Time Ticking on US LNG Export Window of Opportunity

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The clock is ticking on the time window for the United States to reap the benefits of LNG exports, according to Wood Mackenzie.

The clock is ticking on the time window for the United States to reap the benefits of liquefied natural gas (LNG) exports, an analyst with Wood Mackenzie told attendees at the Platts 13th annual Liquefied Natural Gas Conference in Houston last week.

More than 25 LNG export projects have been proposed for construction in the United States. To date, six LNG export applications representing 8.47 billion cubic feet per day (Bcf/d) of supply have been approved. However, a final investment decision has only been taken on one project.

The pace of regulatory approvals for non-Free Trade Agreement (FTA) and for construction permits are cited primary factor holding up the pace of LNG export project approvals, said Asish Mohanty, senior analyst with Wood Mackenzie.

After a long pause, approvals for non-FTA export projects are starting to occur again, though not at a fast pace. The process for construction permits from the Federal Energy Regulatory Commission (FERC) has slowed down noticeably, with the environmental impact statement for the Freeport and Cameron LNG projects delayed by six months. These delays mean that other projects in the queue will be delayed even further, Mohanty noted.

The U.S. Department of Energy (DOE) approval  process for non-FTA projects and FERC construction approval process are the most visible bottlenecks that projects face. Other bottlenecks include specific technical and environmental issues such as footprint restrictions and opposition by local communities. Other projects face challenges in gaining access to existing infrastructure at brownfield developments.

The outlook for U.S. export terminals hinges on value and package that U.S. LNG supply brings to the global LNG market table, Mohanty noted.

Asian Energy Demand Primary Driver of LNG Market

Asian LNG demand, which comprises two-third of the global LNG market, is the fastest growing segment of the market. LNG projects moving forward will primarily be underwritten by Asian LNG demand, which has grown significantly in the past 2.5 to three years due to the Fukushima nuclear disaster in Japan. By 2025, global LNG demand is expected to reach 350 million tonnes per annum (mmtpa). However, this demand is expected to be dwarfed by proposed liquefaction capacity of 555 mmtpa in that same year. 


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Dr. Tom Williams  |  February 27, 2014
US LNG is probably now well behind the curve as PRC/Korea/Japan are investing NOW in pipelines and fracking and like PRC did with HongKong Black Point Power plant - built 500mi subsea pipeline from and gas collector system for a 1000++MW power plant in HK...before the contracts could be signed to get the coal... Now PRC is getting the gas production going in west and central China...laying pipelines to Beijing and Shanghai...once in Beijing piping into Incheon is piece of cake...only question is a gas line from Incheon to Pusan by land/sea...then jump the straits to Japan...subsea again. One question - highly compressed NG or LNG by pipe PRC/Korea/Japan, I believe, have already gotten agreements regarding technologies, pipelayers, pipe production/transport, and sizing/number of pipelines...along with 25 year delivery contracts. These are easy and lucrative contracts for all three.. Russians are trying to come into the north end of Japan but their gas will probably much more expensive and not include the Koreans in the mix - kiss of death...in this commodity market system. US gas may provide a little LNG in 2016-18 until the pipelines are operating to Japan. So who would want to invest in a pipeline to NWUS/Can-BC which will be moot within 5-years, as no one in Japan would sign a 25-year supply contract for LNG and receiving gasifiers when they know the PRC gas will be there within five years. That take care of the Pacific market while Argentina is progressing for the SoAmerican market...and NoAfrica and Europe can deal with the European demands within ten years...With tankers and pipeline investments it is difficult to deal with a spot market when it is LNG vs CNG.