Gas and oil are fundamentally different. Most individuals do not completely comprehend just how different they are and how gas projects (particularly with respect to LNG) are a completely different economic ball game.
1. Buyer Be There
When it comes to crude oil, you find it, produce it and sell it. Possibly the market price is lower than anticipated but finding crude buyers is not an issue, also crude oil is fairly cost effectively bunkered.
For LNG: sell first, produce it later.
A industry joke is there three LNG permits you must have: DOE, FERC and Adam Smith Permit. The first two are easy to get because they authorize your LNG project to lose money in a environmentally sanctioned manner.
Note that a FERC permit alone cost $100 million dollars and the US Government is happy to accept that check in the spirit of American laissez faire without inquiring to the interest of would-be buyers. You have to actually be able to sell the LNG to make money. Financiers, banks, venture capitalist and private investors will not lend money or put capitol into a LNG project without buyers.
For LNG: sell first, produce it later.
A industry joke is there three LNG permits you must have: DOE, FERC and Adam Smith Permit. The first two are easy to get because they authorize your LNG project to lose money in a environmentally sanctioned manner.
Note that a FERC permit alone cost $100 million dollars and the US Government is happy to accept that check in the spirit of American laissez faire without inquiring to the interest of would-be buyers. You have to actually be able to sell the LNG to make money. Financiers, banks, venture capitalist and private investors will not lend money or put capitol into a LNG project without buyers.
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