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The Business Spectator has a look at the downside of Australias expanding natural gas / coal seam gas export sector - Losing friends with an expanding gas export sector. When exports of shale gas start from the US I imagine a similar debate will start up there - cheap gas only lasts as long as you arent exposed to global markets.

The export gas multinationals are no friend of Australian manufacturing. There is only one reason that the gas prices are set to at least double over the next few years – gas export companies will force Australian consumers to compete with the Asian market for gas.

That’s the true cost of opening up coal seam gas mining and allowing gas from eastern Australia to be exported. And no amount of drilling for more CSG will either secure the gas for domestic users or keep the price down. The simple reason for this is that no matter how much gas is found, it can all be exported.

The gas export terminals currently under construction will have a massive capacity of 1637 petajoules. That’s more than double all the gas we use in Australia at the moment. But according to analysis done by Core Energy for the Australian Energy Market Operator, there are over 6000 petajoules of additional proposed LNG export facilities, enough to quadruple the export capacity currently under construction. These include several additional liquefied natural gas trains at the existing Curtis Island facilities in Gladstone and new facilities at existing ports in Queensland and New South Wales.

The Australia Institute recently used AEMO gas demand and price projections to calculate the increased cost of gas to the manufacturing industry in the Gladstone region as a result of CSG exports. It found a massive cost of $2.9 billion over the next 10 years, to be paid by just a handful of manufacturers.

This is threatening the viability of these industries. We are effectively allowing multinational gas exporters to displace our manufacturing sector. And it’s not just as a result of the gas price. The gas expansion is also displacing manufacturing by keeping the Australian dollar higher than it would otherwise be, and creating a severe skills shortage.

Bloomberg reports that origin is looking to expand its APLNG coal seam gas export project - Origin Seeking at Least One More Buyer to Expand LNG Project.

Origin Energy Ltd., ConocoPhillips’s partner in a $20 billion Australian liquefied natural gas venture, said it aims to sell more than half the fuel from the project’s second phase before committing to an expansion.

The project in Queensland state will likely need to sell 50 percent to 75 percent of the LNG from the second stage before the partners make an investment decision, Karen Moses, executive director of finance and strategy at Sydney-based Origin, said today in a telephone interview, adding that no final decision had been made.

Origin and Conoco, the third-largest U.S. oil company, are among energy companies in Australia planning more than A$200 billion ($200 billion) of LNG projects to tap rising Asian demand for the cleaner-burning alternative to coal. The venture yesterday agreed to supply Japan’s Kansai Electric Power Co. with 1 million metric tons of LNG a year, or almost 25 percent of the capacity from the second unit, or train.

Origin and Conoco are pursuing “at least one more” buyer for the coal seam gas-to-LNG venture, with customer interest increasing since the nuclear crisis in Japan caused by the March 11 earthquake and tsunami, she said.

The partners approved the first stage of their Australia Pacific LNG development in July, targeting first exports in mid-2015.

Shell recently announced that their Prelude floating LNG project off north west Western Australia has passed another milestone, with the $US12.6 billion ($11.8bn) project receiving final investment approval.

Prelude is expected to produce 3.6 million tonnes per annum of LNG, as well as 1.3 million tonnes of condensate and 400,000 tonnes of LPG.

The facility is scheduled to begin production in 2016. The gas will be cooled by cold water pumped from about 150m below the ocean’s surface - allowing around 50,000 m3 of cold seawater each hour to cool the gas.



The project will be the world’s floating LNG development and the facility will be the largest floating structure ever built. The vessel will be built by South Koreas Samsung Heavy Industries. At 488 metres long, 74 metres wide and 600,000-tonne in weight it will be longer than four soccer fields laid end-to-end and will be six times heavier than the worlds largest aircraft carrier.

The vessel will be permanently moored about 200km off the coast for its 25 years of production and is designed to withstand severe category 5 cyclones (or a “one-in-10,000-year" tropical cyclone, as Shell executive director Malcolm Brinded put it).

Shell has self-insured the project, so its not clear what the view of maritime insurers is of the likelihood of the project suffering significant damage during its lifetime is.



In Australia we’ve seen onshore natural gas largely depleted, near offshore natural gas well developed (the north west shelf LNG operation has now been in operation for decades and long-stalled projects like Gorgon are now well underway), a boom in coal seam gas and emerging interest in exploiting shale gas (local producers seem to view speculation that US shale gas production will undermine Australian LNG export markets in Asia as unfounded, notwithstanding the strong Australian dollar) and biogas.

Research by the CSIRO in 2008 found that up to half Australias natural gas resources (140 trillion cubic feet) could not be developed because they were too remote to be connected to onshore processing plants.

Floating LNG platforms remove this barrier and would seem to be the final stage of our entry into what has been dubbed by some (including the IEA [pdf]) as "The Gas Age" (I guess you could view the fossil fuel era as an act in 3 parts, similar to the era of the dinosaurs, with the coal age being analagous to the Triassic period, the oil age to the Jurassic and the gas age echoing the Cretaceous, with the end of the era approaching).



By adopting the offshore floating LNG solution Shell hopes to also substantially reduce the time and cost of the project development phase.

Global LNG demand is expected to double this decade and the introduction of floating storage and regasification vessels in recent years has enabled fast entry of new buyers such as Argentina, Brazil, Kuwait and Dubai in recent years, with Thailand and Singapore soon to join the club and Indonesia, Malaysia, Pakistan, Sri Lanka and possibly the Philippines following along behind them.

Shell is already looking at a number of other locations for floating LNG projects, including the Greater Sunrise project in East Timor, and projects in Indonesia, Cyprus, East Africa and South America. Other companies are also interested in floating LNG with the BBC claiming Flex LNG and Hoegh LNG hoping to make final investment decisions shortly on projects in Papua New Guinea.

Jarand Rystad, founder of a Norway-based research consultancy for the oil industry says there are up to 160 gas fields where floating LNG could be applicable worldwide over the next decade.

The prospect of a number of floating LNG developments has Darwin excited, with the town hoping to be the base for servicing Prelude and up to 10 additional platforms over time.

The 10 platforms figure may have emerged from a statement from Samsung Heavy Industries estimating the size of the market last year.

Besides the PNG projects mentioned earlier, Woodside have been pushing for a floating LNG development for the Sunrise development between Australia and East Timor, and there has been some speculation that Woodsides Browse development could avoid opposition to plans to build an onshore LNG plant in the Kimberly region. There has also been speculation that Inpexs Abadi and Ichthys projects could be candidates.

TreeHugger has a post on the surge in hype about natural gas - Incoming: A Glut of "Natural Gas is Green" Nonsense.

It has begun. Okay, so it began a while ago, ever since natural gas companies first got wind of the news that their product produces fewer greenhouse gas emissions than the worlds other favorite fossil fuels. But now that gas prices are once again rising (and increasingly unlikely to come down for long) and coal plants are coming under increasing scrutiny, the natural gas industry is rearing its head. Conservatives are smelling an opening to embrace natural gas on bipartisan territory, and will soon start driving towards the hoop with increasing gusto. Exhibits A & B: An unabashedly anti-clean energy and pro-natural gas op-ed in the New York Times and a nat gas love-fest in the typically liberal Salon.com.

John Laumer already poked some holes in the false choice presented by the NY Times op-ed, which was authored by a member of the far-right think tank the Manhattan Institute. That piece argued that since renewable energy projects require so much land and new materials and endanger wildlife, its better just to switch to nat gas. He even turns the words of economist E. F. Schumacher against greens (many of whom hold as an inspiration), claiming "small is beautiful" and renewable energy aint small.

Of course, neither is natural gas, whose extraction sites, transportation via massive pipelines, refineries, and distribution networks span hundreds of miles and also endanger species -- and of course our underground drinking water stores. But that doesnt quite make it into the article.

Michael Linds article in Salon is even more egregious, which argues that the fossil fuel era is just getting started. It dismisses both renewable energy and climate change as relative nonsense in the course of advocating for exploiting our vast natural gas reserves.

A case can be made for using natural gas as a transition fuel. That doesnt make it "green". Discounting the climate impacts of burning the stuff and counting out the potential renewable energy holds is just plain stupid -- the amount of emissions that extracting and burning natural gas creates is still up in the air, though it does undeniably yield a substantive amount. And yes, there will be challenges with deploying solar and wind on a large scale -- but there will be (far more environmentally detrimental) challenges to ramping up natural gas extraction too. Neither author is up on the latest climate science, or understands the urgency by which we must stop spewing greenhouse gases into the atmosphere.

Renewable technology is getting better and cheaper, and clean energy solutions are proving viable and being embraced by nations around the globe. Mapping out a future that relies on fossil fuels for decades longer just isnt really an option if were keen on stabilizing our climate and keeping temperatures at a range that planetary life is accustomed to.

So be forewarned -- a storm of high-minded, seemingly well-reasoned arguments that natural gas is green looming on the horizon. And if those opinionators, pundits and policymakers get their way, they could doom us to another few decades of fossil fuel reliance. If we do so without making serious, serious inroads in clean energy deployment, we can kiss that stable, livable climate goodbye ...