Saturday, December 10, 2016

Another First: US Shale LNG To Japan; As Joe Biden Would Say: This Is A Big Freakin' Deal -- December 10, 2016


May 30, 2017: another story mentioning the Oak Spirit; an investment story.

Original Post
This article in Rigzone/Bloomberg connects three major dots:
The linked article, another milestone: The U.S. shale revolution that turned North American energy markets upside down is finally headed to the world’s largest consumer of liquefied natural gas: Japan.

Again: Japan is the world's largest consumer of natural gas and US natural gas now headed to Japan. Track the movement here.

Data points:
  • Jera Co: joint venture between Tokyo Electric Power and Chubu Electric Power
  • Jera Co: will get its first LNG cargo produced from US shale in early January, 2017
  • will be first supply to reach Japan from Cheniere Energy's Sabine Pass terminal
  • the contract was signed more than two years ago
  • contracts are tied to US natural gas prices and NOT to price of crude oil (which is how most LNG coming to Japan is priced)
  • also, contract allows fro switching cargo destinations; importers are pressuring producers for more flexibility
  • "a turning point" -- Wood Mackenzie
  • 70,000 metric tons in this first shipment
  • Oak Spirit
  • by the way, the Oak Spirit is a story of its own
  • a breadth of 46.4 m (152.231 feet); an overall length of 294.9 m, (819.88 feet) the design has been optimised for transits of the new, larger Panama Canal locks (see new canal capacity below)
Other articles on the Panama Canal expansion:
Previously posted, regarding the Panama Canal expansion:
  • Panama Canal Expansion Project: Third Set of Locks project, 9-year project; does two things:
    • creates a new traffic lane
    • first new line since canal built 100 years ago: allows for larger ships
  • previous restrictions: no longer than 965 feet; no wider than 106 feet; draft capped at 40 feet (ships up to this size and draft: Panamax vessels
  • new restrictions: 1,200 feet in length; 160 feet in width; 50 feet of draft: "New Panamax" or post-Panamax
  • ultra large crude carriers (ULCCs) nearly 5x larger than the maximum capacity of the current canal; most other big crude vessels won't fit
  • after the expansion: only 10% of LNG carriers won't fit (vs 90% currently)
  • the only LNG carriers that will not be able to use the canal because of their width are Q-Flex (164 feet wide) and Q-Max (180 feet wide) -- the larger vessels pioneered by Qatar Gas to move staggering volumes of LNG (up to 157 metric tons for the Q-Flex and almost 200 MT for the Q-Max)
  • it's possible, the Q-Flex will eventually be allowed to use the canal
  • for LPG (propane and butanes); "very large gas carriers" (VLGCs) are preferred; between 375 MBbl and 550 MBbl; currently only 20% of the 180 global VLGC's can fit through the cana; once the new canal is operational, virtually every VLGC will be able to use the waterway

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