Actual Injection/(Withdrawal): (72) Bcf
Economist Average Estimate: (75) Bcf
Previous: 3,724 Bcf
Can a movie actually convince you to support torture? Can a movie really persuade you that “fracking” — a process used to drill for natural gas — is a danger to the environment? Can a movie truly cause you to view certain minority groups in a negative light?
Some scoff at the notion that movies do anything more than entertain. They are wrong. Sure, it’s unlikely that one movie alone will change your views on issues of magnitude. But a movie (or TV show) can begin your “education” or “miseducation” on a topic. And for those already agreeing with the film’s thesis, it can further entrench your views. – Read More
* The Multiple Distortions of Wind Subsidies – WSJ
Federal subsidies for new wind-power generation will end on Dec. 31 unless they are renewed by Congress. For the sake of our economy and the smooth operation of the energy market, Congress should let the subsidies lapse. They waste taxpayer money, subvert the allocation of capital, and generate a social cost many times the price tag of the subsides themselves.
Since 1992, the federal government has expended almost $24 billion to encourage investment in wind power through direct spending, tax breaks, R&D, loan guarantees and other federal support of electric power. The Joint Committee on Taxation estimates that a one-year extension of existing federal subsidies for wind power would cost taxpayers almost $12 billion. – Read More
* Lawmaker Gets a Say on Gas Exports – WSJ
New discoveries of natural gas are beginning to transform the U.S. economy, and energy companies say exporting it is the next logical step. But a call for restraint is coming from Sen. Ron Wyden.
The Oregon Democrat, who will have a powerful perch in Congress to influence the debate, has been fielding substantial home-state opposition to such exports. The brewing fight illustrates how energy abundance can be just as divisive in Washington as a shortage, a theme likely to play out in coming years as the U.S. deals with growing energy supplies. – Read More
* McMoRan Exploration Co. Updates Gulf of Mexico Exploration and Development Activities – McMoRan
McMoRan Exploration Co. (NYSE: MMR) updated its ultra-deep exploration and development activities in the shallow waters of the Gulf of Mexico (GOM) Shelf and onshore in the Gulf Coast area, including ongoing operations at Davy Jones No. 1, completion plans at Blackbeard West No. 2 and operations at Lineham Creek and Lomond North. – Read More
*Exxon to Sempra Can Export Half of U.S. Home Gas Supply: Energy – Bloomberg
Natural gas suppliers from Sempra Energy (SRE) to Exxon Mobil Corp. (XOM) are fighting for the first U.S. export permits after a study said selling some of the fuel to Asia will benefit the economy more than consuming it domestically.
They could win approval for projects to ship about 6 billion cubic feet a day of liquefied natural gas by 2025, according to estimates by consultants including Tudor Pickering Holt & Co. That amount of LNG would supply about half the current U.S. residential market and is worth $93 million a day at Japan’s current import price, a global benchmark. – Read More
*Drillers Shift to Use of Natural Gas – WSJ
Energy companies that want Americans to embrace the use of inexpensive natural gas are beginning to lead by example. The three biggest providers of oil-field services in North America—Schlumberger Ltd. (ticker: SLB), Halliburton Co. (Ticker: HAL) and Baker Hughes Inc. (Ticker: BHI) are spending millions of dollars to retrofit pumps and drilling-rig engines to run on natural gas instead of diesel fuel. – Read More
*High Energy Costs Plaguing Europe – The New York Times
On Dec. 19, Voestalpine, an Austrian maker of high-quality steel for the auto industry, announced that it would build a plant in North America that would employ natural gas to reduce iron ore to a kind of raw iron that would then be used in the company’s European blast furnaces.
Asked whether he had considered building the plant in Europe, Voestalpine’s chief executive, Wolfgang Eder, said that that “calculation does not make sense from the very beginning.” Gas in Europe is much more expensive, he said. High energy costs are emerging as an issue in Europe that is prompting debate, including questioning of the Continent’s clean energy initiatives. – Read More
*Encana to Sell Its Interest in Proposed Kitimat Liquefied Natural Gas Export Terminal – Encana
Encana Corporation (TSX: ECA) (NYSE: ECA) (Encana) has agreed to sell its 30 percent interest in the proposed Kitimat liquefied natural gas (LNG) export terminal project to Chevron Canada Limited
(Chevron), subject to regulatory approvals and post-closing adjustments. Included in the sale are Encana’s 30 percent interest in the associated Pacific Trail Pipelines as well as approximately 32,500 acres of undeveloped land in the Horn River Basin of northeastern British Columbia and the assumption of Encana’s take-or-pay processing commitments for the first phase of the Cabin Gas Plant.
“This investment by Chevron, a multinational LNG player, represents a key step in the development of LNG export from Western Canada,” says Randy Eresman, Encana’s President & CEO. “Our main goal since we first acquired an interest in Kitimat LNG almost two years ago was to help ensure the progression of this project towards its development. While we are no longer a direct participant in this project, we continue to support LNG export as vital to diversifying markets for North American natural gas.” – Read More
*Cheniere and Total Sign 20-Year LNG Sale and Purchase Agreement for LNG Exports from Sabine Pass – Cheniere
Cheniere Energy Partners, L.P. (“Cheniere Partners”) (NYSE MKT: CQP) announced today that its subsidiary, Sabine Pass Liquefaction, LLC (“Sabine Liquefaction”), has entered into a liquefied natural gas (“LNG”) sale and purchase agreement (“SPA”) with Total Gas & Power North America, Inc. (“Total”) under which Total has agreed to purchase 91,250,000 MMBtu of LNG annually plus 13,500,000 MMBTU of seasonal LNG volumes upon the commencement of train five operations. These volumes represent approximately 2.0 million tonnes per annum (“mtpa”) of the approximately 4.5 mtpa of nominal capacity of train five being developed at Sabine Liquefaction.
Sabine Liquefaction is currently developing five liquefaction trains adjacent to the Sabine Pass LNG terminal. The first two trains are under construction and the third and fourth trains are expected to commence construction in 2013. As previously announced, a partial assignment agreement was entered into between Sabine Liquefaction and Total, allowing Sabine Liquefaction to gain access to services under Total’s terminal use agreement with Sabine Pass LNG, L.P., including Total’s berthing and storage capacity, making further expansion of the LNG export capabilities at the Sabine Pass LNG terminal possible. – Read More
RESEARCH COMMENTARY
*Macquarie (12/27/12)
In Wednesday’s trading Natural Gas for January delivery gained 4.6 cents to settle at $3.392. This was the first gain on the day in 3 days due to below freezing temps in most of the Midwest and Northeast. With this said this said, the NG contract for January delivery is trading 6.6 cents lower at $3.326 per mmBtu currently. The market appears to be more focused on a warmer weather outlook for much of the U.S. in the 11-15 forecast. Another bearish note for NG could be the EIA storage number which comes out on Friday. Current Surveys predicting that this will produce a draw somewhere in the 70’s bcf range. This is much lower than historical draws for this time period.
There is also a potential bearish note on the technical’s side as well. NG has traded lower over the past few days, approaching the 100 Day MA. A settle below the 100 Day MA should produce more bearish signals for NG in the near term. A EIA storage draw in the 60’s may force NG below the 100 day MA average as well.
CLSA (12/20/12)
As an anemic 2012 draws to a close, we believe significant natural-gas demand drivers will have to emerge or show signs of real potential in 2013 in order to drive interest in E&P stocks. The decline in the rig count already addresses the supply side of the equation. Now demand needs to step up. LNG exports, for example, loom large, but it remains a political issue even following the recent report from the Dept of Energy and, in any case, won’t be material for another five years. Weather aside, we think E&P investors need to keep a close eye on two themes in 2013: the stickiness of natural-gas power generation and movement in the increasing use of natural gas as a transportation fuel.
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