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CSG Discussion
triage
post Posted: Apr 19 2014, 02:01 PM
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I used to subscribe to the blogsite macrobusiness but dropped out after a couple of what I thought were fairly biased non-evidence-based unbalanced offerings by the blogger Leith van Onselen - who uses the handle Unconventional Economist - regarding coal seam gas and fracking. Mr van Onselen apparently is an ex-federal Treasury official and an economic dry which should mean that his level of analysis would be very thorough, fearless and data driven (just about any local economist worth their salt would likely to have been blooded either in the federal Treasury or at the RBA). But at least when it comes to csg, fracking and the Australian gas sector generally it appears to me that Mr van Onselen resorts to the more typical level of analysis available in Oz: that of looking for any shred of evidence to support whatever preconcieved bias you have.

One article in particular was where he called for the prohibition of all unconventional gas development entirely on the basis of his having just watched the "doco" Gasland. That Gasland had been out for several years already suggests that he had actually not been following the debate very closely up till then, and that a primary assertion of Gaslands - that fracking was causing gas to seep into people's home water supplies - had been conclusively shown to have been a distortion of the facts but was not picked up by Mr van Onselen caused me to doubt the quality of the research and analysis he had applied in writing his post.

Another more recent article was based on one of the csg companies being fined $1500 for a minor spill at a drilling site in NSW. Based solely on this finding Mr van Onselen declared that this was sufficient evidence that fracking and unconventional gas extraction was unsafe and should be closed down. One $1500 fine and he calls that a key plank in Australia's energy sector should be boarded up. Meanwhile conventional energy producers like BP and car manufacturers like Toyota and GM and pharmaceutical companies have been fined billions of dollars for errors and faults that threatened the community's health and safety but apparently that does not warrant any calls for us to return to burning wood, riding around in horse-pulled buggies and drays or getting exorcising priests and witch doctors to take back control of our health.

I appreciate that a blogger's lot is not easy in that they have to churn out a regular amount of work addressing contentious issues so as to attract enough traffic to generate momentum. But there does appear to be a clear editorial line regarding csg and fracking at macrobusiness which to me pushes a fixed opinion that is fully against the sector rather than analysis that addresses the pros and cons and strengths and weaknesses of what is happening in Qld.

Here is another recent blogentry by another blogger, David Llewellyn-Smith or Houses and Holes, at macrobusiness that again doesn't let a few facts get in the way of a good prejudice.

http://www.macrobusiness.com.au/2014/04/the-lng-cost-curve/

He shows a chart that identifies that most of the older first-wave LNG liquidification facilities were much cheaper to build than many of the newer second-wave facilities and it just so happens that the second wave of LNG export facilities are mostly in Australia. On that basis he claims that the more expensive facilities - that is much of the Australian industry - cannot compete and are white elephants. As was pointed out in the comments section of that blogentry the blogger conventiently did not point out that the Australian facilities are all being built on the back of signed long-term supply agreements based on the price of oil and that many of the main customers of these facilities have also taken a material equity position in them. Whilst they may be relatively high-cost operations as long as they have customers buying the product at profitable rates then they are hardly white elephants.

One of the main arguments that the bloggers at macrobusiness seem to rely on is that north american gas is ready to flood the international markets at prices so low that the Australian industry will be decimated. But that is assuming that the glut of north american gas is a sure thing and is available now when clearly things are not so certain or clear.

As I have mentioned on another ss thread I think there are doubts about some of the straight-line extrapolations regarding the growth of north american shale gas supplies, including present production levels being partly due to the application by producers of the bygones rule and partly due to producers concentrating on the sweet spots in their fields first up. Another assumption made to argue that north american gas will always maintain material price advantages over Australian LNG supplies is that whilst Australian construction and production prices spiked when the sector started growing a similar thing will not happen in the States.

But here is a Bloomberg article that indicates that even in the US labour (or in their case labor) shortages may impact on the costings of building an export industry.

http://www.bloomberg.com/news/2014-04-17/m...campaign=buffer

Anyway there appears to be some uncertainty even amongst the major players in the sector how things will play out regarding the development of a US export industry that will destroy all other sources of gas. Here is an article written by someone who is admittedly hardly independent who reports on what he saw as the sentiment at a recent international gas industry conference. From this take at least there are signs that the US push into LNG exports is not the done deal that many seem to assume and that all this uncertainty is favouring those players that are already in production or at least are close to completing construction of facilities on the basis of long-term contracts.

http://www.alaskadispatch.com/article/2014...al-lng-industry

I think that the quote from the Calvin and Hobbes cartoon strip that Barry Ritholtz put on his blog site is apt:

QUOTE
"CALVIN: The more you know, the harder it is to take decisive action. Once you become informed, you start seeing complexities and shades of gray. You realize that nothing is as clear and simple as it first appears. Ultimately, knowledge is paralyzing. Being a man of action, I canít afford to take that risk.

HOBBES: Youíre ignorant, but at least you act on it."

-Bill Watterson, Calvin & Hobbes




--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle

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arty
post Posted: Mar 9 2014, 07:27 PM
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QUOTE
How come fraccing and shale oil exploration/production is encouraged in the US and China but not in Australia?

As regards China's concern for environmental issues, look no further than current coverage of smog in Beijing. Or you can buy some catfish raised and caught in their "pristine" rivers.

It's also a good idea to brush up on the geological differences between North American and Australian shale and coal seam resources. Can we trust assurances by US-based Multi-Nationals that groundwater contamination just cannot happen?
Yeah, right. Ask anyone from Bhopal to Brazil...

On a less well-known note: A major coal mining project has been rejected in WA's South-West because it might interfere with established viticulture in the same area.
QUOTE
So why should the public take these "protestors" seriously?




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I trade daily, but I am not a licensed adviser. Whether you find my ideas reasonable or not: The only person responsible for your actions is YOU.
I follow two rules: (1) There are no sacred truths. All assumptions must be critically examined. Arguments from authority are worthless. (2) Whatever is inconsistent with observed facts must be discarded or revised. We must understand the Market as it is and not confuse how it is with how we wish it to be. (inspired by Carl Sagan)
 
bermuda
post Posted: Mar 9 2014, 06:30 PM
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In Reply To: flower's post @ Mar 7 2014, 06:57 PM

Flower,
The Gasland movie gained emotional and long term support until the oil industry also showed a clip of burning kitchen water fawcett taps. This oil industry clip was taken 26 years before fracking was even heard of. It was lost on the audience.

Methane has been bubbling up through pristine aquifers for 150 million years plus. Fox, from Gasland said this fact was irrevelant.

Emotion has taken over.

The water requirements do need addressing but quite often natural unusable saline water is used.


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flower
post Posted: Mar 7 2014, 07:57 PM
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In Reply To: balance's post @ Mar 7 2014, 07:43 PM

Hi balance, taking the latest BRU issue which was given prime time in that ultra left wing programme ----the ABC 7.30 report, the clip showed just a few locals having their say, with children who obviously thought it a huge joke, it was obvious which camp the reporter fell into.

From memory--- I hasten to add -----the clip showed the locals going about their daily business, but unless I was very much mistaken their mode of transport was what appeared to be a fairly new 4WD of quality.

So why should the public take these "protestors" seriously?

Reckon we have listened to and been influenced by minority interests for far too long.

btw: Apparently some of the wells proposed by BRU are plain old vertical ones, but nobody bothered to point that out in the intro.



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Combining Fundamental comments with Fundamental charts.
 
balance
post Posted: Mar 7 2014, 07:43 PM
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In Reply To: flower's post @ Mar 7 2014, 06:57 PM

Interesting discussion Flower.

It is difficult to seperate fact from fiction with so much money involved. Then the facts presumably do no fit for every drill site with different geological conditions.
I do not doubt there are valid points of difference on where certain things are safe or not.

On one hand you have some drillers / investors who dont give *&^% about anything in the environment and then you have the extreme left who will stop at nothing to halt any mining or resource development. Unfortunately people can be swayed by poor science (on either side) , propaganda or simply $$.

I've made more money out of CSG than just about anything (on my small scale anyway) but also have sympathy for people on the land worried about what could happen to their plot.

Who can you trust?

I do no think the USA experience is smooth sailing environmentally but their geology and what is allowed to be pumped into the drill holes maybe quite different to here. Right or wrong, it is clear the Gasland movies have had a big impact.

People get scared, reject change and make do with what they know. To be honest I do no blame them whether they are right or wrong.
They may look at Queenstown in Tassie or the Ok Tedi in PNG and think is it worth the risk? Once your land is rooted it stays rooted for a long time.
Like I said, I do not know enough to be an impartial judge and finding one I think would be quite a challenge.



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flower
post Posted: Mar 7 2014, 06:57 PM
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Any body prepared to openly discuss this whole fraccing business in Australia?

Reason I ask is that whilst I have shares in SUR (fracking in Texas) SEH (likely to be fraccing in China) and BRU---the only one of the three that seems likely to have its progress impeded is BRU. This follows the 7.30 report this week on the new troubles BRU is facing.

It is very difficult to understand why a small and vocal body who seem well recompensed one way and another should be allowed to even interfere at this late stage when years of negotiations have already taken place.

Do they not realise the importance of encouraging domestic oil production, or does nobody drive cars, fly in planes etc up in that part of the world?

eg: Doesn't the RFDS operate vital services in that area?

How come fraccing and shale oil exploration/production is encouraged in the US and China but not in Australia?



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Combining Fundamental comments with Fundamental charts.
 


triage
post Posted: Jan 19 2014, 11:42 AM
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This is a link (hat-tip to darwin and SP007 on hc) to a committee hearing of the UK House of Lords from last week. It is long but very (relatively) interesting and informative imo.

The contrast between the civil tone and genuine interest of the pommy pollies in seeking information from the witnesses as compared to the pouting dogmatic show-boating on display at the Australian Senate Committee's similar hearing a couple of years ago is really quite demoralising for me. I suppose what can one expect from a bloke like Bill Heffernan who is so bogan as to boast that he has not read a single book since leaving school.

http://www.parliamentlive.tv/Main/Player.a...meetingId=14641

Great point made by the boss of Liberty Resources: he said that he can live with tough regulations - he stated he actually prefers that the industry is required to meet high standards, and he can live with governments and land-holders and the community getting a fair chunk of the revenues generated - though of course no doubt only to a certain extent, but what he reckons is a killer for the unconventional gas industry is delays: whether that be in clarifying the regulatory regime or getting approvals for exploration.

The fact that the NSW premier clearly prefers to sit on any number of decisions rather than upset anyone (who is a donor?) is a killer, whether it be for the unconventional gas industry in NSW or some 18 year old kid who happens to walk in front of an obnoxious drunk at the wrong time.






--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
triage
post Posted: Jan 12 2014, 10:49 AM
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The news that the French supermajor, Total, is about to formally throw its hat into the UK shale gas ring should be a shot in the arm for the likes of Dart and Lucas (?).

http://www.bbc.co.uk/news/uk-25695813






--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
triage
post Posted: Oct 4 2013, 02:08 PM
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Here is an interesting read that I picked up from the comments section of a thread on the local financial blogging collective, Macrobusiness. It is about a recent international chin-wag about LNG pricing as in whether international prices should be based on oil prices (as they are now) or whether those prices should be anchored to some gas index.

http://www.platts.com/latest-news/natural-...-boost-27395293

Whilst the talk is that any new pricing system would mean a material drop in prices being paid in north asia once you factor in the additional transport and capital costs the gas would not be selling for anything like what is currently the going price in the US; there was one mention that the new pricing structure could see a 30% drop in spot prices.

As an aside the blogger who posted the original piece continues his anti-csg crusade of bias over logic. For instance he argues that high gas prices in NSW will be caused by csg rather than addressed by csg. Funny that: as far as I know NSW currently uses virtually no csg and the contracts supplying gas to NSW that are about to start running out are from Bass Strait and the Cooper Basin in SA, neither of which have much chance of producing csg any time soon. The only hope for NSW to start producing substantial amounts of gas for its own use is by allowing the csg companies to do their thing, how that is divied up between export and domestic use would be determined by regulation. As it happens, the two csg projects I know that were all-but ready to go in NSW were Metgasco supplying a local dairy and Dart supplying a proposed local greenhouse and yet the macrobusiness blogger conveniently ignores this and says that any csg produced in NSW would end up being exported through Gladstone. (I find it sad that the justification that blogger gave for originally setting up macrobusiness was to encourage balanced discussion of economics and finance that was not available in the local mainstream media and yet here he is pushing his own "political" barrow as blatantly as anything Rupert has tried on [whilst I suspect glaring enviously at the huge amount of money Allan Kohler made from his portrayed break from MSM]: ah well there are plenty of foreign analysts and bloggers who taken as a whole can provide the balanced discussion unavailable locally).



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
triage
post Posted: Sep 12 2013, 02:14 PM
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I see the Qld government yesterday gave the go-ahead for Shell and PetroChina (aka the Arrow jv) regarding their building a LNG facility at Gladstone. The new broom in Canberra now has 30 business days to either block the project or not on environmental grounds.

The article I read in the Fin Review was all about whether the conservatives will follow through with all the pre-election spruiking to favour land-holders and the environment over gas companies, and block the project. To me the journo got it all arse about. To me the rural conservatives made a big thing of sticking up for the farmer in an attempt to stem the loss of voters to the independents and single issue candidates. But now the election is over the reality is that the bulk of the Liberal Party will want to give the appearance of being all gung ho about development. They are hardly likely to kill off a major project in the first few weeks of them being in government. The rural conservatives like Heffernan and Joyce may or may not kick up a stink but I reckon approval from Canberra is a fait accompli.

What is more surprising to me is that Shell and PetroChina are even pushing on with the approval process when all the signs appear to indicate that they are not inclined to bring the project into production any time soon.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

"It is the mark of an educated mind to be able to entertain a thought without accepting it." Aristotle
 
 


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