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50 comments on US Natural Gas Prices: "The Fix is Underway"

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Gail the Actuary on April 22, 2009 - 1:44pm Permalink | Subthread | Parent | Comments top

Rockman,

Thanks for your comments!

By the way, this article is Jon Freise's, not mine. About all I did was copy his HTML onto our server.

My impression has been like yours--it seems like it is going to be hard to get the price to come up very much for very long, because of the very high production on some of the newly drilled NG wells, and because of LNG.

Regarding all of the new LNG terminals, is there any reason we need as many additional terminals as people are looking at? It seems like we have plenty already. None of them have ever been utilized at more than at a small percentage of capacity, have they?

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ROCKMAN on April 22, 2009 - 2:36pm Permalink | Subthread | Parent | Comments top

Gail -- I’ve just found a current assessment of US LNG import potential. Not a lot of supporting details but does seem to have a handle on the situation. His bottom line: LNG won’t be playing a big role for the US anytime soon. Now if the NG companies would just believe that.

http://www.petroleum-economist.com/default.asp?page=14&PubID=46&ISS=2535...

“And development of import capacity continues, although the pace of construction has slowed down. In 2008, three new terminals started operations, increasing US import capacity to about 9.1bn cf/d. In addition, three new terminals are expected to start up by 2010, which, combined with capacity expansions at existing terminals, will raise import capacity to well above 13bn cf/d.”

“Domestic gas-supply growth and sustained lower US gas prices will make it difficult for LNG to penetrate North American markets. Even during periods of volume influxes, US imports have never accounted for more than 3.5% of annual gas supply. Consequently, LNG will remain a marginal US gas-supply source in the short term, accounting for less than 5% of gas consumption.”

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Moneyman on April 22, 2009 - 10:55pm Permalink | Subthread | Parent | Comments top

I know a guy who works at the new LNG terminal in Freeport TX south of Houston. In the last year, they have taken only two ships due to low US prices compared to the world market. Off the top of my head, they have capacity for roughly one ship every two days...so ~1% of capacity. Fortunately for them, they have long term contracts in place that keep them financially viable... unless their counterparties fail.

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Neil1947 on April 22, 2009 - 7:27pm Permalink | Subthread | Parent | Comments top

Gail,
The US used 22Tcf NG in 2008(62Bcf/day), so a LNG import capacity of 13Bcf/day is >20%, sounds like this capacity is vastly under utilized if only 3.5% NG was LNG imports. What about NG coming from Mexico LNG terminals? Is this counted as LNG or just pipeline imports from Mexico?

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ROCKMAN on April 23, 2009 - 6:34am Permalink | Subthread | Parent | Comments top

Neil -- I couldn't find country specific import data for LNG but the report below indicates that there is probably no LNG imported from Mexico. I know for some time Mexico had been a net importer of pipeline NG from the US. They have also been importing the bulk of refined products for some time also...serious lack of refining capability. I think the report indicates the situation for NG remains the same:

"In 2007, the United States received 99.8 percent of its pipeline-imported natural gas from Canada with the remainder from Mexico. Canada also accounted for 60 percent of pipeline natural gas exports, and Mexico, 40 percent."

http://www.eia.doe.gov/pub/oil_gas/natural_gas/analysis_publications/ngp...

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elwoodelmore on April 27, 2009 - 5:05am Permalink | Subthread | Parent | Comments top

we have this from xom's annual rept:

"by 2030 lng demand is expected to represent about 15% of the world's gas demand"

and, "exxonmobil is currently participating in lng operations in qatar and indonesia with a combined gross capacity of approximately 35 million tons per year supplying lng to markets in asia, europe and north america. this represents about 20 percent of global industry capacity. exxonmobil is participating in four additional lng trains in qatar that will increase gross capacity by over 30 million tons per year in 2009"

1 million tons of lng(methane) is about 47.4 bcf. i think i have this right:

2000lbs/ton/16lbs/lb-mole = 125 lb-moles/ton 1 lb mole is about 379.5 scf, 125 x 379.5= 47,438 scf/ton and a million tons is 47,438 x 1e6/1e9 = 47.4 bcf/million tons.

also from xom's annual report:"rasgas trains 6 and 7 - two 7.8-million-tons-per-year lng trains........with start-up planned in 2009..... train 6 is planned to supply the u.s. market,...."

7.8 million tons per yr is a little over 1 bcfd.

and a related story:

http://www.reuters.com/article/marketsNews/idAFLR4094220090427?rpc=44

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50 comments on US Natural Gas Prices: "The Fix is Underway"

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