Time Ticking on US LNG Export Window of Opportunity
Eighty percent of global LNG supply will be sourced from five areas, including the United States, Canada, East Africa, Australia and Russia.
Australia has seen tremendous growth in LNG development in the past two to three years, with final investment decisions made and construction underway for eight projects. However, this growth has taken its toll on labor and resources, resulting in cost escalations and project delays. As a result, greenfield LNG project proposals are losing steam, and planned expansions on greenfield projects will take time. Most LNG buyers will take a “wait and see” approach on greenfield projects, only taking them seriously when they’ve come through.
East Africa, where a number of LNG projects are proposed, has great potential, but the lack of basic industry infrastructure and high institutional uncertainty means LNG project development will take time, Mohanty said. With minimal or non-existent service sector, the region is less equipped to handle large LNG construction projects.
LNG project developers will face significant technical challenges along the supply chain – from upstream to the plant – for Canadian LNG export projects, which will slow progress on these projects. Companies will face challenges in constructing pipelines to ship Western Canadian reserves to British Columbia, where eight projects have been proposed for construction on Canada’s west coast.
Other challenges facing Canadian LNG projects include limited labor and resources – and competition with other countries for workers and resources – fiscal uncertainties, dealings with indigenous group First Nations, give the perception that Canadian LNG projects are moving at a slower pace. While Canadian LNG projects will move forward eventually, significant uncertainty remains on the timing of project start-up.
In Russia, the Yamal LNG project faces significant technical challenges associated with its location within the Arctic Circle. However, LNG exports from the project are expected to start up before the end of the decade.
Unlike other members of the Big Five, including Russia, most LNG buyers are interested in having exposure to U.S. LNG export terminals, which offer several advantages to projects in other countries. These advantages include lower deliverability risk, better access to labor and other resources, an extensive pipeline network and multiple supply sources.
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Senior Editor | Rigzone