Short-term oversupply of global LNG markets will – beyond 2020 – gradually get absorbed and make way for, new liquefaction projects on the east coast of Africa (Mozambique, Tanzania). Yet, sub-Saharan Africa is also likely to evolve as a niche market for US LNG supply, notably via flexible floating LNG storage and regasification units (FSRUs).
Ivory Coast, Ghana and South Africa are tipped to become front-runners in setting up integrated LNG-to-power projects. Developers can arrange attractive import terms as a glut of new gas supply is entering global markets while demand from key Asian buyers remains subdued.
Japan's JGC Corp, joint venture partner of Boston-based Energy Management Inc., has offered its expertise to build a 1.3 Bcf storage facility for regasified LNG in Maine – suggesting LNG imports may come cheaper than expanding gas pipelines to New England’s most northern state. The Maine Public Utilities Commission (PUC) is currently considering the use of the proposed Maine Energy Storage for ‘peak-shaving’ during the winter season.
US LNG equipment maker Air Products has marked the roll-out of the first completed LNG heat exchanger manufactured at its new production facility in Manatee County, Florida. Air Products has won contracts to supply Cameron LNG in Louisiana, the Freeport regas and export facility in Texas, and the Cove Point LNG Maryland.
Chart Industries, the supplier of liquefaction, storage and fueling equipment to the LNG industry, said the US Patent and Trademark Office had awarded the company a patent for its latest processing technology.
Low-cost LNG imports gains attractiveness in the United Arab Emirates (UAE) as gas-burn for power generation is outstripping domestic production, while upstream investments stall. Abu Dhabi now resorted to chartering an FSRU in July, following Dubai’s example – yet while “Dubai is expected to source more LNG cargoes from the US, Abu Dhabi gets all its requirement this year from ADGAS’s Das Island plant – and that is domestic gas supply” says Priyank Srivastava, oil & gas analyst.
LNG cargoes from Sabine Pass going to Argentina face challenging economics on a purely point-to-point basis, data released by the US government and Argentine state energy firm Enarsa show. A free-on-board (FOB) price of $4.51/mmBtu was paid for each of the six cargoes sold by Cheniere from its Sabine Pass liquefaction plant, according to figures by the US Department of Energy (DOE) – not quite enough to cover costs. As South America loses some attractiveness for US LNG, delivery of a fist cargo to China has just opened up a potentially vast export market.
Assertive buyers ask for reworked terms of long-term LNG imports, making use of their rising bargaining power increases as a wave of new supply from the US and Australia enters a subdued global gas market. ‘Homeless LNG’, estimated to amount to up to 50 mtpa by 2020, is prompting Indian and Japanese buyers to ask for changing terms of trade of LTCs to better match spot rates. Resale of excess cargoes through swaps is yet another trend to reign in the LNG glut.
Despite challenging market conditions, global capital expenditure on floating import units is anticipated to surge, with more than 14 countries are expected to commission their first FRSU during 2016-2022.
Det Norske Veritas and Germanischer Lloyd (DNV GL), an international classification society, have given IHI the approval in principle for its design of a Floating LNG Power Station (FLPS). The concept is a combination of a FSRU and a power plant.
Plans for several LNG-fuelled power plants in Chile have been shelved after none of the projects won contracts at the country’s latest electricity tender. A series of wind and solar power projects secured more than half of the contracts at auction.
Ivory Coast, Ghana and South Africa are tipped to become front-runners in setting up integrated LNG-to-power projects. Developers can arrange attractive import terms as a glut of new gas supply from Australia and the United States is entering global markets while demand from key Asian buyers remains subdued.
Cleaning up China’s power mix is becoming an increasingly tedious process as domestic shale gas production slows. Faced with a challenging geology and spiralling costs, the government cut 2020 targets by a third to around 30 Bcm, simultaneously to slashing subsidies – but analysts call even these reduced goals ‘unrealistic’.
With exports of pipeline gas to Mexico on the rise, and LNG exports from Louisiana ramping up, the United States is forecast to become a net exporter of natural gas by the second half of next year. “For the first time since 1957, the United States is on track to export more natural gas than it imports,” commented said EIA Administrator Adam Sieminski. Yet, the spread widens between Marcellus spot and Henry Hub gas prices.
US to stay ‘net exporter’ past 2018
The United States’ status as a net exporter is expected to continue for the rest of this year and past 2018 because of growing U.S. natural gas exports to Mexico, declining pipeline imports from Canada, and increasing LNG exports the US Energy Administration (EIA) forecasts. Meanwhile, Wood Mackenzie principal analyst, Patrick Kirby forecasts oil pricing dynamics will increase, through near-term $50-60 range.
Texas oil and gas boost
The Texas Alliance of Energy Producers said natural gas prices in July averaged $2.84 per thousand feet, increasing the value of Texas-produced gas by 2.3 percent to nearly $1.9 billion. Sizeable year-on-year improvements in the rig count, drilling permits and the value of Texas-produced crude oil and natural gas combined to push the Texas Petro Index up in July to 176.9, the eighth straight monthly increase. However, it is in oil where Texas and the US are excelling. “OPEC production curtailments did not achieve the desired price outcome,” said spokesman Karr Ingham. “Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel (US) oil market provides more incentive than in the past,” added Ingham, referring to the West Texas Intermediate (WTI) US benchmark oil price.
Florida LNG bunkering
Jax LNG, the port bunkering project in Jacksonville in Florida, has received a Letter of Acceptance (LOA) for the facility from the United States Coast Guard and approval to conduct ship-to-ship LNG fuel operations with the LNG barge “Clean Jacksonville”. The expectation is that ship-to-ship LNG bunkering will start in early 2018. Jax LNG already supplies fuel for the LNG-fueled container ships of US shipping line TOTE Maritime. The fuel is supplied by Pivotal LNG.