US LNG export projects face an uncertain future despite continued discoveries and production growth, a Brookings Institution analyst said. "More liquefaction capacity may be coming than markets can absorb," warned Tim Boersma, acting director of Brookings's Energy Security and Climate Initiative.
A number of projects are moving ahead and will go into operation, he said during an Aug. 3 presentation at the US Energy Association. But competition from pipelines, new production, and other LNG export projects will combine with slower general—as well as LNG—demand growth to create a supply surplus that the International Energy Agency expects to last at least until 2017, Boersma said.
Supplies will not be a problem, he said. Nearly 1,800 US unconventional gas wells await completion, and recovery rates have risen to 20% from 5% in some areas, Boersma said. "An enormous amount of shut-in gas is waiting to be produced," he said. "Major advances also continue to be made in crude oil production, which affects associated gas volumes."
Global market uncertainties include Russia's eastern gas export strategy ("So far, it's not very successful," Boersma observed); shale gas deposits outside North America; gas's ability to compete, particularly in Asian and European power markets; nuclear power's role in Japan and South Korea; government schemes to support deployment of renewable and alternative sources; and new gas markets such as marine transportation and small-scale LNG operations.
"Regional gas exports to Mexico have doubled over the last few years," he said. "Imports from Canada will continue to fall, but still serve some niche US markets."
Boersma said gas export companies will try to recover their investments in a buyer's market in the medium-to-long term. Contracts overseas increasingly will move to long-term, take-or-pay formats, reflecting growing US influence and investors' desire for certainty, he said. "I expect the oil-price link to further erode in the future," Boersma added.
"It will be increasingly tough to finance major LNG export projects," he said. "Small-scale facilities may be another matter."
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NOVATEK - According to the MOU, the parties agreed to explore opportunities for KOGAS to enter the Arctic LNG 2 project and possible LNG off-take from the project, participate in the LNG transshipment project in Kamchatka and other infrastructure projects, as well as develop cooperation in LNG trading and logistics optimization, including swap operations.
BAKER HUGHES A GE - U.S. Rig Count is down 7 rigs from last week to 1,052, with oil rigs down 1 to 862, gas rigs down 6 to 188 and miscellaneous rigs unchanged at 2. Canada Rig Count is up 21 rigs from last week to 160, with oil rigs up 16 to 103 and gas rigs up 5 to 57.
REUTERS - Benchmark Brent crude LCOc1 was up $1.05 a barrel at $74.10 by 0925 GMT. U.S. light crude CLc1 was 80 cents higher at $66.34.
МИНЭНЕРГО РОССИИ - По итогам заседания расширенного мониторингового комитета большинством его участников было рекомендовано рассмотреть на предстоящей министерской встрече ОПЕК и последующей за ней министерской встрече с участием не входящих в ОПЕК стран-экспортеров нефти увеличение добычи на 1 млн барр в сутки (от текущего уровня) с распределением этого объема между участниками соглашения.