Exxon moving LNG West

http://www.glgroup.com/News/Exxon-mo...

March 25, 2009

Implications

ExxonMobil (Exxon) delivered their first LNG cargo from Qatar to the UK South Hook LNG receiving terminal in Milford Haven, Wales The terminal has a receiving capacity of 2 bcfd.

Analysis

Exxon is now delivering large capacities of LNG to the Adriatic and the UK from Qatar. There will be more capacity forthcoming, potentially moving to the US Gulf Coast. Today's natural gas prices on the NYMEX rose to $4.35 per million BTU. This is an attractive price for Exxon's total LNG chain to earn a respectable net-back with their superior economy of scale largest liquefaction plants and Q-Flex LNG tankers. As multiple US utilities are changing from coal feed to NG feed of their power plants LNG will be in demand on the East Coast with the existing pipeline NG infrastructure.

Unconventional natural gas can not compete at this time for Eastern demand due to lack of pipeline capacities and reduced production financing. Instead of wasting billions on wind and solar - having very limited future influence on US power generation demands - unconventional gas from the Rocky Mountain States, Texas, Oklahoma and West Virginia can meet the future NG requirements for clean-power production and also support for our sagging petrochemical industry.

The legislators of the unconventional rich natural gas States should speak up now and act accordingly with their votes against cap-and-trade and against waste of funds for inconsequential renewable energy work projects.