FGE: 2010 US LNG imports, future buck regional trends

Warren R. True
Chief Technology Editor-LNG/Gas Processing

HOUSTON, Apr. 20 -- Saying 2010 was an “indifferent year” for US LNG imports, FACTS Global Energy, Singapore, also said in a review of the US market that rising unconventional gas output has helped contain US LNG demand while higher natural gas production has helped depress US gas prices.

FGE also said that several US LNG players seem to agree with the US Energy Information Administration’s assessment that unconventional gas development will depress LNG demand by initiating moves to become LNG exporters of US-produced natural gas, mainly unconventional.

Growing public opposition to shale-gas exploration and development along with additional costs from future government regulations could retard the scope and timing of future shale gas production in the US, said FGE’s analysis.

Regional trend
In an analysis of the Americas, FGE noted how the experience in the US during 2010 has run counter to that in the rest of the region. The US was the only country to see a drop in year-on-year LNG imports last year, registering a more than 12% decline over demand in 2009.

In overall imports, the region brought in 20.7 million tonnes/year (tpy), 37.3% more than in 2009. Brazil and Chile were the largest gainers last year, accounting for about 20% of total Americas’ LNG demand. Argentina also boosted demand by about 80% and Canada by 12%, both from relatively small bases in 2009.

FGE said the success of US shale-based LNG export projects rests on two factors.

The first is for price spreads between the US, Europe, South America, and Asia to remain much as they are today. Current pricing levels in the US offers the country’s producers a better opportunity than depending solely on domestic demand.

The second factor is the coming to fruition of most of the optimistic supply forecasts for shale gas. Some regions of the country, for example, may prove more receptive to environmental concerns over how shale gas is explored for and produced. New York has in fact imposed a moratorium on shale gas exploration.

The concerns are based not only on the feared effects of fracking and its ingredients but also on the wider possible contribution of shale-gas activity to greenhouse gases. A full study of the effects of shale gas exploration and production is scheduled to be released in late 2012, noted the FGE report, by the US Environmental Protection Agency.

Contact Warren R. True at warrent@ogjonline.com.

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