Will Canada Squeeze the U.S. out of LNG Exports?

In less than one month, the Canadian National Energy Board has received three brand-new requests for liquefied natural gas, or LNG, export terminals. Add these facilities to the two that have already been granted approval, and Canada would have export capacity greater than all the natural gas it produces in one year. Obviously, this means that some of these facilities will never get off the ground, and the same can be said for those in the U.S. as well.

With 14 export licenses waiting approval from the U.S. Department of Energy, these facilities' capacity would far outpace the global demand for LNG, so it is almost certain that not all of them will get built. A few have a much better chance than others, but to be competitive in the LNG space, it could come down to who can get built and contracted the fastest. Tune into the video below where contributor Tyler Crowe looks at a few companies jumping ahead of the game.

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  • Report this Comment On July 12, 2013, at 3:19 PM, Dadw5boys wrote:

    LNG Storage Facilities ?

    Dangerous ?

    Needs to to be placed far away and in a place surrounded by mountains ?

    The ships

    Ships have to connect to the supply lines out at sea ??

  • Report this Comment On July 12, 2013, at 5:04 PM, buddyblack wrote:

    Politics will kill LNG exports before competition. Cheniere has booked most of its capacity via long term contracts, so worldwide competition is not such a concern. The problem is, Cheniere alone will be using about 4 Billion Cubic Feet per day when fully operational assuming that they can book the rest of their capacity. This is 1.5 Trillion Cubic Feet per year. We don't have that kind of volume just lying around. I know that the argument is that a slight increase in gas will mean a large increase in production from our shale resources, but I do not believe this to be the case. $4.50 gas won't even begin to recover this much off-take. $6.50 to $7.50 might. Then you have the cyclical nature of natural gas to deal with. Just get one hot summer followed by a bitter winter and presto, were paying $20.00 in January and February as they frequently have to pay in New York and Boston right now because of pipeline capacity restraints. Don't forget, this is one facility with 6 trains. Take away Canadian imports as this article suggests and the situation only gets tighter. So if you think the public and their elected politicians are going to stand up for this, you are wrong. Exports will be limited, if not eliminated. While higher natural gas prices will help Cheneire with their 15% gas acquisition fee, the increase in the price itself could be their enemy.

    While I haven't seen any Wall Street Estimates, it looks to me that Cheneire will be making $2-$3 per share once they are fully operational. That's in 2017-2018. It will be many years after that before their debt covenants will allow a dividend. But you never know, this company may never make a profit at all. The first attempt at importing LNG sure didn't work out. The price was high then and it fell. The price is low now, but will probably rise. I know Blackrock is strong, but I do not think they can fight the scenario that I laid out above.

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