Uncle Sam is on an LNG tear. Overnight the US Department of Energy (DOE) approved another new LNG project for exports and this time it’s a greenfields project in Oregon,suggesting even more could be in the pipeline
OregonLNG will have a capacity of 9 million tonnes per annum (mtpa) and begin shipping in 2019. That takes the total of US approvals in the past eighteen months to 80mpta, just shy of the capacity of Australia’s current wave of projects.
As well, the Federal Energy Regulatory Commission (FERC) approved construction of FreeportLNG (it already has export approval).
Meanwhile, global firms can’t get out of Australian projects fast enough. Shell wants to sell down Woodside and now Apache wants out of Wheatstone (as well as Canada’s Kitimat). From the AFR:
US oil and gas company Apache, under pressure from activist investor Jana Partners, said it plans to sell interests in two liquefied natural gas projects as it sharpens the focus on developing North American shale fields.
The move, a significant pullback from the LNG market, relieved investors worried about the potential project costs. Apache shares rose to their highest level in more than two years.
Very sensible. Australia’s magnificently expensive seven projects are a return on equity sink hole.
I am increasingly of the view that the Asian market, and the contract pricing mechanism that dominates it, are going to come under greater pressure, earlier than most think.
