With rigs cut back in response to low prices, U.S. shale gas production is expected to decline somewhat in 2010—but the projected influx of LNG cargoes will tend to keep natural gas prices low, say analysts.

Conservative forecasts are suggesting that global LNG supply will increase by 4 bcf/day in 2010. About half will be headed to the U.S., say some.

Most long-term LNG contracts in Asia and many in Europe price the fuel by linking it directly to oil prices. But with ample regasification capacity in place on both sides of the Atlantic basin, LNG could contribute to uniformity in pricing that would be futures-based.

Atlantic Basin cargo prices are already based on futures prices at Henry Hub and at the U.K.’s National Balancing Point.

Despite continuing low prices for natural gas and the relative inactivity at the U.S.’s existing LNG terminals, several additional LNG terminal projects are proposed, nearing construction or awaiting construction in the U.S.

Additionally, ExxonMobil, which is making moves to align itself with new LNG and natural gas projects, predicts that global LNG demand will increase about 4 percent each year over the next two decades, accounting for 15 percent of global gas supply by 2030.

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February 2010 News Team
Publisher: Chuck Meyer
Editor: John Rozsa