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U.S. LNG Export Market Overview

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Published on Oct 30, 2013

Deepa Poduval, Principal Consultant, discusses the current U.S. LNG export market and the outlook for future export license approvals. Find out more in our report: http://bit.ly/1cpX6xq

Transcript:
The primary driver shaping the U.S. LNG export market I would say are two fold. The first is the volume of shale gas and the revolution we've seen over the last 7-8 years now. The other driver which is probably on a more operational level is the DOE export license application process.

The number of export permits that have been approved to date is four and the story is the first one was approved two years ago in May 2011 and that was Cheniere Sabine Pass terminal. Right after that export license was awarded the debate started raging here on whether U.S. LNG exports are good or bad for domestic consumers and that controversy has held up subsequent applications. Starting May this year, the DOE as seemingly debottlenecked that process. Freeport acquired it's license in May, two years after Sabine did and in August and September we've seen two more approvals here.

We believe the outlook for future approvals is maybe optimistic just given the recent trend that we've seen. The Freeport approval that we saw in May was in some ways overdue just because it had been two years since the last one and market was really hankering for the DOE to make progress. But the subsequent two that came out and the speed at which those two were issued, you know just behind each other, in August and September I think has maybe pleasantly surprised some market participants and it may be an indication that DOE intends to get through the list at a speedier pace than they have before. Just because they have an export license, doesn't mean that they will all get built. Ultimately what's going to drive the success of these projects will be the commercial viability that they have. The cost structure that they have, the buyers they are able to attract and viability of the actual site they are sitting on. So the market will have a natural process of rationalizing how many get built.

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