Canada LNG Projects

An interesting read.....not sure if this has any bearing to our LNG.





Canadian LNG proponents face harsh reality, report showsMike Carter / Alaska Highway News
June 5, 2015 01:28 PM

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A report released Thursday by the Paris-based International Energy Agency says new liquefied natural gas (LNG) projects will face challenges in light of lower Asian market demand and falling prices. Photo By Metro
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A report released Thursday by the Paris-based International Energy Agency says new liquefied natural gas (LNG) projects will face challenges in light of lower Asian market demand and falling prices. Photo By Metro

Canadian gas exporters wanting to develop liquefied natural gas (LNG) projects are facing a harsh reality of lower Asian demand and increased competition.
A report released Thursday from the Paris-based International Energy Agency (IEA) revised its projected global demand for natural gas to show a downward trend.
The IEA notes the rush to supply the tight Asian market with gas had caused an over supply.
“One of the key — and largely unexpected — developments of 2014 was weak Asian demand,” IEA Executive Director Maria van der Hoeven said. “The belief that Asia will take whatever quantity of gas at whatever price is no longer a given. The experience of the past two years has opened the gas industry’s eyes to a harsh reality: in a world of very cheap coal and falling costs for renewables, it was difficult for gas to compete.”
Asian gas prices are indexed (linked) to oil prices. The IEA notes that currently low prices will have a major impact on upstream infrastructure investment.
In the short term, gas demand will benefit from plunging prices, but the report adds that the long-term outlook for gas has become uncertain — especially in Asia.
"Some Asian countries have decided to move ahead with plans to expand coal-fired power generation instead of gas-fired generation," the report says.
This could have far ranging effects for Northeast B.C. LNG developments.
“Due to their capital-intensive nature and long lead times, LNG projects are soft targets for investment reductions and several of them are likely to be delayed or even cancelled,” an IEA release says.
If low prices persist, the LNG market could tighten substantially by 2020.​

Gas markets will also have to cope with a flood of new LNG supply in the short term.

The report predicts a 40 per cent increase in LNG market supply by 2020, with 90 per cent of the additions coming from Australia and the United States.
B.C.’s LNG industry is being built from the ground up, whereas Australia and the United States already have most of the infrastructure it needs, giving them a marked advantage.
In addition, the report shows new Australian developments are in advanced stages, while United States projects will have "limited exposure" to price changes once deals are signed.
“New projects will struggle to get off the ground at current prices,” the report states.
The IEA points to Europe as an interesting source of demand in the coming years.
The report suggests the region's demand could double by 2020. However, European imports from Russia will remain locked in at set rates.
Still, domestic gas production in Europe is set to fall by as much as 25 per cent below its 2010 level by 2020 meaning European gas imports could provide an interesting alternative to Asian markets.​

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