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Tuesday, May 17, 2005

Lake Charles: LNG Hotbed

According to Maritime Global Net
Lake Charles, Louisiana liquefied natural gas (LNG) terminal is the most obvious receiving port for the impending wave of new LNG coming to the US market, according to specialist analyst Steve Johnson, principal of consulting firm Commercial Services Company.

Mr Johnson says: “Start-ups of a number of LNG trains are now ahead of schedule and the volume of new supply expected to enter the market before year’s end continues to increase. The latest tally of additional LNG to begin to flow by the end of 2005 is estimated at 34.4 million tons per year.”

According to Mr Johnson, the Lake Charles terminal’s ability to receive LNG from all suppliers, regardless of heat content, coupled with an eventual import capacity of up to 1.5 bcf/day, make it the anticipated workhorse in the Western Hemisphere. The end effect on the US domestic market will be a significant reduction in the price basis in the western region of Louisiana relative to Henry Hub, especially in the winter months when Lake Charles imports have traditionally been lower.

He says: “Though France and Spain certainly have the appetite to ingest a significant volume of LNG, storage is a limiting factor. And, though there is enough global receiving capacity to absorb the expected onslaught of supply, one must take into account the logistics involved with shipping and scheduling,” Johnson explained. “Available dock space must be sufficiently contiguous to be practical for would-be sellers and this is why we may see discounts given for fully loaded cargoes which require significant waiting time before discharging.”

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