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Permalink Reply by Skip Peel - Mineral Consultant on September 30, 2014 at 2:42

The FERC website has the data for those interested in LNG export.

http://www.ferc.gov/industries/gas/indus-act/lng.asp

As to how much impact it may have on domestic natural gas prices, my crystal ball broke in 2012.  Sorry cocodrie man.  What I do regularly follow because IMO it is the most important price component of domestic gas is the price of an mcf of Marcellus natural gas.  Although it will dominate east coast LNG supply it will also have a major impact on the price of an mcf in the Gulf Coast market.  By the time LNG export is underway to any significant extent in LA and TX there will be multiple pipeline connections to Marcellus supply.  Here's the latest from eia on Marcellus prices.

U. S. Energy Information Administration Natural Gas Weekly Update

for week ending September 24, 2014  |  Release Date:  September 25, 2014  |  Next Release: October 2, 2014

Marcellus prices vary considerably. Marcellus prices varied more than 20% across the week, but remained low compared to most markets. The Marcellus trading point (Tennessee Pipeline's Zone 4) started the report week on Wednesday at $2.24/MMBtu, then fluctuated before closing the report week at $1.73/ MMBtu yesterday.

Excerpt from Reuters article:

EnLink buys Henry Hub and other Louisiana gas pipelines from Chevron

The Henry Hub, though still important for U.S. gas pricing, has been surpassed as the most active place for trading the physical form of the fuel by hubs in shale-rich Pennsylvania and elsewhere.

A decade ago, the federal Gulf of Mexico pumped about 20 percent of all U.S. natural gas, much of which flowed through the Henry Hub. Now it produces just 4 percent of the nation's total.

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Permalink Reply by tc on September 30, 2014 at 3:03

A Bloomberg report said 5.25 million tons a year capacity plant in 2017, I don't know the conversion from tons to mcf.  Cove Point is already an import facility so less construction needed than if it started from scratch.

This facility will have more impact on Marcellus NG prices as they are already at a discount to Henry Hub prices due to pipeline constraints. 

Royalty owners won't see dramatic price impacts from LNG facilities, because NG production is still increasing as fast as LNG exports.  All that the exports are going to do is stabilize the NG price in the $4-5 range and allowing the operators to sell more NG in this range.  Between now 2017, a lot of currently flared NG will be forced into the pipeline system.    

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Permalink Reply by tc on September 30, 2014 at 3:15

I was slow posting my reply, so I ended up repeating Skip's Marcellus comments.

Skip's last paragraph shows how things change.  In 2005 hurricanes caused a dramatic price increase due to supply disruption and in 2025 hurricanes could cause dramatic prices decreases due to demand disruptions, the closing of LNG export facilities.

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Permalink Reply by Skip Peel - Mineral Consultant on September 30, 2014 at 4:34

Marcellus gas is so cheap to produce it can incur transportation costs and still be price competitive with HA production on the Gulf Coast.  Agree with tc on the $4 to $5/mmbtu range for the foreseeable future.

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Permalink Reply by jim weyland on September 30, 2014 at 4:54

there's an old expression in the life sciences: 'nature abhors a vacuum'. 

imo, the two dollar spread between marcellus and henry is the natural gas marketplace equivalent of a vacuum.

skip, i think you're spot on as to your perspective of today's and tomorrow's gas prices.

in a related note, the rockies express pl, aka rex, was put into service in 2008, i want to recall. rex is a super high pressure 42" beast running from opal, wyoming to eastern ohio.

it was conceived to move 'cheap' rockies gas to the high price eastern markets.

now, they're looking at reversing its' flow to carry cheap marcellus gas west and via existing pls flowing west from opal, in theory, carry marcellus all the way to the cali markets.

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