Gorgon getting closer....

[Ausprop]

not sure it's this one project that maketh the boom. It's also pluto, wheatstone, oakajee, olympic dam, various uranium in WA, Inpex in Darwin, various gas in Qld etc

$10bn of gorgon contracts being placed immediately apparantly. I have learned in this thread tho that there is no benefit to be had from the gorgon project. I will have to call the sales rep back and tell him that he is wrong and that my block of land hasn't really gone up $30k in value before I have settled on it... seems I should be focussing on some place called elwood. And here I was thinking it was a yuppie clothes brand!

 

[Aaron Sice]

Haha.............you sandgropers just can't help yourselves.I'm sure that one day you will eventually lose that inferiority complex.......

(and that'll probably only happen when you welcome daylight saving and late night shopping with open arms......)

ciao

Nor

no inferiority complex mate - we just enjoy having our kids and relatives not at work on sundays but at the beach and bbqs instead.

daylight savings can go jump. if you want to live on tonga time, go move to tonga.

 

[TJamesX]

I try to work out few things with gas prices and quantity they forecast (15 mil ton a year). With today prices of around 3US$ per mmBtu for lng it makes around 5 bil AU$ for a year wich is much less then the 300 bil AU$ over 25 years you read on press. May be I got the conversion wrong (here are the links I used: 1 2).
If that is the case it is not a great return for 50 bil$ investment, it will depend very much about gas prices in the future

Gas price assumption is the key, $3/mmbtu is very low...

recent contracts for LNG are priced at closer to oil parity, so after taking out the cost of liquefaction and using $80/bbl oil it equates ~ $9/mmtbu.

Just doing some rough calculations, assuming revenue of ~ $50/boe for the gas at the field, Gorgon gas field is 40tcf which equates to 7,200 mboe. 50*7,200 = $361 billion in revenue (in todays dollars). Also there will be associated liquids produced with the field, although Gorgon is a relatively dry gas field, but this would definitly add to the revenue as well.

I'm currently running some economics on the Ichthys development which is smaller but has heavier hydrocarbons (liquids) and getting numbers of ~ $200 billion in revenue..... add to that browse, wheatstone etc you could get close to $1 trill in revenue from these projects pretty quick... even before adding in the CSM LNG.....

Ofcourse all of this relies on the world LNG markets keeping up with Oil, but the numbers do make the mind boggle

 

[boz]

Gas price assumption is the key, $3/mmbtu is very low...

recent contracts for LNG are priced at closer to oil parity, so after taking out the cost of liquefaction and using $80/bbl oil it equates ~ $9/mmtbu.

love this pricing at "the price should be" and not at market price.
you can find gas price on bloomberg home page (bottom right) or at the commodity homepage, at present is much higher then when i posted at a whoopie 3.4 US$ mmbtu, that make the project at today market price and today US$ not much more then 100 bil$ (assuming a market gas price of around 20 BOE).
there is a lot of press and political interest in make the projet look good. It is still worth develop it but who win out of it is australia only if prices will be high enough in the future. other importing countries will win if prices will be low

 

[Ausprop]

It is still worth develop it but who win out of it is australia only if prices will be high enough in the future. other importing countries will win if prices will be low

the capital spend is what will help now and that doesnt change regardless. how are the royalties calculated?

 

[boz]

the capital spend is what will help now

still, i presume banks will not flog those company of money to invest over there. if gas prices are low i'll bet there will be delays and other project would have priority. it would also depend on the health of those energy company.

 

[Alex P Keaton]

Any thoughts on what this project will do for residential property prices in Perth. Price growth due to more demand from perth based companies providing services perhaps?

Or will this be insgnificant?

Ditto, hope someone can explain how this all works? What exactly leads and causes the property values to rise in Perth. What? People have more money to spend and buy properties. Fly in fly out workers want somewhere to stay during their week off so they buy a place? There is more demand for property due to interstate workers that have moved here and immigrants increasing which helps to increase the values? Is this a bit right in a way, my explanation. I dunno

What will drive the values higher? I dont know much about economics. What happened last time when Perth boomed in 2006?

 

[Ausprop]

drawing form last time...

- tradies become impossible to secure. lead times on new builds can blow right out. supply of any new home is thus delayed and significantly more expensive...both because labour costs rise so much and material costs

- influx of cashed up population in an environment of stifled supply

- land titles can't be released quick enough

- confidence is boosted, people invest and spend. money velocity increases

Barnett doesn't like to use the word boom but I think he will have to live with it


I just checked out karratha listings on re.com... wow! now there is a boom unfolding before your very eyes.

 

[Ausprop]

here's a $2.7bn contract to kick start things...

http://www.news.com.au/perthnow/story/0,21598,26076458-5017962,00.html

 

[Aaron Sice]

*sigh*

how long is the contract for $3/mmbtu? 1 year? 5 years? 90 years?

it sounds to me like a "from" price for real estate developments....

 

[Aaron Sice]

drawing form last time...

- tradies become impossible to secure. lead times on new builds can blow right out. supply of any new home is thus delayed and significantly more expensive...both because labour costs rise so much and material costs

- influx of cashed up population in an environment of stifled supply

- land titles can't be released quick enough

- confidence is boosted, people invest and spend. money velocity increases

Barnett doesn't like to use the word boom but I think he will have to live with it


I just checked out karratha listings on re.com... wow! now there is a boom unfolding before your very eyes.

being number 4 sucks...

 

[Minxdamanx]

The flow on effect already appears to be starting.

Lots of buzz around about contracts being awarded, quotes requested, employment opportunities for those not directly involved but in allied industries that will be helping to 'build' the project.

And this is just from one industry meeting that my husband attended last night. Not gas related, just a small cog in the construction chain.

He said there were a lot of people starting to get very excited.

Positivity (is that a word?) is just as catching as D&G apparently.

 

[boz]

*sigh*

how long is the contract for $3/mmbtu? 1 year? 5 years? 90 years?

it sounds to me like a "from" price for real estate developments....

you can still buy the gas now and store it for a future use. or you can just buy the future up to dec 2017 which is quite expensive at nearly 8$ mmBtu, not much difference from the jan 2014 future at 7.6$ mmBtu. I guess it is quite expensive to store gas. I just realised that october future is 3.4 while december one is 5$, so you could just store gas for few months for a great profit. then price is quite steady untill end of summer (5.6 for august 2010). but these are prices for the Nymex in north america

 

[TJamesX]

you can still buy the gas now and store it for a future use. or you can just buy the future up to dec 2017 which is quite expensive at nearly 8$ mmBtu, not much difference from the jan 2014 future at 7.6$ mmBtu. I guess it is quite expensive to store gas. I just realised that october future is 3.4 while december one is 5$, so you could just store gas for few months for a great profit. then price is quite steady untill end of summer (5.6 for august 2010). but these are prices for the Nymex in north america

Boz there isn't one world market price for natural gas, for one main reason - it is very costly to transport (ie turn into condensed liquid), so in effect you have a whole number of disconnected markets with different prices.... North America is a large market and their gas prices have collapsed because of supply from unconventional fieds (and recession).

In Aus, gas wholesale is sold at different prices between WA and East coast. WA used to be much cheaper < $3 now its closer to $6 because there are limited suppliers and it all goes to export, east coast is still ~ $3-4 but will probably increase after LNG projects start.

Spare a thought for the gas importing countries who have no gas - they buy these shipments, regassify and sell into market at $10++. All the Aus LNG will be going into the Asian marketplace. Most contracts for this market are written relative to oil prices (not US Nymex gas market)

 

[boz]

Boz there isn't one world market price for natural gas, for one main reason - it is very costly to transport (ie turn into condensed liquid), so in effect you have a whole number of disconnected markets with different prices.... North America is a large market and their gas prices have collapsed because of supply from unconventional fieds (and recession).

In Aus, gas wholesale is sold at different prices between WA and East coast. WA used to be much cheaper < $3 now its closer to $6 because there are limited suppliers and it all goes to export, east coast is still ~ $3-4 but will probably increase after LNG projects start.

Spare a thought for the gas importing countries who have no gas - they buy these shipments, regassify and sell into market at $10++. All the Aus LNG will be going into the Asian marketplace. Most contracts for this market are written relative to oil prices (not US Nymex gas market)

thanks for that info, i was getting into working it out...
anyway, i thought about a bit of where the gas is and who need it, coal is kind of same thing but more dirty then gas and oil. I am not sure about supply in asia as europe got all these pipes coming from asia (russia, kazhakistan and around there and also from north africa), not much lng is going into europe, may be because, like you say, it is too expensive to liquify it and ship it, so, if that is the cheapest option from europe i don't see why china shouldn't build pipes going to those not far places as well, may be their agreement with gorgon is a "just make sure we have other options" and a way to get long term gas prices cheaper (from more production and investments) also there is a lot of gas in africa that can be piped up to europe or asia. The key is still if it is worth to get gas in places like gorgon in 20-30 years time, demand would still be there? prices will hold? may be there will be cheaper way to transport lng by then but on the other hand many other sources of energy will be more used (like renewable or nuclear)

 

[Ausprop]

Well it looks like 12 out of 15 million tonnes per year is enough after all...

It's on for young and old! Link here.

Enjoy the ride everyone... I imagine Elwood will do very well out of it!

here's another 1.5m tonnes for your kitty...

http://au.news.yahoo.com/thewest/business/a/-/business/6039312/another-lng-deal-signed-for-gorgon/

How true is this article tho? a real lack of vision and implementation has failed to change the shanty towns of the north west...

http://au.news.yahoo.com/thewest/a/-/newshome/6037678/fears-of-dark-side-of-the-boom/

 

[Norwester]

Ausprop,

I will have to call the sales rep back and tell him that he is wrong and that my block of land hasn't really gone up $30k in value before I have settled on it... seems I should be focussing on some place called elwood. And here I was thinking it was a yuppie clothes brand!

Nice to see you having a win, particularly after all the crap you've gone through recently.

And what is with all the recent postings about Elwood.....


ciao

Nor

 

[attrill]

I think the Elwood connection is from Micheal Yardney's recent visit to Perth. He is mad keen on the place and wants everybody else to feel the same way as he has so much tied up there.

 

[Ausprop]

cheers mate... nearly worked thru my issues then it's onwards and upwards. some of the advice on this forum could have saved me from every mistake I have made, unfortunately there is a lot to filter! it's quite clear from here on in tho. (acting a sa quasi-homeswest dept is not part of that plan!)

 

[Alex P Keaton]

drawing form last time...

- tradies become impossible to secure. lead times on new builds can blow right out. supply of any new home is thus delayed and significantly more expensive...both because labour costs rise so much and material costs

- influx of cashed up population in an environment of stifled supply

- land titles can't be released quick enough

- confidence is boosted, people invest and spend. money velocity increases

Barnett doesn't like to use the word boom but I think he will have to live with it


I just checked out karratha listings on re.com... wow! now there is a boom unfolding before your very eyes.

thanks for that