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Permalink Reply by LP on September 16, 2009 at 1:14

RE:
What to do with all that gas? Some reports are that North American LNG receiving terminals may reverse flow to export LNG.

What a brilliant idea ! Why don't we stop the IMPORT of NG into the USA and begin EXPORTING it to other countries? Geez !!! Is this rocket science?

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Permalink Reply by Grillin' - MmmMmm on September 16, 2009 at 1:41

LP:

What you are hearing about at US LNG facilities really isn't EXPORTING; its re-exporting. Basically, all of the LNG facilities in the Lower 48 are IMPORT terminals with only the capability of gasifiying LNG and sending it on to users via pipeline. What the facilities are doing is IMPORTING LNG and putting in their storage tanks in liquid form. Then they turn around and pump it back on to other ships and re-EXPORT it to other countries. So, no U.S. produced natural gas is ever exported in the Lower 48. In order to turn a gasification IMPORT terminal into a liquifaction EXPORT terminal will take billions of dollars and a wad of permits and environmental impact statements because a bird or two might not like the plant!

There is a U.S. LNG EXPORT facility, but it is up in Alaska (Kenai) and has been around for a long time (20 years I believe). It is small by today's standards. And there are Congressmen from the Left who are fighting to revoke its export permit.

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Permalink Reply by Les Bamburg on September 16, 2009 at 2:59

Mmmarkk, just to add - there are only two LNG terminals with permits to re-export LNG (both Cheniere's) and no LNG cargo re-exports have yet occurred.

One LNG import terminal planned for the west coast of Canada has been re-permitted and now is proposed to be built as an LNG export plant (liquefaction).

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Permalink Reply by Grillin' - MmmMmm on September 17, 2009 at 2:10

That one export plant (Kitimat) is one I've done a lot of reading on. I think its still a long way from being built, but making progress. Biggest challenge is economics. At today's pricing (low gas, high oil prices) it looks okay but LNG investments depend on 10-20 years of pricing assumptions and no one can predict or get comfortable that oil prices and gas prices will exhibit the current spread that we are seeing now. Why is that important? Because LNG contracts in Asia are based on oil pricing arrangements and gas purchases to feed the LNG plant are based on gas prices in Canada. We'll see if this one gets off the ground. With the massive number of LNG liquifaction plants being built and/or planned in Australia, the Kitimat folks have a lot of competition. And don't think the Qataris will let this all just happen around them! Could be an interesting next few years, hey?

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