LNG Message Board - Msg: 22724372

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Gold/Mining/Energy : LNG

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To: John Carragher who wrote (885)	8/16/2006 10:22:31 AM
From: Dennis Roth	Read Replies (1) of 919

>> are we looking at a supply glut of lng in the coming years? << With the high price of oil we are seeing a big increase in demand for LNG world wide. It seems to me that regas facilities are being built around the world and in this continent faster than upstream liquefaction trains. Although the later are being built rapidly, they are not coming on line as fast as new regas ports. If by a supply glut of lng you mean too much lng being landed for the NA NG market to absorb, I think not. LNG in NA has to compete with domestic NG production in NA and with oil in the world market. Currently NA NG sells at a discount to oil on a BTU basis. Most new LNG supply contracts no longer contain destination clauses so if an importer of LNG can get a better price for his LNG in Spain or Korea any gas not obligated under a long term contract will likely go there. I read somewhere that the price of LNG under new long term contracts has doubled in the last year. The exporters of LNG aren't stupid. They're not going to agree to sell new gas at a big discount to its equivalent in oil. I dont think the big increase in LNG import capacity is going to crash NA NG gas prices but instead bring them into equalibrium with world oil prices on a BTU basis. When NA NG sells at a discount to the oil equivalent, LNG will tend to stay away and when it sells at a premium more LNG will come in. >> we got about terminals being built or under consideration in maritime providences, one in maine, several in states and now these jumbo tankers. << There is no shortage of regas capacity along the Gulf. A few more terminals in the northeast and west coast need to be built. Landing LNG in Texas and sending it over a thousand miles by pipeline to New England makes no sense. It should be landed closer to where the demand is if the NIMBY objections can be overcome. Some LNG tankers have been built on speculation and with some new LNG liquefaction trains running into delays there may be a temporary LNG tanker glut developing. >> Is there a shortage of gas? << Most planned new liquefaction capacity has been spoken for. Anadarko had to cancel their Bears Head LNG port in the maritimes because they couldn't round up a supply of LNG for it. I suspect that more of the planned LNG ports will have to be delayed or canceled due to a lack of an LNG supply contract and that some of the regas facilities being built may be under utilized initially and run into financial problems.

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