Daily LNG price update (first export ready)

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A long regulatory process and a historical preference to keep hydrocarbons at home have delayed efforts to export LNG. Moreover, the relatively useless LNG import facilities, constructed pre-shale boom, serve as a reminder of how quickly fortunes can change. Currently, the US re-exports approximately 1.5 bcm of LNG overseas, but has not shipped domestic LNG abroad since 2011.

That should change in 2015, when the Sabine Pass liquefaction facility comes online. The project will export up to 26 bcm per year to free trade and non-free trade agreement partners. Beyond that however, the Federal Energy Regulatory Commission (FERC) and Department of Energy (DOE) have been stingy with their approval.

A total of four LNG projects, with a projected capacity of 70 bcm, await approval by FERC or DOE. US preliminary volumes have contracted well – LNG importers like diversity – but the Energy Information Administration (EIA) has taken an increasingly pessimistic view of potential US exports.

US LNG exports according to the EIA

Source: IEA

Oil’s collapse has more than halved Henry Hub’s price advantage over oil-linked supplies from Qatar and elsewhere. The International Energy Agency estimates that oil prices of $70 to $75 per barrel translate to a pricing advantage of only 50 cents.

Saturation is the name of the game in LNG, good for consumers, households and businesses but maybe not good news for stockholders and of course, governments dependent on revenue from mineral extraction.