The potential scale of US LNG exports

Bodroff, up until last year a high ranking energy expert working in the Obama administration, talked about encouraging communications between the government and business-oriented academics.

One important snippet from the talk, given to the New York Energy Association, was that “Fossil fuels are going to be a big part of our energy picture for quite awhile.” Though he shied away from explicit forecasts, he cited studies showing estimates for annual LNG exports; one bullish study, from consultants Charles River Associates, suggested that US exports of LNG could reach 20 Bcf per day, about three times the volumes expected from terminals currently approved by the US Department of Energy. The 20 Bcf per day number translates into roughly 140m tonnes per year of liquid exports. For comparison, overall 2012 world LNG trade is estimated at just under 240m tonnes.

A big message from Bodroff was that over time, the growing role for natural gas, including that exported out of the US, will help meet worldwide greenhouse gas objectives decades out into the future, as it gains market share against coal. His slides, drawn from DOE data, suggested that arbitrages supporting US exports would likely remain throughout the present decade even after the commencement of US gas exports. This is due to structural rigidities surrounding oil linked pricing of gas in Asia where gas prices will remain high and abundant supply in the States where gas prices will remain low.

A different perspective, voiced by commentator Clay Maitland at the recent Capital Link conference two weeks earlier is worth noting. Maitland questioned whether the capital would be available to fund the numerous liquefaction plants that would produce exportable gas. At the panel, a group of equity analysts suggested that vessel deliveries would get ahead of incremental new LNG shipping demand, during the next few years. Not so fast with the export boom.

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