailand to hold steady at about 1% per year over the next five years. PTT won the rights last year to take over production and development of the country’s largest natural gas fields Erawat and Bongkot in the Gulf of Thailand from 2022-2023. Production from the two fields was forecast to fall by half to 1.5 billion cubic feet per day in the next 5-10 years as the government is keen to sustain output over a longer period, Chansin said. The gas fields are valuable to Thailand because they also produce condensate, an ultralight oil used for petrochemical production. “If production decreases in the Gulf of Thailand then we’ll increase (LNG) imports,” he said. PTT has long-term LNG purchase contracts for 5.2 million tonnes per year (tpy) with Qatargas, Shell, BP and Petronas, but is also looking to ensure demand levels before pursuing new ones, Chansin said. To prepare for more LNG imports, PTT is building a second 7.5 million tpy LNG terminal which will be completed in 2023, bringing its total LNG regasification capacity to 19 million tpy, he added.
India’s MRPL buys Upper Zakum crude in its 1st sour crude tender in 2019
Indian refiner MRPL has bought 1 million barrels of Upper Zakum crude in the first sour crude tender issued by the refiner this year, a source familiar with the matter said * The tender comes after India stopped lifting Iranian oil in May as Washington did not extend waivers from sanctions on Iran for Iranian oil buyers * MRPL bought the cargoes from Shell at $2.05 a barrel above Dubai quotes and they will load on Aug. 1-10, the source said
Northeast Asia’s LNG import demand growth declines on economic headwinds
Economic headwinds are limiting the appetite for liquefied natural gas (LNG) in Northeast Asia, home to the world’s biggest importers of the fuel, even as global supply is expected to rise by 14% this year. The growth in monthly import volumes of LNG into Northeast Asia during the first half of 2019 will decline for the first time since 2015, according to Reuters calculations based on Refinitiv ship tracking data. The region includes Japan, China, South Korea, which are the world’s three largest LNG importers, and Taiwan. Further underscoring the weaker demand, LNG imports into the region in June are set to fall from May, for the first time ever, according to Refinitiv data going back to 2013. Imports typically rise in June as gas demand increases to generate power for air conditioners during the Northern Hemisphere summer. This slowdown is occurring as additional volumes from Russia, the United States and Australia are expected to swell overall LNG supplies to 365 million tonnes by the end of the year, from about 320 million tonnes currently, according to consultancy Wood Mackenzie. The main driver of the slowdown is China, whose LNG imports for June look set to drop by 9% from May as the country’s coal-to-gas switching has moderated amid weaker economic growth. “Asian LNG demand this year so far has been dampened due to a range of factors including mild weather, high storage levels, and a lower policy emphasis on coal-to-gas switching in China,” said James Taverner of consultancy IHS Markit. “New export volumes look likely to come online faster than they can be absorbed in the Asian market.” While China’s long-term LNG demand is still set to grow, the rate will be slower compared with 2017 and 2018, said Wood Mackenzie analyst Nicholas Browne. This is due to factors including “uncertain industrial growth, regasification capacity constraints and the reduced pace of coal-to-gas switching,” he added. In South Korea, the start-up of three new nuclear power plants is expected to further curb LNG imports. Japanese LNG demand is expected to be relatively flat in 2019, though there may be some upside in the third quarter when some nuclear plants undergo maintenance, said Giles Farrer, research director, global LNG, at Wood Mackenzie. Overall, they forecast LNG demand in Japan, South Korea, and Taiwan next year to be 9 million tonnes below 2018. LNG demand has also been pressured by the rise of renewables in power generation, especially in Europe. LNG industry participants are meeting in Singapore this week for a conference where Asia’s demand growth will likely be a key topic of discussion. The global gas glut is expected to persist until at least next year, Bank of America Merrill Lynch’s global research team said last week. “The trade wars are taking their toll on global growth projections, which poses a downside risk to global gas demand and prices,” they said.
LPG tanker operators announce indefinite strike from July 1
The Southern Region Bulk LPG Transport Operators Association has announced that it would launch an indefinite strike from July 1. The strike is in response to failure of oil companies to renew job orders to all the bullet tankers under the association, said office-bearers of the organization. The Namakkal-based association has about 5,500 bullet tankers, which transport LPG from the refineries of three oil companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum — to bottling plants, across south India. “The companies renew their agreements with tanker operators once in five years and the last renewal was due on October 31, 2018. When they came forward for the talks, the association demanded that they give job orders for all the bullet tankers,” an office-bearer with the association said. “However, the oil companies did not renew agreements of 700 bullet tankers. Those tanker operators are facing huge loss for the past nine months,” P Kumaresan, a bullet tank operator said, adding, “the companies failed to deal with the issue.” So, all the LPG tanker operators have decided to take part in the indefinite strike at a general body meeting last week. The operators would not withdraw the strike till their demands were met, M Ponnambalam, president of the association, said.