In a possible sign of things to come for the still emerging L N G energy industry, Conoco Phillips (COP), the U.S.'s 2nd largest Natural Gas producer and Crude Oil Refiner, is investing $8 Billion in a Liquefied Natural Gas joint venture with Australia's Origin Energy Ltd. The business will focus on converting Coal-seam gas into Liquefied Natural Gas for sale/export to Asia. Conoco's 50% stake in the J-V will entitle the company to a 50% ownership interest in Origin's 'Gross Resource' (think 'Reserves') of 42 Trillion cubic feet of Coal-Seam Gas. As power producers switch to cleaner fuels, Citigroup's research arm forecasts LNG demand will increase by 10% a year through 2015...more than 5 times the projected demand growth of Crude Oil (RTOB: makes sense as Crude Oil has such a HUGE existing 'demand base' relative to LNG...given current demand levels, it would take something extraordinary for global crude oil usage to spike 10% a year...production capacity constraints would never allow supply to accommodate 10% growth anyways). FYI + According to Bloomberg, LNG is Natural Gas that has been chilled to liquid form, reducing it to 1/600th (one six-hundredth) of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation by ship to destinations not connected by pipeline. The gas is odorless, colorless, non-toxic and non-corrosive. On arrival, it's turned back into gas for distribution to power plants, factories and households.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0aFYl4uRBO4&refer=home
Additional points per the link above:
* At a marketcap of $15 Billion, Origin Energy Ltd is Australia's Largest Producer of Gas from Coal seams...coal-seam gas, mostly comprising methane, bonds as a thin film on the surface of coal and is released when pressure is reduced (usually after water is removed)
* The companies plan initially to build 2 LNG 'Production Units' (plants), each with a capacity of 3.5 million metric tons a year, with deliveries scheduled to start by 2014
* Origin Energy will operate the coal-seam gas production part of the venture, while Conoco Phillips, which already operates an LNG plant in northern Australia, will operate the LNG output.
Data Courtesy: Bloomberg
Full Disclosure: I own shares of COP.
Posts
