How Many Gas Tankers Would It Take to Wipe out a U.S. Glut?

LNG Tanker Docks At Cheniere's Sabine Pass Before First Shipment

Asia Vision sits docked at a terminal in Sabine Pass, Texas, on Feb. 22.

Photographer: Eric Kayne/Bloomberg
  • Mild winter and high output have sent stockpiles soaring
  • First LNG export from Cheniere terminal expected on Wednesday

At least 163 tankers.

That’s how many cargoes of natural gas it’d take to wipe out the ever-expanding glut of the heating and power-plant fuel in the U.S. A mild winter and production still flowing out of America’s shale formations have inventories swelling compared with previous years, dragging down U.S. gas prices even as the first export of shale gas prepares to leave from Cheniere Energy Inc.’s Sabine Pass terminal in Louisiana today.

“Production keeps going and right now we are pricing in a natural gas-ageddon,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “How many tankers do we need to to get rid of the glut?”

In a testament to how massive America’s natural gas supplies have become (they’re near a seasonal record), it’d take at least 163 tankers the size of the Asia Vision, the vessel at Cheniere’s docks, to bring U.S. gas inventories back to the five-year average. If you lined them up end to end, they would stretch about 30 miles (48 kilometers), just long enough to ring the perimeter of Manhattan.

And the chances of this fleet suddenly showing up to whisk U.S. gas away are slim. Initial exports will be too small to make a dent in the U.S. supply surplus anytime soon, said Jason Schenker, president of Prestige Economics LLC in Austin, Texas.

“It’s hard to find much of a bullish story,” Schenker said. “We see low natural gas prices for the balance of this year.”

Natural gas futures fell 0.4 cent Wednesday to settle at $1.778 per million British thermal units on the New York Mercantile Exchange.