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Permalink Reply by Skip Peel - Mineral Consultant on July 28, 2015 at 4:13

IMO. carbon restrictions should make natural gas the best energy choice.  The challenge for US LNG exporters in the short term is the increasing supply and the declining demand. 

RBN excerpt:

Given all that’s going on in the energy world, it’s not surprising to see the international LNG market in a state of flux. Consider this: Demand for LNG has plateaued in Asia (by far the largest market for LNG, led by Japan and South Korea) due to a combination of milder-than-normal weather, slower economic growth, renewed competition from nuclear, and lower-cost power from oil and coal. Also, the biggest Asian growth markets (China and India) are looking to pipe in natural gas from their neighbors (Russian/Siberian gas into China, for instance) as a lower-cost alternative to LNG. Europe, meanwhile, is concerned about relying too heavily on piped-in gas from Putin’s Russia, and is considering its gas-supply options too—including, as of late, piped-in gas from Iran. All of this comes as a flood of new liquefaction/LNG export capacity is poised to enter commercial operation, most of it in Australia and the U.S and as major LNG consumers are trying to move away from long-term LNG supply deals indexed to oil prices and toward shorter-term and spot deals, prices tied to spot natural gas (as U.S. LNG exporters are offering), and—very important—“destination flexibility” to allow LNG to be shipped wherever the liquefaction off-taker wants.

What matters most to U.S. and Canadian natural gas producers (and developers planning new liquefaction/export facilities) is what these LNG market changes (a demand-growth lull; low spot and short-term prices; game-changing offers of gas-indexed LNG pricing; buyers’ insistence on destination flexibility) mean to them and their plans. In what’s becoming an increasingly liquid, competitive and lower-margin market, the most frequent among natural gas producers and LNG exporters will be those who offer the full package: ample gas supplies, low-cost gas production, supportive pipeline infrastructure, competitive liquefaction costs, easy access to multiple markets, and destination flexibility. As it turns out, the U.S. gas/LNG sector ticks every one of those boxes, and provides a bonus: LNG prices tied to the price of U.S. spot natural gas. The prospects for U.S. gas producers/LNG exporters stack up well against both the biggest existing player in LNG supply (Qatar) and the other big up-and-comer, Australia, which may take the top spot by 2020.

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