From Raymond James' recent "Energy Stat" dated 5-16-2022
Let’s start with natural gas (methane). Natural gas is about ~25% of total global energy consumption, of which liquefied natural gas (or
LNG) is a growing proportion. Among hydrocarbon energy alternatives, natural gas is broadly considered a cleaner fuel, emitting ~55% less carbon
than coal. Traditionally, it is also a more affordable resource, though this is more obvious on a cost of production basis than in observing current
market costs. Perhaps most importantly, natural gas is a significantly more reliable source of energy relative to most renewables alternatives (wind/
solar). < Europe now knows that making wind and solar a high percentage of a nation's energy supply is unwise and will lead to regular power outages.
LNG is a form of natural gas that is the result of cooling the commodity to -260 degrees Fahrenheit, at which point the gas converts into a liquid
state. The cooling process shrinks the volume of natural gas by approximately 600 times, making it significantly easier and safer to transport and
store. LNG is typically then moved to specialized storage tanks in its liquefied state to await transportation. At this point it can be loaded onto
specific carrier vessels for shipment. These vessels are often called liquefied natural gas carriers (LNGCs). The process with LNGC transportation to
a regasification terminal is fairly simple: once vaporized (via regasification) at its central destination point (e.g., a terminal or equivalent), natural
gas can be transported by pipeline to end customers. Alternatively, floating storage and regasification unit vessels (FSRUs) are specialized vessels
that can convert LNG back to its gaseous form without the use of a fixed regasification terminal.
What is LNG?
What is LNG?
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: What is LNG?
How does the global LNG market work? While there is currently still a hodge-podge of regional gas markets, we expect a more cohesive global
natural gas and LNG market to develop over time. Around 1/3 of total global trade is on a spot basis, with the remaining 2/3 done via long-term
contracts. Despite the long-term contracts, destination flexibility is increasing and making the global LNG market more fungible. As logistical
constraints are lifted, we believe it will eventually become relevant to think about global LNG in a way similar to the way we typically think about
oil: total global supply and total demand. In doing so currently, the global gas/LNG market is considerably tight — exacerbated by, and not solely to
blame on, recent geopolitical issues — and the medium-term picture has become significantly more optimistic for global natural gas/LNG pricing.
The elephant in the room: can LNG solve the European energy crisis? Not on its own, and not anytime soon. The Russian invasion of Ukraine
has elevated the global energy crunch to another level, but were not the root cause. In fact, Germany, France, Italy, and Spain each spent 20-30
billion Euros on some form of subsidy for natural gas, electricity, gasoline, and diesel from September 2021 through the end of April 2022, a stretch
that started well before escalation in Ukraine near year-end. Unfortunately, things are not getting better. Last week, the Ukraine TSO called force
majeure on the Russian the Soyuz pipeline at the Sokhranovka transit point. Before that, in late April, the refusal by Poland and Bulgaria to pay
for natural gas imports in rubles caused flows to halt. These are just the latest in a sequence of events that has forced the EU to target a 100 bcm
annual reduction in Russian natural gas pipeline imports. Of course, the notably anti-oil & gas Biden administration asserted earlier this spring
that the U.S. would supply the EU with an incremental ~15 bcm of LNG in order to help with the European supply shortage (though this remains
a point of confusion across the industry). For some context, some industry commentators made the argument that the only “LNG-only” solution
for Europe would call for the U.S. in particular to increase its current export capacity ~150%. < In other words, "Europe is screwed without gas from Russia."
natural gas and LNG market to develop over time. Around 1/3 of total global trade is on a spot basis, with the remaining 2/3 done via long-term
contracts. Despite the long-term contracts, destination flexibility is increasing and making the global LNG market more fungible. As logistical
constraints are lifted, we believe it will eventually become relevant to think about global LNG in a way similar to the way we typically think about
oil: total global supply and total demand. In doing so currently, the global gas/LNG market is considerably tight — exacerbated by, and not solely to
blame on, recent geopolitical issues — and the medium-term picture has become significantly more optimistic for global natural gas/LNG pricing.
The elephant in the room: can LNG solve the European energy crisis? Not on its own, and not anytime soon. The Russian invasion of Ukraine
has elevated the global energy crunch to another level, but were not the root cause. In fact, Germany, France, Italy, and Spain each spent 20-30
billion Euros on some form of subsidy for natural gas, electricity, gasoline, and diesel from September 2021 through the end of April 2022, a stretch
that started well before escalation in Ukraine near year-end. Unfortunately, things are not getting better. Last week, the Ukraine TSO called force
majeure on the Russian the Soyuz pipeline at the Sokhranovka transit point. Before that, in late April, the refusal by Poland and Bulgaria to pay
for natural gas imports in rubles caused flows to halt. These are just the latest in a sequence of events that has forced the EU to target a 100 bcm
annual reduction in Russian natural gas pipeline imports. Of course, the notably anti-oil & gas Biden administration asserted earlier this spring
that the U.S. would supply the EU with an incremental ~15 bcm of LNG in order to help with the European supply shortage (though this remains
a point of confusion across the industry). For some context, some industry commentators made the argument that the only “LNG-only” solution
for Europe would call for the U.S. in particular to increase its current export capacity ~150%. < In other words, "Europe is screwed without gas from Russia."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: What is LNG?
French Engie is looking for some NG. Can anyone help??
https://ieefa.org/articles/frances-engi ... ort-us-lng > THIS DIDNT AGE WELL
Dec 2020
A French utility won't move forward with a $7 billion deal to import liquefied natural gas from Houston-based NextDecade Corp., roughly two weeks after contract negotiations paused over reported concerns about the methane emissions footprint of U.S. natural gas.
sacre bleu
https://ieefa.org/articles/frances-engi ... ort-us-lng > THIS DIDNT AGE WELL
Dec 2020
A French utility won't move forward with a $7 billion deal to import liquefied natural gas from Houston-based NextDecade Corp., roughly two weeks after contract negotiations paused over reported concerns about the methane emissions footprint of U.S. natural gas.
sacre bleu
Re: What is LNG?
There are plenty of other buyers in a world that is short gas.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group