The US-led shale gas revolution has already reshaped the structure of energy trade in the Americas. Under a Trump administration, U.S. liquefied natural gas (LNG) exports are likely to proliferate, sending shock waves across the region from Trinidad to Peru.
http://afcmarseille.com/porn/helion-foursome-fanfic Natural Gas Growth in the U.S.
According to the US Energy Information Administration (EIA), the United States is poised to become a net exporter of natural gas by mid-2017. American gas producers will finally be able to exploit their pricing advantage in international markets because looser EPA regulations will permit more exporter terminals. Furthermore, the laborious effort of revamping domestic gas pipelines to service exports instead of only imports is almost complete. Gas uncovered in Marcellus and Utica shale fields will soon flow freely to newly created export terminals mushrooming along the Gulf coast. The largest export prizes are markets in Asia and Europe, but in fact it is regional markets in the Americas that will most feel the brunt of US LNG gas exports. In February, 2016, U.S. gas company Cheniere Energy sent their first LNG tanker to the Brazilian market. Two-thirds of all U.S. gas deliveries this year stayed in the hemisphere and were sent principally to Mexico, Brazil, Argentina and Chile.
Natural gas generation will increase by 26% over the next 5 years and by 44% by 2040, generating an additional volume of 7.5 bcf of natural gas for LNG exports. The Sabine Pass LNG terminal is the only gas export facility operational in the US but four others are under construction and 17 new LNG terminal projects are proposed, pending authorizations. A wider Panama Canal now enables 90% of new LNG tankers to pass through its locks versus 6% pre-Panama expansion. Now US LNG gas leaving the Gulf coast can reach Japan in only 20 days, competing directly with Peru and Colombia.
source link Regulatory Changes Expected
Former Texas Governor Rick Perry was picked by Trump as the next Secretary of Energy. Perry sits on the boards of Energy Transfer Partners and Sunoco Logistics, two companies involved in the development of the Dakota Access Pipeline, and is a strong supporter of the gas industry. Perry is expected to simplify and loosen regulations that stymie the exploitation of Americans vast gas deposits. He will also pressure the EPA to remove the regulatory obstacles that limited the construction of LNG export terminals. When unemployment stood at practically 10% during the depths of the financial crisis, downstream producers of ammonia, propane, butane, etc. lobbied the Obama administration to keep U.S. gas trapped inside the domestic market. This would allow them to justify building massive downstream plants that contribute much more to the federal tax coffers than gas exports, not to mention employ more people. Now with an energy-friendly administration taking over, gas exporters can finally move unfettered into export markets.
http://afcmarseille.com/porn/amy-andressen-anal Challenges ahead for the LAC Region
US gas imports have steadily declined since 2007 from 4,600 bcf then to 2,600 bcf in 2015. The EIA forecasts that US will become a net exporter in 2018 as more export terminals come on-line. In 2012, the United States ceased to be the main market for LNG exports from Trinidad & Tobago. A decade ago, US customers bought 80% of Trinidad’s gas. Instead, Trinidad must now sell to the international spot market as well as dedicated customers in Spain, Chile and Argentina.
Trinidad boasts some of the lowest liquefaction costs in the world but because of the high government royalties extracted from Trinidad gas SOEs combined with moderate margins of scale and operating inefficiencies, Trinidadian gas will struggle to compete with US LNG exports. Trinidad’s alliance with PDVSA, seen historically as a win for Trinidad, has become a liability of late. On December 6th, 2016, Trinidad had to step in to help cash-strapped PDVSA finance a pipeline from the Dragon gas field (offshore but in Venezuelan territory) to Trinidad’s LNG liquefaction facilities.
The situation is even less favorable for Venezuela. While the South American country holds the hemisphere’s largest proven reserves of gas, it’s weighed down by very high sovereign and operational risks that scare investors. Some predict that Venezuela (or PDVSA, the national oil company) will default on their bonds in 2017, triggering both an economic fire-sale of Venezuelan assets and possibly a political change. If more sensible leadership can emerge in Venezuela that guarantees investor security, then players such as Rosneft, Exxon and Shell are ready to pounce. Expanded US exports combined with renewed investment in Venezuelan oil production and its natural gas byproduct will really drive down pricing in the Americas for delivered LNG supply.
After Trinidad, the next biggest victim of a one-two pricing punch from the Americans and possibly the Venezuelans would be Peru, where the Camisea fields produce 1.6 billion cubic feet of natural gas per day (with just under half of the production sold to the domestic market at regulated prices). The royalties earned from Camisea’s exports have fallen sharply since the emergence of cheap gas from U.S. shale producers because of the way the deal was structured between consortium partners.
In 2007 the Spanish firm Repsol obtained the rights to export all the gas produced at Camisea fields and signed a 15-year contract to export 70% of the gas to Mexico’s state electricity utility, which pegs prices to the U.S. benchmark, Henry Hub. As Henry Hub prices fell by 50% over the last five years, so did Peru’s royalties with it. To make matters worse for Lima, the contract houses a progressive royalty scheme which pays lower royalties when prices fall to ensure producers continue to produce, as opposed to reducing or even abandoning production. With a commitment to Mexico through 2023, Lima is unable to target more lucrative markets in Asia. Opportunities for investment could be found in the development of new transit routes to supply the domestic market but regulated domestic pricing limits profits there.
follow Argentina and Central America Far Less Threatened by Cheaper U.S. LNG
Far less threatened by the prospect of cheap US gas are the investment plans of expanded gas production in Argentina. There a soon-to-be burgeoning domestic market, whose industrial base will be reawakened by Macri’s reforms, presently has to import 1/3 of its demand. Argentina pays international suppliers $6.50 USD/mmBtu, well above the average $5.20 price paid for domestically produced gas. Gas supplied from US gulf coast terminals will not displace Argentina supply for their domestic market, particularly once Argentina ramps up its production volume, which investment flows into their industry indicate will happen in 2-3 years.
On a very positive note, Central America and the Caribbean (outside of Trinidad & Tobago) rely heavily on imported energy, including natural gas. Low oil and gas pricing since late 2014 has been a boon for these regions. Central America led hemispheric growth in both 2015 and 2016. In Mexico, cheap US gas now can enter via pipeline. Over a dozen major Mexican electricity generation plants near the US border will soon come on line, helping to decrease electricity costs to Mexican manufacturers who pay up to 80% more than their US counterparts. That will further incentivize foreign manufacturers to build in Mexico, assuming the Trump administration fails to follow through on its campaign threat to dismember NAFTA, which is precisely the scenario most analysts predict given that no one would suffer more from a broken NAFTA than corporate America, Trump’s most valued post-election constituency.
In recent years the gas lobby tried different geopolitical arguments to loosen the regulatory hurdles facing the expansion of US LNG exports, tanging from neutralizing Moscow’s influence in Europe and controlling the purse strings of Iran to securing allies in East Asia. Such lofty diplomatic goals may prove impossible to achieve with higher US gas exports alone. However, where expanded US gas exports will impact is the Americas: particularly Canada, Mexico, Venezuela, Trinidad & Tobago, Peru and the Caribbean and Central America. For those countries, U.S. natural gas regulations, molded by a pro-fossil fuels Trump Administration, really do matter.