[ROCKMAN]

E-R: An Olympic size swimming pool holds 660,000 gallons of water. 1000 bbls oil = 42,000 gallons. So 1,000 bbls per second = filling one pool in about 15 seconds. If that's too big a reference frame think small: 1,000 bbls/sec = 42,000 one gallon milk cartons per second...or about 150 million milk cartons in an hour. Or if you're sitting in 15' X 15' room with an 8' ceiling in would fill a little more the 3 of them in one second. Or more simply a cube measuring 20' X 20' X 20' every second. One bbl is about 7 cubic feet.

[ROCKMAN]

The thoughts of one Reuters' analyst on the potential movement of a very large volume of hydrocarbons: LONDON, May 19 (Reuters) - "China is our reliable friend," Russian President Vladimir Putin said on Monday in an interview ahead of a conference in Shanghai. "To expand cooperation with China is undoubtedly Russia's diplomatic priority." Most evaluations of the bilateral relationship begin by reciting the historical border disputes, rift between Mao Zedong and Nikita Khrushchev, opening to China by Richard Nixon, and the perennial problem of reaching an agreement on gas pricing. But these are all essentially backward looking and ignore the growing community of interests between the two countries. The case for a closer bilateral relationship on energy, trade, security and diplomatic issues is compelling.

In the energy sphere, the two countries are an almost perfect match: the world's largest net energy exporter and its second-largest net energy importer (2011) with a long land border. China is already Russia's largest single trading partner, with bilateral trade flows of $90 billion in 2013, and the two neighbours aim to double the volume to $200 billion by the end of the decade, according to Xinhua, China's official news agency. The Obama administration's strategic pivot towards Asia and shifts in the energy market are pushing China and Russia closer together as both react to fears of encirclement and energy security.

[toolpush]

Fracking is dangerous!

I always thought fracking must have been dangerous as everybody from those that don't know anything to those that have heir own agenda have always told me so. But I didn't realise how dangerous it is, but Wikipedia has all the answers.

http://en.wikipedia.org/wiki/Hydraulic_fracturing

$this->bbcode_second_pass_quote('', 'S')ocial impact[edit]
One study has linked shale gas operations to increased risks in public health and safety. A study in rural Pennsylvania found hydraulic fracturing to be associated with increases in heavy truck crashes, social disorder arrests and cases of sexually transmitted infections. In counties in rural Pennsylvania with at least one well per fifteen square miles, heavy truck crashes rose 7.2 percent. Additionally the study determined that in rural counties with heavy hydraulic fracturing operations disorderly conduct arrests rose by 17.1% while in rural counties without hydraulic fracturing operations the arrests only increased by 12.7%. Furthermore the study found that following hydraulic fracturing, the average rise in chlamydia and gonorrhea cases was 62% higher in rural counties with heavy hydraulic fracturing operations than in rural counties without these operations. It is likely that the increased rate of truck crashes, social disorder arrests and cases of sexually transmitted infections will increase public health costs in a community, but additional research is needed to fully understand the public health and safety impacts of hydraulic fracturing.[97][citation needed]

[ROCKMAN]

And now Chile wants to move more of its share of LNG from the market place: Reuters - President Michelle Bachelet said on Thursday that Chile would build a new liquefied natural gas (LNG) terminal and strengthen the state-run oil company as she set out her $650 million energy policy that seeks to deal with a mounting power crunch. An LNG terminal would be built in the central-south region of the mining powerhouse, she announced. It would be Chile's third, alongside the already running Mejillones in the mineral-rich north and centrally-located Quintero, which is set to also be expanded. Power projects in Chile have increasingly faced strong public opposition on health and environmental grounds, often winding up entangled in regulatory limbo. Center-left Bachelet, who took power in March, has spoken in favor of gas as part of a quick, substantial and environmentally acceptable solution to the stalemate. She is also keen to expand the use of renewable energy. The push towards LNG has been further bolstered by a surge in shale gas production in the United States that is transforming the global energy market.

[And one more example of an incompetent writer unable to do a 30 second web search that shows that despite US shale drilling the US is still a net NG importer which puts upwards pressure on prices instead of lowering it.]

But experts warn that LNG is no silver bullet, and much depends on whether its price falls well below that of coal. The government estimates that its energy drive will help add a little over 6,000 megawatts to Chile's current matrix of roughly 18,000 megawatts by 2025. Like many of its emerging market peers, Chile is struggling to strike a balance between its power-hungry mining industry and the environment.

[ROCKMAN]

And some more bad news for Europe about the movement of LNG...or in this case the lack of movement: Reuters - BG Group does not expect more than one or two LNG cargoes to Brtain out of Egypt this year. BG does not expect to make any significant progress in its talks with Egypt on higher prices for gas which Egypt is diverting to its domestic market before presidential and parliamentary elections later this year. Gas is in short supply in Egypt due to declining domestic production, forcing the government to cut into LNG earmarked for export.

Egypt was the largest LNG supplier to the US just several years ago but has dropped to virtually zero. Perhaps the folks who just got US gov't approval to import 180 bcf/year into Maine will source that LNG from countries that are currently supplying Europe...let the bidding begin. BTW Israel has been negotiating with Egypt to use their idle LNG plant to export some of their new and huge offshore NG discovery. I wonder who will get the Jewish NG: the EU or their one major supporter...the USA? Who loves you, baby? Time will tell.

[ROCKMAN]

Thank Dog...finally a solution to the Russian strangle hold on the EU NG supplies. And best yet it doesn't involve shipping the EU excess US NG...which the US doesn't have in the first place. The EU countries cab contract all this ExxonMobil LNG under long term contracts. All they need do is offer better price for it than the Japanese:

Reuters - ExxonMobil's Papua New Guinea gas liquefaction plant is expected to export around 20 cargoes during the project's start-up phase lasting until September. The rapid export rate from the new plant was completed slightly ahead of schedule. Exxon will sell the bulk of its output to buyers such as Japan's Tokyo Electric Power and Osaka Gas. It's going to be exporting around four to five cargoes per month over this period, but most of that will go to long-term buyers. Traders expect Exxon, however, to offer two to three cargoes on the spot market for July loading as early as this week.

[ROCKMAN]

Heck...even more good news for the EU: lots of LNG available to the right now!!!

Reuters - Korea Gas Corp. is looking to sell 20 to 40 cargoes of LNG this summer after misjudging the scale of its demand and committing to buy excessive supply. State-run Kogas, faced with an over-supply it is unable to absorb, is seeking to offload cargoes. This strategy may be difficult to realize as major Asian importers are already fully stocked and prices are falling rapidly due to weak demand. In which case, they will need to try and reduce off take in the third quarter under long-term deals, but it may already be too late to do that fully. They tied up too many deliveries options from various locations under the assumption that not all of it would arrive, but it seems that every last drop is now coming their way. Spot LNG prices for July have fallen to around $13.60 per mmBtu in Asia, compared with levels of around $19 per mmBtu earlier this year.

At this rate the EU could be choking on NG in a month or so. LOL.

[sparky]

.
The big news of the year , the long delayed gas contract between Russia and China is signed after all !
everybody though it would happen , then Prez Putin called it off
then it was on again .
the sticking point was the price and the upfront deposit , Chinese are ruthless negotiators
but they need the gas for their hinterland , an East Siberian pipeline is perfect
Russia want to strengthen their Eastern option to cut 28% of their unpaid exports going to Ukraine

http://uk.reuters.com/article/2014/05/2 ... S320140521

the deal is probably a Byzantine construct of several agreements
the big secret is the base price

Some other deals were signed

1. Russia's Gazprom and China's CNPC signed a historic gas deal worth $400 billion, which will provide the world's fastest growing economy with the natural gas it needs to expand over the next 30 years.

2. The Russian United Aircraft Corporation and China's Commercial Aircraft Corporation COMAC have confirmed plans to build a 400-seat, wide-body, long-range passenger aircraft, a potential rival to Boeing of the US, and Europe's Airbus. The new program aims to become one of the biggest large-scale international cooperation projects in both aviation and high-tech.

3. Russia’s biggest independent natural gas company NOVATEK signed a deal to supply China's CNPC with 3 million tons of liquefied natural gas annually for 20 years from their joint Yamal LNG project in the Russian north. The plans for the Yamal LNG project involve building a plant that can produce 16.5 million tons of LNG annually by 2020. It is slated to start production in 2017 with an initial output of 5.5 million tons of LNG per year.

4. Russia’s second biggest financial institution, VTB, signed a deal with Bank of China to bypass the dollar and pay each other in domestic currencies.

the number 3 imply less gas for Europe from the existing Yamal terminal
it would suggest a polar route to be used , else it hardly make commercial sense
the number 4 on the list is noteworthy

[ROCKMAN]

Sparky - IMHO that Yamal LNG deal was a big cherry. It's a much shorter sail from Yamal to the EU than China. The French company Total owns a big chunk of the Yamal project (which includes building 16 ice breaker LNG tankers) and I would think they would try to steer those reserves towards their EU brethren. And I also suspect that when the EU runs short of NG during a harsh winter the Chinese might be glad to redirect some ships to the EU and get spot prices which would be 2 to 3 times what they'll have to pay the Russians.

[ROCKMAN]

An interesting new wrinkle in oil movement by rail in the US: trains are starting to come to Texas. Apparently all the various opposition to oil pipelines has had the unanticipated consequences of increasing this less safe method:

The increase in crude oil production in the U.S. and Texas has created issues in the transportation and refining sectors of the oil industry. Crude oil traditionally has been transported by truck and a network of sophisticated pipelines in Texas. However, many crude oil acquisition companies are exploring rail to get large amounts of crude to refineries. On May 19, a large train with more than 100 cars designed to carry crude oil traveled through North Texas, which is very unusual. A majority of the trains traveling parallel to U.S. 287 from Wichita Falls to Fort Worth are transporting coal produced in Wyoming to power plants in South Texas.

This article didn't mention where the oil came from but I tracked it own: Colorado. It was offloaded to a barge on an east Texas river and hauled to a coastal refinery. Once again it's been foolish IMHO for anyone to believe that throwing up some relatively minor obstacles would interrupt many $trillions in commerce.

[ROCKMAN]

And this is about the potential movement of "our NG" to Asia. And not only is the US a net importer of NG and LNG (we only produce 93% of the NG we consume) but Canada supplies more than 90% of our NG imports. At least for now.

Reuters - Malaysia's Petronas has proven up about half of the 15 tcf target for Canadian gas reserves it needs to make a final investment decision on its $32.9 billion (C$36 billion) natural gas export project, Chief Executive Shamsul Azhar Abbas said on Wednesday. The state-owned oil company plans to drill aggressively through the summer to further prove out its reserves in Western Canada ahead of a final go or no-go decision, anticipated by year-end, on a gas field, pipeline and liquefied natural gas (LNG) export terminal development. "To date, I am pleased to report that we have already proven approximately 50 percent of our 15 tcf target to reach final investment decision," Shamsul said at an industry conference in Vancouver. He added that the company plans to have 25 to 30 rigs running throughout the summer on its gas fields in northern British Columbia and Alberta. Petronas dove into the Canadian natural gas space in 2012 with its C$5.2 billion takeover of Progress Energy Resources and is now racing to develop its Pacific North West LNG project near Prince Rupert in northern British Columbia. The project is just one of about a dozen LNG export terminals proposed for the province's rugged Pacific coast, as energy companies from around the world scramble to build the facilities to export cheap Canadian gas to Asian markets. Petronas has vaulted ahead of its rivals, aiming to start construction on the massive development next year, with first shipments in 2019. "The window to approve, build and deliver the first cargo is short and very tight considering the competition out there," Shamsul said.

[ROCKMAN]

At first it looked like Iraq was getting some international traction with their complaint over the Kurd oil. But thumbing thru the International Chamber of Commerce web site they don't appear to have the authority to fix a traffic ticket: "...the delegates are business executives..."

Reuters - The Iraqi government filed a request on Friday for arbitration against Turkey and pipeline firm BOTAS with the Paris-based International Chamber of Commerce over the selling of oil from Iraq's semi-autonomous Kurdistan region. "The Ministry of Oil of the Republic of Iraq announced today that it has filed a request for arbitration against the Republic of Turkey and its state-owned pipeline operator BOTAS," the government said in a statement. Iraq said it was seeking to stop the "unauthorized transportation, storage and loading of crude oil pumped into the Iraq-Turkey pipeline by the Kurdistan Regional Government (KRG)". European markets bought the first load of oil to be carried by pipeline from Iraqi Kurdistan, the KRG said in a statement earlier on Friday, adding that the revenue will be deposited in Turkey's Halkbank .

World Council ICC’s supreme governing body, the World Council is the equivalent of the general assembly of a major intergovernmental organization. In this case however, the delegates are business executives and not government officials. Chairmanship and Secretary General The Chairman, his/her immediate predecessor and the Vice-Chairman form the Chairmanship. ICC’s Secretary General, appointed by the World Council, heads the International Secretariat and works closely with national committees to carry out ICC's work programme. - See more at: http://www.iccwbo.org/about-icc/governa ... eWqe8.dpuf

[ROCKMAN]

OK let's look at the potential movement of NG out of the US. According to the EIA from 2011 thru 2013 US NG production increased from 24.04 tcf/yr to 25.62 tcf/yr. Or 6.6%. During the same period US NG consumption increased from 24.48 tcf/yr to 26.03 tcf/yr. Or 6.3%. Or in 2011 US NG production supplied 98.20% of US NG consumption. In 2013 US NG production supplied 98.42% of US NG consumption. So in three years the "surge" in production from the shales increased the amount of NG 0.22% or about 0.07%/yr. So at the current rapid rate of domestic NG production it will take only take about 22 years for the US to become sell sufficient in NG. So if the increased rates of consumption and production remain the same the US can start exporting EXCESS NG in a couple of decades. Like in the form of LNG to our EU cousins. Of course, any increase in LNG we export before 2038 (we currently import 7X as much LNG as we export) will have to be relaxed by an increase in imported NG to keep domestic consumption requirements static.

Thank Dog we've had this great surge in domestic NG production so we can help out the EU...eventually.

[ROCKMAN]

And now a bit about the politics involving the movement of PA coal to Germany. In absolute volumes not a huge deal but goes a long way to explain the overall support of gov't officials for exporting our coal resources despite the DC rhetoric about saving us from GHG:

In the 1960s and 70s, powerful Democrat Daniel Flood worked to find a federal government buyer for the anthracite coal mined in his district. He succeeded: Some five decades later, the heat coming off the radiators at the U.S. military's installation at Kaiserslautern, Germany, is still generated by burning Pennsylvania anthracite. Each year, the coal is dug from century-old mines in these hills and valleys, loaded onto rail cars and sent to an East Coast port, typically Baltimore. There, it's loaded onto a bulk carrier for the trans-Atlantic journey to Rotterdam in the Netherlands. Then a barge takes the coal down the Rhine River and delivers it to the village of Rhinau, France, says Uschi Hoermann, a civilian contracting officer for the Air Force in Germany. Kaiserslautern has a storage area there, she says, and "they pick up the coal as they need it."

Yet Germany's environmental policy is to shift away from coal — which produces twice as much carbon dioxide as natural gas does for the same amount of energy. Even setting that aside, there is plenty of anthracite to be found on the European market — at a fraction of the price of American anthracite, after factoring in the shipping costs. So why haul Pennsylvania coal all the way to Germany? Hoermann points to a $20-million-a-year contract which requires it. And the contract requires it because, year after year, Congress has inserted into defense appropriations bills a requirement that the heating of the military bases at Kaiserslautern be done with "United States anthracite."

[Synapsid]

ROCKMAN,

Thanks for this. I'd asked a couple of weeks ago if that anthracite/DOD connection was still active.

I'd expect that anthracite yields lower CO2 emissions per BTU when burned than the bituminous that is most of the coal produced in the US, except in backward lignite areas such as parts of Tex...oops. A small silver lining of sorts.

[ROCKMAN]

Syn - "except in backward lignite areas such as parts of Tex...oops". Hey, bubba, that's MAJOR backward lignite areas to you. LOL. But we still get less of our electricity from burning the nasty the rest of the county: Electrical energy from the use of coal as a fuel provides over half of the electricity generated in the United States and over 37% in Texas. And we also produce as much wind e- as the #2 and #3 states combined.

But we have a lot of it: Texas is the 5th largest producer of coal in the United States but the largest consuming state. Coal reserves in Texas amount to some 23 billion tons, of which 10 billion tons are economically recoverable. And we burn about 40 million tons/yr...a 250 year supply at current economics. But we are evolving: they are laying a $400 million pipeline to transport the nasties from the second largest source of GHG in the US to a depleted oil field where it will be sequestered. So as usual Texas does things (both good and bad) bigger than anyone else. LOL.

[ROCKMAN]

Another indication of why the gov't ban on oil exports isn't really a big issue. What the following article doesn't explain is how they aren't encumbered by the export ban. They aren't exporting EFS oil but refined products produced from the EFS. But "refined product" is a bit of a stretch: they just do a light partial crack that's just enough to qualify. That's the "splitter" they mention below. Refiners like Valero just did some cheap modifications to their systems to allow this backdoor method. The big increase in US production has come from the EFS and Bakken so while the total amount of liquid hydrocarbon is still relatively small but is disproportionally represented by the shale play. And besides the trick with the EFS the gov't has granted more than 70 exceptions to the ban mostly focused on the Bakken. And on top of these exceptions about 3 millions bbls of oil is refined in the US with the products exported over seas. If one were to take refined products as proxies for oil the US has increased exports of liquid hydrocarbons from just 1 million bbls/day 2005 to over 3.6 million bbls/ now. IOW the US is currently the third largest exporter of liquid hydrocarbons on the planet behind Russia and Saudi Arabia.

Ban? What ban? LOL. Just one more delusion perpetuated by politicians to convince the average US consumer that the gov't is looking out for them.

Reuters - Global trader Trafigura AG is seeking potential investors to buy a stake in its oil terminal and storage facility in Corpus Christi, Texas, a once-quiet port that has become a bustling hub for shipping Eagle Ford shale crude. Trafigura bought Texas Dock & Rail in early 2012, just as Eagle Ford production was emerging as the next big U.S. shale play after North Dakota's Bakken. It has since built the facility, once home to a failed steel plant, into a major gateway for shipping rapidly growing U.S. oil production as far as Canada, with two deepwater tanker berths and an expanding suite of logistical assets. Energy Transfer Partners is expected this year to start up a converted natural gas pipeline system to ship oil and condensate from Eagle Ford to the Trafigura terminal. Trafigura is also partnering with Magellan Midstream Partners LP, which is building a condensate splitter at the port. "Trafigura AG confirms it is exploring strategic options with potential third-party investors in its dock and storage facilities in Corpus Christi, Texas," the company said in a statement. It said a final deal could not be assured.

[Synapsid]

ROCKMAN,

I stand corrected.

Gosh, and I do try so hard to be accurate on the important points.

[ROCKMAN]

Syn - The big issue with Texas lignite has been the battle between it and the EPA. About a year ago the feds said thy would stop negotiating and let the courts decide. And the SCOTUS just did:

From 29 April: The state of Texas, which has fought the federal government over several environmental regulations, lost a major battle Tuesday, as U.S. Supreme Court justices ruled in a 6-2 vote to reinstate a regulation that aims to limit the effects of air pollution across state boundaries. Texas was one of a number of states, joined by industry and labor groups, that had sued the Environmental Protection Agency over the Cross-State Pollution Rule in 2011. Tuesday’s Supreme Court ruling means that Texas and 26 other "upwind" states in the South, Midwest and Appalachia will have to reduce some of their emissions that contribute to air pollution in East Coast states like New York. Coal plants are among those likely be the most affected, particularly as they are already dealing with new limits on their carbon dioxide emissions. He added that the EPA, whose attempts to regulate cross-state air pollution date back to the Clinton administration, has gained some clarity. Nearly 15 years of legal challenges to such rules are now over; the only way they could change now is if a presidential administration orders the EPA to go in a different direction.

Texas Commission on Environmental Quality spokesman Terry Clawson said the agency is disappointed with the ruling. But, he added, “we’re encouraged that the court clearly acknowledged … the complexity of the interstate transport problem.” In their legal challenge of the rule, industry and labor groups had argued that the EPA's consideration of cost-effectiveness in deciding how states should limit their emissions was unfair. Texas added that the agency had not given states enough time or guidance to follow the new regulations. The D.C. Circuit Court of Appeals had agreed and ordered the EPA to go back to the drawing board. But the Supreme Court reversed the court’s decision and dismissed both complaints, calling the agency's use of cost-effectiveness "permissible, workable, and equitable." Justice Ruth Bader Ginsburg, writing for the majority, added that nothing in the Clean Air Act requires the EPA to give the extra guidance or time that Texas had insisted was necessary to follow the rules. “EPA is not obliged … to postpone its action even a single day,” she wrote.

Environmental groups hailed the ruling as a victory for clean air, noting that the EPA estimates the Cross-State Air Pollution Rule would save 30,000 lives a year. But Texas and other states that challenged it, including Louisiana and Alabama, said it would devastate their economies. Justice Anthony Kennedy, the Supreme Court’s swing vote on many issues, and Chief Justice John Roberts, one of the court’s most conservative justices, joined the court’s four more liberal justices in ruling in favor of the EPA.

Abbott has sued the EPA multiple times. A federal court dismissed a lawsuit last year that challenged the agency for taking over Texas’ greenhouse gas permitting program. The state lost another lawsuit protesting the EPA’s definition of greenhouse gases as a danger to public health and welfare, and the Supreme Court declined to hear an appeal. The fate of another challenge by Texas and industry groups to EPA regulations will soon be decided. The Supreme Court heard arguments in February against the agency’s greenhouse gas permitting rules and will issue a ruling in the coming months.

[But Texas is already working on a plan (in addition to sequestration) should they have to switch a lot of lignite burners to NG. A fair bit of the state's NG production comes from state owned mineral rights. It also has the right to take severence tax in physical NG instead of a cash payment. So instead of sending all that NG to our Yankee cousins the state could mandate the sale of some of our production to our NG fired plants...especially during the winter.]

[Keith_McClary]

$this->bbcode_second_pass_quote('', 'A')lberta needs to kick its coal habit, says report
Electricity generation from other sources would cut greenhouse gases
Alberta could cut its greenhouse gas emissions almost by half by shutting down its coal-fired power plants, a move that would make room for more oilsands production.

“If we want to expand the oilsands, coal is the place to cut down carbon emissions,” say Ben Thibault of the Pembina Institute, which released a new report, Power to Change, written with Vancouver-based think-tank Clean Energy Canada.

Alberta’s 19 coal plants produce as much greenhouse gas as the major oilsands producers, though the oilsands are often targeted in the province’s battle to reduce its share of carbon emissions.

Alberta — which gets 63 per cent of its electric power from coal — burns more coal than the rest of Canada combined, the report notes.

A large-scale shift away from coal to a variety of electricity sources including solar, wind, and geothermal power, could be accomplished in 20 years with only a slight price increase in the first decade and then cheaper prices starting in the second decade, said Thibault.