Don’t believe the reports that more liquefied natural gas (LNG) shipments are headed to the United States this year, an executive with GDF-Suez Gas North America (GSGNA) said last week.

It’s just not happening, and it won’t be for quite a while, Guy Braden, senior vice president of Commercial Operations for GSGNA, told the crowd at GasMart 2010 in Chicago. GSGNA is a subsidiary of Paris-based gas giant GDF-Suez.

The delayed start-up of new liquefaction trains and the “relative attractiveness” of European markets kept North American LNG imports in 2009 well below early expectations. Now increased shale gas supplies may keep imports away from domestic shores even longer, he told the audience.

GSGNA would rather the imports were flowing to U.S. shores: it imports LNG into the United States through its Everett, MA, marine terminal and the Neptune Deepwater Port offshore Gloucester, MA.

“Not unlike other industries, the LNG industry went through a significant transition in 2009, with rapidly declining gas demand, an increase in supply and an increase in shipping capacity,” Braden said.

LNG shipping capacity alone grew 114% between 2006 and 2009 — bulking up at an inconvenient time.

“The shipping fleet arrived to the party a little too soon,” said Braden. Construction of new LNG shipping vessels began several years ago “in anticipation of lots of supply. It came on pretty much in full force and absolutely crushed shipping rates last year…The charter range is usually three or four times higher” than it was in 2009.

But it wasn’t all bad for LNG exporters in 2009. “Europe started to ramp up [LNG imports], and as Asian demand dropped, European buyers took advantage and brought in considerably more LNG,” with shipments up 22% from 2008, he noted.

Still, the Middle East continued to expand its LNG shipments, which led to a “significant increase in ‘liquidity'” across the globe.

“With all that LNG sloshing around…spot LNG offered a more competitive advantage to pipeline gas, and flexible LNG became an attractive alternative,” Braden said.

Conventional LNG ties the production source to the delivery pipeline — like a floating pipeline — but the growth in regasification capacity, destination-flexible supplies and shipping capacity “accelerated the evolution of the LNG spot market.”

So much LNG available “made spot LNG far more competitive to long-term pipelines.” In addition, “Asian spot prices softened substantially. Even though oil indices and demand fell, low Atlantic spot LNG prices also influenced Asian prices.”

With new supplies satisfying Asia’s demand, “relative appetites in Europe and the Americas…will determine the disposition of most of the remaining flexible LNG,” he said. “European regas capacity is more limited than U.S. capacity,” and the United States now is “positioned as the market of last resort for LNG.”

U.S. LNG deliveries actually jumped 60% in the first three months of 2010 from the year-ago period, “and you might expect, ‘here comes the LNG play’…But that’s not going to be the case.

“We’ve seen supplies increase in Canaport and the Northeast Gateway, which are taking advantage of New England basis, much to our chagrin,” said Braden. But “the current price levels do not favor this activity going forward.

“The trend line is up, and there’s definitely more flexible LNG out there. The byproduct is the entrance of new players who are trying to take advantage of arbitrage, oil indices, Henry Hub, NBP [UK’s National Balancing Point].”

In “just two years,” LNG exports have grown to 70 million tons a year, which equals “about 3% of total world gas demand.” According to Braden, 52 Bcf equals 140 MMcf/d, which equals one million tons of LNG.

“That’s a sizeable portion, and really, the center section is coming from Qatar, about 50%…and a large portion of it is flexible LNG.”

Geographically, “Qatar sits in the center of the world. It’s taking advantage of Atlantic pricing, and the cost of gas is very low, so it’s very competitive…,” Braden added.

“So, where’s all of that supply going to go?” he asked the audience. “Over the coming years, Asia is looking to scoop up uncommitted volumes…Asian demand and oil pricing influence “still favor the Middle East and Pacific,” and the NBP/Henry Hub gas price spread “is sufficiently positive to favor Europe.”

In Asia, there’s “no question that demand will continue to grow and the market for LNG will tighten up. There’s been a significant increase there and it’s absorbed relatively quickly in a rapidly growing environment.”

However, there will be no shortage of LNG. In addition to growing Middle East supplies, new Australian LNG projects are scheduled to start up within a few years, which could increase exports “possibly three times,” said Braden.

For North America, however, “shale gas will determine LNG’s role over the next decade. Essentially there is a constrained market for LNG here, with a massive amount of regas capacity, but it will always remain the market of last resort as long as flow remains what it is…”

If there is an “inflection in demand or depending on legislation that alters the demand picture, you are probably not going to see LNG at a terminal near you, not in an appreciable quantity.”

U.S. LNG demand, said Braden, may “tighten by the middle of the next decade, but it will be much more developed for the spot market.”

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