Liquefied natural gas doesn’t get much attention in the US because in aggregate, it is not a significant energy source here, and imports were at a five-year low in 2008. But supply/demand conditions has shifted dramatically overseas. The combination of depressed LNG prices and cheap shipping means that excess LNG may show up in the US, pressuring prices of natural gas.
From Llyod’s List (hat tip reader Michael):
Spot freight rates for liquefied natural gas carriers will remain under pressure next year in the face of a heavy newbuilding delivery schedule, warns a new report from Houston-based consulting group Waterborne Energy….
Waterborne Energy expects global LNG production to increase significantly next year, and to result in a fall in international spot prices.
“While 2009 will start slow, we expect a 30% rise in total LNG production worldwide by year end,” says Waterborne Energy president Steve Johnson….
Waterborne Energy does not believe Asia and Europe will be able to absorb this new production, despite have 11 new regasification terminals under construction. Moreover, the economic downturn will limit power demand in Europe, Asia and the US.
By next May, Mr Johnson expects excess global LNG will begin to move toward US import facilities “simply because it has no place to go”….
Looking to 2010, Mr Johnson says intelligence data suggests US import volumes will exceed the record set in 2007 of 2.1bn cu ft a day.