Home' Trinidad and Tobago Guardian : May 1st 2014 Contents MAY 2014 • WEEK ONE www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Natural gas companies
in the United States
can produce the com-
modity for between
US$3.25 and US$3.50 per mmbtu and make
money at that price, said Nicholas Deluliis,
president of Consol Energy, one of the largest independent
natural gas producers in the eastern United States.
In an interview in Pittsburgh with the Business Guardian
recently as part of an energy reporting tour of the United
States, Deluliis said he could not see producers making money
from the Marcellus and Utica shale formations below that
He said, "We are operating in a low price environment.
Now even in a low price environment, we need to have a
floor price, and depending on the geology, one would have
to say that a minimum price that will be economic to produce
the Marcellus and Utica shale will be in the vicinity of US$3.25
Deluliis said Consol Energy, which by the end of 2014, will
be producing just over 500mmcf/d, is hopeful a lot of that
gas will be exported as liquefied natural gas and therefore
will be in a position to compete with natural gas from the
Atlantic's facilities in Point Fortin.
"Natural gas through LNG is a global commodity, and we
are hopeful we will be in a position to export some of our
gas as LNG and tap into those markets like China and Japan.
We know that at the Henry Hub, the prices are low, but we
see a strong market in the Far East and we think that we
should be looking to export some of that gas," Deluliis said.
T&T has significantly reduced the
amount of gas it is selling into the US
at Henry Hub because of the depressed
prices occasioned by the advent of the
shale revolution in areas like Pennsylvania and North Dakota.
This country used to be responsible for 70 per cent of all the
LNG imported into the US. That is now down to less than
20 per cent, and a lot of that gas has not been diverted to
South America and to the Far East like China where the
natural gas prices are four to five times the prices at the
Deluliis said his company, which has made a strategic shift
into natural gas away from coal production, said Consol esti-
mates it could average growth over the next three years with
US$29 billion invested over the next three years in shale gas.
The company is a leading producer in the Marcellus shale,
has an active exploration programme in the Utica shale and
has proved natural gas reserves of 4.0 trillion cubic feet.
The Marcellus and Utica shales are considered two of the
largest shale plays in the world and are expected to have a
significant impact on the United States efforts to become
It is estimated that more than 500 trillion cubic feet of
natural gas is contained in shale that run through parts of
Pennsylvania, New York, Ohio and West Virginia.
Consol's natural gas operations include coalbed methane
extraction, conventional and shale gas exploration and pro-
duction. It has already drilled more than 4,000 coalbed
methane wells and its 9,000 conventional wells have positioned
it to maximise production in the Marcellus and Utica acreage.
BG Group chief executive officer, Chris Finlayson, resigned
after little more than a year in the job as the third-largest United
Kingdom oil and gas producer ditched an output forecast that's
just three months old.
Finlayson, 58, will be replaced immediately by chairman
Andrew Gould until a permanent successor is found, BG said
on Monday in a statement. The company said Finlayson resigned
for personal reasons.
BG said Monday oil and gas output this year would be at the
lower end of an estimated range on falling production in Egypt.
The company's reviewing operational, investment and portfolio
management plans and won't offer 2015 guidance until February,
it said, abandoning a forecast Finlayson made in January.
"The board felt that it was in the best interests of the group
to accept Chris's resignation and seek fresh leadership," said
Gould, who becomes interim executive chairman. BG needs to
accelerate returns to shareholders, he said.
BG closed little changed at 1,146 pence in London. It earlier
fell as much as 6.8 per cent in the biggest intraday decline since
the outgoing chief unveiled project delays on January 27.
Finlayson, a former Royal Dutch Shell Plc executive who
joined BG in 2010 before taking over from long-term CEO Frank
Chapman at the start of last year, was forced to issue a profit
warning in January because of delays at projects in Australia,
Brazil and the North Sea, as well as political turmoil in Egypt.
The shares dropped 14 percent that day.
months ago, he was still
confirmed in the job, obvi-
ously frustrated by Egypt,
and seemed to be the sav-
iour of BG a year ago," said
Jason Kenney, an analyst at
Banco Santander SA in
Edinburgh. "The surprise
resignation could be seen
as a reaction or a frustration
that a growth period for BG
is struggling to get started."
The Reading, England-
based company will report
its first-quarter earnings on
Egyptian oil and gas pro-
duction dropped 35 per cent
in the first quarter to
66,000 barrels of oil equivalent a day from the prior three
months because of deteriorating reservoir performance and the
diversion of fuel to the domestic market, BG said. That means
total output for 2014 will be at the lower end of its forecast
of 590,000 to 630,000 barrels a day.
In January, BG had said 2015 production would be 710,000
to 750,000 barrels a day as new fields started output.
"Egypt has further deteriorated," said Bertrand Hodee, an
analyst at Raymond James Financials Inc in Paris, cutting his
output forecast 4.6 per cent to 587,000 barrels a day this year.
Finlayson was charged with balancing record capital spending
with lower-than-expected oil and gas production after taking
over from Chapman.
BG shares rose 28 per cent last year under his leadership
before plummeting this year following the January profit warning
and Monday's resignation.
He won the top job at BG in competition with former chief
operating officer Martin Houston, who led the company's liq-
uefied natural gas business. Houston decided to retire in Novem-
ber ending his more than 30-year career with the company.
BG, formed in 1997 when former state gas monopoly British
Gas Plc split its exploration and production arm from its retail
business, is the biggest UK-listed gas producer after Royal Dutch
Shell Plc and BP Plc. Chapman was CEO from 2000 to 2012.
BG CEO Finlayson
quits as oil producer
US natural gas producer
Consol Energy to compete
with Atlantic on price
This country used to be responsible for 70 per cent
of all the LNG imported into the US.
That is now down to less than 20 per cent.
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