October 25, 2021

Exports of U.S. Gas May Fall Short of High Hopes

Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.

Just like last time, some of the costly ventures could turn out to be poor investments.

Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.

“It will be easier to export the technology for extracting shale gas than exporting actual gas,” said Jay Hakes, former administrator of the Energy Department’s Energy Information Administration. “I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.?  Not so clear.” 

Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.

“It’s a monumental effort to put a deal together like this, and you need well-heeled partners,” said Mark A. Snell, president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. “There are only a handful of people who can do this kind of thing.”

At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.

Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.

Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.

Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.

“You have got to be able to change, adapt as changes take place in the world,” said Michael E. Gardner, manager of the Cove Point plant.

The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.

Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.

The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.

Eric Lipton contributed reporting from Washington.

Article source: http://www.nytimes.com/2013/01/05/business/energy-environment/exports-of-us-gas-may-fall-short-of-high-hopes.html?partner=rss&emc=rss

Stocks & Bonds: Once Again, Fear Sends Stocks Down

On Monday, stock indexes had finally recovered from the huge sell-off of the previous week, after the downgrade of United States long-term debt by Standard Poor’s late on Aug. 5 unleashed days of painful market turmoil.

But by midweek, stocks were falling again, as investors worried about Europe’s debt crisis, and the possibility of recession in the United States intensified. The Standard Poor’s 500-stock index slid 1.5 percent on Friday, and closed down more than 4 percent for the week.

It was the fourth consecutive week of market declines as investors remained rattled. The latest signs of strain came from some European banks laden with debt from the region’s troubled economies — strains that could spread across the Atlantic.

Despite a meeting in Paris earlier in the week between the leaders of Germany and France to pledge greater economic coordination between nations sharing the euro, confidence quickly eroded in the markets over whether Europe’s policy makers have solutions to the Continent’s debt crisis.

In the United States, dismal economic data on Thursday pointed to an unexpectedly abrupt slowdown in manufacturing and a pickup in inflation.

Next week, the market’s attention will turn to the Federal Reserve’s annual symposium in Jackson Hole, Wyo., for signs of how confident the chairman of the Fed, Ben S. Bernanke, is about the strength of the American recovery.

At last year’s symposium, faced by a similar midyear slowdown, Mr. Bernanke paved the way for a second round of large-scale bond purchases, or quantitative easing.

But after the Fed this month already promised to keep short-term interest rates close to zero for the next two years, few economists expect further stimulus from the Fed.

On Friday, markets closed sharply lower in Asia and Europe, and that sentiment then carried over into the United States. Stocks had been briefly higher in the morning hours, but then slipped. Some analysts attributed the slide to technical factors and thin volume.

At the close, the S. P. 500 was down 17.12 points, or 1.5 percent, at 1,123.53. The Dow Jones industrial average fell 172.93 points, or 1.57 percent, to 10,817.65. The Nasdaq composite index lost 38.59 points, or 1.62 percent, to 2,341.84.

For the week, the S. P. was down 4.6 percent, the Dow fell 4 percent and the Nasdaq slid 6.6 percent. The steepest declines were on Thursday, when the indexes slipped more than 3 percent on persistent worries about the economy and Europe’s debt problems.

Stocks of companies most susceptible to slow growth and those related to banks have been hit. Technology, financials and industrials were among the sectors down more than 1 percent on Friday.

“You are still seeing a lot of the economically sensitive names leading us on the way down,” said Seth Setrakian, co-head of United States equities at First New York.

Some of the downturn on Wall Street was attributed to technical reasons. Friday, for example, was a day when options contracts expire, an event that can fuel volatility or market moves.

Analysts were also quick to point out that on a day before a summer weekend, low volumes could unfold into a “bleed” toward the end of the trading session — and indeed, what had been a relatively placid session in New York turned downward in the final hours.

“Just as importantly, any important policy makers that can come up with anything constructive are on vacation,” said Mr. Setrakian. “So what good news can come over the weekend?”

“So everyone is playing much lighter and much tighter,” he said. “It is very simply the data that has been coming out economically has not been constructive.”

Gold continued the sharp ascent it has seen over the last months, demonstrating that nervousness remained intense. Gold futures were up $30, to $1,848.90 an ounce.

Europe’s major stock indexes ended the day lower. The FTSE 100 in London fell 1 percent and the Euro Stoxx 50, a  barometer of European blue-chip stocks, pulled back 2.15 percent.

Asian markets were also lower. The Nikkei 225 index in Japan lost 2.51 percent, and the major market indexes in Singapore and Hong Kong closed down more than 3 percent.

Tension on money markets, which some analysts said was overblown, awoke unpleasant memories of the seizure in interbank lending that came after the collapse of Lehman Brothers in 2008.

“Everybody is taking risk off the table,” said George Rusnak, national director of fixed income for Wells Fargo. “This is probably going to be a trend over the next several weeks. There is not a lot of robust trading going on right now.”

Mr. Rusnak and other analysts again noted that concerns had mounted about the banking sector, especially with respect to the exposure of American banks to their European counterparts.

One drag on the American markets, and specifically the tech sector, on Friday was Hewlett-Packard, which is considering plans to spin off the company’s personal computer business into a separate company and is spending $10 billion on Autonomy, a business software maker. Shares of Hewlett-Packard fell 20 percent, or $5.91, to $23.60.

The benchmark 10-year Treasury note was unchanged, and the yield remained at 2.07 percent. It had touched record lows below 2 percent in intraday trading on Thursday.

“The growth outlook being hurt in Europe, and the ongoing sluggish data we have seen in the United States is the underlying issue the stock market is trying to grapple with,” said Robert S. Tipp, a managing director and chief investment strategist for Prudential Fixed Income.

He said the crisis of confidence was evident as investors parked money in cash and short-term fixed-income assets.

One thing to worry about next week will be whether the European Central Bank can continue to hold down yields on Italian and Spanish bonds. If not, Italian and Spanish borrowing costs might reach the point where they became too expensive, raising the risk of default.

On Friday, Italian bonds and Spanish bonds dipped to 4.96 percent.

Jack Ewing and Julia Werdigier contributed reporting.

Article source: http://www.nytimes.com/2011/08/20/business/daily-stock-market-activity.html?partner=rss&emc=rss

Stocks Fall Anew on Debt Worries and the Economy

The turmoil of last week returned with a vengeance as investors dumped stocks of companies that would suffer if worldwide growth slowed and the United States, in particular, broached another recession.

But the declines began in Asia and in Europe, where an unidentified bank had resorted to borrowing from the European Central Bank, hinting of strains in the banking system that some fear could ripple to the United States. Europe’s chronic debt problem continues to plague the Continent’s banks because so many of their assets are invested in the region’s troubled countries.

Investors rushed into United States Treasuries as a safe haven, despite unease about how the government will address its deficit and economic slowdown. Bond prices rose and the yield on the 10-year bond fell below 2 percent for the first time since at least the early 1960s.

  The Dow Jones industrial average fell 419.63 points on the day, or 3.7 percent, to 10,990.58. The Standard Poor’s 500-stock index dropped 4.5 percent to 1,140.65. The technology-laden Nasdaq composite fell the most, ending down 5.2 percent at 2,380.43.

Gold rose along with Treasuries as investors sought safety. Oil prices fell on expectations that demand would be tempered in a slowdown.

The S. P. 500 has now fallen more than 16 percent from its April 29 peak. It is once again near bear market territory, defined as a fall of 20 percent.

Analysts said the fear stalking markets was not going away. “We took a little break for a couple days, and it is reinstating itself and I just think that this should probably be expected,” said Nick Kalivas, an analyst at MF Global in New York.

After the sell-offs in Asia and Europe on Thursday, stock prices opened lower in the United States on a spate of dismal economic data. Consumer prices suggested inflation was picking up, and jobless claims rose, defying hopes that the nation’s high unemployment rate might slide.

The big stock plunge, though, came around 10 a.m., when the Federal Reserve Bank of Philadelphia reported a sharp drop in regional manufacturing activity in its monthly survey, deepening worries that the economy may dip back into recession.

That report came a day after Morgan Stanley lowered its forecasts for both worldwide and domestic economic growth, partly because it expected cuts in government spending in Europe and the United States to damp recoveries. It described the United States and the euro area as “hovering dangerously close to a recession” and said it would not take much in the form of additional shocks to tip the balance.

The yield on 10-year Treasury bonds dropped to 1.97 percent on the Philadelphia Fed news before recovering to close at 2.07. According to data from Bloomberg, that low during the day was the lowest yield since at least 1962. Global Financial Data, a supplier of historical financial and economic statistics, said it was the lowest since 1950.

“What freaked me out today was that Philly Fed number,” said James W. Paulsen, chief investment strategist for Wells Capital Management. “That was the first number that says recession.”

That sentiment was echoed by Eric Green, an economist at TD Securities. “When you have an economy operating at stall speed facing these headwinds, it does not take much to tip it over the edge,” he said. “You read a report like this and you think we are going over the edge.”

Credit Suisse said in a note that if the Philadelphia numbers proved a national barometer, and that was unknown, “then a recession likely began in August.”

The latest worries about Europe’s banks flared after an unnamed lender tapped an emergency borrowing program, which was established by the European Central Bank to ensure that firms had ample money in dollars.

The bank borrowed $500 million, a relatively modest sum. But it was the first time a bank had turned to the special program since February, and it set off worries that at least some banks might be struggling to find dollars to finance their operations.

Regulators and bank executives played down the possibility that it could lead to a repeat of the 2008 financial crisis, when credit markets froze virtually around the world.

Eric Dash, David Jolly, Jack Ewing and Bettina Wassener contributed reporting.

Article source: http://www.nytimes.com/2011/08/19/business/daily-stock-market-activity.html?partner=rss&emc=rss

Gold and Oil Dip on News of Bin Laden’s Death

Investors also took in a couple of strong earnings reports, some big corporate mergers and the latest economic report, which showed that manufacturing in the United States continued to expand in April, but at a slower pace.

The Dow Jones industrial average was 54.04 points, or 0.4 percent, higher while the broader Standard Poor’s 500-stock index added 6.20 points or 0.5 percent. The technology heavy Nasdaq gained 12.68 points or 0.4 percent.

Markets in Asia and Europe also were generally higher. The Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 0.3 percent. The CAC 40 in Paris rose 0.2 percent and the DAX in Frankfurt rose 0.5 percent. London markets were closed for a bank holiday.

The dollar was mixed. The euro rose to $1.4834 from $1.4806 late Friday, while the British pound slipped to $1.6671 from $1.6706. The dollar rose to 81.29 yen from 81.20 yen

The Japanese and South Korean markets were already 1 percent higher before President Obama announced that American forces had killed Bin Laden in Pakistan.

By the close the Nikkei 225 index had gained 1.6 percent and the Kospi by 1.7 percent. This took the Nikkei to 10,004,20 points, the first time it closed above 10,000 points since the devastating earthquake and tsunami that struck the country on March 11.

Still, compared to the enormous political and psychological significance of Bin Laden’s death, the stock market reaction was relatively muted.

“News of the death of Osama Bin Laden has had a limited impact on regional asset prices,” analysts at Royal Bank of Canada summed up in a note on Monday.

The news about Bin Laden comes at the start of a week that culminates with the release of the latest retail sales numbers on Thursday and April’s employment report on Friday. Before the markets opened, the Chrysler Group reported its first quarterly profit since going through bankruptcy reorganization in 2009, as the company sold more cars at higher prices. Chrysler said it earned $116 million in the quarter, after losing $197 million in the period a year ago. Revenue grew 35 percent, to $13.1 billion, while sales were up 18 percent.

On the economic front, the Institute for Supply Management, a trade group of purchasing executives, said its index of manufacturing activity dipped to 60.4 points in April but remained above 60 for a fourth month. That was down from 61.2 in March and 61.4 in February, the fastest expansion in nearly seven years. A reading above 50 signals growth.

Investors also took in a couple of significant acquisitions on Monday. Teva Pharmaceutical Industries said on Monday that it had agreed to buy the biopharmaceutical company Cephalon for $6.8 billion, a deal unanimously approved by the boards of the two companies. And Arch Coal said that it would buy International Coal Group in a cash deal worth $3.4 billion that would create one of the world’s largest coal producers.

Some of the sharpest reactions to the news of Bin Laden’s death were in the commodities markets.

Oil prices initially fell but turned higher after trading opened in New York. Benchmark crude for June delivery rose 46 cents to $114.39 a barrel.

Many analysts cautioned, however, that Bin Laden’s death could stoke, rather than ease, worries about oil supplies and global security in the longer run if it leads to retaliatory attacks.

“This is a positive development in the campaign against terrorism,” Jonathan Ravelas, chief market strategist at Banco de Oro Unibank in Manila told Bloomberg News. “In the last 10 years, Bin Laden’s presence has been a serious threat to global stability. The flip side is this could be followed by retaliation activities from his supporters.”

Gold, which also initially fell, also turned high in New York trading, rising $3.60 to $1,560 an ounce. The precious metal, which is seen as a safer investment and tends to rise during times of rising inflation and global unrest, has been hitting successive record highs in recent weeks.

Silver prices dropped more than 10 percent on Monday, a declined attributed to a decision by the CME Group, which is the parent of the Chicago Board of Trade, to increase the margins for futures trading on silver.

A commodities analyst at Commerzbank in Frankfurt, Carsten Fritsch, said the rule change, which took effect after business Friday, had made speculating in silver less attractive by requiring investors to tie up more capital while chasing potential gains.

The price fell because with the higher margin requirement and a widespread sense that silver was overvalued, investors who bought early were selling to lock in gains while those who bought recently were selling to limit losses, Mr. Fritsch said. Silver is still up 45 percent on the spot market this year, the best performance of any commodity, he said.

In India, the Sensex index closed 0.7 percent lower amid widespread expectations that the Indian central bank will once again raise interest rates on Tuesday in a bid to tame rising inflation. Most other stock markets in the region, including Singapore, Hong Kong and mainland China, were closed for a public holiday.

David Jolly contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=be029322f43a9991048134741f1c45c0