Only a fraction of big gas export projects will be built, Shell exec says


Only a fraction of the big natural gas export projects being developed around the world will become reality, as high costs and low profit margins in the gas sector sink those that once had promised huge returns on investment, Royal Dutch Shell (RDS.A, RDS.B) director of projects and technology Matthias Bichsel tells Reuters.

He knows from experience: Estimated development costs for the Gorgon LNG project in Australia (Shell owns 25%) have soared from $37B initially to nearly $55B thanks to high labor expenses and complex technology, Shell quit the Wheatstone LNG project in the country, and it also has abandoned a proposed gas-to-liquids project in Louisiana.

In Asia, where 70% of global LNG trading takes place, spot LNG prices have fallen more than 35% this year to their lowest since late 2012.

Bichsel nevertheless says the long-term outlook for the sector is positive: "We're talking decades ahead, we see a decrease in oil demand and gas will take a more prominent role, including from shale gas. But it'll take time."

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Comments (4)
  • treyminator
    , contributor
    Comments (85) | Send Message
     
    So now Obama and company can start approving all the gas export license applications in this country knowing full well his administration's delay policy worked by causing America to miss this economic opportunity. Running up huge government debt, delaying solid economic opportunities and releasing terrorists - nice work Obama and Co.
    9 Jun 2014, 07:00 PM Reply Like
  • rlmod
    , contributor
    Comments (30) | Send Message
     
    Strange that when G.B. was president, every democrat claimed he was in bed with big oil at $1.85 a gallon.
    9 Jun 2014, 09:36 PM Reply Like
  • Jensen111111
    , contributor
    Comments (13) | Send Message
     
    It's all Obama's fault. If he wouldn't have promoted natural gas as an alternative transportation fuel, it would still be at artificially low, low prices and we could have sold it all to Japan and Europe for peanuts while we meanwhile got used to paying $5.00 per gallon of gasoline, since we'd be buying a lot more oil from Venezuela and the Middle East.
    9 Jun 2014, 09:56 PM Reply Like
  • sethmcs
    , contributor
    Comments (3573) | Send Message
     
    If Russia builds pipelines to Russia and Japan its game over LNG. Remember natural gas loses 25% of its energy to convert to liquid so the price has to be well over 125% of costs to make economic sense. That's before transportation costs.
    10 Jun 2014, 12:20 AM Reply Like
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