North America poses threat to gas exports
The approvals come as concern is mounting that a large rise in North American gas reserves on the back of the shale gas boom will undercut much of the optimism of Australia's gas exporters over projects being developed in the North-West Shelf off Western Australia and in Queensland.
Australia is set to emerge as one of the world's largest gas exporters over the next five years, although growth prospects further out are being hurt by the increase in the number of export projects vying for approval in North America.
On Tuesday Shell won approval for a project it is promoting in British Columbia, on Canada's west coast, which includes PetroChina, Korean Gas and Mitsubishi Corp as shareholders. Both PetroChina and Mitsubishi are participants in export gas projects in Australia.
As well, the US Department of Energy granted Pangea LNG approval to begin exports from its south Texas project. Pangea has been authorised to export up to 8 million tonnes a year of liquefied natural gas for 25 years.
And Shell has joined another consortium planning to export gas from Georgia, in the US south.
In the past, the inability of large vessels to use the Panama Canal has meant that gas from the United States could only be exported to Asia from the west coast and Alaska, but that will change from late 2015 when the canal's capacity rises following a long $US5.5 billion ($53 billion) expansion.
This, along with surging gas reserves thanks to the boom in shale gas in the US, will pave the way for gas to be shipped from the US gulf states to Asia for the first time.
The increase in export projects seeking to get off the ground in North America comes as companies such as Origin Energy are seeking to win export orders so they can boost future shipments from their domestic gas projects.
Origin Energy is developing a project with initial sales of about 9 million tonnes a year of gas exports, with a second tranche planned. It is expected to update investors this month on the progress it is making in selling gas abroad, which will enable it to give the green light to the second tranche of its Queensland project.
Origin's partner in Queensland is ConocoPhillips, which is seeking to develop an export gas project in the US for export to Osaka Gas, which is also buying gas from Origin's Queensland project.
The Pangea project needs other approvals before it can proceed, most importantly from the US Federal Energy Regulatory Commission. It hopes to be in operation by 2018.
Frequently Asked Questions about this Article…
The article says Canadian authorities approved a Shell-led export project in British Columbia (with PetroChina, Korean Gas and Mitsubishi as shareholders), and the US Department of Energy granted Pangea LNG approval to begin exports from its south Texas project. It also notes Shell joined a consortium planning exports from Georgia in the US south.
According to the article, a large rise in North American gas reserves and more export projects under development could undercut much of the optimism of Australian gas exporters. While Australia is set to be a major exporter over the next five years, increased competition for export orders in North America may hurt longer‑term growth prospects for Australian projects.
The article reports the US Department of Energy authorised Pangea to export up to 8 million tonnes a year of liquefied natural gas for 25 years. Pangea still needs other approvals—most importantly from the US Federal Energy Regulatory Commission—and hopes to be in operation by 2018.
The article mentions Shell (British Columbia project and a Georgia consortium), PetroChina, Korean Gas, Mitsubishi Corporation, Pangea LNG, Origin Energy, ConocoPhillips and Osaka Gas. It also notes PetroChina and Mitsubishi participate in export gas projects in Australia.
The article explains that the Panama Canal expansion (a US$5.5 billion project) increases the canal's capacity from late 2015. That expansion will allow large LNG carriers to transit the canal and enables gas to be shipped from US gulf states to Asia for the first time.
Origin Energy is developing a Queensland project with initial sales of about 9 million tonnes a year and a planned second tranche. The company is expected to update investors on progress selling gas abroad; securing export customers is key to approving the second tranche. Origin's partner in Queensland is ConocoPhillips.
The article notes that projects like Pangea still require other approvals beyond the Department of Energy sign‑off—most importantly the US Federal Energy Regulatory Commission (FERC) approval—before they can proceed to construction and operation.
Based on the article, investors should watch progress on North American export approvals (DOE and FERC decisions), sales and offtake agreements for projects (for example Origin's updates on selling gas abroad), developments in shale gas reserves, and infrastructure changes like the Panama Canal expansion that enable new shipping routes to Asia.
Call 1300 880 160
Start a chat
Schedule a call
