Replies to post #1824 on The Rising Influence of Rising Affluence

[DewDiligence]

HES’ LNG Proposal Faces Stiff Opposition from Local Politicians

[In New England, the hysteria surrounding LNG is mind-boggling. When a tanker delivers a load to the LNG facility in Everett, Massachusetts (just north of Boston), the metropolitan area nearly shuts down. This article from Sunday’s Boston Globe is about HES’ proposed facility in Fall River known as Weaver’s Cove.]

http://www.boston.com/news/local/massachusetts/articles/2010/12/19/proposed_lng_facility_for_fall_river_facing_new_obstacles/

›By Beth Daley
December 19, 2010

FALL RIVER — A proposed liquefied natural gas project avoided a potentially crippling blow last week in Congress’ lame-duck session, but the controversial Weaver’s Cove proposal continues to face major political and other hurdles.

A bipartisan coalition of Massachusetts and Rhode Island politicians — including Republican Scott Brown and Democrat John F. Kerry — inserted language in the $1.2 trillion Senate omnibus budget bill prohibiting any of the money from being used to approve the project. The measure would have halted federal permitting for Weaver’s Cove, but Senate majority leader Harry Reid abandoned the full bill late Thursday night after support for it faltered. [I.e., Reid’s omnibus bill to fund the federal government for the next year, which included assorted earmarks and riders, was scrapped in favor of a bill to be voted on by the new Congress that has not yet been crafted.]

Members of the two states’ congressional delegations pledged to have the same provision added when the budget is ultimately debated, the latest turn in opponents’ ramped-up campaign to kill the nearly decade-old plan to deliver super-cooled natural gas to Fall River. Critics say a terrorist attack or accident would place thousands of people in peril in the densely populated city and harm fish habitat and tourism.

“We want to put a stake through this vampire’s heart,’’ said Representative Barney Frank, Democrat of Newton, who first inserted the spending prohibition into a House bill this year [Frank, who is my own Congressman, should keep his nose out of energy, IMO; he has already done more than anyone in Congress to screw up the US banking industry] with Representative James P. McGovern, Democrat of Worcester, which Senate colleagues then picked up.

Only one other LNG storage facility exists on Massachusetts shores — in crowded Everett, where post-9/11 safety concerns have made it a national symbol of where not to place such facilities.

Yet Hess, the company behind the estimated $700 million Fall River project, will press ahead despite the continued and “disappointing’’ efforts to kill it, said Gordon Shearer, chairman of Weaver’s Cove Energy. He said the project will bring 1,000 jobs to the region and the political obstacles it has endured are unfair.

“It is most viable and needed,’’ said Shearer. “We have a process in place that allows people to evaluate and weigh these things. . . . So why can’t it be allowed to work here? Once you start bypassing [established procedures] where do you stop?’’

Hess now proposes to have up to 70 LNG tankers a year travel up Narragansett Bay to berth in Mt. Hope Bay. From there, a subsea pipe would carry the liquefied gas more than 4 miles up the Taunton River to a storage facility at a former oil terminal. Then it would be vaporized to go to homes or businesses or be shipped by truck as a liquid.

The company’s original proposal called for LNG tankers to dock at the Fall River terminal. While that plan was approved by the Federal Energy Regulatory Commission in 2005, McGovern successfully blocked federal funding to demolish an old bridge, preventing the massive tankers from getting up the Taunton.

Weaver’s Cove then proposed using smaller vessels, but the US Coast Guard rejected that, saying they would not be able to safely navigate the river or bridges. Now the energy commission is reviewing the plan to berth in Mt. Hope Bay, a spokeswoman said last week.

The LNG project has parallels to Cape Wind, the proposed 130-turbine project in Nantucket Sound that is expected to begin construction next year [#msg-49606470]. Both are massive energy projects that have spent almost a decade getting federal approvals. Both have been opposed by politicians who have tried to work language into federal legislation to have them killed. But unlike the massive wind farm, which received federal support and ultimately secured state support in the Patrick administration, Weaver’s Cove has virtually no state or local political support.

Still, the project has moved forward because LNG exports and imports are overseen by federal energy regulators, not local and state authorities.

Seven years ago, as the natural gas supply waned in the United States, a flurry of LNG projects were proposed across the country and in New England, from on a Boston Harbor Island to Harpswell, Maine. Most died out after an LNG terminal was built in St. John, New Brunswick, or because of public opposition.

An LNG port was built 10 miles off Gloucester, however, and another proposal remains viable in northern Maine. While new natural gas deposits have been found across the country, Shearer said an LNG port in New England is still needed because there is little gas storage here. He says the LNG terminal can help lower and stabilize gas prices.

“In spite of everything you read, New England is still at the end of the energy pipeline grid,’’ Shearer said.

In the past year, opponents have redoubled efforts to stop the project. Save the Bay, a Rhode Island advocacy group, took out a large ad in the Wall Street Journal recently warning investors against the project. Opponents were also spurred on when Federal Energy Regulatory Commission meeting minutes revealed testimony against the project by a National Marine Fisheries Service official, who said the offshore berth was inappropriate because winter flounder in Mt. Hope Bay are on the verge of collapse. Shearer said Hess is willing to offer a $15 million plan to offset any harm.

The city of Fall River, which opposes the project, is challenging Weaver’s Cove on calculations they used to determine the spread of flammable gas in an LNG pipe rupture, saying the company dramatically underestimated how large an area might be affected. The designation of the Taunton River as a federal Wild and Scenic River — and a letter from the National Parks Service to the energy commission suggesting the project was incompatible with that title — is also encouraging, opponents said.

“It’s just in the wrong place,’’ said Gordon Carrolton , a board member of the Coalition for Responsible Siting of LNG, as he stood in Somerset and gazed across the Taunton River at Fall River. Carrolton grew up sailing on the bay and said people in Boston don’t seem to know that a massive LNG terminal similar to the one that has drawn so much negative attention in Everett could be coming to the city.

“When they were trying to site the LNG terminal [on a Boston Harbor Island] everybody was up in arms,’’ Carrolton said. “But that was way out [from people] in comparison to this.’’‹

[DewDiligence]

Encana Buys Stake in Kitimat LNG-Export Terminal

[Financial terms were not disclosed. ECA’s own PR is at http://finance.yahoo.com/news/Encana-to-acquire-30-percent-bw-1457607669.html?x=0&.v=1 .]

http://ca.finance.yahoo.com/news/Encana-buy-30-per-cent-stake-capress-2837323165.html

›By Lauren Krugel
Friday March 18, 2011, 3:07 pm EDT

CALGARY - Canadian natural gas giant Encana Corp. is looking to tap into lucrative overseas markets by taking a 30 per cent stake in an export terminal planned for the northern British Columbia coast.

"New and plentiful natural gas supplies and reserves have created a remarkable opportunity to expand our well-developed energy trade to other continents," chief executive officer Randy Eresman said in a release Friday.

At the facility in Kitimat, B.C., the gas will be converted into a liquid in ultra-cold temperatures. The liquefied natural gas, or LNG, can then be loaded onto specialized tankers and sold around the world.

North America is currently awash in natural gas as new technology unlocks huge volumes from shale formations that had once been too costly to exploit. Virtually all of North America's gas moves around the continent by pipeline and has not yet had meaningful access to burgeoning Asian markets.

The supply glut in North America has dampened the price producers like Encana (ECA) are able to fetch for their gas, so there's good reason to look abroad.

"We expect that this project will help advance North America's natural gas economy across the Pacific to markets where demand is growing and natural gas prices are more closely tied to oil prices," Eresman said.

The current operator of the project, U.S.-based Apache, will own 40 per cent, while Encana and third partner EOG Resources Canada Inc. will each own 30 per cent.

Engineering and design work is underway on the Kitimat terminal, which will have an initial capacity of 700 million cubic feet per day. The three companies could begin exporting gas in 2015. The National Energy Board is in the process of reviewing the project.

The company's did not disclose financial details of the deal. Preliminary construction costs are estimated to be about $3 billion.

Encana and Apache already work together developing land in the Horn River Basin in northeastern B.C.

"Encana is a natural partner with Apache and EOG for the Kitimat project," said Janine McArdle, president of Kitimat LNG and a senior vice-president at Apache.

Citing industry studies, Encana said the province could increase production from its current level of 2.8 billion cubic feet per day to more than seven billion bcf/d within the next decade.

Meanwhile, the partners are in talks with potential Asia-Pacific customers interested in buying the gas.

Earlier this year, Encana inked a $5.4-billion joint-venture with PetroChina to work together on B.C. and Alberta shale lands.

At the time, Eresman said a push into the LNG scene was on Encana's radar.

"We are, of course, very interested in the expansion or the creation of an LNG export market from North America and we do think it makes a tremendous amount of sense for that market to be linked to the Asian market from a proximity point of view,'' he told a February conference call.

He said LNG wasn't part of Encana's negotiations with PetroChina, "although I fully understand and appreciate the desire for PetroChina to link up with LNG in North America.''

Encana also has a farm-out agreement with Korea Gas Corp. Korea is one of many Asian countries with an appetite for liquefied natural gas.

The demand for liquefied natural gas in Asia is enormous, said Ed Kallio, with Ziff Energy Group. Asian demand is expected to more than double from about 18 to 19 bcf/d to 42 bcf/d by 2020, he said.

Most long-term LNG contracts in Asia track robust oil prices more closely than they do lacklustre North American gas prices, Kallio added.

"If you can take gas and sell it into an oil-referenced market, you're getting a huge uplift on the price, on the value of your gas," [no kidding] he said.

And LNG demand is likely to grow if countries around the world become increasingly wary of nuclear power. Several reactors at a Japanese nuclear facility were badly damaged in last week's massive earthquake and tsunami, and officials have been scrambling to prevent a full-scale meltdown for several days.

"There have to be questions as to whether you'd consider replacing that capacity with more nukes, or with another source of energy," Kallio said.‹

[DewDiligence]

Owners of IOC may find this piece of interest even if
they do not concur with the posited thesis. (I do not
concur with it, FWIW.) Thanks to ‘CommanderCricket’
on SI for this find.

http://www.americanthinker.com/2011/03/soros_wins_under_obamas_energy.html

›Soros Wins Under Obama's Energy Policies

March 28, 2011
By Ed Lasky

Are Barack Obama's energy policies influenced by hedge fund billionaire and political patron, George Soros?

Abby Wisse Schacter, in the New York Post, notes that the Obama administration is clamping down on oil and gas development in America (both onshore and offshore) but is hell-bent on helping other nations tap their resources and points out that such help is being showered specifically in New Guinea, of all places.
It is starting to look obvious that the administration doesn't want oil exploration and extraction at home while it is promoting the same exploration and extraction elsewhere -- specifically Brazil and New Guinea. The Bureau of Ocean Management, Regulation, and Enforcement (BOEMRE) has assigned only six drilling engineers to process all permit applications pending in the Gulf of Mexico. While Michael Bromwich bemoans a lack of the staff necessary to speed up the process, he's sending his staffers to Papua New Guinea to advise its officials on ways to develop the country's offshore drilling infrastructure. A significant portion of the agency's budget is covered by fees, royalties, taxes, and rents from energy production, so curtailing drilling closes off cash flow too.

Others have commented on Obama's generosity regarding Brazil's oil wealth and how those actions might help George Soros.

But focus should now turn towards the exotic land of New Guinea.

New Guinea? Why there? Why is he using our taxpayer dollars to help energy development in New Guinea? Hasn't Secretary of the Interior Salazar bemoaned that his budget is just not large enough to process all the drilling permits submitted for tapping America's oil and gas wealth? Why are he and the President devoting staff and money to help that undeveloped island nation?

Perhaps, he just wants to pay back George Soros, who was so instrumental in helping his election and the election of fellow Democrats across America. George Soros is the Patron Saint of the Democratic Party and was a very early and generous supporter of Barack Obama's. Soros even used a loophole in Federal campaign laws that allowed him and his family to give outsized donations to Barack Obama; he also fielded his army of so-called 527 groups (such as MoveOn.Org) to help Obama win the Oval Office.

Soros also stands to massively benefit if New Guinea becomes an energy power, especially if the American taxpayer subsidizes this development.

…George Soros, through his hedge fund, has a huge ownership interest in a company called InterOil (stock symbol IOC), whose one major asset is reportedly a huge reservoir of natural gas in New Guinea. He has been increasing his ownership stake in recent months and, as of last November, showed an 11.9% ownership stake. His InterOil holding is the third-largest stock holding in his hedge fund.

InterOil has been subject to some controversy -- there are some investors who are shorting the stock, thinking that the reserves may not be as large as claimed and that it will be very difficult to develop them given the problems with developing energy resources in such an undeveloped nation and the heavy expenses overcoming those problems entail.

The stock has been soaring upward, along with the rise in energy prices. The move may also be related to the prospect that Japan will rely more on liquefied natural gas (LNG) imports (from Asian nations such as New Guinea) to power its economy in the wake of its nuclear energy problems.

But there may also be a short squeeze propelling the stock upwards. This occurs when people sell the stock short. Shorting happens when investors think a stock will fall in price. They borrow the stock from others and then sell it. They hope to be able to replace the stock they borrowed by buying it back in the market after the stock price has declined. They profit if the price they pay to buy it back (and return it to the people they borrowed it from is lower than the price they sold it at).

The nightmare for short-sellers is when the price of the stock moves contrary to what they hoped, and it moves up. Then the pain and bloodletting starts. They may face margin calls. They have to see their shorts decline in value as the stock price moves up. They may eventually be forced to buy back the stock at ever high prices. Sometimes, if there is a large short position in terms of the percentage of the stock float, serious pain ensues as the stock shoots upwards when they are compelled to meet margin calls and cut their losses. Being caught on the wrong side of a short squeeze is akin to being subject to the Wall Street equivalent of water-boarding.

Meanwhile, those who own the stock (are "long" the stock) are happily counting their riches as the value of their stock soars. They laugh all the way to the bank, as the shorts lie bloodied, bruised, and defeated, all but begging for mercy.

How can one help engineer a short squeeze? One proven way is to foster a positive news flow that boosts the prospects for the stock and send its shares upwards. Sometimes, public relations firms are involved as they spin out a series of "news" items that promise untold riches to come from a company and its shareholders (a new product, new customers and contracts, the possible sale of the company).

However, the hype can go into overdrive if you partner up with a more powerful and richer partner -- say, the United States of America.

In the case of InterOil, one big positive development has been Barack Obama's decision to invest taxpayer dollars in stoking the development of energy resources in New Guinea. InterOil disproportionally benefits from the steps Barack Obama has taken in New Guinea since InterOil's assets are dominated by its New Guinea operations. InterOil will not have to spend its own money to develop (basically, build from the ground up) the infrastructure that is needed to fully tap the wealth that lies under the leases that InterOil has in New Guinea.

Instead, the American taxpayer picks up the tab. Sweet deal. We pay the costs and InterOil (along with its major shareholder, George Soros) picks up the profits.

The market sees what is going on, even if the American taxpayers do not. The American government is picking favorites and InterOil is one of them.

Has Barack Obama made American taxpayers complicit in engineering a short squeeze in InterOil stock by deciding to help build up the nascent energy industry in, of all places, New Guinea?

This is far from the first time that political patrons of Barack Obama have minted money from his energy policies. To compound the insult to American taxpayers, much of government spending comes from borrowing money from other nations, such as China. That nation is a huge energy importer. The Chinese would be among the first beneficiaries of the development of New Guinea energy resources. Why aren't the Chinese paying to develop New Guinea's energy wealth?

We won't be the beneficiaries from the spending of tax dollars in New Guinea? We may actually be the losers from all that spending.

We have an abundance of natural gas (due to the tapping of our own shale gas reserves); we don't need LNG. We have such vast amounts of natural gas that ports that were built to import LNG are being reconfigured to export LNG [#msg-57238659]. Why is Obama spending our tax dollars to help a foreign competitor while increasing taxes exponentially on American oil and gas companies? Why encourage New Guinea to develop its LNG capability to export to China, Japan, and other nations when we can and should export our own LNG to them?

But helping America's oil and gas industry (and helping lower the energy bills for Americans) is not and never has been on the agenda of Barack Obama.

Obama's rewarding his friends and donors, who no doubt will reciprocate by supporting him in 2012, is Cook County Politics writ large. That modus operandi has always guided him.

Does his agenda include helping further enrich George Soros, sugar daddy of the Democratic Party?‹

[DewDiligence]

Cheniere (LNG) +17% today on DoE approval of LNG export from Louisiana terminal:

http://finance.yahoo.com/news/Cheniere-Receives-Additional-prnews-998040349.html?x=0&.v=1