Has Aubrey McClendon lost his mind?!
WSJ: U.S. buyers are outbid in the natural-gas crunch.
Even with natural-gas prices surging to new heights and heating bills soaring across the U.S., much of the nation's import capacity remains idle.
The U.S. has four onshore terminals for receiving and processing imported gas, and they are processing only about half the volume they can handle. The reason: U.S. buyers are being aggressively outbid by Europeans and Asians for the limited number of cargoes available.
The supply crunch means natural-gas prices will stay high -- and sensitive to weather changes -- for years, even as the U.S. builds more terminals to handle overseas gas.
"There will be continued competition for supply, certainly through the end of the decade," says Martin Houston, president of North American operations for BG Group PLC, the largest importer of liquefied natural gas into the U.S.
High prices are one reason big producers are looking to boost North American gas production. This week, ConocoPhillips said it would pay $35.6 billion to acquire Burlington Resources Inc.. Eighty percent of Burlington's assets are North American gas.
But imports also are key. While the majority of natural gas consumed in the U.S. comes from North American wells, many aging fields can't produce more.
With U.S. production leveled off, the energy industry expected to compensate with imports from the Middle East and Africa, where excess supplies of the fuel are never brought to market. Instead, a pressing global shortage has developed, in part because of overseas competition. As the price of liquefied natural gas fell, a building boom began. While supply increased and the number of cargoes available for purchase on the spot market grew, so too did the number of new import terminals in other countries.
Global production capacity for natural gas, in liquefied form, is about 20 billion cubic feet, or about 600 million cubic meters, a day, but there are enough terminals around the globe to eat up twice that volume, according to the Federal Energy Regulatory Commission.
A global shortage has developed in recent months, amid supply glitches, cold weather in the U.K. and a drought in Spain, which has been turning to liquefied natural gas to make up for a shortfall in hydroelectric power.
In an extreme example of the situation, a tanker carrying liquefied natural gas last month arrived from Nigeria and idled in the Gulf of Mexico for a week -- during which prices in Europe rose -- before sailing on to Spain to unload its cargo. Recently, the Spanish have been willing to pay $2 to $3 per million BTUs above Gulf Coast spot prices, according to PIRA Energy Group, a New York consultant. South Koreans, meanwhile, are paying a premium of about $2 and the British a premium of $2 to $6.
Tom Ward too..
This has to be the most aggressive insider buying I've ever seen.