Some tanker arithmetic relating to LNG supply

I'd like to follow up a little on Dave's excellent post the other day on LNG supplies. He pointed out there, that US production will likely see a shortfall relative to demand of 5 billion cubic feet/day (Bcf/d) by 2010, and around 26 Bcf/d by 2020, against current US production numbers of around 75 Bcf/d. He also notes that a typical LNG facility has a capacity of around 1 Bcf/d, and we currently have four of them. Further, as he notes, about 1 Bcf/d can be regasified in the Bahamas and piped into South Florida.

One of his underlying points, however, is that, even though we might be able to establish enough capacity to regassify the LNG, to ensure a reliable, and even available supply, we are going to need to have long-term delivery contracts in place for both the gas itself, and for the vessels to move it in. The UK has, for example, plans to use 8 vessels in bringing LNG from Qatar. As the OGJ noted

As of August 2005, the world fleet of conventional LNG ships stood at 180 ships with total cargo capacity of about 22 million cu m. There were also more than 100 firm orders and under construction with a total of about 16 million cu m. These included eight large LNG carriers to be deployed between Qatargas II and South Hook LNG terminal, UK.
The charter rate is quoted as being around $80,000 a day - however, larger vessels, say 50% larger than current ones, over longer distances (say 7,000 miles) might anticipate this being about 10% less.
I mention this because China has just launched the first of their domestically build LNG carriers, with a fleet of 8 currently anticipated and a rumor of orders for at least 12 more being in the offing. China anticipates having 10 terminals by 2010 out of a planned total of perhaps 16.

At this stage it might be useful to quote from a paper on the subject of LNG terminal design (a pdf file)

A typical facility will have tank storage capacity for 2 to 3 ships cargoes or about 5 to 8 bcf at standard conditions (250,000 to 380,000 cu. m in liquid form).The terminal will always have an LNG inventory in its storage tanks to keep everything cooled down. Typically the high-pressure pumps and vaporizers are the units limiting send-out as the facility can receive a cargo in 24 hours but takes from 3 to 6 days to discharge that volume as gas to the pipelines. There are four LNG terminals in the U.S. of this design, one of which is being refurbished. All have announced expansion plans but collectively the expanded terminals fall far short of the projected imports of LNG by 2020.
The key fact to note is that 1 cu m of LNG will convert to 20,000 cu ft of NG. Inverting that, a facility that supplies 1 Bcf/d of NG will need 50,000 cu m of LNG per day or 1 carrier bringing in 150,000 cu m every three days.

Thus if we need 5 bcf a day, then we would need 5 tankers showing up every three days, or (allowing for accidents etc) say 2 a day. Handling them in Qatar is not expected to be a problem, since that port is enlarging and already shipping tankers a day to Asia.  It takes 40 - 45 days for tankers to get to the US from the Gulf And one would presume that it would take the same amount of time to get back. So allowing a day to load, and a day to unload, a round trip would take 82 days. That means, I believe, we would need 164 carriers. Unfortunately I would doubt that this many are going to be available, since a number of other folk have an interest in LNG supplies at the same time we do. Both China and India have been hosting King Abdullah and hoping to strengthen the opportunity for future energy supplies.

Along the lines of Dave's piece, therefore, one does wonder how much gas we have already got our bids in for over the next five years, and how many tankers have we actually got plans to charter. For as he said, expecting to be able to do this with a handful of money at the last minute is not going to work.

The LNG in our neck of the woods, is coming from Alaska and Sahkilin Islands.
I would guess the same for Mexico/West Coast/Canada as well.  It seems these trips would be much shorter, so the number of ships, maybe lower.
I chatted with an energy company exec last April about just this subject.

His capacity concerns in the near term was not on the shipping capacity, but rather in the liquification facilities.  In a few years though, shipping capacity will be tight.

As for ship capacities, the average is 3.3BCF with capacities as large as 4.5 out there.  His expectation was that as time goes one, ship capacity would also increase, somewhat reducing the overall number.  

When it comes to servicing NA, its clear that most deliveries would not originate from the ME.  Sempra (the only one with a terminal underconstruction) signed a contract with an indonesian supplier (for only half of the terminals rated capacity though).  Logic would dictate that most sources would be closer, namely 20-25 day sail, not 40.  Alaska LNG would be the fastest, as would bolivia for any new West Coast location.  East coast locations would probably continue to source from existing locations, plus any incremental additions from W. Africa.

Read the rest of my conversation here:

My real question on the future of LNG really has to deal with how much GTL production could impinge on LNG production.  Given the inevitable shortage in Liquid fuels and the attendant rise in prices, how much gas will get Haber-Bosched into diesel and sold to China in a simple tanker ship rather than chilled and liquified and sent via LNG ship to the US.

I am not sure if anyone has looked at the play between these two end uses for methane.

LNG supplies to the usa are a concern for 2008 & 2009 condidering rising demand and limited domestic supply.  LNG imports were 0.65-bcf in 2004 and likely the same in 2005 due to disruptions.  In 2006, we expect 0.95-bcf and 1.2-bcf in 2007.

2006 & 2007 is of little concern as i see it.  As of Friday, working nat'l gas in the usa was 8.3% higher than last yr and 21.7% above the 5 yr avg.  The world is unfolding as it should and prices should drop further as this becomes common knowledge.

Ah, Freddy.

Are you just one of those guys who is always cheerful?

By the way, could you provide a source when you cite these numbers? I always like to see the source. Thanks in advance.

And, have a great day!  

Jan. 26 (Bloomberg) -- Natural gas dropped to the lowest in almost half a year as mild winter weather leaves supplies fuller than normal.

U.S. stockpiles fell by 81 billion cubic feet last week, a much smaller drop than is typical in the middle of winter, the Energy Department said today. The decline left stocks at 2.494 trillion cubic feet, or 22 percent above the five-year average.

``There's plenty of gas in storage,'' said Ed Kennedy, an energy trader at Commercial Brokerage Corp. in Miami. ``Every day in January has been above normal,'' he said, referring to the warm weather that's spread over much of the northern tier of the country.

These are my own tracking figures based on analysis of the weekly oil and gas reports issued by EIA.  In crisis times, we post them weekly to our website;  otherwise we issue a monthly report of usa stocks.
Just a little clarification. Current U.S. consumption is about 62 bcf/day, not 75 bcf/day. U.S. production is at about 51 bcf/day. The other thing is that according to a model prepared by Prof. Douglas Reynolds (University of Alaska-Fairbanks) and me, given a North American natural gas peak in 2007 and EIA-projected demand, the U.S. might actually need to import 13.8 bcf/day in 2010. This is in agreement with the calculations of the Energy Ventures Group. I talked to Bush's gas lobbyist, Ms. Dena Wiggins of the firm Sutherland Asbill and Brennan, and she said that this is what they expect too. However, the tankers are NOT going to be there to provide supply to these terminals. I think that if you're investing billions of dollars, you have to check if you're going to have adequate supply. So in the end I believe that while everyone sees the need for two and a half times more LNG than the official EIA projection, the terminals won't be built if the investors are worried about tanker capacity.
For petroleum, Henry Groppe uses an estimate of demand elasticity in the neighborhood of today's prices that says a $1/bbl increase in price causes a 100K bbl/day decrease in demand on a global basis.  It would be useful and interesting to have a similar ballpark number for natural gas demand in the US -- if the supply is constrained, how much will prices have to increase in order to make supply and demand equal?
I don't know of any Alaskan LNG project. The proposed projects will never be economical because of the competition in the Pacific Rim, especially from Australia which has cheaper gas. The only economical way of delivering Alaskan gas to the U.S. will be a 52-inch, 3,600-mile pipeline from the North Slope to Chicago. At a cost of over $ 15 billion, that won't be ready for another 10 years, and will deliver about 5.5 bcf/day. By then, the situation will be desperate.
Alaska already exports natural gas via LNG.  It's not alot but it is most certainly operational right now.  The LNG is currently purchased by Japan as they are the nearest consumer that could utilize it.  If there was a terminal in WA or OR, no doubt some or all of it would make it to the L48.

Having said that, the real future for Alaska natural gas still lies within the pipeline route and not by LNG for obvious capacity and security reasons.

Is there a place where they have a good breakdown on how natural gas is used in the U.S.?  The big ones are probably home heating, electricity, and industrial, but I gather that the industrial stuff is gradually moving overseas.
EIA's website does a fairly good job.
Well man, LNG tankers will be a great business in the future.
Unless somebody's starting the projects now, I question whether the regasifiers would be ready by 2010 either.  Even 2010 might be a stretch, if you're competing with China and others for the components.
The answer to NIMBY-ism?,0,565793.story?coll=ny-business -print

Deepwater ocean LNG terminal.  Far from any towns or shipping lanes.

They can't really mean deepwater, can they?  Wouldn't that be like, 50 miles offshore?
I don't know.  They haven't picked a site.

But it would have to be far enough offshore to be invisible from the beach, in that area.  

Why is the focus always, "How can we continue business as usual (or some close facsimile)?"

So, we are running out of global-warming poison in our neck of the woods. Hmmm. Let's see if we can jimmy up some imports to keep the planet's destruction on schedule.

Now, I know that many here will say they are only speculating on what the powers that be will likely do to keep the entropy machine going, but that only smacks of the current media's obsession with "fair and balanced" treatment of the news. Put simply, the media feels they cannot challenge the logic of anyone and will merely allow any ole insane person put forth their views without commentary from the program's "journalist" hosts. Thus, lunatics like Robertson, Rove, Frist and the entire neocon circus can come onto the Sunday pundit pulpits and blather their idiocy without fear of a run-in with contradictory facts. We don't have to do that here. We can call it like it is.

Any continuation of the existing paradigm will result in increased suffering a little further down the road, increased war just around the corner, increased mortality for the human species in twenty years instead of lesser suffering in ten. Those who advocate technical solutions involving the release of more carbon into the atmosphere are simply allowing more people to overpopulate the planet and thus are increasing the number of people who will die unnecessarily. It is tantamount to murder. Murder in the name of consumer greed. Murder just so the current generation can continue their consumer orgy, so they can buy more plastic crap that ends up in the upstairs closet in two weeks, so they can overeat incredibly bad food from their local Mickey Dees.

Obviously we deserve our fate. We cannot seem to look beyond our two hundred function graphing calculators to the ultimate reality; it HAS to end no matter what we do to keep the party going. Physics is not the energy glutton's friend.

I can now see that this has to play out in the worst way possible. We are just like the monkeys at the zoo. A keeper tosses a treat into the enclosure and one of the smaller females grabs it and runs. A small male runs her down and takes it by force. Finally, the bull male slaps the small male around and eats it himself. Ahhh, America, bull monkey in the enclosure of life. Here we are a bunch of selfish monkeys all fighting for the scraps of the industrial revolution. Will we act in a reasoned manner? Of course not. The monkeys have tribes and the tribes are about to face off over the oil. One day the keeper will not have enough treats and then the monkeys will kill each other. Many will die of starvation. If this is the only way to kill off the energy monkeys, so be it.

Ecofascism anyone?
Aw Man! You just reminded me how good a quarter-pounder with cheese would taste right now.
Exactly! Thank you Cherenkov! Old thinking will not get us out of the old problems. Our current world is already "fossilized", literally.

To address your question, though, I think we have to consider who's running the show. It's not you or me, or any of us who have a new vision for the future based upon renewable resources and much less available energy. It's the current global energy behemoths and their attendant global media subsidiaries (to brainwash the global public). In reality, most of the discussion here--which we know is ridiculous because it won't solve the underlying problems--is likely to be some form of how it really plays out. Those who are "large and in charge" are greedy bastards and they will make out like bandits as the world collapses around the heads of the rest of us. The don't need to replace all the gas (or oil, or electricity) that we currently use, just enough for them 'til the end of their lives. Remember, this world economy and the old white men who run it only think in the short, short term.

You are asking the right questions, but you are being drowned out by a media empire that's impossible to compete with.

Call me naive, but brainwashing isn't the right word. Nobody is putting a gun to John & Jane Doe's heads and forcing them to watch moronic television shows rather than read TOD. If only it could all be blamed on those "greedy bastards." I fear the truth is a tad more depressing. Consumer society with all its attendant advertising, PR and other "brainwashing" only exists because lots of people like it. Didn't somebody here quote Kunstler the other day to the effect that we will only change when we are forced to?
I think you have it there...

But the implication of this Kunstler's statement is that a supply shortfall relative to projected demand of any kind resets the conditions for calculating projected demand.  I'd wager that few consumers will maintain their gas consumption levels while prices soar in hopes that someday they'll get price relief via LNG.  The EIA assumes a particular price range when calculating this figure that is, perhaps, optimistically low.  Demand destruction will happen in any number of ways.  We know because we've experienced at least once before.  I wonder if there's potential for a new boom and bust cycle in gas prices (at a higher range) that will undermine investment and development in LNG?...

Regarding Cherenkov's (understandable) frustration, I'd draw attention to the title of the blog.  This is a supply side forum.  While demand side issues are relevant their regular inclusion may make these threads a tad daunting to navigate.    I view TOD as a part of the whole equation - whatever that might be.

Thanks for the post!  This is very well timed for me as I'm preparing a presentation on post "peak gas" strategic opportunities in housing.  Keep 'em coming.

Why is the focus always, "How can we continue business as usual (or some close facsimile)?" - Cherenkov

Please don't be rude to our hosts, who do the best honest quantitative analysis publically available.  I appreciate their contributions greatly.  

The answer to your question is obvious, this is a forum for bargaining, not acceptance.  (See the "rocket train" thread on building a continental network of maglev trains running in evacuated tunnels)

The answer to your question is obvious, this is a forum for bargaining, not acceptance.  

LOL!  I never thought of it quite that way, but now that you mention it...  :)

Just to remind everyone:



Not that these are linear or that people go through them all.  Many get stuck or go through loops between pairs, etc.

Why is it that no one acknowledges my key points, or at least makes some sort of attempt to prove me wrong?

I understand the need to understand what is happening so that we can better find a way to deindustrialize. I have no qualms with that. My problem is there seems to be no argument against our flawed technology worshipping system which is inherently unsustainable. Sure we might find some way to keep pumping out the babies and have a close approximation of our current deeply screwed up society, but is that what we really want? Do we want to go further and further out on the technological limb? If the answer is yes, then we are in serious trouble. Physics does not allow for us to continue with this population level once we can no longer supplement our solar income with fossil sunshine.

The time to radically change the basic way we relate to nature is now while the solar subsidy is relatively abundant and cheap, not when we discover that all of our technical fixes are not enough, not when the planet is even more overpopulated.

I am not being rude. I am being as kind and as gentle as possible given the fact that we are facing an immense problem that could result in a massivbe dieoff. Should the government get involved? Maybe not this government given the level of competence evidenced by the New Orleans disaster response. Probably would be better to just shoot ourselves.

But, at some point we need to recognize that the free marketers are just flat dumbly wrong. In crisis situations, waiting for some imaginary hand of the market is specious, irresponsible and rather cruel. It seems to work fine for the rich, but I assure you it does not work for the poor. Take a little trip to New Orleans to see that paradigm in action.

The graphs are fine. I'd just like to see a lot more rabble rousing, many more demands upon the government, more suggestions for deindustrialization, relocalization, and so on.

Dissent is your right --- at least for now. Soon Bush and his cronies will see to it that you will toe the line, their line.

To paraphrase the right wing nut jobs, Peak Oil will kill 'em all, let nature sort 'em out.

This isn't that kind of blog.  You want political rabble-rousing, go to a political site.

Personally, I don't think that kind of argument does much good when it comes to this topic.  People who believe that we will never run out of oil, or that we will easily transition to nuclear or coal or solar or wind, will never be convinced otherwise, no matter how much you badger them.  

Indeed, partisans actually get a "high" from ignoring facts that contradict their worldview:


I am tryig to figure out what kind of jucy power hungry industries that can be encouraged to move to my country if we build a couple more nuclear powerplants, a few thousand wind turbines, etc.  Some people will surely start looking for a solid grid, kWh and good logistics.

Silicone refining?
Carbon fibre manufacturing?
High powered machining of metal parts?
Chemical synthesis?
Clean room manufacturing?

Further suggestions?

Just go with aluminum and cement.
No, Iceland will outbid Sweden for new aluminium plants in our courner of the world. We need to find stuff to produce that require a larger pool of skilled workers then Icelands. Iceland has already specialized on aluminium.

Cement? Dont know much about cement, limestone plus heat. Guess you could use some kind of plasma torch for heating the rotating kiln.

Industrial gas production is power intensive, but you need pipelines or liquid transports to get it to customers.  Speciality steel is a possibility, that's mostly electric furnaces.  Pharmaceuticals would be another.
Speciality steel is already a large industry in Sweden. I do not have  breakdown on the numbers but the total steel production was 5,2 million ton during 2004, I think most of it was stainless steel and high strenght low alloy heat treated plate steel.  3,9 million tons of steel was used in Sweden during 2004 and 3/4 of it was imported since there is no Swedish production of rebar, low strenght bulk steels and so on.

The main fossil fuel inputs are coke for making iron and propane or oil for heating. The steel industry is expected to become a natural gas customer if the pipeline network gets larger. Some people argue that the steel industry should use less electric heating and more fuel heating since the total CO2 released goes down if we burn propane for heat, dont use electricity and an old coal fired powerplant in Poland no longer have to run.

I happen to agree with your analysis. Unfortunately, although a fair number here probably do too, nearly all this planet doesn't since they can't look much further than the ends of their own noses and are either totally ignorant on this subject or deny or avoid it.

We need to do what we can, every one of us, to change our own behavior to be more sustainable and, probably more importantly, try to inform and educate as many people as we can about the imminence and likely severity of peak oil.

I've noticed that many people just turn off when presented with the probable dire consequences of peak oil, a steady drip of supporting snippets of information over several months seems to eventually sink in and then some are ready to take a proper look at the problem.

The way TOD works, with continuous and mostly excellent analysis of many aspects of the problem, is likely to be as effective a way as any to really get people to think about peak oil and hopefully come to a decent understanding and conclusion.

It could be this is all too late, I personally expect the global population to possibly halve over the next 30 years due to direct and indirect consequences of peak oil, but it is still worth doing all we can to help humanity to make the necessary and inevitable transition to a more sustainable lifestyle.

I just have a couple of questions for you, before we get started, Cherenkov?

Do you drive a car? If not, do you take the bus or train?

Do you eat? If so, where does that food come from?

The computer and internet connection you are using right now - where did the computer come from, who developed that internet, and where did the electricity come from to power it all?

As soon as you have answered these simple questions, we can proceed with your concerns.


I disagree with your assessment of Cherenkov's current state. You seem to think he is in "acceptance". I'd say he is still in "anger".  ;-)


I think you might be in two wrong places.

Firstly, this site is not a place to debate how we are going to solve the problem of Global Warming.  There are loads of other internet sites and blogs dedicated to that purpose.  TOD (thank god) is not one of them. TOD (as far as I can see from the six months I've been hanging around here) is primarily focussed on where we are at with respect to Peak Oil. It's essentially a discussion of "how fucked are we?".

Secondly, the country you are in (and I'm assuming it's the US of A) is unlikely (IMHO) to change from it's "non-negotiable" way of life. That is why the US is probably more doomed than most other countries.  If you seriously think that your actions (or any body else at the grass roots) could make a difference to american society, then I think you are gravely mistaken.

My advice to you would be to emmigrate to a country where the political process is a bit more democratic. Yes, I said "democratic".  If americans think their political process is democratic, then they are simply delusional.  We in the rest  of the world, with the benefit of being outside the politically controlled media of the US, know otherwise.

Hi all, I'm a new poster.
Isn't the one key use of ng to make ammonia fertilizer for the "green revolution?" As I understand it, (just a lay person who reads a fair number of books and doesn't watch tv or know much about Brad and Angelina,) ng is the main magic behind the bumper crops that feed the 6 billion people around here.  As ng becomes increasingly scarce, will not the imperitive to keep the fertilizer flowing make most other uses less and less important?  
If that be the case, won't it make sense to stop liquifying it    where it is "produced" and insted, start "bosching" it into fertilizer at that point and shipping it in powder form to the agricultural belts?  
Can someone quote what percent of global gas is currently used for fertilizer?  
Sure David Holmgren doesn't need ammonia fertilizer on his permaculture farm in Australia, but the white bread in the 7-11 is made out of the stuff.  Heck, I'm made of it.  
Approximately half the nitrogen used by human crops comes from the Haber-Bosch process utilising NG. It would be possible to use other sources, like coal gas or electrolysis of water but they are significantly less cost effective and no one, as far as I know, is doing that ATM.

I don't know how much of NG production is used for fertiliser but I would guess it is less than 20%, possibly quite a lot less.

One thing about LNG - it's easier to guard than a pipeline.

Russia Gas Line Explosions Scare Europe

Saboteurs who bombed two natural gas pipelines high in the Caucasus Mountains this week, by one estimate sending a gas fireball nearly 600 feet into the sky, paralyzed Georgia and sent a message straight to Western Europe, which depends on Russian natural gas.

The Russian authorities are calling the strike a terrorist attack, suggesting that groups in or near the rebellious Chechnya region are aiming attacks at the country's energy distribution system.

That would be bad news for Western Europe, which gets a quarter of its natural gas from Russia. European leaders were already jittery after supplies were disrupted twice this month, once during a Russian dispute with Ukraine -- ostensibly over prices -- and later when extremely low temperatures caused demand in Russia to surge.

Georgian officials, upset over what they contended were unexplained delays in fixing the sabotaged pipeline, cautioned that Europe should look at their unheated capital, Tbilisi, before becoming more reliant on Russia.

Any idea how these ships are going to be built? I would think its a safe assumption that these will be quite large, technologically sophisticated ships. How many shipyards in the world are capable of building them? Are there any such shipyards in the U.S. or will they need to be built at the big yards in Asia? Assuming a limited number of shipyards are capable, what kind of competition for their services will there be. If HO is even close that the US needs 160+, how much will the world as a whole need? Is there even that sort of shipbuilding capacity on the planet?
Thanks for this post, HO, giving more detail than I was able to provide about both the LNG carriers and terminals. I graphed the EIA data because it was the only forecast data I could find. Regarding their numbers, I was disturbed to read unplanner's
According to the [anonymous] executive [he interviewed], they used to make more pessimistic assumptions until Congress cut their funding in the mid 1990's. Since then, the EIA has sung a more upbeat tune about energy reserves. This similar level of optimism permeates the USGS and influences some of the consultants (that accept federal funds) as well.
If the actual need for imported LNG is 13.8 bcf/day in 2010, as marek and his sources say (Dena Wiggins, no less!), I see no way that number can be met given all the constraints that HO, unplanner, marek and I have mentioned.

What is particularly alarming is that Americans are completely in the dark (pun intended?) about the future natural gas situation. When the hurricanes hit, gas got shut-in and prices rose. This was widely reported and understandable to the average citizen who doesn't keep up with energy issues which are, lets face it, less interesting than what Brad Pitt and Angelina Jolie are up to--they're having a baby! It used to be Brad and Jennifer Aniston but that's another sad story.... Sorry, I got sidetracked.

Anyway, the point is that the North American natural gas situation should be Front Page News. I had cited Michael Klare's The Geopolitics of Natural Gas but that's in a far left-leaning commie pinko magazine that nobody reads. Nonetheless, some parts are worth quoting.

Iran is also a major producer of natural gas. Under increasing diplomatic pressure from the Bush Administration to halt its suspected pursuit of nuclear weapons, Tehran has been eager to establish joint production and export projects with friendly nations in Europe and Asia. In the past two years alone, it has signed several multibillion-dollar deals with companies from France, Italy, Norway, Turkey, Japan and India for joint development of offshore gas fields in the Persian Gulf and the construction of new pipelines to Europe and Asia. Capping this drive was the signing in October 2004 of a $100 billion, twenty-five-year contract with the China National Petrochemical Corporation (Sinopec) for the joint production and export of liquefied natural gas (LNG), much of which will ultimately go to China. While all this makes perfect commercial sense, given Iran's need for foreign partners in the management of these ambitious projects, it is safe to assume Tehran is also seeking to increase the number of allies it can turn to in case of a showdown with the United States.

Qatar has tacked the opposite way, using its huge gas reserves to establish close ties with Washington and to insinuate itself beneath the US defense umbrella. Under a $10 billion, twenty-five-year agreement signed in 2003, ExxonMobil will build the world's largest LNG shipping facility in Qatar. Much of the resulting liquid will go to the United States to be converted back into gas. This will entail the construction of new LNG terminals at ports on the US Gulf Coast, a major undertaking.

Like Qatar's, many of the world's largest deposits of natural gas are located far from the areas where demand is greatest....
I have thought, and still think, that Iran is dealing from a position of strength because of their vast untapped gas reserves. This underscores the shortsighted and self-defeating US policies toward Iran that have characterized our relations with them for 25 years. Meanwhile, the US is dealing with Qatar--which means the 82 day round trip HO notes. There's more.
Increased cooperation in the transport of natural gas is developing too among Russia, China, Japan and the two Koreas. At the center of these efforts are the vast reservoirs of natural gas lying off Sakhalin Island in Russia's far east. To move this gas to international markets giant energy firms, including ExxonMobil and Royal Dutch/Shell, will build a huge LNG facility on Sakhalin's southern tip and at least one major pipeline. One pipeline is expected to extend from Sakhalin to northern China, while another might go to Japan; some visionaries have also proposed a branch line extending to South Korea via North Korea (a project that, if undertaken, would go a long way toward cementing the increasingly warm relations between the two). The LNG, meanwhile, will travel by ship to terminals in Japan and possibly the United States, if new LNG regassification plants are constructed along America's Pacific coast and/or in Baja California.
So, if we build some LNG terminals on the West Coast, we may get some of that Sakhalin Russian gas. But growing Asian demand may preclude that because long delivery routes increase costs--this implies competitive price wars. Finally, we should mention the growing fights over eastern regions of the Pacific Ocean.
Although demand for natural gas has engendered cooperation between once-estranged nations, rival claims to oil and gas fields have frequently caused friction, even armed conflict. This has most often occurred in cases involving disputed offshore territories, notably in portions of the South China Sea, the East China Sea and the Strait of Korea. All these areas are believed to harbor substantial reserves of hydrocarbons in one form or another...

The most intense and prolonged of these conflicts has occurred in the South China Sea, a relatively shallow body of water believed to harbor substantial reserves of oil and gas. All of the countries with shorelines on the South China Sea--Brunei, China, Indonesia, Malaysia, the Philippines and Vietnam--have laid claim to a 200-mile offshore Exclusive Economic Zone in the area, many of them overlapping with one another, and all have laid claims to some or all of the small islands and reefs that dot the region. China, the dominant power in the area, claims all the islands and has been particularly aggressive in asserting its sovereignty over them--on several occasions using military force to drive away ships belonging to Vietnam and the Philippines.

I have quoted at length from Klare's article because the potential for escalating conflict between North America and Asia (including Russia in this case) is very real indeed. And among the Asian nations themselves. If we take any action against Iran, the situation will only escalate further. I don't know how these conflicts will play out but I think we'll know by 2010 because I think gas rationing in the US by that date is a serious possibility.
Don't look now but I think it's Angelina and Jennifer with Brad's donation . . . but on a serious note, did anyone catch Pres. Bush's press performance: (e.g. 'the times have changed and I am no longer bound by 1978 laws . . . ')
Hmmmm. I already had a suspicion that the USGS and EIA figures were 'biased' (read total bullshit).

It's looking more and more like an attack on Iran is just a gas-grab.  All the while the EIA will be saying that "we do not have a natural gas supply problem".

LNG Tankers are currently in a bad
state as tanker companies cannot
get their tankers loaded with gas.
LNG supplies are lower than predicted
due to delays in getting new projects
going.  In addition, ship builders
having no issues deliverying ships.

Thus, currently if you are in LNG tanker
business, you are suffering badly.

Now, I believe that the total number
of LNG ships that can be built in a year
is around 110 on the size.  Ship sizes
should be around 150m3, but new
designs call for 200m3.  I would not
be surprised if in five years we will
see 250m3.
m3=cubic meters.

Now, remember these shipyards are also
the same ones building oil tankers and
any other ships including oil platforms,

Looking at new LNG facilities, etc.
I don't think we will have LNG tankers
as the bottleneck.  Gas production
should be the bottleneck as they are

One other thing.
Australia is a big LNG player, yet
almost no one here has mention it.
They are the ones who want to supply
China and US with more LNG.

So the places with potentially more
gas productions are:
Australia, Alaska, West Africa, Burma,
and Bolivia.  As far as I know,
these hold the biggest promise for
significant expansions and that other
issues are hindering them from increasing.

I agree, liquification facility capacity looks like the bottleneck for some time to come.

For those who are interested the State of California has a nice list of LNG resources, including current production facilities:

The list will have to be much more extensive to match demand 5 yrs out.

Actually, looking through the ship order books for delivery through 2009 the average capacity is nearly 3Bcf, so the incremental 128 ships will have a increased impact. Still with the shipyard schedules full through 2010 I don't see how we hit that 5-6/bcf/d mark with gas from the ME.
The latest ASPO-USA Peak Oil Review newsletter has a nice write up which includes the full text of an article Commentary: DOE Showdown with Oil Industry and Congress By Dan Berard. This is recommended reading. It does state, however, a questionable conclusion that this post and mine try to address.
[Energy] Secretary Bodman has inherited a number of problems. For starters, he must somehow learn from the two abortive efforts to pass a reasonable energy policy. The administration has had success with Clean Coal projects and new LNG hubs, but the rest are incentive-based giveaways for fuel additives.
From the newsletter--

Dan C. Berard, trained as a geophysicist, spent his early career in the oil & gas business as an exploration seismologist with Chevron Oil Company, and later as a technology executive with Exxon Corporation. Retired from the oil majors, Dan consults out of Clearwater, Florida (

The American Petroleum Institute (or somesuch) did a cost estimate and predicted that a 1 bcf/day capacity (terminals, ships, liquefaction plant but excluding wells and gathering fields, etc) would require $5 to $10 billion of capital up front.

If we need 13 bcf/day in a few years, that $75 to $130 billion of capital investment.

I'm guessing that oil and gas E&P eats about $250 billion a year globally - anyone with a better estimate?

Looking at the Hirsch Report, I estimated that a 3% depletion rate for oil would need between $100 and $150 billion a year of capital investment in the Hirsch alternatives based on capital requirements I found on the net.

As to tankers, with this expansion of global traffic, how many tankers will be afloat on the world's oceans?  Sounds like in the mid-hundreds or more by 2020.  That's a lot of targets.

I know this is OT, but I got a chill reading the following portion of that ASPO report:
The Iranians could even calculate that by withholding a portion of their oil from the world market, they could drive oil prices so high that they would be more than compensated for the smaller volume of exports.

My question--sorry if this has been discussed previously: what happens when other countries decide that limiting production is the way to go?

"Regime change"?
Sounds a little like the Laffer Curve.  I'm sure our neocons will be all for it...
Anyone heard of OPEC? Limiting production collectively to increase prices has been the core strategy of the organization since its creation. While it has had significant success, it has also been hindered by massive cheating.

Historically, it has been broadly assumed that any one country that withholds supplies from the market loses as other countries increase production and take the gain from higher prices. The surplus supply to make this happen now may not exist.

However, it remains true that the primary beneficiaries of Iran's withholding oil from the market would be the suppliers that did not withhold oil from the market as they would get higher priced and would not need to be compensated for lower production rates.

Historically, reducing oil production
by OPEC led to increase oil production
in other regions and lower demand as
the high prices will trigger a recession.

Today is a lot different because
increasing oil prices has relatively
no effect on the economy.

Historically, recessions will cause
a big slowdown reducing oil consumptions
in the millions of barrels making
OPEC needing to cut back even more.

Of course, in today's situation, OPEC
is more than happy to cutback as
they want to preserve their oil and
they are not hard press for cash.

The corrupt rulers of those countries have long had vast stock brokerage accounts stuffed with their loot. What would happen to their stock prices if they jacked up the price of oil? Why do you think the price of oil was so low only a few years ago?
The price isn't going up because the corrupt thugs want it to go up, it's going up because we are running out of oil.