Simmons & Co.: US 2011 gas imports off; Japan to pull global LNG

By OGJ editors

Preliminary data for 2011 have prompted Simmons & Co., Houston, to forecast US natural gas imports for the year will drop by 7% over 2010, a decline driven by fewer Canadian import and LNG cargoes.

US gas imports in 2011, net of exports, says Simmons, will be 5.1 bcfd; for 2012, net imports will fall again to 4.3 bcfd. Simmons estimates US total imports last year at 9.5 bcfd. US imports of Canadian gas peaked in 2007 at 10.4 bcfd, it said.

The company has forecast US LNG imports for 2011 at 1 bcfd, which it says is about the “bare minimum” to keep the country’s regasification terminals operational.

Japan to pull LNG

Globally, Simmons & Co. noted that the effects of the Fukushima nuclear plant incident resulting from the March 2011 earthquake and subsequent tsunami will be long lasting, exercising an especially long call on the world’s LNG supply.

In December, the Japanese government said the Fukushima nuclear power reactors were officially stabilized. The lasting impact of that tragedy has been an “increased short and long-term call on natural gas and LNG,” Simmons & Co. said.

Since mid-2011 when Japan was operating 19 of the country’s 54 nuclear reactors, the report said, the country is now only running 7 reactors due to a combination of scheduled maintenance, increased inspections, and challenges restarting facilities. The current 13% utilization will increase as some plants come back online after maintenance. Japan’s government has committed to phasing out nuclear power generation over the next 40 years.

The ripple effect of this accident has caused Germany to plan to shut its reactors by 2022, the Swiss parliament to vote to be nuclear free by 2034, and Italy to vote in a referendum that prohibits starting a nuclear power program. The Simmons report cites Platt’s, which reported Japan’s 10 major power utilities bought a record 26.16 million tonnes of LNG from April-September 2011 as they hiked gas-fired power generation compensate for a shortfall in their nuclear output.

Further, LNG consumption in September increased about 23% year on year, according to Japan’s Federation of Electric Power Cos.’ data.

In late November, said Simmons, a conference presentation by an official of Japan Oil, Gas & Metals National Corp. said LNG demand would rise by 20 million tonnes in 2012 (more than 24%) if all the reactors under inspection do not restart their operations. Simmons & Co. calculated the incremental 20 million tonnes of LNG to equal 2.6 bcfd of gas or about 8% of the global LNG market.

US LNG exports

Simmons & Co. says this situation has aided US net imports by decreasing spot LNG cargoes available to Mexico, increasing US pipeline exports to Mexico to compensate for the lost spot LNG, reducing LNG arriving into the US as it was diverted to Asia, and increasing LNG re-exports from the US.

In the US, re-exports of LNG reduced natural gas supply into the US. From January to October 2011, US LNG re-exports were up 56% year over year. But that is related to an absolute figure of only about 300 MMcfd, the report said.

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