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U.S. natural gas at major disadvantage in Europe and China.

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(edited)

IT COSTS MORE TO TRANSPORT THE LNG THAN THE COST OF THE GAS ITSELF.  

Pipelines from Russia and LNG from countries much closer (Russia, Qatar, Papua New Guinea, Austraila) render U.S. natural gas uncompetitive.

Geography matters.

Edited by BLA
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3 hours ago, BLA said:

https://m.youtube.com/watch?v=C4QnZXIBnjo

Biden breaks wind.

Penn Governor Tom Wolf shakes his head and winces in disbelief. 

That's raised his carbon arse print a bit

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20 hours ago, BLA said:

It cost more to ship U.S. natural gas (LNG) to China or Europe than the gas itself costs.  Pipelines from Russia and LNG from countries much closer (Russia, Qatar, Papua New Guinea, Austraila) render U.S. natural gas uncompetitive.

Apart from Russia none of those Countries are nearer to Europe than the USA. Qatar has to ship LNG via the Cape of Good Hope. Oz and PNG are are about as far as it gets. Longer term if Qatar can build a pipeline to Europe or China via Iran & Pakistan 9good luck on the security with that) than thats a possibility

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On 6/29/2020 at 5:22 AM, BLA said:

It cost more to ship U.S. natural gas (LNG) to China or Europe than the gas itself costs.  Pipelines from Russia and LNG from countries much closer (Russia, Qatar, Papua New Guinea, Austraila) render U.S. natural gas uncompetitive.

NG in the Permian is effectively free. NG  delivered from the Permian to the US Gulf Coast LNG plants is dirt cheap. US-to-Europe is basically the shortest LNG carrier route to Europe from anywhere. US LNG acts as a cap on the price Russia can get for their NG in Europe. US LNG also provides a counter to any implied strategic Russian threat.  Finally, The UK now imports LNG and it has become an important percentage of their inadequate NG storage capacity.

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43 minutes ago, Dan Clemmensen said:

NG in the Permian is effectively free. NG  delivered from the Permian to the US Gulf Coast LNG plants is dirt cheap. US-to-Europe is basically the shortest LNG carrier route to Europe from anywhere. US LNG acts as a cap on the price Russia can get for their NG in Europe. US LNG also provides a counter to any implied strategic Russian threat.  Finally, The UK now imports LNG and it has become an important percentage of their inadequate NG storage capacity.

The UK has so much LNG terminal capacity it can export moderate quantities of gas to Europe when the price signals are right. 

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(edited)

32 minutes ago, NickW said:

The UK has so much LNG terminal capacity it can export moderate quantities of gas to Europe when the price signals are right. 

I have not investigated that. I know that Europe's major NG storage capacity is underground storage for compressed NG, and Germany has more than ten times the total NG storage that the UK has. With the current massive LNG glut, I suspect it's a lot cheaper to buy an LNG carrier cargo on the spot market and deliver it to Rotterdam than it would be to load it in the UK. Condensing NG==>LNG is an energy-intensive operation, so the UK would be shipping from their LNG storage. I guess the condensing facilities date from the time the UK was still an exporter?  Surely there is a cross-channel NG pipeline?

UPDATE: Oh, I see: their LNG terminal is a re-gasifier: import only, and they do have bidirectional pipelines to Europe, therefore their terminals are physically part of a combined EU/UK LNG import capacity:

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/010620-lng-fundamentally-changes-uk-gas-supply-in-2019-halves-nbp-price

 

Edited by Dan Clemmensen
update, with ref.

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BLA

That is an extraordinarily ignorant - and inaccurate  - statement that even a few minutes online checking can easily show.

 

Singapore is on track for massive imports of LNG - US sourced at the moment - and will not renew long term piped gas from Malaysia and Indonesia.

The Ukraine, Turkey and Poland are in the process of purchasing US LNG at spot prices in the $5/$6 per mmbtu range rather than the $6/$7+ costs currently from Gazprom.

Qatar is having difficulty in extending new contracts to ship LNG to both Pakistan and India as its $7/$8 price point is way higher than JKM spot and the contractual obligations currently do not favor the buyer.

Algeria has stopped shipping piped gas to Europe due to low pricing.

The price of the Siberian gas arriving at the Chinese border via the new pipe is said to be above $6/mmbtu.

Shipping it south will cost way more than US LNG arriving in that area.

 

Easy to continue, but you may want to look at the low cost of new US LNG plant construction (~$500k/mt), current transport and regas costs, new innovative tolling agreements between customers and US LNG plant owners, the mind blowing pace of innovation regarding hardware/processing of LNG (especially as it relates to mid/small/micro scale operations), combined with the expansive downstream  possibilities as countries such as Pakistan and India lead the global switch into the uses of natgas for transportation.

Throw in realities like the 2 new plants proposed for west coast of Mexico (Ensenada  and Puerto Libertad), US LNG will be supplying Crib Point, Newcastle, and Port Kembla before you know it.

 

The Al Thani regime is not pleased.

The other governments/regimes around the world  relying upon hydrocarbon  revenues are battling ferociously to kneecap US LNG as their revenue decline is causing enormous internal upheaval.

 

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(edited)

On 6/30/2020 at 4:25 AM, NickW said:

Apart from Russia none of those Countries are nearer to Europe than the USA. Qatar has to ship LNG via the Cape of Good Hope. Oz and PNG are are about as far as it gets. Longer term if Qatar can build a pipeline to Europe or China via Iran & Pakistan 9good luck on the security with that) than thats a possibility

U.S. LNG can't compete with Russian pipeline gas in Europe. 

The two largest growing markets for overly abundant Natural Gas are India and China.

U.S. LNG can't compete with Australia , Papua New Guinea LNG  including transportation to China. 

U.S. LNG can't compete with Russian pipeline has to China .

U.S. LNG can't compete with Qatar LNG in India. 

Too much Natural Gas.

Wait till the U.S. LNG Japanese and South Korean contracts expire.  

Too much U.S. gas .  .  .  No where to sell it.  

Once things settle down. Once the true cost gas + transportation is quantified it will become apparent that the U.S. NG producers/exporters loose.  Supply of inexpensive Natural Gas is growing faster than the demand.   

The determining factor is the transportation costs.  THEY ARE MORE THAN THE COST OF GAS. 

A loosing proposition.

Do you realize how much U.S. NG production has been shut down in the last 6 months ?

Majors selling assets in the marcellous  

Edited by BLA
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(edited)

15 hours ago, Coffeeguyzz said:

BLA

That is an extraordinarily ignorant - and inaccurate  - statement that even a few minutes online checking can easily show.

I disagree

Quote

 

Singapore is on track for massive imports of LNG - US sourced at the moment - and will not renew long term piped gas from Malaysia and Indonesia.

Malaysia was charging extraordinary high prices.  After the shorter U.S. contract expires Malaysia will be reasonable. U.S. will be out.

Countries use desperate U.S. producers to force their local providers hand.  Any contract win is temporary. 

Quote

The Ukraine, Turkey and Poland are in the process of purchasing US LNG at spot prices in the $5/$6 per mmbtu range rather than the $6/$7+ costs currently from Gazprom.

Nobody in Europe is paying $6 to $7 spot.  Under $4 delivered now. Even $3.  Could go negative.

Poland and Ukraine buying U.S. for national Security reasons.  Plus subsidized with $ billions in U.S. aid.   

Won'tlast long. Can't.

It all comes down to price.  It's a commodity.

 

Quote

Qatar is having difficulty in extending new contracts to ship LNG to both Pakistan and India as its $7/$8 price point is way higher than JKM spot and the contractual obligations currently do not favor the buyer.

Qatar contracts will end. Why would Pakistan or India extend a $7 contract.  That's not viable anymore. You think those contracts will go to the U.S. ?  Keep dreaming.  All contracts expire.  Qatar will have to get competitive. Will beat U.S. on any and all bids. 

Quote

Algeria has stopped shipping piped gas to Europe due to low pricing.Can't compete.  They praying for high prices.  Never get high enough.  Margins on NG shrinking.  New reality.

Quote

The price of the Siberian gas arriving at the Chinese border via the new pipe is said to be above $6/mmbtu.

China agreed to a set contract price to get Russia to build pipeline.  All agreements expire.  Then China  names the price they will pay. Bait and hook.   Russia will have no choice but to agree to much lower prices.

Quote

 

Throw in realities like the 2 new plants proposed for west coast of Mexico (Ensenada  and Puerto Libertad)

"PROPOSED" export terminal.

Just like the proposed NG and Oil export terminals for West Coast of Canada. They're dead.  

Even at lower construction costs for NG tranes they are not economically feasible anymore. 

It's the shipping costs !

Quote

 

 

 

It's a game of "Musical Chairs" when the music stops the U.S. Natural Gas Industry will be standing alone, nobody buying and priced out of European and Asian markets.  

New ballgame.  

Too much NG.

First I would check your internet data. It's a bit dated.  Actually, it's a lot dated.  Much has changed .

Second the only reason buyers will contract for some U.S. NG is to play them against their current provider.  U.S. sales are short-lived till the regular producer gives in. 

It's simple:

What do you expect when the cost to transport is more than the cost for the product.  Geography counts.

Wait till U.S. producers contracts with South Korea and Japan expire.

Screwed. 

Edited by BLA

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20 hours ago, Dan Clemmensen said:

I have not investigated that. I know that Europe's major NG storage capacity is underground storage for compressed NG, and Germany has more than ten times the total NG storage that the UK has. With the current massive LNG glut, I suspect it's a lot cheaper to buy an LNG carrier cargo on the spot market and deliver it to Rotterdam than it would be to load it in the UK. Condensing NG==>LNG is an energy-intensive operation, so the UK would be shipping from their LNG storage. I guess the condensing facilities date from the time the UK was still an exporter?  Surely there is a cross-channel NG pipeline?

UPDATE: Oh, I see: their LNG terminal is a re-gasifier: import only, and they do have bidirectional pipelines to Europe, therefore their terminals are physically part of a combined EU/UK LNG import capacity:

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/010620-lng-fundamentally-changes-uk-gas-supply-in-2019-halves-nbp-price

 

Well yes that's the point Im making. It comes to the UK, gets re-gassified and then send down the Bacton - zeebrugge interconnector. Originally this was designed to export gas from the UK North Sea. It then became an import terminal after Bliar spunked away all our gas. Its now mainly import but does act occasions act as an export terminal  exporting gas that arrived as LNG. 

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Hard facts

Gazprom breakeven is 100 $ per 1.000 cubic meters

US LNG to Europe about 250 $ per 1.000 cubic meters

What more to add? You need a lot higher price to breakeven. 

Quatar needs about 180 $ to breakeven so is a lot more price competive to Russian gas that US LNG

Thats why you want to sanction Nord Stream II because you cannot compete with its breakeven price so you choose sanctions instead of free market,

Source Oxford Institute for Energy Studies

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On 6/30/2020 at 10:10 PM, BLA said:

U.S. LNG can compete with Russian pipeline gas in Europe.  Knucklehead.

The two largest growing markets for overly abundant Natural Gas are India and China.

U.S. LNG can compete with Australia , Papua New Guinea LNG  including transportation to China.  Knucklehead.

U.S. LNG can compete with Russian pipeline has to China .  Knucklehead.

U.S. LNG can compete with Qatar LNG in India.  Knucklehead.

Too much Natural Gas.

Wait till the Japanese and South Korean contracts expire.

Too much U.S. gas .  .  .  No where to sell it.  

Once things settle down. Once the true cost gas + transportation is quantified it will become apparent that the U.S. NG producers/exporters loose.  Supply of inexpensive Natural Gas is growing faster than the demand.   

A loosing proposition.

Do you realize how much U.S. NG production has been shut down in the last 6 months ?

Whats the point you are trying to make here? I was simply pointing out that geographically the USA is closer than other major LNG suppliers in response to someone elses comment. I don't know how much transport distances effect LNG break even costs. 

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(edited)

3 hours ago, Tomasz said:

Hard facts

Gazprom breakeven is 100 $ per 1.000 cubic meters

US LNG to Europe about 250 $ per 1.000 cubic meters

What more to add? You need a lot higher price to breakeven. 

Quatar needs about 180 $ to breakeven so is a lot more price competive to Russian gas that US LNG

Thats why you want to sanction Nord Stream II because you cannot compete with its breakeven price so you choose sanctions instead of free market,

Source Oxford Institute for Energy Studies

"Thats why you want to sanction Nord Stream II because you cannot compete with its breakeven price so you choose sanctions instead of free market,"

Yes, you are probably correct about that. Trump has always tried to promote the sale of U.S. hydrocarbons regardless if it was a deal with Europe, Asia or China.

Also, it really burns Trump that U.S. pays most of NATOs budget to protect EU from Russia , while EU/GERMANY spends Billions on Russian gas

That would piss me off. 

 

Edited by BLA

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Anyone thinking the EU needs any form of gas is off their trolly!

 

https://agsi.gie.eu/#/

 

EU gas is going to be full early, Russia are ditching gas into the Ukraine as the only real storage left in Europe, the irony should make everyone chuckle!

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