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TRANSPORTATION — Quick Takes
US LNG exports to have little effect on Europe
LNG exports from the US—if and when they happen—based on surplus natural gas from shale development will have little if any effect on the European gas supply scene. That's according to E.On Energy Trading Chairman Klaus Schafer in comments to Oil & Gas Journal made on the final day of the 20th World Petroleum Congress in Doha.
The immediate effect of shale gas development in the US, said, Schafer, was to divert LNG shipments away from the new and growing import capacity there. That effect has been absorbed by the markets, he said.
Shale gas development in the US has certainly been a "game-changer," he said in both private remarks and those in his speech to the congress. But in Europe, he said the effect will be less drastic and develop more slowly.
"Natural gas is currently at a price disadvantage to coal in Europe," he said. Couple that with the likely demand-depressing effects of the ongoing financial crisis and the slow recovery from the 2007-08 global financial collapse, Europe is unlikely to attract much US-produced LNG, no matter how much or how little liquefaction eventually gets built there.
Plains to convert Oklahoma LPG line to oil service
Plains All American Pipeline LP is converting an existing Oklahoma liquefied petroleum gas pipeline to crude oil service. The pipeline, which extends from Medford, Okla., to PAA's oil terminal in Cushing, will provide initial throughput of 12,000 b/d of oil by January 2012 and will be expanded to 25,000 b/d by July 2012.
The converted line will serve the Mississippian Lime formation in northern Oklahoma and southern Kansas.
PAA announced plans to expand crude takeaway capacity from its Bone Spring play in the Delaware basin of West Texas earlier this year (OGJ Online, June 17, 2011).
The company also agreed earlier this month to acquire BP PLC's Canadian NGL and LPG business (OGJ Online, Dec. 5, 2011).
TexStar launches open season for Eagle Ford line
TexStar Midstream Services has launched a binding open season for its TexStar Crude Oil Pipeline LP, transporting Eagle Ford shale crude oil and condensate from various points in Frio, LaSalle, McMullen, and Live Oak counties, Tex., to NuStar's North Beach Terminal in Corpus Christi.
TexStar is building and will operate a 110-mile, 12- and 8-in. OD pipeline capable of moving 100,000 b/d to Oakville, Tex., where TexStar plans to lease a portion of NuStar Logistics LP's 16-in. OD pipeline for transit to the terminal (OGJ Online, Apr. 19, 2011). NuStar will also build truck-loading facilities along the pipeline, with storage as necessary.
The North Beach Terminal has roughly 2 million bbl of storage and will be capable of loading ocean going barges and ships. NuStar is also adding about 1 million bbl of new tankage.
TexStar expects the system to enter service by third-quarter 2012, pending sufficient commercial interest and regulatory approvals. NuStar also reached agreement with Velocity Midstream Partners earlier this year for transport of Velocity's Eagle Ford production to North Beach Terminal (OGJ Online, June 27, 2011).
GAIL India signs 20-year LNG deal with Cheniere
GAIL (India) Ltd. signed a 20-year sales and purchase agreement (SPA) with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners, for the supply of 3.5 million tonnes/year of LNG.
"The SPA with Cheniere will help GAIL to ensure long-term gas supply for the growing demand in the Indian market," said GAIL Chairman and Managing Director B.C. Tripathi, who added that his firm seeks more US shale gas assets.
Under the SPA, GAIL said it will pay Sabine "as per contractual provisions on a Henry Hub basis after transfer of custody on fob. LNG will be loaded onto GAIL's vessels."
The SPA has a term of 20 years starting from the date of first commercial delivery, and a 10-year extension option. LNG deliveries are to occur upon commencement of operations of train four in 2017, but bridging supplies of LNG will start from Sabine's train two in 2016. Last month, Gas Natural Fenosa entered into a deal with Cheniere Energy to buy 3.5 million tpy of LNG the company's Sabine Pass facility by 2016, paying Cheniere $454 million a year for use of the terminal.
In October, Cheniere signed a 20-year agreement to supply BG Group with LNG from US shale gas, aiming to export 3.5 million tpy of LNG from the Sabine Pass terminal, at a cost of 115% the US price plus $2.15/MMbtu.
The Sabine Pass LNG terminal project is being developed by Sabine Liquefaction and would include up to four liquefaction trains capable of producing up to 18 million tpy of LNG.
Cheniere Partners owns 100% of the Sabine Pass LNG receiving terminal on the Sabine Pass Channel in western Cameron Parish, La. The Sabine Pass terminal has regasification and sendout capacity of 4 bcfd and storage capacity of 16.9 bcf of gas equivalent.
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