Investors Walking Away From LNG – Christie Blowing Smoke

Gas Glut Renders LNG Ports an “All But Impossible Business Model”

[Update 2″ 11/21/10 – as predicted, the Star Ledger took the bait and printed the DEP’s spin as fact (unrebutted). Even worse, they gave the Gov. credit for killing two other LNG facilities  – totally wrong. Those were killed by market forces, not by the Governor:

Previously, Atlantic Sea Island Group planned a $1.7 billion facility 19 miles offshore Sandy Hook and Exxon Mobil wanted to build a $1 billion floating LNG terminal 20 miles off Asbury Park.

Both companies withdrew their applications after Christie pledged in April to oppose all offshore LNG projects.

Update 1: 11/18/10 - surprise, surprise!: ExxonMobil scraps proposed floating LNG port offshore New Jersey

ExxonMobil said it is suspending efforts to build a $1 billion floating LNG import terminal about 20 miles off New Jersey’s coast.

The company’s decision on its BlueOcean Energy project is the latest in a string of US LNG import proposals scrapped by developers as shale production has flooded the market with cheap supply.

“The natural gas supply and demand outlook for the region has changed since the BlueOcean Energy project was launched in 2007,” spokeswoman Rachael Moore said in an email Wednesday. “As a result, ExxonMobil is putting on hold further permit work while we evaluate the range of options for supplying natural gas to the region

Here’s the latest counter-spin from Liberty, but note that there is no independent analysis here, just merely the self interested promotional statements by Liberty: Location will help New Jersey port survive bleak LNG market: Liberty – this is basically just a PR rebuttal of prior bad market news]

DEP just issued a press release announcing NJ’s intervention in the Federal Energy Regulatory Commission (FERC) review of a proposed pipeline to a proposed off shore Liquified Natural Gas (LNG) facility known as “Liberty”.

DEP touts Governor Christie’s threat to exercise his veto power under the Deepwater Port Act to kill the project outright.

But Christie is merely playing politics, getting favorable media and faux “green” accolades in the wake of his recent embarrassing controversial global warming denial comments.

And my bet is that the press and some environmental groups will fall for it hook, line, and sinker and trip all over themseves in soundbites of praise of the Governor’s courage and environmental leadership in protecting the NJ coast. (of course, while pulling punches or providing cover for numerous Christie anti-environmental initiatives, including those directly related to natural gas and coastal protection he touts in the Liberty LNG policy).

The Liberty LNG project is DOA anyway.  In Christie’ faux Jersey Tough Guy talk: It ain’t gonna happen.

But Christie hypocritcally supports other viable natural gas projects that will do extreme harm to NJ.

These harmful Christie policies include , ironically, joining the Obama Administration in undermining the Delaware River Basin Commission’s moratorium on fracking in the Delaware River watershed.

Christie’s DEP also has entered sweetheart deals with the ongoing construction of the Tennessee Gas Company’s pipeline through the heart of the NJ Highlands.

Meanwhile, the huge glut of North American natural gas as a result of the new “hydro-fracking” technology has completely changed the economic assumptions that supported the economic viabilty of LNG ports.

As I wrote on September 24, 2010, here are the views of gas industry’s analysts:

More US LNG projects scrapped as economics become less favorable

 One by one, developers of US LNG import terminals pulled the plug this summer as overabundant domestic natural gas production turned what had been a challenging outlook for imported gas into an all but impossible business model. (full article here)  

We are not fooled by symbolic gestures.

[Update 2: I just noted that several environmental groups also are seeking to intervene in the FERC process for Liberty. At least one of those groups, NJ Environmental Federation, has secured a commitment – in exchange for their endorsement – from the Goveror to kill off shore LNG. The Gov. has pledged to do that. So, why the need to intervene in a dead project? Why waste scare legal resources?  Doesn’t sound like there’s much trust in the Gov.’s commitment.]