Targeting demand – The 108 Regasification Terminals

Might actively slowing the burning of already sold fossil fuels be more effective than preventing new supply entering the market?

In reading a recent report from the LNG industry (as you do), I became aware of a surprising fact – there are currently only 108 LNG import terminals operating around the world. This makes the LNG export industry extremely vulnerable to ‘bottlenecking’ and LNG prices highly susceptible to artificial supply ‘gluts’.

If import facilities experienced slowdowns and stoppages, while production continued apace in exporting nations like Australia, the experience of ‘global demand’ for LNG would be negative and gas prices would fall.

Over recent years community actions targeting the supply-side of the fossil fuel industry has grown.  I fully support campaigns to #KeepItInTheGround. It’s important to stop and slow down fossil fuel production and export.

But would it be more effective to target demand? 

Are we not in a ‘supply glut’, with source-fuel stockpiles weeks long? Do supply-side actions have ANY impact on fossil fuel consumption?

The biggest depressor of growth in new gasfields is low gas prices. Low prices persist when available supply outstrips actual demand. When throughput at import facilities slows absent supply constrictions, global gas prices tend to go down.

Producers are then hit with a double whammy – a reduced capacity market to sell in AND a lower-value product to sell too.

While 70% of global gas production is consumed domestically – and pipelines account for the bulk of exports globally – Australian gasfield development is driven by LNG exports. Interruptions and slowdowns at import facilities overseas would have a HUGE impact on the rate of gasfield development here.

Why stop ships leaving port, when we can stop them coming in?

Imagine the flow-on impacts of preventing LNG ships from getting to port for a few days. Pretty soon the regasification plant will run at reduced capacity, and down-stream operators will have to burn less. The economic ramifications could be huge, the kind of thing people in high places would pay attention to.

It’s not necessarily going to be easy to non-violently prevent huge LNG ships from entering busy ports – but it could be highly effective.

 

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