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Permalink Reply by dbob on September 8, 2015 at 12:39

Skip,

Probably a glut regardless if some or most of the projects that have not yet moved into construction are shelved or canceled.  Of course, construction on many of these projects will actually be the sign of the end completion of the project - getting the facility designed and placing firm orders for the equipment is really the start.

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Permalink Reply by Skip Peel - Mineral Consultant on September 8, 2015 at 12:53

We tend to focus on U.S. LNG projects without taking into account projects elsewhere.  I've been generally aware of some other LNG projects particularly Australia however I had no idea that there was a potential for 80 million tonnes in new capacity over seas. 33% more than new U.S. capacity.  I guess we shouldn't be surprised - first a glut in natural gas, then a glut in oil, then one in NGLs and now LNG.  The concern for future energy shortages and high prices are certainly over.  Now the question is, how many energy companies can survive the industry's success.

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Permalink Reply by Steve P on September 9, 2015 at 12:31

My intuition would tell me that the Wall Street suits would be taking hard second looks at all of the projects as a whole, and funding the strong ones (or first to market ones) and the others would be dumped.  But my intuition also tells me that lots of both crude and gas producers would be filing bankruptcy, or at least no longer drilling.  But my intuition is wrong.  I'm now read 2 articles, one an interview with Rex Tillerson, the CEO of Exxon/Mobil, that both stressed that the most surprising factor in the oil glut is that marginal companies can still get financing to stay afloat.  The oil glut is big, but apparently there is an even bigger glut of investment capital, and even shaky exploration projects look better than the yield on Treasuries or the volatility of the stock market.

Under that paradigm, perhaps more of these LNG plants will actually move forward than is prudent.

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Permalink Reply by Skip Peel - Mineral Consultant on September 11, 2015 at 4:35

Houston-based Excelerate Energy says it has ended its plans for an LNG export project in south Texas because of falling oil prices and other economic factors. Argus Media reports Excelerate recently asked the US Federal Energy Regulatory Commission to withdraw its application to build a floating LNG export project in Lavaca Bay, Texas, making it the first company to halt its FERC proceedings for US LNG exports. It is unclear if Excelerate is the first company to stop development of a US LNG export project because of low oil prices, as a number of other proposed projects have not entered the expensive FERC construction approval process and have not announced any progress since oil prices started to plummet last summer. Read the full story.

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