Liquified Natural Gas Ventures - Economics and Outlook

Abstract

Society of Petroleum Engineers 6200 North Central Expressway Dallas, Texas 75206 THIS PAPER IS SUBJECT TO CORRECTION American Institute of Mining, Metallurgical, and Petroleum Engineers, Inc. Abstract LNG projects under development will send Algerian supplies to Europe and the U.S., Southeast Asia is the major supplier of Japan. Further ventures are planned to export LNG from Alaska, Africa, Southeast Asia, the Middle East and Siberia. Economics are developed for judging their potential attractiveness. Southeast Asian - Japanese trades are shown to be the most viable, followed by Algerian sales to the U.S. Middle East LNG to the U.S. or Europe is not promising. Delays in obtaining FPC authorizations may hinder U.S. import projects. Introduction Many liquefied natural gas (LNG) ventures are under development, but their successful implementation is by no means assured. A number of ambitious schemes have been launched in the past and summarily abandoned later, other proposed projects have langushied for years. Deciding which of the current prospective ventures have the greatest chance prospective ventures have the greatest chance of becoming realities is the subject of this paper. The information on which this study is based comes from the numerous reports on LNG which appear in petroleum industry periodicals, such as Platt's Oilgram News Service, the Foster Natural Gas Report, and Petroleum Intelligence Weekly. Articles from the financial pages of the daily press, especially the New York Times and the Wall Street Journal, were also used. PRESENT STATUS OF LNG TRADES PRESENT STATUS OF LNG TRADES Through at least 1980, LNG will be a growth industry. Currently, worldwide trade amounts to 1.6 billion CF/D, but if projects under construction start up on schedule, this will increase to over 6 billion CF/D by decade's end. LNG is gaining prominence as an energy source in all three of the world's major consuming areas — Europe, Japan and the U.S. Europe In a few years, Europe's indigenous gas production will go into decline, and substantial production will go into decline, and substantial new supplies will have to be imported if the gas industry there is to meet the demands which have now been established. Pipeline imports from Russia and Iran (via an exchange agreement with the USSR) are planned, but Europe has also turned to North Africa for supplies of LNG.