Woodside Starts Global LNG Supply Push

By Reuters 2015-06-06 21:06:05

Australia’s Woodside Petroleum is expanding its LNG business and aims to build a global supply network ahead of an expected surge in trading of the fuel, its chief executive said in an interview.

Peter Coleman said Woodside’s latest venture with U.S.-based Sempra, announced on Wednesday, to potentially build from scratch an LNG export plant in the United States at Port Arthur was the latest signal of its intention.

“What our strategy is: focus on Asia customers, but sourcing LNG globally,” and not just from the company’s existing Australian producing plants, he said on the sidelines of an industry conference in Paris.

Sources close to the matter say the strategy could take advantage of any disruption at BG Group, a heavyweight in LNG trading which analysts think could lose some of its flexibility following its takeover by oil giant Shell.

“We see an opportunity in the marketplace at the moment for a company like Woodside to differentiate,” Coleman said.

The world’s biggest LNG buyers in Asia have shown a strong appetite for United States-sourced supply due to its linkage to domestic Henry Hub gas prices, some of the world’s cheapest.

A shale gas-drilling boom brought U.S. futures prices down to decade-low levels, providing a cheap feedstock for LNG export plants. In contrast, LNG supply sourced from Australia is linked to a more expensive basket of crude oil grades.

“For us we see a real opportunity in the marketplace where Woodside can position itself, we want to be seller of choice to our buyers, but to do that we need to offer options,” Coleman said.

The Sempra deal follows Woodside’s agreement to buy LNG supply from Cheniere’s planned Corpus Christi export plant on the U.S. Gulf Coast. Last year, it also paid $3.7 billion to buy stakes in Canada’s Kitimat LNG and Australia’s Wheatstone projects.

“The Port Arthur deal (with Sempra) extends the Corpus arrangement where we are a buyer, to actually one step upstream where together we can add our value as Woodside,” Coleman said.

“What that does is it allows us to bring to our customer optionality with respect to the LNG’s pricing point, and also its geography and distance from markets.”


Government to Reveal Offshore Fracking Details

By MarEx 2015-06-06 20:58:00

The U.S. government has agreed to provide an environmental group with documents revealing information about the use of hydraulic fracturing for oil and gas drilling in the Gulf of Mexico.

The Center for Biological Diversity filed a lawsuit against U.S. offshore drilling regulators earlier this year seeking data on how much fracking has been allowed in the Gulf.

The federal government must reveal the extent of offshore fracking occurring in the Gulf of Mexico under a legal settlement filed in U.S. District Court in Washington, D.C. The agreement settles a Center for Biological lawsuit that challenged the government’s failure to disclose offshore fracking documents requested under the Freedom of Information Act.

Under the new agreement, the Bureau of Ocean Energy Management and the Bureau of Safety and Environmental Enforcement are required to turn over permits, reports, emails and other documents related to the federal government’s approval for oil and gas companies to frack offshore wells in the Gulf.

“Offshore fracking has been shrouded in secrecy, but this settlement will finally force the government to tell us where oil companies are using this toxic technique,” said Kristen Monsell, a Center attorney. “Fracking pollution is a huge threat to marine animals, and the high pressures used to frack offshore wells increase the risk of another devastating oil spill. This inherently dangerous activity just doesn’t belong in the Gulf of Mexico.”

Oil and gas companies are allowed to dump fracking chemicals mixed with wastewater directly into the waters of the Gulf, says the Center, but the government can’t say how much oil waste is being dumped into the ocean because it’s not tracking such discharges.

Offshore fracking is similar to fracking that occurs onshore — companies blast water and chemicals into the earth at high pressures to crack rock beneath the Earth’s surface, in this case the ocean floor. Onshore, fracking is done in 90 percent of wells on federal land, and it’s increasingly common offshore.

The federal government reportedly allowed oil and gas companies to frack at least 115 offshore wells in the Gulf of Mexico in 2013, but the full extent of offshore fracking is unknown. Oil industry representatives have said they plan to increase the use of the technique so that they can extract oil from even deeper wells. There are nearly 4,000 offshore platforms in the Gulf, so the scope of the practice could increase dramatically.

Center scientists recently released a report outlining the dangers of toxic chemicals, air pollution and earthquake risk linked to offshore fracking. Fracking can expose coastal communities to air pollutants that cause cancer and other illnesses, it states.

Earlier this year, the Center filed a separate lawsuit against the federal government for rubberstamping offshore fracking off California’s coast without analyzing fracking pollution’s threats to ocean ecosystems, coastal communities and marine wildlife. The case, which is currently pending in the Central District of California, could impact all federally permitted offshore fracking, including in the Gulf of Mexico.

“Every offshore frack increases the risk to wildlife and coastal communities,” Monsell said. “The government has no right to give the oil industry free rein to frack at will in our oceans or to keep coastal communities in the dark about this toxic industrial activity.”

EPA Control

The Bureau of Safety and Environmental Enforcement (BSEE) has stated that all discharges from offshore fracking must meet EPA specifications as required in the operators discharge permit. All discharges are regulated by the EPA under the general NPDES permit for offshore oil and gas operations, which addresses the chemical constituents that are allowable for overboard discharge of treated water.

The EPA has deemed the discharges related to hydraulic fracturing to be considered as well treatment fluids and are authorized for discharge subject to the requirements of the general permit for discharge and that no additional requirements or approvals would be needed from the EPA.

Hydraulic fracturing has been used offshore for several decades.


Taiwanese Coast Guard Launches Biggest Ships

By Reuters 2015-06-06 20:02:56

Taiwan’s coast guard commissioned its biggest ships for duty in the form of two 3,000-ton patrol vessels on Saturday, as the island boosts defenses amid concerns about China’s growing footprint in the disputed South China Sea.

The new vessels will be able to dock at a new port being constructed on Taiping Island, the largest of the naturally occurring Spratly Islands in the South China Sea, before the end of this year.

Taiwan’s coast guard has had direct oversight of the 46-ha (114-acre) island, also known as Itu Aba, since 2000.

“Taiping Island’s defense capabilities will not be weak,” said Wang Chung-yi, minister of the Coast Guard Administration, referring to recent upgrading done on the 1,200-metre (yards) long airstrip on Taiping and the building of a new port, which he said could be completed as early as October this year.

“As far as Taiping Island is concerned, we still maintain not so much a military as a civil role,” Wang told Reuters in an interview in Taipei. Taiwan will not create conflict, but if it is provoked “we will not concede,” he said.

Unlike the Philippines and Vietnam, Taiwan has largely avoided becoming ensnared in public disputes with China over the South China Sea, through which $5 trillion in ship-borne trade passes every year.

Beijing claims most of the South China Sea, while the Philippines, Brunei, Malaysia, Taiwan and Vietnam also have overlapping claims.

Rival claims by Taiwan and China go back to before defeated Nationalists fled to Taiwan after losing a civil war with the Communists in 1949.

Beijing sees self-ruled Taiwan as a renegade province to be retaken one day and bans actions that would confer sovereignty, such as negotiating territorial disputes in the South China Sea.

Taiwan President Ma Ying-jeou boarded one of the new ships on Saturday, observing rescue drills in waters off the southern Taiwan port city of Kaohsiung.

One of the vessels will be sent to the South China Sea, while the other will be assigned to waters north of Taiwan where it has overlapping claims with Japan.

Japan’s Yomiuri newspaper reported on Saturday that Group of Seven leaders meeting in Germany on Sunday would express their concern over any unilateral action to change the status quo in the East and South China Seas.

China has been criticized for extensive reclamation work and moves to turn submerged rocks into man-made structures. The United States last week said Beijing had placed mobile artillery systems in contested territory.


Death Toll Rises in Chinese Cruise Disaster

By MarEx 2015-06-05 21:08:52

The death toll from a Chinese cruise ship which capsized during a storm in the Yangtze River jumped to 331 on Saturday, leaving around 100 still missing, as the boat operator apologised and said it would cooperate with investigations.

Only 14 survivors, one of them the captain, have been found after the ship carrying 456 overturned in a freak tornado on Monday night.

Rescuers are searching the cabins of the ship, which was righted on Friday, looking for more bodies, the official People’s Daily, wrote on its microblog.

Jiang Zhao, general manager of the company which operated the Eastern Star, bowed in apology for the disaster during an interview with state media reported late on Friday, saying they would “fully” cooperate with the investigation.

Beijing has pledged there would be “no cover-up” in the probe.

Police have detained the captain and chief engineer for questioning. An initial investigation found the ship was not overloaded and had enough life vests on board.

More than 1,000 family members have come to Jianli in the central province of Hubei, where the ship went down, with many expressing frustration at a lack of information from the government.

On Friday, an irate relative of two passengers missing aboard the ship burst into a just-concluded news conference with senior officials and publicly accused the government of treating its people like enemies.


Huntington Ingalls Wins Aircraft Carrier Deals

By Reuters 2015-06-05 19:36:28

Huntington Ingalls Industries Inc won two contracts worth a combined $4.3 billion to complete design work and construction of the USS John F. Kennedy aircraft carrier on Friday. The Pentagon announced the news in its daily digest of major contracts.

The first contract, a fixed-price deal with an incentive fee, was worth $3.4 billion for design and construction work on the new warship, and runs through June 2022.

A second contract, a cost-plus contract with an incentive fee, was worth $941 million and is a modification of a previously awarded contract. Together the two deals will cover all remaining design and construction of the new ship, CVN 79.

Rear Admiral Thomas Moore, program executive officer for aircraft carriers, said the contract reflected three years of tough negotiations with the company to ensure the new carrier met a congressional cost cap of $11.5 billion.

“With a stable design, mature requirements and an improved build process, we will reduce construction hours by 18 percent, lower the cost to build the ship by almost $1 billion in real terms compared to CVN 78 and meet the cost cap,” Moore said.

He said the Navy would continue to drive costs down with the next ship in the class, CVN 80.

Huntington Ingalls said the contracts would help provide stability for shipbuilders at its Newport News Shipbuilding unit, but also for thousands of suppliers around the country.

Huntington Ingalls received its first contract for the carrier in fiscal 2007 to start buying materials that take a long time to procure.

The first steel was cut in December 2010, with more than 450 of the ship’s 1,100 structural units constructed since then that will be used to start erecting the ship’s hull.

The ship’s keel-laying ceremony is scheduled for August 22.