By OGJ editors
HOUSTON, Oct. 22 -- LNG is becoming a more popular topic regarding incremental energy needs, but it offers a long-term supply solution rather than a quick fix, said Raymond James & Associates Inc.
Questions remain regarding how much LNG will cost and the available transportation capacity of LNG tankers. The existing LNG tanker fleet would have to about double in 5-7 years to accommodate the proposed increases.
"More specifically, we believe that it is unlikely that LNG will alleviate the (US) production shortfall until at least 2007. In the meantime, expect gas prices to reflect a tight market for at least the next 3 to 5 years. Additionally, the minimal economic hurdle rate for LNG to hit our hubs suggests a 'global' gas price that ultimately will be tied to global oil prices," RJA said in a research note last month.
RJA analyst J. Marshall Adkins said 30 new LNG terminals have been proposed for North America, representing as much as 25 bcfd of additional LNG capacity. Adkins works in the Houston office of the St. Petersburg, Fla.-based RJA.
"Of course, most of these are not realistic. After weeding through these proposals, it looks as though there is only 1 bcfd of add-on LNG capacity that is currently under construction," Adkins said. That includes the recently opened Cove Point facility (OGJ Online, Sept. 3, 2003).
These are expansions to existing facilities, and most are expected to be in full operation by Dec. 31, 2004. Additional proposed expansions could bring on another 2 bcfd of capacity by Dec. 31, 2006, he said.
"As far as 'greenfield' projects are concerned, there has only been one out of these proposed US LNG facilities that has received regulatory and environmental approval by the Federal Energy Regulatory Commission," he said.
Applications for another 8-10 bcfd of capacity has been filed with FERC but not yet approved. Additionally, many more proposals for LNG capacity has been announced, but have not yet been filed with FERC, Adkins said.