After a quiet 2008, the U.S. liquefied natural gas (LNG) market could be significantly impacted by new imports in 2009 with about 2,868 Bcf of new LNG hitting global markets between November 2008 and December 2009, according to Houston-based consultancy Waterborne Energy Inc.
Waterborne President Steve Johnson said a worldwide production "bubble" is set to dramatically shift the dynamics of the global LNG market and should begin to impact the U.S. LNG market by next summer. Approximately 117 Bcf/month of new LNG production could be available globally by the end of March 2009, he said.
Citing 2008 as an anomaly, Johnson said LNG imports fell short of expectations this year due to delays in new production, rising demand and other unexpected incidents. Several LNG projects, already behind schedule, are under pressure to commission facilities and bring production online, he said.
"This is just pure math," Johnson told NGI. "We know how much is coming on and we have a very good idea what global growth and demand is doing. There's so much LNG that Asia and Europe can take during the summer, which kind of dictates [the United States'] role in the LNG industry. We are the market of final resource, and that's really what drives this...we're the only country in the world that actually imports out of profitability, as opposed to necessity, so we're going to get the last pick. But next year there should be enough LNG out there to more than satisfy foreign needs and still come here, regardless of price."
Waterborne estimates that Qatargas, Nigeria's NLNG and NW Shelf will bring three LNG projects representing a total of 782 Bcf annually online by the end of this year. Another eight projects in Qatar, Indonesia, Russia and Yemen will start up during 2009, the consultant said.
Some energy analysts have said that medium-term domestic prices aren't likely to match the $18-20 highs fetched by LNG cargoes overseas, which in turn could deter some LNG imports for as long as five years (see related story). Industry executives and observers have predicted a dearth of LNG cargoes available to the United States given the thirst for the liquefied fuel in Asian markets (see NGI, May 26; May 19).
Last month Waterborne said LNG imports this year will fall "well short" of the 770 Bcf seen last year, likely hitting only 420 Bcf, an amount "staggeringly below" previous projections (see NGI, June 23). Drought conditions in Spain, a prolonged nuclear shutdown in Japan and increased demand for LNG among power generators all led to the drop in imports, the consultant said.
Industry observers were hoping for another record year of U.S. LNG imports based on 50 Bcf/month of new production that was expected to hit the market earlier this year.
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