LNG’s future hinges on demand more than exports, expert says

HOUSTON — While the status of government permits for liquefied natural gas terminals have received more attention, global demand and capital investment decisions will be more important for the fuel’s future, said GE Fuel Center of Excellence leader Michael Farina on Thursday.

“The thing that is going to drive the development of LNG is not so much the number of projects,” said Farina, who led a Google chat on the future of the natural gas industry Thursday. “It will be governed more by capital decisions and need for gas in the global market.”

As the LNG market develops in the US, it could also begin to compete with refined oil exports in some regions, Farina said. The federal government has approved four facilities to export LNG: Cheniere Energy’s Sabine pass facility, Freeport LNG’s Quintana Island facility; Dominion’s Cove Point and the Lake Charles Exports facility in Louisiana.

Overseas, the increased supply of LNG could help encourage greater investment into natural gas-fired power generation, especially in Asia, where many countries are significantly expanding their generation capacity.

However, Farina cautioned that high natural gas prices could deter some countries from switching away from coal.

“If you don’t create competition against coal, there are a lot of parts of Asia where coal is going to be the more economic supply,” Farina said. “If gas doesn’t find a way to compete in power generation, you are going to lock in coal based resources, and they will be there for the next 40 to 50 years.”