Ditch, FRO has been on a tear and it pays a nice dividend to boot. I've put it on my research list.
On GNLG as a pure play, I agree.
Message 19145355
You mentioned the premium on building the LNG terminals, take a look at one stock busy in this area, LNG, verrrry expensive valuations and enjoying a nice run.
biz.yahoo.com
I think Greenspan set LNG stocks on fire earlier this year. SRE is another one:
biz.yahoo.com
Interesting article from WSJ:
<U.S. BUSINESS NEWS
FROM THE ARCHIVES: August 15, 2003
Cooled Natural Gas
Heats Up Interest
By RUSSELL GOLD
Staff Reporter of THE WALL STREET JOURNAL
Faced with higher natural-gas prices and declining production in the U.S., some industrial companies are seeking to guarantee long-term supplies of the fuel by helping to finance new terminals that will accept liquefied natural gas from overseas.
Liquefied natural gas is cooled to minus-260 degrees Fahrenheit so it can be loaded on tankers and transported. LNG use is growing, though the U.S. has only a handful of terminals that can accept it.
Earlier this summer, Sherwin Alumina, a bauxite refiner, purchased a one-third interest in a planned LNG receiving terminal adjacent to its Corpus Christi, Texas, facility. In exchange, Sherwin gave 200 acres of land on the ship channel and $6 million to Cheniere Energy Inc. of Houston. Energy constitutes 60% of Sherwin's cost of producing alumina, an ingredient in aluminum smelting, up from 20% to 30% in 2000.
Dow Chemical Co., a large consumer of natural gas as both a fuel and ingredient, has agreed to take one-third of the capacity at a $450 million terminal planned up the coast, in Freeport, Texas. The agreement is contingent on Dow securing a foreign supply of natural gas.
"We are accustomed to shopping for feedstock globally; now we'll be shopping for fuel globally," says Bill Jewell, vice president of energy for the Midland, Mich., chemicals concern. "It's a natural step."
Dow Chemical's 20-year agreement would supply it with about two-thirds of the 700 million cubic feet of natural gas per day consumed by Dow Chemical's plants in and near Freeport.
Other industrial consumers could follow. Occidental Petroleum Corp., Los Angeles, has told analysts it would be interested in such an investment. The company's chemical division is one of the Gulf Coast's largest consumers of natural-gas-powered electricity.
Cheniere Chief Executive Charif Souki says a half-dozen companies have sought to become equity partners in proposed LNG receiving terminals. The exploration-and-production company is developing three LNG receiving terminals along the Gulf Coast, in the Texas cities of Freeport, Sabine Pass and Corpus Christi. All three terminals are scheduled to open in 2007, pending federal permits.
Backing from industrial companies will likely boost the efforts of small companies such as Cheniere to open terminals, even as Exxon Mobil Corp., Irving, Texas, and ChevronTexaco Corp., San Ramon, Calif., eye similar projects.
Traditionally, North American natural gas has been supplied by pipeline. But as domestic supply fails to keep pace with demand, interest in importing LNG has grown. For the first six months of the year, the U.S. imported 204 billion cubic feet of LNG, up from 108 billion cubic feet during the year-earlier period.>
Also worth passing on, regarding future of LNG facilities in U.S. and SRE:
<
August 22, 2003 2:46 p.m. EDT
FROM THE ARCHIVES: August 22, 2003
FERC Environmental OK Gives Sempra Energy,US LNG A Boost
By JOHN M. BIERS
Of DOW JONES NEWSWIRES
HOUSTON -- After receiving environmental clearance from federal energy regulators, Sempra Energy (SRE) sees no more significant hurdles to winning regulatory approval for the first new liquefied natural gas import facility in the U.S. in two decades, company executives said this week.
The optimism follows a final environmental impact statement issued by the Federal Energy Regulatory Commission for a proposed LNG receiving facility that would be located in the town of Hackberry, La., about 30 miles east of the Texas border. The statement concluded Hackberry "would have limited adverse environmental impact."
Sempra saw the environmental impact statement as the last main obstacle to winning approval to begin construction from FERC, which issued a preliminary determination in favor of the project last December. Observers saw the approval as a signal federal energy regulators are prepared to approve LNG development.
"There's nothing left that is an obstacle to their approval," Darcel Hulse, president of Sempra Energy LNG, said of the three-person commission. "All of the questions pertaining to the project have been satisfied."
If built, Hackberry would be the first new U.S. "greenfield" LNG receiving terminal in more than 20 years. The Louisiana entry is the furthest along in the FERC permitting process of the new generation of proposed terminals.
Many in the energy industry view U.S. regulatory approval as a major uncertainty lingering over plans to build new LNG facilities.
Randolph McManus, a partner at Baker Botts in Washington who works on the firm's LNG permitting team, said the environmental go-ahead was "a very significant" sign of the commission's willingness to allow more LNG.
"It confirms FERC is committed to approving onshore receiving facilities," McManus said.
Construction Seen In 2004
Sempra still needs to get permits from the Army Corps of Engineers, the Louisiana Department of Environmental Quality and some other agencies before construction can begin.
Dale Kelly-Cochrane, vice president of operations for Sempra Energy International, said these other permits are in various stages with agencies. The permitting process shouldn't delay the plan to begin construction in the first quarter of 2004, he said.
"We're not seeing significant issues," Kelly-Cochrane said.
Other companies are also opting for low-population areas like Hackberry to avoid the so-called "not-in-my-backward" resistance of many communities that has killed past energy proposals. Observers see the Gulf Coast as far friendlier to new construction than the East or West coasts.
The progress on Hackberry comes as the Bush administration, Federal Reserve Chairman Alan Greenspan and others tout imports of LNG as a critical counterbalance to declining domestic production, which has helped tighten supplies and send prices soaring this year.
As high prices have persisted this summer, administration officials have signaled their goal to speed approvals of LNG terminals and other infrastructure, which even recently had been uneconomical for the most part.
The proposed $700 million Hackberry site would process up to 1.5 billion cubic feet of natural gas per day, slightly more than 2% of current U.S. consumption and equal to about half of the country's current capacity to import LNG. The project would convert a mothballed liquid petroleum gas terminal in an area far from major population centers.
Final Decision Seen Soon
Sempra expects Hackberry to begin operating in 2007. The company plans to finance the $700 million project from available cash, but may refinance later, Hulse said. Clearing the environmental-approval hurdle will facilitate ongoing negotiations with gas suppliers, he said.
Outside experts familiar with the process stopped short of terming FERC approval a formality, but called the environmental impact statement significant and said a go-ahead can be expected at this point. Experts said the final order should be issued within three months and may come within weeks.
"It should be expected that FERC should issue a final order within a month or two," said McManus of Baker Botts.
FERC's next meeting is scheduled for Sept. 10. The agenda for the meeting hasn't been set, a FERC spokeswoman said.
Sempra, which purchased Hackberry from Dynegy Inc. (DYN) in April 2003, addressed a series of issues raised by FERC staff in a preliminary environmental impact statement, including a requirement to consider a site five miles away. The agency discounted the alternative location after the landholder said it wasn't available.
To compensate for 203 acres of wetlands affected by the site, Sempra will create at least 85 acres of coastal marsh in a nearby area.
Patrick Pope, an expert on LNG's regulatory history in the U.S., was disappointed FERC staff declined Hackberry's request to require facilities to use a tank design that would eliminate the need for a dike system around the site. The staff ordered the dike system, a mandate that will require additional land.
Final approval would be a "watershed moment" for the government and industry said Pope, vice president and general counsel for Southern Natural Gas, a unit of El Paso Corp.
"But even with the receptiveness of the commission, there are still significant siting challenges," he said of new onshore LNG infrastructure in the U.S.> |
