By reading Oil & Gas Journal, gas industry professionals can readily keep up with major events in the rapidly expanding LNG industry. For additional news as well as details and developments of those major events, OGJ readers since late 2004 have also had available OGJ’s quarterly LNG Observer.
No issue of importance and no project that has advanced beyond conception have gone unnoticed in that supplement, which now reaches more than 87,000 OGJ subscribers. And its frequency allows LNGO the luxury between issues to sort fact from rumor, fantasy from reality.
As we enter fourth-quarter 2007, it might be useful to employ that perspective to see where the LNG industry has reached this year and what new thresholds it likely will cross in 2008.
Two years’ growth
When 2007 began, the LNG industry was coming off an impressive 2006: More than 20 million tonnes/year of production capacity came online between December 2005 and January 2007; the population of LNG carriers surpassed 200; and new regasification capacity started up in Spain, China, and Mexico. The latter two terminals were the first in their respective countries.
This year has witnessed a continuing charge of events.
More than 22 million tpy of liquefaction capacity was to have started up this year. In June, Marathon Oil commissioned its 3.4-million-tpy Bioko Island plant in Equatorial Guinea. Qatar Petroleum’s RasGas completed the 4.7-million-tpy Train 5 in March. And the first LNG export project north of the Arctic Circle, Statoil’s Snohvit, began production in September and was to have loaded out its first cargo this month.
Only Nigeria’s Bonny Island Train 6, due to start up in 2007, has been delayed until early next year.
In shipping, EA Gibson Shipbrokers, London, lists 22 vessels that have been or will be commissioned in 2007 (www.lngobserver.com). Of special note is that five of them will exceed 200,000 cu m each in capacity. A glut of vessels along with escalating material and labor costs have slowed vessel construction this year; originally, EA Gibson had forecast 35 vessels to be commissioned.
New regas capacity in 2007 was to have reached more than 30 million tpy. So far, a new 2.7-million-tpy Spanish terminal at Reganosa has started up, and Excelerate Energy in January commissioned the world’s second offshore terminal at Teesside, UK.
Yet to come online in 2007 are two terminals at Milford Haven, UK, which will add 12.2 million tpy, and a new terminal in France at Fos Cavaou to add 6 million tpy. All three may well run into 2008.
Indeed, next year’s developments will exceed this year’s. Making a few assumptions about some liquefaction projects whose start-up dates have slipped suggests 38.8-54.1 million tpy coming online in 2008.
It is possible, though improbable, that Indonesia’s much-anticipated 7.6-million-tpy Tangguh plant will start up in 2008. Yemen LNG is to bring on 6.7 million tpy; Qatargas II and RasGas Train 6 will combine for more than 23 million tpy (more than for all of 2007); and Sakhalin 2 is supposed to finish bringing on more than 9 million tpy-a long shot.
For 2008, EA Gibson has projected 61 LNG carriers will be commissioned. Capacity will average more than 161,000 cu m. Of these, at least 21 are of more than 200,000 cu m in capacity, and eight of them are for more than 215,000 cu m each.
And for 2008, more than 57 million tpy of regas capacity is set to come online at such locations as St. John, NB; near Lake Charles, La., and Sabine Pass and Freeport, Tex.; and in Baja California.
However late to the terminal scramble, Brazil may open both planned offshore terminals; another opening is likely in Chile late in the year; and another terminal will open in China.
Scale, significance
For scale, global crude oil and product transportation facilities dwarf those for LNG and likely always will.
But this overview illustrates the pace of development in an industry many had given up on scarcely a decade ago. Most important about the development is that, for the first time in the international trade in hydrocarbons, natural gas has finally become a globally traded commodity, breaking out of the regional restrictions caused by reliance on pipelines for transportation.
And given the environmental benefits of burning natural gas for power generation-by far the largest demand driving LNG growth-such growth is welcome indeed.