News
ENLARGE
DARREL CUMMINGS
In a guest column in the Nov. 17 News-Review, Greg Hickey expressed alarm that LNG will be exported to China. With the advent of horizontal drilling and hydro-fracturing of shale formations, known natural gas reserves are calculated to be in excess of a 100-year supply. When one contemplates shale formations yet to be discovered, the millions of acres of federal lands that are not now available for drilling, the massive Alaska reserves (that would need a pipeline to the lower 48) and the outer continental shelves which are now off limits to American drillers (but not to Canadian, Cuban or Mexican drillers), the natural gas supply would seem sufficient.
Cnooc (China National Offshore Oil Corp) has made a $2.16 billion deal with Chesapeake Energy for a one-third interest in a 600,000-acre shale field in South Texas. It is subject to a 75-day review by the Committee on Foreign Investment in the United States; it is felt they will not oppose the deal. A spokesman for Chesapeake stated the deal might create up to 20,000 jobs. Cnooc also has small interests in deep water projects in the Gulf of Mexico owned by Statoil, the Norwegian firm.
Although China's per capita energy use is about one-fourth the rate of the U.S., their total energy use has now exceeded the U.S., making China the world's largest energy user. In 2009, China spent $17.1 billion acquiring oil and gas interests and $24.3 billion in 2010, according to data provider Dealogic. 2011 totals will probably be more. This year China made deals in Venezuela, Brazil, Argentina and Canadian oil sands to add to their existing interests in Africa, Iraq, Iran and their own drilling in the South China Sea.
If the South Texas project results in any technology transfer, the Chinese need for American LNG might evaporate. The International Energy Agency says China has reserves of 26 trillion cubic meters of shale gas (a cubic meter = 35 cubic feet) which they have not been able to tap because of a lack of drilling know-how.
Due to abundant supply, well-head prices in the U.S. the last couple of years has ranged from $2.50 to $4.50 per million British thermal unit, in Asia $10 to $17. Low prices have stimulated investment. Sasol, the South African company, has announced plans to spend $10 billion on a plant to produce diesel fuel from natural gas. Sasol estimates the plant could produce 96,000 barrels/day and it will be located on land next to their chemical plant in Calcasieu Parish, La.
Cheniere Energy Partners has agreed to sell BG Group PLC (a British company) $8.2 billion of LNG over 20 years. Cheniere will build a $6 billion facility in Cameron Parish, La., while BG Group, formerly one of the largest importers of LNG into the U.S. is seeking permits to convert a facility in Lake Charles, La., to export LNG. Many other projects and deals in work.
Many of these projects face permitting issues, extensive environmental reviews, and possible lawsuits. Maybe eventually they will result in jobs and better balance of payments. In 2010 the U.S. spent $352 billion on foreign oil/gas, in 2011 it has hovered around a $1.2 billion per day. Astounding, considering the amount of potential energy in the U.S.
Darrel Cummings has been a resident of Roseburg since 2002. He retired as the supervisor of engineering in the development testing laboratory for Solar Turbines Inc. of San Diego. He can be reached at darrelcummings@hotmail.com.
In a guest column in the Nov. 17 News-Review, Greg Hickey expressed alarm that LNG will be exported to China. With the advent of horizontal drilling and hydro-fracturing of shale formations, known natural gas reserves are calculated to be in excess of a 100-year supply. When one contemplates shale formations yet to be discovered, the millions of acres of federal lands that are not now available for drilling, the massive Alaska reserves (that would need a pipeline to the lower 48) and the outer continental shelves which are now off limits to American drillers (but not to Canadian, Cuban or Mexican drillers), the natural gas supply would seem sufficient.
Cnooc (China National Offshore Oil Corp) has made a $2.16 billion deal with Chesapeake Energy for a one-third interest in a 600,000-acre shale field in South Texas. It is subject to a 75-day review by the Committee on Foreign Investment in the United States; it is felt they will not oppose the deal. A spokesman for Chesapeake stated the deal might create up to 20,000 jobs. Cnooc also has small interests in deep water projects in the Gulf of Mexico owned by Statoil, the Norwegian firm.
Although China's per capita energy use is about one-fourth the rate of the U.S., their total energy use has now exceeded the U.S., making China the world's largest energy user. In 2009, China spent $17.1 billion acquiring oil and gas interests and $24.3 billion in 2010, according to data provider Dealogic. 2011 totals will probably be more. This year China made deals in Venezuela, Brazil, Argentina and Canadian oil sands to add to their existing interests in Africa, Iraq, Iran and their own drilling in the South China Sea.
If the South Texas project results in any technology transfer, the Chinese need for American LNG might evaporate. The International Energy Agency says China has reserves of 26 trillion cubic meters of shale gas (a cubic meter = 35 cubic feet) which they have not been able to tap because of a lack of drilling know-how.
Due to abundant supply, well-head prices in the U.S. the last couple of years has ranged from $2.50 to $4.50 per million British thermal unit, in Asia $10 to $17. Low prices have stimulated investment. Sasol, the South African company, has announced plans to spend $10 billion on a plant to produce diesel fuel from natural gas. Sasol estimates the plant could produce 96,000 barrels/day and it will be located on land next to their chemical plant in Calcasieu Parish, La.
Cheniere Energy Partners has agreed to sell BG Group PLC (a British company) $8.2 billion of LNG over 20 years. Cheniere will build a $6 billion facility in Cameron Parish, La., while BG Group, formerly one of the largest importers of LNG into the U.S. is seeking permits to convert a facility in Lake Charles, La., to export LNG. Many other projects and deals in work.
Many of these projects face permitting issues, extensive environmental reviews, and possible lawsuits. Maybe eventually they will result in jobs and better balance of payments. In 2010 the U.S. spent $352 billion on foreign oil/gas, in 2011 it has hovered around a $1.2 billion per day. Astounding, considering the amount of potential energy in the U.S.
Darrel Cummings has been a resident of Roseburg since 2002. He retired as the supervisor of engineering in the development testing laboratory for Solar Turbines Inc. of San Diego. He can be reached at darrelcummings@hotmail.com.
