North American LNG imports to rise to 4.2 Bcf/d by 2014: report

http://www.petroleumworld.com/story09011606.htm

WASHINGTON
Petroleumworld.com, Jan 16, 2009

North American imports of liquefied natural gas will increase from a projected 1.7 Bcf/d this year 4.2 Bcf/d in 2014 despite producers’ success in developing shale gas plays and the erosion of demand associated with the weak economy, consulting firm Wood Mackenzie said Thursday.

“In light of recent history and the longer term outlook for growth in domestic US shale gas, many industry analysts and commentators have been suggesting that the outlook for LNG imports into North America is bleak,” Wood Mackenzie North American LNG analyst Murray Douglas said in a statement. “While it is fair to say that [regasification] capacity has undoubtedly been overbuilt, the medium-term outlook for LNG in North America is not as dire as other commentators are suggested, despite the success in developing shale gas,” Douglas said.

In its report, “North American LNG imports set to rise,” the consultant said that in addition to baseload supply, which is equivalent to total LNG imports this eyar, additional volumes will be available from the 80 million metric tons of annual liquefaction capacity set to enter operation over the next three years.

Wood Mackenzie said the “original target and most likely home for a significant proportion of this LNG are the liquid Atlantic basin markets, the largest and most liquid of which is the US.” “The US can easily accept large volumes of unallocated LNG as required due to its size, liquidity and significant regas and storage capacity.

Some of this relatively low cost new liquefaction capacity will compete with domestic shale gas resources in the US market. This will suppress price and in turn delay some higher cost domestic developments,” Douglas said.

He said the report predicts “further upside to the North American forecast if there is a sustained period of low oil prices,” adding that under such a scenario there would be an increase “in the attractiveness of the North American gas market to LNG suppliers as the oil-linked gas prices in European markets soften and Asian buyers switch from gas to oil resulting in more LNG on the market.”

The Wood Mackenzie report added that with the softening of global gas demand, the LNG market could very well be oversupplied in the near term, leading to increased flows of LNG to the US “as it plays its role as the global sink for LNG.”

In its January Short-Term Energy Outlook, released Tuesday, the US Energy Information Administration said US LNG imports totaled 350 Bcf in 2008 and projected that they would increase to 420 Bcf in 2009.

The agency added that LNG shipments to the US could increase beyond 420 Bcf this year if global demand for gas does not increase as expected. EIA put estimated US LNG imports in 2010 at a little more than 500 Bcf.

Story from Platts
Platts 01/15/2009

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