Mon. Apr 22nd, 2024

Prof. ST Hsieh

Director, US-China Energy Industry Forum

626-376-7460

[email protected]

March 8, 2023

The US is endowed with abundant natural resources, especially oil and gas. The US does not have to be concerned with any fossil energy supply, after the successful shale gas revolutions about a decade ago.

Now “the United States will remain the world’s largest LNG exporterat least for the next two years. In fact, there is no reason to doubt that the US will lose the dominating position beyond 2024.

Europe becomes a US captured LNG market after the Ukraine war started in 2022. There is no end in sight for the Ukraine war, but even if the war were to end, there is no going back for Europe to do business as usual with Russia.

The only near-term risk for US LNG exports is the global economic recovery. US LNG is relatively expensive than some competitors, if the global economy suffers major set back such as a global recession, then global demand of energy will suffer. US LNG will be less competitive with other suppliers as well as coal.

The other political risks are:

  1. US domestic environmental regulations such as “control escaped methane” may be costly.
  2. Escalating US-China trade wars may undermine US-China energy businesses.

Liquefied natural gas will continue to lead growth in U.S. natural gas exports

EIA MARCH 8, 2023

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook (STEO)
Note: LNG=liquefied natural gas

Exports of liquefied natural gas (LNG) will continue to drive growth in U.S. natural gas exports over the next two years, according to our recently released Short-Term Energy Outlook (STEO).

In our March STEO, we forecast that U.S. LNG exports will average 12.1 billion cubic feet per day (Bcf/d) in 2023, a 14% (1.5 Bcf/d) increase compared with last year. We expect LNG exports to increase by an additional 5% (0.7 Bcf/d) next year.

We forecast U.S. LNG exports to rise because of high global demand as LNG will continue to displace pipeline natural gas exports from Russia to Europe. So far this year, mild winter temperatures and fuller-than-average storage resulted in reduced LNG prices, which could be an incentive to import more LNG, especially in the price-sensitive countries of Southeast Asia. The Freeport LNG export terminal’s return to service and the new LNG export projects that will commissioned by the end of 2024 support our forecast increase in exports.

The Freeport LNG terminal is one of seven U.S. LNG export facilities; it can produce 2.14 Bcf/d of LNG on a peak day. Prior to the full shutdown of the facility in June 2022, exports from the facility averaged 1.9 Bcf/d from January 2021 through May 2022, according to our Natural Gas Monthly.

Because of the Freeport shutdown, U.S. LNG exports declined to an average 10.0 Bcf/d from June 2022 through December 2022, after peaking at 11.7 Bcf/d in March. When the new Calcasieu Pass LNG export facility was commissioned, it partially offset the decline in exports from Freeport LNG; exports from Calcasieu Pass have averaged 1.2 Bcf/d since June 2022.

This year, once all three trains at Freeport LNG return to service, we forecast U.S. LNG exports to exceed 12 Bcf/d, and the United States will remain the world’s largest LNG exporter. We forecast that U.S. LNG exports will increase further, to approximately 14 Bcf/d, by December 2024 because some LNG export projects under construction are expected to start operations by then.

We expect U.S. natural gas exports by pipeline to grow by 0.5 Bcf/d in both 2023 and 2024, mainly because of increased exports to Mexico. Several new pipelines in Mexico—Tula-Villa de Reyes, Guaymas-El Oro, the Mayakan pipeline on the Yucatán Peninsula, as well as some other minor interconnects—are scheduled to come online in 2023–24. We also expect an increase in exports via the Sur de Texas-Tuxpan underwater pipeline to supply the proposed floating liquefaction (FLNG) project off the east coast of Mexico.

Principal contributor: Victoria Zaretskaya

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