Top
Commentary

North American LNG exports will make a significant difference in a few years

29 Feb 2012 by Jim Fickett.

Existing and planned facilities to liquefy and export natural gas from North America will, by about 2016, have the capacity to export about 13% of current US production. Thus exports could, a few years from now, begin to have a significant influence on equalizing prices between the US (where gas is currently very cheap) and the rest of the world (where, on average, gas is considerably more expensive).

A few years ago, due to a projected North American natural gas shortage, there was a great deal of investment to build LNG (liquified natural gas) import facilities. Now, with projections of a long-term excess of gas, there is interest in exporting LNG instead. An increase in the ability to export gas will be one factor in helping to equalize prices between the US, where gas is currently very cheap, and the many other countries where it costs considerably more.

How much difference could LNG exports make for the US market?

According to a Wikipedia article entitled List of LNG terminals and an article in Energy Biz entitled LNG ready for export, there is one existing LNG export plant in North America, at Kenai, Alaska, and seven more export plants proposed, at Cameron, Louisiana; Cove Point, Maryland; Freeport, Texas; Jordan Cove, Oregon; Kitimat, British Columbia; Lake Charles, Louisiana; and Sabine Pass, Louisiana. The capacities of these plants are, or will be, as follows:

Plant Billion cubic feet per month
Cameron 52
Cove Point 30
Freeport 58
Jordan Cove 37
Kenai 6
Kitimat 21
Lake Charles 61
Sabine Pass 16
Total 281

(For capacity data see Cameron, Cove Point, Freeport, Jordan Cove, Kenai, Kitimat, Lake Charles, Sabine Pass.)

The US is currently producing about 2100 BCF/month. So 281 BCF/month, the total of the above described facilities, is quite significant, being equal to about 13% of current production.

To put the total export capacity into perspective in another way, US production was fairly steady around 1700 BCF/month from 1995 to 2005, then increased quickly with the shale gas boom to the current 2100 BCF/month. That is an increase of roughly 400 BCF/month. Exports might remove more than half of that.

Clearly, if all these export terminals are built as planned, it will make quite a large difference in the North American market.

Most of the facilities are planned to be operational in 2016 or 2017. I suspect that curtailment of unprofitable drilling will be the biggest factor in the next couple years. But 5 years from now, if US gas is still relatively cheap, exports will begin to have a major influence on the market.

(Data footnote: I do not have current Canadian production figures, but in 2010 total Canadian production was about 1/4 total US production. So, when one is just trying to get an order-of-magnitude idea of whether exports will make a significant difference, as I am trying to do here, it is not unreasonable to compare total North American export capacity to just US production.)

Discussion

Mark Aikele, 2012/02/29 19:27

Thanks, James. Seems a prime example of how our global economy benefits the proverbial 1% at the direct expense of the 99%.

Enter your comment
BKFGR