RBN Energy: the economics of global LNG.
The international market for liquefied natural gas (LNG) is an inherently risky business where returns depend on paying back huge upfront infrastructure investments with cash flows based on volatile energy prices. Tectonic shifts in the market are giving North American LNG exporters and natural gas producers an opportunity to become pivotal players. The world is on the cusp of an LNG supply glut that may last several years, and the old order of long-term supply contracts with prices indexed to oil is being phased out in favor of a market structure that features more destination flexibility, more spot market sales—and, for U.S. and maybe some Canadian and Mexican LNG exporters—more liquefaction “tolling” deals with LNG prices linked to gas. Today, we continue our look at what these changes mean for the North American energy sector.
Only a few years ago, the U.S. was planning to import large volumes of LNG to offset declining domestic gas production, China and India were starting up a new coal-fired power plant or two every week, Japan was getting nearly one-third of its electricity from nuclear power, and Qatar was the king of LNG exporters. Qatar remains on its throne, with about 32% of the market, but the traditional business model that put it on top is shaking and shattering.
When LNG exporting and importing began in earnest in the late 1960s, LNG prices were fixed at first, but starting with the OPEC oil crisis in 1973-74 (when oil prices soared, putting LNG at a steep discount) oil and LNG prices were linked, with the goal of mitigating the risks faced by LNG buyers and sellers—and the developers of capital-intensive LNG export facilities.
Minnesota Declares State Emergency -- Bird Flu
Bird flu emergency. This is getting to be quite a big story.
Minnesota declared a state of emergency on Thursday over a fast-spreading strain of avian flu that has led to the extermination of more than 7.3 million birds in the country. It followed Wisconsin's action on Monday.
The highly pathogenic H5N2 strain of bird flu has been identified on 46 Minnesota farms in 16 counties and affected more than 2.6 million birds in the state.
The virus can kill nearly an entire infected flock within 48 hours. Millions of turkeys and chickens are in quarantine waiting to be culled and large flocks have already been destroyed.
Officials have said they believe wild birds are spreading the virus but they do not know how it is entering barns.
Two bird flu strains have been discovered in the United States this year. The H5N2 strain is in Arkansas, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin. It has also been identified on farms in Ontario, Canada.If "it" jumps to humans ....
By the way, the virus is spread by wild birds, thus suggesting that "free-range" birds at high risk.