Today’s Blog – Wednesday 25th March 2015

Introduction

Normal service is nearly resuming (says he optimistically) – must be time to undertake another long haul trip in germ infested flying steel tube!

Commodity prices

Crude oil prices were flattish overnight, with WTI strengthening a bit to US$47.58 and Brent falling slightly to US$55.11.  Again USD foreign exchange rates and the anticipation of new inventory figures from the EIA (due overnight our time) were the key factors driving the market.

Gas remained flat at Henry Hub at US$2.78.  It is not often appreciated that natural gas prices in the over-supplied (and outbound pipe constrained) North East of the US are actually considerably lower than this – down to US$1/mcf – which cannot be profitable for just about any well profile one can think of.

LNG

Continuing a point I made yesterday about Japan currently experiencing “peak” LNG, yesterday an influential Japanese body (the Japan Association of Corporate Executives) called for substantial investment in a whole new generation of nuclear power plants.  Notwithstanding the well grounded public concerns post-Fukushima, in my view it is inevitable that Japan will increase its demand for nuclear fuels – and reduce it for LNG.

In the week that Lee Yuan Kew died, it is timely to note what could be a typical legacy of Singaporean long term thinking – in the LNG space.  Temasek funded Pavilion Energy has a clear mandate to develop Singapore as the premier Asian (and hence likely Global) LNG trading hub – and has already invested substantially in facilities – and upstream – to start to deliver this.

I don’t see any other rivals emerging with the combination of rule of law, location, facilities, domgas demand, bunkering, Chinese/Western bridge, etc, that Singapore brings to this.  BG Group is currently contracting to Pavilion in Singapore – but in the long term, watch out for the IP, etc, to increasingly vest locally.

New South Wales – coal bed methane (CBM)

As predicted yesterday, Martin Ferguson delivered the voice of reason to a Sydney hosted gas conference yesterday, saying “Luke Foley’s campaign has been tarnished by rank opportunism and blatant scaremongering.  By threatening to kill the Santos Pilliga Project, Luke Foley is sending a very clear message that he doesn’t care about jobs or energy security for NSW.”

However, a typical response (from the Wilderness Society) drew upon emotions rather than reason: “Minister Burke must not oversee the steamrollering of dangerous CSG production on our largest temperate woodland, home to a declining Koala population and the Piliga Mouse – found nowhere else in the World“.

The good old Piliga Mouse is back in the game!  I haven’t heard from him for a while.  Maybe large numbers of Piliga mice could be bred in captivity to run round in wheels to produce electricity instead of using nasty old gas?

Company news

Its pretty thin on the company news front so far today.  Woodside and Chevron are reported to be reducing their Western Australian workforces – but largely it would appear due to normal project ups and downs rather than anything more secular.

Quote of the day

Again with a nod to the masterful use of psychology/propaganda by Frackman and friends:

“But if thought corrupts language, language can also corrupt thought”.

Orwell

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