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US LNG imports slump, according to EIA

EIA data shows shale gas ramp-up slaking country's thirst

US LNG imports slumped by nearly half last year, with overall net gas imports recording huge falls over the past three years, according to new data from the US Energy Information Administration (EIA).

"US net imports of natural gas have fallen for three consecutive years, due largely to growing domestic production from shale-gas formations. Between 2007 and 2010, annual net imports declined by about 1.2 trillion cubic feet (cf), or nearly one-third," the EIA said.

Total net imports in 2010 were 2.6 trillion cf compared with 2.7 trillion cf in 2009, with net pipeline imports – mainly from Canada – declining 28% while LNG imports fell nearly 50%.  Pipeline gas accounted for over 80% of total imports last year.

"While net natural gas imports for 2010 were down only slightly compared to 2009, they accounted for less than 11% of the total US natural gas consumption, the lowest level since 1992," the EIA added.

Imports dropped against a background of rising gas consumption and production. Production was up 1 trillion cf at 21.6 trillion cf while consumption was up 1.3 trillion cf at 24.1 trilion cf. Production rose on the back of increased shale-gas output, with the share of total domestic natural gas consumption increasing from about 5% to over 20% from 2007 to 2010.

The slump in LNG imports also comes at time when a number of regasification terminals were commissioned, with 11 plants existing, according to the Federal Energy Regulatory Commission (FERC).  Three terminals – Cameron, Freeport, and Sabine Pass – have also successfully applied for licences to re-export LNG to other countries, with Sabine Pass sending three cargoes to Spain, India, and the UK, according to the US energy department.

The increased gas production from shale has helped depress US Henry Hub gas prices, which been trading around $4/m Btu in recent months, compared with over $13/m Btu in 2008.

But President Barack Obama's speech last week, which called for more domestic energy production and a focus on natural gas and renewables, was enough to edge gas prices up slightly.

"Unlike the 2010 State of the Union speech in which natural gas was off the radar screen, in this speech natural gas was cast as a central pillar of the blueprint," Barclays Capital analysts led by James R. Crandell said. "This is quite a status change for gas; indeed, natural gas is now in the select circle of alternatives when the president discusses clean energy and alternative fuels," they added.

Gas for delivery in 2011 and 2012 was $4.60/m Btu and $5.08/m Btu respectively in Friday's session.

The US gas glut stemming from the unexpected success of shale gas extraction over the past few years has turned the US from a potential LNG importer to a potential exporter. Cheniere Energy's Sabine Pass, Dominion's Cove Point; and Freeport LNG are among the US terminals which have applied to export LNG, with Cove Point possibly exporting directly from the huge Marcellus shale-gas formation, in the US northeast.

In light of the additional gas demand from disabled Japanese nuclear plants due to the earthquake and tsunami and a growing global aversion to nuclear energy, analysts believe US LNG exports are becoming more and more likely. 

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