Oil & Gas Journal - CERA: LNG growth exceeds expectations

In a market growing faster than had been expected, LNG will meet 15% of global gas demand by 2012, says an analysis by Cambridge Energy Research Associates.
"CERA's 2004 projection that the LNG industry would grow in the 8 years to 2012 by the same amount as in the first 40 years of its history now looks, if anything, overly cautious," said Michael Stoppard, CERA senior director for global LNG.
He now expects the LNG industry to double in 6-7 years from 2004. The conclusion comes in a CERA report entitled "Progress in the Face of Adversity."
More than 25 million tonnes/year of liquefaction capacity has been commissioned since October 2005, adding 18% to global capacity, Stoppard said. For 2006, LNG trade is projected to grow to 159 million tonnes/year, up 12% from 2005, with US imports rising by almost 25%.
Based on projects currently under construction alone, global LNG supply capacity will rise 60% by 2012 or earlier, CERA said, adding that almost half the global construction is planned for Ras Laffan Industrial City, Qatar.
Future growthThe LNG industry is focusing on the next generation of supply beyond Qatar. Technological, economic, and political challenges will be greater but not insurmountable.
"The strain of growth globally is starting to show," according to the CERA report. "Evidence is mounting of cost inflation and budget overruns, of project delays and operational hiccups, of shortages of specialized labor, and expanding lead times for specialty parts."
Although the LNG industry faces the same difficulties that pressure the entire energy industry, CERA noted that LNG also has specific cost problems.
"Much of the upward pressure on costs is linked to a more general inflationary trend across the oil and gas industry," the analysis said. "Part of it is exacerbated by characteristics more specific to LNG, notably shortages of key specialty materials, and a select set of engineering, procurement, and construction companies with proven track records on large-scale LNG projects."