OVERVIEW

ANALYSIS & PROJECTIONS

DATA

US GAS-TO-LNG MARKET
View History:

Monthly

Annual

Download Data (XLS File)

US Gas Market
The United States gas market has been witnessing an unprecedented transformation - changing from a

gas-deficit
a gas-surplus
(exporting)
market.
The
supply position in the has improved rapidly, leading to
U.S.(importing)
Natural Gas to
Wellhead
Price (Dollars
per Thousand
Cubic
Feet)
depressed gas prices (a 10-year low) that is forcing gas producers to produce well below their optimal capacities.
The current natural gas spot price (Henry Hub) is around US$ 2.461 per MMBtu (June 06, 2012), and it is likely to remain
1992to medium
1.74 term,
1.26 whereas
1.35 the
1.42LNG 1.51
1.62
1.55
1.84
2.38
2.13 shows
2.07 how
low in the short
prices are
showing
a rising
trend.1.92The following
table
the gas prices
have varied
2003
2012. 2.18
1993
2.03 between
1.76
2.00 and
2.06
1.98
1.99
2.04
2.09
2.02
2.03
2.15
1994

1.93

1.88

1.93

1.91

2.00

1.80

1.81

1.83

1.78

1.70

1.75

1.88

1995PRICES:
1.62
A. THE GAS

1.48

1.47

1.52

1.55

1.58

1.43

1.43

1.52

1.54

1.61

1.84

1996

2.05

1.89

1.95

2.08

2.01

2.08

2.25

2.10

1.85

1.94

2.50

3.26

1997

3.40

2.49

1.79

1.81

2.00

2.08

2.00

2.08

2.33

2.68

2.92

2.28

1998

1.96 U.S.
1.96
2.06
2.16
2.04
1.91
1.82 Cubic
1.70Feet) 1.86
Natural
Gas Wellhead
Price (Dollars
per2.09
Thousand

1.94

1.95

Year
1999

Jan
1.85

Feb
1.77

Mar
1.70

Apr
1.90

May
2.17

Jun
2.14

Jul
2.20

Aug
2.51

Sep
2.62

Oct
2.52

Nov
2.68

Dec
2.24

1973
2000
1974
2001

NA
2.60
NA
6.82

NA
2.73
NA
5.08

NA
2.66
NA
4.37

NA
2.86
NA
4.52

NA
3.04
NA
4.36

NA
3.77
NA
3.79

NA
3.84
NA
3.35

NA
3.73
NA
3.33

NA
4.26
NA
2.93

NA
4.58
NA
2.78

NA
4.40
NA
3.41

NA
5.77
NA
3.42

12-Year Gas Prices (2000 -2012)

1975
2002

NA
2.50

NA
2.19

NA
2.40

NA
2.94

NA
2.94

NA
2.96

NA
2.92

NA
2.76

NA
2.97

NA
3.24

NA
3.59

NA
3.96

1976
2003

0.54
4.43

0.54
5.05

0.54
6.96

0.55
4.47

0.55
4.77

0.58
5.41

0.58
5.08

0.60
4.46

0.60
4.59

0.62
4.32

0.63
4.26

0.64
4.76

1977
2004

0.67
5.21

0.71
5.02

0.75
5.12

0.77
5.03

0.77
5.40

0.82
5.82

0.83
5.62

0.82
5.52

0.83
5.06

0.84
5.43

0.83
6.21

0.84
6.01

0.91
6.09
1.17
5.77
1.57
6.62

0.89
6.71
1.20
5.91
1.64
6.21

0.91
6.48
1.24
6.55
1.64
5.76

0.92
8.95
1.24
6.06
1.69
5.30

0.92
10.33
1.28
5.09
1.71
5.78

U.S.1978
Natural Gas Wellhead
Cubic
0.87 Price (Dollars
0.88 per Thousand
0.89
0.88Feet)

12:07 AM
0.936/8/120.96
9.89
9.08
1.29
1.31
6.71
6.76
1.76
1.74
6.46
6.87

2005
1979
2006
1980
2007

5.80
1.02
8.01
1.37
5.70

5.73
1.05
6.85
1.42
6.80

5.95
1.10
6.43
1.46
6.65

6.57
1.11
6.37
1.51
6.26

0.91
6.25
1.15
6.23
1.56
6.75

1981
2008
1982
2009

1.77
7.38
2.23
4.60

1.81
8.02
2.30
3.70

1.86
8.63
2.35
3.38

1.93
8.87
2.40
3.18

1.95
9.96
2.45
3.23

1.95
10.36
2.45
3.38

2.01
10.79
2.47
3.45

2.02
8.21
2.53
3.37

2.08
6.71
2.56
2.98

1983
2010
1984
2011
1985
2012

2.66
5.69
2.67
4.37
2.64
2.89

2.66
5.30
2.71
4.34
2.71
2.46

2.58
4.70
2.67
3.95
2.62
2.25

2.53
4.10
2.64
4.05
2.64

2.53
4.24
2.67
4.12
2.53

2.59
4.27
2.70
4.20
2.58

2.52
4.44
2.68
4.27
2.51

2.58
4.38
2.69
4.20
2.47

2.67
3.83
2.62
3.82
2.42

2.11
5.64
2.60
3.83
2.58
4.05
2.63
3.62
2.37

2.26

2.16

2.10

1.96

1.85

1.80

1.77

1.78

1.73

1.77

1.73

1.73

1.69

1.65

1.65

1.66

1.63

1.56

1.57

1.64

1.70

History:Reported;
Monthly -- =
Annual
Download Data
(XLS File)
- = View
No
Data
Not
Applicable;
Not Available;
to avoid
company
1988
1.96
1.84
1.70 NA =1.59
1.52 W = Withheld
1.53
1.56 disclosure
1.62 of individual
1.53
1.68 data.
1.76

1.89

NATURAL GAS
OVERVIEW

1986

DATA

2.28

1987

1.74

ANALYSIS & PROJECTIONS

2.15
5.23
2.62
4.20

2.16
5.94
2.62
4.66

2.60
4.12
2.61
3.35
2.36

2.61
4.68
2.57
3.14
2.28

GLOSSARY

FAQS

1.76

US Natural Gas Wellhead Prices (1975-2012)

Release
Date: 5/31/2012
1989
1.99
1.81
1.69
NextU.S.
Release
Date:
6/29/2012
Natural
Gas
Wellhead Price

1990

2.23

1.85

Dollars per Thousand Cubic Feet

Referring
1991 Pages:1.96
1.62
12.5
Natural Gas1.74
Wellhead
Price
1992
1.26
10.0U.S. Natural Gas Prices
1993
2.03
1.76
Natural Gas Wellhead Price
1994
1.93
1.88
7.5

1.61

1.65

1.65

1.61

1.55

1.58

1.66

1.92

1.55

1.49

1.47

1.48

1.49

1.51

1.56

1.76

1.94

2.04

1.49

1.50

1.48

1.43

1.34

1.43

1.59

1.82

1.89

2.00

1.35

1.42

1.51

1.62

1.55

1.84

1.92

2.38

2.13

2.07

2.00

2.06

2.18

1.98

1.99

2.04

2.09

2.02

2.03

2.15

1.93

1.91

2.00

1.80

1.81

1.83

1.78

1.70

1.75

1.88

1995

1.62

1.48

1.47

1.52

1.55

1.58

1.43

1.43

1.52

1.54

1.61

1.84

5.0
1996

2.05

1.89

1.95

2.08

2.01

2.08

2.25

2.10

1.85

1.94

2.50

3.26

1997

3.40

2.49

1.79

1.81

2.00

2.08

2.00

2.08

2.33

2.68

2.92

2.28

1998

1.96

1.96

2.06

2.16

2.04

1.91

2.09

1.82

1.70

1.86

1.94

1.95

1999
0.0

1.85

1.77

1.70

1.90

2.17

2.14

2.20

2.51

2.62

2.52

2.68

2000

2.60

2.73

2.66

2.86

3.04

3.77

3.84

3.73

4.26

4.58

4.40

5.77

2001

6.82

5.08

4.37

4.52

4.36

3.79

3.35

3.33

2.93

2.78

3.41

3.42

2002
2.50Information
2.19
2.40
Source: U.S. Energy
Administration

2.94

2.94

2.96

2.92

2.76

2.97

3.24

3.59

3.96

2.5

1980

Chart
2003Tools

1 of 2

1.56

1985

1990

1995

2000

U.S. Natural Gas Wellhead Price

2005

2.24
2010

4.43

5.05

6.96

4.47

4.77

5.41

5.08

4.46

4.59

4.32

4.26

4.76

no analysis applied
2004
5.21

5.02

5.12

5.03

5.40

5.82

5.62

5.52

5.06

5.43

6.21

6.01

2005

5.73

5.95

6.57

6.25

6.09

6.71

6.48

8.95

10.33

9.89

9.08

5.80

U.S. Natural Gas Wellhead Price (Dollars per Thousand Cubic Feet)

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

1973

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

1974

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

1975

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

1976

0.54

0.54

0.54

0.55

0.55

0.58

0.62

0.63

0.64

1977

0.67

0.71

0.75

0.77

0.77

0.82

0.58
0.60
Page:
1 of 0.60
3

NA

0.83

0.82

0.83

0.84

0.83

0.84

1978

0.87

0.88

0.89

0.88

0.91

0.91

0.89

0.91

0.92

0.92

0.93

0.96

B. WORLD LNG PRICES

Natural Gas Overview: World LNG Prices
Federal Energy Regulatory Commission Market Oversight www.ferc.gov/oversight

World LNG Estimated March 2012 Landed Prices

UK
UKUK
UK

Cove
CovePoint
Point

$4.50
$4.50
Altamira
Altamira
Altamira

$4.60
$4.60
$2.73
$4.57

$8.75
$8.75
Belgium
Belgium
$9.03
$8.75 Belgium
Belgium
$8.98
$8.99
$8.84
$8.84

Korea
Korea

$14.60
$13.10

Cove
CovePoint
Point

$2.73
$4.40
Spain
Spain
Spain
Spain
$9.05
$9.05
$9.62
$9.15

Lake
Lake
Charles
Charles
Lake
Charles

$3.96
$3.96
$2.25
$3.93

Korea
Korea

$12.40
$12.40

Japan
Japan

Japan
Japan
$12.40
$12.40
$14.60
$13.10

India
India
India

$11.55
$11.55
$13.45
$11.55

(updated as of February 14, 2012)

Source: Waterborne Energy, Inc. Data in $US/MMBtu

Updated: February 14, 2012

2169

The LNG market developments indicate a strong unmistakable trend - that while the LNG prices are going up, the gas
prices are either going down or remaining essentially flat. This indicates that the LNG market is growing, and even if
gas prices increase in future, the LNG market is unlikely to contract significantly as users of LNG would find it almost
impossible to drastically cut back their current demand or resort to fuel-switching which involves large capital
expenditure.

C. Supply Sources
For any LNG export project, there are essentially 3 sources of gas purchase: (a) gas spot market which is very liquid
and highly traded, (b) large gas producers/ suppliers, and (c) own gas assets which one would have acquired or
entered into a JV on with other companies. Gas pricing can be either at the spot price (as many other LNG plants
have done) or at a hedged price (collar based pricing) or a combination of the two in various proportions. US
Southern LNGs approach is that while the LNG buyer takes the gas price risk, the management of US Southern LNG
would assist the LNG buyers to (i) enter into a pricing formula that would reduce the pricing volatility for the LNG
buyers to the extent possible, and/or (ii) facilitate acquisition of natural gas assets by the LNG buyer so that it hedges
against any future price rises.
The gas supply situation has been dramatically augmented by the shale gas production/ proved reserves recently
established, which is projected to account for about 49% of the total US gas supply, per the projections of the US
Energy Information Administration (EIA), a US Government agency (see chart below).
According to the EIA Annual Energy Outlook 2011, the US possesses 2,543 trillion cubic feet (Tcf) of potential natural
gas resources. Natural gas from shale resources, considered uneconomical just a few years ago, accounts for 862 Tcf
of this resource estimate. At the 2010 rate of US consumption (about 24.1 Tcf per year), 2,543 Tcf of natural gas is
enough to supply over 100 years of use. However, since the US gas market is pretty much integrated with Canada

Page: 2 of 3

and Mexico (by pipelines), having a total reserve of 2,617 Tcf.

US Natural Gas Production: 1990-2035 (in trillion cubic feet)

This scenario has changed the balance in the US LNG market - from an LNG importing country, it will now export LNG
to outside markets.

Monthly Dry Shale Gas Production (billion cubic feet per day)

Please note that the maximum shale gas production has so far been from the Haynesville Shale of
Louisiana and Texas.

Page: 3 of 3