The Time of Gas

Alberta Oil - - EDI­TOR’S LOG - NICK WIL­SON nwil­son@al­ber­taoil­


main player in the en­ergy mix, rais­ing stan­dards of liv­ing around the world for many years to come. But the im­por­tance of nat­u­ral gas, and the liq­uids that sup­port its de­vel­op­ment, is in­creas­ing in trans­port, petro­chem­i­cals and power.

Nowhere is this truer than in North Amer­ica, where a tidal wave of NGLs and LNG is chal­leng­ing Mid­dle East­ern mar­ket dom­i­nance. This great gas glut pro­vides op­por­tu­ni­ties: Wait­ing at the end of the tun­nel are plan­ners and in­vestors in LNG, gas-toliq­uids (GTL), methanol and propy­lene. And oil sands de­mand for con­den­sate is con­tin­u­ally ris­ing.

In Au­gust, the Al­berta gov­ern­ment is ex­pected to award the first of its roy­alty-de­rived sub­si­dies to petro­chem­i­cal firms. Wil­liams En­ergy will take the first fi­nal in­vest­ment de­ci­sion (FID) soon af­ter to build a propane-con­sum­ing propy­lene plant in Al­berta. Kuwaiti in­vest­ment may fol­low next year.

Al­t­a­gas ex­pects to take an FID on build­ing an LPG ex­port ter­mi­nal on the B.C. coast by year-end, and Chi­nese in­vestors are in talks with Al­berta’s In­dus­trial Heart­land As­so­ci­a­tion to build a methanol ex­port plant.

Canada’s nat­u­ral re­sources min­is­ter, Jim Carr, says by the end of Septem­ber the feds will de­cide whether to green­light B.C.’s first ma­jor LNG ex­port plant. South African and U.S. firms are study­ing build­ing GTL plants in Al­berta too, to pro­duce trans­port fu­els and naph­tha. These FIDs will be in­flu­enced by oil prices—GTL is prof­itable when oil prices are high and gas prices low, and LNG prices in Asia are linked to oil. Fur­ther­more, Canadian de­mand for LNG as a trans­port fuel for trucks looks poised to grow.

This fall, the Al­berta gov­ern­ment will un­veil its plans to phase out coal­fired power plants in the prov­ince, mak­ing room for 1.5 bil­lion cf/d of nat­u­ral gas de­mand to help fill the vac­uum along with re­new­ables. And that’s just Al­berta.

Abun­dant U.S. gas sup­ply is at­tack­ing other mar­kets, cre­at­ing an es­cape valve for the con­ti­nent’s over­pro­duc­tion and sup­port­ing gas prices. The Texas Gulf coast has ex­panded propane ex­port fa­cil­i­ties eas­ing the glut; Mex­i­can de­mand for U.S. pipe­line gas is in­creas­ing; the Euro­pean ap­petite for U.S. east coast LNG is whet­ted; and U.S. petro­chem­i­cal giants are spend­ing bil­lions on eth­yl­ene plants, boost­ing eth­ane de­mand. Ad­di­tion­ally, Wash­ing­ton is lead­ing a drive to re­place coal with gas for the na­tion’s power plants. As an added short-term bonus, weather watch­ers pre­dict that Mother Na­ture will this year pro­duce a force­ful La Nina, bring­ing a cold win­ter with her. This fall, the lights at the end of the great gas glut tun­nel should start turn­ing green.

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