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Outlined further down below is a story (sourced from the ABC) on the ongoing opposition from some quarters to unconventional gas exploration in Victoria. The ABC refers to gas “mining” – a word usage which always grates with your blogster.
The Macquarie Dictionary defines “mining” as “the action, process, or industry of extracting ores and other materials from mines“. A “mine” is defined as “an excavation in the earth for the extracting coal or other minerals“.
One can only conclude from these definitions that extracting forms of petroleum from narrow bore wells is not “mining” under any reasonable understanding of the term.
Crude oil prices firmed yesterday by nearly 1%, with Brent closing at US$48.17 and WTI at US$44.91. There did not appear to be any particularly strong driver behind the rise, with market pundits only pointing towards some marginally favourable private sector “numbers” from a reduction in inventories at the key storage and pricing hub of Cushing, Oklahoma.
An eagle eyed reader spotted an error in my blog yesterday – when discussion US crude oil restrictions I of course meant on exports not imports. Mea culpa.
Henry Hub also closed up, at US$2.59.
Regular readers will know that this blog considers the Alaska LNG (AKLNG) project to be the Aesopian tortoise of the LNG project world – not as flashy as some, but plodding towards first gas next decade.
However, that tortoise carries a heavy shell that would be familiar to LNG project proponents in most locations around the world – a Government that wants to maximise its share of something that does not as yet exist – and therefore risks getting a larger share in nothing rather than a reasonable share in something.
Australian readers of this blog will likely be familiar with only one Alaskan Governor – the surprisingly socialist (when it comes to taxing oil companies) Sarah Palin. Her populist instincts live on in the State and even the Russian news service Interfax today points out that AKLNG risks being bogged down by politics (http://interfaxenergy.com/gasdaily/article/17647/alaska-lng-could-be-left-out-in-the-cold).
Alaskan based website Northern Gas Pipelines (http://www.northerngaspipelines.com) today provides an update on the latest Government meddling in AKLNG and asks the reasonable question – “with so many government cooks in the LNG kitchen, really, what could possibly go wrong?”
As noted above, the ABC yesterday reported on a Victorian Government enquiry into onshore unconventional gas exploration in the State (currently subject to the usual type of “moratorium” that seems to have been adopted globally as an excuse to kick the can down the road).
The headline was “science and reality irrelevant to the debate“. That is, the oil and gas industry cannot win in any circumstance, according to its opponents.
This is due to the contention that any E&P activity, no matter how safe in practice, will spoil the “clean” image that farming (apparently) has in Victoria.
Last time I looked there appeared to be a pretty damned healthy farming sector in Texas (to name only one location with a vibrant onshore petroleum sector).
Company news – Beach Energy (BPT)
BPT yesterday announced that its recently departed Managing Director, Rob Cole, would remain on the Board as a non-executive Director.
Good luck to the company’s next CEO, who now seems somewhat constrained in what he/she can do/say in implementing and/or changing the strategic review that Cole undertook in his few months as BPT’s MD.
In my view this decision makes it even more likely that BPT’s current acting CEO will be affirmed to the permanent job (but be somewhat diminished in that role).
Company news – Senex Energy (SXY) and Santos (STO)
SXY yesterday announced that it had entered into a binding gas sales agreement (GSA) with the STO led GLNG project in Queensland – for 50 TJ per day for 20 years. Gas for the GSA will be sourced from what was previously known as the Lacerta CBM field adjacent to GLNG’s Roma CBM asset.
Pricing was said to be linked to oil prices. The net-back deductions for haulage and liquefaction were not disclosed, but one could guess that at current oil prices these would leave SXY with fairly slim pickings.
Lacerta is not a well understood gas field (its production history is close to zero), so the most interesting aspect of this story is also not disclosed – what is the conditionality in the GSA that would likely be required to protect both parties as the field is appraised and developed?
Company news – Antares Energy (AZZ)
This news story happened whilst the blog was on holiday – AZZ’s stock has been suspended by the ASX due to the company refusing to disclose the name of the purchaser of its Eagle Ford acreage.
Although there are other factors at play, this story illustrates a classic (and not uncommon, in my experience) mis-match between ASX requirements to disclose and the practices of the private sector players who dominate the smaller end of the US oil patch. The latter are very reluctant to give out any information that could be used by competitors whilst the former requires an informed market.
In AZZ’s case an impasse has been reached that could well not be resolved for many months.
Quote of the day
The incessant use of the phrase “gas mining” brings to mind the following quote from Nazi arch-propagandist Joseph Goebbels:
“If you tell a lie big enough and keep repeating it, people will eventually come to believe it”.