LNG Potential

…LNG Potential…

In 2022 the US was the third largest exporter of LNG at 76.4 million tonnes/year (Mtpy), just behind Qatar and Australia. Operations had been curtailed at the Freeport terminal as the result of a June, 2022 fire.

With resumption of operations at the Freeport LNG terminal, the US could export 89 million tpy in 2023 and be the world’s largest exporter ahead of Qatar and Australia. Without new additions to LNG terminals, American exports of LNG would be limited to 89 million tons in 2023.

According to Wood Mackenzie, based on projects underway and expected to be completed, it’s possible that US, LNG exports could grow to between 70 Mtpy and 190 Mtpy by 2030.

There are two potential impediments to such growth.

1. Rapid growth in building liquefaction facilities could result in cost escalation making new LNG terminals uneconomic thereby limiting potential export growth.
2. Large increases in exports could decrease domestic supply and cause domestic natural gas prices to rise, resulting in higher heating and electricity costs for American consumers. Increased costs for American consumers could result in the government limiting LNG exports.

Some comparisons: Showing million tons per year (Mtpy) as billion cubic feet (BCF): 

First for a small increase from 2022 to 2023 LNG exports:

• 2022 exports = 76.4 Mtpy = 3,721 BCF
• 2023 exports = 89 Mtpy = 4,334 BCF

Next, for Wood Mackenzie’s alternative growth projections for 2030:

• Alt 1: Increasing LNG exports by 70 Mtpy = 3,409 BCF
• Alt 2: Increasing LNG exports by 190 Mtpy = 9,253 BCF

Increasing LNG exports in 2023

Production of natural gas in 2022 was 35,732 BCF before exporting 3,721 BCF of LNG.

Domestic consumption of natural gas in 2022 was therefore 32,011 BCF.

Increasing LNG exports in 2023 to 4,334 BCF from 2022, only requires increasing natural gas production by 613 BCF, to 36,345 BCF. 

It’s not likely that natural gas prices for American consumers will increase very much in 2023, certainly not as much as they did in 2022 with Russia’s invasion of Ukraine.

Henry Hub NG prices showing increase in 2022 due to resupplying Europe with LNG.

LNG prices for US exports

LNG export prices are two to six times higher than Henry Hub prices making LNG exports a valuable business opportunity.

But what about larger increases by 2030 as projected by Wood Mackenzie?

Alternate 1: Increasing LNG exports 70 Mtpy by 2030

Increasing 2022 LNG exports by 3,409 BCF would require increasing domestic production to 39,141BCF. Without additional supply, this could potentially result in reducing domestic supply by 3,409 BCF, or approximately 11%.

Increasing natural gas production by 11% could be a problem with the output of shale oil wells in Texas, Louisiana, New Mexico, and Oklahoma, decreasing.

Alternate 2: Increasing LNG exports 190 Mtpy by 2030

Increasing 2022 LNG exports by 9,253 BCF would require increasing domestic production to 44,985 BCF, resulting in a potential 28% reduction in domestic consumption.

Any such imbalance would put upward pressure on domestic prices since LNG export prices are substantially higher. 

This shines a spotlight on the United States’ huge reserves of natural gas.

America’s Huge Natural Gas Reserves

America’s largest natural gas reserves are in Appalachia, with the Marcellus, Utica and Burket/Geneseo shale formations.

The amazing size of these reserves is best shown by comparing the Marcellus shale formation’s reserves with the ten largest natural gas reserves in the world. 

The Marcellus, alone, contains more natural gas than all the other ten largest reserves in the world combined. Add the Utica and Burket/Geneseo natural gas reserves and it’s an eye popping amount of natural gas.

The United States could easily increase supply to meet the demand of exporting 70 Mtpy, or even 190 Mtpy, by producing natural gas from these fields.

The only thing needed are pipelines to bring the natural gas to where it can be exported.

Once again, government policies to eliminate the use of fossil fuels could harm Americans.

Pipelines to transport natural gas from Appalachia have been blocked by protesters, and unless government policy towards fossil fuels changes, protesters will continue to block any attempt to bring natural gas from Appalachia to where it can be exported.

Without natural gas from Appalachia, it will not be possible to export large quantities of LNG without harming Americans with higher prices for heating and electricity.

Government climate policies are harming Americans.

Read Clean Energy Crisis. Learn more about America’s predominant energy strength amzn.to/3QcyiyH

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