Exhibition & Conference

13-16 September 2021

Singapore EXPO, Singapore

Strategic Programme

Kristy Kramer

Head of Americas Gas Research

Wood Mackenzie

11:30 - 11:55

Thursday, 19 September 2019

S1.8 How to Make Money on the Second Wave of USLNG

At Gastech 2018 in Barcelona, the buzz among US LNG developers was about how developing the second wave of US LNG would be different from the first. The facts were that getting to FID for the second wave would require a deeper focus on gas sourcing within a transitioning US market, where the opportunity to optimize idle regas facilities and repurpose brownfield pipelines was quickly disappearing. Since then, US LNG projects have made significant commercial progress, and there is no longer a question whether there will be a second wave – the second wave is now a reality. We expect at least 30 mmtpa of US LNG could take FID in 2019, as part of a record year for LNG FIDs globally.

Second wave projects are evolving with the market, offering commercial structures that change the risk and reward balance for project developers, suppliers, and offtakers.  Some developers are competing on cost, while others are differentiating themselves with new offerings, like upstream integration or alternative pricing schemes.  The offerings have transformed as a result of fierce competition between projects over the last several years; the remaining projects have fought to survive through the cycle where, in the US, only 7 mmtpa took FID since the nearly 50 mmtpa rush in 2014 and 2015.

Everyone from projects to buyers and traders to suppliers will be positioned differently amid the transitioning market and evolving commercial structures.  With different players entering different market segments, "the pie" will be sliced differently. In this paper, Kristy evaluates where value is captured along the value chain and the implications for different market participants to ultimately answer the question: who is best placed to make money on the second wave of US LNG?