Worldwide

A lack of storage capacity worldwide for liquefied natural gas (LNG) could push most of the global oversupply to U.S. shores, but it may not be as much as some are forecasting, Barclays Capital analysts said Thursday.

A lack of storage capacity worldwide for liquefied natural gas (LNG) could push most of the global oversupply to U.S. shores, but it may not be as much as some are forecasting, Barclays Capital analysts said last week.

With the substantial added global capacity and decreased demand for liquefied natural gas (LNG) supplies, spot cargoes are likely to dominate worldwide gas markets in the next two years, with very few long-term contracts being signed, according to Sempra Energy CEO Donald Felsinger.

With the substantial added global capacity and decreased demand for liquefied natural gas (LNG) supplies, spot cargoes are likely to dominate worldwide gas markets in the next two years, with very few long-term contracts being signed, according to Sempra Energy CEO Donald Felsinger.

ConocoPhillips’ natural gas and oil production worldwide rose in the first three months of the year, but its exploration and production (E&P) unit apparently suffered because of lower gas prices in North America. In an interim quarterly earnings update, the Houston-based producer said it expects 1Q2009 production to be about 30,000 boe/d more than in 4Q2008. E&P results, however, are expected to be impacted by “losses in the U.S. Lower 48 and Canada mainly due to lower realized natural gas prices.” Exploration expenses for the quarter were estimated to be around $275 million before taxes. CEO Jim Mulva early this year projected that the company’s output in 1Q2009 would be flat sequentially (see NGI, Jan. 26). The company swung to a loss of $34 billion in 4Q2008. Midstream operating results are seen falling in 1Q2009 because of a drop in natural gas liquids prices. However, Conoco expects to record an $85 million gain related to the recognition of deferred gains on shares issued by a unit of DCP Midstream Partners LP, a joint venture of Spectra Energy and Conoco. Conoco is scheduled to issue its quarterly results on April 23.

The pipeline industry worldwide is set to ramp up substantial capacity additions between now and 2013, with natural gas pipelines responsible for 63% of total capital expenditures (capex) over the period, according to a report.

Anadarko Petroleum Corp. is close to approaching a milestone of 600,000 boe/d net production worldwide, and assuming no significant weather-related challenges, 3Q2008 oil and natural gas output should be “above the midpoint” of its guidance of 51-54 million boe, said CEO Jim Hackett.

ExxonMobil Corp. spent 38% more to look for oil and natural gas reserves in 2Q2008 — nearly $7 billion worldwide — but the oil major’s output still slumped 8% from the same period a year ago. Exxon’s record profit, up 14%, barely topped the earnings reported by rival Royal Dutch Shell, which reported a 1% production decline.

Liquefied natural gas (LNG) is clearly becoming a more freely traded flexible worldwide commodity that will reshape the global market’s traditional pricing and contracting prices — and most of the new supplies will be flowing to North America, according to Cambridge Energy Research Associates (CERA).