We posted a couple of articles on the economics of liquid natural gas (LNG) and liquified natural gas from Papua New Guinea today (see our section background material on the left). Just after finishing that, another article caught our attention, from the WSJ online. Here’s a quote:
- “Today, a tanker of liquefied natural gas, or LNG, pulling into port in Japan can command close to $20 per million BTUs, roughly double the price of the U.S. benchmark.”
Close to $20, double the price of the U.S. benchmark, which is around $10Mcf. Hmm. Now, in the article on the economics of LNG posted earlier, it is calculated that building an LNG facility cost around $2.15Mcf. if a plant can be supplied for 20 years. (plus some fraction to get the gas to the LNG facility and turn it back into gas form at the buyers end, which would max out in total at $4.15Mcf). So, selling to Japan would 5-10 fold an investment in an LNG facility. We’re waiting for the results of Elk4 at IOC and the assessment of independent engineering bureau Netherland Sewell, but if these prove what IOC has argued all along, that there is sufficient gas at Elk, we cannot imagine an LNG facility would not be build. The economics are just too good.