The “likely trajectory” of U.S. liquefied natural gas (LNG) imports through 2011 essentially matches the “probable” growth in natural gas-fired power generation, energy analyst John Gerdes said in a report issued this week. He said the need to reduce industrial demand given the limited supply should underpin at least an $8/MMBtu average gas price after 2006.
The Houston-based analyst of SunTrust Robinson Humphrey/the Gerdes Group reviewed “every existing, under construction and proposed liquefaction/regasification facility worldwide,” along with its corresponding LNG term contracts. After accounting for growth in gas-fired power demand and year-to-year changes in gas storage (assuming the heating-season requires about 3,250 Bcf of early November gas storage), Gerdes said industrial demand appears likely to contract about 1.2 Bcf/d, or 7% from 2007 though 2011.
“The growth in U.S. LNG imports comes from a myriad of sources, most notably Qatar, Equatorial Guinea and Nigeria,” Gerdes noted. Between now and 2011, “the vast majority of the almost 4 Bcf/d of additional Far East liquefaction should remain in the Pacific Basin, while Atlantic Basin liquefaction should expand over 4 Bcf/d and Middle East liquefaction should increase almost 7 Bcf/d.”
Far East LNG imports, he noted, are projected to increase by about 3 Bcf/d by 2011, or 3 Bcf/d less than the 6 Bcf/d growth in European and North American LNG imports. “By 2011, the North American LNG market should almost quadruple and the European LNG market should roughly double. Conversely, the more mature Far East LNG market should experience about 25% growth.”
Meanwhile, U.S. regasification capacity should roughly quadruple between now and 2010, said Gerdes. “Notably, from 2008 through 2011, U.S. LNG receiving capacity should exceed U.S. LNG imports by about three-fold. Liquefaction, not regasification capacity, is likely to remain the limiting factor in the growth of the U.S./global LNG trade.”
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