Chicago (Platts)--14Sep2009/447 pm EDT/2047 GMT

Liquefied natural gas will keep coming to US shores despite a global gas glut because the US has become the dumping ground for excess capacity, an executive with French energy giant Total said Monday.

Global gas producers will continue to send excess gas to the US until about 2014, when global demand catches up to production and LNG infrastructure construction gains, Darryl Kennedy, Total Gas and Power North America's Director of Origination and Marketing, told distribution company executives at the LDC Forum in Chicago.

"Liquefaction is growing," Kennedy said, with 8 Bcf/d worth of new capacity predicted to come on line next year despite very little growth in demand. "Where are those molecules going to go?"

"On price alone, we'd never get any LNG," Kennedy said, comparing low prices at the Henry Hub to slightly higher prices at the UK's National Balancing Point and even higher prices dictated by the Japanese Crude Composite used for Asian supply. "It comes down to having a place to put the gas."

Global gas giants are able to disregard the money-losing prospect of selling gas into a depressed US gas market because they regard their investments in liquefaction and regasification facilities as sunk costs. The actual gas, Kennedy said, needs to be sold or stored and the only place on the globe with measurable storage is the US.

LNG imports are adding to this year's high storage numbers and Kennedy predicted that even more gas will come to the US next year, up to 4.5 Bcf/d because producers will be indifferent to price.

"It needs a home and we have a place for it," Kennedy said.

"US regas capacity is currently 11.26 Bcf/d and is expected to grow to 15.5 Bcf/d within the next two years," Kennedy said. "Utilization from the terminals is running approximately 14%, leaving plenty of room for additional LNG imports."

Kennedy downplayed the potential impact of US shale gas production, saying the announcements of drilling rates and reserves gains neglect the cost of building the pipelines and processing plants needed to get the gas to market.

"The entry costs to get into shale are costly, there's an infrastructure that has to be built," Kennedy said. --Bill Holland, bill_holland@platts.com