LNG no magic answer for North America natural gas shortfall

Gary Park

Petroleum News Calgary Correspondent

Imported liquefied natural gas will only be a solution to North America’s supply shortfall after 2007 and will need gas prices well over $4 per thousand cubic feet to be economical, says a report by analysts at Raymond James.

In the meantime, North America “will be on its own for a while as LNG will not be a quick fix ...” said the report entitled LNG — A Longer-term Solution with its own Problems.

The analysts noted that LNG capacity expansions will introduce 1 billion cubic feet per day by the end of 2004 and 2 bcf by the end of 2006, but a flood of 30 new proposals for receiving and regasification terminals could see those imports grow by 25 bcf per day over the next few years.

However, it is unlikely that more than a quarter of the plans will actually proceed, with the odds favoring those in regions that are well disposed towards LNG, such as the Gulf Coast of Louisiana and Texas, or those located so far offshore that they don’t stir up opposition from coastal communities.

Just to match the proposed increase in North American LNG deliveries, the current global tanker fleet of 140, with capacity of 14.5 billion cubic feet per day, would have to be doubled over the next five to seven years.

Marshall Adkins, one of the study authors, also predicted that as LNG grows as a global energy commodity prices will move over the next several years into line with oil, intensifying the competitive environment.