U.S. LNG Developers Waiting Out Shale Gas-Driven Slump

With U.S. gas prices down over 60 percent from what they were in the summer of 2008, some developers whose terminals have received FERC approval have put their projects on hold.

Los Angeles-based Occidental gained approval in 2005 for a terminal near Corpus Christi, Texas, but has been delaying construction. Last year FERC approved its request to delay until April 2011.

San Diego-based Sempra Energy’s proposed Port Arthur, Texas terminal, which received FERC approval in 2006, is similarly on hold. A spokesperson told Dow Jones that the company is still trying to secure contracts for capacity before construction begins.

Dow Jones also reported that a Sempra LNG executive said that the company “would consider” selling its planned import facility in Port Arthur, Texas if a buyer were interested.  Also, given continued near-term prospects for LNG imports, the company was exploring other plans for the property, such as an oil terminal

Gulf Coast LNG projects are particularly vulnerable to competition from inexpensive shale gas. Markets in the Northeast and West, to which pipeline constraints make shale gas less available, are considered more favorable sites for LNG import terminals if those projects can gain FERC approval.

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