UPDATE 3-Japan hopes to buy LNG from U.S. by 2015

Wed Sep 14, 2011 10:43am GMT
 

* Japan demand for LNG to stay strong after Fukushima crisis


* Japan LNG imports rise to record in August


* Japan eyes initial annual imports of 2-3 mln tonnes/yr-Nikkei


TOKYO, Sept 14 (Reuters) - Japan hopes to start buying liquefied natural gas from the United States after a project there starts exporting LNG in 2015, as the country looks to secure a steady supply amid growing demand for the fuel, a trade ministry official said on Wednesday.


Japan's demand for natural gas is expected to rise for years to come, with its LNG imports climbing at a record pace this year as utilities ramp up gas-fired generation to offset a drop in nuclear utilisation following the Fukushima crisis.


Seishu Makino, a senior vice trade minister, met with U.S. Energy Secretary Steven Chu on Tuesday and requested approval for imports by Japanese firms.


"Japan conveyed the expectation that exports of LNG from the United States to Japan can contribute to a stable supply, to which the U.S. expressed a certain understanding," the official told reporters.


The official said one project, the Sabine Pass terminal, has won approval to export LNG and is expected to start production and exports in 2015. Two other projects are now seeking approval. One of them is the Freeport LNG receiving and regasification terminal, in which Japan's No. 2 natural gas distributor Osaka Gas Co has a stake.


The official declined to give an outlook for how much Japan LNG would like to import from the U.S.


The Nikkei business daily reported on Wednesday that Japanese power and gas utilities would initially import 2 million to 3 million tonnes of LNG a year, while the trade ministry estimates U.S. shipments could eventually make up 10 percent of Japan's LNG imports.


Gas extracted from shale rock formations will be liquefied in Texas and Louisiana. The LNG will then be shipped to Japan via the Panama Canal, the Nikkei said.


Some Japanese companies have expressed hopes for U.S. exports of LNG.


Osaka Gas sees the United States as a promising shale gas exporter.


"Japan can be a destination when an expansion of the Panama Canal in 2014 allows large LNG carriers to get through the canal," Kenji Kawamoto, an executive officer in charge of overseas business development at Osaka Gas, told Reuters last week.


Sumitomo Corp , Japan's third-largest trading firm, is eyeing more upstream investment opportunities in U.S. shale gas and is looking to pick up shale oil assets there, as it sees those markets growing, a senior official told Reuters in July.


The Sumitomo official said obstacles to exporting U.S. shale gas, such as U.S. export regulations and the cost of establishing facilities to liquefy gas for export, could be reduced as some U.S. LNG import facilities are looking to become export facilities to sell surplus gas supplies.


Mounting public concerns over nuclear safety after the Fukushima Daiichi radiation crisis have made it difficult since the March 11 earthquake to restart reactors once they shut for routine maintenance, forcing utilities to tap fossil fuels to make up for lost nuclear power generation.


Japan's 10 regional power firms used a record 4.81 million tonnes of liquefied natural gas in August to help offset a record low nuclear utilisation rate.


LNG imports this year are set to jump 12.2 percent to 78.6 million tonnes, exceeding the record of 70 million tonnes in 2010.


Japan's top three sources of LNG imports are Malaysia, Australia and Indonesia, although it recently resumed imports of LNG from Norway for the first time since 2008.

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Great news.  We need new markets and should move before some other nation does.  The US is not the only country with large shale deposits. It's remarkably widespread around the world.

 

"obstacles to exporting U.S. shale gas, such as U.S. export regulations"

US/regulations/obstacles = ?

I read some blog comments wailing everything from… household water faucets will become blast furnaces to drilling for natural gas disrespects the sacred burial grounds of dinosaurs. I kid you NOT !!

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