Last year was the best for global LNG demand growth since 2011, and a combination of ample LNG supply, new buyers and relatively low prices suggest that demand will continue rising at a healthy clip in 2017. That’s good news not only for LNG suppliers, but for natural gas producers and for developers planning the “second wave” of U.S. liquefaction/LNG export projects. Before those projects can advance, the world’s current—and still-growing—glut of LNG needs to be whittled down, and nothing whittles a supply glut like booming demand. Today we discuss ongoing changes in the LNG market and how they may well work to the advantage of U.S. gas producers and developers.
Northeast producers are about to get a new path to target LNG export demand at Cheniere Energy’s Sabine Pass LNG terminal. Cheniere in late December received federal approval to commission its new Sabine Pass lateral—the 2.1-Bcf/d East Meter Pipeline. Also in late December, Williams indicated in a regulatory filing that it anticipates a February 1, 2017 in-service date for its 1.2-Bcf/d Gulf Trace Expansion Project, which will reverse southern portions of the Transcontinental Gas Pipe Line to send Northeast supply south to the export facility via the East Meter pipe. Today we provide an update on current and upcoming pipelines supplying exports from Sabine Pass.
There’s good reason to believe that the international LNG market has turned a corner, with demand and LNG prices on the rise and with a number of new LNG-import projects being planned. That would be good news for U.S. natural gas producers, who know that rising LNG exports will boost gas demand and support attractive gas prices. It also would help to validate the wisdom of building all that liquefaction/LNG export capacity now nearing completion. Today we look at recent developments in worldwide LNG demand and pricing and how they may signal the need for more LNG-producing capacity in the first half of the 2020s.
Every day, crude oil producers on Alaska’s North Slope re-inject nearly 7.8 Bcf of natural gas into their wells, enough gas to supply the entire U.S. West Coast—California, Oregon and Washington State. If only there were some way to monetize that gas supply, to move it to market. The problem is that there isn’t, at least in today’s gas/LNG market, which is characterized by ample supply and relatively low prices. This same market also favors infrastructure projects that are simple and low-cost; no one wants to make multibillion-dollar commitments when natural gas prices and margins are so low. Today we conclude our series on the tough times ahead for Alaska’s energy sector with a look at the state’s vast natural gas reserves and the challenges associated with tapping them.
Some 3.2 Bcf/d of new LNG export capacity will be coming online along Texas’s Gulf Coast over the next two and a half years, and 8 Bcf/d of new natural gas pipeline capacity is under development to transport vast quantities of gas through Texas to the Mexican border. But while gas-export opportunities abound, Texas gas production is down, mostly due to a big fall-off in Eagle Ford output, so exporters will need to pull gas from as far away as the Marcellus/Utica to meet their fast-growing requirements. That will flip Texas from a net producing region to a net demand region once when you factor in exports that will flow through the state. This profound shift will put extraordinary pressure on Texas’s unusually complex network of interstate and intrastate pipeline systems, which will need to be reworked and expanded to deal with the new gas-flow patterns. It also will have a significant effect on regional gas pricing––putting a premium on Texas prices. These issues and more are addressed in RBN’s latest Drill Down Report, highlights of which we discuss in today’s blog.
Intrastate natural gas pipelines in Texas reach far and wide, and can transport extraordinary volumes of gas. The problem is, the traditional supply/demand dynamics that spurred the development of all that pipe decades ago are being up-ended by burgeoning Marcellus/Utica production headed to the Gulf Coast and the demand-pull of gas to planned LNG export terminals along the Texas coast and to Mexico. Lone Star State pipelines that for years have flowed north and east to the Houston Ship Channel and beyond now must flow south and west. Today, we continue our review of efforts to rework and expand key elements of Texas’s intrastate gas pipeline network to meet growing export needs, this time with a look at plans by Enterprise Products Partners.
Providing the capacity to transport Marcellus/Utica natural gas to and through the state of Texas to LNG export terminals and to Mexico will require pipeline reversals, new pipe and other enhancements along a combination of interstate and intrastate lines. In many ways, the long-distance part of the job––the reversal of large-diameter pipelines between the Northeast and the Lower Mississippi Valley––is the more straightforward; the greater challenge will be reworking the complicated pipeline networks between the Texas/Louisiana state line and the U.S./Mexico border. Today we review Texas pipeline projects being planned to allow increasing southbound flows of Northeast gas.
The increasing availability of LNG at low and relatively stable prices, combined with the ability to expedite the installation of LNG receiving/regasification infrastructure, has the potential to spur faster growth in global LNG demand than many have been expecting. If that happens, the current––and still growing––glut in worldwide liquefaction capacity could shrink in a few years’ time, and a “second wave” of U.S. liquefaction/LNG projects could start coming online by the mid-2020s. Today, we conclude our series on U.S. LNG exports with a look at how low, stable LNG prices may turn the market toward supply/demand balance.
After about four weeks offline for modifications and maintenance, Cheniere’s Sabine Pass liquefaction terminal in Cameron Parish, Louisiana began accepting nominal deliveries of feed gas starting last Friday, indicating the facility is due to ramp up to capacity any day now. Since the first export cargo in February, about 130 Bcf, or 0.6 Bcf/d, of natural gas has been delivered to the terminal. While those aren’t quite game-changing volumes yet, deliveries just prior to the outage were averaging more in the vicinity of 1.2 Bcf/d and indications are that deliveries could ramp up to more than 1.0 Bcf/d in short order with the restart and grow to more than 2.0 Bcf/d by the end of 2017. It’s clear that LNG exports are quickly becoming a prominent and inescapable feature of the U.S. natural gas market. Today, we wrap up our series on the growing impact of LNG exports on the U.S. supply/demand balance.
Developing a multibillion-dollar liquefaction/LNG export project takes perseverance and patience––and having good luck wouldn’t hurt. The “first wave” of U.S. projects is now cresting; the first two liquefaction “trains” at Cheniere Energy’s Sabine Pass LNG facility are essentially complete, and 12 other trains are under construction and scheduled to come online in the 2017-19 period. But what about the “second wave” of projects that was supposed to be arriving soon thereafter? Today we continue our series on the next round of U.S. LNG projects with a run-through of the projects themselves and a look at how (despite the current market gloom) there is at least some cause for optimism that a few may get built by the early 2020s.
The “first wave” of liquefaction/LNG export projects in the U.S. is cresting. Two new liquefaction trains in Louisiana are already producing liquefied natural gas, and a dozen other trains are under construction and scheduled to begin commercial operation in the Lower 48 over the next three years. The problem is, these multibillion-dollar facilities––planned when LNG market dynamics were much more favorable––are “rolling in” as the global market faces a supply glut, weak LNG demand growth, and low prices. Today, we begin a series on the next round of U.S. LNG projects and how soon market conditions might improve enough to justify building them.
For some time now, discussions about the possible development of Canadian liquefaction/LNG export terminals have focused on the Western Canadian coast in British Columbia––partly because most of Canada’s natural gas reserves are nearby in northeastern BC and in Alberta, and partly due to Asia being a primary LNG target market. . But it could be that liquefaction/LNG export projects in Eastern Canada may make more sense. In today’s blog, “So Far Away –Sending Western Canadian Natural Gas East for Export as LNG,” LNG Ltd.’s Greg M. Vesey considers the rationale for piping Western Canadian natural gas long distances to Quebec and the Canadian Maritimes for export as LNG.
Planned liquefaction/LNG export facilities along the South Texas coast and growing demand from Mexico’s electric power sector together will require several billion cubic feet/day of additional U.S. natural gas over the next three to five years. Gas producers from the Marcellus/Utica to the Permian are targeting these markets, but there are questions regarding whether the Lone Star State’s existing pipeline infrastructure is sufficient to deliver all that gas to these critically important export markets. Part of the solution will be optimizing the use of Texas’s impressive—but sometimes misunderstood intrastate pipeline networks, particularly the far-reaching systems operated by Enterprise, Energy Transfer and Kinder Morgan. Today, we discuss one part of the solution, an inexpensive but impactful Kinder Morgan project that will enable about 1 Bcf of natural gas from various sources to reach South Texas LNG exporters and Mexico on KM’s intrastate system.
Despite the doom and gloom that many see in the global LNG market –– too much supply, weak demand growth, and low LNG prices –– the possibility remains that the sector may offer the opportunity for low-cost, highly responsive market participants to do quite well, and even thrive. How can that be? After all, we’ve just seen another year of low crude oil prices resulting in very low oil/natural gas margins, and the expectation of high oil/gas margins were critical in supporting the development of many U.S. liquefaction/LNG export projects. But a combination of responsive demand, low cost infrastructure development and the possibility that number of exporting countries could run out of gas at or near the end of their existing contracts could change the outlook for ongoing LNG export development. Today, we look at the LNG market in the context of themes discussed at the North American Gas Forum (NAGF). Warning: this blog includes a plug for this year’s NAGF conference.
California and New England are two of the nation’s quirkier regions when it comes to energy –– and we mean that in the nicest way possible. So maybe it’s not too surprising that, at a time when the U.S. is just beginning a big push to export natural gas as LNG, the Golden State and “Yankeeland” (as some still refer to New England) are turning to imported LNG to help them deal with possible gas shortages during peak demand periods this coming winter. In neither case is liquefied natural gas considered to be a long-term fix, but –– for now at least –– LNG may be playing a role in keeping the pilot lights lit and the electric lights on. Today, we look at how the stockpiling and use of LNG can still make sense in a nation with an abundant supply of gas.