Gasoducto Bajanorth/North Baja Pipeline 2nd Annual Customer

Transcription

Gasoducto Bajanorth/North Baja
Pipeline 2nd Annual Customer Meeting
October 8-10, 2008
Electric Infrastructure of the Baja California System
Eduardo Quirazco González
October 9th, 2008
Generation units in the Baja California System
ML
IV
(3)
TIJ
(1)
ROA
(1) GT - MEXICALI
62 MW, 3 units
(2)
PRESIDENTE JUAREZ
320 MW, 2 units ST
498 MW, 2 units CC
206 MW, 3 units GT
Valley Zone
1232 MW
Coast Zone
860 MW
(2) C.C. MEXICALI ( INTERGEN )
1000 MW (3 units GT + 1 unit ST)
(1 unit GT + 1 unit ST)
Natural gas
Heavy oil, diesel and
natural gas
(3) TERMOELECTRICA DE MEXICALI
(SEMPRA)
600 MW, (2 GT + 1ST) CC
Natural gas
TV
TV Steam
SteamTurbine
Turbine
TG
Gas
TG GasTurbine
Turbine
CC
CC Combined
CombinedCycle
Cycle
GEOT
GEOT Geothermal
Geothermal
Generation
diesel
TG
GT - CIPRES
47 MW, 2 units TG
diesel
CERRO PRIETO
720 MW, 13 units GEOT
geothermal
2008 System Demand:2092 MW (August 27th, HE21)
3
14%
11.96%
12.77%
12%
9.74%
9.32%
10%
8.17%
8%
6.42%
7.06%
6.44%
6.06%
6%
5.42%
4.79%
4.14%
4%
2.85%
2.62%
2%
0.09%
0%
1991 1992 1993 1994
-2% -1.54%
-4%
-3.39%
-6%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Growth Demand
-5.25%
-8%
14%
12.50%
11.96%
12%
12.53%
*
11.29%
Consumption energy growth
10.39%
10%
8.65%
8%
5.17%
6%
4.57%
4%
2%
5.92%
5.25%
3.36%
3.15%
2.10%
1.95%
1.65% 1.63%
0%
1991
-2%
1992 -0.75%
1993 1994
1995
1996
1997
1998
1999
2000
2001
2002 2003
-1.02%
2004
2005
2006
2007
2008
4
Economic Sectors Statistic - 2007
0.4%
0.2%
89.2%
9.0%
residential
services
agriculture
commercial
medium industry
big industry
1.2%
0.0%
1,098,824 users
2.7%
4.6%
11.2%
51.0%
7.2%
10,026 GWh
23.4%
5
Generation participation
Heavy Oil
Natural Gas
Diesel
Geothermal
2003
3.6%
39.2%
0.1%
57.1%
2004
1.1%
41.9%
0.1%
56.9%
2005
2.2%
38.4%
0.1%
59.4%
2006
1.5%
42.7%
0.1%
55.7%
2007
0.2%
40.5%
0.1%
59.1%
6
Power plant factors by type
0.621
0.610
0.590
0.598
0.586
Gas Turbines
0.325
0.313
Combined Cycles
0.243
0.222
Steam units
0.196
0.065
0.054
0.022
2003
2004
0.052
0.025
2005
2006
2007
7
Transactions (GWh)
1037
929
768
790
770
563
468
316
75
2000
127
2001
249
165
97
2002
2003
Exports
81
43
48
2004
2005
2006
2007
Imports
8
Future Generation Projects
PROJET
TYPE
SOURCE
CAPACITY
OPERATION DATE
BAJA CALIFORNIA
COMBINED CYCLE
NATURAL GAS
271.9 MW
May 15TH,2009
GAS TURBINES
AERODERIVADAS
NATURAL GAS
150MW
July 1ST,2009
GT REPOWERED USING
STEAM TURBINES
COMBINED CYCLE
GEOTHERMAL STEAM
90 MW *
May1ST,2009
CERRO PRIETO V
GEOTERMICO
NATURAL GAS
100 MW
March 2012
BAJA CALIFONRIA II
COMBINED CYCLE
NATURAL GAS
280 MW
2013
BAJA CALIFORNIA III
COMBINED CYCLE
NATURAL GAS
280 MW
2014
BAJA CALIFORNIA IV
COMBINED CYCLE
NATURAL GAS
271 MW
2015
* Gas turbine of 150 MW located in PJZ power plant repowered
9
Load and Resources
2009
2010
2011
2012
2013
2014
2015
2016
DEMAND
2384
2600
2730
2866
3067
3159
3285
3417
RESOURCES (GEN + IMP)
2900
3153
3190
3240
3520
3800
4071
4071
2011
2012
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2009
2010
2013
2014
2015
2016
10
Energía Costa Azul LNG Terminal
Ensenada, Baja California
LNG Technology Enhances Benefits
Commercializes
large gas
resources with
little or no local
demand and allows
access to
previously
“stranded”
resources
Can be transported
over long
distances
12
ECA LNG Regasifying Terminal
Facts
US$1.2 billion investment,
including pipeline
28 MMC/day process capacity;
expandable to 42 MMC/day
Berth can dock 300m ships
2 storage tanks - 160,000 m3 each;
space for 2 additional tanks
A 648m breakwater built with 25m
deep concrete cells
Construction started in 2005;
Completed in May 2008
13
LNG Regasification Process
REGASIFICATION PLANT
BOG
Compressor
LNG
SEA WATER
Recondenser
GASIFICATION
GAS
Pipelines
LN
G
VAPORS
SEA WATER
VAPORS
Domestic Market
and Exports
Sendout Pump
Intank Pump
Storage tank
Open Rack
Vaporizer
ORV
SEA
14
Modes of Operations
SENDOUT CASE
Zero sendout
FLOWRATE
(MMSCFD)
-
Minimum (without ship unloading)
100
Minimum (with ship unloading)
350
Maximum normal (100%)
1,000
Peak (130%)
1,300
15
Pipelines to Mexico & US Markets
Simbología
Gasoducto TGN
Gasoducto Bajanorte
North Baja Pipeline
Ampliación Bajanorte
(propuesto para LNG)
Interconexión
LNG Terminal LNG (propuesta o
en construcción)
Plantas Eléctricas
Existentes
En Construcción
Propuestas
16
ECA LNG Project
17
ECA LNG Project
18
Main Components
1.
2.
Sea water pumps (4)
Combustion Turbine Generators (3)
3., 4. Facilities to handle boil off gas
5.
High pressure LNG pumps (7)
6.
Regasifying system (ORVs) (6)
7.
Recondenser
8.
LNG storage tanks
9., 10. LNG carrier berthing and unloading facilities
11. Electro Chlorination Plant
12. Reverse Osmosis Plant (3 trains @ 10 m3/hr per train)
9 10
1
11
8
2
7
6
3
12
5
4
19
Critical Safety Conditions
Primary Containment
Secondary Containment
Safeguard Systems
Separation Distance
Industry Standards / Regulatory Compliance
20
Our Approach Towards Sustainable
Development
GOVERNMENT
Tax, Royalties,
Rights and
Other payments
Indirect contribution to society
COMPANY
DIRECT CONTRIBUTION TO SOCIETY
ECONOMY
LOCAL
CONTENT &
EMPLOYMENT
BUSINESS
CHAMBERS
ENVIRONMENT
LOCAL
ECONOMY
HSE
CONSERVAT
CULTURE
PROGRAMS
MONITORING
SOCIAL
SOCIAL
CULTURE AND
INVESTMENT
HISTORY
(TRUST FUND)
SPONSORSHIP
AND CHARITY
GETTING ENERGY FOR THE CURRENT
AND FUTURE GENERATIONS
DEVELOPMENT
COMMUNITY
21
On-site Nursery
Over 5,000 Ferrocactus relocated & protected
22
Relocation of Marine Life
Relocated over 670,000 sea urchins, sea cucumbers & sea snails
23
Our Commitment
Energía Costa Azul is committed to global
sustainable development, by taking an integrated
approach to economic balance, environmental
and social issues as it relates to our business, for
the current and future generations benefit.
We believe we can help to achieve this goal, not
only by getting a competitive, safe and reliable
energy source to help promote regional
economies, but by respecting the environment,
diversity and local cultures to enhance quality
life through responsible Corporate actions.
24
Energía Costa Azul LNG Terminal
Ensenada, Baja California
Sempra Pipelines & Storage
2008 GB/NBP Customer Meeting
October 9th, 2008
BUILDING OUR ENERGY FUTURE
©2007 Sempra Energy. All copyright and trademark rights reserved.
©2008
What is new ?
Completed Construction of Gasoducto Bajanorte/TGN Expansion, including:
LNG Spur - 45 mile, 42” pipeline, MAOP 1480 psig, max capacity 2.9 Bcfd
TGN II - 9 mile, 30” pipeline, MAOP 940 psig, max capacity 800 MMcfd
GB Compressor Station - 30,000 hp located at the east end of GB Mainline
Installed odorization system near the LNG Spur / GB Mainline interconnect
Energia Costa Azul LNG Terminal tested successfully at maximum send out - 1.3 Bcfd
During test, deliveries reached SDG&E at Otay and SoCal at Blythe
Started Construction of the Yuma Lateral – 8 mile, 12” pipeline MAOP 1150 psig
27
©2007 Sempra Energy. All copyright and trademark rights reserved.
What is next ?
Complete SCADA integration, update portals
CRE approval GB 5-year rate case ~mid 2009
Fuel tracker implementation (GB, TGN, NBP) - target 1Q2009
Complete Construction of the Yuma Lateral
Expect LNG !
29
Scheduling Issues In The LNG World
Marvin Hoffman
Senior Transportation Coordinator
North Baja Pipeline
• Scheduling allowed within primary receipt and delivery points
• If constraint on SoCal System, Blythe delivery point will be
allocated by SoCal Gas
• Become familiar with scheduling cycles on El Paso Pipeline
• New scheduling system at least 18 months away
31
GB & TGN Pipelines
• Contract MDQs and delivery paths are unique
• Operator Communications are essential with multiple sources
of supply
• If constraint on SoCal System, Otay Mesa delivery point will
be allocated by SoCal Gas
32
ECA Spur
• Scheduled volumes may not match physical send-out volumes
• Scheduled volumes will match confirmed scheduled deliveries
off NBP, GBN and/or TGN
• Scheduled volumes are confirmed daily on ECA’s website as
‘Point Operator’
33
Rosanety Barrios Beltrán for Gasoducto Bajanorte‐North Baja Pipeline 2nd annual customer meeting
All comments and opinions given in this presentation do not
represent Comisión Reguladora de Energía opinion, but the
author´s
34
“Fair Regulation is now, and always will be, a difficult process. But is not
impossible”
Ralph M.Beese
“At most, regulation is a supplement or partial alternative to competition resorted
on a largely and ad hoc basis to secure particular objectives wich it is thought
cannot be obtained by competition”
Lee Loevinger
“Modern regulation is increasingly in need of more headlights and fewer
taillights”
Francis X Welch
35
1995 Reform
Æ Natural gas Regulation:
Reglamento de Gas Natural
Directiva de Precios y Tarifas (1996)
New Directiva de Precios y Tarifas (2007)
Methodologies, estrategic
linesÆ
Each project must be justified
by its own merits. Costs go to each system´s
users
36
37
38
Current Infraestructure
Mexicali
Importación
10 NACO 14
Nogales
Importación
Cd. Juárez
2
ACCESO ABIERTO PRIVADOS
Agua
Prieta
LIBERTAD
Santa
Ana
1
2
3
4
5
6
7
8
9
Cananea
Importación
Hermosillo
Chihuahua
Anahuac
Delicias
Guaymas
Piedras Negras
Cd.
Camargo
Química
del Rey
Jiménez
o
M
lo
nc
H id
alg
Escalón
Mo
MAZATLAN
13
o
yn
Re
6
10
11
12
13
14
15
16
17
18
Matamoros
sa
12 18
Sn. Fernando
Durango
OCEANO PACIFICO
SAN LUIS
POTOSI
AGUASCALIENTES
8
ISLAS
MARIAS
Guadalajara
SIMBOLOGÍA
PGPB sistema de transporte
Acceso abierto privado
Proyecto en evaluación
Proyecto viable
Terminal de GNL viable
Ciudad
Puntos de inyección
Planta petroquímica
Importación
nte
Saltillo
rr
C ad
ere ey yta
Parras
Torreón
rgo
ma
Ca
1
Gómez P.
Cd. Lerdo
Pandura
Miguel
Alemán
o
Castaños
TOPOLOBAMPO
Nuevo
Laredo
va
Salamanca
C.F.E. El Verde
230 km
Morelia
TA
C.F.E.
Colinas
M
A
ZU
NC
HA
3
MANZANILLO
L. Cárdenas
17
Poza
Rica
C.P.Q.
Poza R.
Sta. Ana
Cuernavaca
Cd. Madero
Tampico
16
LE
del Río Tula
Toluca
n
pa
ua
Ur
Campo
Tam.
Qro. SnTlalchinol
Juan
5
ALTAMIRA
Kinder Morgan
Gasoductos de Chihuahua
Igasamex Bajío
Energía Mayakán
Tejas Gas de Toluca
FINSA Energéticos
Transportadora de Gas Zapata
Gasoductos del Bajío
Transportadora de Gas Natural
de Baja California
Ductos de Nogales
Gasoducto BajaNorte
San Fernando
Gasoductos del Río
Agua Prieta
Conceptos Energéticos Mexicanos
Transportadora La Huasteca
Tejas Gas de la Península
Terranova Energía
Pachuca
Jalapa
Puebla
Cd. doza a
c
n
Me . Blan
T
Mérida Valladolid
GOLFO DE MEXICO
4
z
ru
ac
r
Ve
C.P.Q.
Matapionchi
7
lán
atit
Min
Q. s
P. ito Q. a
C. ajar .P. ent
C V
P
La
Atasta
C.P.Q.
Cd. Pemex
sa
mo Nvo. Teapa
her
Villa
Cactus y Nuevo Pemex
Cancún
Campeche
MAR CARIBE
S.L. Río Colorado
15 11
39
Investments
requires an anchor contract.
Only CFE and Pemex signed long term
contracts.
There´s no opportunity to recuperate any
redundancy or non used capacity
Risk of saturation in the National Pipeline
System (SNG‐Pemex)
40
Based
on international experience, and in order to attract new investments and give
redundacy to SNG, CRE started to analize the
possibilities to develop a new rate model, in order to incorporate the cost of specific
projects into a National System.
This project is leaded by CRE in coordination
with SENER
41
SNG 5 year
rate review:
• Decreased the number of rate zones from 16 to 5.
• Minimized the arbitrage among rate zones
• Minimize Pemex discretionality in order to define the
“gas route”
• CRE Resolution establish the posibility to incorporate
new projects into a National Rate System.
42
Ciudad Juárez
Norte
Chihuahua Importación
Chihuahua Norte
Anáhuac
Chihuahua
Delicias
Cd. Camargo
Jiménez
Laguna
del Rey
Chihuahua Sur
Monclova
Monterrey
Argüelles
Reynosa
Gómez Palacio
Torreón
Los
Ramones
Saltillo
Durango
Linares
Matamoros
Los Indios
Golfo
Altamira
Occidente
Guadalajara
Tlalchinol
Salamanca
Morelia
Uruapan
L. Cárdenas
Cd. Madero
San Luis Potosí
Tula
Poza Rica
Poza
Rica
Toluca
Sta. Ana
Pachuca
Venta de Carpio DF
Puebla
Tuxpan
Punta de Piedra
Sur
Cempoala
Veracruz
La Venta
Centro
T. Blanca
Centro
Matapionche
Mendoza
Villa Hermosa
Cd. Pemex
Cárdenas
Cactus y Nuevo Pemex
Minatitlán
43
First
hand salesÆ Sine qua non condition for
NGR:
• At the end of 2008, users must choose if the stay in the
transitory regime, or switch to the permanent one.
• Definition of adquired rights.
• Formula FHS‐CRE:
x Reference market: From Houston Ship Channel to Henry Hub
x Minus: HH‐South of Texas
x Adjustment for cost of transportation between South of
Texas and Reynosa
x Adjustment for net‐back (new SNG tariffs)
44
Premise: Not
to the NGR
all projects are feasible to incorporate
Goal: Transparency, clear
rules for all. Only the
projects that fit with the criteria will be part of
NGR
1) Externalities measurement methodology:
• To identify the benefits that specific infraestructre have for
consumers upstream or downstream
• To identify who will pay what portion of the new capacity: (federal, regional, direct users)
• Establish the marginal cost of not to built the new
infraestructure vs the marginal benefit of have more capacity
45

1) Externalities methodology premises:
• How to manage the assets currently under
construction
• What to do with capacity in excess
• Standard GTS
• To have a solid demand study
• Standard reports to CRE
46

2) Legal adecquations:
• Create the “clearence and settlements house” figure
• This new entity must be solid in legal and financial
terms, in order to guarantee payments to all
participants and making economically posible the
leverage of the projects.
• To evaluate the need of modify current legal frame.
3) Software development
47
Feasibility
for new projects
Economic scales
Standard services, standard quality
Redundancy
48
Unnecesary infraestructure
Excessive cost of infraestructure
Transfering market risk to final users

49
Emerging Dynamics of the Global LNG Market:
North America’s Newest Roller Coaster Ride
October 9, 2008
Pace U.S. Natural Gas
Market View
- 51 Proprietary & Confidential
U.S. Natural Gas Markets—Bull or Bear?
• Upward Price Pressure
• Lower Price Pressure
• Obstacles to new coal generation
& potential Carbon legislation
• Recent bounce in domestic
production
• Canadian Supply Risk – royalty
tax, tar sands, etc
• Unconventional Shale emerging
as significant domestic resource
• Material & labor cost increases
• Improvements likely in finding &
recovery technology over the next
10-20 years
• Global LNG liquefaction lagging
• Higher prices make alternative
fuels more economic
• Large oil-gas differential while
markets becoming more global
• Asian Economies = Energy Sink
U.S. Lower-48 Supply/Demand Balance
30
$12.00
Consumption CAGR: 0.6%
25
$10.00
20
$8.00
15
$6.00
10
$4.00
5
$2.00
0
2005
2007
2009
2011
2013
2015
2017
Lower 48
LNG
Consumption L 48
2019
2021
2023
2007$/ MMBtu
Tcf/yr
FORECAST
$0.00
2025
Net Pipeline Imports
Alaska
Henry Hub
•Demand for gas-fired electric generation key driver of gas
demand growth, especially through the next decade
Sources: EIA and Pace
Shale Resource Is Vast & Becoming More Understood
Resulting In Year Over Year Supply Increase ~8.0%
U.S. Marketed Gas Production, 2005-2008
65,000
Bounce
in
Unconventional
Shale
MMcf/d
60,000
55,000
50,000
45,000
Katrina
Ja
nM 05
ar
M 05
ay
-0
Ju 5
lSe 05
pN 05
ov
Ja 05
nM 06
ar
M 06
ay
-0
Ju 6
lSe 06
pN 06
ov
Ja 06
nM 07
ar
M 07
ay
-0
Ju 7
lSe 07
pN 07
ov
Ja 07
nM 08
ar
M 08
ay
-0
Ju 8
l- 0
8
40,000
• 1980 …last time U.S. production exceeded 58 Bcf/d
Source: EIA.
From Rickety To Sharp Ups And Downs…
14.00
12.00
8.00
6.00
4.00
2.00
Henry Hub
El Paso, San Juan Basin
- 56 -
Proprietary & Confidential
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
May-06
Mar-06
0.00
Jan-06
$/MMBtu
10.00
…And Whip-Arounds, Getting Faster and Faster
• Evidence of a Growing Supply Surplus…
Weakening
economy could
trigger a loss of
industrial demand
for gas, helping to
keep prices below
$10/MMBtu
Chesapeake Energy
plans to cut its
drilling capital
spending through
end 2010 by 17% in
response to the drop
in natural gas prices
$7-$8/MMBtu
natural gas prices
and the credit
crunch won’t be
favorable to
companies that
have to borrow a
lot of money to
support drilling
activity
Global Pricing Competition
and Implications
LNG Market And Price Definitions — The Basics
Price (Europe)
UK = NBP = Spot Market Index
Price (US) = Henry Hub Index
Integrated NA
Commodity
Market
Continental = GBP = (Gas Oil+Fuel Oil) Index
Parallel European
Index/Commodity
Markets
Atlantic
Price (Asia) = JCC Index
Europe
East Asia
U.S.
Middle
East
Asian Index
Market + One-off
Spot Trade
Pacific
Sources: Pace and various public sources.
Gas Index Market Prices Move To Their Own Beat…
UK
$6.2
USA
$7.6
$6.9
$7.1
Dec Apr Dec
‘06 ‘07 ‘07
$10.2
$9.1
$3.3
$7.3
Dec Apr Dec
‘06 ‘07 ‘07
$6.4 $6.0$7.5
Dec Apr Dec
‘06 ‘07 ‘07
SPAIN
$9.3
$7.6
$10.6
$3.9
Dec Apr Dec
‘06 ‘07 ‘07
BELGIUM
$7.6
Market Price
LNG Contract Price
Dec Apr Dec
‘07 ‘07
$9.2 ‘06
Dec Apr Dec
‘06 ‘07 ‘07
KOREA
LEGEND
$6.9
JAPAN
…While Incremental Volumes Follow The Money
UK
250
5300
60 170
5800
4600
Dec Apr Dec
‘06 ‘07 ‘07
SPAIN
1900
1600 1300
1900
1000
400
Dec Apr Dec
‘06 ‘07 ‘07
Dec Apr Dec
‘06 ‘07 ‘07
360
130 240
Dec Apr Dec
‘06 ‘07 ‘07
2700
2000 2300
Dec Apr Dec
‘06 ‘07 ‘07
BELGIUM
JAPAN
USA
Dec Apr Dec
‘06 ‘07 ‘07
KOREA
Note: All volumes in thousand tons per month.
2008: SE Asia And North Africa/Mideast Lead Supply
2
2
19
1
11
31
7 6 10
15
LEGEND
19
Existing Projects
23
4
31
New Entrants
1-15 MTA
19
16-30 MTA
31-45 MTA
46-100 MTA
100-> MTA
Note: Expansions are italicized
and denoted by size variations.
Note: All volumes in million tons per year (MTA).
2015: New Players, w/Qatar, Australia & Nigeria Dominant
22
4
2
32
4
78
15
11
7 6 10
7
18
5
LEGEND
38
Existing Projects
New Entrants
23
4
36
5
1-15 MTA
36
16-30 MTA
31-45 MTA
46-100 MTA
100-> MTA
8
4
2008: Northeast Asia Is Primary Market
6
12
4 49
81
6
3 5
9
4
8
13
1
1
LEGEND
Existing Projects
3
New Entrants
1-15 MTA
16-30 MTA
31-45 MTA
5
46-100 MTA
100-> MTA
63
8
174
2015: The 800-lb. Gorilla Jumps In
2
11
41
3
166
7
34 6
7
53
32 5
11
9
68
26
4
17
20
2
1
5
11 3
1
LEGEND
Existing Projects
3
5
New Entrants
1-15 MTA
16-30 MTA
31-45 MTA
5
46-100 MTA
8
100-> MTA
178
Atlantic Liquefaction Capacity Rapidly Catching Up To Pacific?
165
130
50
60
90
130
140
60
2007 2010 2015 2020
ATLANTIC
BASIN
2007 2010 2015 2020
MIDDLE
EAST
150
75
115
2007 2010 2015 2020
PACIFIC
BASIN
…with the Middle East a growing swing supplier
90
Regas Capacity Following The Same Trend?
425
400
270
290
145
338
340
255
2007 2010 2015 2020
ATLANTIC
BASIN
2007 2010 2015 2020
PACIFIC
BASIN
Creating the potential for the Atlantic activity to rival traditional Pacific Markets,
with the true wild cards being China and India
Current Pricing Seems To Be Diverging Across The Basins
25
S-Curve Pricing
Oil Price
Contract Gas Price
15
10
5
NBP
HH
JCC
Brent
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
0
Jan-00
2007$/MMBtu
20
Pacific Basin:
Legacy LNG Markets and
Emerging Giants
Times Are Changing ... LNG Is At The Forefront
400
350
Philippines
400
300
Taiwan
BCMA
250
Singapore
350
Thailand
200
300
South Korea
150
Malaysia
250
BCMA
100
50
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Data from BP World Energy Statistics (2008).
Japan
Indonesia
200
India
China and Hong Kong
150
SE Asia Dynamics…Reality Is Nothing Will Change Overnight
• Japan has little
pipeline
infrastructure
• Most cities are
supplied by their own
LNG facilities
• Both continuity and
security of LNG
supply chains are
critical
Japan’s Strategy … Shorter Contracts, Smaller Volumes, Await Softer
Market
70
• …Japanese importers
chasing big volumes to fill
the gap of expiring contracts
+ growing demand beyond
2010
60
MTA
50
40
30
20
10
• Since Summer 2007
contracted ~14 MTA
additional volumes to start in
2015
0
2008
Indonesia
2015
Malaysia
Australia
UAE (Abu Dhabi)
Qatar
Brunei
Oman
Russia
USA (Alaska)
Source: Pace.
• Japan’s nuclear dilemma:
living on the Ring of Fire
• With loss of 8,600 MW of
nuclear capacity in
earthquake . . .
• Japan is now importing LNG
& Fuel Oil to fire old thermal
plants
2020
Emerging Markets & Impact On LNG Prices
Source: GAIL
India and China …
• Small but rapidly growing gas market
• Highly price-sensitive
• Potentially large (but ultimately
inadequate) domestic resources
• Pipeline import options
• Rapidly expanding domestic pipeline
infrastructure
Singapore
Singapore …
• To become an LNG Trading Hub??
Singapore As An International Market For LNG
• De-regulated gas market with rules and legal structure for
marketing, trading & settlement of gas contracts
• Encourages importation of LNG to complement existing
supplies of pipeline natural gas
• LNG Re-Gasification Terminal (3 MTA) recommended for
Singapore in 2012 – expandable to 6 MTA by 2024
• 4 pipeline natural gas importation contracts with a gas price
linked to oil (HSFO/MSFO)
• Forthcoming liberalization of gas market & established
supply of PNG provides basic elements of an “international
maker price” for LNG
Increasing LNG Price ($/MMBtu)
Renegotiating The S-curve For Higher Crude Oil Prices
L
OI
P
Y
IT
R
A
LI N
New Cap proposed by sellers to
represent the reality of today’s
oil prices
E
LNG Price/ Oil Price relationship
with floor & cap prices
Increasing Crude Oil Price ($/BBL)
LNG Asia
New Projection Asia
LNG Europe
New Projection Europe
- 75 -
The Competition: Sempra Loses Tangguh LNG Supply
• Sempra signed 20-year supply deal in 10/04 with Tangguh LNG (Indonesia –
~37% BP, 46% Japanese interests, 14% CNOOC) with base rate of
$5.94/MMBtu beginning late 2008, but with diversion option
Reported Tokyo Gas/Nippon Oil LNG Pricing Formula
• Other Tangguh deals
(2002): POSCO @
$3.36, K-Power
@$3.50, both for 20
years
(Source: Heren LNG M arkets , 5/2/08)
$30.00
$25.00
• Japanese now
proposing five-year
diversion contract
priced per graph at
right
$/MMBtu
$20.00
Formula
$15.00
Oil Parity
$10.00
$5.00
• Koreans and Chinese
also bidding for this
supply
$2
5.
0
$3 0
5.
0
$4 0
5.
0
$5 0
5.
0
$6 0
5.
0
$7 0
5.
0
$8 0
5.
0
$9 0
5.
$1 0 0
05
.
$1 00
15
.
$1 00
25
.
$1 00
35
.
$1 00
45
.0
0
$0.00
Crude Oil, $/bbl
Expectations for North American
LNG Volumes
Consider Gradually Going Global
• Full but measured global recovery from current
credit crisis
– BRIC (Brazil, Russia, India & China) economies resume more
moderate growth, but world GDP growth remains above long-term
historical levels
– Uneasy equilibrium in oil markets keeps price high but relatively
stable
• OECD adoption of moderate carbon control
measures
– BRIC countries reject all carbon controls, but attempt to appease
with limited natural gas/LNG preference over coal and residual fuel
• Robust N.A. gas demand growth moderating over
time
– No new coal-fired power plants for decade; some older plants
scrapped
– Natural gas is planned bridge fuel to introduction of lower-carbon
alternatives
• Early robust growth in N.A. gas production, then
decline in 15-20 yrs
– Prevailing U.S. gas prices reach oil parity in winter months
– Alaska gas pipeline in-service by 2021
– N.A. draws in growing share of LNG production
North America Is Ready For LNG ... But Supply Has Yet To Arrive
Rabaska
Sabine
SabinePass
Pass
Expansion
Expansion
2010
Sabine Pass
Trunkline LNG
Canaport
1Q 2009
GoldenPass
Pass
Golden
2010
Cameron LNG
Everett
2Q 2009
Cove Point
Cove Point
Expansion
Expansion
Freeport
FreeportLNG
Gulf Gateway
Calhoun LNG
Gulf Gateway
Neptune LNG
4Q 2009
Northeast
Gateway
2Q 2009
Energia Costa Azul
Gulf LNG
4Q 2010
Hoegh LNG
Altamira
Manzanillo
Elba Island
Elba Island Expansion
3Q 2010
Hoegh LNG
LEGEND
Operational
Under Construction
Expected (Approved)
Volumes Search Highest Valued Market…Import Terminals Underutilized
• Freeport LNG and Cheniere LNG have both applied for blanket export
authorization
• Zeebrugge also announced in late July that it would now load as well as offload
LNG cargoes
Monthly Average U.S. LNG Imports by Source, 2006-2008YTD
3.5
3.0
2.5
Bcf/day
2.0
1.5
1.0
0.5
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
0.0
Trinidad
Egypt
Algeria
Nigeria
Equatorial Guinea
Qatar
Spot
- 81 -
Manzanillo
Altamira
Energia Costa Azul
Hoegh LNG
2.5
Elba Island Expansion
3
Elba Island
Northeast Gateway
Neptune LNG
Canaport
Everett
Rabaska
Cove Point Expansion
1.5
Cove Point
2
Calhoun LNG
Gulf Gateway
Gulf LNG
Golden Pass
Sabine Pass Expansion
Sabine Pass
Freeport LNG
Cameron LNG
Tunkline LNG
Total Regas Capacity
(Bcf/d)
North American Terminals Still Looking For Capacity Holders & Supply
Available Capacity
Contracted Capacity
Total Regas Capacity:
24.5 Bcf/d
Total Uncontracted Capacity:
8 Bcf/d
1
0.5
0
Major U.S. Shale Basins…Displacing LNG Demand?
• “Conventional
gas”
predominates
production in the
San Juan and
Permian Basins
LEGEND
Conventional
CBM, Shale, Tight Sand
Rockies Supply
Basins
• Unconventional
gas production
(i.e., Shale, and
Tight Sands) has
strong position in
the Rockies
San Juan
Basin
ia n
rm
Pe asin
B
Energia Costa Azul LNG
Western U.S. Natural Gas Production On the Rise…
25
FORECAST
20
Bcf/day
15
10
5
San Juan
Permian
Rockies
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
0
…And Pipeline Infrastructure Is Poised To Accommodate Growth
WA
MT
Blue BridgeS
Pi uns
pe to
Palomar
l in n e
e
ID
OR Bronco
WY
Pipeline
Pathfinder
Ruby Pipeline
CA
Ke
Ex rn R
p n iv
NV
er
Rockies Express
UT
AZ
Phoenix
Lateral
ECA LNG
Bajanorte (recently in service)
CO
NM
Baja Regional Pipelines Reconfiguration Completed For ECA
All-American
Pipeline
California
0.6 Bcf/d
Rosarito
Power Plant 1
(135 miles)
3
Intergen
DGN
TDM
Mexicali Algodones
2
LNG Spur
2.7 Bcf/d
Energia
Costa Azul
LNG
Gasoducto Bajanorte
El Paso Gas Co.
0.6 Bcf/d
Border Loop
0.94 Bcf/d
(80 miles)
0.5 Bcf/d
Otay Mesa
Power Plant
0.
8
Bc
f/d
Tijuana
TGN
North Baja Pipeline
SoCal Gas Co.
SDG&E
Blythe/ Ehrenberg
Arrowhead Exp.
Yucca
Arizona
Yuma Lateral
Compressor
80 Mmcf/d
0.54 Bcf/d
Sonora
Baja California
Note: GB and NBP capacities displayed account for the completed Phase I expansion on both pipes.
Gasoducto Bajanorte
Pipeline
Gasoducto Bajanorte
GP Exp Phase I
GB Exp Phase II
In-Service
Date
2002
2008
2012
North Baja Pipeline
Pipeline
Capacity
(MMcf/d)
600
600
2,600
North Baja Pipeline
NBP Exp Phase I
NBP Exp Phase II
In-Service
Date
2002
2008
2010
Capacity
(MMcf/d)
500
600
2,600
Or Maybe a Turn Away from Greener Sources?
• Significant & extended slowdown in
global economy
– Extended global economic contraction
– Global commerce declines as consumer discretionary
spending shrinks
– BRIC economies return to modest growth; weak growth
returns to OECD
• National self-interest trumps carbon
control agenda
– Coal is fuel of choice for baseload power generation
worldwide
– Natural gas maintains recent market share in power
generation
• Modest N.A. gas demand growth
– Modest power generation demand growth
• Unconventional U.S. gas supply fails
to meet expectations
– Marginal acreage goes undrilled in weak price environment
– Weaker global demand growth creates LNG supply overhang
– Alaska gas pipeline never built
Perhaps We Will Become the “Natural Gas Nation”
• No widespread economic growth
impact from current credit crisis
– BRIC (Brazil, Russia, India, China) economies continue
rapid growth
– Tight oil markets – widespread demand destruction
through price-based rationing
• Wide global (including U.S.)
adoption of very tough carbon
control measures
– Strong global demand for LNG No new traditional coalfired power plants; older plants scrapped by 2050
– Natural gas becomes political panacea
– Rapid development of zero-emission resources
• Very robust growth in N.A. gas
production isn’t enough
– Prevailing gas prices approach oil parity
– Rush to complete Alaska gas pipeline by 2018
– N.A. draws in rapidly growing share of LNG production
Truth Is No One Really Knows What’s Next!
•
Define a flexible and robust
portfolio consistent with defined
objectives.
•
Concurrently define a risk
management program.
•
Execute the program the
second you take a position.
•
Actively manage your positions
to your specific objectives.
You may get an upset stomach & dizziness, but you will avoid
whiplash!
Our Heavenly Future—What we do Know!
Market Equilibration Mechanism #1 .. The Tightening Cycle
Gas Price
Rig Count
Wellhead
New Well
Deliverability
Additions
• Response time of 6-18 months
• Lagging infrastructure development may create delays extending the cycle,
e.g., Rocky Mountain export capacity
Equilibration Mechanism #2 … The Transatlantic Tango
Relative Levels of
Piped Gas Availability
Relative Levels of
Seasonal Demand
Relative Transatlantic
Price Levels
Indicative, price-responsive
LNG flows
LNG Supply Flows
GBP
NBP
HH
In The End Gravity Will Dominate Prevail With “Music of the Spheres”
• Think of cross-market price convergence as the result of the mutual gravitational
attraction of massive objects, where cross-market trading volume equates to
spatial distance. Remember, convergence will be the result of mutual movement.
ASIA
ASIA
2000
N.A.
2015
EUROPE
EUROPE
N.A.
James S. Diemer
Executive Vice President
Pace
703-608-5554 (mobile)
713-315-5660 (office)
[email protected]
www.paceglobal.com