The winter of 2013-14 offered up a perfect storm of natural gas price spikes and threats to electric reliability. Expect more of the same.
LNG as Price Taker
And its impact on power generation.
$22 billion in today’s dollars.
Beyond liquefaction, a major investment in the LNG tanker fleet also will be required to accommodate LNG demand growth. Currently, approximately 159 tankers are involved in global LNG trade. To meet the 20 Bcf/d of expected North American LNG demand by 2020, more than 200 additional LNG tankers must be added to the existing fleet dedicated to North America.
North American Regasification Capacity
In 2005, five regasification terminals were operating in the United States with a combined peak-withdrawal capacity of 4.2 Bcf/d, and expansion plans are under way for another 1.8 Bcf/d of peak capacity in 2006, for a total withdrawal rate of 6 Bcf/d. During 2005, this regasification capacity had a 50-percent use rate.
In addition, there are plans for 41 LNG import terminals that could increase maximum deliverability capacity to more than 48 Bcf/d. Twelve of those 41 terminals, with a total peak of 16 Bcf/d, have received final regulatory approval in Canada, the United States, and Mexico. Two-thirds of the maximum withdrawal capacity is in the Gulf Coast regions and will compete with flows from conventional storage, both salt cavern and depleted reservoirs.
In the near- to mid-term period, Global Energy’s long-term forecasts include the five operational U.S. facilities with expansions, two additional Gulf of Mexico offshore facilities, plus one Bahamas plant, one in Baja, a Nova Scotia facility, and three more in Freeport, Cameron, and Sabine. Throughput at these facilities is expected to rise significantly over the coming seven years.
Global Energy’s forecasted LNG imports could require regasification investments of more than $10 billion over the forecast horizon with half of the new regasification facilities likely to be located along the Gulf of Mexico (GOM) Coast, which is attractive for a number of reasons:
1. Relative ease of siting a new LNG facility in GOM compared with the East or West Coasts;
2. GOM already is industrialized and industrial friendly with low opposition; and
3. Abundance of natural-gas pipelines and infrastructure already built and in place helps significantly lower the cost of new projects.
These LNG facilities and their cryogenic storage with a projected 16 Bcf/d withdrawal capacity by 2020 will compete with conventional onshore gas- storage facilities including the Starks facility with a projected withdrawal capacity of 1.2 Bcf/d by 2009.
In addition, a smaller number of new facilities likely will be built in high demand locations like the Northeast and Southern California. Two good examples already are under construction—the Bear Head LNG facility in Nova Scotia, and the Energia Costa Azul LNG facility in Baja California, Mexico. They are located to serve both domestic and United States demand. Bear Head will transport gas into the supply constrained New England market, while Energia Costa Azul will deliver gas to Southern California. By siting facilities close to the U.S. border, these projects overcame the regulatory burden and public opposition that plagued U.S. projects.
Global Energy has modeled all the greenfield and brownfield expansion LNG projects currently under construction. LNG regas capacity is expected to reach 13 Bcf/d by 2009. However, capacity utilization at