Oversupply of liquefied natural gas has created a ‘Golden Age’ for LNG buyers, but questions for LNG producers.
Larry Persily, Special Oil and Gas Assistant to the Kenai Peninsula Borough Mayor, says what’s known right now is that the world doesn’t need more LNG producers over the next several years.
Persily: “What no one can answer is will the world need more LNG in the 2020’s than the plants that exist and are under construction can supply? Does the world need new LNG plants to be built to add to the supply in the 2020’s or the 2030’s? A lot of people think so.”
It is a very competitive market right now according to senior managing director Deepa Poduval at Black and Veatch Management Consulting. In an October presentation in Vancouver she stated while annual global LNG production capacity could drop from the current 85 percent to approximately 75 percent by 2020, supply and demand after that “is anyone’s guess”.
The bright side of low LNG prices now is that countries who could not afford the energy before have been attracted to the market, creating a new audience.
Persily says the Alaska LNG Project is looking to find the market ‘sweet spot’.
Persily: “The perfect solution is a low enough price so that it is affordable, but a high enough price so that investors and developers can still make money.”
Governor Bill Walker has promised that the project won’t be built unless it is commercially viable.