The Brookings Institution’s Energy Security Initiative has been looking at the changing natural gas market including, among other things, potential issues surrounding LNG exports from the United States. Overall it looks like reasonable stuff.
Owing to growing gas demand, limited domestic supply, and a more rigid and expensive pricing structure, Asia represents a near-to-medium term opportunity for natural gas exports from the United States. The expansion of the Panama Canal by 2014 will allow for LNG tankers to traverse the isthmus, thereby improving the economics of U.S. Gulf Coast LNG shipments to East and South Asian markets and potentially allowing for an even shorter shipping route than from the Gulf Coast to the U.K. This would make U.S. exports competitive with future Middle Eastern and Australian LNG exports to the region.
The WSJ quotes from the middle sentence, and I’m having trouble believing it. No matter how I look at it, shipping from the U.S. Gulf Coast to the U.K. appears to be a shorter route than shipping from the U.S. Gulf Coast to any East and South Asian market. (I.e., Houston to Bristol is about 4800 nautical miles, Houston through the Panama Canal to Toyko is about 9400 nautical miles. Hong Kong and other major Asian ports are farther than Toyko. See shipping distance calculator here.)
The WSJ article is titled “Natural-Gas Glut Could Bypass Europe,” but if I were a European energy analyst, I wouldn’t bet on it. Sounds more like wishful thinking from Gazprom rather than reasoned analysis.