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Page added on July 8, 2014
Chile to import US shale gas in 2015
Chile’s state oil company ENAP has signed long-term deal with British Gas to import shale gas from the United States at the end of next year, local media reported.
Shipments will leave from a U.S. port, Chilean Energy Minister Maximo Pacheco was quoted as saying on Monday in newspaper La Tercera’s Tuesday edition.
“Among the first gas shipments to leave from that port will be gas destined for Chile,” Pacheco said.
The deal’s volumes and prices were not revealed.
A press officer at the Energy Minister confirmed the information but did not give further details. ENAP declined to give details but said an announcement would be made next week. It was not possible to immediately contact British Gas, Britain’s largest energy supplier owned by utility Centrica .
A surge in shale gas production in the United States is transforming the global energy market. Once a regular liquefied natural gas (LNG) importer, the United States is now set to export significant volumes of LNG across the globe by the end of the decade, including to copper powerhouse Chile, which has long viewed gas as a way to alleviate a looming power crunch.
“Today, without a doubt, the most important revolution happening in the United States is the ‘Energy Revolution,'” Pachecho told paper El Mercurio.
Shipments are due to arrive to the Mejillones terminal, in the mining-intensive North, and Quintero, in the central region.
23 Comments on "Chile to import US shale gas in 2015"
rockman on Tue, 8th Jul 2014 2:42 pm
First, no “shale gas” will ever be exported to Chile. LNG might be exported…not shale gas. And from where: Trading firms have already signed tentative deals to export gas to Chile from a proposed export plant in Louisiana, which is expected online in 2018. And where will that LNG plant get the NG? From the regional NG gathering grid that collects all the NG in the Gulf Coast: shale gas as well as all conventional onshore and offshore NG production. Once the NG enters the system it loses its source identity.
No one on the planet could contract a 20+ year contract of LNG from a producer of shale gas because none of them can issue a financially backed guarantee to supply the volume for the context period. The only way to do so is to have supply contracts tied to the regional NG gathering grid. Which is why the first scheduled LNG exports by Cheniere are tied to the price of NG at the Henry Hub in S La. Henry Hub NG will be exported eventually…not shale gas.
“Once a…LNG importer”. The US is not only a net LNG importer today we are also a net NG importer: we consume more NG then we produce. The intentional(IMHO) deception is using “export” and not “net export”. I’ve seen no data to indicate any possibility of the US not continuing to be a net importer of NG. But that does not preclude the possibility of eventually exporting a significant volume of LNG. It just means that for every $ of new LNG export the US will have to import a $ of NG from somewhere else. Otherwise local demand would not be satisfied.
Pveroi on Tue, 8th Jul 2014 4:02 pm
What a crock. Canada still sends US 50 percent of its total LNG output.
“Local media” in this case is worthless, or worse.
Plantagenet on Tue, 8th Jul 2014 5:02 pm
I predict the next headline will assert the US is exporting its shale gas to Ukraine.
toolpush on Tue, 8th Jul 2014 5:46 pm
Pveroi,
Can you please advise me of the location of Canada’s LNG production plant please. I know they have an gassification plant on the east coast, which they have talked about converting to a LNG production plant?
Afaik the US only get pipeline gas from Canada, but I could be wrong.
bobinget on Tue, 8th Jul 2014 8:54 pm
Argentina, for example, passed laws last year allowing foreign companies to export 20 percent of their shale production tax free after the fifth year of development. Shale gas deposits in Argentina’s Vaca Muerta rock formation at the foot of the Andes are estimated to be among the largest in the world.
Nony on Tue, 8th Jul 2014 9:38 pm
Rockman: Look at a graph of net imports. They are much smaller than they were a year ago. EIA predicts net export by about 2016. The people who should be really concerned are Western Canadian gas producers. The mighty Marcellus is coming at Ontario. You heard it here. Berman 0, Marcellus 1. Woot, woot, woot!
toolpush on Tue, 8th Jul 2014 11:18 pm
Rockman,
I will have to disagree with you on this one. Everything is pointing to the US becoming a net exporter of Nat Gas in the next few years
http://www.eia.gov/naturalgas/importsexports/annual/
“Natural gas net imports fell by 14% to 1,311 Bcf in 2013, the lowest level since 1989.”
https://rbnenergy.com/south-eastbound-and-down-the-southeast-emerging-demand-epicenter-of-us-gas-industry
” By far the largest source of demand is LNG exports, increasing by about 6 Bcf/d”
Plus as pipelines get build and reversed in the North east and Mid West more Candain gas will be pushed back and Marcellus gas looks likely to be exported to Canada instead.
Everything seems to have been put onto the Marcellus. It is really going to be big and put all the other straight nat gas producers out of business, or someone is going to go OOPS!.
I am sure we will find out before the end of the decade.
Nony on Tue, 8th Jul 2014 11:33 pm
I love the Marcellus. 🙂
toolpush on Wed, 9th Jul 2014 1:49 am
Nony,
You had better hope the Marcellus, returns the love, because the US seems to be on a one trick pony.
The Marcellus seems to be the only place that can perform at the current Nat gas price, apart from the associated gas which you will always have.
Nony on Wed, 9th Jul 2014 4:15 am
It’s a big ‘un. 😉
rockman on Wed, 9th Jul 2014 9:38 am
Pusher – I don’t know if the US will or won’t be a net NG importer in the future. But I do know that the US is net NG importer today. And I also know how much NG we export or import in the future will depend on more then how much NG we produce. As the economy improves and if NG consumption increases at about the same rate as production we’ll have no excess NG to export…ever. And a portion of that increase in domestic NG consumption may involve more the economic growth: everyone here understands the govt’s effort to displace coal fired electricity generation with NG. We won’t have a “bridge to the future” using NG if we disassemble the bridge and ship it to China. LOL.
I’ll be very glad to continue this discussion the very day the US becomes a net NG exporter. Until that day my words stand…like a rock. LOL
Nony on Wed, 9th Jul 2014 2:18 pm
Rock:
Of course, we’ll see. Que serat, serat. Care to bet a bottle of Costa Sera on the outcome? I bet US is a net methane exporter for at least one year before 2020. You bet the con.
Nony on Wed, 9th Jul 2014 2:24 pm
http://www.platts.com/latest-news/natural-gas/washington/lng-growth-to-make-us-net-natural-gas-exporter-21054975
Barclay’s:
“The US will become a net exporter of natural gas by the first half of 2016, largely due to the expected rapid growth of the US liquefied natural gas export industry along with a boost in Mexican pipeline capacity and a drop in domestic demand for Canadian gas, analysts with Barclays Commodities Research said in a report Thursday.”
“Barclays’ 2016 estimate is a full two years ahead of the US Energy Information Administration’s estimate that the US will be a net exporter of natural gas beginning in 2018.”
“US natural gas imports have dropped 67% from their peak in 2007, with Canadian gas imports falling from 9 Bcf/d in 2001 to 5 Bcf/d in 2013 and imports of Canadian gas into the Northeast falling to historically low levels last year, Barclays said. With increased production in the Marcellus and Utica shales, the Northeast will likely become a net exporter by 2015 with US gas going to Canada’s eastern provinces and displacing Canadian imports in the Midwest.”
Barclays also estimates that gas exports to Mexico will climb from 2 Bcf/d in 2013 to 6 Bcf/d by the end of the decade as several pipeline expansions in that country “ramp up to full utilization.”
—–
Fear the mighty Marcellus. Watch it flex its muscles. Watch the 9 month inventory of drilled wells be completed. Watch it go up 3BCF/day each year. Watch the takeout capacity unleash more of the play. Watch it’s little brother, the Utica, start chipping in. Watch the Canadian gas get rammed back. Watch Art Berman keep saying “next year, next year” (has he changed his rap since 2009?)
rockman on Wed, 9th Jul 2014 2:53 pm
“Barclays also estimates that gas exports to Mexico will climb from 2 Bcf/d in 2013 to 6 Bcf/d by the end of the decade…”
So if the US doesn’t increase domestic NG production by that extra 1.5 TRILLION cubic feet per year and US NG demand doesn’t decline the US will have to import that 1.5 tcf from somewhere. Which isn’t as strange as it sounds: the US today is net NG importer which means we are currently importing from some other country (probably Canada) the 730 bcf/year we currently export to México.
Which for those who might get lost in the math this is why the US is a net NG importer. IOW the US doesn’t currently produce all the NG (and oil) it consumes. If that FACT changes in the future we can talk about then. But we are currently dealing with the present. Future expectations are fine but they don’t change the current dynamics effecting the price of oil/NG.
—–
Nony on Wed, 9th Jul 2014 3:14 pm
We have both imports and exports to Canada but are a net importer. We are both big countries and just because Toronto can use Marcellus gas, doesn’t mean Seattle can’t use Alberta gas. But the net impact is we use more from Canada then they do from us. But the trend is changing. See this graph. Kind of a matter of time. Of course trends don’t have to go forever…but that is where this one is heading.
See this graphic from the EIA to see what the trend is:
http://www.eia.gov/naturalgas/importsexports/annual/
That’s really not such a sizable amount of gas, Rock. It’s like 5% of total usage is imported right now…very different situation than crude oil import balance. And Marcellus is growing 3 BCF/year (more than double the “trade gap”). Of course most of that growth is at the expense of other fields (not just Canadian, but Haynesville, conventional, etc.). We are a close system right now. But when LNG exports kick in, that will change.
P.s. Opening up exports will naturally lead to a price increase, NA demand reduction and take some pressure off of Canadian cram-back gas. How much the price goes up is in question (a lot of people say “not much”)…but it will go up some. That is supply and demand 101.
Nony on Wed, 9th Jul 2014 3:16 pm
I may have made a math error. 1 TCF per year is like 3 BCF/day per year. In which case a year of Marcellus growth is about the size of the trade gap (not double it).
Nony on Wed, 9th Jul 2014 3:20 pm
From the EIA:
•Nearly all (97%) of U.S. natural gas imports arrived via pipeline from Canada, which decreased by 6% to 2,785 Bcf in 2013. The United States imported a minimal amount of gas via pipeline from Mexico. Pipeline imports from Canada have decreased almost every year since 2007. In 2013, pipeline imports from Canada into the eastern United States decreased the most, falling 12% from the previous year. Increased natural gas production from the Marcellus shale in the Northeast likely displaced natural gas imports from Canada. In contrast, natural gas imports from Canada in the western part of the United States remained relatively stable compared with levels in previous years.
•LNG imports decreased by 45% from the 2012 level to 97 Bcf in 2013, the lowest level since 1998. Even though U.S. natural gas prices increased in 2013, they remained unattractive compared with international LNG prices, which were two to four times higher than Henry Hub prices. LNG imports from Trinidad and Tobago and Yemen made up 83% of total LNG imports. LNG imports were lower from almost all trading partners, particularly from Qatar and Trinidad and Tobago, which decreased by 78% and 38% from the previous year’s level to 7 Bcf and 70 Bcf, respectively.
Nony on Wed, 9th Jul 2014 3:47 pm
Think the peakers need to be intellectually fair. If we had a trend of a net exporter getting closer and closer to being a net importer, than y’al would naturally expect the trend to continue. So when the reverse happens, you need to honor that trend. And the features like LNG capacity coming online, Marcellus growth…all support the trend continuing. Yeah, we can’t know the future to a mathematical certitude…but the EIA predictions are rational. And remember, they have a history of UNDER estimating the Marcellus. Not the converse.
Northwest Resident on Wed, 9th Jul 2014 3:58 pm
Nony — It sounds like you’re confident that Marcellus and other shale oil sources combined with increasing LNG capacity/production are going to provide a solid energy foundation for not only America but the rest of the world as far into the future as one might care to look. Correct? In other words, all those “peakers” are intellectually dishonest and don’t have a clue. The reality is, according to you, that shale oil is an adequate substitute for conventional oil decline with no down sides that can’t be compensated for. All we have to do is keep on fracking to meet our energy needs and keep BAU rolling happily along. Do I understand your point of view correctly?
Nony on Wed, 9th Jul 2014 4:13 pm
No. As usual, you make digital straw men.
I am more nuanced than that. I like to woot and cheerlead. But I also like to read both sides and make my mind up.
I think a quick thing to look at is price. NG price and 5 year futures is “good”. Oil price and 5 year futures is “bad”. So the shale oil and gas are not automatically the same. Peakers here should not treat them as same (peakers say both bad, cornies say both good).
You have to be eclectic man. Like I like Russel Wilson and hate the rest of the SeaChickens. 😉
Northwest Resident on Wed, 9th Jul 2014 4:27 pm
But Nony, how can the future be “good” for NG if the future for oil is “bad”?
Isn’t that kind of like saying the future for the Seahawks is “good” but the future for Russel Wilson is “bad”? I mean, how can the Seahawks be looking good in the future without Russel Wilson unless they find an adequate replacement for him? No adequate replacement for a bad-in-the-future Russel Wilson would equate to an equally bad future for the Seahawks, wouldn’t it? Same with oil/NG. Bad future for oil = bad future for NG, unless an adequate replacement for oil is discovered.
Or not?
Explain it to me and all the peak oil doomers who come here to get their daily dose of doom.
Nony on Wed, 9th Jul 2014 7:39 pm
you need to be able to look at data points for and against your theories, NR. Live in a nuanced world. Be open and inquisitive and willing to change your opinion with new data.
I believed Powell when he said Saddam had WMD. After the teams couldn’t find any…I changed my mind. I looked at die hards like Dick Cheney or the freepers who just HAD to believe in that to keep their spirits up as intellectual cowards.
Similarly, you need to get over your “any new oil has to be bad” and just READ the damned assays! That stuff is within a finger of WTI, the reference light, sweet, high quality oil!
Being at 100/bbl is NOT good. Rock is right on when he talks about the massive wealth transfer going to Arabia. 20 or 30 would be much more disco for the users. But it sure as heck ain’t the 200-500 that Cambell, Simmons, etc. predicted. And it ain’t the peak in 2005 with 2% drop (and devastation) that Deffeyes predicted. More like a yucky, middling Carteresque stagflation. Sort of middle ground.
Oh…and the shale gas IS disco. The Marcellus is rocking the house. No, Rock did not know all about the Marcellus. And no it was NOT just waiting for some price to open it up. That play is very competitive with all the other gas resources on the continent. Some of the sweet spots in there are competitive at a dollar/MCF (not all, some). And enough to grow it very fast is competitive at 3.75 (on-site pricing in east Ohio terminal).
You have to be able to look at both things and be fair and open. The trends AND official estimates by EIA, banks etc. do NOT predict US becoming a net crude exporter. Shale will fall short of that. I have to fess up and deal with that. The trends and estimates DO predict US will become a net methane exporter. You should deal with that.
Don’t be a peaker and only listen to things that fit your world view. That’s wrong when a freeper does it and wrong when a KOSer does it.
Nony on Wed, 9th Jul 2014 7:41 pm
Oh…and Russell belongs in DC. Give him back to us please. You can keep Sherman. Trent Williams will deal with him.