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What the Specter of Global Uncertainty Means For Asia

by Dr. Kent Moors | published May 1st, 2014

I’ve spent the last two days in Baltimore hammering out the details on my next big project. So stay tuned, there are some exciting new opportunities headed your way very shortly.

However, before heading out of town, I was scheduled to do an interview with CNBC Asia. Given the time difference, that meant I needed to be in a Baltimore studio at 1 o’clock in the morning. The show was live from Singapore.

But it didn’t go off as planned. A studio snafu prevented the interview, which left me with mixed emotions. I was happy about the extra rest, but it came at the expense of continuing an important conversation with an audience half way around the world.

Much like my discussion on Chinese television a few days ago, this one involved the crisis in Ukraine and what it means for global energy markets.

Only this time, the focus was to go beyond the impact it’s having on European natural gas and delving into what it means for Asia.

Of course, the interview didn’t happen, but there is no reason I can’t tell you what I would have said.

The impact is much bigger than you think…

As Ukraine Explodes, Here’s What I’m Telling the Russians

by Dr. Kent Moors | published December 5th, 2013

There is a huge elephant in the room here in Moscow. The issue is permeating everything but remains off the official agenda. Even the media is treating it with kid gloves.

It’s the uprising in Ukraine.

As the protests intensify in Kiev, the Kremlin has now entered into a huge tug of war with the European Union (EU) over access to and influence over Ukrainian energy policy.

At issue is the direction of Ukraine’s future partnerships…and who is likely to end up having influence over the crucial natural gas pipelines that span the country, moving more gas to Europe than any other venue.

For years now, Kiev has maintained a steadfast refusal to allow Gazprom, the Russian gas behemoth, to gain control over those domestic pipelines.

Gazprom, whose moves are clearly extensions of Russian foreign policy, has already taken over both the export pipeline network and the company responsible for the transit in neighboring Belarus.

This arrangement allows Moscow to control the access to Europe – even though the pipeline crosses a separate sovereign state. But Ukraine has since made it clear it would not allow the same result.

However, the situation is becoming more acute and the options are limited. But that doesn’t mean there isn’t a workable solution.

In fact, here’s what I’m about to tell the Kremlin

The LNG Era Just Moved One Step Closer

by Dr. Kent Moors | published September 9th, 2011

A major U.S. utility just made a significant move into the future of liquefied natural gas (LNG) – to surprisingly little fanfare or media attention.

You, of course, will get the full scoop on why it’s so important.

Last week, Dominion Resources Inc. (NYSE:D) applied for permission to turn part of its Cove Point, Md., terminal into an export facility.

Cove Point is already the largest LNG receiving installation on the Eastern seaboard of the U.S.

When it became operational back in the 1970s, the assumption was that LNG imports would account for at least 15% of the natural gas used in the American market.

Of course, that was before the U.S. realized how much unconventional volume (primarily shale gas) was extractable from within its own borders.

Thanks to this terrific abundance of gas here, there is no need to import any gas any more (save for what’s used in the occasional balancing of supply and demand in localized areas, or to augment swap contracts entered into by some of the larger players internationally).

But there is a rising concern over what it will mean for the price of natural gas.

That’s because estimates of available volume are, well, staggering.

Without breaking a sweat, the American industry could increase overall production by 20% to 25% a year for several decades. And that’s before any technical advances that could allow for the retrieval of additional volume above current projections.

Sounds great… but it is also a cause for great concern. And it is particularly worrisome in the fastest-growing production basin in the U.S. – the Marcellus Shale.

In the past two years, expected volume from the Marcellus in Pennsylvania and West Virginia has skyrocketed. (Production in New York is currently subject to a moratorium.) And with it has emerged the prospect of a gas glut that would depress prices – badly.

The challenge is to find usages for all of this newfound gas.

There are three major ones…

1) As a Solution to the Coal Problem

Some of this added volume will go toward replacing coal as a fuel source in the generation of electricity.

The balance is swinging decidedly in favor of natural gas as the preferred power source.

Older coal-fired generating facilities are under pressure.

That’s due to a combination of the prospect of predictable and stable prices for natural gas, a lower carbon footprint, and the introduction of new non-carbon regulations in mercury, nitrous, and sulfurous oxide emissions requirements (“Two Non-Carbon Regulations About to Rock the Coal Sector,” October 29, 2010).

I now look for an additional 20% to 25% jump in the use of natural gas to produce electricity in the U.S. by 2020.

The industry also sees this reality. Not a single new coal-fired or co-fueled power plant (able to use both coal and gas) is being planned anywhere in the country.

2) As a Fuel for Transportation

Then there is the prospect of moving to a more gas-based transport system. There are signs of this really starting to rev up.

In both Canada and the U.S., there are frequent new developments in retrofitting trucking fleets from diesel to compressed natural gas (CNG), liquid petroleum gas (LPG), and LNG.

Within just a few years, upwards of 20% of municipal buses will run on natural gas rather than oil products.

Yellow Cab just rolled out its very first CNG-powered taxis onto the streets of Los Angeles.

Yet the real push into transport will take some time. So in the meantime, finding additional usages for all of this newfound gas is still a challenge.

(That is where the importance of this new LNG export venue comes in to play.)

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