Shale boom stalls process projects
17 Sep 2013
The booming US shale development and subsequent low gas prices are stalling the global development of process plants, according to one supplier to the industry.
With gas prices much higher elsewhere in the world, Invensys systems business president Gary Freburger said many developers of energy-intensive process plants are waiting to see whether US plans to significantly expand its exports of Liquefied Natural Gas (LNG) come to fruition.
Just last week the US Department of Energy (DOE) approved Dominion’s Cove Point LNG plant in Maryland (pictured above) for export to countries without a free trade agreement with the US. It is the third such project to receive export approval this year, and the fourth overall.
China’s gas price is currently five times the price in the US
Invensys systems business president Gary Freburger
However, there are a further 20 projects awaiting export approval by the DOE, and Freburger said that many process plant developers, especially in Asia, are waiting to see whether these export plans go ahead before they commit to new projects and related energy supply contracts.
“In Asia they are waiting to see from shale oil what the impact will be financially,” said Freburger, speaking last week at Invensys’ Foxboro and Triconex users’ conference in San Antonio, Texas.
“The impact could be huge. The concern is that if natural gas prices stay low then they will be better off importing from the US. For example, China’s gas price is currently five times the price in the US.”
Freburger added that plant developers were not walking away from projects, but were rather “rethinking about financial models and returns on investments, and building in the risk that they see could happen in the world [as a result of the US shale gas boom]”.
