Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2015 at 2:17

NYMEX Natural Gas contract price for June deliveries is $2.815.  The monthly average for the year to date is $2.812.

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Permalink Reply by JHH on June 1, 2015 at 2:47

Skip:  When do you expect the Cheniere LNG terminal at Sabine Pass to go on line? By the fourth quarter this year or early next year?

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Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2015 at 2:55

JHH, I haven't seen any recent projections but unless something has changed some shipments should begin in the 4th. Quarter.  The question that we will all be waiting to have answered is, where that natural gas will come from?  Haynesville?  Marcellus?  Eagle Ford?  Permian?  Fayetteville?  There is a lot of excess supply out there looking for a market and the competition on price is likely to be high.  I suspect that once all the trains are completed and operational sometime in 2016 and Cheniere finds markets where it can successfully compete with other international exporters, supply will be sourced from a number of plays with low costs to produce an mcf and reasonable transportation costs to the Gulf Coast.

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Permalink Reply by kittycatmama on June 1, 2015 at 3:39

Does anyone have projected times when other terminals being built on gulf coast will go online

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Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2015 at 4:19

Here are some links to the data from the three companies that are on schedule to begin the first shipments.  The short answer is the bulk of export capacity is projected for 2018.

Cheniere

See map near the bottom of the page for both Sabine Pass and Corpus Christi facilities.

http://www.cheniere.com/terminals/lng/

Sempra

"The liquefaction project will be comprised of three-train natural gas liquefaction facilities with an export capability of 12 million tonnes per annum of liquefied natural gas (LNG), or approximately 1.7 billion cubic feet per day.  All three trains are expected to commence operations during 2018, with the first full year of operations in 2019."

Link to full article              http://sempra.mediaroom.com/index.php?s=19080&item=136982

Freeport LNG

PROJECT STATUS AND SCHEDULE
	Freeport LNG started construction of the liquefaction project in November 2014 and expects to achieve commercial operation of the first liquefaction train in 2018.

 

http://www.freeportlng.com/Project_Status.asp

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Permalink Reply by cocodrie man on June 1, 2015 at 9:36

An article this morning notes that the first shipments from Sabine Pass will most likely happen early in the new year.  It was further noted that Cheniere has in hand contracts with French and British firms to purchase LNG  from two addition trains, which would bring the total number of trains to six.  The Sierra Club has apparently filed a suit to stop construction of the two additional trains.  Thus, the final governmental approvals to build the two additional trains have not been granted.  To my mind, the good news is that market demand for LNG is sufficient to warrant the expansion of U.S. export capacities.  

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Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2015 at 9:47

As exports increase competition will drive prices down and more countries will import LNG.  US LNG exporters will be entering an existing competitive market.  Use the link below and see Page 8.

http://www.igu.org/sites/default/files/node-page-field_file/IGU%20-...

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Permalink Reply by dbob on June 1, 2015 at 12:42

one of the key issues with LNG is that pricing is often tied to cost of crude oil so when the cost of crude is low relative to NG, it looses some of its cost advantage.  

I do think LNG export will help set a higher floor under NG pricing.  but it may be 20-40% higher than today, rather than 80%.

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Permalink Reply by Skip Peel - Mineral Consultant on June 1, 2015 at 13:05

Agreed, dbob.  I expect that the price linkage will decouple as the international balance of supply and demand works out an equilibrium.  I also expect that with relatively cheap and reliable access to LNG many nations will change their energy source mix to favor natural gas.  I would like to see it  NG displace a lot of coal.

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