This week at the UT Energy Symposium, Gürcan Gülen will give a talk titled "Global gas demand and US LNG exports."
Gürcan Gülen is a senior energy economist with the Bureau of Economic Geology at the University of Texas at Austin. Dr. Gülen has 25+ years of experience in research, technical assistance, and capacity building across oil, natural gas, and electric power value chains. He has worked with ministries, regulatory agencies, companies, universities and/or NGOs in numerous countries around the world. His current research covers assessment of low-permeability oil and gas resources in the U.S., electric power dispatch modeling, global gas demand and U.S. LNG exports, and supply chains for lithium and other critical minerals. He holds a Ph.D. in Economics from Boston College, and B.A. in Economics from Bosphorus University.
Abstract: As late as 2007, many believed that the U.S. would need to import LNG to compensate for declining conventional natural gas production in the country. Four new regasification terminals were built and the capacity of existing facilities were increased in the 2000s. However, the expectation of increasing prices for natural gas also lured new investment to domestic geologic plays, including emerging shale gas locations. With the turnaround in domestic supply, imports were no longer needed, and U.S. natural gas prices collapsed by mid-2009. Despite occasional spikes, Henry Hub spot price averaged below $3.5 per MMBtu since that time.
Outside of the U.S., natural gas prices are indexed to crude oil or oil products. Oil prices had recovered fairly quickly to $90 per barrel by the end of 2010. Until late 2014, oil prices remained generally between $90 (WTI) to $110 (Brent) per barrel. Throughout this period, forward curves were indicating the persistent expectation of high oil prices. The gap between Henry Hub and global natural gas prices encouraged the idea of exporting excess natural gas production from the U.S. The increase in LNG prices in the Asia-Pacific market following the Fukushima accident in Japan was also an important driver for LNG exports from the U.S. Several terminals received all necessary permits form DOE and FERC and have been built or are under construction.
But, around the world, there are also many liquefaction projects, and many more stranded gas assets hoping for LNG exports to save them. Is U.S. LNG exports competitive with other suppliers? Can the world demand for natural gas grow enough, and fast enough to help these projects and assets? Can the recent demand growth be sustained if/when the oil price recovers? Do countries/companies have sufficient funds to invest in expansive networks of pipelines and storage? Can customers pay full cost? Will China and India substitute gas for coal? How about the impact of renewables and climate policies? We’ll discuss these and other questions.
The UT Energy Symposium meets every Thursday during the long semesters. Come early to attend a networking session before the talk: refreshments will be served at 4:45 p.m. in the POB Connector Lobby outside the auditorium.