Replies to post #86389 on Mohacsy's Safe Portfolio Member Forum

[Elroy Jetson]

ET has hugely overextended themselves into their dubious thesis that LNG exports from the US will be a huge and profitable business.

With LNG, like many businesses, it's best to be the least-cost producer. This means exporting from locations where natural gas is effectively 'stranded', which is to say it has few if any alternate uses. The least cost producers are places like Qatar, north-west Australia, and Papua New Guinea.

Natural gas prices in the US are lower than in other parts of the world, but far more valuable (and thus more costly) than it is in stranded gas locations. This is good for natural gas consumers in North America, but it makes the breakeven cost of LNG produced in North America far higher than other locations.

This makes North America a 'marginal LNG producer' where LNG exporters will experience huge cycles where they occasionally make good money and are occasionally shut-out of the global market as prices fall below their cost of production in the US and Canada.

Turning natural gas into LNG is a very costly affair, probably about $0.92 per mmBTU

[santafe2]

I'll wait for the fallout to fall out. Custer pipeline, (ET), took even a bigger hit with the Bakken pipeline shutdown. They're in court this week and next. We should know more next month. ET wants to continue to move oil while the Army Corp completes a proper EIS. You might remember the president signed an executive order and then ordered the Corp to expedite the permits. It's a mess.

The pipeline crosses the Missouri river twice in North Dakota. I'm not sure why but when they wanted to go east and have the pipeline cross the 2nd time they had to choose to fight with the citizens of Bismarck or the Standing Rock Sioux. They chose the wrong fight as people from almost every tribe in the US came to protest for months. A shutdown will cost ET ~$1.5B and a reroute might cost the same. As I said, it's a mess.