US cuts LNG import forecasts to just over 16 MTPA

Wednesday, 13 February 2008

Annual US LNG import volumes were previously projected to reach more than 19 MTPA, about 937 Bcf, a 34 percent increase over the more than 781 Bcf imported last year. The 2008 rise in LNG imports is now expected to be a more conservative 1.8 percent.

Previous industry forecasts now appear optimistic. They projected US LNG imports, including spot cargoes, growing to 60 MTPA of LNG by 2010. However, total US imports this year will only be the equivalent to the amount of LNG a producer such as Malaysia exports to Japan.

That’s as three new LNG import terminals come into service in the US this year, adding to the four already in operation at Everett, Massachusetts, Elba Island, Georgia, at Cove Point, Maryland, and at Lake Charles, Louisiana.

The current import forecast is not enough to cover much more than half of existing regasification capacity.

Imports of LNG in 2008 will be the equivalent of 2.15 billion cubic feet per day of natural gas, compared with 2.15 Bcf in 2007 and 1.60 Bcf in 2006. One million tonnes of LNG is equal to 48.7 Bcf.

“This reflects a downward revision from the January outlook due to the expectation of continued demand strength in Asia and Western Europe, which compete with the United States for marginal LNG supplies, and uncertainty about supply projects set to come online in late 2008 and early 2009,” the Energy Information Administration said.

However, total US marketed natural gas production is expected to increase by 2.2 percent in 2008 and by 0.8 percent in 2009.  Projected growth in 2008 is primarily due to the start-up of new deepwater supply sources in the Gulf of Mexico.

The Henry Hub spot price averaged $8.25 in January, $0.92 per Mcf more than the average December spot price, but still lower than equivalent prices in Europe of around $10 per million British thermal units. Prices were even higher in Asia.

On an annual basis, the Henry Hub spot price is expected to average about $7.83 in 2008 and $7.93 in 2009.