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As low as it gets: cash costs of US LNG

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Report summary

On a full life-cycle cost basis, US LNG linked to northwest European spot prices will struggle to find margin at spreads above Henry Hub of less than $5.00/mmbtu, taking into account the full costs of liquefaction, shipping and regasification. But once operational, the plant economics change. Sunk costs become irrelevant to decision making, and US LNG will flow where offtakers can find margin based on cash costs alone. In thinking about US export potential in an oversupplied market, therefore, cash costs are key.

What's included

This report contains

  • Document

    As low as it gets: cash costs of US LNG

    PDF 310.70 KB

Table of contents

    • Cash costs will drive US LNG flows
      • Sale and purchase agreements (SPAs)
      • Liquefaction tolling agreements (LTAs)
    • Leveraging cost advantages
    • Spot price formation

Tables and charts

This report includes 3 images and tables including:

Images

  • Sunk vs. cash costs of US LNG (FOB)*
  • Cash costs of Gulf Coast FOB: SPA vs. LTA contracts*
  • Delta between SPA and LTA offtakers cash costs

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