HOUSTON (Dow Jones)
Exxon Mobil Corp. (XOM) said Monday it has suspended plans to build a floating liquefied natural gas import terminal off the New Jersey coast due to changes in its outlook for natural gas supply and demand in the area.
The project, known as BlueOcean Energy, had a planned capacity to deliver about 1.2 billion cubic feet a day of natural gas to markets in the Northeast U.S., according to Exxon's website.
"The natural gas supply and demand outlook for the region has changed since the BlueOcean Energy project was launched in 2007," Rachael L. Moore, a company spokeswoman, said in an email. "As a result, ExxonMobil is putting on hold further permit work while we evaluate the range of options."
The suspension of the project is further evidence of the rapid shift in the supply picture for U.S. natural gas, production of which was once thought to be in fast decline.
In the middle of the past decade, energy companies embarked in a massive build-up of natural gas importing facilities as the U.S. economy boomed and its energy resources seemed close to exhaustion. In October, Exxon, the largest U.S. oil company by market value, received the inaugural shipment of LNG at its newly-built Golden Pass LNG terminal in Louisiana. The pipeline and the terminal cost Exxon and its partners Qatar Petroleum and ConocoPhillips (COP) about $2 billion to build.
But most LNG terminals are underutilized, as new techniques to exploit unconventional natural gas unleashed an unexpected supply boom in recent years. Prices for the commodity have fallen from about highs above $13 per million British thermal units in 2008 to below $4 per million British thermal units in recent months. Now LNG terminal operators like Cheniere Energy Inc. and Freeport LNG Development LP are thinking about exporting U.S.-produced gas from their terminals.
ExxonMobil joined the trend of companies betting on the future of domestic natural gas with its June acquisition of U.S. natural gas producer XTO Energy in June. The $36 billion purchase turned Exxon into the largest producer of natural gas in the U.S., giving the oil giant a large foothold into shale gas resources.
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