Wheres can this UPI article be found that everyone keeps referring to??
The Drudge report times out.
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Announcement from ERM has made my day. :)
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Global LNG Outlook 2020
Nick Prowse and Penny Cygan-Jones, Norton Rose Fulbright, UK, take a look at what’s on the horizon for the year ahead.
2019 has seen the start of a re-shaping of the LNG industry, with the promise of further changes in 2020 and beyond. As well as new import and export countries entering the market, the year has been marked by the development of mega-liquefaction projects, particularly in the US, Russia and Qatar. Developments in technology are opening up previously stranded reserves and there have been significant moves towards the commoditisation of LNG.
In this article, Norton Rose Fulbright takes a closer look at how some of these themes are playing out in different regions.
The US
The US has gone from being an importer of LNG to being one of the largest exporters in a very short time, with plans to double its production again. There are currently nine LNG trains operating and producing LNG, plus Kinder Morgan’s Elba Island liquefaction project placed its first train in commercial service in October (although as of the time of writing no commissioning cargo has been loaded and shipped).
All of these projects were designed to take advantage of the ‘great shale revolution’ in the US and the corresponding upheaval in the supply and demand dynamics of the domestic natural gas market. Consequently, the US has already become the fourth largest LNG supplier globally (behind Qatar, Australia and Malaysia) and, by adding 8.2 million t of LNG to global supply in 2018, it is second only to Australia as the largest driver of supply growth.
Furthermore, as these ‘first wave’ projects emerge from the development and construction phase to become operational, the ‘second wave’ is becoming a reality with four more projects making firm progress.
The emergence of US LNG exports has likely been the most significant development affecting the global LNG trade over the last few years. The de-coupling of LNG and crude oil with the introduction of Cheniere’s Henry Hub-based pricing formula, combined with the elimination of ‘destination clauses’ (removing restrictions on cargo destinations and allowing diversions) from US LNG sale and purchase agreements (SPAs) has contributed to accelerated growth and liberalisation of the global LNG trade, including in the spot market, which accounted for 31% of total global LNG trade in 2018.
Alongside this significant growth in the physical trading and delivery of LNG on a spot basis, the industry is seeing an increase in the development and volume of financial trading of LNG, largely in the form of futures contracts. LNG futures contracts have been around for a few years, but meaningful penetration and growth in trading volumes emerged only in 2017/2018.4
One of the key issues hindering the development of LNG as a global commodity has been the lack of physical trading hubs in different regions. While natural gas trades and physically settles at the Henry Hub (and other points) in the US, the National Balancing Point (NBP) in the UK, or the Title Transfer Facility (TTF) in the Netherlands, a true physical trading hub in LNG has yet to develop and emerge in a meaningful way, despite the efforts of initial contenders, such as Singapore, to develop a liquid financial derivatives trading market for LNG with its SGX LNG Index Group spot price index (which ceased publication on 31 October 2019), and leading importing countries, such as China and Japan. However, on 14 October, CME Group published its new LNG futures contract – the ‘Gulf Coast LNG Export Futures’.
According to CME, this new contract is the first-ever physically delivered LNG contract, which is listed with and subject to the rules and regulations of NYMEX. The Gulf Coast LNG Export Futures contract applies to all LNG bought or sold for future delivery on NYMEX with delivery at Cheniere’s Sabine Pass LNG terminal facility (CME Group also reported that the Freeport LNG terminal and additional facilities will be included as loading ports in future delivery months). The publication of this contract is certainly an important milestone in the development of a physical LNG trading hub, though its practical implementation and effect on the global LNG industry remain to be seen.
As further evidence of the development of LNG as a commodity in the global marketplace, Freeport LNG announced that it will operate the first ever ‘virtual’ LNG store-front in Redwood Marketplace – an online commodity trading platform that will enable bilateral negotiation and confirmation of commercial terms between buyers and sellers.
The US Geological Survey (via the Department of the Interior) reported in October 2019 that the Marcellus and Utica shale basins hold an estimated 214 trillion ft³ of ‘undiscovered technically recoverable’ natural gas. If this is correct, there is ample reason to conclude that production of US LNG will continue to grow and increase market share for the foreseeable future.
References
- AYALI, N., Partner, and MAJEED, K., Associate, Norton Rose Fulbright US LLP.
- Five trains at Cheniere’s Sabine Pass LNG; two trains at Cheniere’s Corpus Christi LNG; one train at Sempra’s Cameron LNG; and one train at Dominion’s Cove Point.
- International Gas Union 2019 World LNG Report
- CME Group, ‘Monthly Exchange Volume Report’ (November 2019).
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1.19 Gigawatts Of Solar Power For The Land Of The Gigafactory
When plans for new solar power development start piling up in gigawatts instead of megawatts, it’s time for natural gas stakeholders to start worrying. That’s the case in Nevada, where natural gas still maintains a tight grip on electricity generation but solar power is coming on strong.
NV Energy is upping its solar power game in Nevada (photo: solar array at Nellis Air Force Base via USAF).
More Solar Power For Nevada, Less Coal
Nevada has an advantage when the topic turns to renewable energy from the sun. It ranks high among US states for solar potential, and it is living up to its standing. Nevada currently holds the 4th highest slot in the US for installed solar capacity (up from 5th place last year), with a hair over 3.5 gigawatts.
The latest news about solar power in Nevada concerns NV Energy. The company has just won approval for a plan to add 1.19 more gigawatts of solar power to the state’s renewable energy profile.
The firm has had its ups and downs with solar advocates and environmental organizations over its solar power policies, but the new announcement is a big step forward for the renewable energy transition.
The new solar additions will replace two coal power plants scheduled for shutdown. Last December, the state’s Pubic Utilities Commission approved a plan for NV Energy to retire one of the plants four years ahead of its former schedule, in 2021. The other plant will close in 2013, pending approval.
The two coal plants, North Valmy units 1 and 2, have a combined capacity of 522 megawatts. They are the last two utility-owned coal power plants in Nevada.
More Solar, Less Gas
Coal is falling into the dustbin of history for power generation in the US. Natural gas is the next domino to fall, but that’s going to be a tough row to hoe, especially in Nevada.
As of 2017, 70% of the state’s electricity generation came from natural gas, and as of last December NV Energy was leaving open the option of converting North Valmey Unit 2 to natural gas.
That idea seems to be fading away, though. Last spring Nevada Governor Steve Sisolak signed a new state law that required energy companies to get their portfolio up to the 50% mark for renewables by 2030.
The 1.19 gigawatts in new solar capacity will be spread among three projects in southern Nevada, near the Las Vegas area. Here’s the rundown from NV Energy (condensed for an easy read):
Arrow Canyon Solar Project — 200 megawatts, located in Clark County, 20 miles northeast of Las Vegas on the Moapa Band of Paiutes Indian Reservation, developed by EDF Renewables North America.
Southern Bighorn Solar & Storage Center — 300 megawatts, also located in Clark County on the Moapa River Indian Reservation, developed by 8minute Solar Energy.
Gemini Solar + Battery Storage Project — 690 megawatts, also located in Clark County, on 7,100 acres of federally-owned land under the management of the Bureau of Land Management, developed by Quinbrook Infrastructure Partners in collaboration with Arevia Power.
What About Energy Storage?
All three projects include a copious amount of energy storage, including the Arrow Canyon project.
That’s what should really set gas stakeholders’ hair on fire. At utility scale, the solar-plus-storage trend is beginning to nudge into the natural gas space for 24/7 electricity delivery.
That’s where things get interesting. In reaching the decision to achieve the three new solar power projects, Nevada PUC relied on analysis by The Brattle Group.
Brattle just broadcast its finding to the rest of the world yesterday. The company ran down the factors supporting solar-plus-storage in Nevada and came up with this list:
1. Demand for firmed solar generation as a capacity resource (and growing reluctance to contract for new gas capacity) is evidenced by recent utility procurements.
2. Efficiencies of co-location reduce costs and increase revenues of solar-plus-storage investments.
3. Declining costs of both solar and storage make the hybrid resources increasingly competitive with other resources.
4. The Federal Investment Tax Credit (ITC) provides up to a 30% reduction in storage costs, if paired with solar.
5. State solar and storage mandates prioritize deployment of those resources, reflecting priorities of policymakers and regulators.That’s not all. Brattle found that co-location is not the only pathway for increasing the interplay between solar power and energy storage. Standalone energy storage projects are beginning to compete with solar-plus-storage hybrids on cost, providing energy stakeholders with more options for siting storage projects.
CleanTechnica is curious about the competition between the standalone and the hybrid approach, so we’re reaching out to Brattle for its insights. Stay tuned.
No Country For Old Fuel
Meanwhile, gas is also facing pressure from the building electrification trend, which has built up a good head of steam over the past couple of years.
Electricity advocates are pushing for older buildings to switch from natural gas to clean kilowatts for heating, cooling, cooking, and other uses. Meanwhile, several US cities are considering bans on gas hookups in new construction.
Berkeley, California, has already taken the leap into banning new gas hookups. According to a report last summer in S&P Global, oil and gas stakeholders in the region are already concerned that the gas-to-electricity movement could spill over into Nevada and elsewhere.
Hold on to your hats!
GLTAH - esp the "Ladies in Lake Charles" & PP
Stay Cool
Cheers
Frank
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