Other Source of Energy

The SMH has an article speculating that east african may be the next frontier for the gas age, imperiling new Australian coal seam gas projects - $100b LNG projects imperiled by African gas rush.

The discovery along Africas east coast of the worlds biggest gas finds in a decade threatens to undo investment plans on the other side of the Indian Ocean. Royal Dutch Shell, BG Group of the UK and Frances Total may scale back projects to build liquefied natural gas export plants in Australia and switch to Tanzania and Mozambique, where the new prospects lie and will cost about half as much, according to Jefferies International.

The LNG boom in Australia, where $180 billion of planned investment was set to make gas the countrys fastest-growing export over the next five years, risks losing strength as labor and material shortages force up building costs. As energy companies consider the next $100 billion of projects, a switch to East Africa would hold back Australias market share in China and India, where energy consumption is forecast to rise more than 60 percent by 2030.

“Because of the volume thats been discovered in East Africa, the economics look to be able to challenge Australian LNG projects, given the cost inflation they have experienced,” said Peter Hutton, an RBC Capital Markets analyst in London. “All companies will have that on their radar.”

The Asian market for LNG, gas thats chilled to a liquid for shipment by tanker, accounts for about two-thirds of global demand and will grow by 6 percent a year this decade, according to Sanford C. Bernstein & Co. Among six Australian projects scheduled to reach investment decisions in 2013, few will be approved because of climbing costs, Neil Beveridge, a Hong Kong- based analyst at Bernstein, said in a report this month.

The Australian has a rather weird article suggesting Australian exports to Asia of LNG from coal seam gas could be under threat from American exports of shale gas - US revolution puts Australian exports at risk. While shale gas seems to have solved the USs yawning natural gas deficit it doesnt look like the shale plays are going to supply the sorts of volumes in the long term that will underpin LNG export infrastructure.

THE shale gas revolution in the US could threaten long-term demand for Australian LNG exports as big energy players start to talk about exporting gas from North America to Asia.

While any export of shale gas is at least six years away, big energy players such as Apache are already mentioning the potential for shale gas exports to Asia.

As recently as five years ago, the US was expecting to need large volumes of LNG to offset a domestic gas shortage.

But technological leaps in shale gas extraction technology have unlocked previously unavailable resources.

The domestic US market is now oversupplied with low prices.

"Talk of new LNG re-gasification (import) terminals in North America has been replaced by talk of liquefaction plants, which means that US shale gas may find markets in Asia and compete against other suppliers, including Australia," Deloitte Australian oil and gas leader Stephen Reid said.

Deloitte focused on the issue in a report released yesterday.

The potential for shale LNG exacerbates earlier concerns that increasing shale and coal seam gas production in China could give Australia only a short time to line up LNG contracts for a host of planned multi-billion-dollar export ventures.

While analysts have raised concerns, most LNG producers maintain China-driven gas demand is likely to be strong enough to soak up all new supply.

Apache is looking to open Kitimat LNG terminal on Canadas west coast, producing 5 million tonnes a year, and has shale gas acreage that could eventually be shipped to Asia.

Encana has also talked about exporting LNG through Kitimat, while Houston-based LNG terminal operators Cheniere Energy and Freeport LNG have reportedly applied to US regulators for permits to export gas from the US Gulf Coast.

Last week, ConocoPhillips, which owns 50 per cent of the Australia Pacific LNG plant slated for Gladstone, said LNG demand was already rising because of Japans need for the fuel to replace power lost from nuclear plants at Fukushima.