Liquified Natural Gas

U.S. trucking companies, trash haulers and transit agencies continue to invest in new vehicles fueled by compressed natural gas or liquefied natural gas, in part to meet corporate or agency carbon-footprint goals. But the economic rationale for switching trucks and buses from diesel to CNG or LNG is weaker than it was a few years ago, when diesel cost two-thirds more than natural gas fuels on a per-BTU basis — prices for diesel, CNG and LNG are now in the same ballpark. Also, developing regional or national networks of CNG/LNG fueling stations doesn’t come cheap. Today, we discuss the growing use of natural gas in trucks and buses — and threats to that trend.

After the $5 billion-plus expansion of the Panama Canal is dedicated this Sunday, June 26, the first “New Panamax” vessel scheduled to pass through the canal’s new, longer, wider locks will be the Lycaste Peace, a Very Large Gas Carrier (VLGC) that is transporting propane from Enterprise Products Partners’ Houston Ship Channel export terminal to Tokyo Bay in Japan. What remains to be seen, though, is how many other supersized vessels carrying propane, liquefied natural gas (LNG) or other hydrocarbons will follow, and how soon. Today, we mark the formal opening of the newly enlarged Atlantic-Pacific short-cut with a look both at the game-changing potential of the expanded canal and the realities of today’s energy and shipping markets.

Lately, it’s not just liquefied natural gas (LNG) prices that are headed south, it’s LNG cargoes too.

In January 2015 new international regulations came into force that reduced the permitted sulfur content in ships “bunker” fuel in Northern European and North American coastal regions. So far, international shipping companies and cruise lines have been responding to these rules primarily by switching to marine gasoil (MGO), burning lower-sulfur fuel oil, or sticking with higher-sulfur fuel oil and adding “scrubbers” to capture most of the sulfur being emitted by their ships’ engines. More recently, though, some of the shipping sector’s biggest players have unveiled plans to boost the use of liquefied natural gas (LNG) as a bunker fuel, figuring that LNG bunkering will not only help them meet existing regulations but the tougher rules likely to be implemented over the next few years. Today, we begin a short series on the opportunities and challenges associated with shifting ships from fuel oil to LNG.

After years of debate and speculation regarding prospects for U.S. exports of liquefied natural gas (LNG), the first cargo left the Gulf Coast around 8:30 pm EST Wednesday (February 24, 2016) from Cheniere’s Sabine Pass terminal, according to Genscape’s global LNG cargo monitoring service. The vessel carrying a little more than 3.0 Bcf of LNG is reportedly bound for Petrobras in Brazil. The incremental export demand that this LNG cargo and others like it to follow represent, is potentially good news for U.S. gas producers, with benchmark futures prices at Henry Hub, LA closing yesterday (February 25, 2016) near record seasonal lows at $1.711/MMBtu in the face of mild winter demand, record production and brimming storage levels. Today we look at how this first cargo was supplied and what that tells us about current and future impact to flows and regional prices.

The first U.S. liquefied natural gas (LNG) export cargo from the Lower 48 is now likely within just a week or two of shipping from the Cheniere Sabine Pass, LA terminal. In the meantime, physical flow data is already giving us a first glance at how the terminal will be supplied from U.S. natural gas production. In today’s blog, we begin a look at flows to the terminal, how the gas is getting there and where it’s coming from.

Demand for liquefied natural gas has been flat recently, but liquefaction/LNG export capacity is on the rise. The resulting supply/demand imbalance along with the crash in crude oil prices has sent LNG prices to unexpectedly low levels, and raises questions about the competitiveness of all the new Australian and U.S. projects coming online in 2016-20. Today, we continue our examination of the fast-changing international market for LNG with a look at the new capacity being added to an already saturated LNG market, and how U.S. LNG exporters might fare in a hyper-competitive world.

Things are not looking so good in the liquefied natural gas sector. LNG prices--both in the spot market and in contracts linked to oil prices—are very low, LNG demand growth is weak or non-existent, and a flood of new liquefaction capacity is coming online. But as we’re starting to see with crude oil, markets thrown out of whack respond; they try to self-heal. Low LNG prices are spurring demand growth in Europe and attracting some new buyers—Egypt, Jordan and Pakistan among them. The pace of liquefaction-capacity expansions is slowing. And Asia may finally get an LNG hub, which would only improve LNG’s long-term prospects there. Today, we continue our look at the fast-changing international market for LNG with an assessment of demand and destinations.

Yesterday (January 14, 2016) Cheniere Energy announced a delay to the first shipment of liquefied natural gas (LNG) out of its Sabine Pass liquefaction/export terminal in Louisiana that was expected this month (January 2016), but is now planned for late February or March of this year. Meanwhile, LNG demand has leveled off. LNG prices have collapsed and stayed low. And a slew of liquefaction capacity planned and committed to years ago—Sabine Pass and other U.S. projects included—is coming online, suggesting an LNG supply glut that could last into the early 2020s. But are the LNG market’s prospects really as grim as all that sounds? Today we begin a review of recent developments in the LNG market, and consider their implications for U.S. natural gas producers, midstream companies, and LNG exporters.

Depending on whom you believe, the international liquefied natural gas (LNG) market is either struggling through a period of oversupply and rock-bottom prices or poised for a new round of demand growth based on that low-cost supply abundance. (Hint: The answer may well be both of the above.) For electric and natural gas utilities that want to become LNG importers as quickly—and as cheaply--as possible, an increasingly popular option is buying or (more likely) chartering a floating storage and regasification unit, or FSRU. Today, we look at the growing use of FSRUs and how they may boost the LNG market.