ERG-Shell's
Sicily LNG regas plant approved
Eric Watkins Senior Correspondent OGJ.com LOS ANGELES, May 20
ERG SPA Chief Executive Officer Alessandro Garrone said the
regasification terminal his firm plans to build with Royal Dutch Shell
PLC at Priolo, Sicily, has received environmental clearance and will be
operational in 2013. "We have just obtained the VIA
(environmental) clearance," Garrone said, referring to one of the main
steps in the clearance process.
In 2007, ERG postponed the
start of operations at the plant to 2011 from 2010.
In February, Italy's Il Sole 24 Ore quoted Garrone as saying
delays in government approval of the project were "unacceptable." At
the time, Il Sole said, the project had already cost 15 million euros
and had been awaiting approval for 3 years.
On start-up, the plant will have a capacity of 8 billion cu m/year,
with a potential expansion capacity to 12 billion cu m/year. ERG said
construction will begin in 2010.
Earlier this month, Italy's environment ministry approved plans by
Compagnie Industriali Riunite SPA's energy unit Sorgenia SPA and
northwest utility Iride SPA for construction of an LNG terminal at
Gioia Tauro in Calabria (OGJ Online, May 2, 2008).
Last October, Italy's Council of Ministers approved plans to simplify
and accelerate the permitting process for new LNG terminals. The plans
aimed at easing planning restrictions, which had prevented several
terminal developers from securing final planning approvals for their
facilities.
The new plans no longer require operators to consult the public works
council Consiglio superiore dei lavori pubblici. Instead, Italy's
Environment Ministry will conduct and complete an environmental impact
assessment for final authorization by the Ministry of Economic
Development, the Ministry of Environment, and the Ministry of
Infrastructure.
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Suez in Talks to
Sell Distrigaz Stake to Italy's Eni
By Anthony DiPaola and Alan Katz May 24 (Bloomberg)
Suez SA, the French power provider merging with Gaz de France SA,
entered exclusive talks to sell its majority stake in Belgian gas
distributor Distrigaz SA to Eni SpA after the Italian company offered
the highest price.
Eni will complete its examination of Distrigaz's accounts next week and
``should sign'' a final agreement May 29, Suez said in a statement
today. Suez spokeswoman Caroline Lambrinidis declined to give financial
terms. An Eni official declined to comment.
Suez and Gaz de France, both based in Paris, agreed to sell Suez's 57
percent stake in Distrigaz to gain approval for their merger.
Brussels-based Distrigaz, which has a market value of 4.4 billion euros
($7 billion), has contracts for liquefied natural gas and supplies of
fuel from the Netherlands, Norway and Qatar.
``This will make Eni a little stronger in Europe, and it weakens Suez's
energy business in Belgium,'' said Andre Chassagnol, an analyst at
Paris-based brokerage HPC Paresco.
The offer from Rome-based Eni beat out bids from E.ON AG and
Electricite de France SA, Suez said in the statement. The purchase
would give Eni, Italy's largest oil company, more access to fuel and
customers in northern Europe.
Distrigaz shares rose 89.99 euros, or 1.5 percent, to 6,289 euros
yesterday. Eni shed 53 cents, or 2 percent, to 26.40 euros in Milan,
giving it a market value of 106 billion euros.
Energy Assets
The sale is conditional on the merger of Suez and Gaz de France, the
pre-emption right of Publigas not being exercised and European
Commission approval, Suez said. Suez also said it may buy ``a number of
energy assets'' from Eni.
Eni offered the concession to supply natural gas to the city of Rome
and some Italian power generation capacity as part of its bid, Chief
Executive Officer Paolo Scaroni said May 20. Scaroni said winning
Distrigaz was very important for Eni.
Distrigaz attracted European competitors seeking to increase their size
as power and gas markets open to competition. The company owns pipeline
capacity for gas transit in Belgium and other European countries, and
sells the fuel to industrial consumers across northwest Europe.
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Alaska recommends
TransCanada's Alaska gas pipeline
By OGJ editors HOUSTON, May 22
Alaska Gov. Sarah Palin, along with the state's natural resources and
revenue commissioners, recommended that the Alaska legislature accept a
natural gas pipeline proposal from TransCanada Alaska Co. LLC and
Foothills Pipelines Ltd.
State officials on May 22 announced they believe TransCanada's plan
deserves issuance of a license under the Alaska Gasline Inducement Act
(AGIA) along with a $500 million inducement from the state.
Lawmakers will have 60 days to review the license proposal. A special
session begins June 3 in Juneau. If the Legislature were to grant
TransCanada the license, the company then would hold an open season to
solicit firm gas shipping commitments.
After the open season, TransCanada would apply for a federal
certificate. If approved by the Federal Energy Regulatory Commission,
pipeline construction could begin. Alaska state officials said
construction could take up to 3 years.
TransCanada proposes a 4.5 bcfd pipeline that would extend 1,715 miles
from a gas treatment plant at Prudhoe Bay on Alaska's North Slope (ANS)
to the Alberta hub. The Alaska section of the 48-in. pipeline would be
about 750 miles long, and would have five gas delivery points in the
state.
Denali 'uncertain'
Palin said TransCanada's plan was binding and enforceable, which she
believes makes it more appealing to Alaska than the BP
PLC-ConocoPhillips-sponsored Denali gas pipeline proposal.
In April, BP and ConocoPhillips announced they would join resources to
build a 4 bcfd gas pipeline from ANS to markets in Canada and the US.
They said they plans to spend $600 million over the next 36 months on
the first of many phases of the Denali line, namely an open season
(OGJ, Apr. 14, 2008, p. 30).
The Denali proposal was not submitted under the AGIA applications.
Palin told reporters during a May 22 news conference that no commercial
terms are specified under that plan so both costs and benefits to the
state are uncertain.
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Alaska Gasline
Inducement Act Gas line
May 25th, 2008
Palin plan deserves open-minded look from state legislators
When the Legislature passed the Alaska Gasline Inducement Act with one
dissenting vote, lawmakers sent a message: Alaska has learned from the
mistakes we made with the trans-Alaska pipeline.
That oil pipeline is owned by the same companies that produce North
Slope oil. Owning both the oil and the only way to get it to market
enabled the companies to discourage competitors who didn’t own a share
of the line. If you wanted to drill for North Slope oil, and didn’t own
a piece of that very expensive, but very profitable, pipeline, you had
a hard time making money.
The producers/pipeline owners locked up the entire North Slope oil
basin for more than two decades. That’s one reason North Slope
production has dropped from 2 million barrels a day to about 740,000.
With a North Slope gas line, Gov. Palin insisted, and legislators
agreed, the state should take a much different approach.
Open access is key
First and foremost, they decided to pursue an open access gas line.
That means the first set of shippers can’t lock out newcomers. The
line’s owners must agree to expand to make room for new producers. And
the rates have to be reasonable. They should not gouge in-state
customers and should be affordable for new shippers.
If a company agreed to those and other essential conditions, the state
would offer up to $500 million to underwrite most of the company’s
early expenses for a gas line. The state also pledged not to change
production taxes on natural gas during the first 10 years of the
pipeline’s operation. The amount of tax shippers have to pay when
they’re first asked to commit to the line won’t go up for at least a
decade.
Binding commitments
In return, the pipeline builder will make binding, enforceable
commitments to do the project on the state’s terms — not mere promises
that are subject to change. Nor do those commitments depend on the
state signing away billions in state revenue from natural gas.
Gov. Palin says the proposal from TransCanada meets those conditions
and more. Her administration has spent more than $10 million analyzing
the proposal and comparing it to other options: a liquefied natural gas
(LNG) export to Asia and a possible Conoco-BP line to the Lower 48.
The conclusion, says Gov. Palin: TransCanada’s export gas line nets out
much better for the state and is more likely to succeed.
The Legislature’s turn
Now it’s the Legislature’s turn. The job of lawmakers is to see if the
deal is as good as advertised.
The Legislature can’t amend the deal; lawmakers must vote it up or
down. If they want changes, TransCanada would have to agree to
amendments. As provided when the state sought proposals, the company’s
offer expires at the end of August, so there is no time to dilly-dally.
Gov. Palin’s gas team will show Alaskans and lawmakers all the state’s
assumptions and unfiltered analyses from its legal and financial
experts. This week, the administration will hold a three-day seminar in
Anchorage to present the information and field questions.
The governor says she can demonstrate that the deal is a win-win for
the state and the producers. That’s ideal. But as legislators review
the TransCanada deal, they must remember: Their first and only
obligation is to maximize the benefits to Alaskans now and far into the
future.
What about LNG?
The LNG idea still retains a lot of populist, Alaska-first appeal.
However, it is just a dream that has never gotten traction in the
private sector. The LNG proposal is clearly an inferior alternative.
In fact, a line to the Lower 48 could actually improve prospects for
the LNG project. The line from the North Slope to Delta Junction will
be expandable, and from there, it is a shorter and more easily
manageable connection to a future LNG port at Valdez.
The recommended contract includes other off-take points for in-state
use of gas. Rates for in-state gas will be based on how far the gas is
shipped. Deliveries inside Alaska will pay less than gas that’s shipped
all the way through the line.
The Conoco-BP proposal
What about Conoco and BP’s idea? They have agreed to commit up to $600
million to study their project. However, it has many contingencies and
fails the state’s most important test: It doesn’t guarantee the line
would be open to new gas producers on reasonable terms. (And when they
get further along, they will still want to talk about “fiscal
certainty” for their project.)
Tax changes?
Gov. Palin’s analysis says an independently owned line to the Lower 48
is extremely profitable for the state as well as for producers, so no
state tax changes are necessary. If that’s true — and the Legislature
should test that assertion — over the next 30-plus years, natural gas
can do for Alaska’s economy and the state treasury what oil production
has done. AGIA, the Alaska Gasline Inducement Act, has clearly pushed
North Slope producers to quit stalling on a gas line. Gov. Murkowski
went to the producers with hat in hand, eager for a project on any
terms. He made a raft of concessions to the producers in hopes they
would eventually build the line, but he never got a credible commitment
to move the project forward.
SOVEREIGN, NOT SUPPLICANT
Under Gov. Palin, the state has acted as a sovereign, not a supplicant.
Legislators and the governor decided what approach is best for the
state and offered incentives to get the deal the state wants.
The TransCanada proposal leaves room for the North Slope producers to
invest in building the line, if they wish to do so. Ideally, the two
camps will join forces to build a project on the terms the state needs
— open access and reasonable rates — to ensure full development of our
natural gas resources.
The North Slope producers won’t do it out of the goodness of their
hearts. If Alaskans want it to happen, we need our legislators to keep
AGIA in play.
At up to $500 million, that is not a cheap card to keep in the game.
But if Gov. Palin is right, the payoff will be many billions of dollars
— for Alaska’s economy and all of us — for decades to come.
BOTTOM LINE: TransCanada’s proposal sounds worthy of legislative
support, but check the details to make sure.
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Enstar moving ahead
on 'bullet' gas line from North Slope
5/25/08 www.voiceofthetimes.net
The decision by Enstar Natural Gas to spend $6 million over the next
eight months for research on a "bullet" gas pipeline from the North
Slope to Southcentral Alaska is a bold step forward for an Alaskan
company.
It's also a logical one. If only Gov. Sarah Palin and the Alaska
Legislature could be so logical.
Enstar will use its money for engineering to determine the feasibility
of a line to bring natural gas to area consumers. The company is facing
a looming shortage of gas, but such a line would . . .
(cont'd from front page) probably require major industrial users to
make the project worthwhile.
Large corporate customers are entirely possible and were once a
mainstay of the Kenai Peninsula economy, where Cook Inlet gas provided
feedstock for a refinery, a liquefied natural gas plant and a
fertilizer plant.
Flint Hills Resources also has a refinery at North Pole, near
Fairbanks, and Fairbanks Natural Gas has also expressed interest in the
bullet line.
Today the LNG plant at Nikiski, owned by ConocoPhillips and Marathon,
is still functioning and ships its output to Japan, and the nearby
refinery is owned by Tesoro Alaska and produces jet fuel, gasoline,
diesel, propane and other products, primarily for the Alaska market.
Agrium's fertilizer plant at Nikiski is closed but the owners have
expressed interest in reopening it if adequate supplies of feedstock
gas can be secured.
Given the enormous need for fossil fuels in China and the rapidly
expanding economies of other Pacific Rim nations, prospects for the
industrial users Enstar would need seem excellent.
Previous estimates of the finished cost of a bullet line suggest it
will be $3 billion or so. It would probably make more sense for the
state to put the $500 million that Palin seems intent on giving to
TransCanada for nebulous purposes into a bullet line serving Railbelt
customers.
Then let the North Slope producers build their own gas pipeline, the
Denali project, at their own expense.
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Russian oil and
gas companies interested in Mediterranean area
CAIRO, May 21 (RIA Novosti)
Russian oil and gas companies are interested in developing the
Mediterranean region and are set to expand their presence in the area,
an executive of Russia's largest independent natural gas producer said
Wednesday.
"We are interested in working in the Mediterranean," Leonid Mikhelson,
Novatek board chairman, said at an international conference in Cairo,
Egypt, adding that Russian technology would suit the region's climatic
conditions.
"Therefore we will be expanding our presence in the region, based on
the principle of economic feasibility," Mikhelson said.
Last September Novatek bought a 50% stake in a concession agreement for
the exploration and development of the El-Arish offshore deposit in
Egypt from Tharwa Petroleum S.A.E.
The offshore block covering an area of approximately 2,300 sq km (888
sq miles) is located along the Mediterranean coast to the north of the
Sinai. Half of the block lies at depths of up to 50 meters (164 ft)
with the remaining area reaching up to 500 meters (1,640 ft).
The agreement provides for a minimum exploration period of four years,
which will include geophysical studies and the drilling of two wells.
Established in 1994, Novatek handles the prospecting, production and
refining of gas and liquid hydrocarbons. Its gas fields are located in
the Yamal-Nenets autonomous area in West Siberia, which has the world's
largest natural gas reserves. The region accounts for over 90% of
Russian natural gas output and around 20% of global gas production.
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PDVSA, Galp Energia plan
LNG, oil projects
Eric Watkins Senior Correspondent LOS ANGELES, May 16 ogj.com
Portugal's Galp Energia and Venezuela's state-owned Petroleos de
Venezuela SA (PDVSA) have signed five cooperation agreements concerning
energy projects for oil, renewable energy, and natural gas, including
two LNG liquefaction plants.
The agreements follow a memorandum of understanding the two companies
signed last October and cover the creation of the LNG projects, joint
work in the Orinoco belt, the purchase of oil, and development of wind
farms.
The two companies will jointly develop two LNG projects in Plataforma
Deltana and Mariscal Sucre fields. Each project will involve
construction of a pipeline to carry gas from the fields to the
liquefaction trains.
The liquefaction facilities will be installed at Gran Mariscal de
Ayacucho industrial complex, at Guiria, in Sucre state. Each train will
have the capacity to process a total of 6.5 billion cu m/year of gas to
be sold on the international market as LNG.
For the two LNG projects, Galp and PDVSA will create two companies,
owned 15% and 85% respectively. Under the agreement, Galp will receive
2 billion cu m/year of LNG from the companies, with first LNG expected
before 2014.
Galp and PDVSA also signed an agreement for joint studies for the
development, production, upgrade, and commercialization on the
international market of crude oil produced on the Boyaca 6 Block in the
Orinoco belt.
After completing the ongoing Boyaca 6 reserves certification process
and concluding the joint studies in 2009, PDVSA and Galp will found a
company to implement the project.
PDVSA agreed to sell 2-4 million bbl/year of oil to Galp at market
prices, an agreement that can be renewed annually.
Galp and PDVSA also signed an MOU for development of four wind farms,
having a total capacity of 72 Mw, in Guajira, Chacopata, and Nueva
Esparta states.
Galp will provide training and technical assistance to the future
operators of the wind farms and will secure the transfer of the
technology associated with the project.
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Georgia Dino-2 well Taribani field eastern
Georgia's Kura basin
By OGJ editors HOUSTON, May 8
Frontera Resources Corp., Houston, said it appears to have established
sustainable oil production with no associated flow of sediment at its
Dino-2 well in the Taribani field unit in Block 12 in eastern Georgia's
Kura basin (see map, OGJ, Nov. 26, 2007, p. 32).
Zone 9, a 10-m reservoir at 2,300 m, has produced at rates as high as
150 b/d of 36° gravity oil on a 4/64-in. choke with 1,500 psi surface
pressure drawdown from bottomhole pressure of 5,900 psi after frac.
The well will remain on test for 20-60 days, and the workover rig and
frac equipment are moving to the T-45 location for a frac pac
completion attempt in Zone 9 at 2,400 m.
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Gazprom unit signs
LNG agreement with Rabaska partners
Doris Leblond OGJ Correspondent PARIS, May 16
In what is considered its first venture into North America, Gazprom
Marketing & Trading USA Inc., a wholly owned subsidiary of Russia's
OAO Gazprom, is set to import Russian LNG supplied from the Shtokman
liquefication project, which is due on stream in 2014. The LNG will
supply the entire capacity of the Rabaska LNG terminal, to be built in
Levis, Que., and also due on stream in 2014.
A letter of intent was signed between Gazprom M&T and the Rabasca
partners: Canada's Gaz Metro and Enbridge Inc. and and Gaz de France,
which has been involved in the Rabasca terminal project since 2004. The
agreement outlines that Gazprom M&T will become an equity partner
in the proposed $840 million Rabasca LNG regasification project and
contract for 100% of the import terminal's capacity.
Final agreements are
expected to be signed by yearend.
The Shtokman gas and condensate field, discovered in 1988, lies in the
central part of the Barents Sea, 450 km northeast of Murmansk. The
Rabaska terminal is designed to receive, store, and regasify 500 MMcfd
of gas and is intended to introduce a source of gas supply to the
Quebec and eastern Ontario to fuel electric power generation.
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Linde,
Waste Management to convert landfill gas into LNG
By OGJ editors HOUSTON, May 13
Linde Group and Waste Management Inc. plan to build a $15 million plant
in California to convert landfill methane gas into LNG to fuel 300
trash trucks and recycling collection vehicles. The plant at
Altamont landfill near Livermore, Calif., is scheduled to begin
operating in 2009. Linde North America said it will be responsible for
the plant engineering work as well as for collecting and purifying the
landfill gas.
The project to capture and convert methane gas into LNG would cut
greenhouse gas emissions by an estimated 30,000 tonnes/year, project
organizers said.
The plant is expected to produce as much as 13,000 gpd of LNG. Waste
Management already has a fleet of LNG vehicles.
The project received grants from the California Integrated Waste
Management Board, the California Air Resources Board, and the South
Coast Air Quality Management District, a Linde spokeswoman said.
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