ESAI Energy Presentation: The LNG Gamble
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Transcript of ESAI Energy Presentation: The LNG Gamble
The LNG Gamble
Sarah A. Emerson
ESAI Energy
October 2013
10/4/2013 1
Energy Security Analysis, Inc
o Energy research & advisory firm founded in 1984; focused on global oil, natural gas and alternative fuels and North American power markets.
o Grounded in empirical research and practical, analytical innovation, leading to actionable advice and guidance.
o Ongoing market analysis, research & forecasting services, regulatory insight and assessment of market dynamics to corporate, financial, end-user, regulatory, and policy clients globally.
o Provides strategic planning, asset valuations, market studies, economic and political market analysis, provides expert witness support in litigation and arbitration.
ESAI Energy, LLC, a division of ESAI
ESAI Energy provides comprehensive analysis of the global, regional, and national petroleum and alternative fuels markets, developed from a proprietary country-by-country fundamentals database that dates back to 1978.
ESAI Energy’s principals and associates are trained in market analysis, economics, political science, finance and industrial policy.
Our analysts integrate quantitative analysis of proprietary and public source data with trends in policy and regulation to develop a thoughtful projection of petroleum and alternative fuels markets in every country and region from two weeks to twenty-five years.
ESAI Energy also provides customized consulting on topics such as project feasibility and profitability, market access, political and regulatory issues.
U.S. Heading towards Net Exporter
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(2.0)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
40.0
45.0
50.0
55.0
60.0
65.0
70.0
75.0
80.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S. Natural gas Balance (bcf/d)
Net Imports
Supply
Demand
Source: ESAI, EIA
Demand Growth Depends on Sector
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22.09 23.45
20.01 22.44
3.85
5.00
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Composition of Demand Growth (bcf/d)
Other
To NGLS
Transport
Commercial
Residential
Industry
Electricity
Source: ESAI Energy LLC
Chevron Phillips, Cedar Bayou, TX 1500 (2018)
Dow Chemicals, Taft, LA 384 (2013)
Westlake, Lake Charles, LA 106 (2013), 80 (2014) 106 (2015)
Williams, Geismar, LA 272 (2013)
Debottlenecks/feedstock conversions New facility Restart Expansion
INEOS, Chocolate Bayou, TX 115 (2013)
LyondellBasell, Channelview, TX 113 (2015) La Porte, TX 362 (2014)
Eastman, Longview, TX 90 (2013)
BASF, Port Arthur, TX 180 (2014)
LyondellBasell, Corpus Christi, TX 362 (2015)
Dow, Freeport, TX 1500 (2017)
ExxonMobil, Baytown, TX 1500 (2017)
OxyChem, Ingleside, TX 550 (2020)
Sasol, Lake Charles, LA 1400 (2018)
Formosa, Point Comfort, TX 800 (2016)
The Marriage of Natural Gas Liquids and Petrochemicals Ethane Supply and Ethylene Capacity from ESAI’s Study:
A Perfect Storm Of Liquids: Global NGL Forecast & Analysis 2013 – 2023
Source: ESAI Energy LLC: A Perfect Storm Of Liquids: Global NGL Forecast and Analysis 2013 – 2023
Likely US Natural Gas Exports
7
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
U.S Raises Natural Gas Exports (bcf/d)
To Canada by Pipe to Mexico by Pipe LNG outside of region
US Import
Requirement Net Imports
Volumes of
Additional
Exports
LNG
Capacity?
# of
terminals
2012 (3.8) 3.8 - -
2013 (3.6) 3.6 - -
2014 (2.5) 2.5 - -
2015 (2.4) 2.4 0.0 -
2016 (1.8) 2.4 0.6 1.3 2.0
2017 (1.2) 2.4 1.2 3.0 2.0
2018 (0.6) 2.4 1.8 4.1 3.0
2019 0.0 2.4 2.4 5.1 4.0
2020 0.8 2.4 3.2 8.4 5.0
ESAI Energy, Confidential
One Scenario for Natural Gas Exports bcf/d
Source: ESAI Energy LLC
Global LNG, September 2013 ($/MMBtu)
Henry Hub $3.62
Japan $15.75
Korea $15.75
China $15.35
U.K $9.79
India $13.95
Belgium $9.83
Spain $10.25
Rio de Janeiro $14.95
Source: FERC, ESAI
How Much Can Asia Absorb?
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-40
-30
-20
-10
0
10
20
30
40
50
60
70
80
90
100
110
2005 2010 2015 2020
Asia Pacific Natural Gas Balance (bcf/d)
Net Regional Import Requirement Asia-Pacific Supply Asia-Pacific Demand
Source: ESAI Energy LLC
Global LNG Liquefaction Capacity (bcf/d)
Region Existing Capacity Under
Construction Planned
Asia 12 9.8 14
Middle East 13 0 10.5
Europe 1 0 1
FSU 1 0 10
Africa 8 1.3 13.1
N. America 0 2.4 32
Latin America 3 0 2.4
Total 38 13.5 83
Notes: List Includes coal-bed methane to LNG and floating LNG projects Includes Algeria’s Skikda , commissioned 03/13 Sources include ESAI Energy, GIIGNL and IEA
Angola LNG 0.7 bcf/d 2013
Algeria, Gassi Touil LNG 0.6 bcf/d 2013
Qld Curtis LNG 1.1 bcf/d 2014-2015
Papua New Guinea, PNG LNG 0.9 bcf/d 2014-2015
Indonesia, Donngi Senoro LNG 0.3 bcf/d 2014
Gorgon LNG 2.0 bcf/d 2015-2016
Gladstone LNG 1.0 bcf/d 2015-2016
AP LNG 1.2 bcf/d 2015-2016
Wheatstone LNG 1.2 bcf/d 2016-2017
Prelude LNG 0.5 bcf/d 2017
Ichthys LNG 1.1 bcf/d 2017-2018
Sabine Pass LNG 2.4 bcf/d 2015-2017
Malaysia LNG 0.5 bcf/d 2014
LNG Projects Currently Under Construction
Americas: 1 (2.4 bcf/d) Middle East & Africa: 2 (1.3 bcf/d) Asia: 10 (9.8 bcf/d)
View from the Casino
• Beginner’s Luck: o First movers in LNG terminal construction benefit
• Gambler’s Conceit: o Demand for natural gas will go up forever and there is unlimited demand
for LNG
• Stacked Deck: o Some LNG terminal investors/companies are better situated than others
• House Loses: o Prices at Henry Hub will rise with exports
• Count Cards: o There will be a tipping point with these LNG investments, and the
economics will justify a volume far below 34 bcf/d. Analysts need to keep
track of the impact of each new increment of export capacity
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ESAI Energy, LLC [email protected]
+1-781-245-2036 www.esai.com
Celebrating 28 years of Independent Global Energy Market Analysis and Forecasting: Crude | Petroleum Products | Petrochemicals | E + P | Refining | Natural Gas | NGLs
|Alternative Fuels | Vehicle Technology |Geopolitics of Energy
Note: ESAI does not endorse any particular trading or business strategy and is not responsible for any outcomes from any decisions made or attributed to this communication. The estimates, forecasts and analyses in this report are our judgment and are subject to change without notice. No warranty is made or implied.
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