Thursday, October 21, 2010

Speaking of Bad News...

So...natural gas prices are in the proverbial tank, storage levels are suddenly soaring and economic growth in nowhere to be seen.  Now I see news trumpeting today's arrival of approximately 4.56 Bcf of LNG through the Golden Pass LNG terminal near Sabine Pass, TX.  The cargo is the first cargo for the facility, a.k.a. the "commissioning cargo."  The facility is 70% owned by Qatar Petroleum International, with the remaining 30% owned by Exxon Mobil and Conoco Phillips.

I'm sure Golden Pass's owners are happy to see their expensive LNG port is getting used, but it's crappy news for the natural gas market.  It sure seems kooky to transport gas across the Atlantic to sell it into a market where the commodity price doesn't even support local production.  The Golden Pass facility has the capacity to handle 2 Bcf of LNG per day, but given the current oversupply in the North American natural gas market, I'm sure it won't see that kind of action.  But I doubt it will be a candidate for conversion to an export facility like some of its neighbors.  Qatar is swimming in natural gas, so they are only looking for places to sell the stuff.  Since Qatar owns the majority share of the facility, the best we can hope for is a lot of quiet days at Golden Pass.

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