How Dynamic will the LNG Market Become?

LNG imports to the U.S. are set to surge over the next ten years (50+ onshore terminals being built or going through the approval process), resulting in a new set of trading points being generated.

Owners of facilities who buy LNG from the source, move it to their facility, and then sell it off - either at the tailgate or likely utilizing firm transport to sell downstream - will simply serve as additional supply to the market.

However, some facility owners may stay away from the buy/sell process and simply provide services to its customers who do the trading – acting much like pipelines or NGL plant processors who make their money as service providers – in this case LNG services. Depending on the terminal size and number of pipeline connections, these facilities could become fairly flexible and liquid market points. While it would be prudent for LNG supply owners to have set markets for their gas, if demand continues and LNG becomes a necessary and integral supply source, then the call for this gas could be very dynamic.

Will a company take the calculated risk of bringing in supply on the chance that the market will bid up for it? Envision a tanker on its way in with the marketing sharks and end use facilities starved for supply lying in wait. Assuming that pipelines will have capacity, a facility with a number of pipeline outlets could be a very active trading point. And the demand competition wouldn’t just be in the traditional U.S. markets – the rest of the world is already ingrained in the LNG process – and tankers can change directions.

This competition on a global scale could certainly become very interesting. Of course, the facilities still need to be built, rather than just approved.


Robert Young
Product Manager - Commercial Applications