Is LNG a threat to US natural gas producers?

North American natural gas producers need not fear that LNG imports will cause US gas prices to crash, according to Ed Kelly, head of North American gas and power consulting for UK-based research firm Wood Mackenzie.
"There's not going to be enough to flood the market... It's not going to set the US gas price... It's just going to be another source of supply," Kelly told members of the Independent Petroleum Association of America (IPAA) at their annual conference, which was held in New Orleans. He added that LNG may end up in peaking supply if it comes on at the wrong time "but no one is developing [an LNG business] for peaking supply. I guarantee."

Joe Kienle, director of new business development for Dominion Transmission, whose Dominion Resources parent owns the Cove Point, Maryland, LNG terminal that was recently restarted, said LNG won't be a major factor in North American gas supply, but it will help meet future demand.
Kelly said, "LNG is a challenge that is not going to threaten you. It's something we need."
Mark Sexton, president and CEO of Denver-based gas producer Evergreen Resources said, "The reality is that, without imports,... there's probably not enough natural gas."

However, one IPAA member who handles gas marketing for a large independent told that he disagrees that LNG won't reduce US gas prices. Currently, the majority of US gas supply comes from drilling new, short-lived wells. So when market prices go down, supply can quickly be reduced by a slowdown in drilling, which would have a quick, upward impact on market prices.
But the response time won't be as quick with LNG, he said. Costs will already be capitalized, deliveries under contract and cargoes under way, so a reduction in LNG shipments to the US, due to reduced market prices, would take longer to occur.