Although liquefied natural gas (LNG) imports will increase this winter by as much as 750 MMcf/d compared to last winter, bullish analysts at Raymond James & Associates claim they will be offset by the substantial decline in Canadian imports and by exports to Mexico.

In their “Energy Stat of the Week” report, the analysts project a zero change in net imports/exports this year compared to last.

“With at least 75% higher natural gas prices, a second train having been recently brought online in Trinidad and easy year-to-year comparisons, there is no question that LNG imports should be up this winter,” said Raymond James analysts Marshall Adkins and James M. Rollyson. “The real question is ‘will it actually make a difference?’ Our analysis yields a resounding ‘No!’ Specifically, falling natural gas imports from Canada, combined with increasing gas exports to Mexico are on track to largely offset increased LNG imports. Accordingly, it appears that natural gas imports/exports will have virtually no net impact to the U.S. natural gas supply picture this winter.”

LNG imports averaged 0.31 Bcf/d last winter, which was down sharply from the prior winter (0.75 Bcf/d) because of concerns about terrorism. With rising gas prices and the second production train online in Trinidad, LNG imports should finally eclipse the 1 Bcf/d mark this winter and increase by about 0.75 Bcf/d from last winter.

“While this is more than a two-fold increase in LNG imports, don’t get excited just yet,” the analysts said. “Based on our year-to-year supply/demand forecast, the U.S. market is going to need every molecule of that gas and then some.”

According to Raymond James, Canadian gas imports will decline by about 500 MMcf/d this winter, while exports to Mexico from the United States will rise by 260 MMcf/d. Mexico currently is importing 700 MMcf/d compared to 440 MMcf/d at the same time last year.

“Ultimately we do expect LNG to become a more significant factor in U.S. natural gas supply. However, the potential 1+ Bcf/d of additional capacity from demothballing existing facilities anticipated in 2003 should fall way short of satisfying shortfalls in supply and increasing demand,” the analyst said.

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