Thursday, November 5, 2015

The sparkles dim

Before the 2013 election campaign in BC, incumbent Liberals were trailing in the polls and Premier Clark dueled with Nova Scotia Premier Darrell Dexter for the lowest approval rating among Canadian premiers. A grandiose scheme to market the Liberal Party was desperately needed if the government was to be reelected.

LNG had helped Gordon Campbell in 2009 when his government promoted a $3 billion Kitimat LNG terminal that was to be operating by 2013-14. In fact, LNG proposals had been kicked around for decades. Dome Petroleum Ltd. first announced a long-term deal with Japanese LNG users in 1980. It called for shipments to begin in 1986 from a $2.5 billion liquefaction facility at Grassy Point, near Prince Rupert.

The Liberal gang, unencumbered by any sense of ethics, decided if LNG was going to work again in 2013, they would have to invoke Große Lüge. There was little point in talking about hundreds of jobs and a billion dollars of economic activity so every benefit claim was multiplied by a thousand. Prosperity was just around the corner, but only if Liberals were elected.

Here it is almost three years after the dream was sold to BC voters. LNG prices that peaked at $20 in Asia may now be headed south of $5 and production techniques that created a North American gas surplus are being applied in Asia. New regional pipelines and substantial growth in renewable energy suggest an LNG industry based on the Asian market offers little economic benefit for late coming regions that can only participate by offering massive capital and operating subsidies and gas feedstock at giveaway prices.

Unfortunately, the gaseous minister, an ex-police constable, is negotiating LNG deals for BC in secret, without benefit of personal fitness or qualified deputies and advisors. The Deputy Minister is an information technology specialist and, until a few weeks ago, the Assistant Deputy Minister of Natural Gas Development was Fazil Mihlar, a former Fraser Institute ideologue with zero experience in high value contracts.

This post-it note government fears transparency and dares not leave a record of its deal making because it is driven by personal gain and partisan politics, not by a desire to further the public interest. For LNG, what is needed now is caution, not obdurate determination to proceed at any cost.

LNG Buyers May Break Term Contracts, Bloomberg Business, November 4, 2015:
Liquefied natural gas buyers may look to break contracts with suppliers amid a slide in prices in Asia and an “unprecedented surplus” in the market, according to Goldman Sachs Group Inc.

...Goldman lowered its 2016 spot price forecast in East Asia to $6.13 per million British thermal units and sees prices falling to $5.19 in 2017 and $4.75 in 2018 and 2019, the analysts wrote. That compares with the latest price of $7.45 for LNG shipped to northeast Asia, according to Energy Intelligence Group.

Prices have already tumbled more than 60 percent from a record $19.70 in February 2014. LNG may sink as low as $4 by 2017, FGE Chairman Fereidun Fesharaki said in an interview in September.

“A wave of new liquefaction projects in Australia and the U.S. is pushing the LNG market ever deeper into oversupply,” Goldman analysts including Christian Lelong wrote in a broader report Thursday.
Mourning Oil Prices: The Five Stages Of Grief, Forbes, October 27, 2015:
...Don’t count on much of a rally in global gas markets since LNG buyers in 2020 will probably pay less than today. Producers are better off with a commodity, such as oil, that’s leveraged to Chinese consumption versus one like gas or coal that’s leveraged to Chinese industry. On the supply side, LNG facilities are coming regardless of the growing pains in China because capital is committed and contracts have been signed...
85 Gas Projects Dying on the Vine as LNG's Promise Falls Short, Bloomberg Business, October 8, 2015:
Five years ago, energy companies hungry for the next big thing started planning as many as 90 terminals to send natural gas around the globe.

Now, it seems the world only needs five more.

...“The global LNG industry now resembles a game of ‘musical chairs’ with far more projects than the market can absorb,” said James Taverner, an IHS analyst in Tokyo.

...More than half of the 38 terminals proposed for the contiguous U.S. may never be built, according to Fitch Ratings Inc. and the Brookings Institution, a nonprofit research group...

Twenty more terminals are planned for Canada, according to Energy Aspects, including the Kitimat project proposed by Chevron Corp. and Woodside Petroleum Ltd. in British Columbia. The higher costs associated with projects there, in part because of environmental opposition, makes it even less likely that they’ll be built, Jeffrey Currie, head of commodities research at Goldman Sachs & Co. in New York, said in a Sept. 24 interview...

2015 11 05 Oil and Gas Rights Monthly Sales



Oil and Gas Rights Monthly Sales 2008 2015






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18 comments:

  1. Why doesn't anybody want to talk about northeast coal?
    Tumbler Ridge was suppose to be the pot-0-gold at the end of the path to glory and salvation.

    One sure thing about Rich Coleman is that EVERYTHING he touches turns to dust.

    Bloomberg is saying that "LNG Terminal Projects Around the Globe are Dying on the Vine" - by Christine Buurma, Stephen Stapczynski and Naureen S. Malik
    https://gcaptain.com/lng-terminal-projects-around-the-globe-are-dying-on-the-vine

    ReplyDelete
    Replies
    1. Northeast coal in Tumbler Ridge is still very much alive and well...?? If you are a Chinese TFW and Chinese mining company sending BC coal to China everything is rosy. Lots of train and port capacity now that all the other mines are out of the way.

      Delete
  2. Does Christy Clark or Pamela Martin have Scottish blood flowing through their veins seeking independence from England with the reference to
    once in a lifetime now being reduced to once in a generation

    ReplyDelete
  3. Talk about cutting off your nose to spite your face. Every time the price of LNG drops another buck I rejoice in the effect it has on Chrispy's Folly. Even though it effectively harms our economy and my own lifestyle. Unemployment rose above 7% and in spite of all the activity at Site C (who is paying for all that activity and largess?) the economy is in the doldrums. Yet I'm happy to see the price of LNG tank.
    Silly, isn't it.

    ReplyDelete
  4. Norm, in your article you say the ADM to Natural Gas Development, was " Fazil Mihlar ". I take that to mean he is no longer in that position ? If so where did he go ?

    Thanks Norm,

    Guy in Victoria

    ReplyDelete
    Replies
    1. Fazil Mihlar,the former Fraser Institute functionary and Vancouver Sun editorial gatekeeper was sent to the Ministry of Advanced Education (OIC #516) as of September 8, 2015. He remains an Assistant Deputy Minister.

      In fiscal year 2015, Mihlar was paid about $200 K for salary and travel expenses.

      Delete
  5. LinkedIn

    Fazil Mihlar

    Assistant Deputy Minister, Institutions & Programs, BC Ministry of Advanced Education
    Vancouver, Canada Area
    Government Administration

    Previous

    BC Ministry of Natural Gas Development, The Vancouver Sun, Royal Bank of Canada

    Education

    Harvard T.H. Chan School of Public Health

    ReplyDelete
  6. The minister of Natural Gas, a fitting description, and while the whole LNG thing will turn to dust, due to an incredible misunderstanding of global economics, one has to shudder at the implications of such a "genius" negotiating in secret.
    Any form of contract this current BC liberal government signs, has to be rescinded as soon as possible. The contracts are simply not in the best interests, of the people of BC. They are only of interest to a select group at the top of the BC liberal food chain and associated "insider" groups. The rest of us will get a horrific "bill", that will take decades to pay for, with no benefit except for the BC Libs and associates..

    ReplyDelete
  7. Incredibly, people in this province, who have their heads stuck in the sand, don't see the train wreck that the provincial economy will be, barreling down the track.
    Site C, is another "liberal" boondoggle in the making.The cost of power will end up being far higher, after this project is brought on line. What happened to the"promises" of IPP's. That was supposed to solve the hydro problem, and not require site c to be built.
    But yet again, the deception, and most likely insider involvement, were responsible for the "fix" that IPP's were a part of for the"associates" of the government. Its not about the "people" of BC at all.
    Its about the lining of pockets of a select few, at the disadvantage of the rest of us.
    Fraud and organized crime, you bet it is.

    ReplyDelete
  8. I really doubt the whole exercise has anything to do with economic, budgets or the like.
    The end game is personal profit and hence future political influence.
    It really is not so different to the coal baron days of Dunsmuir.

    As to the above comment on Tumbler Ridge( an NDP creation)
    I heard from a somewhat reliable source that Dave Barrett and Jack Monroe had a big party when Tumbler Ridge got the go ahead!
    If it was true it still pales to BC Hydro run of rivers and site C.
    Many years ago I was at site C and had a quick look at a "exploratory" dam diversion tunnel.
    Why we should have a 'exploratory' tunnel is a mystery to me.
    In my eyes the tunnel was a 'keeper'.
    .

    ReplyDelete
  9. Now that the sparkle ponies are hooves-up in the ditch and the trillion dollar bonanza promised by Christy and her outreach mistress is a trillion dollars short, the citizens of British Columbia have a right to some answers.

    What is plan B? How much and how soon will it contribute to the BC Prosperity Fund? Does it involve fortune cookies acquired on your latest vacation mission to China? Why is Gordon Wilson still employed as BC’s LNG advocate at $150,000 per year? Will it be okay if we file blank income tax returns from now on with an explanatory note saying that after an exhaustive search we couldn’t find any records?

    ReplyDelete
    Replies
    1. Lew, your words paint a remarkable and unforgettable picture and your questions are valid.

      Never thought I would say this, but maybe we should thank Gordon Campbell and his business cronies who deposed Wilson when he was Liberal leader. He's now established what he really is. We even know the price.

      Delete
  10. Well spoken Lew.
    Tumbler Ridge. IMHO it was a precursor to what's going on in the oil sands. The coal is still there. It was a very good idea, until coal lost its shine. Much the same will happen to the oil sands.

    ReplyDelete
  11. And to add insult to injury Wilson's wife is writing a biography about Christy Clark. Can't hardly wait to read it, can you?

    ReplyDelete
    Replies
    1. Taxpayers are paying for the book. Not directly, but we're paying the author.

      Delete
    2. We’re paying the author, the author’s husband, and the subject of the biography, who hired the author’s husband with our money. Should be a real tell-all scorcher. I mean, what’s the author got to lose?

      Maybe she’ll pen a similar tome for us about her hubby. After all, he’s left few stones unturned in his selfless quest to serve us. He’s neglected his own best interests to lead the Liberal Party of British Columbia, founded the Pacific Democratic Alliance, and put politics aside to toil as an NDP cabinet member. All for us. He even recommended we vote for Christy as premier. And on top of that, despite the potential for private-sector riches due to his vast knowledge of the LNG industry, he then accepted Christy’s pleas to come and work for us as LNG advocate for a paltry $150K per annum. Just to show us that after recommending we vote for her, he was willing to put our money where his mouth was.

      Delete
  12. So now we can turn the light on Mr. Horgan.
    Can he accomplish in less than 2 years what Mr. Trudeau did in 3?
    Based on results, I don't think so.
    This is BC the best voler la caisse on earth.
    Hawgwash.

    ReplyDelete
  13. The LNG "Dream" is dead and so too is the Northern Gateway. If people actually understood the duplicity of the Liberals we might still be in debt, but at least we would be dealing with it. -Blake Newton-

    ReplyDelete

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