UK-based BG Group, already the largest liquefied natural gas (LNG) importer into the United States, on Thursday forecast that by 2007, it will be the biggest player in the Atlantic Basin, and its worldwide equity gas production will be two and a half times current levels.
More than 100 LNG cargoes are expected to be delivered to the United States this year, officials said during a press briefing and webcast in London. BG also announced an agreement with Duke Energy Corp. to take over 20% of its Lake Charles, LA terminal capacity beginning Jan. 1, 2004. With the Duke agreement, BG will hold access to 100% of Lake Charles terminal capacity beginning in 2004.
“BG’s competitive advantage stems from being an integrated player, with the capabilities necessary to play anywhere along the gas chain in order to create and capture value,” said CEO Frank Chapman. “In LNG, our focus on gas and our clarity in seeing how markets are growing has allowed us to move early so that we can take advantage of the expected increase in demand for LNG in the supply mix of some of the world’s leading industrialized countries.” Chapman said BG was confident that its LNG business would “continue to grow as a significant contributor to the Group’s earnings.”
At the end of the third quarter, BG was averaging 765 MMcf/d in gas shipments to the U.S. market through the Lake Charles terminal, accounting for more than 1% of daily U.S. gas demand. Based on those numbers, Martin Houston, BG’s managing director for North America, Caribbean and Global LNG, said BG would be responsible for 62% of all LNG imports into the United States this year.
At Henry Hub prices of between $2.50-$3.50, BG expects long-term LNG purchase contracts typically to deliver ex-shipment prices of 80-85% of Henry Hub. BG estimated that the future differential between current prices at Lake Charles and Henry Hub also will drop from the current level of 15 cents/MMBtu to close to 10 cents/MMBtu.
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