Monday, February 27, 2012

Blackstone Takes a Flyer on Liquified Natural Gas (BX; CQP; LNG)

 Rather than exporting the stuff it would be strategically smarter to build out the residential distribution system in the Northeast but no one asked me.
Here are today's economics, via the AP:
...Cheniere hopes to export 2.6 billion cubic feet of gas per day, about 4 percent of daily U.S. production.

U.S. natural gas futures closed at $2.55 per thousand cubic feet on Friday. It costs about $3 per thousand cubic feet to liquefy the gas. LNG sells for roughly $10 per thousand cubic feet in Western Europe and $15 in Asia...
Here's Bloomberg via the Houston Chronicle's FuelFix blog:

Blackstone Commits $2 billion to Cheniere Gas-export Plant 

Cheniere Energy Partners LP, operator of the largest U.S. natural gas-import terminal, said Blackstone Group LP agreed to invest $2 billion toward construction of a $10 billion plant to export the fuel.
The investment by the New York-based private equity firm may help convince creditors to lend the rest of the money needed to begin construction of the facility in southwest Louisiana. Cheniere, which has been seeking to add export capacity to its import terminal since 2010, plans to begin construction by the end of June, Chairman and Chief Executive Officer Charif Souki said in a statement.

A flood of gas from shale and other unconventional North American rock formations produced a surfeit of the furnace and factory fuel that pushed the price to the lowest in a decade. ConocoPhillips, Apache Inc. and Sempra Energy are advancing plans to ship gas in liquid form aboard tankers to overseas markets such as Japan and Spain, where it commands higher prices.

“The U.S. now has some of the cheapest gas in the world,” Leonard Coburn, president of Washington-based Coburn International Energy Consultants LLC, said in a telephone interview. “The gas glut has got people seriously talking about exporting.”...MORE