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Ohio Utica Shale

U.S. LNG export terminals could handle 41 billion cubic feet/day

By Bob Downing Published: July 1, 2014

From SNL Energy:

Currently there is over 41 Bcf/d of U.S. LNG export terminals in development. Although the bulk of these projects are in announced and early development phases, some notable projects have progressed through significant regulatory hurdles in 2014.

SNL ENERGY: MORE THAN 41 BCF/D OF LNG EXPORT CAPACITY CURRENTLY UNDER DEVELOPMENT

The year 2014 has proven to be an exciting year for U.S. LNG development, as multiple projects progress through regulatory bottlenecks, regulators shift approval prioritization, and geopolitical implications muddy the waters.

Despite declines in landed LNG prices for Asian countries, producers continue to look for demand overseas. Total proposed U.S. LNG export capacity has expanded to just over 41 Bcf/d, up from almost 33 Bcf/d of proposed capacity tracked in December.

Although regulatory approval from FERC and DOE still represent a time intensive segment of the LNG export development process, approvals have slowly moved forward as both producers and regulators become more familiar with the process. However, a recent proposed shift in DOE's stance toward LNG export applicants may upset the status quo. DOE plans to prioritize approvals based on the commercial merits of a project, rather than on a first-come, first-served basis. The proposed shift would place a larger emphasis on starting the formal FERC review process, given that DOE has said it would review applications to export to non-free trade agreement countries after the project has gone through federal environmental review.

DOE's proposal comes at a time when geopolitical implications of gas exports are at the forefront with recent events in Russia and Ukraine. Ukraine owes billions to Russia's state-owned Gazprom, and Russia has said Ukraine must now pay in advance for any natural gas from Gazprom.

Some lawmakers have pushed for expediting the approval of exports to non-FTA countries as a way to expand U.S. leverage within the region and alleviate energy supply concerns in Eastern Europe. The idea isn't uniformly supported, and Sen. Ed Markey, D-Mass., has asked the U.S. Department of Commerce to prohibit gas exports. Some industry experts have also questioned how much political leverage could be gained by exports to Europe, given that economics within the region still favors Russian gas over U.S. LNG Exports.

Another potential hiccup for U.S. exporters revolves around gas supply to Asia. High landed LNG prices in Asia were one of the main drivers in initial proposals of U.S. LNG export facilities, but prices have now begun to decline. According to FERC estimated landed LNG prices, prices have declined to $14.35/MMBtu in June compared to $15.65/MMBtu in November 2013 for Japan and Korea. China also saw estimated landed LNG prices fall, dropping almost 9% to $13.95/MMBtu from $15.25/MMBtu over the same period.

Russian natural gas making its way to Asia could cause landed LNG prices in the region to continue their decline. Gazprom has agreed to supply natural gas to China in a $400 billion landmark deal. While the infrastructure to transport gas from Russia to China is not currently available, the 30-year deal anticipates sending nearly 3.7 Bcf/d to China Natural Petroleum Corp.

The need for Asian countries to diversify their gas imports will continue to incentivize U.S. projects, however. For example, Japanese utility, Tokyo Electric Power Co. has already agreed to buy 1.2 million tons of LNG from Sempra Energy's Cameron LNG export project. The company has also expressed interest in purchasing LNG from terminals located on the west coast due to their closer proximity than Gulf export terminals.

Keep reading the full report and analysis here: http://www.snl.com/InteractiveX/Article.aspx?cdid=A-28474106-13610

Referenced Tickers: EOS LNG, D, EPB, Cambridge Energy LLC, Barca LNG, VSN, Alturas, Magnolia LNG, Gulf Coast LNG Export LLC, Waller Marine, SCT&E LNG, Exxon Mobil Corp., Texas LNG Holdings, LLC, Qatar Petroleum, Louisiana LNG, SRE, Freeport-McMoRan Energy, ETE, McMoRan Exploration Co., Gulf LNG Energy LLC, Texas LNG LLC, Venture Global Partners LLC, Annova LNG, LLC, Gasfin, Statoil North America Inc., North America, Tokyo Electric Power Co., BP plc, Kansai Electric Power Co., LNG Development Company, GE Energy Financial Svcs, ConocoPhillips Co., Trunkline LNG Co, Southern LNG LLC, ZHA FLNG Purchaser, LLC, Freeport LNG Development LP, Shell US Gas & Power LLC, Dominion Cove Point LNG, LP, Excelerate Energy LLC, LNG, Delfin LNG

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