Staggering -- If You Think About It -- May 28, 2015

From RBN Energy today, a most remarkable blog. One can talk all day about solar and wind energy, but when it comes down to reality, in global energy, it's all about coal and natural gas. Today's RBN Energy post is about LNG exports to Asia. Maybe some day they will find huge natural gas reserves in Asia, but apparently not there yet.

From RBN Energy today:

Asian consumers of liquefied natural gas hope to use the current supply glut—and the start-up of U.S. LNG export facilities--to their long-term advantage. Their very understandable goal is to up-end the old market structure, which for years has had them paying far more for LNG than their Western European counterparts. How will the coming revolution affect U.S. natural gas producers and the next round of U.S. LNG export projects? Today, we continue our review of the fast-changing global market for LNG with a look at a new set of Asian LNG buyers and at the region’s fast-changing supply/demand dynamics.

Most of Asia has experienced significant economic growth in the first 15 years of the 21^st century—not just powerhouses like China and India but smaller, more mature economies like South Korea’s, Taiwan’s and Singapore’s, and still-developing nations like Pakistan, Bangladesh, Thailand and Vietnam. In most places that growth is being fueled in large part by energy from natural gas, and that trend is very likely to continue, especially if (as seems probable) gas prices remain competitive with oil and coal. Asia’s gas reserves are spotty, though, forcing many countries (Japan, Korea, China and India among them) to turn to LNG imports and—if possible—gas delivered by pipeline.

As we said in Episode 1 of our series, the market for LNG has evolved gradually over the last 50-odd years, but it remains dominated by long-term LNG supply deals. At first LNG prices were fixed, but starting with the OPEC oil crisis in 1973-74, oil and LNG prices were linked, with the goal of mitigating risks for buyers and sellers.

In Episode 2, we ran through five major catalysts shaking up the LNG trade:

1) New LNG capacity coming online, mostly in Australia and the U.S.;

2) Fixed liquefaction tolling agreements being offered by U.S. LNG developers and natural gas costs tied to price index percentages (typically 115%) of the U.S. Henry Hub, LA benchmark;

3) The collapse in oil prices and the resulting drop in oil-indexed LNG prices;

4) The roll-off of long-term LNG supply deals and the increasing share of LNG capacity available to the spot market; and

5) The recent slump in Asian LNG demand-and prices--that have occasionally  made Western Europe a more attractive market for spot LNG sales.

In Episode 3, we looked at existing and future demand in China and India, which are expected to be the world’s biggest LNG growth markets—along with the use of LNG as a ship bunker fuel.

And in Episode 4, we considered Japan and Korea, by far the world’s largest LNG consumers, and (with China and India) the driving forces behind reshaping the Asian market.

In RBN Energy's next episode, RBN Energy will look at why the Asian and European sub-markets for LNG have been so different, and at whether there’s a chance that, with lots of new LNG capacity coming online, those sub-markets might finally start to look more alike. RBN Energy will also consider Asian LNG-buying alliances and the potential for an Asian LNG hub—two things that could help keep a lid on LNG prices in the region.

Population:

• China: 1.357 billion (10x Japan; 27x Korea)
• India: 1.252 billion 
• Japan: 127 million
• South Korea: 50 million

And everyone in China and India wants to have the lifestyle of the Japanese and/or the South Koreans.

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Apple Page

Apple, also, has some exciting news today. Apple announced a new retail store to open on Saturday, June 13 in Upper East Side, Manhattan, NYC. 

The comments were interesting: mostly a complaint that there were not enough Apple retail stores in NYC. As hard as it is to believe, there is no Apple retail store near Wall Street. Apple must have a very, very interesting algorithm when determining when/where to open a new retail store.

This is only Apple's seventh store in NYC, and apparently some New York boroughs still have no Apple stores.

Apple overnight added signage to its upcoming retail location in the Upper East Side of Manhattan that confirms the store will open on June 13. The new store will be located at 940 Madison Avenue, on the corner of 74th Street, and remains under construction ahead of opening. The new store will be Apple's seventh retail location in New York City alongside Fifth Avenue, Grand Central, SoHo, Upper West Side, West 14th Street and Staten Island stores.

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Wow, Will This Year's Global Warming Ever Quit?

Caribou, Maine, Reporting Record Snowfall Today

Ice Age Now is reporting: 

Not much, but it’s still a record.

“The 0.3″ of snow observed at Caribou yesterday was the greatest snowfall on record so late in the season,” says National Weather Service Tweet.

“Old record 0.2″ on 5/25/74.