Today’s Blog – Friday 24th March 2017

Blogging remains intermittent due to travel.  Your blogster is currently in Seoul airport – not a bad spot – as long as the Lovely Leader (new title) of its immediate neighbour to the North does not have an especially bad hair day, runs out of relatives to execute and decides to start lobbing missiles and shells instead….

Editorial

Yesterday various bodies from across the Australian gas industry value chain (producers, pipelines, distributors, etc) launched a report called Gas Vision 2050.  We must be feeling homesick for some good old Aussie slang, as the phrase “p*ss weak” unfortunately came to the mind of this gas supporter upon flicking through the document.

The three main focus areas were:

  • Biogas. Err, haven’t we been doing this for decades in terms of landfill gas (of which there is less than there used to be in general dumps due to better rubbish separation processes).
  • Hydrogen.  Apparently this can be mixed with methane and put into existing pipelines.  Who knew?!   Stand well back…..
  • On hydrogen – methane can of course produce hydrogen through chemical separation processes.  But it is a less dense and more dangerous fuel than CH4 – and energy is used in producing it.  And energy is used (a lot) in the resultant capture and storage of CO2.  So more cost for less net and less flexible energy.
  • Speaking of carbon capture and storage – suitable reservoirs in East Coast Australia are yet to be identified.  There has only been oil and gas production since the 1960s of course – so maybe there are great storage reservoirs still to be discovered proximate to emission sources.
  • The head of one of the distribution companies was somewhat over enthusiastic in likening the amount of energy stored in Australia’s gas pipeline network to a large number of Tesla’s batteries.  As someone said on a TV program we watched last weekend, that is like comparing apples with record players.  Issues such as fuel versus electricity, deliverability capabilities, minimum operating gas levels in pipes, etc, come to mind.

Gas has a great story to tell.  But unfortunately we don’t think this is it.

Commodity prices

Crude prices have been slipping from day to day this week, with Thursday’s close being US$50.56 in London and US$47.70 in New York.

Unfortunately last week’s good inventory numbers were not repeated in the weekly report from the EIA out on Wednesday.  This week crude stocks rose again – by 5 mmbbls – partly offset by another smallish SPR draw and product reductions of 2.8 mmbbls of gasoline and 1.9 mmbbls of distillate.  The market needs lots and lots of inventory reduction to underwrite price rises from here (“events” aside of course).

Henry hub has had a better time than crude – trading around the US$3 mark – and last night closed at US$3.04.

LNG and international gas

In a sign of North Asian cooperation (not including someone with a lovely hairstyle near us right now), South Korea’s Kogas, Japan’s JERA and China’s CNOOC have just signed a MOU under which they will aim to cooperate over LNG procurement.

Don’t mention the war!  Or wars.  Or comfort women.  Or Nanking.  Or other events in the last few millenia.

However we are sure the slick operators in these nimble organisations will manage to overcome any such niggles.

So watch out LNG producers!

Moving onto one of our favourite topics – a possible floating storage and regasification unit (FSRU) for Australia – Norwegian player in this space Heogh has been reported in recent days as wanting to join the FSRU party in Australia.

Heogh has prior experience in FSRUs in locations such as Lithuania and Columbia. Australia would be a nice lower sovereign risk addition.  Not much mention of FSRU’s in Gas Vision 2050 though (pipeliners will not exactly like them….)

Company news

ASX reporting rules must have been changed when we weren’t looking – not much happening apparently in listed E&P company land according to the official record.

Quote(s) of the day

The main reason we are pumping out a blog today – its Rodney Dangerfield time again:

“I remember I was so depressed I was going to jump out a window on the tenth floor. They sent a priest up to talk to me. He said, “On your mark…”

“I’m a bad lover. Once I caught a peeping tom booing me”.

 

 

 

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